Smartkarma Daily Briefs

On the 28 October, Potentia announced an improved (and final) off-market Offer of A$1.80/share for Nitro (NTO AU), a 13.9% improvement over its initial proposal on the 30 August.
Nitro has now concluded the Potentia Takeover Bid undervalues Nitro. The Offer, however, is still proceeding, and will open in two weeks.
Separately, KKR’s Alludo has pitched a non-binding – subject to due diligence – Offer by way of a Scheme (or off-market takeover) at A$2.00/share. Nitro is supportive of this Offer.

Chipotle Mexican Grill: Major Drivers

Chipotle Mexican Grill delivered a mixed set of results.
In the quarter, Chipotle continues to view broadening trends by the income levels with the consumers with lower income reducing frequency.
We provide the stock of Chipotle Mexican Grill with a ‘Hold’ rating and a revision in the target price.

Moody’s Corporation: ESG Insurance Underwriting Solutions & Other Drivers

Moody’s Corporation delivered a disappointing result, failing to meet Wall Street expectations with respect to both, revenues as well as earnings.
The Moody’s Analytics business continued to perform quite well with strong revenue growth and an increase in the annualized recurring revenue.
We provide the stock of Moody’s with a ‘Hold’ rating with a revision in the target price.

ServiceNow Inc: Acquisition of Era Software

Service Now had a solid third quarter and the company delivered another all-around beat.
Considering the solid organic growth and market demand of the company, it is expected that there will be 750 million new applications built by 2025.
The company focused on improving customer service experience and expanding its market by acquiring other software companies which is why it closed the acquisition of Era Software.

Texas Instruments: Production At New Facility & Other Drivers

Texas Instruments had a good third quarter, with revenue increasing by 13% year over year to $5.2 billion, surpassing Wall Street expectations.
After two years of construction, the company’s new semiconductor chip facility has begun producing chips.
The management anticipates Texas Instruments’ fourth-quarter revenue to be in the $4.4 billion to $4.8 billion range.

Ford Motors: Major Drivers

Ford’s stock has seen some recovery off-late despite a mixed result for the third quarter.
The company surpassed the revenue expectations of Wall Street but missed out on earnings and ended up with nearly $50 billion in liquidity.
The only silver lining in the quarter was Ford Credit which delivered another healthy quarter with an EBT of $600 million.

Valero Energy: Major Drivers

Valero Energy had a mixed performance in its recent financial results for the quarter as its revenues were significantly above Wall Street expectations.
The company has a good refining margin supported by continued energy cost advantages, low product inventories, and strong product demand for the U.S. refineries in comparison to the global competitors.
The refining fundamentals stay strong, with global product supply staying constrained because of the high natural gas prices and capital reductions.

Biogen Inc: Push For Byooviz & Other Drivers

Biogen’s stock has been on a roll as the company delivered another solid set of results, surpassing Wall Street expectations on all counts.
Along with Eisai, there have been positive results from Clarity AD, a Phase 3 study of the lecanemab.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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Oct 31

Daily Brief Singapore: Moya Holdings Asia, Keppel Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Moya Holdings: 21 Nov EGM For Salim’s Exit Offer
Moya Holding’s EGM for S$0.092 Offer on 21 November
Weekly Deals Digest (30 Oct) – Keppel, GoTo, Fengxiang, Lifestyle, Jinke Services, Kingston, Pushpay

Moya Holdings: 21 Nov EGM For Salim’s Exit Offer

On the 14 September, Indonesian water treatment play Moya Holdings Asia (MHAL SP) announced a S$0.092/share Exit Offer from an Anthoni Salim-controlled entity. The Offer price will not be increased.
The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.
The Circular is now out. The EGM takes place on the 21 November. The IFA reckons the Offer is fair and reasonable.

Moya Holding’s EGM for S$0.092 Offer on 21 November

Moya Holdings Asia (MHAL SP) released its delisting circular. The EGM to approve the delisting proposal from Tamaris Infrastructure (Anthoni Salim) at S$0.092 per share is on 21 November.
The IFA says the offer is fair and reasonable. Gateway Partners, which holds a blocking stake, will likely use the offer as an opportunity to exit an underperforming investment.
The offer price is attractive and will likely succeed. At the last close price, the gross and annualised spread for a 30 November payment is 3.4% and 45.8%, respectively.

Weekly Deals Digest (30 Oct) – Keppel, GoTo, Fengxiang, Lifestyle, Jinke Services, Kingston, Pushpay

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Blibli (1437710D IJ) priced at IDR450, Giant Biogene Holding (2367 HK) priced at the bottom of the range, GoTo (GOTO IJ)‘s upcoming lock-up expiry.
Event-Driven developments – Keppel Corp (KEP SP), Shandong Fengxiang (9977 HK), Jinke Smart Services (9666 HK), Kingston Financial (1031 HK), Lifestyle International Holdings (1212 HK), Pushpay Holdings (PPH NZ), Nitro.

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Oct 31

Daily Brief China: Sichuan Tianyi Science & A, Jinke Smart Services, Shandong Fengxiang, Hong Kong Hang Seng Index, Dongfang Electric, Alibaba Group, Guangzhou Kingmed Diagnostics, Vedanta Resources and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

CSI500 Index Rebalance Preview: 50 Adds/Deletes in December
Merger Arb Mondays (31 Oct) – Jinke, Fengxiang, Lifestyle, Kingston, Pushpay, Nitro, Elmo, DTAC/True
Fengxiang (9977 HK): PAG’s Unconditional MGO And Proposed Delisting
EQD | Volatility Update: Bi-Weekly Review of Vol Changes and Best Trades
Dongfang Electric (1072 HK): Surge in 3Q22 Profit and Acceleration of New Orders
China Internet Weekly (31Oct2022): Alibaba, Tencent, Meituan, Kuaishou, S.F.
Guangzhou Kingmed Diagnostics (603882CH)-Soaring Accounts Receivable/Potential Bad Debt Are Big Risk
Morning Views Asia: Vedanta Resources, Yankuang Energy Group

CSI500 Index Rebalance Preview: 50 Adds/Deletes in December

By Brian Freitas

With a day left in the review period, we forecast 50 changes (the maximum permitted) for the CSI500 Index at the close on 9 December.
We estimate a one-way turnover of 13.53% at the December rebalance leading to a one-way trade of CNY 8.01bn. The Materials, Consumer Discretionary and Information Technology sectors are net gainers.
The potential adds and potential deletes have performed in line over the last few weeks, and we’d look to position for outperformance post the end of the review period.

Merger Arb Mondays (31 Oct) – Jinke, Fengxiang, Lifestyle, Kingston, Pushpay, Nitro, Elmo, DTAC/True

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), 111 Inc (YI US), Genex Power Ltd (GNX AU), O2Micro International (OIIM US), Shandong Fengxiang (9977 HK).
Lowest spreads – Tyro Payments (TYR AU), Tassal (TGR AU), China Vast Industrial Urban Development (6166 HK), Singapore Medical (SMG SP), PTB Group Ltd (PTB AU), Nearmap Ltd (NEA AU).

Fengxiang (9977 HK): PAG’s Unconditional MGO And Proposed Delisting

PAG Capital has won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK).
The acquisition remains subject to regulatory clearance (including SAMR). Once greenlit, PAG will be required to make an unconditional Offer for the H-shares at HK$1.5132/share.
Separately, it is PAG’s intention to delist Fengxiang which involves Scheme-like delisting resolutions.

EQD | Volatility Update: Bi-Weekly Review of Vol Changes and Best Trades

By Simon Harris

Two Week summary of vol changes and moves across Global Markets
Analysing ATM volatility and skew changes over the last 10 days
We suggest a few trades to take advantage of the implied vol surfaces

Dongfang Electric (1072 HK): Surge in 3Q22 Profit and Acceleration of New Orders

By Osbert Tang, CFA

Dongfang Electric (1072 HK) logged a 40.1% growth in reported profit and a 36.5% increase in new orders in 3Q22, both represent excellent sequential momentum.
A 0.5pp 3Q22 gross margin expansion demonstrated order execution and cost control strengths. We also forecast end-FY22 backlog at 1.8x FY22F revenue, well securing outlook.
DEC is set to see accelerated growth momentum from rising power storage, particularly pumped storage, demand in the medium term. Yet, it only trades on cheap 8.1x FY23F PER.

China Internet Weekly (31Oct2022): Alibaba, Tencent, Meituan, Kuaishou, S.F.

By Ming Lu

In 3Q22, S. F. Holdings’s revenue grew by 45% YoY and net profit increased by 89% YoY.
Alibaba resumed its link on Kuaishou’s live streaming sales before Singles’ Day.
Tencent denied the rumor that it would be acquired by China Mobile.

Guangzhou Kingmed Diagnostics (603882CH)-Soaring Accounts Receivable/Potential Bad Debt Are Big Risk

By Xinyao (Criss) Wang

Driven by the demand for nucleic acid testing due to COVID-19, Kingmed’s 22Q3 performance continued to grow. However, its accounts receivable also increased sharply, which would be a risk.
Kingmed has to switch business in time when the huge demand for nucleic acid testing fades away.The YoY growth of other businesses would be the key to decide its outlook.
The current valuation of Kingmed isn’t attractive. After COVID-19 is under control, Kingmed’s YoY revenue growth could fall back to below 40%. Net profit margin could reduce to above 10%.

Morning Views Asia: Vedanta Resources, Yankuang Energy Group

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.

Vedanta Resources
Yankuang Energy Group

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Oct 31

Daily Brief Japan: Keyence Corp, Seiko Epson, Aeon Co Ltd, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Keyence(6861 JP) | The Rise of the Phoenix – A Company like No Other
Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish
Aeon: Making Omnichannel a Reality
Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

Keyence(6861 JP) | The Rise of the Phoenix – A Company like No Other

Keyence reported record 2Q Sales and OP, thoroughly beating street expectations. The company recorded high double-digit growth in all regions – even in Europe.
Pricing power is on display 10-35% price hikes to shore up the dip in GPM to 81.3%, depressed on higher raw material costs. Sets up for future earnings growth.
The share price has underperformed the TOPIX -26%YTD. Valuations at the bottom of the recent range. We expect a share price recovery and are bullish.

Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish

2Q Earnings Neutral; Mainly FX driven. The company sidestepped the worse of what we are seeing in broader printer market (See XEROX; Canon)
The outlook remains Negative. Macro conditions set to be worse in H2 vs H1. Core Home & Office Printing Business key IJP unit sales struggling with severe margin pressures.
Ongoing share buyback mildly supportive but unlikely to be a game changer with falling earnings. Target-based 0.8x PBR implying ¥1700 TP.

Aeon: Making Omnichannel a Reality

By Michael Causton

In search of ¥1 trillion in ‘digital-related’ sales by 2026, Aeon opened its first, built-from-scratch online-offline marketing store in Yokohama this month.
The new Aeon SC introduces a range of features and processes to make e-commerce a natural supplement to the store and the shopping experience.
Aeon has a way to go to reach its targets for e-commerce but is moving in the right direction and has a clearer direction than rival, Seven & I.

Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

By Aki Matsumoto

Clearly, the pace of decline of deemed cross-held shares held in retirement benefit trusts is slower than the pace of decline of ordinary cross-held shares held on the balance sheet.
Companies with deemed shareholdings tend to have larger total assets than companies with general policy shareholdings (policy shareholdings account for 7.3% of total assets).
Although they are less visible, the reduction of deemed shareholdings will come later because shares of important business partners and banks are contributed to retirement benefit trust as deemed shareholdings.

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Oct 31

Daily Brief Utilities: Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

Do Not Miss the Movement of Deemed Cross-Held Shares, Which Are the Last Resort of Cross-Held Shares

By Aki Matsumoto

Clearly, the pace of decline of deemed cross-held shares held in retirement benefit trusts is slower than the pace of decline of ordinary cross-held shares held on the balance sheet.
Companies with deemed shareholdings tend to have larger total assets than companies with general policy shareholdings (policy shareholdings account for 7.3% of total assets).
Although they are less visible, the reduction of deemed shareholdings will come later because shares of important business partners and banks are contributed to retirement benefit trust as deemed shareholdings.

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Oct 31

Daily Brief Industrials: Sichuan Tianyi Science & A, Moya Holdings Asia, Keppel Corp, Dongfang Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

CSI500 Index Rebalance Preview: 50 Adds/Deletes in December
Moya Holdings: 21 Nov EGM For Salim’s Exit Offer
Moya Holding’s EGM for S$0.092 Offer on 21 November
Weekly Deals Digest (30 Oct) – Keppel, GoTo, Fengxiang, Lifestyle, Jinke Services, Kingston, Pushpay
Dongfang Electric (1072 HK): Surge in 3Q22 Profit and Acceleration of New Orders

CSI500 Index Rebalance Preview: 50 Adds/Deletes in December

By Brian Freitas

With a day left in the review period, we forecast 50 changes (the maximum permitted) for the CSI500 Index at the close on 9 December.
We estimate a one-way turnover of 13.53% at the December rebalance leading to a one-way trade of CNY 8.01bn. The Materials, Consumer Discretionary and Information Technology sectors are net gainers.
The potential adds and potential deletes have performed in line over the last few weeks, and we’d look to position for outperformance post the end of the review period.

Moya Holdings: 21 Nov EGM For Salim’s Exit Offer

On the 14 September, Indonesian water treatment play Moya Holdings Asia (MHAL SP) announced a S$0.092/share Exit Offer from an Anthoni Salim-controlled entity. The Offer price will not be increased.
The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.
The Circular is now out. The EGM takes place on the 21 November. The IFA reckons the Offer is fair and reasonable.

Moya Holding’s EGM for S$0.092 Offer on 21 November

Moya Holdings Asia (MHAL SP) released its delisting circular. The EGM to approve the delisting proposal from Tamaris Infrastructure (Anthoni Salim) at S$0.092 per share is on 21 November.
The IFA says the offer is fair and reasonable. Gateway Partners, which holds a blocking stake, will likely use the offer as an opportunity to exit an underperforming investment.
The offer price is attractive and will likely succeed. At the last close price, the gross and annualised spread for a 30 November payment is 3.4% and 45.8%, respectively.

Weekly Deals Digest (30 Oct) – Keppel, GoTo, Fengxiang, Lifestyle, Jinke Services, Kingston, Pushpay

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Blibli (1437710D IJ) priced at IDR450, Giant Biogene Holding (2367 HK) priced at the bottom of the range, GoTo (GOTO IJ)‘s upcoming lock-up expiry.
Event-Driven developments – Keppel Corp (KEP SP), Shandong Fengxiang (9977 HK), Jinke Smart Services (9666 HK), Kingston Financial (1031 HK), Lifestyle International Holdings (1212 HK), Pushpay Holdings (PPH NZ), Nitro.

Dongfang Electric (1072 HK): Surge in 3Q22 Profit and Acceleration of New Orders

By Osbert Tang, CFA

Dongfang Electric (1072 HK) logged a 40.1% growth in reported profit and a 36.5% increase in new orders in 3Q22, both represent excellent sequential momentum.
A 0.5pp 3Q22 gross margin expansion demonstrated order execution and cost control strengths. We also forecast end-FY22 backlog at 1.8x FY22F revenue, well securing outlook.
DEC is set to see accelerated growth momentum from rising power storage, particularly pumped storage, demand in the medium term. Yet, it only trades on cheap 8.1x FY23F PER.

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Oct 31

Daily Brief TMT/Internet: Keyence Corp, Seiko Epson, LX Semicon, Intel Corp, Nitro Software Ltd, Delta Electronics, Mediatek Inc, Servicenow Inc, Texas Instruments and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Keyence(6861 JP) | The Rise of the Phoenix – A Company like No Other
Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish
LX Semicon KOSPI Migration & KOSDAQ 150 Special Change
Intel Vs. TSMC/UMC Long/Short Monitor: Intel Results Drive Share Spike, Still Can Re-Rate
Nitro Software Rejects Potentia, Again, And Engages With KKR
Delta Taiwan Vs. Thailand Monitor: Delta Taiwan Reports Better Margin Trend, Rel Valuation Reverts
Mediatek Results Takeaways — Inventory Correction Bottom Potential 4Q22, Mobile, TV Recovery 1H23?
ServiceNow Inc: Acquisition of Era Software
Texas Instruments: Production At New Facility & Other Drivers

Keyence(6861 JP) | The Rise of the Phoenix – A Company like No Other

Keyence reported record 2Q Sales and OP, thoroughly beating street expectations. The company recorded high double-digit growth in all regions – even in Europe.
Pricing power is on display 10-35% price hikes to shore up the dip in GPM to 81.3%, depressed on higher raw material costs. Sets up for future earnings growth.
The share price has underperformed the TOPIX -26%YTD. Valuations at the bottom of the recent range. We expect a share price recovery and are bullish.

Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish

2Q Earnings Neutral; Mainly FX driven. The company sidestepped the worse of what we are seeing in broader printer market (See XEROX; Canon)
The outlook remains Negative. Macro conditions set to be worse in H2 vs H1. Core Home & Office Printing Business key IJP unit sales struggling with severe margin pressures.
Ongoing share buyback mildly supportive but unlikely to be a game changer with falling earnings. Target-based 0.8x PBR implying ¥1700 TP.

LX Semicon KOSPI Migration & KOSDAQ 150 Special Change

By Sanghyun Park

LX Semicon (108320 KS) will be traded on KOSPI from November 3rd. This event has no trade suspension. So, it will be traded on KOSDAQ until November 2nd.
Nextin (348210 KS) will replace LX Semicon for KOSDAQ 150. Again, the effective date is November 3rd. So, the index trackers will rebalance-trade at the close on November 2nd.
LX Semicon will see an outflow of -1.91x ADTV, whereas Nextin will enjoy an inflow of 3.93x ADTV. This Special Change will likely save AptaBio Therapeutics (293780 KS) from deletion.

Intel Vs. TSMC/UMC Long/Short Monitor: Intel Results Drive Share Spike, Still Can Re-Rate

By Vincent Fernando, CFA

Intel’s 3Q22 earnings beat expectations, and the shares reacted positively, rising 10.7%.
The company announced $3bn of cost savings for 2023E and $8-10bn in annual cost savings by 2025E. 2023E earnings guidance will be provided at the company’s February Investor Day.
Intel has outperformed TSMC and UMC since our pre-Intel Innovation Conference catalyst piece. Intel could still re-rate further relative to the companies into its next earnings.

Nitro Software Rejects Potentia, Again, And Engages With KKR

On the 28 October, Potentia announced an improved (and final) off-market Offer of A$1.80/share for Nitro (NTO AU), a 13.9% improvement over its initial proposal on the 30 August.
Nitro has now concluded the Potentia Takeover Bid undervalues Nitro. The Offer, however, is still proceeding, and will open in two weeks.
Separately, KKR’s Alludo has pitched a non-binding – subject to due diligence – Offer by way of a Scheme (or off-market takeover) at A$2.00/share. Nitro is supportive of this Offer.

Delta Taiwan Vs. Thailand Monitor: Delta Taiwan Reports Better Margin Trend, Rel Valuation Reverts

By Vincent Fernando, CFA

Delta Electronics (2308 TT) reported its earnings on October 28th, after its subsidiary Delta Electronics Thai (DELTA TB) had reported on October 25th.
Sales grew 33% YoY and gross margin expanded sequentially, which outperformed Delta Thailand’s margin performance.
Delta Taiwan shares have outperformed Delta Thailand since having dropped to a historically-extreme relative market cap below 1.0x. However, Delta Taiwan remains historically cheap on a relative basis.

Mediatek Results Takeaways — Inventory Correction Bottom Potential 4Q22, Mobile, TV Recovery 1H23?

By Vincent Fernando, CFA

Mediatek’s business continues to grow YoY, albeit slower than earlier expected. Management comments provided insight into the inventory cycle.
Management expects to see the worst impact of the inventory correction cycle in 4Q22E, but then in 1H23E sees potential for a turn around.
We are still developing a conviction view, however we see the latest results as net-positive for the shares given signs of a turn around ahead and the stock’s laggard status.

ServiceNow Inc: Acquisition of Era Software

Service Now had a solid third quarter and the company delivered another all-around beat.
Considering the solid organic growth and market demand of the company, it is expected that there will be 750 million new applications built by 2025.
The company focused on improving customer service experience and expanding its market by acquiring other software companies which is why it closed the acquisition of Era Software.

Texas Instruments: Production At New Facility & Other Drivers

Texas Instruments had a good third quarter, with revenue increasing by 13% year over year to $5.2 billion, surpassing Wall Street expectations.
After two years of construction, the company’s new semiconductor chip facility has begun producing chips.
The management anticipates Texas Instruments’ fourth-quarter revenue to be in the $4.4 billion to $4.8 billion range.

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Oct 31

Daily Brief Energy/Materials: Eagle Cement Corp, Valero Energy, Vedanta Resources and more

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

In today’s briefing:

Eagle Cement: PCC’s Foregone Conclusion
Valero Energy: Major Drivers
Morning Views Asia: Vedanta Resources, Yankuang Energy Group

Eagle Cement: PCC’s Foregone Conclusion

On the 5 October, San Miguel (SMC PM) announced the acquisition of Eagle Cement (EAGLE PM) at P22.02/share. The deal triggered notification and clearance with the Philippine Competition Commission
I previously concluded in San Miguel Turns Its Sights To Eagle Cement there was no issue with PCC as the transaction was effectively left pocket, right pocket for SMC/Ramon Ang.
SMC has now announced that the Offer is not subject to approval from the PCC. No surprise there.

Valero Energy: Major Drivers

Valero Energy had a mixed performance in its recent financial results for the quarter as its revenues were significantly above Wall Street expectations.
The company has a good refining margin supported by continued energy cost advantages, low product inventories, and strong product demand for the U.S. refineries in comparison to the global competitors.
The refining fundamentals stay strong, with global product supply staying constrained because of the high natural gas prices and capital reductions.

Morning Views Asia: Vedanta Resources, Yankuang Energy Group

By Charles Macgregor

Vedanta Resources
Yankuang Energy Group

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Oct 31

Daily Brief Industrials: Sichuan Tianyi Science & A, Moya Holdings Asia, Keppel Corp, Dongfang Electric and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

CSI500 Index Rebalance Preview: 50 Adds/Deletes in December
Moya Holdings: 21 Nov EGM For Salim’s Exit Offer
Moya Holding’s EGM for S$0.092 Offer on 21 November
Weekly Deals Digest (30 Oct) – Keppel, GoTo, Fengxiang, Lifestyle, Jinke Services, Kingston, Pushpay
Dongfang Electric (1072 HK): Surge in 3Q22 Profit and Acceleration of New Orders

CSI500 Index Rebalance Preview: 50 Adds/Deletes in December

By Brian Freitas

With a day left in the review period, we forecast 50 changes (the maximum permitted) for the CSI500 Index at the close on 9 December.
We estimate a one-way turnover of 13.53% at the December rebalance leading to a one-way trade of CNY 8.01bn. The Materials, Consumer Discretionary and Information Technology sectors are net gainers.
The potential adds and potential deletes have performed in line over the last few weeks, and we’d look to position for outperformance post the end of the review period.

Moya Holdings: 21 Nov EGM For Salim’s Exit Offer

On the 14 September, Indonesian water treatment play Moya Holdings Asia (MHAL SP) announced a S$0.092/share Exit Offer from an Anthoni Salim-controlled entity. The Offer price will not be increased.
The Offer requires approval from 75% of disinterested shareholders. Tamaris and its concert parties hold 72.84%.
The Circular is now out. The EGM takes place on the 21 November. The IFA reckons the Offer is fair and reasonable.

Moya Holding’s EGM for S$0.092 Offer on 21 November

Moya Holdings Asia (MHAL SP) released its delisting circular. The EGM to approve the delisting proposal from Tamaris Infrastructure (Anthoni Salim) at S$0.092 per share is on 21 November.
The IFA says the offer is fair and reasonable. Gateway Partners, which holds a blocking stake, will likely use the offer as an opportunity to exit an underperforming investment.
The offer price is attractive and will likely succeed. At the last close price, the gross and annualised spread for a 30 November payment is 3.4% and 45.8%, respectively.

Weekly Deals Digest (30 Oct) – Keppel, GoTo, Fengxiang, Lifestyle, Jinke Services, Kingston, Pushpay

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Blibli (1437710D IJ) priced at IDR450, Giant Biogene Holding (2367 HK) priced at the bottom of the range, GoTo (GOTO IJ)‘s upcoming lock-up expiry.
Event-Driven developments – Keppel Corp (KEP SP), Shandong Fengxiang (9977 HK), Jinke Smart Services (9666 HK), Kingston Financial (1031 HK), Lifestyle International Holdings (1212 HK), Pushpay Holdings (PPH NZ), Nitro.

Dongfang Electric (1072 HK): Surge in 3Q22 Profit and Acceleration of New Orders

By Osbert Tang, CFA

Dongfang Electric (1072 HK) logged a 40.1% growth in reported profit and a 36.5% increase in new orders in 3Q22, both represent excellent sequential momentum.
A 0.5pp 3Q22 gross margin expansion demonstrated order execution and cost control strengths. We also forecast end-FY22 backlog at 1.8x FY22F revenue, well securing outlook.
DEC is set to see accelerated growth momentum from rising power storage, particularly pumped storage, demand in the medium term. Yet, it only trades on cheap 8.1x FY23F PER.

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Oct 31

Daily Brief Health Care: Guangzhou Kingmed Diagnostics, Biogen Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Guangzhou Kingmed Diagnostics (603882CH)-Soaring Accounts Receivable/Potential Bad Debt Are Big Risk
Biogen Inc: Push For Byooviz & Other Drivers

Guangzhou Kingmed Diagnostics (603882CH)-Soaring Accounts Receivable/Potential Bad Debt Are Big Risk

By Xinyao (Criss) Wang

Driven by the demand for nucleic acid testing due to COVID-19, Kingmed’s 22Q3 performance continued to grow. However, its accounts receivable also increased sharply, which would be a risk.
Kingmed has to switch business in time when the huge demand for nucleic acid testing fades away.The YoY growth of other businesses would be the key to decide its outlook.
The current valuation of Kingmed isn’t attractive. After COVID-19 is under control, Kingmed’s YoY revenue growth could fall back to below 40%. Net profit margin could reduce to above 10%.

Biogen Inc: Push For Byooviz & Other Drivers