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Smartkarma Daily Briefs

Mar 21
0

Japan: Tobila Systems Inc, Loadstar Capital, Softbank Group and more

By | Daily Briefs, Japan

In today’s briefing:

  • Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)
  • TOPIX Inclusion: Loadstar Capital (3482 JP)
  • Softbank (9984) Strong Bull Elements off of 4,200 Big Support

Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)

By Steven Chen

  • With less than 60 employees, Tobila Systems is the absolute dominator in the space that can make a significant impact on Japan’s society;
  • The valuation starts to look attractive while the fundamentals remain sound;
  • Partly benefiting from being the first entrant to this niche with a robust flywheel business model, the company now “monopolizes” both the supply side and the distribution side.

TOPIX Inclusion: Loadstar Capital (3482 JP)

By Janaghan Jeyakumar, CFA

  • On 11th March 2022, Japan-based real estate investment business Loadstar Capital (3482 JP) announced they had received approval to move from TSE’s Mothers Section to the First Section.
  • Today, they completed this move. This will trigger inclusion into the TOPIX Index at the end of April 2022.
  • In this insight, we take a look at the Index Inclusion Parameters to evaluate the upside potential of the TOPIX Inclusion Event. 

Softbank (9984) Strong Bull Elements off of 4,200 Big Support

By Thomas Schroeder

  • Softbank (9984) exhibits a number of bull elements of off 4,200 macro support with bullish price and indicators supporting a big turn around play.
  • 4,200 macro bull  support induced a reversal and upside gap. Buy volumes improved on recent strength.
  • Bull conviction rests with bull divergence noted in the RSI and MACD amid a bullish price wedge that is maturing.

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Mar 21
0

China: Alibaba Group, Poly Real Estate Group Co.,, Yashili International Holdings, ENN Energy, Microport Scientific, China Hongqiao and more

By | China, Daily Briefs

In today’s briefing:

  • Alibaba Group: Looking Through the Noise
  • FTSE China A50 Index: FOL Changes Done; 100 Index Members Next?
  • Merger Arb Mondays – Yashili, Razer, 51Job, Uniti, Link, Sezzle, Guodian
  • ENN Energy (2688 HK): Mediocre FY21, Management Update Not Exciting
  • Microport Scientific (853.HK) – The Subsidiaries Would Be a Better Investment
  • Morning Views Asia: China Hongqiao, ENN Natural Gas, Ronshine China Holdings

Alibaba Group: Looking Through the Noise

By Wium Malan, CFA

  • The major trend, witnessed over the past two years, has been the continued loss of relative market share by Alibaba, and the continued market share gains by JD.com.
  • Alibaba has been able to steadily grow its active user base, on its Chinese retail platforms, by above 10%y/y since at least 2019, off an extremely high base.
  • Short-Term growth expectations seem relatively conservative, with limited risk for a further negative surprise.

FTSE China A50 Index: FOL Changes Done; 100 Index Members Next?

By Brian Freitas

  • With the FOL changes implemented at the March rebalance, the next step could be an increase in the number of FTSE China A50 Index (XIN9I) constituents from 50 to 100.
  • The June rebalance will also see a change in the index universe from the FTSE China A All Cap Free Index to the FTSE China A All Cap Index.
  • If the 50 to 100 stock increase is implemented on one-step, one-way turnover will be around 27.6% and result in a one-way trade of over CNY 13bn.

Merger Arb Mondays – Yashili, Razer, 51Job, Uniti, Link, Sezzle, Guodian

By Arun George

ENN Energy (2688 HK): Mediocre FY21, Management Update Not Exciting

By Osbert Tang, CFA

  • Core earnings growth of 14.6% YoY at ENN Energy (2688 HK) is not very exciting. Gas sales gross profit was down 5% while integrated energy looks better with 51.2% growth.
  • Management guidance of 12-15% growth in FY22 seems to be optimistic, especially in a period of time where high input cost is likely to eat into margin still.
  • Valuations are not too stretched, yet not very appealing. Its net debt position also does not compare well with CR Gas (1193 HK) and Kunlun Energy (135 HK). 

Microport Scientific (853.HK) – The Subsidiaries Would Be a Better Investment

By Xinyao (Criss) Wang

  • MicroPort’s net loss widened according to its profit warning. The negative impact of centralized procurement is already being shown. We analyzed the situation of its different business segments.
  • After continuous M&A, Microport Scientific (853 HK) could face cash flow pressure in this unfriendly financing environment.
  • Due to MicroPort’s development mode, the market value of its subsidiaries could be higher than the parent company. Our view is that the subsidiaries would be a better investment.

Morning Views Asia: China Hongqiao, ENN Natural Gas, Ronshine China Holdings

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Mar 21
0

Indonesia: GoTo, Matahari Department Store and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • GoTo IPO: A No Go
  • Matahari Department Store (LPPF IJ) – All Eyes to the Podium
  • GoTo IPO: Peer Comparison and Valuation

GoTo IPO: A No Go

By Shifara Samsudeen, ACMA, CGMA

  • Superapp GoTo has filed for an IPO to list its shares on the Indonesian Stock Exchange to raise US$1.2bn at a market capitalisation of US$25.0bn.
  • The company plans to use most of the proceeds on developing its businesses including Gojek, Tokopedia and fintech services.
  • Our analysis on the company’s financials suggests the company has been burning cash to grow its business and may not be able to generate any profits in the near future.

Matahari Department Store (LPPF IJ) – All Eyes to the Podium

By Angus Mackintosh

  • Matahari Department Store’s results marked a turning point in terms of profitability, and this year will see the company back in expansion mode, with a new strategy in place.
  • Management is pushing hard to entrench its position in existing categories as well as pushing into new ones, with an omnichannel approach and new partnerships in place. 
  • Matahari Department Store has the potential for a re-rating as it regains its place on the winning podium amongst Indonesian retailers in very reasonable valuations.

GoTo IPO: Peer Comparison and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Superapp GoTo (1379371D IJ) has filed for an IPO to list its shares on the Indonesian Stock Exchange to raise US$1.1-1.25bn at a valuation of about US$24-26bn.
  • The company plans to use the proceeds to develop its business including for customer acquisition, product development and sales and marketing.
  • Our SOTP valuation implies that GoTo’s shares are overvalued at the indicative IPO price range.

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Mar 21
0

Equity Bottom-Up: Alibaba Group, Tobila Systems Inc, Platinum Group PCL, Matahari Department Store, Bloomberry Resorts, ENN Energy, GitLab, Microport Scientific, BigCommerce Holdings and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Alibaba Group: Looking Through the Noise
  • Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)
  • Platinum (PLAT): The Shoppers Coming Back
  • Matahari Department Store (LPPF IJ) – All Eyes to the Podium
  • Bloomberry Resorts: Recovery Cycle Has Arrived for This Manila-Based Casino Hotel
  • ENN Energy (2688 HK): Mediocre FY21, Management Update Not Exciting
  • Gitlab 4Q22 Earnings: Impressive
  • Microport Scientific (853.HK) – The Subsidiaries Would Be a Better Investment
  • BigCommerce: Stock Selloff Looks Finished As Valuation Hit $1.5 Billion

Alibaba Group: Looking Through the Noise

By Wium Malan, CFA

  • The major trend, witnessed over the past two years, has been the continued loss of relative market share by Alibaba, and the continued market share gains by JD.com.
  • Alibaba has been able to steadily grow its active user base, on its Chinese retail platforms, by above 10%y/y since at least 2019, off an extremely high base.
  • Short-Term growth expectations seem relatively conservative, with limited risk for a further negative surprise.

Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)

By Steven Chen

  • With less than 60 employees, Tobila Systems is the absolute dominator in the space that can make a significant impact on Japan’s society;
  • The valuation starts to look attractive while the fundamentals remain sound;
  • Partly benefiting from being the first entrant to this niche with a robust flywheel business model, the company now “monopolizes” both the supply side and the distribution side.

Platinum (PLAT): The Shoppers Coming Back

By Henry Soediarko

  • The Thai government plans to scrap pre-travel COVID-19 to boost tourism, and visitors will only be tested on arrival in Thailand – expect to have more tourists in Thailand.
  • Q4 2021 revenue started to bounce higher YoY although still 50% of pre-COVID level but shows some promise. 
  • Platinum Group PCL (PLAT TB)  share price went up by 24%within a year, with a 0.7x PBR to 1.02x PBR. Still early but why wait longer? 

Matahari Department Store (LPPF IJ) – All Eyes to the Podium

By Angus Mackintosh

  • Matahari Department Store’s results marked a turning point in terms of profitability, and this year will see the company back in expansion mode, with a new strategy in place.
  • Management is pushing hard to entrench its position in existing categories as well as pushing into new ones, with an omnichannel approach and new partnerships in place. 
  • Matahari Department Store has the potential for a re-rating as it regains its place on the winning podium amongst Indonesian retailers in very reasonable valuations.

Bloomberry Resorts: Recovery Cycle Has Arrived for This Manila-Based Casino Hotel

By Howard J Klein

  • We have been bullish on the broad Philippine gaming market because it has moved ahead dealing with covid. It is Asia’s second most robust gaming market.
  • The company’s Solaire resort at Manila’s Entertainment Zone just reported increases in mass revenue sector indicating that recovery is well underway. 
  • 4Q21 and total 2021 results do not include South Korea property due to lockdowns. But once reopened, it will be accretive to forward earnings.

ENN Energy (2688 HK): Mediocre FY21, Management Update Not Exciting

By Osbert Tang, CFA

  • Core earnings growth of 14.6% YoY at ENN Energy (2688 HK) is not very exciting. Gas sales gross profit was down 5% while integrated energy looks better with 51.2% growth.
  • Management guidance of 12-15% growth in FY22 seems to be optimistic, especially in a period of time where high input cost is likely to eat into margin still.
  • Valuations are not too stretched, yet not very appealing. Its net debt position also does not compare well with CR Gas (1193 HK) and Kunlun Energy (135 HK). 

Gitlab 4Q22 Earnings: Impressive

By Aaron Gabin

  • Revenue grew 69% YoY to $78M vs. consensus at $70M (+52%), with very impressive underlying growth metrics that show the larger customers are the fastest growing.
  • Increased selling through hyperscaler partners may aid S&M leverage over time. 
  • Acquisition of Opstrace accelerates the platform expansion into observability, but right now positioned vs. nonconsumption rather than against Datadog.

Microport Scientific (853.HK) – The Subsidiaries Would Be a Better Investment

By Xinyao (Criss) Wang

  • MicroPort’s net loss widened according to its profit warning. The negative impact of centralized procurement is already being shown. We analyzed the situation of its different business segments.
  • After continuous M&A, Microport Scientific (853 HK) could face cash flow pressure in this unfriendly financing environment.
  • Due to MicroPort’s development mode, the market value of its subsidiaries could be higher than the parent company. Our view is that the subsidiaries would be a better investment.

BigCommerce: Stock Selloff Looks Finished As Valuation Hit $1.5 Billion

By Andrei Zakharov

  • Shares of BigCommerce Holdings (BIGC US)  slipped below the IPO price of $24.00 per share, and at current valuation, we see limited downside risk for BigCommerce stock investors.  
  • In 2020, Intuit Inc (INTU US)  offered to acquire BigCommerce for $1.5 billion, according to CNBC and other public sources. Both BigCommerce and Intuit didn’t provide a comment.
  • Insider selling activity has slowed down noticeably over the past three months and BigCommerce Holdings (BIGC US)  insiders sold ~$5 million worth of shares. 

Related tickers: Matahari Department Store (LPPF.JK), ENN Energy (2688.HK), Microport Scientific (0853.HK)

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Mar 21
0

Health Care: Microport Scientific and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Microport Scientific (853.HK) – The Subsidiaries Would Be a Better Investment

Microport Scientific (853.HK) – The Subsidiaries Would Be a Better Investment

By Xinyao (Criss) Wang

  • MicroPort’s net loss widened according to its profit warning. The negative impact of centralized procurement is already being shown. We analyzed the situation of its different business segments.
  • After continuous M&A, Microport Scientific (853 HK) could face cash flow pressure in this unfriendly financing environment.
  • Due to MicroPort’s development mode, the market value of its subsidiaries could be higher than the parent company. Our view is that the subsidiaries would be a better investment.

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Mar 21
0

Macro: Trading the Relief Rally and more

By | Daily Briefs, Macro

In today’s briefing:

  • Trading the Relief Rally
  • How to Spot A Market Bottom
  • Japan Financials: Bottoming Out?
  • The Lowest Jobless Rate Since Start Of The Pandemic

Trading the Relief Rally

By Cam Hui

  • The U.S. stock market is undergoing a relief rally in the context of an intermediate-term downtrend.
  • Investment-Oriented accounts should take advantage of market strength to rebalance to a position of minimum risk.
  • Traders who are long should use a stop-loss to define their risk.

How to Spot A Market Bottom

By Cam Hui

  • Did the stock market make a meaningful bottom last week? Don’t be fooled, this is a bear market. The recent episode of stock market strength is a bear market rally.
  • We are downgrading our Trend Asset Allocation Model from neutral to negative.
  • Investment-Oriented accounts should shift to a maximum defensive posture. Traders could position themselves for a short but vicious bear market rally, but don’t overstay your welcome.

Japan Financials: Bottoming Out?

By Steven Holden

  • Japan Financials have suffered a long-term decline in exposure.  Ownership has dropped from 56% of managers in December 2013 to just 31.2% today.
  • However, there are signs that these ownership declines are starting to reverse course, led by manager buying in Japan Post Holdings, Ms&Ad Insurance and Sompo Holdings
  • If recent activity suggests a shift in sentiment for Japan Financials stocks, there is plenty of room for ownership levels to move higher from here.

The Lowest Jobless Rate Since Start Of The Pandemic

By Maybank Research

  • Decline in labour force participation rate to 60.5%
  • Agriculture the key driver of total employment loss
  • Metro Manila shift to AL1 from 16 Mar 2022
  • Maintain our 2022 unemployment rate forecast

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Mar 21
0

United States: GitLab, BigCommerce Holdings, Crude Oil and more

By | Daily Briefs, United States

In today’s briefing:

  • Gitlab 4Q22 Earnings: Impressive
  • BigCommerce: Stock Selloff Looks Finished As Valuation Hit $1.5 Billion
  • Vanda Insights Bulls & Bears: Near- And Short-Term View on Oil Prices

Gitlab 4Q22 Earnings: Impressive

By Aaron Gabin

  • Revenue grew 69% YoY to $78M vs. consensus at $70M (+52%), with very impressive underlying growth metrics that show the larger customers are the fastest growing.
  • Increased selling through hyperscaler partners may aid S&M leverage over time. 
  • Acquisition of Opstrace accelerates the platform expansion into observability, but right now positioned vs. nonconsumption rather than against Datadog.

BigCommerce: Stock Selloff Looks Finished As Valuation Hit $1.5 Billion

By Andrei Zakharov

  • Shares of BigCommerce Holdings (BIGC US)  slipped below the IPO price of $24.00 per share, and at current valuation, we see limited downside risk for BigCommerce stock investors.  
  • In 2020, Intuit Inc (INTU US)  offered to acquire BigCommerce for $1.5 billion, according to CNBC and other public sources. Both BigCommerce and Intuit didn’t provide a comment.
  • Insider selling activity has slowed down noticeably over the past three months and BigCommerce Holdings (BIGC US)  insiders sold ~$5 million worth of shares. 

Vanda Insights Bulls & Bears: Near- And Short-Term View on Oil Prices

By Vandana Hari

  • The start of Ukraine-Russia peace talks have yanked Brent crude down from 10-year highs of around $128 on March 8 to $108 as of Friday. 
  • But there is a risk premium of at least $18 still embedded in crude prices, which will evaporate only with a rapprochement and ceasefire in the Ukraine war. 
  • In this report, we assess the net impact of the bullish and bearish forces on crude in the very near term and the next couple of months.

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Mar 21
0

Industrials: Gamuda Bhd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Gamuda (GAMU.KL) – Smart 2

Gamuda (GAMU.KL) – Smart 2

By Maybank Research

  • A winning resolution; maintain BUY
  • “Sponge city” concept, with 22km of tunnels
  • Over 2 phases, under PPP 3.0
  • Rising to the occassion

Gamuda’s proposal for a SMART 2 flood mitigation system in western Klang Valley (downstream of the Klang River), if it materialises, should provide a winning resolution to the government and population there. For Gamuda, this project would further uplift its E&C profile, and bring it closer to its MYR20b orderbook target (MYR10.4b now) by mid-2023 (end-FY23). Our earnings forecasts have upside potential, depending on the project value and timeline. No change to our MYR4.28 RNAV-TP.

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Mar 21
0

South Korea: Samsung SDI, LG Energy Solution, Lotte Rental, Hanon Systems and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSPI 200 IT (TIGER ETF) Rebalancing Preview
  • WISE Secondary Cell (TIGER ETF) Rebalancing Preview
  • KOSPI 200 Rebalance in June 2022 Amid Portfolio Changes Post Outbreak of War in Ukraine
  • KRX Auto (KODEX ETF) Rebalancing Preview

KOSPI 200 IT (TIGER ETF) Rebalancing Preview

By Sanghyun Park

  • KOSPI 200 IT sector index rebalances twice a year in June and December. The effective date for the upcoming rebalancing is June 10.
  • The IT sector has a high degree of price cointegration of the stocks within the sector. Therefore, the impact/price correlation is robust despite a smaller impact size.
  • At this point, the following three stocks deserve our attention: Samsung SDI, Kakao Pay, and LG Corp. We can expect a passive inflow of +0.15x for these highly liquid names.

WISE Secondary Cell (TIGER ETF) Rebalancing Preview

By Sanghyun Park

  • WISE Secondary Cell rebalances every quarter in January, April, July, and October. The effective date for the upcoming rebalancing is April 15.
  • The flow impact/price correlation of small/mid-caps is shown to be at a meaningful level. Therefore, we may need to design long/short basket trading setups focusing on these small/mid-caps.
  • The following five stocks are expected to have a significant level of flow impact at this point: SKC, Soulbrain, Youlchon Chemical, Posco Chemical, and LG Energy Solution.

KOSPI 200 Rebalance in June 2022 Amid Portfolio Changes Post Outbreak of War in Ukraine

By Douglas Kim

  • We discuss the potential additions and deletions in the upcoming June 2022 KOSPI200 rebalance. The outbreak of war in Ukraine has impacted the potential additions/deletion candidates. 
  • These top 10 potential inclusions are up on average 10.8% YTD, outperforming KOSPI which is down 9.1% YTD.
  • Among the potential inclusions, Ildong Pharm, Meritz F&M Insurance, Hana Tour, Dongwon Systems, and Lotte Rental have been materially outperforming the market in the past three months. 

KRX Auto (KODEX ETF) Rebalancing Preview

By Sanghyun Park

  • KRX Autos rebalances once a year in September. The effective date of the upcoming rebalancing is September 9.
  • The market cap difference between the top three stocks and the rest of the stocks is significant. So, the passive impact of the non-capped constituents is substantial.
  • Accordingly, this index rebalancing is well worth a preemptive position build-up. At this point, notable stocks from a flow perspective are Hanon Systems, Kumho Tire, and Halla Holdings.

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Mar 21
0

India: Shoppers Stop and more

By | Daily Briefs, India

In today’s briefing:

  • Focus on smaller stores to improve productivity

Focus on smaller stores to improve productivity

By Motilal Oswal

  • According to our channel checks, the new smaller compact feature stores (of 20k-25k sqft) enjoy significantly better revenue/sqft (of ~1.5x) v/s the existing bigger stores (of 40k-50k sqft).
  • Management targets to double revenue over the next 3-4 years backed by: its strategy of adding 10-12% new stores annually, its initiative to revive SSSG to high single or double digit on improved new store productivity and focus on private labels, strong growth in the Beauty segment and ecommerce initiatives.
  • However, our revenue estimates are nearly 40% below the management.
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