Smartkarma Daily Briefs

BeiGene (6160 HK) and ZTO Express Cayman (2057 HK) will replace Sino Biopharmaceutical (1177 HK) and Li Ning (2331 HK) in the HSCEI INDEX at the close on 7 March.
Estimated one-way turnover at the rebalance is 5% resulting in a round-trip trade of HK$6.4bn (US$825m). The final capping will use the close of trading on 4 March.
ZTO Express Cayman (2057 HK) is also an inclusion to a global index with implementation scheduled for the close on 21 March.

Haw Par Corp (HPAR SP): $1 Special Dividend–Xie Xie, Let’s Make It Regular!

By Devi Subhakesan

Haw Par Corp (HPAR SP) announced a special dividend of S$1.00 per share for 2024, alongside its regular S$0.40 dividend.
Investors have long pushed for higher payouts and special dividends, given the company’s strong cash reserves and free cash flow.
Based on our analysis of its financials, Haw Par could sustainably raise its regular dividend to S$1.00 per share without tapping into reserves.

West Pharmaceutical Services: How GLP-1 and Biologics Are Unlocking Explosive Growth!

West Pharmaceutical Services delivered its financial results for the fourth quarter and full year 2024, demonstrating both achievements and challenges.
The company’s financial performance showed signs of recovery in certain areas but also faced headwinds that are influencing its outlook for 2025.
In 2024, West made notable progress in several strategic initiatives.

Telix Pharmaceuticals (TLX AU): Record Performance in 2024; Robust Forecast for 2025

By Tina Banerjee

Telix Pharmaceuticals (TLX AU) reported 2024 revenue of A$783M, up 56% YoY, beating full year revised guidance of A$745–776M, driven by Illuccix. 2024 R&D expenditure was in-line with guidance.
Telix provides 2025 revenue guidance of A$1.18–1.23B ($770–800M), up 51–57% YoY. The company expects 2025 R&D expenses to increase 20–25% YoY to A$234–243M.
2025 will be a pivotal year for Telix, with three new products launches planned for this year in the U.S. (Zircaix, Pixclara, and Gozellix) and the European/UK rollout of Illuccix.

Zoetis Inc.: Double-Digit Growth in Major Franchises Propelling Our ‘Buy’ Rating!

Zoetis reported strong financial results for its fiscal year 2024, reaching the high end of its guidance, largely driven by double-digit operational revenue growth of 11%.
The company’s robust performance is attributed to its formidable portfolio spanning both the Companion Animal and Livestock segments.
For the U.S., revenue surged by 11%, while international revenue saw a 10% operational increase, demonstrating the company’s capability to navigate a competitive landscape effectively.

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

Feb 24

Daily Brief Industrials: Sumitomo Corp, Grab Holdings , Sg Fleet, Republic Services, Deere & Co, Howmet Aerospace and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Warren Buffett and the Japanese Trading Houses I
Grab Holdings (GRAB US) – Solidifying Its Appeal
SG Fleet (SGF AU): 8th April Scheme Vote
Republic Services: The Secret Behind Its Pricing Power That’s Beating Inflation!
Deere’s Precision Ag Revolution – How AI & Tech Are Transforming Farming!
Howmet Aerospace: Can its Industrial Gas Turbine (IGT) Expansion Boost Revenue & Margins?

Warren Buffett and the Japanese Trading Houses I

The Berkshire Hathaway Annual Shareholder Letter for 2024 was released this weekend. Much was made in Japanese twitter-space of the comments he made on the Japanese trading houses.
He said Berkshire Hathaway’s admiration of these companies “has consistently grown” and Berkshire likes their capital deployment, managements, and their attitude in respect to investors. They also pay themselves reasonably.
He mentioned Berkshire will increase their stakes somewhat in the trading houses “over time.” That comment deserves some exploration, as does the comment about yen funding.

Grab Holdings (GRAB US) – Solidifying Its Appeal

By Angus Mackintosh

Grab Holdings (GRAB US) booked a strong finish to the year, beating its upwardly revised guidance, despite some decline in margins due to increased investment, partly due to competitive pressures.
The company continues to expand its total addressable market through its Saver initiatives, whilst successfully increasing monetization through its high-value products, and improving retention and engagement through Grab Unlimited.
Financial services and advertising are becoming increasingly important drivers for growth and profitability. Expect some seasonal slowdown in 1Q2025 but the outlook remains positive and valuations are attractive.

SG Fleet (SGF AU): 8th April Scheme Vote

By David Blennerhassett

On the 25 November 2024, SG Fleet (SGF AU) (SGF), an Aussie provider of fleet leasing services, announced a A$3.50/share non-binding/indicative proposal from Sydney PE outfit Pacific Equity Partners (PEP).
On the 4th December, both parties entered into a SID on the same terms. SGF’s largest shareholder, Super Group (SUPER SP) (53.58%), was supportive.
The Scheme Booklet is now out, with a Scheme Meeting on the 8th April. Expected implementation on the 30th April. The IE (Grant Thornton) says fair & reasonable.

Republic Services: The Secret Behind Its Pricing Power That’s Beating Inflation!

Republic Services, Inc. reported a strong financial performance for the fourth quarter and full year 2024, showcasing revenue growth across various sectors of its operations.
The company achieved 7% annual revenue growth and adjusted EBITDA growth of 12%, leading to a 140 basis point expansion in its adjusted EBITDA margin.
The adjusted earnings per share reached $6.46, accompanied by a remarkable generation of $2.18 billion in adjusted free cash flow.

Deere’s Precision Ag Revolution – How AI & Tech Are Transforming Farming!

Deere & Company’s latest financial results present a mixed outlook reflecting both challenges and opportunities within the company and its key markets.
For the first quarter, Deere reported net sales and revenues down substantially, with a 35% decline in equipment operation sales to $6.809 billion.
Net income attributable to the company stood at $869 million, impacted by a notable $163 million tax benefit.

Howmet Aerospace: Can its Industrial Gas Turbine (IGT) Expansion Boost Revenue & Margins?

Howmet Aerospace’s third quarter 2024 results demonstrate significant performance gains amidst a complex operating environment.
The company’s revenue growth was substantial at 11% year-over-year, with commercial aerospace driving much of this improvement with a 17% increase in revenue.
The engine products and fasteners segments excelled, supported by robust structures performance.

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

Feb 24

Daily Brief Financials: ZhongAn Online P&C Insurance C, Japan Hotel Reit Investment, Nikkei 225, Coinbase Global , NIFTY Index, Siam Commercial Bank, Moody’s Corp, Currency Exchange Internatio, Howard Hughes Holdings , Bell Financial and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade
Japan Hotel REIT: Interest Rate Hike Will Hurt Tourism, with More Hikes to Come. We Turn Bearish
Nikkei Index Options Weekly (Feb 17 – 21): USD/JPY at Inflection Point
Coinbase Global Inc.: The Bitcoin ETF Boom That’s Reshaping Crypto Investing!
Nifty Index Options Weekly (Feb 17 – 21): Low Volatility Strangles Price Action
Siam Commercial Bank (SCB TB) – Creating Wealth Inside and Out
Moody’s Corporation: The Hidden Power of Credit Ratings That Fuels Its Billion-Dollar Business!
Strategic Shifts and Financial Updates: CURN, SGRP, SAGE, WOW, and EMBRAC-B:ST Developments
Weekly Update (SNDK, LBTYA, MRP, HHH, GTX)
Bell Financial Group Ltd – Diversification continues to drive growth

HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade

As expected, Horizon Robotics (9660 HK) replaces East Buy Holding (1797 HK) in the Hang Seng TECH Index (HSTECH INDEX) in March.
In a surprise, Tencent Music Entertainment Group (1698 HK) will be added and ZhongAn Online P&C Insurance C (6060 HK) will be deleted.
Horizon Robotics (9660 HK) is also an inclusion to the HSIII Index and HSCI Index and will be added to Southbound Stock Connect in May.

Japan Hotel REIT: Interest Rate Hike Will Hurt Tourism, with More Hikes to Come. We Turn Bearish

By Jacob Cheng

In April 2024, we published a few notes on Japan REITs on the back of interest rate cut cycle and weaker Asian currencies
Today, the macro environment has shifted, Japan has started a rate hike cycle.
Japan Hotel REITs will suffer due to negative impact on tourism and higher cap rate assumptions

Nikkei Index Options Weekly (Feb 17 – 21): USD/JPY at Inflection Point

By John Ley

The 150 level on USD/JPY seems to be an area of heightened interest. We see potential for greater disparity of Nikkei returns below this level.
Nikkei 1-month implied vol is at the 17th percentile; while not currently monetizing, caution is warranted on short vol positions as USD/JPY vol trends higher.
Call volume dropped sharply vs total volume, with Puts outpacing Calls every day this week.

Coinbase Global Inc.: The Bitcoin ETF Boom That’s Reshaping Crypto Investing!

Coinbase Global, Inc. reported substantial growth in its 2024 financial results, showing significant strategic progress and adaptability in the rapidly evolving cryptocurrency landscape.
The company achieved over $6.6 billion in total revenue, more than doubling from the previous year, along with $3.3 billion in adjusted EBITDA.
This affirmative financial trajectory marks two consecutive years of positive adjusted EBITDA, reinforcing its transition into a resilient company that performs in diverse market conditions.

Nifty Index Options Weekly (Feb 17 – 21): Low Volatility Strangles Price Action

By John Ley

Nifty’s prolonged downtrend continues, making it the worst-performing market year-to-date.
Low volatility dominated price action, with 1-week historic vol at just 3.54 ranking in the 4th percentile since 2021. Possible precursor to a break from here.
Traders may consider letting deltas run, as daily delta hedging offers little benefit in this low vol environment.

Siam Commercial Bank (SCB TB) – Creating Wealth Inside and Out

By Angus Mackintosh

Siam Commercial Bank stands out from its peers for its focus on its new-generation businesses, which have started to bear fruit, whilst the bank provides a solid base.
The bank’s key focus is improving efficiency and asset quality, with the meaningful deployment of AI across the group, while targeting stable growth in its core banking business.
Siam Commercial Bank also expects growing contributions from its 2nd generation businesses including Cardd X and Auto X. Valuations are attractive given the bank’s relatively high ROE and future prospects.

Moody’s Corporation: The Hidden Power of Credit Ratings That Fuels Its Billion-Dollar Business!

By Research as a Service (RaaS)

Moody’s Corporation reported highly commendable financial results for the fourth quarter and the full-year 2024, highlighting robust revenue growth and profitability across its major business segments.
Moody’s achieved total revenue growth of 20% for the year, surpassing $7 billion, significantly driven by the Moody’s Investors Service (MIS) and Moody’s Analytics (MA) divisions.
The company managed to expand its adjusted operating margin by over 400 basis points, translating into a 26% increase in adjusted diluted earnings per share (EPS).

Strategic Shifts and Financial Updates: CURN, SGRP, SAGE, WOW, and EMBRAC-B:ST Developments

By Dalius Tauraitis

Currency Exchange International (CURN) exits Canadian operations, incurring discontinuation costs, but expects $5-$6m profit tailwind by 2026.
SPAR Group (SGRP) faces a third financing delay, suggesting Highwire Capital’s potential funding issues or hesitance.
Embracer Group’s (EMBRAC-B:ST) valuation update post-Asmodee spin-off indicates potential 20%-80% upside if market recognizes Asmodee stake.

Weekly Update (SNDK, LBTYA, MRP, HHH, GTX)

By Richard Howe

I want to use my introduction to provide some comments on Howard Hughes (HHH).
Bill Ackman’s Pershing Square Capital Management has disclosed a new offer related to Howard Hughes.
The proposal is that Pershing Square Capital Management purchases 10 million newly issued shares at $90 each, totaling $900 million, which would increase Pershing Square’s stake from 37.6% to 48%.

Bell Financial Group Ltd – Diversification continues to drive growth

RaaS has published an update report on diversified financials company Bell Financial Group (ASX:BFG) following the release of its FY24 audited results which demonstrated H2 CY24 acceleration in NPAT relative to H1 in the key recurring revenue businesses of Technology & Platforms (+18% vs. +2%) and Products & Services (+9% vs. +3%) as scale benefits continue.
The Retail & Institutional business benefited from improved ECM activity and equity volumes, with H1 FY24 NPAT growth ~290% and H2 FY24 +6% off a strong base.
Products & Services delivered 10% NPAT growth in CY24, with H2 growth accelerating to 16% following 3% growth in H1 as scale benefits kicked in.

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

Feb 24

Daily Brief Consumer: Seven & I Holdings, Alibaba Group Holding , Hang Seng Index, Britannia Industries, Mixue Group, Airbnb and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines
A/H Premium Tracker (To 21 Feb 2025): AH Premia Continue to Fall; Wider Spreads Narrow Most
HK Connect SOUTHBOUND Flows (To 21 Feb 2025); Another HUGE Jump in Value Traded, Consumer Still Bid
Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain
Seven & I Restructures but Discontent Rises Among Franchisees and Customers
HSI Index Options Weekly (Feb 17-21): Alibaba Reignites Momentum
NIFTY50/NEXT50 Index Rebalance: Zomato, JioFin Slide In as BPCL, Britannia Drop Out; US$3.3bn Trade
MIXUE Group (2097 HK) IPO: Reasonably Attractive Pricing
Mixue Group IPO: The Good, The Bad and Valuations
Airbnb Inc.: A $250 Million Bet To Make It the Amazon of Travel?

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines

Over the weekend, the Nikkei and Jiji reported the 7&i Board met Saturday and decided Bain would have preferred negotiating rights to buy York Holdings. They bid “over ¥700bn.”
That’s a trifle lower than the ¥1.2trn Reuters reported (on Christmas Day) Bain bid but details aren’t known. Proper structuring would get the vast majority to 7&i in post-tax cash.
For 7&i to decide by the AGM (which could be contentious), they need time to debate. Bids are likely needed in 3wks. In the meantime, “Trump Risk” lurks.

A/H Premium Tracker (To 21 Feb 2025): AH Premia Continue to Fall; Wider Spreads Narrow Most

AH Premia continue to fall with the widest spreads narrowing more than the narrowest spreads, and liquid pairs seeing more narrowing than illiquid pairs.
Average AH Premia are at a new 5yr low (longer, actually, but charts below only show 5yrs). The big warning sign? Rolling 52wk performance of A vs H in pairs.
Momentum is going to work until it does not. A new Trump EO this weekend seems to have potential to lead to more restrictions on US ownership of Chinese stocks.

HK Connect SOUTHBOUND Flows (To 21 Feb 2025); Another HUGE Jump in Value Traded, Consumer Still Bid

This past week saw SOUTHBOUND Connect clear HK$800bn of gross value traded, and net value was near recent highs at +HK$51bn. Consumer and finance names continue to be the rage.
Notable is the HUGE back-and-forth. If HK$800bn traded and SOUTHBOUND only bought HK$51bn, HK$375bn was round-tripped for short-term purposes.
That is twice the “excess” traded seen for the past year. Tencent (700 HK) saw US$14bn traded but net buying was US$121mm.

Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Seven & I Holdings (3382 JP), Smart Share Global (EM US), Tam Jai International (2217 HK), Vesync (2148 HK), ESR Group (1821 HK), Goldlion Holdings (533 HK).
Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Millennium & Copthorne Hotels Nz (MCK NZ), Domain Holdings Australia (DHG AU), Avjennings Ltd (AVJ AU).

Seven & I Restructures but Discontent Rises Among Franchisees and Customers

By Michael Causton

York HD is due to take over operation of all group business except Seven Eleven at the end of February and press reports suggest Bain’s bid has been accepted.
All of which is fine but this leaves Seven Eleven Japan which is struggling against rivals. Even franchise owners are becoming more critical.
A recent survey by Nikkei also suggested that consumers are increasingly favouring Lawson and Familymart and 30% visited Seven Eleven stores less frequently in 2024. This is a big problem.

HSI Index Options Weekly (Feb 17-21): Alibaba Reignites Momentum

By John Ley

The scorching rally continues with Alibaba saving a lackluster week with huge earnings driven move on Friday.
Implied vols are in the 85th percentile and struggling to move higher with spot.
Third week in a row where Call volume as a percent of total slipped indicating that buying fatigue might be setting in.

NIFTY50/NEXT50 Index Rebalance: Zomato, JioFin Slide In as BPCL, Britannia Drop Out; US$3.3bn Trade

Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN)‘s stock prices have taken a beating this year, but they still make it into the NIFTY Index (NIFTY INDEX) in March.
Bharat Petroleum (BPCL IN) and Britannia Industries (BRIT IN) will be out of the NIFTY Index (NIFTY INDEX) but will be added to the NSE Nifty Next50 Index (NIFTYJR INDEX).
Hyundai Motor India (HYUNDAI IN) will be added to a global index on 28 February and will then be added to the NSE Nifty Next50 Index (NIFTYJR INDEX) in March.

MIXUE Group (2097 HK) IPO: Reasonably Attractive Pricing

By Osbert Tang, CFA

Mixue Group (MIX HK)‘s IPO price of HK$202.5 looks attractive, as it is priced at 16.6x FY24 and 13.5x FY25 PER, below the mainland China peer average.
We estimate a P/B of 4.6x, putting it marginally lower than the sector best-fit line. We think there is potential for at least a 20-30% upside after the IPO.
MIXUE offers the possibility to participate in the spin-off of its overseas businesses in the medium term, which is explicitly spelt out as a plan.

Mixue Group IPO: The Good, The Bad and Valuations

By Devi Subhakesan

Mixue Group (MIX HK) is offering 17.1 million shares at a price of HK$202.50 in its Hong Kong IPO aiming to raise up to HK$3.45 Bn.
The company demonstrated stellar growth in store count, revenue, and profits, focusing on the mass-market freshly made beverage segment despite a sector slow down in 2024.
Mixue’s pace of store expansion may slow down going forward, however its ultra-low prices (RMB4-10) and scale provide a strong foundation for long-term sustainable performance.

Airbnb Inc.: A $250 Million Bet To Make It the Amazon of Travel?

Airbnb’s latest earnings report sent its stock surging 12.6% as investors reacted to stronger-than expected financial performance and ambitious growth plans.
Despite missing out on much of the recent travel boom, the company is now positioning itself as the “Amazon of travel” by expanding beyond its traditional short-term rental business.
CEO Brian Chesky emphasized this strategic pivot, revealing plans to invest up to $250 million in new businesses set to launch in May.

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

Feb 24

Most Read: Seven & I Holdings, Hang Seng Index, Sumitomo Corp, Horizon Robotics, BeiGene , ZhongAn Online P&C Insurance C, Mayne Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines
Hang Seng Internet & IT Index Rebalance: Five Changes with First De-SPAC Listing In
Hang Seng Index (HSI) Rebalance: Does Anyone Know What the Index Committee Is Thinking?
Warren Buffett and the Japanese Trading Houses I
HSCI Index Rebalance: 29 Adds, 41 Deletes & Changes to Southbound Stock Connect
HSCEI Index Rebalance: Beigene, ZTO Replace Sino Biopharma, Li Ning; Surprise for Some
HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade
Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40
Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain
Seven & I Restructures but Discontent Rises Among Franchisees and Customers

7&I (3382) – Bain Gets York Holdings with a Surprising Price, And We Approach Deal Deadlines

Over the weekend, the Nikkei and Jiji reported the 7&i Board met Saturday and decided Bain would have preferred negotiating rights to buy York Holdings. They bid “over ¥700bn.”
That’s a trifle lower than the ¥1.2trn Reuters reported (on Christmas Day) Bain bid but details aren’t known. Proper structuring would get the vast majority to 7&i in post-tax cash.
For 7&i to decide by the AGM (which could be contentious), they need time to debate. Bids are likely needed in 3wks. In the meantime, “Trump Risk” lurks.

Hang Seng Internet & IT Index Rebalance: Five Changes with First De-SPAC Listing In

There will be 5 changes for the Hang Seng Internet & Information Technology Index (HSIII Index) at the March rebalance. There is one surprise for us with Synagistics being added.
Estimated one-way turnover at the rebalance is 6.5% resulting in a round-trip trade of HK$3.74bn (US$482m). 4 stocks will have over 1x ADV to trade.
Horizon Robotics (9660 HK) is an add to the HSIII, Hang Seng TECH Index and HSCI. Inclusion in Southbound Stock Connect will take place in May.

Hang Seng Index (HSI) Rebalance: Does Anyone Know What the Index Committee Is Thinking?

We continue to be led down the garden path – no constituent changes for the Hang Seng Index (HSI INDEX) in March means we remain at 83 members.
Despite having an opportunity to add stocks to the index without increasing turnover, the index committee have done nothing. Which begs the question – what exactly are they waiting for?
Float and capping changes result in an estimated one-way turnover of 3.8% and the resulting round-trip trade is HK$16.7bn (US$2.15bn).

Warren Buffett and the Japanese Trading Houses I

The Berkshire Hathaway Annual Shareholder Letter for 2024 was released this weekend. Much was made in Japanese twitter-space of the comments he made on the Japanese trading houses.
He said Berkshire Hathaway’s admiration of these companies “has consistently grown” and Berkshire likes their capital deployment, managements, and their attitude in respect to investors. They also pay themselves reasonably.
He mentioned Berkshire will increase their stakes somewhat in the trading houses “over time.” That comment deserves some exploration, as does the comment about yen funding.

HSCI Index Rebalance: 29 Adds, 41 Deletes & Changes to Southbound Stock Connect

There are 29 adds and 41 deletes for the Hang Seng Composite Index (HSCI) at the March rebalance to take the number of index constituents down to 505.
We expect 27 of the 29 HSCI inclusions to be added to Stock Connect from the open on 10 March while Horizon Robotics (9660 HK) should be added in May.
We expect 28 of the 41 HSCI deletions will be removed from Stock Connect and there has been increased Southbound holding in a lot of the stock this calendar year.

HSCEI Index Rebalance: Beigene, ZTO Replace Sino Biopharma, Li Ning; Surprise for Some

BeiGene (6160 HK) and ZTO Express Cayman (2057 HK) will replace Sino Biopharmaceutical (1177 HK) and Li Ning (2331 HK) in the HSCEI INDEX at the close on 7 March.
Estimated one-way turnover at the rebalance is 5% resulting in a round-trip trade of HK$6.4bn (US$825m). The final capping will use the close of trading on 4 March.
ZTO Express Cayman (2057 HK) is also an inclusion to a global index with implementation scheduled for the close on 21 March.

HSTECH Index Rebalance: Horizon Robotics, Tencent Music Replace East Buy, ZA Online; US$2.3bn Trade

As expected, Horizon Robotics (9660 HK) replaces East Buy Holding (1797 HK) in the Hang Seng TECH Index (HSTECH INDEX) in March.
In a surprise, Tencent Music Entertainment Group (1698 HK) will be added and ZhongAn Online P&C Insurance C (6060 HK) will be deleted.
Horizon Robotics (9660 HK) is also an inclusion to the HSIII Index and HSCI Index and will be added to Southbound Stock Connect in May.

Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40

Mayne Pharma (MYX AU) entered a scheme implementation deed with Cosette Pharma at A$7.40 per share, a 36.8% premium to the undisturbed price.
The offer is conditional on shareholder and FIRB approval. The vote is low-risk as the two largest shareholders are supportive.
The offer is reasonable but not a knockout bid. At the last close and for an end-of-May payment, the gross/annualised spread was 2.8%/11.0%.

Merger Arb Mondays (24 Feb) – Seven & I, Proto, Tam Jai, Pentamaster, Vesync, Canvest, Domain

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Seven & I Holdings (3382 JP), Smart Share Global (EM US), Tam Jai International (2217 HK), Vesync (2148 HK), ESR Group (1821 HK), Goldlion Holdings (533 HK).
Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Millennium & Copthorne Hotels Nz (MCK NZ), Domain Holdings Australia (DHG AU), Avjennings Ltd (AVJ AU).

Seven & I Restructures but Discontent Rises Among Franchisees and Customers

By Michael Causton

York HD is due to take over operation of all group business except Seven Eleven at the end of February and press reports suggest Bain’s bid has been accepted.
All of which is fine but this leaves Seven Eleven Japan which is struggling against rivals. Even franchise owners are becoming more critical.
A recent survey by Nikkei also suggested that consumers are increasingly favouring Lawson and Familymart and 30% visited Seven Eleven stores less frequently in 2024. This is a big problem.

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 Analytics and News
✓ Events & Webinars

Feb 23

Daily Brief Quantitative Analysis: A-H Premium Weekly (Feb 21st): ZTE and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

A-H Premium Weekly (Feb 21st): ZTE, Hua Hong Semiconductor, Joinn Lab
Hong Kong Connect Flows (Feb 21st): Alibaba, China Mobile, Kuaishou Technology, ICBC, CCB, Meituan

A-H Premium Weekly (Feb 21st): ZTE, Hua Hong Semiconductor, Joinn Lab

By Ke Yan, CFA, FRM

We analyse the changes of A-H premium on 150 stocks over the last week. The average A-H premium was 88.2% as of Feb 21st.
The average A-H premium changed by -3.1ppt week-on-week, led by information technology, health care, communication services and offset by materials.
We highlight weekly changes in A-H premium for ZTE, Hua Hong Semiconductor, Joinn Lab.

Hong Kong Connect Flows (Feb 21st): Alibaba, China Mobile, Kuaishou Technology, ICBC, CCB, Meituan

By Ke Yan, CFA, FRM

We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 21st.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Alibaba, China Mobile, Kuaishou Technology, ICBC, CCB, Meituan, Xiaomi, China National Building Material, Byd Electronic (International), BYD.

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

Feb 23

Daily Brief Thematic (Sector/Industry): #108 India Insight: Adani Shifts to Cash Flow Growth and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

#108 India Insight: Adani Shifts to Cash Flow Growth, Hiranandani Pune JV, Burman Controls Religare
Themes of India: Cement Industry Q3 Update
APAC Healthcare Weekly (Feb 23)- Ono Pharma, Shionogi, Samsung Biologics, Celltrion, CSPC, Mayne

#108 India Insight: Adani Shifts to Cash Flow Growth, Hiranandani Pune JV, Burman Controls Religare

By Sudarshan Bhandari

Adani Group shifts to cash flow-backed, high-capex growth phase aiming for leadership in renewable energy, ports, and infrastructure.
Hiranandani Group enters Pune with a Rs 7,000 crore JV project, developing a 105-acre integrated township in Hinjewadi.
The Burman family takes control of Religare Enterprises (RELG IN) , plans Rs. 2,000 crore capital infusion, rebranding, and new management team

Themes of India: Cement Industry Q3 Update

By Nimish Maheshwari

Ultratech Cement (UTCEM IN) saw a resurgence in demand starting in December. CFO Atul Daga characterized this as a “positive storm,” fueled by continuous demand increases that boosted cement prices.
Ambuja Cements (ACEM IN) is strategically expanding capacity, aiming for cost leadership, and leveraging group synergies to reach 140 million tons of cement capacity by FY28.
JK Cement Ltd (JKCE IN)’s proposed acquisition of 60% equity in Saifco Cements marks their penetration in Jammu-Kashmir(capacity- 0.42 Mn tons), which is expected to improve profitability, increase production capacity.

APAC Healthcare Weekly (Feb 23)- Ono Pharma, Shionogi, Samsung Biologics, Celltrion, CSPC, Mayne

By Tina Banerjee

Ono Pharmaceutical received FDA approval for Romvimza for the treatment of symptomatic tenosynovial giant cell tumor. Shionogi obtains domestic approval for digital therapeutic app, Endeavorride for ADHD.
Samsung Biologics received FDA and European Commission approval for Prolia biosimilar. Celltrion received European approval for Prolia and Eylea biosimilars. Cosette Pharmaceuticals is acquiring Mayne Pharma for A$7.40 per share.
CSPC Pharmaceutical granted an exclusive license to Radiance Biopharma to develop and commercialize antibody drug conjugates SYS6005 in selected geographies. Cipla received FDA approval for anti-cancer drug Nilotinib capsules.

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

Feb 23

Daily Brief Event-Driven: Nifty IT Index Rebalance: Oracle Financial Services Takes a Beating but Replaces L&T Tech and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Nifty IT Index Rebalance: Oracle Financial Services Takes a Beating but Replaces L&T Tech
Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40
Last Week in Event SPACE: Shinko Electric, REA Group, Macromill, CNBM, Prosus/Tencent
Domain Holdings (DHG AU): CoStar Raids the Register and Launches a NBIO at A$4.20
SG Fleet (SGF AU): Scheme Vote on 8 April
(Mostly) Asia-Pac M&A: Domain Holdings, Mayne Pharma, Tam Jai, PEC Ltd, Canvest, Fuji Soft, Proto

Nifty IT Index Rebalance: Oracle Financial Services Takes a Beating but Replaces L&T Tech

In line with our forecast, Oracle Financial Services (OFSS IN) replaces L&T Technology Services Limited (LTTS IN) in the Nifty IT Index (NSEIT INDEX) at the March rebalance.
L&T Technology Services (LTTS IN) is also being excluded from the F&O segment at the close on 27 March. Open interest is ~900k shares and there will be unwinding.
Passive trackers will need to trade between 0.5-0.6x ADV in the stocks. Impact increases to 1-2 days of delivery volume.

Mayne Pharma (MYX AU): Cosette Pharma’s Binding Offer at A$7.40

Mayne Pharma (MYX AU) entered a scheme implementation deed with Cosette Pharma at A$7.40 per share, a 36.8% premium to the undisturbed price.
The offer is conditional on shareholder and FIRB approval. The vote is low-risk as the two largest shareholders are supportive.
The offer is reasonable but not a knockout bid. At the last close and for an end-of-May payment, the gross/annualised spread was 2.8%/11.0%.

Last Week in Event SPACE: Shinko Electric, REA Group, Macromill, CNBM, Prosus/Tencent

By David Blennerhassett

Shinko Electric Industries (6967 JP). Done. Finally. Look at whether you could borrow shares just before the close of the tender and short tender and buy back post ex-date
REA Group Ltd (REA AU) rolls over as Costar Group (CSGP US) bets big on key rival Domain Domain Holdings Australia (DHG AU).
Macromill (3978 JP)‘s tender extended. Still not a done deal. Look to buy shares at terms with the goal of NOT tendering and owning the back end.

Domain Holdings (DHG AU): CoStar Raids the Register and Launches a NBIO at A$4.20

Domain Holdings Australia (DHG AU) announced a non-binding proposal from Costar Group (CSGP US) at A$4.20, a 34.6% premium to the undisturbed price of A$3.12 (20 February).
The bid follows CoStar’s acquisition of a 16.9% stake in Domain on 20 February. Nine Entertainment Co Holdings (NEC AU)‘s support is crucial for its success.
While attractive to precedent transaction multiples, the offer is light compared to peer multiples. Nine is evaluating the offer and will likely push for improved terms.

SG Fleet (SGF AU): Scheme Vote on 8 April

The Sg Fleet (SGF AU) IE considers Pacific Equity Partners’ A$3.50 offer fair and reasonable.
The key conditions are shareholder (Super Group (SPG SJ) and SG Fleet) and regulatory (FIRB, OIO and FCA) approval.
The offer is attractive compared to peer multiples and represents an all-time high. At the last close and for a 30 April payment, the gross/annualised spread is 1.5%/8.5%.

(Mostly) Asia-Pac M&A: Domain Holdings, Mayne Pharma, Tam Jai, PEC Ltd, Canvest, Fuji Soft, Proto

By David Blennerhassett

I tally 58 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma.
Four new deals discussed this week: Domain Holdings Australia (DHG AU), Mayne Pharma (MYX AU), Tam Jai International (2217 HK), and PEC Ltd. (PEC SP).
Key updates/news took place on: Canvest Environmental Protection Group (1381 HK),Fuji Soft Inc (9749 JP), and Proto Corp (4298 JP).

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

Feb 23

Daily Brief Equity Bottom-Up: TSMC (2330.TT; TSM.US): Will TSMC Work on Intel Foundry Services? There Are Three Paradoxes… and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

TSMC (2330.TT; TSM.US): Will TSMC Work on Intel Foundry Services? There Are Three Paradoxes…
Screen Holdings (7735 JP): 25%+ Upside Potential
[Bilibili Inc. (BILI US, BUY, TP US$24) Target Price Change]: C3Q24 Review: Game Slowdown from C2Q25
China Healthcare Weekly (Feb.23)-Ping An Good Doctor Shares Surge, China Healthcare Has Bottomed Out
Keppel DC REIT: An Interesting Play on AI Boom
2025 High Conviction Update: Aster DM Healthcare (ASTERDM IN) Q3 Result- Margin Expansion Continues
Pegasystems Inc.: Can its Focus On Cloud Migration Position It As A Leader In Driving Digital Evolution?
Albemarle Corporation: These Recent Lithium Market Shifts & Diversification Moves Could Reshape Its Future!
AppLovin Corporation: Will Its Mid-Market Direct-to-Consumer Focus Pay Off?
Wyndham Hotels & Resorts: A Tale Of Acceleration of Global Room Growth & RevPAR Expansion!

TSMC (2330.TT; TSM.US): Will TSMC Work on Intel Foundry Services? There Are Three Paradoxes…

By Patrick Liao

It is a paradox US President wanted to make the US the number one semiconductor manufacturing country but is very likely unable to change the existing environment in the US.
Another paradox is that a foreign company must obtain approval from the relevant US authorities before transferring control of the specific US company, which may not be feasible.
It raises the third paradox that a Taiwanese company would need to operate an existing US entity with their company’s expertise under different cost conditions.

Screen Holdings (7735 JP): 25%+ Upside Potential

By Scott Foster

FY Mar-25 guidance has been raised again after strong 3Q results. Growth should continue next fiscal year with rising demand from TSMC.
Sales to Chinese customers bounced back strongly last quarter, defying predictions. Capacity adds and process upgrades should continue to drive demand from China.
FPD, PCB and printing equipment are now profitable and should remain so. More efficient production and slower growth in depreciation should also support the operating margin.

[Bilibili Inc. (BILI US, BUY, TP US$24) Target Price Change]: C3Q24 Review: Game Slowdown from C2Q25

By Ying Pan

Bilibili (BILI) reported C4Q24 revenue and GAAP operating profit in line, 87% vs. our estimates and in line, 130% vs. consensus.
We see BILI’s content strategy to be working to drive higher and better traffic, benefiting the ads business.
We BUY and raised our TP to US$24 awaiting further details on game pipeline. The stock trading at 2025 PE of 31x.

China Healthcare Weekly (Feb.23)-Ping An Good Doctor Shares Surge, China Healthcare Has Bottomed Out

By Xinyao (Criss) Wang

In 2025, the NHSA will continue to deepen the VBP of drugs and centralized procurement of medical consumables, covering 700 drug varieties in total.
Valuation of the entire industry has been sluggish for three years. With the positive changes, we think it is the time to be optimistic on China healthcare in 2025.
Due to the craze for DeepSeek/AI, PAGD’s stock price surged.Although this is a great story, the extent to which DeepSeek can bring substantial benefits to PAGD remains to be verified.

Keppel DC REIT: An Interesting Play on AI Boom

By Jacob Cheng

We think Keppel DC REIT is an interesting play to look at for the AI revolution. The markets are supported by strong fundamentals
With a strong balance sheet and low leverage, the Company has ample headroom to do more M&As to drive DPU growth
The stock has corrected post Deepseek incident. We think valuation is attractive and presents an interesting opportunity.

2025 High Conviction Update: Aster DM Healthcare (ASTERDM IN) Q3 Result- Margin Expansion Continues

By Tina Banerjee

Aster DM Healthcare Ltd (ASTERDM IN) reported stellar performance in Q3FY25. Revenue achieved 11% YoY growth to INR10.5B, driven by increased patient volumes and growth in ARPOB.
Consistent growth across core businesses, combined with strategic cost optimization, operational efficiencies, and optimized service mix, have significantly strengthened margins, with Q3FY25 operating EBITDA margins standing at 19.3% (Q3FY24: 17.7%).
Our original investment thesis is intact. Margin levers are working well. Expansion plan is on track. Macro trend is favorable. Merger with Quality Care can be a game changer.

Pegasystems Inc.: Can its Focus On Cloud Migration Position It As A Leader In Driving Digital Evolution?

Pegasystems, a leader in software solutions for customer engagement and operational efficiency, demonstrated a robust performance in its fiscal year 2024.
The company reached its strategic milestone of becoming a “Rule of 40” company, reflecting balanced growth and profitability.
This achievement highlights the successful execution of its transition strategy from a traditional sales model to a subscription-based cloud business.

Albemarle Corporation: These Recent Lithium Market Shifts & Diversification Moves Could Reshape Its Future!

Albemarle Corporation presented its financial performance for the fourth quarter and full year of 2024, highlighting several critical aspects of the company’s operations, financial health, and market dynamics.
The fourth quarter saw Albemarle reporting net sales of $1.2 billion, although this marked a decline primarily attributed to lower lithium market pricing.
Nevertheless, the company achieved a positive milestone with an adjusted EBITDA of $251 million, showing enhancements in productivity, cost efficiency, and sales volumes across its business segments.

AppLovin Corporation: Will Its Mid-Market Direct-to-Consumer Focus Pay Off?

AppLovin’s financial performance for the fourth quarter of 2024 indicates a pivotal shift in its operational focus and growth strategy.
Over the quarter, total revenue increased by 44% year-over-year to $1.37 billion, fueled significantly by an expanded advertising business that brought in $999 million in revenue.
The company’s adjusted EBITDA surged by 78% to $848 million, maintaining a healthy margin of 62%.

Wyndham Hotels & Resorts: A Tale Of Acceleration of Global Room Growth & RevPAR Expansion!