Smartkarma Daily Briefs

There are 37 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal this week: Qantas Airways (QAN AU) has entered into a Scheme to buy smaller airline Alliance Aviation Services (AQZ AU).
Key updates took place for: AGL Energy Ltd (AGL AU), Virtus Health (VRT AU), Suchuang Gas Corp (1430 HK), Yashili International Holdings (1230 HK) & Hitachi Transport System (9086 JP).

Before it’s here, it’s on Smartkarma

May 08

Health Care: Yunkang Group and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

By Clarence Chu

Yunkang Group (2325 HK) is looking to raise US$139m in its Hong Kong IPO.
Yunkang Group has grown its on-site diagnostics centers and has grand plans to add new centers with the IPO proceeds.
However, its business performance had been largely impacted by COVID, where COVID-related tests amounted to 83.6% of total tests performed in FY21, while contributing 58.1% to total revenue.

Before it’s here, it’s on Smartkarma

May 08

Most Read: Yamada Denki, China MeiDong Auto, Delhivery, Yashili International Holdings, SenseTime Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Yamada Denki – GINORMOUS Buyback To Dramatically Boost EPS and ROE
China Meidong: Back the Porsche at 20 HKD
Delhivery IPO: Offering Details & Index Inclusion Timeline
Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu
Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

Yamada Denki – GINORMOUS Buyback To Dramatically Boost EPS and ROE

By Travis Lundy

Yamada Denki (9831 JP) reported earnings (Revs -7.6% (slight beat), OP -28.6% (slight miss), NP -2.4% (slight miss)), and slightly upbeat forecasts to Mar-2023 (Revs +4.6%, OP +12.5%, NP +2.9%)
They also announced an unchanged dividend at ¥18/share, and a VERY BIG BUYBACK. This is one of the largest, most aggressive, on-market buyback programs I have ever seen.
Previous buybacks have been duds. Yamada Denki is not playing around this time. This time it will be a buy.

China Meidong: Back the Porsche at 20 HKD

By Sameer Taneja

China Meidong Auto (1268 HK) trades at a 12x/9x PE FY22/23E with a 6.5% dividend yield at a 20 HKD/share price (assuming an 80% payout ratio).
In buying China Meidong Auto (1268 HK), you get an industry leader in the dealership space with supreme execution (35% ROE/47% CAGR profit growth/best capital allocator).
The integration of the Starchase Porsche Dealerships provides an upside potential, as the management, with their superior track record, can significantly improve the target’s operations.

Delhivery IPO: Offering Details & Index Inclusion Timeline

Delhivery (1058656D IN) is looking at raising INR 52,350m (US$685m) in its IPO by selling up to 113.3m shares at a range of INR 462-487/share.
At the mid point of the IPO range, Delhivery (1058656D IN) will be valued at INR 344.8bn (US$4.5bn) while the free float market cap will be much lower.
Delhivery (1058656D IN) could get entry to the FTSE All-World Index at the December QIR, while inclusion in the MSCI India Index could take place at the May 2023 SAIR.

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu

Yashili International Holdings (1230 HK) has announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
The cancellation price of HK$1.20/share, a 31.9% premium to last close, and a 161% premium to the undisturbed price, is in line with the 16 March announcement.
Conditions involve various business disposals and the exit of Danone SA (BN FP)‘s stake in Yashili; yet apart from timing, which is contingent on regulatory approvals, this looks done.

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

Before it’s here, it’s on Smartkarma

May 08

Industrials: Misumi Group, Hitachi Transport System and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Misumi Group (9962 JP): Watch Out for Recession
Asia-Pac Weekly Risk Arb Wrap: Alliance Aviation, AGL, Virtus, Yashili, Hitachi Transport

Misumi Group (9962 JP): Watch Out for Recession

By Scott Foster

The shares look cheap on FY Mar-23 guidance, but operating profit has dropped back after a surge and 1H looks difficult.
On the positive side, the VONA e-commerce business is catching up with Factory Automation as a source of profit. Annual sales and profitability have reached new highs.
Management has rebalanced the business. The main risk now is macro-economic.

Asia-Pac Weekly Risk Arb Wrap: Alliance Aviation, AGL, Virtus, Yashili, Hitachi Transport

There are 37 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal this week: Qantas Airways (QAN AU) has entered into a Scheme to buy smaller airline Alliance Aviation Services (AQZ AU).
Key updates took place for: AGL Energy Ltd (AGL AU), Virtus Health (VRT AU), Suchuang Gas Corp (1430 HK), Yashili International Holdings (1230 HK) & Hitachi Transport System (9086 JP).

Before it’s here, it’s on Smartkarma

May 08

Macro: New Global Monetary System Will Evolve and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

New Global Monetary System Will Evolve, as Sanctions and Current Conventions Worsen Supply Shortages

New Global Monetary System Will Evolve, as Sanctions and Current Conventions Worsen Supply Shortages

By Said Desaque

Seizure of Russia’s external assets is prompting countries to think about protecting economic security via alternative payment mechanisms for commodities. The dollar’s role as the leading reserve currency remains intact.
Foreign exchange reserve management could change following seizure of Russian assets. Politicisation of SWIFT could impact flows into banking systems due to fears of potential seizures without legal recourse.
High transaction costs for foreign trade never featured prominently during the globalisation era. New lockdowns in China and Russian sanctions accentuate supply shortages and inflation under current global monetary arrangements.

Before it’s here, it’s on Smartkarma

May 08

China: Yashili International Holdings, SenseTime Group, JCET Group, Yunkang Group and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu
Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime
Yashili’s HK$1.20 Privatisation Offer from Mengniu
JCET (600584.CH): 2022 Outlook Should Be Better than Fear
Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu

Yashili International Holdings (1230 HK) has announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
The cancellation price of HK$1.20/share, a 31.9% premium to last close, and a 161% premium to the undisturbed price, is in line with the 16 March announcement.
Conditions involve various business disposals and the exit of Danone SA (BN FP)‘s stake in Yashili; yet apart from timing, which is contingent on regulatory approvals, this looks done.

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

Yashili’s HK$1.20 Privatisation Offer from Mengniu

Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.
The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by <10% of all disinterested shareholders.
The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).

JCET (600584.CH): 2022 Outlook Should Be Better than Fear

By Patrick Liao

JCET reported revenue/GM RMB$8,138mn/10.7% in 1Q22, which grew 21.2% YoY and 0.5% QoQ.
We expect that its growth would continue and likely reach to revenue/GM for about RMB$8,234.5mn/10.8% in 2Q22.
Although the mainland China insists in the Zero Policy against COVID-19, the GDP growth was targeting at ~5.5% in 2022.

Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

By Clarence Chu

Yunkang Group (2325 HK) is looking to raise US$139m in its Hong Kong IPO.
Yunkang Group has grown its on-site diagnostics centers and has grand plans to add new centers with the IPO proceeds.
However, its business performance had been largely impacted by COVID, where COVID-related tests amounted to 83.6% of total tests performed in FY21, while contributing 58.1% to total revenue.

Before it’s here, it’s on Smartkarma

May 08

Event-Driven: Yashili International Holdings, BHP Group Ltd, SenseTime Group, CJ CGV Co Ltd, Hitachi Transport System and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu
Last Week in Event SPACE: Hitachi Transport, Shiga Bank, CP Food, AGL, Woodside/BHP, Yamada Denki
Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime
Yashili’s HK$1.20 Privatisation Offer from Mengniu
KOSPI 200 Rebalancing: Trade Short Covering Event for Deletions
Asia-Pac Weekly Risk Arb Wrap: Alliance Aviation, AGL, Virtus, Yashili, Hitachi Transport

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu

Yashili International Holdings (1230 HK) has announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
The cancellation price of HK$1.20/share, a 31.9% premium to last close, and a 161% premium to the undisturbed price, is in line with the 16 March announcement.
Conditions involve various business disposals and the exit of Danone SA (BN FP)‘s stake in Yashili; yet apart from timing, which is contingent on regulatory approvals, this looks done.

Last Week in Event SPACE: Hitachi Transport, Shiga Bank, CP Food, AGL, Woodside/BHP, Yamada Denki

If Silchester’s activism towards Shiga (8366 JP) & Chugoku (8382 JP) is going to be fought, it is going to be fought in the Japanese media, not in the AGM convocation.
The idea that the AGL Energy Ltd (AGL AU) de-merger could be thwarted is something which could dampen spirits on the stock near-term
Hitachi Transport System (9086 JP) as a risk arb situation is trading wide. It should trade tighter.

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

Yashili’s HK$1.20 Privatisation Offer from Mengniu

Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.
The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by <10% of all disinterested shareholders.
The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).

KOSPI 200 Rebalancing: Trade Short Covering Event for Deletions

By Sanghyun Park

Short-Selling is not possible after being deleted from the KOSPI 200. So, active short-covering for deletions is witnessed before and after the rebalancing implementation.
CJ CGV (079160 KS) stands out the most at this point. Its short interest is 4.10% of SO, and the short interest has increased the most over the past month.
The short-covering/price movement started to be observed from the end of the prior month. So, I’d consider building positions from the third week of this month.

Asia-Pac Weekly Risk Arb Wrap: Alliance Aviation, AGL, Virtus, Yashili, Hitachi Transport

There are 37 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal this week: Qantas Airways (QAN AU) has entered into a Scheme to buy smaller airline Alliance Aviation Services (AQZ AU).
Key updates took place for: AGL Energy Ltd (AGL AU), Virtus Health (VRT AU), Suchuang Gas Corp (1430 HK), Yashili International Holdings (1230 HK) & Hitachi Transport System (9086 JP).

Before it’s here, it’s on Smartkarma

May 08

Consumer: Yashili International Holdings, CJ CGV Co Ltd and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu
Yashili’s HK$1.20 Privatisation Offer from Mengniu
KOSPI 200 Rebalancing: Trade Short Covering Event for Deletions

Yashili (1230 HK)’s Pre-Conditional Offer From Mengniu

Yashili International Holdings (1230 HK) has announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
The cancellation price of HK$1.20/share, a 31.9% premium to last close, and a 161% premium to the undisturbed price, is in line with the 16 March announcement.
Conditions involve various business disposals and the exit of Danone SA (BN FP)‘s stake in Yashili; yet apart from timing, which is contingent on regulatory approvals, this looks done.

Yashili’s HK$1.20 Privatisation Offer from Mengniu

Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.
The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by <10% of all disinterested shareholders.
The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).

KOSPI 200 Rebalancing: Trade Short Covering Event for Deletions

By Sanghyun Park

Short-Selling is not possible after being deleted from the KOSPI 200. So, active short-covering for deletions is witnessed before and after the rebalancing implementation.
CJ CGV (079160 KS) stands out the most at this point. Its short interest is 4.10% of SO, and the short interest has increased the most over the past month.
The short-covering/price movement started to be observed from the end of the prior month. So, I’d consider building positions from the third week of this month.

Before it’s here, it’s on Smartkarma

May 08

TMT: SenseTime Group, JCET Group, Delhivery and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime
JCET (600584.CH): 2022 Outlook Should Be Better than Fear
Delhivery IPO: Valuation Insights

Index Rebalance & ETF Flow Recap: KOSPI200, KQ150, CSI300, STAR50, SET50, China A50, HSCI, SenseTime

The review cutoff for the FTSE All-World/All-Cap June QIR is 11 May. The changes to the MSCI indices for the May SAIR will be announced on 13 May Asia time.
The review period for the KOSPI2 INDEX, KOSDAQ 150 Index, Shanghai Shenzhen CSI 300 Index, STAR50 INDEX and the SENSEX INDEX ended last week and there are changes.
ETF inflows were larger than outflows for nearly all Asian markets. The largest inflows were in the Hang Seng H Share Index ETF (2828) and Vanguard Aust Shares Etf (VAS).

JCET (600584.CH): 2022 Outlook Should Be Better than Fear

By Patrick Liao

JCET reported revenue/GM RMB$8,138mn/10.7% in 1Q22, which grew 21.2% YoY and 0.5% QoQ.
We expect that its growth would continue and likely reach to revenue/GM for about RMB$8,234.5mn/10.8% in 2Q22.
Although the mainland China insists in the Zero Policy against COVID-19, the GDP growth was targeting at ~5.5% in 2022.

Delhivery IPO: Valuation Insights

Delhivery (1058656D IN) is the largest and fastest-growing 3PL express parcel delivery player in India. It will launch its Rs52.4 billion ($0.7 billion) IPO on 11 May.
In Delhivery IPO: Yet to Convincingly Deliver, we noted that the negatives outweigh the positives.
In this note, we look at the valuation metrics. We think that Delhivery is at best fairly valued at the IPO price range.

Before it’s here, it’s on Smartkarma

May 08

Equity Capital Markets: Delhivery, Yunkang Group and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Delhivery IPO: Valuation Insights
Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

Delhivery IPO: Valuation Insights

Delhivery (1058656D IN) is the largest and fastest-growing 3PL express parcel delivery player in India. It will launch its Rs52.4 billion ($0.7 billion) IPO on 11 May.
In Delhivery IPO: Yet to Convincingly Deliver, we noted that the negatives outweigh the positives.
In this note, we look at the valuation metrics. We think that Delhivery is at best fairly valued at the IPO price range.

Yunkang Group IPO – Futile to Try and Gauge Its Post-COVID Performance

By Clarence Chu

Yunkang Group (2325 HK) is looking to raise US$139m in its Hong Kong IPO.
Yunkang Group has grown its on-site diagnostics centers and has grand plans to add new centers with the IPO proceeds.
However, its business performance had been largely impacted by COVID, where COVID-related tests amounted to 83.6% of total tests performed in FY21, while contributing 58.1% to total revenue.

Before it’s here, it’s on Smartkarma