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Smartkarma Daily Briefs

Sep 26
0

Daily Brief Utilities: CRB Commodity Index and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • The Commodity Report #70

The Commodity Report #70

By The Commodity Report

  • At the beginning of the week, China was redoubling its efforts to bolster food security by trying to cut the amount of soybeans that get turned into animal feed.
  • China is by far the world’s biggest importer of soybeans, which account for the bulk of its consumption.
  • A lower ratio would of course mean fewer soybean imports needed as demand would somehow decline a bit.

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Sep 26
0

Daily Brief Industrials: Xinjiang Goldwind Science & Technology H and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Xinjiang Goldwind (2208 HK): Getting to a More Attractive Point Again

Xinjiang Goldwind (2208 HK): Getting to a More Attractive Point Again

By Osbert Tang, CFA

  • Xinjiang Goldwind Science & Technology H (2208 HK) had a tough 2Q22; but with the recent retreat in share price, the stock appears attractive now at 8.5x FY23F PER.  
  • Goldwind has many growth initiatives backing its outlook. These include solid order backlog, upside on gross margin, contribution from wind farms and growth from the servicing business.
  • Its WTG backlog of 24.1GW is 1.3x higher QoQ and well covers revenue for next two years. Further strategic disposals of wind farm will help realising underlying asset values.  

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Sep 26
0

Daily Brief TMT/Internet: DB Hitek Co., Ltd., Meta Platforms (Facebook), Ethereum and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek
  • Meta Platforms ($META)
  • Interoperability

New Pricing Rule for Appraisal Rights in ECO: Potential Arb Openings in DB Hitek

By Sanghyun Park

  • A South Korean lawmaker introduced legislation that would mandate that appraisal right exercise prices in split-off listings (equity carve-out) be based on asset/earnings value rather than market price (stock price).
  • We may find an arb opening in DB Hitek. The appraisal price based on the asset/earnings value is at an 11.31% premium to the last close.
  • If DB HiTek postpones the split-off listing to next year, FY22 earnings should be reflected. In this case, the appraisal price will be at a 90% premium.

Meta Platforms ($META)

By MT Capital

  • The technology sector is full of polarizing personalities, many of whom stand at the helm of some of the largest companies in the world.
  • Whether that be with the brash antics and lofty ambitions of Elon Musk, the undoubtable brilliance tainted by Bitcoin Maximalism exhibited by Jack Dorsey, the SEC-challenging twitter threads blasted by Brain Armstrong, or the naivety potentially falsely portrayed by Vlad Tenev, there is no shortage of individuals that, love or hate, you can’t help but pay attention to.
  • Mark Zuckerburg is one of those people. The man that steers the ship of of Metaverse has clear technical aptitude, a far-cry away from the resume full of consulting experience and MBAs possessed by a lot of modern c-suite executives.

Interoperability

By Etherbridge

  • Interoperability is a fascinating topic. It is a concept applicable to different systems worldwide, from communication systems, hardware and technology to groups of people.
  • We use interoperable systems every day; it is also often a background function, so many people do not even realise they are interacting with them.
  • Nevertheless, they have allowed many of our current systems to work seamlessly, including our internet and mobile devices. 

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Sep 26
0

Daily Brief Health Care: Pine Care Group, Classys, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Pine Care Group – Another MGO, Still Wrong Price Making One Wonder…
  • Classys (214150 KS): Overseas Expansion +Portfolio Enlargement = Consistent & Sustainable Growth
  • Women Founders Should Be Supported Rather than Goals that Are Less Feasible for Achieving Diversity

Pine Care Group – Another MGO, Still Wrong Price Making One Wonder…

By Travis Lundy

  • In early Feb2020, the #1 shareholder of HK-based elderly home care provider Pine Care Group (1989 HK) sold a 52% stake at HK$1.647, keeping 14.99%. That triggered an Unconditional MGO. 
  • In Aug2022, much of the shareholder consortium which bought in 2020 agreed to sell 56.15% at HK$0.89/share to local privately-held developer Chinachem. That will trigger another Unconditional MGO.
  • The business has suffered under covid, but it is not clear why the business would be better now. Revenues will spike when Causeway Bay opens, but…. Sell. 

Classys (214150 KS): Overseas Expansion +Portfolio Enlargement = Consistent & Sustainable Growth

By Tina Banerjee

  • Classys (214150 KS), under new management, has announced a treasury stock acquisition program of KRW20 billion through March 2023. As of June 2022, Classys had cash equivalents of KRW68 billion.  
  • Global expansion of Classys’ latest lifting product, Shrink Universe is the near-term growth driver. The product is seeing steady domestic demand, with cumulative sales exceeding 1,000 units.
  • In August Classys received approval for its new skin care product Volnewmer. The company is expected to start selling Volnewmer in Q3 and initially targeting 100 units for the device.

Women Founders Should Be Supported Rather than Goals that Are Less Feasible for Achieving Diversity

By Aki Matsumoto

  • If we want to increase women directors even to growth market companies, we can solve this problem by extending the scope of this comply-or-explain requirement to growth market companies.
  • It is a fact that companies with top female executives have more women on their boards of directors. It’s required to create support to increase the number of women founders.
  • Rather than setting targets for the ratio of female managers, which are vague and unworkable, a framework should be created to support female founders.

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Sep 26
0

Daily Brief Industrials: Xinjiang Goldwind Science & Technology H and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Xinjiang Goldwind (2208 HK): Getting to a More Attractive Point Again

Xinjiang Goldwind (2208 HK): Getting to a More Attractive Point Again

By Osbert Tang, CFA

  • Xinjiang Goldwind Science & Technology H (2208 HK) had a tough 2Q22; but with the recent retreat in share price, the stock appears attractive now at 8.5x FY23F PER.  
  • Goldwind has many growth initiatives backing its outlook. These include solid order backlog, upside on gross margin, contribution from wind farms and growth from the servicing business.
  • Its WTG backlog of 24.1GW is 1.3x higher QoQ and well covers revenue for next two years. Further strategic disposals of wind farm will help realising underlying asset values.  

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Sep 26
0

Daily Brief Financials: Onewo, NIFTY Index, Times China and more

By | Daily Briefs, Financials

In today’s briefing:

  • Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion
  • EQD | NIFTY Index: Option Selling Strategies for Short-Term Yield  (RIL,SBIN,SBILIFE,COAL,INFY,BRIT)
  • Morning Views Asia: Tata Steel Thailand, Times China

Onewo (2602 HK): No Passive Flow or Stock Connect Inclusion

By Brian Freitas

  • Onewo (2602 HK) is looking to raise between US$700m-US$784m by selling 116.714m shares at a price range of HK$47.1-52.7/share. Indications are that the IPO will be priced close to mid-point.
  • Given the domestic shares and unlisted foreign shares will not be converted to H-shares, there is no chance of MSCI inclusion and a small chance of FTSE inclusion.
  • Onewo (2602 HK) is also unlikely to be added to the HSCI and consequently will not be added to Stock Connect.

EQD | NIFTY Index: Option Selling Strategies for Short-Term Yield  (RIL,SBIN,SBILIFE,COAL,INFY,BRIT)

By Simon Harris

  • We screen the NIFTY Index components for yield enhancing opportunites
  • We screen for expensive options and combine with stock performances to find the best candidates
  • We identity 6 stocks where selling short-term premium makes sense

Morning Views Asia: Tata Steel Thailand, Times China

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.

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Sep 26
0

Daily Brief Consumer: Shandong Fengxiang, Alibaba Group, Fast Retailing and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
  • Alibaba: Accelerating Retail Sales, and a Depressed Comp Base, Bode Well for Near-Term Earnings
  • Fast Retailing (9983) | Elevated Multiple and Guidance Risk
  • China Internet Weekly (26Sep2022): S.F., STO, YTO, Yunda, JD Logistics, Alibaba, Baidu, Trip.com

Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex

By Arun George

Alibaba: Accelerating Retail Sales, and a Depressed Comp Base, Bode Well for Near-Term Earnings

By Wium Malan, CFA

  • In line with previously reported trends in Chinese retail sales growth, the large Chinese eCommerce operators reported a decline (or contraction) in GMV growth in 2Q2022.
  • Following a contraction between March and May this year, China’s retail sales growth has returned to growth since June, which continued in July and accelerated in August.
  • Alibaba’s next reported quarter’s annualised growth will be on an extremely depressed base.

Fast Retailing (9983) | Elevated Multiple and Guidance Risk

By Mark Chadwick

  • Fast Retailing’s share price has risen 24% year-to-date, outperforming the index and global peers
  • The share price has been driven by multiple expansion, which we believe is now at risk of reversing
  • With an uncertain economic backdrop, we believe management may issue conservative guidance for the next fiscal year. We turn Bearish.

China Internet Weekly (26Sep2022): S.F., STO, YTO, Yunda, JD Logistics, Alibaba, Baidu, Trip.com

By Ming Lu

  • Revenues of major express parcel companies grew rapidly in August.
  • JD logistics will provide logistics service to live streaming retailers on Douyin.
  • In 2Q22, revenue of Trip.com decreased by 32% YoY and operating profit turned negative.

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Sep 26
0

Daily Brief Credit: Morning Views Asia: Tata Steel Thailand and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Tata Steel Thailand, Times China

Morning Views Asia: Tata Steel Thailand, Times China

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.

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Sep 26
0

Daily Brief Quantitative Analysis: Hong Kong Connect Flows (Sep 23rd): Tencent and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Hong Kong Connect Flows (Sep 23rd): Tencent, CNOOC
  • A-H Premium Weekly (Sep 23rd): China Tourism A-H at All Time Low
  • Northbound Flows (Sep 23rd): Tianqi Lithium, Midea Group, Moutai, Sungrow

Hong Kong Connect Flows (Sep 23rd): Tencent, CNOOC

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of September 23rd.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight three weeks of inflows despite weak market sentiment and flows into Tencent and CNOOC.

A-H Premium Weekly (Sep 23rd): China Tourism A-H at All Time Low

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 119.5% as of Sep 23rd.
  • The average A-H premium changed by 3.8ppt weeok on week, led by energy, financials, materials and offset by consumer staples, information technology.
  • We highlight weekly changes in A-H premium for Angang, Flat Glass, Zoomlion, China Tourism, China Telecom.

Northbound Flows (Sep 23rd): Tianqi Lithium, Midea Group, Moutai, Sungrow

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of September 23rd.
  • We estimate the weekly outflows to be US$854.1 million, led by industrials, consumer staples, and offset by communication services, consumer discretionary, real estate.
  • We highlight flows for Tianqi Lithium, Midea Group, Moutai, Sungrow.

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Sep 26
0

Daily Brief Macro: Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming and more

By | Daily Briefs, Macro

In today’s briefing:

  • Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming
  • The Right and Wrong Way to Throw in the Towel
  • The Week That Was in ASEAN@Smartkarma – Astra International, Ace Hardware, and DTAC’s Merger
  • The Commodity Report #70

Icarus Is Falling! The Markets Are Breaking: More Volatility Is Coming

By Michael J. Howell

  • Daily Liquidity has tanked lower, causing bond term premia to worryingly collapse to near all-time lows
  • S&P500 (SPX) likely to test 3200 because of skidding Liquidity, but may even drop below 3000 as earnings get crushed.
  • Lower term premia are already set-in-stone and have  always led to much weaker reported corporate earnings some 15 months later. US S&P500 earnings could skid by over 20% in 2023  

The Right and Wrong Way to Throw in the Towel

By Cam Hui

  • Sentiment readings are sufficiently washed out that a relief equity rally can happen at any time.
  • However, technical conditions indicate that the intermediate-term direction is still down.
  • Prepare for the counter-trend bounce, but don’t forget to sell the rips.

The Week That Was in ASEAN@Smartkarma – Astra International, Ace Hardware, and DTAC’s Merger

By Angus Mackintosh

  • The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
  • The past week saw insights on Astra International,Ace Hardware Indonesia, Total Access Communication, and Genting Bhd (GENT MK). 
  • We also look at the recent decision in Indonesia to raise interest rates, which we see as a sensible pre-emptive move, which should be positive for the Indonesian banks 

The Commodity Report #70

By The Commodity Report

  • At the beginning of the week, China was redoubling its efforts to bolster food security by trying to cut the amount of soybeans that get turned into animal feed.
  • China is by far the world’s biggest importer of soybeans, which account for the bulk of its consumption.
  • A lower ratio would of course mean fewer soybean imports needed as demand would somehow decline a bit.

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