Smartkarma Daily Briefs

Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher

MHI (7011) | The Time to Act on Energy Transition

It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize

KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate

KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
On balance, the print is positive and management remains confident on full-year targets
There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten’s rebound from peak losses is modest

SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily

In March, SanBio Co Ltd (4592 JP) completed the application filing for approval for its investigational product SB623, as a treatment for chronic motor deficit from traumatic brain injury.
With a priority review designation, SB623 approval was expected in September. SanBio is expecting a delay in the approval. SB623 is now expected to be approved next year.
For FY23, the company is now expecting operating expenses of ¥8.1 billion, which exceeds the earlier expectations by ¥2.2 billion due to an anticipated increase in manufacturing-related expenses.

Japanese Cosmetics: Trading Around Q3 Earnings

By Oshadhi Kumarasiri

A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses
Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.

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Nov 03

Daily Brief China: XPeng, ABM Investama, Giant Biogene Holding and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
Asia HY Monthly – October 2022 – Lucror Analytics
Giant Biogene IPO Trading – Demand Was Relatively Better but Still Weak

Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead

By Victoria Li

After a 86% decline on share price YTD, we believe it’s time to revisit Xpeng.
Having gone through all the negatives which led to Xpeng’s underperforming vs peers, we believe the market has overreacted, while the company’s advantages/technology improvements have been ignored.
After 4 months of sales decline, company fundamentals would bottom out from November onwards with G9 starting to speak for itself.

Asia HY Monthly – October 2022 – Lucror Analytics

By Charles Macgregor

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

Giant Biogene IPO Trading – Demand Was Relatively Better but Still Weak

By Sumeet Singh

Giant Biogene (GB) raised around US$70m by pricing its HK IPO at the low-end.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
We had looked at various aspects of the deal in our previous note. In this note, we will talk about the demand for the deal and other trading dynamics.

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Nov 03

Daily Brief Energy/Materials: ABM Investama and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Asia HY Monthly – October 2022 – Lucror Analytics

Asia HY Monthly – October 2022 – Lucror Analytics

By Charles Macgregor

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Nov 03

Daily Brief Financials: Fusion Micro Finance Ltd, LIC Housing Finance, Polygon and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Fusion Micro Finance IPO – Not Worth the Premium
LICHF: FY23 NIM Guidance Intact Despite One-Off Impact in Q2FY23
Reddit Creates an Adoption Tsunami

Fusion Micro Finance IPO – Not Worth the Premium

By Ethan Aw

Fusion Micro Finance Ltd (1053199D IN) is looking to raise approximately US$134m in its India IPO.
Fusion Micro Finance (FMF) is a non-banking financial company – microfinance institution (NBFC-MFI) that provides financial services to unserved and underserved women in rural and peri-rural areas across India.
We have looked at the background of the deal in our earlier notes. In this note, we talk about its recent RHP updates, peer comparison and valuations.

LICHF: FY23 NIM Guidance Intact Despite One-Off Impact in Q2FY23

By Ankit Agrawal, CFA

While LIC Housing Finance (LICHF IN) posted substantial decline in NIM to 1.80% vs 2.54% QoQ, this was largely due to one-off impact from a couple of items.
LICHF has maintained its prior guidance of beating FY22 NIM of 2.29%, which means that for full-year FY23, LICHF is still on track for a NIM of 2.3% or above.
There was a one-off provisioning relating to INR 180cr of write-offs, which was fully provided for, but due to Ind-AS accounting had to be booked again resulting in excess provisioning.

Reddit Creates an Adoption Tsunami

By Carbono Insights

Reddit creates and adoption tsunami Bear times are build times.
You’re probably tired of hearing this already. But if you’re still with us during these bear times, and you’re still following the news, you’re probably aware that engineers are hard at work building what will be the rails of the next great wave of adoption.
As soon as liquidity enters back the room, crypto will be ready to onboard the first billion customers, be sure of that.

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Nov 03

Daily Brief Industrials: Taiwan Glass Industry, Mitsubishi Heavy Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Good Start, Some Surprises, More to Come!
MHI (7011) | The Time to Act on Energy Transition

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Good Start, Some Surprises, More to Come!

By Janaghan Jeyakumar, CFA

In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
The estimated one-way flow was ~US$2bn and I discussed my flow expectations for this event in FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: New Methodology! Massive Flow Implications!
With less than three weeks remaining to the base date, below is an updated look at my latest flow expectations for this event.

MHI (7011) | The Time to Act on Energy Transition

It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Company Data and News
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Nov 03

Daily Brief TMT/Internet: SK Square, KDDI Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Sweden’s EQT Partners to Invest Big in SK Shieldus: Impact on SK Square
KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate

Sweden’s EQT Partners to Invest Big in SK Shieldus: Impact on SK Square

By Douglas Kim

On 2 November, it was reported that Sweden’s EQT Partners is to acquire a 36.87% stake in SK Shieldus.
EQT Partners is expected to invest more than 2 trillion won in SK Shieldus which is expected to be valued at about 4.5 trillion won to 5.2 trillion won.
Our base case valuation of SK Square is NAV per share of 59,272, which is 59% higher than current price.

KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate

KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
On balance, the print is positive and management remains confident on full-year targets
There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten’s rebound from peak losses is modest

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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Nov 03

Daily Brief Industrials: Taiwan Glass Industry, Mitsubishi Heavy Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Good Start, Some Surprises, More to Come!
MHI (7011) | The Time to Act on Energy Transition

FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: Good Start, Some Surprises, More to Come!

By Janaghan Jeyakumar, CFA

In October 2022, FTSE Russell confirmed that the number of constituents in the FTSE TWSE Taiwan Dividend+ Index will be increased from 30 to 50 during the December 2022 Rebalance.
The estimated one-way flow was ~US$2bn and I discussed my flow expectations for this event in FTSE TWSE Dividend+ Quiddity Leaderboard Dec 22: New Methodology! Massive Flow Implications!
With less than three weeks remaining to the base date, below is an updated look at my latest flow expectations for this event.

MHI (7011) | The Time to Act on Energy Transition

It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
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✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Nov 03

Daily Brief Health Care: Singapore Medical, Pfizer Inc, SanBio Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Singapore Medical’s VGO: Revised Offer of S$0.40 Is Good to Go
Pfizer Inc (PFE US): Stellar Q3 Performance; Despite Unfavorable Fx Impact, Raises 2022 Guidance
SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily

Singapore Medical’s VGO: Revised Offer of S$0.40 Is Good to Go

By Arun George

Singapore Medical (SMG SP)‘s voluntary conditional offer from management (chairman, CEO, exec director) has been increased from S$0.37 to S$0.40 per share (share option unchanged).
The revised offer is final unless there is a competitive situation. The offeror came to the realisation that a bump was required to meet the 90% minimum acceptance condition.
Acceptances stand at 77.42% of outstanding shares. The revised offer is now reasonable and should be sufficient to nudge holdouts to accept. At last close, the gross spread is 5.3%.

Pfizer Inc (PFE US): Stellar Q3 Performance; Despite Unfavorable Fx Impact, Raises 2022 Guidance

Pfizer Inc (PFE US) reported beat-and-raise Q3 results. Revenue declined 2% operationally to $22.6 billion, beating consensus by $1.5 billion. Adjusted EPS of $1.78 was ahead of consensus of $1.40.
Pfizer raised its 2022 financial guidance, on an operational basis, for revenue and adjusted EPS by approximately $1.7 billion and $0.19, respectively.
The company aims to launch 19 new products or indications, of which more than two thirds have the potential to be blockbusters, in the market over the next 18 months.

SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily

In March, SanBio Co Ltd (4592 JP) completed the application filing for approval for its investigational product SB623, as a treatment for chronic motor deficit from traumatic brain injury.
With a priority review designation, SB623 approval was expected in September. SanBio is expecting a delay in the approval. SB623 is now expected to be approved next year.
For FY23, the company is now expecting operating expenses of ¥8.1 billion, which exceeds the earlier expectations by ¥2.2 billion due to an anticipated increase in manufacturing-related expenses.

💡 Before it’s here, it’s on Smartkarma

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Nov 03

Daily Brief Consumer: Bikaji Foods, Samyang Foods, Orion Corp, XPeng, Z Holdings, Kose Corp, Save Foods Inc, Giant Biogene Holding and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Bikaji Foods International IPO – Spicy Snacks
KOSPI200 Index Rebalance Preview: Potential Changes, Excess Volumes & Pre-Positioning
A Pair Trade Between Orion Holdings and Orion Corp
Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
Japanese Cosmetics: Trading Around Q3 Earnings
Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety
Giant Biogene IPO Trading – Demand Was Relatively Better but Still Weak

Bikaji Foods International IPO – Spicy Snacks

By Sumeet Singh

Bikaji Foods (BIKAJI IN), an ethnic snacks company, is looking to raise approximately US$107m in its India IPO.
Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs, frozen food, mathri range and cookies.
In this note, we look at the company’s past performance.

KOSPI200 Index Rebalance Preview: Potential Changes, Excess Volumes & Pre-Positioning

By Brian Freitas

With the review period complete, we see 1 high probability change and 1 lower probability change for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in December.
We estimate passive trackers will need to trade over 10 days of ADV on the high probability names. There are indications that there are pre-positions built on the stocks.
With short-sell eligibility flipping post implementation of the changes, a lot of pre-positions will be unwound prior to implementation and there will be trading opportunities on the reverse side.

A Pair Trade Between Orion Holdings and Orion Corp

By Douglas Kim

In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short).
Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp.
We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.

Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead

By Victoria Li

After a 86% decline on share price YTD, we believe it’s time to revisit Xpeng.
Having gone through all the negatives which led to Xpeng’s underperforming vs peers, we believe the market has overreacted, while the company’s advantages/technology improvements have been ignored.
After 4 months of sales decline, company fundamentals would bottom out from November onwards with G9 starting to speak for itself.

Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up

Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher

Japanese Cosmetics: Trading Around Q3 Earnings

By Oshadhi Kumarasiri

A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses
Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.

Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety

By Baptista Research

This is our first research note on Save Foods Inc.
The company is a distinguished player within the field of developing green solutions for the food industry in order to improve food safety and increase shelf life.
With a rising number of quality inspections faced by food companies, increased awareness of foodborne illnesses, and the necessity to avoid food contamination, Save Foods’ offerings are in high demand.

Giant Biogene IPO Trading – Demand Was Relatively Better but Still Weak

By Sumeet Singh

Giant Biogene (GB) raised around US$70m by pricing its HK IPO at the low-end.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
We had looked at various aspects of the deal in our previous note. In this note, we will talk about the demand for the deal and other trading dynamics.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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Nov 03

Daily Brief Equity Bottom-Up: A Pair Trade Between Orion Holdings and Orion Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

A Pair Trade Between Orion Holdings and Orion Corp
Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
Pfizer Inc (PFE US): Stellar Q3 Performance; Despite Unfavorable Fx Impact, Raises 2022 Guidance
MHI (7011) | The Time to Act on Energy Transition
SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily
KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate
Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety
Japanese Cosmetics: Trading Around Q3 Earnings
LICHF: FY23 NIM Guidance Intact Despite One-Off Impact in Q2FY23

A Pair Trade Between Orion Holdings and Orion Corp

By Douglas Kim

In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short).
Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp.
We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.

Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up

Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher

Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead

By Victoria Li

After a 86% decline on share price YTD, we believe it’s time to revisit Xpeng.
Having gone through all the negatives which led to Xpeng’s underperforming vs peers, we believe the market has overreacted, while the company’s advantages/technology improvements have been ignored.
After 4 months of sales decline, company fundamentals would bottom out from November onwards with G9 starting to speak for itself.

Pfizer Inc (PFE US): Stellar Q3 Performance; Despite Unfavorable Fx Impact, Raises 2022 Guidance

Pfizer Inc (PFE US) reported beat-and-raise Q3 results. Revenue declined 2% operationally to $22.6 billion, beating consensus by $1.5 billion. Adjusted EPS of $1.78 was ahead of consensus of $1.40.
Pfizer raised its 2022 financial guidance, on an operational basis, for revenue and adjusted EPS by approximately $1.7 billion and $0.19, respectively.
The company aims to launch 19 new products or indications, of which more than two thirds have the potential to be blockbusters, in the market over the next 18 months.

MHI (7011) | The Time to Act on Energy Transition

It is just 3 days 7 hours 52 minutes before the private jets start touching down at Sharm El-Sheikh International Airport for COP27
Expect a lot of jawboning on energy transition and decarbonization – music to the ears of MHI shareholders
MHI excels at Energy Transition as carbon intensive industries such as power generation and steelmaking shift to decarbonize

SanBio (4592 JP): Remains Unlucky for Second-Time; Delay in First Product Approval Weighs Heavily

In March, SanBio Co Ltd (4592 JP) completed the application filing for approval for its investigational product SB623, as a treatment for chronic motor deficit from traumatic brain injury.
With a priority review designation, SB623 approval was expected in September. SanBio is expecting a delay in the approval. SB623 is now expected to be approved next year.
For FY23, the company is now expecting operating expenses of ¥8.1 billion, which exceeds the earlier expectations by ¥2.2 billion due to an anticipated increase in manufacturing-related expenses.

KDDI (Buy) – Q2 22 Results Reaction: Mixed Quarter as Power Costs Accelerate