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Smartkarma Daily Briefs

Sep 16
0

Daily Brief Energy/Materials: Sayona Mining, Adaro Energy and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • MV Global Rare Earth/​​​​​Strategic Metals Index Rebalance: One Deletion & Other Changes
  • Morning Views Asia: Adaro Energy, Vedanta Resources, Yankuang Energy Group

MV Global Rare Earth/​​​​​Strategic Metals Index Rebalance: One Deletion & Other Changes

By Brian Freitas

Morning Views Asia: Adaro Energy, Vedanta Resources, Yankuang Energy Group

By Leonard Law, CFA

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 16
0

Daily Brief Health Care: China Traditional Chinese Medicine, Pro Medicus Ltd and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Merger Arb Mondays (16 Sep) – China TCM, Canvest, GA Pack, Raysum, Seven & I, Fuji Soft, Dyna-Mac
  • MV Australia Equal Weight Index Rebalance: One Add, Two Deletes, Capping to Drive Flow

Merger Arb Mondays (16 Sep) – China TCM, Canvest, GA Pack, Raysum, Seven & I, Fuji Soft, Dyna-Mac

By Arun George

MV Australia Equal Weight Index Rebalance: One Add, Two Deletes, Capping to Drive Flow

By Brian Freitas

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Sep 16
0

Daily Brief Consumer: Seven & I Holdings, Midea Group Co Ltd A, PDD Holdings, Taste Gourmet and more

By | Consumer, Daily Briefs

In today’s briefing:

  • The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard
  • Midea Group: Offer Upsized at Top Tier. Updated Valuation Analysis
  • Pre-IPO Midea Group H Share – Here Are the Risks Behind
  • ECM Weekly (16th Sep 2024) – Midea, Bajaj Housing, 99 Speed, P N Gadgil, Hozon, Trial, NextDC, Via
  • Weekly Consumer Tales: Cross Border Comm Crisis-Midea Upsized-LG Elecs’ Upside-Platform Workers Law
  • Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2024

The New FEFTA List (With 7&I (3382) As “Core”) Is Not a Big Hurdle for Couche-Tard

By Travis Lundy

  • On Friday 13 September, the Ministry of Finance of Japan released revisions to the list (Japanese, English) of company classifications under the Foreign Exchange and Foreign Trade Act (FEFTA)
  • It appears 72 names were newly upgraded to “Core” (“3”), 21 newly listed companies (since the last list in Nov 2021) were labeled “3”, and six lost their Type3 designation. 
  • Seven & I Holdings (3382 JP) saw breathless news articles Friday suggesting a foreign takeover became more difficult. Not really. 

Midea Group: Offer Upsized at Top Tier. Updated Valuation Analysis

By Devi Subhakesan

  • Midea Group(000333 CH)  has increased the shares on offer in Hong Kong by 15% to 565.9 million shares, priced at the top end of the range at HKD54.8 per share.
  • With strong investor interest, the company may exercise an over allotment option that could take the deal size to USD 4.6 billion.
  • Midea’s Hong Kong pricing reflects a nearly 21% discount to its A-share closing price, compared to the average 33% discount for dual-listed companies between Hong Kong and Shanghai or Shenzhen.

Pre-IPO Midea Group H Share – Here Are the Risks Behind

By Xinyao (Criss) Wang

  • For the reasons why Midea is eager to IPO in HK, investors shouldn’t just look at the surface of its glory, but delve into the “real motives” behind capital operations.
  • The policy of subsidizing the trade-in of home appliances belongs to “early overdraft of demand” and is unsustainable. Valuation logic for the performance increment brought by such policy is P/B.
  • If Midea cannot achieve the expected breakthroughs in To B business or internationalization in 2025-2026 to hedge against the weak domestic business, Midea’s performance/valuation in following years would inevitable decline.

ECM Weekly (16th Sep 2024) – Midea, Bajaj Housing, 99 Speed, P N Gadgil, Hozon, Trial, NextDC, Via

By Sumeet Singh

Weekly Consumer Tales: Cross Border Comm Crisis-Midea Upsized-LG Elecs’ Upside-Platform Workers Law

By Devi Subhakesan

  • Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
  • Temu, (owned by PDD US), and Shein might need to rethink their US strategies if a new rule stops overseas shipments of tariffed products from bypassing US customs duty.
  • Singapore passed a groundbreaking law last week to protect gig workers. Other countries may follow suit and this could adversely impact margins. Take note: Meituan (3690 HK) , Zomato (ZOMATO IN)

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2024

By Sameer Taneja

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Sep 15
0

Daily Brief ESG: Share Trading Unit System and more

By | Daily Briefs, ESG

In today’s briefing:

  • Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

By Aki Matsumoto

  • Rather than lowering the minimum investment amount, attention is focused on whether the essence of the issue is whether the long-standing unit share system can be abolished.
  • This system, which doesn’t grant voting rights to shareholders who don’t hold more than certain number shares, has led companies to turn inward-looking by making AGMs skeleton and accelerating cross-shareholdings.
  • With corporate racketeer, who triggered the introduction of this system, gone and the reduction of cross-shareholdings beginning, shareholder units that can exercise voting rights for open AGMs should be reexamined.

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Sep 15
0

Daily Brief Thematic (Sector/Industry): Japan Weekly | Domestic Stocks Miss Global Rally and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Japan Weekly | Domestic Stocks Miss Global Rally
  • Chinese Banks’ Cash Flow Plummets After Crackdown on High Deposit Rates

Japan Weekly | Domestic Stocks Miss Global Rally

By Mark Chadwick

  • Major central banks are shifting towards rate cuts, with the European Central Bank this week lowering rates to 3.5%
  • Japanese stocks ended mixed: Nikkei (+0.5%), Topix (-1%), while the yen strengthened ~1 yen to 140.8/$.
  • Ebara, IHI, and Softbank were among the major gainers this week

Chinese Banks’ Cash Flow Plummets After Crackdown on High Deposit Rates

By Caixin Global

  • Chinese banks are under strain as their deposits shrink in the wake of a regulatory crackdown on offering deposit rates higher than regulatory caps.
  • In the first half of the year, many Chinese mainland-listed commercial banks saw a decline in their net cash flow generated from operating activities — a key indicator of lenders’ liquidity — Caixin calculations based on their interim reports show.
  • Among China’s “Big Six” state-owned banks by assets, only Postal Savings Bank of China Co.

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Sep 15
0

Daily Brief ECM: SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War”  Vs DTC Platforms and more

By | Daily Briefs, ECM

In today’s briefing:

  • SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War”  Vs DTC Platforms
  • K Bank IPO Preview
  • Weekly Deals Digest (15 Sep) – Midea, Seven & I, Raysum, Haitong/GJTA, Dyna-Mac
  • K-Bank’s IPO Details Out: Aggressive Pricing, but as a Crypto Play, It Might Surprise

SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War”  Vs DTC Platforms

By Daniel Hellberg

  • Biden Administration rule would make “de minimis” items subject to tariffs
  • Besides adding to landed cost of those items, reporting requirements would rise
  • In addition, US/EU governments launch probes of SHEIN/Temu product safety

K Bank IPO Preview

By Douglas Kim

  • K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago. 
  • Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank. 
  • Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.

Weekly Deals Digest (15 Sep) – Midea, Seven & I, Raysum, Haitong/GJTA, Dyna-Mac

By Arun George

K-Bank’s IPO Details Out: Aggressive Pricing, but as a Crypto Play, It Might Surprise

By Sanghyun Park

  • Compared to its overseas peers, K-Bank’s high valuation still stands out due to a significant gap in net income size relative to market cap.
  • The offering structure, with 50% secondary sales and weak lock-up commitments, means post-IPO float could spike to around 40%, making a stock price bump unlikely.
  • K-Bank’s crypto-focused model might attract investors valuing it as a crypto play, potentially influencing IPO pricing and post-listing stock performance.

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Sep 15
0

Daily Brief Equity Bottom-Up: Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market
  • China Banks; Challenged on Credit Quality Trends, with Selective Opportunities to Be Found
  • Palo Alto Networks’ Bold Shift: Can AI-Driven Security Keep Up with Cyber Threats?
  • Insulet Corporation: Will The Enhanced Focus on MDI Market Segments Pay Off? – Major Drivers
  • GameStop’s Bumpy Road to Recovery: Is The Meme Stock Worth The Risk?
  • European Airlines – Fare Data Suggests Risk to EasyJet/Wizz Peak Summer but Winter More Encouraging
  • Ambarella’s AI Surge: Can IoT and Automotive Growth Drive Future Success?
  • Teradyne Inc.: Expansion into High-Payload Robotics and Channel Growth Is A Critical Growth Lever! – Major Drivers
  • The Descartes Systems Group: Advantage Through Strategic Acquisitions – Focus on BoxTop Technologies! – Major Drivers
  • Toll Brothers: Expanding Geographic Footprint & Emphasis on Spec Homes Driving Growth! – Major Drivers

Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market

By Mohshin Aziz

  • Tuhu Car (9690 HK) is poised to capture the lion share of China’s automotive aftersales service industry that is forecasted to grow at 7.3% CAGR from 2023:30. 
  • Tuhu is on an inflection of high earnings growth (+30% CAGR) as it has reached scalability, cost efficiency, and its younger shops are maturing profitably.    
  • Our fair value of HKD24 implies 25x FY25 PE – average for US peers. A bargain with 3-year CAGR of 30%, net cash, and churns high free cash flow.

China Banks; Challenged on Credit Quality Trends, with Selective Opportunities to Be Found

By Victor Galliano

  • In this China banks screen, we focus on the credit quality headwinds going forward and which are the better positioned banks to confront the challenge
  • China bank shares’ PBV ratios have eroded over time, due to low growth and credit quality concerns; yet through our analysis of these bank, we see selective contrarian positive opportunities
  • CCB is a core GEM bank buy for its deeply discounted valuations and strong balance sheet; Ping An Bank is the deep value contrarian pick; Minsheng is our fundamental sell

Palo Alto Networks’ Bold Shift: Can AI-Driven Security Keep Up with Cyber Threats?

By Baptista Research

  • Palo Alto Networks’ fiscal fourth quarter 2024 earnings announcement underscores both strides and challenges in the cybersecurity landscape, reflecting a dynamic sector intensively engaged with technological advancements and emerging threats.
  • Chairman and CEO Nikesh Arora detailed the company’s response to significant cybersecurity threats, including ransomware and public data extortion, emphasizing a heightened focus on AI and platformization to simplify client security architectures.
  • Financially, Palo Alto Networks reported exceeding its quarterly revenue and EPS guidance.

Insulet Corporation: Will The Enhanced Focus on MDI Market Segments Pay Off? – Major Drivers

By Baptista Research

  • Insulet Corporation has demonstrated robust financial performance in the second quarter of 2024, aligning with the company’s primary goal of enhancing diabetes management through its Omnipod products.
  • Jim Hollingshead, the CEO, highlighted the significant demand for Omnipod 5, which has been central to the company’s growth both domestically and internationally.
  • The company’s innovation trajectory remains strong with numerous product launches, including the full market release of Omnipod 5 integrated with Dexcom’s G7.

GameStop’s Bumpy Road to Recovery: Is The Meme Stock Worth The Risk?

By Baptista Research

  • GameStop, a major player in the video game retail industry, revealed a complex scenario in its latest earnings presentation for the fourth quarter and full year 2022.
  • The company’s leadership highlighted substantial shifts in strategies aimed at improving profitability and creating sustainable long-term growth.
  • From a financial perspective, GameStop reported a net income of $48.2 million for the quarter, compared to a considerable net loss of $147.5 million in the same quarter of the previous year.

European Airlines – Fare Data Suggests Risk to EasyJet/Wizz Peak Summer but Winter More Encouraging

By Neil Glynn

  • Latest RDC fare data deep dive suggests scope for negative surprises at easyJet and Wizz Air – we publish a detailed analysis across booking windows.
  • ​easyJet fare data suggest potential for late-market disappointment, albeit winter prospects more encouraging.
  • Wizz Air fare data cast doubt on hopes for fare growth.

Ambarella’s AI Surge: Can IoT and Automotive Growth Drive Future Success?

By Baptista Research

  • Ambarella’s Q2 Fiscal Year 2025 earnings revealed a mixed yet promising scenario as the company navigates through a challenging economic environment while seizing growing demands for AI-powered solutions.
  • Dr. Fermi Wang, President and CEO, alongside CFO John Young, presented a detailed account of the company’s performance and future outlook which provides a comprehensive understanding of its position and strategies moving forward.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Teradyne Inc.: Expansion into High-Payload Robotics and Channel Growth Is A Critical Growth Lever! – Major Drivers

By Baptista Research

  • Teradyne, a leading provider of automated test equipment, exhibited mixed financial results in the second quarter of 2024, grappling with various segment-specific dynamics and macroeconomic factors.
  • The company reported a robust performance in its System on Chip (SOC) and Memory segments, primarily boosted by elevated demand from cloud AI applications.
  • Additionally, Teradyne noted solid deliveries in the Compute sector, attributed to the dense network requirements of AI data centers.

The Descartes Systems Group: Advantage Through Strategic Acquisitions – Focus on BoxTop Technologies! – Major Drivers

By Baptista Research

  • The Descartes Systems Group has reported its quarterly financial results, illustrating a strong performance across several key financial metrics.
  • This performance is anchored by a 14% increase in total revenues yearover-year, with a significant component of this growth being organic, estimated at about 9%.
  • Furthermore, the company enjoyed a 23% increase in net income compared to the previous year, and adjusted EBITDA climbed by 17%, surpassing the company’s target growth range of 10%-15% annually.

Toll Brothers: Expanding Geographic Footprint & Emphasis on Spec Homes Driving Growth! – Major Drivers

By Baptista Research

  • Toll Brothers, a prominent homebuilder, showcased an optimistic third quarter for the 2024 fiscal year, reflecting growth and stability despite varied market conditions.
  • In this quarter, the company reported record home sale revenues of $2.72 billion, demonstrating a strong performance with the delivery of 2,814 homes at an average price of $968,000.
  • The adjusted gross margin significantly outperformed projections, reaching 28.8%, aided by operational efficiencies and a favorable mix of home sales.

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Sep 15
0

Daily Brief Event-Driven: MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
  • MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
  • Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
  • (Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente
  • Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec
  • HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!
  • China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass
  • A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance
  • Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn

By Brian Freitas

MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn

By Brian Freitas

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal

By Arun George

  • Raysum Co Ltd (8890 JP) has recommended Hulic Co Ltd (3003 JP)’s tender offer at JPY5,913, a 94.2% premium to the last close price of JPY3,045.
  • The tender offer runs from 17 September to 30 October (30 business days), with payment commencing from 7 November. The offer represents an all-time high. 
  • This is a done deal, as the irrevocable (Oasis) represents a 63.88% ownership ratio. With a knockout offer, the required 7.7% minority acceptance rate is easily achieved.  

(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente

By David Blennerhassett

Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec

By David Blennerhassett

HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!

By Travis Lundy

  • SOUTHBOUND was a net buyer this week. Over five days, it was +HK$12.5bn on high gross volume, but all of that net buying was on Alibaba Group Holding (9988 HK). 
  • Alibaba Group Holding (9988 HK) became SOUTHBOUND-eligible on Tuesday, and mainland buyers bought US$2.1bn of BABA shares, more than total SOUTHBOUND net buys.
  • Gross volumes were highest in months. This was a big week. Even bigger than just BABA. After BABA the story was banks buying. 

China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

By Xinyao (Criss) Wang

  • Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.
  • BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.
  • The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.

A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance

By Travis Lundy

  • Repeat of last week: Miserable economic data continues. Trade geopol is mixed. Territorial geopol getting more serious. But SOUTHBOUND gross volumes way up.
  • AH Premia rose slightly as HK-listed shares outperformed mainland share indices. The HK/mainland spread is consistently better than H/A performance. It’s not clear why. This week no exception.
  • This week will see limited H/A action because of the long Mid-Autumn Festival. Hopes are high for non-durables purchases this month. Maybe even homes. But I am skeptical…

Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

By Janaghan Jeyakumar, CFA

  • The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
  • In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in December 2024.
  • At present, we see two ADDs/DELs based on the latest available data but the rankings can change until 30th September 2024.

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Sep 15
0

Daily Brief Macro: Central Bank of Russia Hiked Key Rate to 19% as Inflation Continues to Soar and more

By | Daily Briefs, Macro

In today’s briefing:

  • Central Bank of Russia Hiked Key Rate to 19% as Inflation Continues to Soar
  • OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports
  • FOMC: 25bps Or 50bps?

Central Bank of Russia Hiked Key Rate to 19% as Inflation Continues to Soar

By Alex Ng

  • Central Bank of Russia (CBR) announced that it increased its policy rate by 100 bps to 19% to tame the stubborn price pressures stemming from high military spending.
  • CBR said in a press release that the current inflationary pressures remain high, and annual inflation is likely to exceed the July forecast range of 6.5–7.0% by end-2024.
  • The regulator emphasized that growth in domestic demand is still significantly outstripping the capabilities to expand the supply of goods and services.

OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports

By Suhas Reddy

  • OPEC cuts demand growth estimates for the second straight month, lowering its 2024 and 2025 forecasts by 3.8% and 2.2%, respectively, citing demand weakness in China.
  • Total production of OPEC members obliged to implement supply cuts averaged 21.48m bpd in August, exceeding the target by 1.6%.
  • EIA lowered its 2024 and 2025 oil price forecasts due to slower demand growth. However, it expects a quick recovery in prices driven by declining inventories.

FOMC: 25bps Or 50bps?

By Alex Ng

  • Looking at press reports that the September FOMC call is a close one between 25bps and 50bps does not persuade us to change our call from 25bps.
  • The slightly disappointing August CPI does not exclude a 50bps move, and that whichever option the Fed does choose for September, markets should not assume a string similar moves.
  • Economists are still looking for a more moderate 0.2% increase in August core PCE prices, with a number slightly softer before rounding possible.

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Sep 15
0

Daily Brief Australia: Evolution Mining and more

By | Australia, Daily Briefs

In today’s briefing:

  • MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn

By Brian Freitas

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