All Posts By

Smartkarma Daily Briefs

Event-Driven: HDFC Bank, HDFC Limited, Jindal Steel & Power, Pendal Group, Tokyo Century Corp, SK Square, Brewin Dolphin Holdings and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • HDFC/HDFCB Merger: Mega Merger & Index Treatment
  • Shocker! HDFC Bank To Merge With HDFC Limited
  • MSCI India Index Rebalance Preview: Potential Changes in May
  • Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications
  • HDFC+HDFC Bank Merger – A Long Time Coming
  • MSCI Japan Index Rebalance Preview: Only Deletions for Now
  • Expect Pendal To Reject Perpetual’s Offer
  • Pendal’s Indicative Bid from Perpetual Is Underwhelming
  • SK Square: NAV Post IPOs of SK Shieldus/OneStore and a Major Investment in ARM Holdings?
  • Royal Bank of Canada/Brewin Dolphin Holdings: Agreed Offer

HDFC/HDFCB Merger: Mega Merger & Index Treatment

By Brian Freitas

  • HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) are looking at a mega-merger where HDFC shareholders will receive 42 shares in HDFCB for every 25 HDFC shares held.
  • Regulatory and other approvals are expected to take around 18 months and the merger will create a US$145bn behemoth. Some regulatory approvals could be tougher to get than others.
  • HDFC Limited (HDFC IN) is a member of the FTSE All-World and MSCI India indices, while HDFC Bank (HDFCB IN) is not. The index treatment is tricky.

Shocker! HDFC Bank To Merge With HDFC Limited

By Travis Lundy

  • This is at a time a shocker and at a time, not. Because of rising regulatory requirements for NBFCs, this was to be expected at some point.
  • The deal pays Limited shareholders a slight premium vs previous close, but enables them to exit without a holdco discount. 
  • Early days yet regulatorily speaking, but accretive, and it makes a lot of sense. It will be appreciated. 

MSCI India Index Rebalance Preview: Potential Changes in May

By Brian Freitas


Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications

By Brian Freitas


HDFC+HDFC Bank Merger – A Long Time Coming

By Sumeet Singh

  • Today morning, HDFC Limited (HDFC IN) announced that it would merger with HDFC Bank (HDFCB IN)
  • Investors have been asking the two companies about a possible merger for at least the past decade.
  • In this note, we talk about the background for the merger and why now.

MSCI Japan Index Rebalance Preview: Only Deletions for Now

By Brian Freitas

  • As of the close on 1 April, we see 13 potential deletions from the MSCI Japan Index. There could be changes in the next couple of weeks as prices change.
  • The potential deletions are Tokyo Century, Pola Orbis, Miura, Lion Corp, Tsuruha Holdings, Hino Motors, Benefit One, Stanley Electric, Ryohin Keikaku, Sohgo Security Services, Orix JREIT, Rinnai Corp and Lawson. 
  • Most of the stocks will have over 5 days of ADV to sell from passive funds and there has been an increase in short interest over the last month.

Expect Pendal To Reject Perpetual’s Offer

By David Blennerhassett

  • Asset manager Pendal Group (PDL AU) has announced a non-binding proposal from investment firm Perpetual Ltd (PPT AU).
  • Perpetual’s cash/scrip Offer provides an indicative price of $6.23/share. The proposal would see Pendal’s shareholders owning 48% of the merged entity and Perpetual the remainder.
  • Pendal is assessing the proposal; however, the wording in the announcement suggests the bid is opportunistic and will be rejected. 

Pendal’s Indicative Bid from Perpetual Is Underwhelming

By Arun George

  • The scrip-heavy bid values Pendal Group (PDL AU) at A$6.23 based on the Perpetual Ltd (PPT AU) price on 1 April, a 39.2% premium to the unaffected price of A$4.48.  
  • The Pendal Board hints at opportunism. We agree as the Perpetual offer is unattractive in the context of historical multiples and share prices. 
  • The bid lays a marker of Pendal’s inherent value, and we think another bidding round is possible. The gross spread to the offer at the last close prices is 12.1%.  

SK Square: NAV Post IPOs of SK Shieldus/OneStore and a Major Investment in ARM Holdings?

By Douglas Kim

  • Our updated NAV valuation of SK Square suggests an implied price of 82,167 won per share, which represents a 46% upside from current levels.
  • For SK Shieldus and OneStore, we took the mid-points of the IPO price ranges and applied SK Square’s post IPO ownership stakes, respectively. 
  • SK Square’s CEO Park Jung-Ho announced that the SK Group is interested in investing in Arm Holdings. SK Group is well positioned to participate in the investment of ARM Holdings. 

Royal Bank of Canada/Brewin Dolphin Holdings: Agreed Offer

By Jesus Rodriguez Aguilar

  • Brewin Dolphin Holdings (BRW LN) has agreed to be acquired by RBC (scheme of arrangement). Consideration is 515p/share in cash, cum dividend; it represents a 62% premium.
  • The offer represents 3.2x forward sales vs. 2.9x for the median of comparables (source: Capital IQ consensus). The offer also represents 2.8% of AuM (vs. a common multiple of 2.5%).
  • Consideration looks fair. The market believes there will be a deal; gross spread is an unexciting (in my view) 0.58%, 1.19% annualised (assuming settlement on 30 September).

Before it’s here, it’s on Smartkarma

Indonesia: Lippo Karawaci and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Lippo Karawaci – Earnings Flash – FY 2021 Results – Lucror Analytics

Lippo Karawaci – Earnings Flash – FY 2021 Results – Lucror Analytics

By Trung Nguyen

Lippo Karawaci’s FY 2021 results were strong and exceeded expectations, with robust revenue and soaring EBITDA. Moreover, operating cash flows turned positive ahead of management’s guidance (FY 2022 onwards). The financial risk profile has improved significantly, and liquidity is sound.

We expect upward rating pressure to start building in FY 2022, as the company’s business and financial risk profile has improved significantly. Meanwhile, the agencies’ forecasts appear too conservative.

We revise our recommendation to “Buy” from “Hold” on the LPKRIJ 6.75 26. The notes dropped following Russia’s invasion of Ukraine, and are now trading at 96 and yielding 7.9%. The yields are attractive, given the fast-improving fundamentals and our expectation of robust FY 2022 results.


Before it’s here, it’s on Smartkarma

Financials: HDFC Bank, HDFC Limited, Pendal Group, Tokyo Century Corp, ICICI Prudential Life Insurance, Brewin Dolphin Holdings, USD and more

By | Daily Briefs, Financials

In today’s briefing:

  • HDFC/HDFCB Merger: Mega Merger & Index Treatment
  • Shocker! HDFC Bank To Merge With HDFC Limited
  • Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications
  • HDFC+HDFC Bank Merger – A Long Time Coming
  • MSCI Japan Index Rebalance Preview: Only Deletions for Now
  • Expect Pendal To Reject Perpetual’s Offer
  • Pendal’s Indicative Bid from Perpetual Is Underwhelming
  • ICICI Prudential Life Insurance – Leader in Mis-Selling Life Insurance
  • Royal Bank of Canada/Brewin Dolphin Holdings: Agreed Offer
  • A powder keg

HDFC/HDFCB Merger: Mega Merger & Index Treatment

By Brian Freitas

  • HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) are looking at a mega-merger where HDFC shareholders will receive 42 shares in HDFCB for every 25 HDFC shares held.
  • Regulatory and other approvals are expected to take around 18 months and the merger will create a US$145bn behemoth. Some regulatory approvals could be tougher to get than others.
  • HDFC Limited (HDFC IN) is a member of the FTSE All-World and MSCI India indices, while HDFC Bank (HDFCB IN) is not. The index treatment is tricky.

Shocker! HDFC Bank To Merge With HDFC Limited

By Travis Lundy

  • This is at a time a shocker and at a time, not. Because of rising regulatory requirements for NBFCs, this was to be expected at some point.
  • The deal pays Limited shareholders a slight premium vs previous close, but enables them to exit without a holdco discount. 
  • Early days yet regulatorily speaking, but accretive, and it makes a lot of sense. It will be appreciated. 

Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications

By Brian Freitas


HDFC+HDFC Bank Merger – A Long Time Coming

By Sumeet Singh

  • Today morning, HDFC Limited (HDFC IN) announced that it would merger with HDFC Bank (HDFCB IN)
  • Investors have been asking the two companies about a possible merger for at least the past decade.
  • In this note, we talk about the background for the merger and why now.

MSCI Japan Index Rebalance Preview: Only Deletions for Now

By Brian Freitas

  • As of the close on 1 April, we see 13 potential deletions from the MSCI Japan Index. There could be changes in the next couple of weeks as prices change.
  • The potential deletions are Tokyo Century, Pola Orbis, Miura, Lion Corp, Tsuruha Holdings, Hino Motors, Benefit One, Stanley Electric, Ryohin Keikaku, Sohgo Security Services, Orix JREIT, Rinnai Corp and Lawson. 
  • Most of the stocks will have over 5 days of ADV to sell from passive funds and there has been an increase in short interest over the last month.

Expect Pendal To Reject Perpetual’s Offer

By David Blennerhassett

  • Asset manager Pendal Group (PDL AU) has announced a non-binding proposal from investment firm Perpetual Ltd (PPT AU).
  • Perpetual’s cash/scrip Offer provides an indicative price of $6.23/share. The proposal would see Pendal’s shareholders owning 48% of the merged entity and Perpetual the remainder.
  • Pendal is assessing the proposal; however, the wording in the announcement suggests the bid is opportunistic and will be rejected. 

Pendal’s Indicative Bid from Perpetual Is Underwhelming

By Arun George

  • The scrip-heavy bid values Pendal Group (PDL AU) at A$6.23 based on the Perpetual Ltd (PPT AU) price on 1 April, a 39.2% premium to the unaffected price of A$4.48.  
  • The Pendal Board hints at opportunism. We agree as the Perpetual offer is unattractive in the context of historical multiples and share prices. 
  • The bid lays a marker of Pendal’s inherent value, and we think another bidding round is possible. The gross spread to the offer at the last close prices is 12.1%.  

ICICI Prudential Life Insurance – Leader in Mis-Selling Life Insurance

By Hemindra Hazari

  • This analyst has historically highlighted many cases of mis-selling by the ICICI Prudential Life Insurance (IPRU IN) and the company has responded by focusing on its improving persistency ratio
  • However disclosures reveal that the company has the highest mis-selling, total complaints (per 10,000 policies) and surrender ratio as compared to  the top 6 life insurance companies
  • IRDAI and IPru Life’s board of directors remains unconcerned about the company’s status as a leader in mis-selling and in surrender ratios. Shareholders need not share this apathy.

Royal Bank of Canada/Brewin Dolphin Holdings: Agreed Offer

By Jesus Rodriguez Aguilar

  • Brewin Dolphin Holdings (BRW LN) has agreed to be acquired by RBC (scheme of arrangement). Consideration is 515p/share in cash, cum dividend; it represents a 62% premium.
  • The offer represents 3.2x forward sales vs. 2.9x for the median of comparables (source: Capital IQ consensus). The offer also represents 2.8% of AuM (vs. a common multiple of 2.5%).
  • Consideration looks fair. The market believes there will be a deal; gross spread is an unexciting (in my view) 0.58%, 1.19% annualised (assuming settlement on 30 September).

A powder keg

By Untying The Gordian Knot

  • While much focus has been on EURO/USD cross, Asian currencies haven’t seen that much focus due to range-bound markets.
  • That is until two weeks ago when the USD/YEN breakout caught the imagination and became the centre of all things foreign exchange. Bonds & short-term interest rates have been the macro focus of 2022.
  • The extent to which US bond yields have risen signals that the bond sell-off is not about to end despite the inverted yield curve. It is likely to cause more pain for EM countries.

Before it’s here, it’s on Smartkarma

United States: USD, Terra, Darling Ingredients and more

By | Daily Briefs, United States

In today’s briefing:

  • A powder keg
  • Getting Started With Terra
  • Weekly Stock Bullfinder- Week of 4/4

A powder keg

By Untying The Gordian Knot

  • While much focus has been on EURO/USD cross, Asian currencies haven’t seen that much focus due to range-bound markets.
  • That is until two weeks ago when the USD/YEN breakout caught the imagination and became the centre of all things foreign exchange. Bonds & short-term interest rates have been the macro focus of 2022.
  • The extent to which US bond yields have risen signals that the bond sell-off is not about to end despite the inverted yield curve. It is likely to cause more pain for EM countries.

Getting Started With Terra

By Etherbridge

  • Terra was co-founded by Do Kwon and Daniel Shin in 2018. The original vision for Terra was to create a solution to crypto and blockchain adoption
  • Through this, the idea of Terra was born; Terra launched as a public blockchain protocol for algorithmic stablecoins. 
  • The best way to think about Terra is as a traditional bank that you can earn, borrow, pay, invest and transfer from, but everything is automated by the blockchain. 

Weekly Stock Bullfinder- Week of 4/4

By Weekly Stock Bull Finder

  • Darling Ingredients Inc. develops, produces, and sells natural ingredients from edible and inedible bio-nutrients
  • The company operates through three segments: Feed Ingredients, Food Ingredients, and Fuel Ingredients.
  • It offers ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy, and fertilizer industries

Before it’s here, it’s on Smartkarma

Health Care: Wuxi Biologics and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Wuxi Biologics (2269.HK) 2021 Results – The Highlights and the Concerns

Wuxi Biologics (2269.HK) 2021 Results – The Highlights and the Concerns

By Xinyao (Criss) Wang

  • The continuous increase of backlog and CMO projects would provide high visibility and certainty for the growth of Wuxi Biologics (2269 HK) in 2022.
  • Given the complex international relations, it is possible that the US may add WuXi Biologics to any sanctions list again in the future, which means large stock price volatility.
  • There could be some short-term rally, but due to the lack of clear positive “signals” in the industry, we do not think it means a complete “reversal” for WuXi Biologics. 

Before it’s here, it’s on Smartkarma

Most Read: HDFC Bank, NIO Inc, HDFC Limited, Jindal Steel & Power, Pendal Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • HDFC/HDFCB Merger: Mega Merger & Index Treatment
  • Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)
  • Shocker! HDFC Bank To Merge With HDFC Limited
  • MSCI India Index Rebalance Preview: Potential Changes in May
  • Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications

HDFC/HDFCB Merger: Mega Merger & Index Treatment

By Brian Freitas

  • HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) are looking at a mega-merger where HDFC shareholders will receive 42 shares in HDFCB for every 25 HDFC shares held.
  • Regulatory and other approvals are expected to take around 18 months and the merger will create a US$145bn behemoth. Some regulatory approvals could be tougher to get than others.
  • HDFC Limited (HDFC IN) is a member of the FTSE All-World and MSCI India indices, while HDFC Bank (HDFCB IN) is not. The index treatment is tricky.

Hang Seng TECH Index Rebalance Preview: Big Impact as NIO (9866) Could Replace ASM Pacific (522)

By Brian Freitas


Shocker! HDFC Bank To Merge With HDFC Limited

By Travis Lundy

  • This is at a time a shocker and at a time, not. Because of rising regulatory requirements for NBFCs, this was to be expected at some point.
  • The deal pays Limited shareholders a slight premium vs previous close, but enables them to exit without a holdco discount. 
  • Early days yet regulatorily speaking, but accretive, and it makes a lot of sense. It will be appreciated. 

MSCI India Index Rebalance Preview: Potential Changes in May

By Brian Freitas


Perpetual’s Indicative (& Opportunistic) Offer for Pendal Group: Details & Index Implications

By Brian Freitas


Before it’s here, it’s on Smartkarma

South Korea: SK Shieldus, SK Square and more

By | Daily Briefs, South Korea

In today’s briefing:

  • SK Shieldus IPO: Industry Dynamics of Four Business Units
  • SK Square: NAV Post IPOs of SK Shieldus/OneStore and a Major Investment in ARM Holdings?
  • SK Shieldus IPO Initiation: Track and Shield

SK Shieldus IPO: Industry Dynamics of Four Business Units

By Douglas Kim

  • In this insight, we provide further details of the four main business units of SK Shieldus, which is a leading one-stop shop provider for security services in Korea.
  • The company has been able to improve the customer churn rate of the Physical Security (CMS) unit from 14.7% in 2019 to 11.7% in 2021. 
  • The leading global cybersecurity stocks have been outperforming the market this year by a big margin which should have a positive impact on the SK Shieldus IPO.

SK Square: NAV Post IPOs of SK Shieldus/OneStore and a Major Investment in ARM Holdings?

By Douglas Kim

  • Our updated NAV valuation of SK Square suggests an implied price of 82,167 won per share, which represents a 46% upside from current levels.
  • For SK Shieldus and OneStore, we took the mid-points of the IPO price ranges and applied SK Square’s post IPO ownership stakes, respectively. 
  • SK Square’s CEO Park Jung-Ho announced that the SK Group is interested in investing in Arm Holdings. SK Group is well positioned to participate in the investment of ARM Holdings. 

SK Shieldus IPO Initiation: Track and Shield

By Arun George

  • SK Shieldus (ABFHIZ KS) is a leading South Korean security provider. It is pre-marketing a KRX IPO to raise up to US$0.9 billion.  
  • SK shieldus is offering 27.1 million shares with a primary/secondary split of 53/47 at an indicative price range of KRW31,000- 38,800 per share.
  • SK shieldus has attractive fundamentals with healthy growth and margins. The leverage is manageable due to good cash generation.

Before it’s here, it’s on Smartkarma

India: HDFC Bank, HDFC Limited, Jindal Steel & Power, ICICI Prudential Life Insurance, Axis Bank Ltd, Bajaj Auto Ltd, Wipro Ltd, ICICI Bank Ltd, Oberoi Realty and more

By | Daily Briefs, India

In today’s briefing:

  • HDFC/HDFCB Merger: Mega Merger & Index Treatment
  • Shocker! HDFC Bank To Merge With HDFC Limited
  • MSCI India Index Rebalance Preview: Potential Changes in May
  • HDFC+HDFC Bank Merger – A Long Time Coming
  • ICICI Prudential Life Insurance – Leader in Mis-Selling Life Insurance
  • Axis Bank (Update): Citibank consumer business calls for upping the game. Maintain BUY
  • Bajaj Auto: Since Its Q3FY22 Result, Bajaj Auto (BJAUT) Has Outperformed NIFTY50 by ~15%
  • Pick of the Week: Wipro Ltd
  • Axis Top Picks April 2022
  • Oberoi Realty: Thane Launch Deferred to 1QFY23; Sales Momentum in Ongoing Projects Intact

HDFC/HDFCB Merger: Mega Merger & Index Treatment

By Brian Freitas

  • HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) are looking at a mega-merger where HDFC shareholders will receive 42 shares in HDFCB for every 25 HDFC shares held.
  • Regulatory and other approvals are expected to take around 18 months and the merger will create a US$145bn behemoth. Some regulatory approvals could be tougher to get than others.
  • HDFC Limited (HDFC IN) is a member of the FTSE All-World and MSCI India indices, while HDFC Bank (HDFCB IN) is not. The index treatment is tricky.

Shocker! HDFC Bank To Merge With HDFC Limited

By Travis Lundy

  • This is at a time a shocker and at a time, not. Because of rising regulatory requirements for NBFCs, this was to be expected at some point.
  • The deal pays Limited shareholders a slight premium vs previous close, but enables them to exit without a holdco discount. 
  • Early days yet regulatorily speaking, but accretive, and it makes a lot of sense. It will be appreciated. 

MSCI India Index Rebalance Preview: Potential Changes in May

By Brian Freitas


HDFC+HDFC Bank Merger – A Long Time Coming

By Sumeet Singh

  • Today morning, HDFC Limited (HDFC IN) announced that it would merger with HDFC Bank (HDFCB IN)
  • Investors have been asking the two companies about a possible merger for at least the past decade.
  • In this note, we talk about the background for the merger and why now.

ICICI Prudential Life Insurance – Leader in Mis-Selling Life Insurance

By Hemindra Hazari

  • This analyst has historically highlighted many cases of mis-selling by the ICICI Prudential Life Insurance (IPRU IN) and the company has responded by focusing on its improving persistency ratio
  • However disclosures reveal that the company has the highest mis-selling, total complaints (per 10,000 policies) and surrender ratio as compared to  the top 6 life insurance companies
  • IRDAI and IPru Life’s board of directors remains unconcerned about the company’s status as a leader in mis-selling and in surrender ratios. Shareholders need not share this apathy.

Axis Bank (Update): Citibank consumer business calls for upping the game. Maintain BUY

By HDFC Securities

  • Axis Bank announced the acquisition of Citibank’s cards, consumer lending, and wealth businesses in a transaction that is likely to be closed over the next 9-12 months
  • At an acquisition cost of US$1.6bn, while the deal appears to be a bargain for Axis Bank, the value accretion from Citi’s portfolio over the medium term is contingent on a host of factors including retention of existing customers, Axis Bank’s ability to continually add customers of such profile and its ability to up-sell and cross-sell
  • Although the Citibank transaction adds significant heft to Axis Bank’s competitive positioning across cards and wealth management businesses, we believe that Axis Bank will need to up its game in order to create sustainable value from the Citibank portfolio.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Bajaj Auto: Since Its Q3FY22 Result, Bajaj Auto (BJAUT) Has Outperformed NIFTY50 by ~15%

By ICICI Securities Limited

  • Since its Q3FY22 result, Bajaj Auto (BJAUT) has outperformed NIFTY50 by ~15% amid worsening outlook on profitability, rising fuel prices and flattish demand outlook in key export markets.
  • Though we keep our FY23E revenue estimates largely unchanged, we trim FY23E EBITDA margin by ~300bps to ~14.5% due to surge in RM costs, resulting in 2% cut in FY24E earnings.
  • Though recent cost inflation would get partially reflected in Q4FY22, bulk of it would come Q1FY23E onward.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Pick of the Week: Wipro Ltd

By Axis Direct

  • Wipro Ltd is India’s one of the largest IT services exporter and has a strong global presence
  • It provides industry-wide solutions including next-gen services like Cloud Computing, Digital Transformations, IoT, Machine Learning, and ADM, among others.
  • Wipro also has expertise in providing solutions in banking and financial and other services through its product and platform portfolio

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Axis Top Picks April 2022

By Axis Direct

  • Commodities and IT sectors are the biggest winners of FY22. In the last one year, the Metals sector has gone up 53%, Energy by 40%, commodities by 30%, and the IT index by 40%
  • However, the consumer-facing sectors closed FY22 on a muted note with FMCG reporting growth of only 4% and the Auto sector of 5%
  • The current market performance is factoring in the current rising inflation and the rising interest rate regime

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Oberoi Realty: Thane Launch Deferred to 1QFY23; Sales Momentum in Ongoing Projects Intact

By Motilal Oswal

  • As per our channel checks, OBER’s Thane launch has been pushed out to 1QFY23 (likely in Apr’22) v/s our initial expectation of an early launch in Mar’22 as the company awaits approvals.
  • We had assumed INR6b of sales from the Thane project in 4QFY22, which will now spill over to FY23.
  • While the delayed launch will impact our 4QFY22 presales/collections estimate, sales momentum in ongoing projects has largely remained intact.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Before it’s here, it’s on Smartkarma

Japan: Tokyo Century Corp, Softbank Group, Seven & I Holdings, Fujitsu Ltd, Tokyo Stock Exchange Tokyo Price Index Topix, Skylark Co Ltd, Mitsubishi Heavy Industries, Fast Fitness Japan Inc and more

By | Daily Briefs, Japan

In today’s briefing:

  • MSCI Japan Index Rebalance Preview: Only Deletions for Now
  • Softbank Group – Early Read on Q4 Portfolio Performance
  • Seven & I: Going Strong in Overseas, Another Beat On the Cards
  • Fujitsu (6702 JP): At Risk of Short-Term Profit Taking
  • Japan’s Governance: About an Article on Resignation of Taking Responsibility
  • Skylark Holdings (3197): March Sales Negatively Affected by Omicron Again
  • Mitsubishi Heavy (7011) | Helping the World to Transition to a Cleaner and More Secure Energy Future
  • Fast Fitness Japan (7092): Reiterate Buy While Lowering TP on Model Adjustment.

MSCI Japan Index Rebalance Preview: Only Deletions for Now

By Brian Freitas

  • As of the close on 1 April, we see 13 potential deletions from the MSCI Japan Index. There could be changes in the next couple of weeks as prices change.
  • The potential deletions are Tokyo Century, Pola Orbis, Miura, Lion Corp, Tsuruha Holdings, Hino Motors, Benefit One, Stanley Electric, Ryohin Keikaku, Sohgo Security Services, Orix JREIT, Rinnai Corp and Lawson. 
  • Most of the stocks will have over 5 days of ADV to sell from passive funds and there has been an increase in short interest over the last month.

Softbank Group – Early Read on Q4 Portfolio Performance

By Kirk Boodry

  • Vision Fund’s public portfolio dropped $18.6bn (-24%) in Q4. China concerns grabbed headlines but it was Asian names (Coupang, Grab) that drove losses
  • Public investments held at the parent level fell 41% (-$1.3bn), led by SoFi (-$862mn), Lemonade (-$189mn) and THG (-$147mn) 
  • We expect that Softbank will also need to write down private investments although it is not clear just how far private valuations have tracked public changes

Seven & I: Going Strong in Overseas, Another Beat On the Cards

By Oshadhi Kumarasiri

  • After raising full-year guidance in 3QFY22 due to stronger than expected performance in the overseas business, Seven & I is scheduled to release the fourth-quarter results on 7th April 2022.
  • Domestic performance has been relatively stable, but 7-Eleven Inc should outperform expectations in the US through the yen depreciation and rising fuel retail margins.
  • Thus, we would buy Seven & I Holdings (3382 JP) leading up to earnings expecting substantial upside on a potentially large earnings beat.

Fujitsu (6702 JP): At Risk of Short-Term Profit Taking

By Scott Foster

  • The shares have rebounded by nearly 30% since the 1st of February. Consolidation seems likely while waiting for evidence that management’s sales and profit targets can be met.
  • As Japan’s No. 1 IT services company, Fujitsu should benefit from the ongoing digitalization of Japan’s public and private sectors, the roll-out of 5G and the development of 6G.
  • Risks for investors include the weakening yen and economic slowdown. A history of IT system failures also raises a red flag.

Japan’s Governance: About an Article on Resignation of Taking Responsibility

By Aki Matsumoto

  • Nikkei carried an article titled “Toshiba, Mizuho, and Mitsubishi Electric Lighten Up on Censure Resignations without Renewal Power.” I would like to touch on the points discussed in the article.
  • Although the goal should be to take responsibility for scandals and to put a clean slate in place, there have been resignations that show delays in decision-making and lackadaisical succession system.
  • It shows only the form of board practices changes, but nothing changes on the inside and that scandals are repeated. Why do scandals repeat themselves are discussed in “Repeated Scandals”.

Skylark Holdings (3197): March Sales Negatively Affected by Omicron Again

By Mita Securities

  • Skylark HD (3197, the company) disclosed monthly data for March (on a preliminary basis)
  • Same-store sales were 99.0% vs. March 2021 (93.0% for February), 92.8% vs. March 2020, and 71.0% vs. March 2019
  • In March, the company opened one new store. The number of stores at the end of March was 3,094 (-3 MoM)

Mitsubishi Heavy (7011) | Helping the World to Transition to a Cleaner and More Secure Energy Future

By Mark Chadwick

  • MHI benefits from the structural themes of energy security and carbon neutrality
  • MHI’s Energy Systems account for over 60% of operating profits
  • The inevitable push to restart nuclear plants in Japan will be a catalyst for the share price

Fast Fitness Japan (7092): Reiterate Buy While Lowering TP on Model Adjustment.

By Mita Securities

  • We update our earnings forecast and valuation model for Fast Fitness Japan (7092, FFJ, the company) and lower our target price to 2,650 yen
  • We changed our OP forecasts from 2.8bn yen to 2.9bn yen (+26.5% YoY; OPM 22.6%; company guidance 2.6bn yen) for FY3/22
  • In calculating our target price of 2,650 yen, we used a residual income model (RIM) with a cost of equity of 7.0% (previously 5.5%) and a terminal growth rate of 3.0% (previously 3.5%), based on our earnings forecasts for FY3/22-FY3/27

Before it’s here, it’s on Smartkarma

Industrials: SK Shieldus, Lingkaran Trans Kota Holdings, Mitsubishi Heavy Industries, Gamuda Bhd, Praj Industries and more

By | Daily Briefs, Industrials

In today’s briefing:

  • SK Shieldus IPO Initiation: Track and Shield
  • Lingkaran Trans Kota (LTKH.KL) – Fair Offer; Bumper Upside
  • Mitsubishi Heavy (7011) | Helping the World to Transition to a Cleaner and More Secure Energy Future
  • Gamuda (GAMU.KL) – Fair Offer; Win (3x) Proposition
  • Axis Research Scorecard Report – Mar 2022

SK Shieldus IPO Initiation: Track and Shield

By Arun George

  • SK Shieldus (ABFHIZ KS) is a leading South Korean security provider. It is pre-marketing a KRX IPO to raise up to US$0.9 billion.  
  • SK shieldus is offering 27.1 million shares with a primary/secondary split of 53/47 at an indicative price range of KRW31,000- 38,800 per share.
  • SK shieldus has attractive fundamentals with healthy growth and margins. The leverage is manageable due to good cash generation.

Lingkaran Trans Kota (LTKH.KL) – Fair Offer; Bumper Upside

By Maybank Research

  • Bumper upside; maintain BUY
  • MYR2.7b, being LITRAK’s share of equity value
  • Key take-aways from Gamuda’s investor briefing
  • For LITRAK, it means an unlocking of value …

Mitsubishi Heavy (7011) | Helping the World to Transition to a Cleaner and More Secure Energy Future

By Mark Chadwick

  • MHI benefits from the structural themes of energy security and carbon neutrality
  • MHI’s Energy Systems account for over 60% of operating profits
  • The inevitable push to restart nuclear plants in Japan will be a catalyst for the share price

Gamuda (GAMU.KL) – Fair Offer; Win (3x) Proposition

By Maybank Research

  • ‘Win-win-win’ proposition; maintain BUY
  • MYR2.33b, being Gamuda’s share of equity value
  • Key differences with MoF’s offer in Jun 2019
  • For Gamuda, it means an unlocking of value …

Axis Research Scorecard Report – Mar 2022

By Axis Direct

  • Axis Top Picks basket has delivered an astounding return of 127% since its inception, notably beating the 89% return reported by the benchmark Nifty 50 Index over the same period
  • Pick of the Week (PoW): PoW delivered an excellent monthly strike rate of 77% in Mar’22
  • Axis Alpha: Axis Alpha continues to deliver robust returns with absolute profits of over 4.2 Lc since its inception. It reported a healthy cumulative strike rate of 68% in Mar’22.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Before it’s here, it’s on Smartkarma