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Smartkarma Daily Briefs

Mar 31
0

Daily Brief ECM: ECM Weekly (31st Mar 2025) – Xiaomi and more

By | Daily Briefs, ECM

In today’s briefing:

  • ECM Weekly (31st Mar 2025) – Xiaomi, NIO, FCT, Gigabyte, DN Sol, Nanshan Al, Zenergy, LXJ, Veeda

ECM Weekly (31st Mar 2025) – Xiaomi, NIO, FCT, Gigabyte, DN Sol, Nanshan Al, Zenergy, LXJ, Veeda

By Sumeet Singh

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Mar 31
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Markets Rattled by Tariff Threats and Soaring Inflation Fears and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Markets Rattled by Tariff Threats and Soaring Inflation Fears
  • Japan Morning Connection: US Defense Secretary Hegseth Reconfirming Commitment to Japan
  • DeekSeek May Not Be The “Game Changer” In China Healthcare – Time to Be Rational

Ohayo Japan | Markets Rattled by Tariff Threats and Soaring Inflation Fears

By Mark Chadwick

  • Stocks plunged Friday as trade policy uncertainty and inflation concerns rattled markets. The  S&P 500 fell 2% and the Nasdaq sank 2.7%.
  • Mitsui Sumitomo Insurance will spend ¥420bn to acquire a 15% stake in US insurer W.R. Berkley, gaining expertise in specialty insurance.
  • SoftBank Group plans to invest around ¥1,000bn in industrial parks across the US, featuring AI-equipped factories. The parks will utilise humanoid robots and AI in production processes

Japan Morning Connection: US Defense Secretary Hegseth Reconfirming Commitment to Japan

By Andrew Jackson

  • Tech and AI down again ahead of Trump’s tariff ‘liberation day’ on April 2.
  • Wolfspeed -51% puts Renesas’s $2bn advance payment for SiC under jeopardy.
  • Dead rat, anyone? Should be positive for Yoshinoya as Sukiya shutters most stores.

DeekSeek May Not Be The “Game Changer” In China Healthcare – Time to Be Rational

By Xinyao (Criss) Wang

  • Although DeepSeek’s continuous updates, iterations, and deep integration with more and more healthcare enterprises in China will bring positive market sentiment, we have seen certain limitations and even risks behind.
  • Currently, AI healthcare relies heavily on government subsidies or hardware sales in China, which lacks sustainable payment scenarios and profit model. The data security/privacy/compliance issue may not be completely solve.
  • For the companies that have integrated with DeepSeek, investors need to verify their afterwards financial performance and fundamentals. If it does not meet expectations, investors are recommended sell in time.

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Mar 31
0

Daily Brief Event-Driven: [Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3 and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • [Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share
  • Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road
  • Korea Short Selling: Off to the Races
  • Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?
  • Vesync (2148 HK): Scheme Vote on 23 April
  • Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road
  • Vesync (2148 HK): 23rd April Scheme Vote. Done Deal
  • The Reject Shop: Dollarama’s Done Deal
  • MFE Tunes In to ProSieben for a Pan-European Broadcast Power Play

[Japan Activism] – KKR and JIC Buy Out Topcon (7732 JP) At ¥3,300/Share

By Travis Lundy

  • The difference between an LBO (Leveraged Buy Out) and an MBO (Management Buy Out) is that an MBO is usually just an LBO where the buyers don’t replace the CEO.
  • After 4+mos  of speculation/noise since a Bloomberg article said Topcon was weighing takeover bids, we have a deal. KKR and JIC will buy out Topcon in an “MBO” at ¥3,300/share.
  • Unusually, the lower limit is 50.1%. This is an OK exit for the “Bad Cops” but not a great one. It should be higher. Start delayed for 4 months.

Weekly Deals Digest (30 Mar) – Seven & I, Topcon, ENN Energy, Jinke Smart, Sinarmas Land, Gold Road

By Arun George

Korea Short Selling: Off to the Races

By Brian Freitas

  • Short selling in Korea resumes in a couple of hours. Expect heightened volatility for a few days before things settle down.
  • Foreign investors have increased their holdings over the last five weeks and there could be further buying in select stocks on stock price drops.
  • The KOSPI 200 INDEX has outperformed the KOSDAQ 150 Index, and the forecast index deletes have underperformed the indices indicating that there will be positioning for the short-sell resumption.

Jinke Smart Services (9666 HK): Boyu to Launch a Privatisation Offer?

By Arun George

  • Jinke Smart Services (9666 HK) is in a trading halt “pending the release of an announcement pursuant to the Hong Kong Code on Takeovers and Mergers which constitutes inside information.”
  • It is likely that Boyu, the largest shareholder, is seeking to privatise Jinke. The privatisation of PRC-incorporated entities is usually done through a merger by absorption.
  • I use several methods to triangulate the likely offer price, which suggests a price range of HK$10.00-16.86, with an average of HK$12.47, a 45% premium to the last close.

Vesync (2148 HK): Scheme Vote on 23 April

By Arun George

  • Vesync (2148 HK)’s IFA opines that the Yang family’s HK$5.60 cash offer is fair and reasonable. The IFA does not recommend the scrip option. The vote is on 23 April. 
  • Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). The offer price is final.
  • The vote is low-risk due to a lack of opposition. At the last close and for the 15 May payment, the gross/annualised spread is 2.9%/28.7%.

Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road

By Arun George

Vesync (2148 HK): 23rd April Scheme Vote. Done Deal

By David Blennerhassett

  • On the 27th December, Vesync (2148 HK), a manufacturer of small home appliances, announced an Offer, by way of a Scheme, from the Yang family controlling ~69.04% of Vesync.
  • The Cancellation Price of $5.60/share – declared final – was a 33.3% premium to undisturbed, and above the 2020 IPO price of HK$5.52/share.
  • The Scheme Doc is now out, with a Court Meeting on the 23rd April, and expected payment on or before the 15th May. The IFA (Somerley) says “fair & reasonable”.

The Reject Shop: Dollarama’s Done Deal

By David Blennerhassett

  • Reject Shop (TRS AU), a discount variety store, has entered into a Scheme Implementation Deed with Canadian outfit Dollarama (DOL CN).
  • Dollarama is offering A$6.68/share, a 112% premium to last close. The Offer does NOT require FIRB signing off. The Offer has the unanimous backing of both boards.
  • The Offer also has the backing of TRS’ largest shareholder, Kin Group (20.8%).  Implementation is expected July 2025. This is done.

MFE Tunes In to ProSieben for a Pan-European Broadcast Power Play

By Jesus Rodriguez Aguilar

  • MFE’s €5.70/share offer reflects strategic aims, not a traditional control premium, and values ProSieben near peer multiples amid industry disruption and weak organic growth prospects.
  • The deal structure and German takeover law enable MFE to carry out a creeping takeover strategy, allowing it to gradually increase its stake post-settlement without launching a new public offer.
  • Estimated net synergies of €1.00–1.39 per share, boosting the deal’s potential strategic return.Market skepticism is visible in the -10.2% gross spread.

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Mar 31
0

Daily Brief Credit: EM Spreads – Weekly News & Views and more

By | Credit, Daily Briefs

In today’s briefing:

  • EM Spreads – Weekly News & Views

EM Spreads – Weekly News & Views

By Leandro Gubler

  • Argentina’s $20 Billion IMF Deal Could Calm Markets Ahead of Midterms
  • Pemex Monthly Report: February/Minerva Positioned to Benefit from China’s Shift in Protein Imports
  • Cemex: Stable Outlook Affirmed Despite Hybrid Reclassification Dragging Metrics/ YPF Launches “Vaca Muerta Institute” to Support Shale Growth

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Mar 31
0

Daily Brief Equity Bottom-Up: Taiwan Dual-Listings Monitor: TSMC Spread Close to Long Level; UMC & ASE Deep Discounts and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Taiwan Dual-Listings Monitor: TSMC Spread Close to Long Level; UMC & ASE Deep Discounts
  • CICC (3908 HK): Underestimated by the Market
  • Global Digital Niaga (BELI IJ) – Firmer Underfoot for the Dark Horse
  • Edelweiss: Growing Well and Unlocking Value
  • Nuvama: Yet Another Strong Quarter
  • Nesco: Strong Q3FY25
  • Delta Taiwan Vs. Thailand Monitor: Delta Thailand Crash Closes Gap, But Still Relatively Expensive
  • HCG: Strong Q3FY25 and Promoter Change Update
  • RPPL: Weak Q3FY25, However Medium-Term Outlook Is Strong
  • Sariguna Primatirta (CLEO IJ) – Pure Water on the Move

Taiwan Dual-Listings Monitor: TSMC Spread Close to Long Level; UMC & ASE Deep Discounts

By Vincent Fernando, CFA

  • TSMC: +14.9% Premium; Spread Has Fallen Close to Long Levels
  • UMC: -2.6% Discount; Good Level to Go Long the Spread
  • ASE: -3.2% Discount; Spread at Extreme Low, Good Level to Go Long

CICC (3908 HK): Underestimated by the Market

By Osbert Tang, CFA

  • China International Capital Corporation (3908 HK)‘s 2H24 net profit surged 33.6% in 2H24, reversing the downtrend in 1H24. It has benefited from lower staff and other operating costs. 
  • Better 1Q25 market turnover and activities, more IPOs and placements and improved cost dynamics imply that the consensus forecasts are too conservative.
  • Its 0.55x P/B cannot adequately reflect better profitability. Despite the denial, CICC’s potential merger with China Galaxy Securities (H) (6881 HK) cannot be completely ruled out.

Global Digital Niaga (BELI IJ) – Firmer Underfoot for the Dark Horse

By Angus Mackintosh

  • Global Digital Niaga (BELI IJ) booked a strong finish to 2024, driven by its 3P retail and institutional business, although 1P retail and physical stores also performed well. 
  • The company continues to see improving take rates in FY2024, whilst its average order value increased through a more favourable product mix, with gross margins and cash flows improving significantly.
  • Global Digital Niaga continued to expand its physical stores for monobrand and multibrand stores, adding Huawei as a brand. Valuations look reasonable given growth prospects and progress towards profitability.

Edelweiss: Growing Well and Unlocking Value

By Ankit Agrawal, CFA

  • Edelweiss reported a decent Q3FY25 with ex-Insurance PAT of INR 185cr, a growth of 16% YoY excluding NBFC PAT. Growth was led by Asset Management and Insurance businesses.
  • Within the Credit business, the Home Finance business which operates under the brand Nido is scaling up well. It disbursed INR 400cr+ worth of retail loans during Q3FY25.
  • Edelweiss is focusing on unlocking value and has already filed DRHP for its Alternative Asset Management business. Once approved, it will proceed for an IPO with OFS of INR 1500cr.

Nuvama: Yet Another Strong Quarter

By Ankit Agrawal, CFA

  • Nuvama continues to post strong earnings. Its Q3FY25 revenues grew 30% YoY to INR 723cr. Q3FY25 PAT grew 43% YoY to INR 252cr. 
  • Q3FY25 performance was surprisingly led by the Asset Services segment where revenue grew 77% YoY with addition of new clients and positive asset flow, leading to market share gain.
  • Together the Wealth and Asset Management segments performed steady with revenue growth of 18% YoY. Net flows in 9MFY25 in ARR and MPIS assets exceeded that for whole of FY24.

Nesco: Strong Q3FY25

By Ankit Agrawal, CFA

  • Nesco reported a strong Q3FY25 with 16% YoY revenue growth and 17% YoY PAT growth. The exhibitions (BEC) segment grew 13% YoY and the IT Parks segment grew 16% YoY.
  • Nesco Foods segment reported 29% YoY growth in revenues led by improved BEC footfalls and scaling up of the Food Court and Restaurants business.
  • Recently, Nesco also received IOD from the municipal corporation of Mumbai, thus paving way for receiving future approvals for Tower 2. Tower 2 construction is expected to commence in Q3FY26. 

Delta Taiwan Vs. Thailand Monitor: Delta Thailand Crash Closes Gap, But Still Relatively Expensive

By Vincent Fernando, CFA

  • Delta Thailand Has Dramatically Underperformed Delta Taiwan — Delta Thailand Now Finally Trading at a Less Extreme Level vs. Delta Taiwan
  • Latest Relative Growth Profiles — Delta Taiwan Has Higher Growth Profile in 2025E
  • Even After the Major Pricing Reversion Since Mid-February, Delta Thailand Remains Overvalued Relative to Delta Taiwan

HCG: Strong Q3FY25 and Promoter Change Update

By Ankit Agrawal, CFA

  • HealthCare Global Enterprises (“HCG”) reported a strong Q3FY25 despite Q3 being a seasonally weak quarter. Revenue growth was strong across both the established centers and the emerging centers.
  • Revenue from established centers grew 20% YoY while that from emerging centers grew 25% YoY in Q3FY25. Within emerging centers, Kolkata led the growth with 40% YoY rise in revenues.
  • HCG saw promoter change in Feb 2025. KKR announced acquisition of 54% stake from CVC who owns around 60%+. Dr. BS Ajaikumar, the founder promoter, will continue to own 10%+.

RPPL: Weak Q3FY25, However Medium-Term Outlook Is Strong

By Ankit Agrawal, CFA

  • Earlier this month, RPPL announced a new factory to expand its thermoforming and extrusion capacity by 1250 MTPA and 1600 MTPA, respectively. This will come on-stream within a month.
  • RPPL reported a weak Q3FY25 due to adverse fluctuation in raw material prices as well as seasonal impact. Q3 tends to be a weak quarter seasonally.
  • RPPL’s capacity expansion has been leading to upfront expenses. The new Olive Ecopak JV also reported losses, share of which was INR -2.6cr in Q3FY25.

Sariguna Primatirta (CLEO IJ) – Pure Water on the Move

By Angus Mackintosh

  • Sariguna Primatirta (CLEO IJ) booked yet another quarter of impressive sequential growth in 4Q2024, hitting another record quarterly revenue, with margins improving at the same time, boosting profits.
  • The company opened three factories in 2024 and plans three more in FY2025, with the total to 35 across Indonesia and further extending its scale and reach, and driving growth.
  • The main driver for growth will come through general trade, which makes up 70% of distribution, with a factory opening push outside Java. Valuations are attractive versus growth.

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Mar 31
0

Daily Brief Macro: EM Stock Rotation: China & HK Stocks Take Centre Stage and more

By | Daily Briefs, Macro

In today’s briefing:

  • EM Stock Rotation: China & HK Stocks Take Centre Stage
  • The Message From Gold’s Generational Breakout
  • Globalisation Enters More Nuanced Phase, Shaped By Sovereign Interests
  • Uncharted Investor Waters: From Soft to Hard Power

EM Stock Rotation: China & HK Stocks Take Centre Stage

By Steven Holden

  • China and HK stocks dominate the list of rising exposures among EM funds
  • Trip.com, CATL, and Xiaomi have reached new highs following sustained rotation, while Meituan and JD.com are rebounding after periods of consolidation
  • Aubrey and Putnam initiate stakes in Xiaomi, GIB open Trip.com exposure, and the Alger EM fund enters Meituan.

The Message From Gold’s Generational Breakout

By Cam Hui

  • Gold has staged a relative breakout against the S&P 500 and 60/40 portfolio is a signal of financial stress ahead and an era of hard asset outperformance against paper assets.
  • While we are long-term bulls on gold, it is highly extended and investors seeking to deploy cash into this investment theme should consider the energy sector as an alternative.
  • Our base-case scenario calls for a tactical recovery in stock prices into April. What happens next will depend on the evolution of economic data.

Globalisation Enters More Nuanced Phase, Shaped By Sovereign Interests

By Said Desaque

  • The trade infrastructure established during the globalisation period will not be entirely dismantled during the second Trump administration.  Globalisation has entered a new phase, shaped by national security considerations.
  • Control of natural and strategic resources will feature prominently in the new environment, bringing inflationary implications that will impact bond markets in the absence of fiscal discipline.
  • Complex production processes in the strategically important semiconductor sector make changes in fabrication location expensive and disruptive. The new trade environment makes displacing market leaders more difficult, particularly in EVs.

Uncharted Investor Waters: From Soft to Hard Power

By Cam Hui

  • Trump’s ultimate game plan is to reshore manufacturing by reversing the effects of globalization by harvesting the goodwill from U.S. alliances since the end of World War II.
  • The long-term costs of these policies are a stall in productivity, and an increase in the cost of capital to U.S. companies through the removal of the USD’s “exorbitant privilege”.
  • The market is undergoing a regime shift of unknown proportions. The phrase “past returns are no guarantee of future performance” will especially be true today.

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Mar 31
0

Daily Brief Utilities: ENN Energy and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road

Merger Arb Mondays (31 Mar) – ENN Energy, ESR, Vesync, Seven & I, Topcon, Sinarmas Land, Gold Road

By Arun George

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Mar 31
0

Daily Brief Industrials: BayCurrent Consulting , Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows
  • Kospi Index Options Weekly (Mar 24 – 28): Volatility Dynamics and Tariff Uncertainty Support Hedging

Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows

By Travis Lundy

  • The Nikkei 225 March 2025 rebalance is today. The ADD is  big, with more to buy later. The SELL is a really big sell in terms of float. 
  • The Sell, Mitsubishi Logistics (9301 JP), means Max Real World Float doubles. It’s like a huge offering, with warning.
  • There’s a big cap trade on Fast Retailing (9983 JP) where timing is not on its side, leaving US$2bn to buy in funding. 25 names at 0.4x ADV to buy.

Kospi Index Options Weekly (Mar 24 – 28): Volatility Dynamics and Tariff Uncertainty Support Hedging

By John Ley

  • A weekly recap of volatility and price metrics, including option volumes, volatility trends, the spot/implied relationship, and open interest statistics.
  • Implied vol held firm despite price swings, with the spread between 1M implied and historic vol continuing to widen.
  • We suggest a tactical hedge given implied vol dynamics and uncertain political environment.

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Mar 31
0

Daily Brief Energy/Materials: Rajshree Polypack, Petroleos Mexicanos, Tata Steel Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • RPPL: Weak Q3FY25, However Medium-Term Outlook Is Strong
  • EM Spreads – Weekly News & Views
  • Tata Steel (TATA IN): Scaling Up Domestic Operations, Easing EU Drag

RPPL: Weak Q3FY25, However Medium-Term Outlook Is Strong

By Ankit Agrawal, CFA

  • Earlier this month, RPPL announced a new factory to expand its thermoforming and extrusion capacity by 1250 MTPA and 1600 MTPA, respectively. This will come on-stream within a month.
  • RPPL reported a weak Q3FY25 due to adverse fluctuation in raw material prices as well as seasonal impact. Q3 tends to be a weak quarter seasonally.
  • RPPL’s capacity expansion has been leading to upfront expenses. The new Olive Ecopak JV also reported losses, share of which was INR -2.6cr in Q3FY25.

EM Spreads – Weekly News & Views

By Leandro Gubler

  • Argentina’s $20 Billion IMF Deal Could Calm Markets Ahead of Midterms
  • Pemex Monthly Report: February/Minerva Positioned to Benefit from China’s Shift in Protein Imports
  • Cemex: Stable Outlook Affirmed Despite Hybrid Reclassification Dragging Metrics/ YPF Launches “Vaca Muerta Institute” to Support Shale Growth

Tata Steel (TATA IN): Scaling Up Domestic Operations, Easing EU Drag

By Rahul Jain

  • Tata Steel’s India business is poised for multi-year volume expansion, backed by ample land availability across three key locations. 
  • Losses from UK and Netherland operations set to ease. UK operations are under transitioning phase from BF to EAF. Discussions are on with the Netherlands govt. 
  • Valuations: Tata Steel trades at 6.5x EV/EBITDA based on estimated FY26 EBITDA. Stock has outperformed local indices and could likely continue. 

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Mar 31
0

Daily Brief Industrials: BayCurrent Consulting , Korea Stock Exchange KOSPI 200 and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows
  • Kospi Index Options Weekly (Mar 24 – 28): Volatility Dynamics and Tariff Uncertainty Support Hedging

Nikkei 225 Mar25 Rebal – A Big Buy With Buying Shadow, A Bigger Sell, And $2bn of Funding Flows

By Travis Lundy

  • The Nikkei 225 March 2025 rebalance is today. The ADD is  big, with more to buy later. The SELL is a really big sell in terms of float. 
  • The Sell, Mitsubishi Logistics (9301 JP), means Max Real World Float doubles. It’s like a huge offering, with warning.
  • There’s a big cap trade on Fast Retailing (9983 JP) where timing is not on its side, leaving US$2bn to buy in funding. 25 names at 0.4x ADV to buy.

Kospi Index Options Weekly (Mar 24 – 28): Volatility Dynamics and Tariff Uncertainty Support Hedging

By John Ley

  • A weekly recap of volatility and price metrics, including option volumes, volatility trends, the spot/implied relationship, and open interest statistics.
  • Implied vol held firm despite price swings, with the spread between 1M implied and historic vol continuing to widen.
  • We suggest a tactical hedge given implied vol dynamics and uncertain political environment.

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