Smartkarma Daily Briefs

With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

CSI300 Index Rebalance Preview: Potential Changes and Close Names

Near the end of the review period, we see 16 potential changes to the CSI 300 Index at the December rebalance. There are other stocks very close to the cutoffs.
We estimate a one-way turnover of 3.04% at the December rebalance leading to a one-way trade of CNY 8.4bn.
The potential adds have outperformed the potential deletes, though the gap has narrowed in the last few weeks. We’d position for outperformance post the end of the review period.

Ping An A/H Premium: Outpacing the Market

The selloff in the broader market has led to the A/H premium on PingAn blowing out to levels not seen in the last few years and outpacing the HSASP Index.
At a 24% premium, the risk/reward for a long Ping An Insurance (H) (2318 HK) / short Ping An Insurance Group (601318 CH) trade has never been better.
The shift from A-shares to H-shares is already taking place – Southbound Stock Connect holdings have been increasing while the Northbound Stock Connect holdings have been decreasing.

Giant Biogene IPO – Reasonable Valuation but in Unreasonable Markets

By Shifara Samsudeen, ACMA, CGMA

Giant Biogene (GB) is now looking to raise around US$80m in its Hong Kong IPO, down from its earlier target of US$500m raising.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
We had looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we’ll talk about valuations and other deal dynamics.

China/HSI Uptick Short Levels

By Thomas Schroeder

Bear impulse in China/HK sets up a sell on a squeeze. Sell volumes ignited on the A50 12,400 support break. HSI has been our top short in Asia and rewarded.
We did trim our HSI short at the 15k target but still represents 10% of our book. RSI is oversold with short squeeze risk (then re cycle short).
Hong Kong likes to bottom on big impulsive downside moves so will be interesting how our price and timing models converge.

Giant Biogene IPO: Peer Comparison and Valuation

Giant Biogene Holding (GBH HK) designs, develops and manufactures professional skin treatment products with recombinant collagen as the key bioactive ingredient in China.
The company’s IPO offering has been downsized and now plans to raise approx. US$80m through issuing 22.6m shares at an indicative IPO price range of HK$24.3-27.7 per share.
Our analysis shows that Giant Biogene’s IPO is attractively priced compared to domestic and international peers, however, we expect the upside to be limited given the current market volatility.

Tencent (700 HK): Game Market Weak in 3Q22 and to Be Worse in 2023

By Ming Lu

In 3Q22, the game market size shrank in China and globally.
The limitations on time spent on games by juveniles, imposed earlier by the authorities, severely impacted the domestic market.
We believe the key impact for 2023 is the predictable license approval.

Giant Biogene IPO: Valuation Insights

By Arun George

Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate.

Sunshine Insurance Group Pre-IPO – The Negatives – Lacks Growth

Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
In this note, we talk about the not-so-positive aspects of the deal.

Alibaba ADR: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on global tech giant, Alibaba.
The company is currently trading close to its 52-week low with its results just around the corner.
Tmall GMV and Taobao experienced a percentage decline in the mid-single-digit in the last quarter.

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

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

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

Oct 26

Daily Brief Energy/Materials: Fosun International, Alcoa Inc, Enterprise Products Partners, Kinder Morgan, Pioneer Natural Resources and more

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

In today’s briefing:

Morning Views Asia: Fosun International
Alcoa Corporation: Alloy Innovation & Other Drivers
Enterprise Product Partners: New Projects To Fuel Organic Growth
Kinder Morgan: Recent Acquisitions & Other Drivers
Pioneer Natural Resources: Methane Emissions Reporting Initiative & Other Developments

Morning Views Asia: Fosun International

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.

Fosun International

Alcoa Corporation: Alloy Innovation & Other Drivers

After a phase of some solid financial performances driven by rising aluminum prices, Alcoa delivered a disappointing result, failing to meet Wall Street expectations in terms of revenues as well as earnings.
While the long-term fundamentals for the aluminum sector are still promising, Alcoa’s stock has been on a downward trajectory given the high volatility in the European energy markets causing losses to their two units in Europe.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Enterprise Product Partners: New Projects To Fuel Organic Growth

Enterprise Products Partners’ results are approaching and the company had delivered an all-around beat in the last quarter.
Its strong financial performance was primarily driven by higher margins in the octane enhancement business of the company, contributions from Midland Basin assets that it acquired recently, and higher natural gas dispensation margins.
Enterprise Products Partners has recently announced an expansion of footprints of three organic growth projects for supporting the ongoing production development in the basin.

Kinder Morgan: Recent Acquisitions & Other Drivers

Kinder Morgan delivered astonishing results.
Due to high summer power demand, which resulted in an additional 880 million dekatherms of gas traveling to power plants per day, deliveries to power plants were strong in the quarter, increasing by roughly 11%.
In addition, Kinder Morgan acquired North American Natural Resources and its sister companies, North American Biofuels and North American-Central, for $135 million during the quarter.

Pioneer Natural Resources: Methane Emissions Reporting Initiative & Other Developments

Pioneer Natural Resources’ stock has been climbing as its results are approaching.
Pioneer, along with ConocoPhillips and Devon, join OGMP2.0 with a commitment to increased transparency and leading Methane Performance in Emissions Reporting.
Overall, we provide the stock of Pioneer Natural Resources with an ‘Underperform’ rating and a revision in the target price.

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

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

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

Oct 26

Daily Brief Consumer: Yamazaki Baking, Giant Biogene Holding, Costa Group Holdings, Melco Resorts & Entertainment, Tokyo Stock Exchange Tokyo Price Index Topix, Netflix Inc, Omnicom Group, Domino’s Pizza and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Yamazaki Baking: Profitability to Double Over The Next Few Years
Giant Biogene IPO – Reasonable Valuation but in Unreasonable Markets
Costa Group’s Low-Hanging Fruit: Paine Schwartz Renews Interest
Asia Gaming: Despite Continuing Covid Headwinds, Melco Remains Too Cheap to Ignore, as Dips Prevail
Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies
Netflix Inc: Subscriber Growth
Omnicom Group Inc: Launch of Transact & Other Drivers
Domino’s Pizza: Major Drivers

Yamazaki Baking: Profitability to Double Over The Next Few Years

By Oshadhi Kumarasiri

Yamazaki Baking (2212 JP)’s Q3 was mixed with revenue growing 5.6% YoY to surpass consensus by 3% but OP of ¥1.6bn was ¥650m below consensus.
However, this was mostly priced-in, as shares are currently trading at the bottom end of the upward trend channel.
With wheat prices down 23% from the peak, pressure from input price inflation should alleviate, resulting in margin upside in the fourth quarter.

Giant Biogene IPO – Reasonable Valuation but in Unreasonable Markets

Giant Biogene (GB) is now looking to raise around US$80m in its Hong Kong IPO, down from its earlier target of US$500m raising.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
We had looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we’ll talk about valuations and other deal dynamics.

Costa Group’s Low-Hanging Fruit: Paine Schwartz Renews Interest

Costa Group Holdings (CGC AU), one of Australia’s largest fresh fruit and vegetable producer, is understood to be in the cross-hairs of Paine Schwartz Partners.
According to the AFR, Paine is using Citi to buy shares up to $2.60/share a 16.6% premium to last close, with a 15% stake in mind.
There’s a whiff of opportunism here after Costa’s recent EBITDA downgrade. However, the return of its major shareholder suggests value has emerged.

Asia Gaming: Despite Continuing Covid Headwinds, Melco Remains Too Cheap to Ignore, as Dips Prevail

By Howard J Klein

Melco Resorts & Entertainment will report 3Q22 results by November 11th. We expect sustaining recovery for its Manila and temporary Cyprus properties.
Current valuations of the shares do not yet reflect some recovery expected from increased arrivals due to the re-opening of 4 China provinces and Shanghai, Sporadic closures happen.
Threats of delisting fron last spring have significantly diminished as MLCO moved aggressively to meet NASDAQ concerns.

Little Discussion of Listing Criteria Appropriate for Prime Market Listed Companies

By Aki Matsumoto

It is anticipated that the plenary session will now begin the process of determining a deadline for transitional measures based on public comments.
It is likely that a decision will be made on the direction to proceed with English disclosure with respect to the prime market and other market segments.
In the meantime, a full-scale discussion on the listing criteria appropriate for prime market listed companies is awaited.

Netflix Inc: Subscriber Growth

Netflix shareholders finally got some good news this quarter as the leading streaming entertainment company in the world finally posted some subscriber growth.
Netflix successfully added a further 2.41 million net subscribers and now has 223.09 million paid subscribers globally.
The management forecast indicates that it is expected to add more 4.5 million subscribers in the ongoing quarter.

Omnicom Group Inc: Launch of Transact & Other Drivers

Omnicom had a decent financial performance this quarter with organic growth that was broad-based across its client sectors, regions, disciplines, and agencies.
The introduction of Transact by Omnicom follows the blossoming interest from the agencies in getting a piece of the retail media pie.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Domino’s Pizza: Major Drivers

Domino’s Pizza delivered a disappointing result barely managing to meet analyst expectations with respect to its revenues and missing out on earnings.
The company, along with its franchisees, opened more than 200 net new stores with net new store additions in 44 markets.
We provide the stock of Domino’s Pizza with a ‘Hold’ rating and a revision in the target price.

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

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

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

Oct 26

Daily Brief TMT/Internet: NTT (Nippon Telegraph & Telephone), China Zhenhua (Group) Science & Tech, LG Energy Solution, GoTo, Tencent, Delta Electronics, Alibaba (ADR), Iridium Communications, Elmo Software, Lam Research and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TOPIX October 2022 Rebal – Treading Water
CSI300 Index Rebalance Preview: Potential Changes and Close Names
Closing the Gap Between LG Energy Solution & LG Chem Pair Trade
GoTo Lock-Up: A Sizeable Secondary Offering Incoming
Tencent (700 HK): Game Market Weak in 3Q22 and to Be Worse in 2023
Delta Taiwan Vs. Thailand Monitor: Major Disconnect Post Thai Earnings, Trade Taiwan Into Earnings
Alibaba ADR: Initiation of Coverage – Business Strategy & Key Drivers
IRDM: Orbiting Subscriber Growth
ELMO Software (ELO AU): $4.85/Share Offer From K1 Investment
Lam Research: Major Drivers

TOPIX October 2022 Rebal – Treading Water

By Travis Lundy

The TOPIX October FFW rebalance is Friday at the close.
It is still ¥2trln+ to buy and ¥2trln+ to sell. And there are some big names. A spreadsheet is attached with all the flows.
Surprisingly, the top 40 Z-scores on each side have traded in a VERY tight range for the 6 weeks prior to the announcement and the two weeks post. Very weird.

CSI300 Index Rebalance Preview: Potential Changes and Close Names

Near the end of the review period, we see 16 potential changes to the CSI 300 Index at the December rebalance. There are other stocks very close to the cutoffs.
We estimate a one-way turnover of 3.04% at the December rebalance leading to a one-way trade of CNY 8.4bn.
The potential adds have outperformed the potential deletes, though the gap has narrowed in the last few weeks. We’d position for outperformance post the end of the review period.

Closing the Gap Between LG Energy Solution & LG Chem Pair Trade

By Douglas Kim

In this insight, we discuss a pair trade between LG Chem Ltd (051910 KS) (go long) and LG Energy Solution (373220 KS) (go short).
LG Chem’s shares are trading at nearly 66% discount to its NAV which we believe to be excessive.
Another major factor that could negatively impact LGES’ shares in the next several months is the end of the lock-up period for the company’s ESOA shares in about three months.

GoTo Lock-Up: A Sizeable Secondary Offering Incoming

By Arun George

GoTo (GOTO IJ) confirmed that it is exploring a coordinated secondary offering of shares held by pre-IPO shareholders. The Series A shareholders’ lock-up expires on 30 November 2022.
The lock-up of 89.63% of the outstanding shares expires on 30 November. Within these shares, Alibaba (ADR) (BABA US) and Softbank Group (9984 JP) stakes are worth a combined US$2.6bn.
GoTo continues to grow but with material losses and cash burn. The shares are fairly valued but the sizeable secondary offering (US$1 billion based on reports) will pressure the price.

Tencent (700 HK): Game Market Weak in 3Q22 and to Be Worse in 2023

By Ming Lu

In 3Q22, the game market size shrank in China and globally.
The limitations on time spent on games by juveniles, imposed earlier by the authorities, severely impacted the domestic market.
We believe the key impact for 2023 is the predictable license approval.

Delta Taiwan Vs. Thailand Monitor: Major Disconnect Post Thai Earnings, Trade Taiwan Into Earnings

By Vincent Fernando, CFA

Delta Electronics Thailand shares rose sharply ahead of its earnings result, where profit beat expectations. Delta Taiwan shares fell the same day, thus we see an opportunity.
Delta Taiwan to report on October 28th. Delta Taiwan is now smaller in market cap than its subsidiary despite earning substantially higher levels of net profit.
2023E growth expectations are relatively similar for both, supporting Delta Taiwan to revert vs. Thailand. Trade opportunity into the Delta Taiwan October 28th results.

Alibaba ADR: Initiation of Coverage – Business Strategy & Key Drivers

This is our first report on global tech giant, Alibaba.
The company is currently trading close to its 52-week low with its results just around the corner.
Tmall GMV and Taobao experienced a percentage decline in the mid-single-digit in the last quarter.

IRDM: Orbiting Subscriber Growth

By Hamed Khorsand

IRDM put the emphasis on its quarterly report versus commentary on smartphones and drones using satellite connectivity. The third quarter results continued to show the ongoing growth in IOT subscribers
IRDM’s service revenue has been trending higher with added maritime and IOT subscribers
During the third quarter, IRDM added 7 thousand voice subscribers and 89 thousand IOT subscribers. The rate of voice customer additions can be lumpy depending on seasonality

ELMO Software (ELO AU): $4.85/Share Offer From K1 Investment

Elmo Software (ELO AU) has entered into a Scheme Implementation Deed (“SID”) with K1 Investment under which ELMO shareholders will be entitled to receive $4.85/share, in cash.
The SID has the support of the independent board and ELMO’s three largest shareholders collectively holding ~33.4% of shares out.
The Scheme is expected to complete in the 1Q23. The proposal requires FIRB approval. This looks done.

Lam Research: Major Drivers

Like most of its semiconductor peers, Lam has witnessed a strong correction after its earlier highs.
It demonstrated its sustained strength in execution by surpassing the $5 billion revenue for the first time.
It is ramping up output levels and has increased revenue by almost 10% compared to the previous quarter.

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

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

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

Oct 26

Daily Brief Industrials: Sunac Services Holdings, Keppel Corp, S&P 500 and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Hong Kong Stocks Priced For Liquidation
Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes
Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

Hong Kong Stocks Priced For Liquidation

With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
Keppel DC REIT (KDCREIT SP) is currently the lowest ranked index constituent and could get kicked out when Sembcorp Marine (SMM SP) gets added.
Olam Group (OLG SP) and SATS (SATS SP) are the next highest ranked potential ADD and DEL respectively and could be involved in index changes if their prices move sharply.

Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

By Joe Jasper

The bear market rally we have been discussing since our Sept. 27 Compass report has begun.
Over half of the Sectors and all the major indexes (S&P 500, Nasdaq 100, DJIA, and S&P 600 Small Caps) display bullish 2+ month inflections.
As referenced last week, we expect the aforementioned indexes to rally to their 200-day MAs; longer-term, this is still a bear market until they can break above their 200-day MAs.

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

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

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

Oct 26

Daily Brief Industrials: Sunac Services Holdings, Keppel Corp, S&P 500 and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Hong Kong Stocks Priced For Liquidation
Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes
Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

Hong Kong Stocks Priced For Liquidation

By Shifara Samsudeen, ACMA, CGMA

With investors chucking in the towel and the HSI touching a thirteen-year low, it’s time for some old school perspective.
This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
Graham would conclude these stocks are priced for liquidation. Stocks discussed include Sinopec Engineering (2386 HK), PC Partner (1263 HK), Linklogis (9959 HK), Antengene (6996 HK) and property service companies.

Straits Times Index Quiddity Leaderboard Mar 23: Sembcorp/Keppel and Other Potential Index Changes

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for the FTSE Straits Times Index (STI) (STI INDEX) between now and the March 2023 index review.
Keppel DC REIT (KDCREIT SP) is currently the lowest ranked index constituent and could get kicked out when Sembcorp Marine (SMM SP) gets added.
Olam Group (OLG SP) and SATS (SATS SP) are the next highest ranked potential ADD and DEL respectively and could be involved in index changes if their prices move sharply.

Another Bear Market Rally Begins; Indexes and Sectors With Bullish 2+ Month Inflections

By Joe Jasper

The bear market rally we have been discussing since our Sept. 27 Compass report has begun.
Over half of the Sectors and all the major indexes (S&P 500, Nasdaq 100, DJIA, and S&P 600 Small Caps) display bullish 2+ month inflections.
As referenced last week, we expect the aforementioned indexes to rally to their 200-day MAs; longer-term, this is still a bear market until they can break above their 200-day MAs.

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

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

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

Oct 26

Daily Brief Health Care: Myovant Sciences, Giant Biogene Holding, Incyte Corp, Shanghai Bio-Heart Biological Technology and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Sumitomo/Myovant: Agreed Minorities Takeout at $27
Giant Biogene IPO: Peer Comparison and Valuation
Giant Biogene IPO: Valuation Insights
Incyte Corp: Acquisition of Villaris Therapeutics & Other Drivers
Shanghai Bio-Heart Biological Technology (2185.HK) – The Bubble Will Eventually Burst

Sumitomo/Myovant: Agreed Minorities Takeout at $27

By Jesus Rodriguez Aguilar

Sumitomo has increased its all-cash offer by c. 19% to $27/share, a 50% premium, 4.6x EV/Fwd Revenue and corresponds to an implied equity value of $1.7 billion and EV of $2.9 billion.
The Board of Myovant recommends the offer, which should close in Q1 2023. The market has bought into the deal: USD turnover on 24 October has been $585 million.
As a result of the improved offer, I increase my TP to $27 (vs $22.84 formerly). Gross spread is 0.78% and the estimated annual return is 1.83%.

Giant Biogene IPO: Peer Comparison and Valuation

Giant Biogene Holding (GBH HK) designs, develops and manufactures professional skin treatment products with recombinant collagen as the key bioactive ingredient in China.
The company’s IPO offering has been downsized and now plans to raise approx. US$80m through issuing 22.6m shares at an indicative IPO price range of HK$24.3-27.7 per share.
Our analysis shows that Giant Biogene’s IPO is attractively priced compared to domestic and international peers, however, we expect the upside to be limited given the current market volatility.

Giant Biogene IPO: Valuation Insights

By Arun George

Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate.

Incyte Corp: Acquisition of Villaris Therapeutics & Other Drivers

Incyte has started appreciating with its financial results being just around the corner.
In the last quarter, the company’s revenues rose 29% and it managed an all-around beat.
With an increase in new patient starts across all 3 indications, Jakafi’s net revenues increased 13% to $598 million.

Shanghai Bio-Heart Biological Technology (2185.HK) – The Bubble Will Eventually Burst

By Xinyao (Criss) Wang

Among innovative medical device companies in HKEX under Chapter 18A, Bio-heart is quite “special”- It is the only company without commercialized products but has higher market value than the peers.
The competitiveness of Bio-heart’s core products is not high. There are great uncertainties in terms of the commercialization outlook, because Bio-heart doesn’t have obvious advantages in development progress/sales capability.
Bio-Heart is overvalued. Its efforts to maintain high share price may be to pave the way for listing in A-share,but anything deviates from fundamentals would inevitably return to the origin.

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

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

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

Oct 26

Daily Brief Financials: Ping An Insurance (H), Hong Kong Hang Seng Index, Clearpool, Sunshine Insurance and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Ping An A/H Premium: Outpacing the Market
China/HSI Uptick Short Levels
Crypto Lending Series (#2) Clearpool – A Bright Spot Emerging from the Rubble
Sunshine Insurance Group Pre-IPO – The Negatives – Lacks Growth

Ping An A/H Premium: Outpacing the Market

The selloff in the broader market has led to the A/H premium on PingAn blowing out to levels not seen in the last few years and outpacing the HSASP Index.
At a 24% premium, the risk/reward for a long Ping An Insurance (H) (2318 HK) / short Ping An Insurance Group (601318 CH) trade has never been better.
The shift from A-shares to H-shares is already taking place – Southbound Stock Connect holdings have been increasing while the Northbound Stock Connect holdings have been decreasing.

China/HSI Uptick Short Levels

By Thomas Schroeder

Bear impulse in China/HK sets up a sell on a squeeze. Sell volumes ignited on the A50 12,400 support break. HSI has been our top short in Asia and rewarded.
We did trim our HSI short at the 15k target but still represents 10% of our book. RSI is oversold with short squeeze risk (then re cycle short).
Hong Kong likes to bottom on big impulsive downside moves so will be interesting how our price and timing models converge.

Crypto Lending Series (#2) Clearpool – A Bright Spot Emerging from the Rubble

By Rose Choy

As the crypto lending market recovers from the shock of large defaults in the sector, the markets are now focused on institutional lending where capital efficiency and liquidity are key.
Overcollateralized lending has been stagnant although holding ground, but its low utilization, low interest rates and wide bid ask are not appealing to most lenders and borrowers.
The market preference is switching to non-collateralized lending where a mix of Cefi and Defi characteristics may evolve to provide the winning combination.

Sunshine Insurance Group Pre-IPO – The Negatives – Lacks Growth