Smartkarma Daily Briefs

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: LG CNS (LGCNSZ KS) seeks to raise up to US$837 million through a primary/secondary offering.
Event-Driven developments: Shanghai Henlius Biotech (2696 HK), Greatview Aseptic Packaging (468 HK), Jamco Corp (7408 JP), Macromill, Inc (3978 JP), Insignia Financial (IFL AU), Avjennings Ltd (AVJ AU).

China Healthcare Weekly (Jan.19)- WuXi AppTec Sells Shares in WuXi XDC, National Biological Drug VBP

By Xinyao (Criss) Wang

Anhui Province will lead the first National biological drugs VBP in 2025. However, we are optimistic because we think the whole industry will start to bottom out from here.
EVER001 has the potential to become “a game changer” for membranous nephropathy treatment. We are waiting for Everest Medicines to reach licensing cooperation based on EVER001 in the future.
The real motivation for the Disposals of WuXi XDC shares could be to boost WuXi AppTec’s stock price first so that the management can again reduce positions at high level.

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Jan 20

Daily Brief Consumer: Macromill, Inc, Millennium & Copthorne Hotels Nz, Kalyan Jewellers, Indian Hotels, JD.com Inc (ADR), Guming Holdings, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

CVC Bumps the Macromill (3978) Price, Declares Final, and That’s That… Or Is It?
Millennium & Copthorne Hotels (MCK NZ): City Dev’s Privatisation Offer
Kalyan Jewellers: Rumour-Driven Stock Slide, F&O Ban—Is There Room for Further Correction?
NIFTY NEXT50 Index Rebalance Preview: 7 Potential Changes in March
JD.com (JD US): Trusted Online Retailer Trading at a 9x P/E with a Coming Margin Inflection
Pre-IPO Guming Holdings (PHIP Updates) – Some Points Worth the Attention
Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

CVC Bumps the Macromill (3978) Price, Declares Final, and That’s That… Or Is It?

On Friday 17 January, the closing date of the CVC Tender Offer for Macromill, Inc (3978 JP) at ¥1,150/share, the bidder announced an extension of the Tender Offer.
They also announced a bump to ¥1,250/share, and that included a comment saying they resolved not to raise the price further.
This happened during market hours, and the price jumped to just below ¥1,250/share. But one should not consider this a done deal. For reasons…

Millennium & Copthorne Hotels (MCK NZ): City Dev’s Privatisation Offer

Millennium & Copthorne Hotels (MCK NZ) (MCK), a Kiwi hotel chain, has announced that City Developments (CIT SP), its major shareholder, has made an Offer for shares not held.
City Dev is offering NZ$2.25/share, a 25% premium to last close. City holds 75.86% and the offer is conditional on a 90% holding, including shares currently held.
Reg approvals include OIA, which should be rubber-stamped. Very illiquid company.

Kalyan Jewellers: Rumour-Driven Stock Slide, F&O Ban—Is There Room for Further Correction?

By Devi Subhakesan

Kalyan Jewellers (KALYANKJ IN) stock has dropped 36% year-to-date and is now under an F&O ban after open interest hit threshold limits.
The rumours driving the stock decline lack financial or strategic relevance with no substantial reason for long-term investors to panic.
The stock correction has realigned Kalyan’s P/E discount to Titan, with current levels likely to stabilise and thus provide a near term support for Kalyan Jeweller’s stock price.

NIFTY NEXT50 Index Rebalance Preview: 7 Potential Changes in March

By Brian Freitas

With 10 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in March.
Estimated one-way turnover is 15.9% resulting in a one-way trade of INR 52bn (US$600m). All forecast changes, bar one, have over 1.5x ADV to trade from passive trackers.
All the forecast deletes are F&O members while two adds are not. NSE Indices could revisit the index membership criteria especially given the launch of futures on the index.

JD.com (JD US): Trusted Online Retailer Trading at a 9x P/E with a Coming Margin Inflection

By Michael Fritzell

China-focused Twitter user “pandawatch” posted a tweet comparing the total shareholder return of Chinese tech companies.
At the top of the list was online retailer JD.com (JD US — US$57 billion) with a total dividend yield and buyback yield of 10% — even after deducting share-based compensation. That’s impressively high.
JD is one of China’s largest e-commerce companies. It dominates the niche of selling authentic, branded goods online with fast and reliable delivery.

Pre-IPO Guming Holdings (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

Due to intense competition, freshly-made beverage market has shown signs of saturation after rapid growth in previous years. Guming is currently in a bottleneck period. Future performance growth will decline.
Due to a decrease in consumption, we have seen the price war in this industry. We think Guming’s profit margin performance will decline in the future if it reduces prices.
Guming’s valuation should be higher than Nayuki Holdings (2150 HK) and Sichuan Baicha Baidao Industrial (2555 HK) due to larger revenue scale/higher net profit margin, but lower than MIXUE.

Going Private Is Not an “exit” from the Market, but the Beginning of the Next Step

By Aki Matsumoto

The previous share price of FUJISOFT did not reach the value it should have, and therefore, the company did not achieve its management goal of maximizing shareholder profit.
The decision for shareholder return or investment in growth rests with management. Cash returned to shareholders is simply invested by investors to find investments where they can earn better investment.
Rather than “shareholder pressure,” we should think this is the beginning of an effort to return to the basics of shareholder-oriented management, which is to expand shareholder interests.

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Jan 19

Daily Brief Quantitative Analysis: A-H Premium Weekly (Jan 17th): Innocare Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

A-H Premium Weekly (Jan 17th): Innocare Pharma, China Eastern Airlines, Air China
HK Short Interest Weekly: Mnso, Ntes, HKEx, China Shenhua
Hong Kong Connect Flows (Jan 17th): Tencent, SMIC, Alibaba, Xiaomi, ICBC, Meituan

A-H Premium Weekly (Jan 17th): Innocare Pharma, China Eastern Airlines, Air China

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 93.7% as of Jan 17th.
The average A-H premium changed by -0.3ppt week-on-week, led by financials, information technology, consumer discretionary and offset by consumer staples, energy.
We highlight weekly changes in A-H premium for Innocare Pharma, China Eastern Airlines, Air China.

HK Short Interest Weekly: Mnso, Ntes, HKEx, China Shenhua

By Ke Yan, CFA, FRM

We analyzed the latest HK SFC report for aggregate short position as of Jan 10th.
Top short increases and decreases were tabulated for one week and four week period.
We highlight short changes in Mnso, Ntes, HKEx, China Shenhua.

Hong Kong Connect Flows (Jan 17th): Tencent, SMIC, Alibaba, Xiaomi, ICBC, Meituan

By Ke Yan, CFA, FRM

We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of January 17th.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight flows for Tencent, SMIC, Alibaba, Xiaomi, ICBC, Meituan.

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Jan 19

Daily Brief ESG: If Profits Cannot Grow and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

If Profits Cannot Grow, Tokyo Market Will Be Full of PE and Activist Investors

If Profits Cannot Grow, Tokyo Market Will Be Full of PE and Activist Investors

By Aki Matsumoto

There do not seem to be many companies that have executed large one-time dividends that have subsequently grown in corporate value.
Now that the exit from deflationary economy is seen and profit margins have room to grow, the environment is conducive to investing in growth, and companies have opportunities to change.
Limited profit growth is making it easier for market risk-taking investors to leave. Unless companies can grow profitably, Tokyo market will be full of private equity funds and activist investors.

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Jan 19

Daily Brief ECM: Metsera and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Metsera, Inc. (MTSR): Peeking at the Prospectus for the Next Obesity and Metabolic Diseases Biotech

Metsera, Inc. (MTSR): Peeking at the Prospectus for the Next Obesity and Metabolic Diseases Biotech

By IPO Boutique

Biotechnology company developing next-generation injectable and oral nutrient stimulated hormone, or NuSH, analog peptides to treat obesity, overweight and related conditions filed for Q1 IPO
Preliminary Phase 2 results in January suggested a durable pharmacodynamic, or PD, effect consistent with the observed half-life.
ARCH Ventures along with Fidelity are among the existing shareholders as this company enters begins its road to be a publicly traded company

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Jan 19

Daily Brief Thematic (Sector/Industry): APAC Healthcare Weekly (Jan 19)- Samsung Biologics and more

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

In today’s briefing:

APAC Healthcare Weekly (Jan 19)- Samsung Biologics, Daiichi Sankyo, Eisai, Sun Pharma, Biocon

APAC Healthcare Weekly (Jan 19)- Samsung Biologics, Daiichi Sankyo, Eisai, Sun Pharma, Biocon

By Tina Banerjee

Samsung Biologics secured highest ever contract manufacturing order worth KRW2.07T ($1.4B) from a European pharmaceutical company. The cumulative order volume has now surpassed $17.6B.
FDA has accepted Daiichi Sankyo’s revised filing for Dato-DXd for certain types of non-small cell lung cancer (NSCLC) and Eisai’s BLA for Leqembi subcutaneous autoinjector for weekly maintenance dosing.
Sun Pharma is acquiring Canada-based Antibe Therapeutics, a clinical-stage biotechnological company developing novel drugs primarily focusing on reducing pain and inflammation. Biocon got FDA clearance for insulin facility in Malaysia.

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Jan 19

Daily Brief Event-Driven: Makino Milling (6135) – Trading Through Terms and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Makino Milling (6135) – Trading Through Terms, May Need Investor Pushing
A/H Premium Tracker (To 17 Jan 2025): AH Premia Fall Further, Lowest Avg Premium in 5yrs
Last Week In Event SPACE: Shanghai Henlius, Malaysia Airports, Kokusai Electric, Smart Share
Insignia Financial (IFL AU): CC Capital Bumps, Next Move Bain
HK Connect SOUTHBOUND Flows (To 17 Jan 2025); Again Big Net Buying by SB, Again on Tech
Quiddity Leaderboard CSI Medical Jun 25: 1-5x ADV to Trade; Sector-Neutral Rebal Trade Idea Inside
GA Pack (468 HK): Shandong Xinjufeng’s Offer on the Cusp of Being Declared Unconditional
Quiddity Leaderboard STAR 50/100 Mar 25: LONGs Up ~12% Vs SHORTs in a Month; More to Come
(Mostly) Asia-Pac M&A: Jamco, AVJennings, Insignia Financial, Advanced Info Service/Thaicom

Makino Milling (6135) – Trading Through Terms, May Need Investor Pushing

Nidec Corp (6594 JP) in late December proposed an unsolicited takeover of Makino Milling Machine Co (6135 JP), with a 3-month delay before launching a Tender Offer.
Makino has asked for an extension to the start. Nidec has said no. Makino is going about this the wrong way. Makino needs to assume Nidec thought this through.
Makino needs to open up the process to other bidders, and investors can help.

A/H Premium Tracker (To 17 Jan 2025): AH Premia Fall Further, Lowest Avg Premium in 5yrs

AH Premia are lower over the last few weeks of holiday and this past week of heavy SOUTHBOUND buying on telcos, banks, brokers, insurers, tech, and airlines.
The average AH Premium across all pairs is now the lowest it has been in five years.
The VERY WIDE Tech spreads bifurcated. SMIC (981) and Shanghai Fudan Microelectric (1385) both continued strongly. China Rail Signal (3969) and Flat Glass (6865) widened again.

Last Week In Event SPACE: Shanghai Henlius, Malaysia Airports, Kokusai Electric, Smart Share

LVC sits a blocking stake ahead of Shanghai Henlius Biotech (2696 HK)‘s shareholder vote on the 22nd Janaury. I’ve yet to see a solid rationality why they would block.
Malaysia Airports Holdings (MAHB MK)extends the closing date to the 24th January. Shares held plus tendering is currently 86.18%. This is done.
Kokusai Electric (6525 JP) was IPOed in September 2023. Lockup expiry is next week, and there is a likely large index event in ~10 weeks

Insignia Financial (IFL AU): CC Capital Bumps, Next Move Bain

Insignia Financial (IFL AU) disclosed a revised non-binding privatisation offer from CC Capital at A$4.60, a 7.0% premium compared to its previous A$4.30 offer and Bain’s A$4.30 offer.
While the revised CC Capital offer is attractive compared to historical trading ranges, there remains valuation headroom for Bain to engage in a bidding war.
The presence of several substantial shareholders facilitates a bidding war. The board should provide both bidders with due diligence access to promote the auction.

HK Connect SOUTHBOUND Flows (To 17 Jan 2025); Again Big Net Buying by SB, Again on Tech

SOUTHBOUND gross trading activity was again not stronger per day than the previous several weeks, but SB Net Buying was again BIG. Given the change in Tencent, remarkable even.
The story was follow-through, but SMIC and Xiaomi were also big buys. This is shaping up to be a “let’s buy what US Persons cannot” moment.
No sectors saw net selling through CCASS data five days to Weds. Top 10 activity was quite concentrated this week. Very few stray names.

Quiddity Leaderboard CSI Medical Jun 25: 1-5x ADV to Trade; Sector-Neutral Rebal Trade Idea Inside

By Janaghan Jeyakumar, CFA

CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in June 2025.
We expect up to four ADDs and four DELs for the CSI Medical Service index during this index review event based on the latest available data.

GA Pack (468 HK): Shandong Xinjufeng’s Offer on the Cusp of Being Declared Unconditional

Greatview Aseptic Packaging (468 HK)’s offer from Shandong Xinjufeng Technology Packaging (301296 CH) is HK$2.65 with a 50% minimum acceptance condition. The first closing date is 21 January.
The Board has recommended that shareholders not accept. However, based on CCASS data, including acceptances, Shandong Xinjufeng’s shareholding was 46.41% of outstanding shares as of 17 January.
Absent an unlikely competing offer, the offer is on the cusp of being declared unconditional. At the last close and 4 February payment, the gross/annualized spread is 3.1%/128%.

Quiddity Leaderboard STAR 50/100 Mar 25: LONGs Up ~12% Vs SHORTs in a Month; More to Come

By Janaghan Jeyakumar, CFA

STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the March 2025 index rebal event.

(Mostly) Asia-Pac M&A: Jamco, AVJennings, Insignia Financial, Advanced Info Service/Thaicom

I tally 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. I’ve yet to see a solid rationality why they would block.
One new deal was discussed this week: Bain’s Tender Offer for Jamco Corp (7408 JP). Ho Bee Land Ltd (HOBEE SP) also countered for AVJennings Ltd (AVJ AU).
Key updates/news took place on: Insignia Financial (IFL AU), Lifestyle China (2136 HK), and Advanced Info Service (ADVANC TB)/Thaicom Pcl (THCOM TB).

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Jan 19

Daily Brief Equity Bottom-Up: Duolingo’s TikTok-Fueled Surge: A Golden Opportunity or Fading Trend? and more

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

In today’s briefing:

Duolingo’s TikTok-Fueled Surge: A Golden Opportunity or Fading Trend?
Walgreens Boots Alliance: An Insight Into Its Procurement Optimization
Axiscades Technologies Ltd- Forensic Analysis
Constellation Brands: Beer Market Positioning & Performance Powering Our ‘Buy’ Rating! – Major Drivers
DuPont’s Separation 2.0: How a Two-Way Split Could Reshape Its Future!
LS Electric: Increasing Supplies for Distribution Board Components to Elon Musk’s XAI Data Centers
Monthly Chinese Express Tracker: Fight For Parcel Volume Share Heated Up in Q424 (January 2025)
MSC Industrial Direct Co Has Bold Investment Plans For Market Expansion But Will They Work? – Major Drivers
Plexus Corporation: Regional Expansion & Manufacturing Wins As A Pivotal Growth Enabler! – Major Drivers
RPM International Inc.: Construction Products Group (CPG) & Performance Innovations As A Major Growth Accelerator! – Major Drivers

Duolingo’s TikTok-Fueled Surge: A Golden Opportunity or Fading Trend?

Duolingo has made headlines recently with a sharp rise in users flocking to its Mandarin courses.
This surge coincides with a wave of U.S. users abandoning TikTok amidst uncertainty about its future, following potential bans discussed by the U.S. Supreme Court.
As TikTok users migrate to RedNote (Xiaohongshu), a Chinese social media app, interest in Mandarin has grown significantly, contributing to a 216% year-over-year increase in Mandarin learners on Duolingo.

Walgreens Boots Alliance: An Insight Into Its Procurement Optimization

Walgreens Boots Alliance’s latest earnings reveals a mixed financial and strategic picture for the company, which has been taking significant strides in response to ongoing challenges and strategic realignments.
On the positive side, the company has initiated a turnaround strategy for its U.S. Retail Pharmacy business as a crucial focus area.
The company made progress in optimizing its store footprint, with positive early results and better-than-expected script retention rates following store closures.

Axiscades Technologies Ltd- Forensic Analysis

By Nitin Mangal

Axiscades Engineering Technologies (AXET IN) provides comprehensive engineering and technology solutions for global manufacturers in diverse sectors such as aerospace, defence, automotive, energy, electronics, and heavy engineering.
The acquisition of Mistral Solutions using deferred consideration has helped the group grow its turnover and net profit during the last six years
Our concerns stem from the current vacuum in top management due to exits of senior personnel in spite of high remuneration levels, risk of goodwill impairment, few questionable transactions, etc.

Constellation Brands: Beer Market Positioning & Performance Powering Our ‘Buy’ Rating! – Major Drivers

Constellation Brands’ third-quarter fiscal 2025 results reveal a mixed performance across its segments, with resilience shown in its beer business but significant challenges faced in the wine and spirits sector.
The company’s strategic investments in marketing and distribution for its beer brands have driven an uptick in consumer demand.
However, macroeconomic factors continue to challenge overall sales growth, prompting a recalibration of financial guidance.

DuPont’s Separation 2.0: How a Two-Way Split Could Reshape Its Future!

In a major strategic pivot, DuPont de Nemours has announced a streamlined separation strategy that could significantly impact its operational focus and market positioning.
Initially planning a three-way split of its Water, Electronics, and Materials businesses, the company has revised its approach by deciding to retain the Water business while accelerating the spinoff of the Electronics division.
This decision underscores DuPont’s intent to simplify its structure and enhance shareholder value in a more agile manner.

LS Electric: Increasing Supplies for Distribution Board Components to Elon Musk’s XAI Data Centers

By Douglas Kim

LS Electric, one of the major power equipment providers in Korea, became a new supplier of distribution board components to Elon Musk’s xAI data centers in Memphis, Tennessee.
Some of the major electric utilities and other companies in the US have been reluctant to use electrical equipment products from China due to quality and security concerns.
Therefore, leading Korean companies such as LS Electric have been beneficiary of receiving more orders from the major US electrical utilities and other major companies in the US.

Monthly Chinese Express Tracker: Fight For Parcel Volume Share Heated Up in Q424 (January 2025)

By Daniel Hellberg

In Q424, there were dramatic shifts in share among the six listed Chinese express companies
STO and J&T gained the most volume share, while volume leader ZTO gave up the most
STO won share without ceding much price; ZTO still has not settled on a new strategy

MSC Industrial Direct Co Has Bold Investment Plans For Market Expansion But Will They Work? – Major Drivers

MSC Industrial Supply Co.’s first-quarter fiscal 2025 performance reflects a mixture of both achievements and ongoing challenges in line with its strategic objectives and the current economic climate.
The company recorded a modest improvement against its sales expectations, with average daily sales surpassing initial guidance despite an overall 2.7% year-over-year decline.
This decline was narrower than anticipated, driven by growth in the public sector and sustained momentum in their solutions offerings, notably within November, though these gains are not seen as indicative of a long-term trend.

Plexus Corporation: Regional Expansion & Manufacturing Wins As A Pivotal Growth Enabler! – Major Drivers

Plexus Corporation has demonstrated significant progress in its fiscal fourth-quarter 2024 results, reflecting both operational strengths and some challenges faced by the company.
The company’s revenue for the quarter was robust, reaching $1.05 billion, which surpassed the guidance range and was driven by stronger demand across various market sectors.
The aerospace and defense, as well as the healthcare/life sciences sectors, contributed significantly to this performance.

RPM International Inc.: Construction Products Group (CPG) & Performance Innovations As A Major Growth Accelerator! – Major Drivers

RPM International delivered a robust performance in the fiscal year 2025 second quarter even amidst a macroeconomic landscape characterized by no to low growth.
The company set new records in sales, adjusted EBIT margin, and adjusted EPS.
This achievement is notable considering a significant $4.4 million earnings headwind due to a customer bankruptcy charge in the Consumer Group sector.

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Jan 19

Daily Brief Macro: Asian Equities: US Exceptionalism Vs Asian Valuation Allure and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Asian Equities: US Exceptionalism Vs Asian Valuation Allure

Asian Equities: US Exceptionalism Vs Asian Valuation Allure

By Manishi Raychaudhuri

Asian equities are at record valuation discount to that of US. Slightly lower earnings growth and ROE forecasts for Asia don’t justify the steep discounts, we believe.
However, EPS estimates are a concern. Asia’s consensus EPS estimate for 2025 has declined 9% over past 10 months, dragged down by China and Korea. USA’s has remained virtually flat.
Based on our themes of continued AI spending, China’s consumption recovery and “unloved India”, our top picks remain TSMC, Tencent, Yum China, HDFC Bank and SK Hynix.

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Jan 19

Daily Brief Australia: Insignia Financial and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Insignia Financial (IFL AU): CC Capital Bumps, Next Move Bain
(Mostly) Asia-Pac M&A: Jamco, AVJennings, Insignia Financial, Advanced Info Service/Thaicom

Insignia Financial (IFL AU): CC Capital Bumps, Next Move Bain

Insignia Financial (IFL AU) disclosed a revised non-binding privatisation offer from CC Capital at A$4.60, a 7.0% premium compared to its previous A$4.30 offer and Bain’s A$4.30 offer.
While the revised CC Capital offer is attractive compared to historical trading ranges, there remains valuation headroom for Bain to engage in a bidding war.
The presence of several substantial shareholders facilitates a bidding war. The board should provide both bidders with due diligence access to promote the auction.

(Mostly) Asia-Pac M&A: Jamco, AVJennings, Insignia Financial, Advanced Info Service/Thaicom