Smartkarma Daily Briefs

In today’s Morning Views publication we comment on developments of the following high yield issuers: New World Development, Indofood CBP, Azure Power, Adani Green Energy, Meituan
In the US, treasuries climbed in a holiday-shortened session on Friday, with yields falling 8-10 bps across the curve. The yield on the 2Y UST dropped 8 bps to 4.15%, while that on the 10Y UST declined 10 bps to 4.17%.
Equities rallied, with the S&P 500 rising 0.6% to a new record high of 6,032.

Lucror Analytics – Morning Views Asia

In today’s Morning Views publication we comment on developments of the following high yield issuers: China Water Affairs, Shui On Land, Rakuten Group, Vedanta Resources
In the US, the November ISM manufacturing index came in above estimates at 48.4 (47.5 e / 46.5 p). The prices paid component fell to 50.3 (55.2 e / 54.8 p), while the new orders component rose to 50.4 (48.0 e / 47.1 p).
Separately, the November (final) US manufacturing PMI climbed to 49.7 (47.3 p), above the preliminary estimate of 48.8.

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Dec 04

Daily Brief Crypto: Crypto Crisp: Indeed and more

By Smartkarma Daily Briefs | Crypto, Daily Briefs

In today’s briefing:

Crypto Crisp: Indeed, Ethereum Shines Again

Crypto Crisp: Indeed, Ethereum Shines Again

By Mads Eberhardt

In Crypto Moves #44 from September 19, we stated that Ethereum would shine again.
This prediction appears to be steadily materializing.
Since the U.S. Presidential election, Ethereum has regained some of the ground it has lost against Bitcoin during the year.

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Dec 04

Daily Brief Macro: South Korean Parliament Lifts Martial Law Declared by the President Yoon and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

South Korean Parliament Lifts Martial Law Declared by the President Yoon
November Themes and Thematic Portfolio Review
The Week at a Glance: Manufacturing Rebound, Fed Liquidity Signals & Oil’s Fragile Balance
CX Daily: Chinese Chipmakers Look to Malaysia to Sidestep U.S. Tariffs
[US Crude Oil Options Weekly 2024/48] WTI Drops on Easing Supply Concerns
IO Weekly Technicals Review [2024/48]: Bullish Trend to Persist
[US Nat Gas Options Weekly 2024/48] Henry Hub’s Uptrend Continues on Bullish Demand Outlook
UK Revisions Raise Inflationary Pressure
BDI at the Lows of Year 2024 Trading Range

South Korean Parliament Lifts Martial Law Declared by the President Yoon

By Douglas Kim

Late Tuesday on 3 December, South Korean President Yoon Suk-Yeol declared a martial law. Several hours afterwards, the South Korean Parliament voted to lift President Yoon’s martial law order.
By drawing so much attention to the “dangers of the communist party from within Korea and outside,” President Yoon is trying to align himself closer to President Trump.
In the near term, the impact on the Korean stock market of the declaration and lifting of martial law is likely to be negative.

November Themes and Thematic Portfolio Review

By Rikki Malik

A monthly review of how the markets and our themes are currently performing
Analysing what went wrong and what went right in stocks and sectors
Highlighting positions added or removed from the thematic investment portfolio

The Week at a Glance: Manufacturing Rebound, Fed Liquidity Signals & Oil’s Fragile Balance

By Andreas Steno

Happy Monday!Each week, we collect the most important events in the week ahead and provide you with our direction going into them.
Enjoy!Monday – ISM ManufacturingThe ISM Manufacturing data is due this afternoon, with consensus expecting a rebound from last month’s report, forecasting a figure of 47.6. After reviewing our model library, we see substantial risk/reward in betting on an upward surprise in manufacturing data.
For instance, our regional PMI model—which uses regional manufacturing prints as inputs—indicates a material increase in the manufacturing PMI today.

CX Daily: Chinese Chipmakers Look to Malaysia to Sidestep U.S. Tariffs

By Caixin Global

Chips / Cover Story: Chinese chipmakers look to Malaysia to sidestep U.S. tariffs
Forestry /: Environmentalists sound alarm over China’s relaxed forest rules
PMI /: China manufacturing activity continues to build up steam, Caixin PMI shows

[US Crude Oil Options Weekly 2024/48] WTI Drops on Easing Supply Concerns

WTI futures dropped 4.6% for the week ending 29/Nov, driven by easing Middle East tensions and higher US gasoline and distillate inventories.
WTI options Put/Call volume ratio fell to 0.82 from 0.87 (22/Nov) last week, as call volume fell by 17.9% WoW and put volume dropped by 22.4%.
WTI OI PCR inched up to 0.88 from 0.86 compared to last week. Call OI rose by 1.3% WoW, while put OI increased by 4.5%.

IO Weekly Technicals Review [2024/48]: Bullish Trend to Persist

SGX IO Futures closed USD 4.17/ton higher for the week ending on 29/Nov. It traded in a range of USD 5.05/ton, which was smaller than the prior week.
Chinese portside inventories fell 1.5% to 148.5M tons for the week ending 29/Nov. China’s manufacturing PMI for November came in at 50.3, beating analyst expectations of 50.2.
Seasonally strong demand ahead of the Lunar New Year, improving steelmaker conditions, stimulus hopes, and robust PMI signal continued iron ore price gains.

[US Nat Gas Options Weekly 2024/48] Henry Hub’s Uptrend Continues on Bullish Demand Outlook

By VRS (Valuation & Research Specialists)

US natural gas prices rose 7.5% for the week ending 29/Nov, driven by forecasts of colder weather, rising US LNG exports, and higher heating demand.
Henry Hub Put/Call volume ratio rose to 1.47 from 1.14 (22/Nov) the previous week as put volumes fell by 56.1% WoW, while call volumes decreased by 66%.
Henry Hub OI PCR fell to 0.83 from 0.84 compared to last week. Call OI fell by 14.4% WoW, while put OI decreased by 15.8%.

UK Revisions Raise Inflationary Pressure

By Phil Rush

Updated UK population estimates and projections drove a 402k upward revision to the employment level while unemployment was broadly unchanged.
With output and wages unaffected, productivity was weakened into a slight trend decline while implied unit wage costs are 1.3pp higher and stuck above 5% y-o-y.
Full typical passthrough to consumer prices reinforces the underlying inflation problem. The BoE should discount labour market data and cautiously hold rates in December.

BDI at the Lows of Year 2024 Trading Range

The Baltic Dry Index (BDI)* settled at around ~1,354.00 points (USD) on December 2nd, 2024 versus ~1,947.00 points (USD) in the beginning of September 2024, which was the release date of our previous blog.
During the year 2024, the BDI has been trading within the broader range of 1,200 – 2,500 with continuous notable swings along a relative downward trend line.
In the same period, and so far in the year, the Index has recorded a low on January 17th at 1,306 and a high on March 13th at 2,412.

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Dec 04

Daily Brief Australia: Goodman Group, DigiCo REIT, Latin Resources, Sg Fleet, Amaero International Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Goodman Group (GMG AU) Placement: Limited Index Flows
Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight
DigiCo Infrastructure REIT IPO – Looks Decent – After All the Adjustments
Latin Resources (LRS AU): 16th January Merger Vote
Latin Resources (LRS AU): Pilbara Minerals (PLS AU)’s Scheme Vote on 16 January
SG Fleet (SGF AU): Now PEP’s A$3.50/Share Firm Offer
Amaero International Ltd – Locking in supply of US melt and forged titanium bar

Goodman Group (GMG AU) Placement: Limited Index Flows

China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.

Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight

CIC is looking to raise around US$1.2bn, via selling around 2.6% of its stake in Goodman Group (GMG AU) , via a block trade.
Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
In this note, we will talk about the placement and run the deal through our ECM framework.

DigiCo Infrastructure REIT IPO – Looks Decent – After All the Adjustments

DigiCo REIT (DIGICO AU) is looking to raise around US$1.3bn in its Australian IPO.
DigiCo REIT (DREIT) aims to be a diversified owner, operator and developer of data centres, with a global portfolio and broad investment mandate across stabilised, value-add and development opportunities
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

Latin Resources (LRS AU): 16th January Merger Vote

Back on the 15th August, lithium play Latin Resources (LRS AU) entered into a Scheme with Pilbara Minerals (PLS AU). PLS offered 0.07 new PLS shares for every LRS share.
The Scheme Booklet was slightly delayed to reflect Pilbara’s recently adjusted FY25 guidance – nothing deal/project related.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 16th Jan. Expected implementation on the 4th Feb. The IE (BDO) says fair & reasonable.

Latin Resources (LRS AU): Pilbara Minerals (PLS AU)’s Scheme Vote on 16 January

By Arun George

On 29 November, the Latin Resources (LRS AU) IE considered Pilbara Minerals (PLS AU)’s all-scrip offer fair and reasonable. The offer is 0.07 PLS share per LRS share.
The key conditions are LRS shareholder and Brazilian regulatory approvals. No disinterested shareholder holds the 25% blocking stake, and low retail ownership lowers the headcount test risk.
An attractive offer and the lack of a competing bidder suggest a done deal. At the last close, for the 4 February payment, the gross/annualised spread was 2.9%/18.8%.

SG Fleet (SGF AU): Now PEP’s A$3.50/Share Firm Offer

By Research as a Service (RaaS)

Back on the 25 November, 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).
The initial due diligence period was extended one week to the 6th December. That short timeframe suggested a firm Offer was imminent. Both parties have now entered into a SID.
Terms remains the same as the NBIO. SGF’s largest shareholder, Super Group (SPG SJ) (53.58%), is supportive. Implementation is expected in the 1Q25.

Amaero International Ltd – Locking in supply of US melt and forged titanium bar

RaaS has published a flash comment on advanced materials manufacturing group Amaero International (ASX:3DA) following the company’s announcement yesterday that it has signed a three-year supply agreement for US melt and forged titanium bar with The Perryman Company, a US-based privately owned, fully-integrated manufacturer of titanium products.
For the term of the contract, Amaero says Perryman will be its preferred and primary supplier of high-quality, reliable and scalable US melt and forged titanium alloy bar feedstock for the atomisation of premium spherical powder.
The contract guarantees that Amaero will have sufficient titanium bars to meet anticipated contractual demand for Ti64 powder in an environment of heightening tariff wars between the US and China, limited sources of supply for critical metals and ongoing demand from the US defence, aerospace and space components sector for full lot traceability of feedstock.

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Dec 04

Daily Brief South Korea: Korea Stock Exchange Kospi Index, Young Poong Precision and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?
A Review of Tender Offers in Korea in 2024

Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?

By Sanghyun Park

Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.

A Review of Tender Offers in Korea in 2024

By Douglas Kim

In this insight, we review the major tender offers of Korean companies in 2024. The tender offers have mostly been profitable for the investors in these targeted companies.
What is also impressive is that even after the 1st day of trading (post tender offer announcement), there have been extra alpha for the following week and month.
The number of tender offers in Korea increased from 6 in 2020 to 12 in 2021, 7 in 2022, 18 in 2023, and 28 in 2024.

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Dec 04

Daily Brief Singapore: Singapore Post and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Singapore Post – Australian logistics to be divested for c A$1bn

Singapore Post – Australian logistics to be divested for c A$1bn

By Edison Investment Research

Following Singapore Post’s resilient H1 results in November, the company has now announced that it has agreed to sell its Australian logistics business for an enterprise value of c A$1bn to a private equity investor. The disposal is likely to result in the reporting of a gain on disposal of over S$300m. The proceeds are likely to be used to pay down debt and to potentially pay a special dividend to shareholders.

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Dec 04

Daily Brief United States: Abercrombie & Fitch Co Cl A, Urban Outfitters, Equity Commonwealth, Netapp Inc, Copart Inc, Dell Technologies , Ethereum, Crude Oil, Guess? Inc, Agilent Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Abercrombie & Fitch Co.: Expansion of Global Brand Awareness & Localization Efforts Driving Our Bullishness! – Major Drivers
Urban Outfitters Inc.: These Are The 7 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
Equity Commonwealth Liquidation: Potential 40%-60% Upside Amid Real Estate Asset Sales and Wind-Down Challenges
NetApp Inc.: Keystone Subscription Model Expansion As A Critical Growth Lever! – Major Drivers
Copart’s Revolutionary Edge: Tapping into the Vehicle Miles Traveled Surge! – Major Drivers
Dell Technologies: An Insight Into Expansion Beyond Endpoint Security & Storage Opportunities! – Major Drivers
Crypto Crisp: Indeed, Ethereum Shines Again
[US Crude Oil Options Weekly 2024/48] WTI Drops on Easing Supply Concerns
Guess? Inc.: The Role of Rag & Bone Acquisition & Other Major Drivers
Agilent Technologies: Pharma Market Expansion As A Key Growth Catalyst! – Major Drivers

Abercrombie & Fitch Co.: Expansion of Global Brand Awareness & Localization Efforts Driving Our Bullishness! – Major Drivers

Abercrombie & Fitch’s latest quarterly performance showed strong results, effectively capitalizing on consumer demand and strategic execution across multiple facets of their business.
The company reported a record net sales figure of $1.2 billion for the third quarter, marking a 14% increase from the previous year, alongside a comparable sales rise of 16%.
The operating income also witnessed a 30% growth year-over-year, driven by a 170 basis point improvement in operating margin to 14.8%.

Urban Outfitters Inc.: These Are The 7 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers

Urban Outfitters, Inc. reported a promising performance for Q3 of fiscal 2025, with total sales reaching a record $1.4 billion, a 6% rise compared to the previous year.
This growth was primarily driven by strong performances from its Anthropologie and Free People brands, both of which posted mid-single-digit positive retail segment comps, which counterbalanced a high single-digit decline at Urban Outfitters.
Nuuly, the company’s fashion rental business, also saw robust double-digit revenue growth, credited to a 51% rise in average active subscribers.

Equity Commonwealth Liquidation: Potential 40%-60% Upside Amid Real Estate Asset Sales and Wind-Down Challenges

By Dalius Tauraitis

Equity Commonwealth is in late-stage liquidation; a $19/share dividend is set for December 6, with a remaining distribution expected in Q1 2025 between $1-$2/share.
The Denver property, 17th Street Plaza, is expected to sell for $142 million, with potential risks of sale delays beyond Q1 2025.
Wind-down expenses are estimated at $0.40-$0.50/share, mainly for executive compensation, with contingency reserves expected to be under $10 million.

NetApp Inc.: Keystone Subscription Model Expansion As A Critical Growth Lever! – Major Drivers

NetApp’s recent earnings for the second quarter of fiscal year 2025 reflects a strong performance with both opportunities and challenges evident in the company’s results.
Key aspects of the company’s current position and future outlook can be synthesized as follows: NetApp demonstrated significant growth in its all-flash storage segment, showing a 19% year-over-year increase, and enjoyed solid momentum in cloud storage services, which helped drive revenue beyond expectations.
The reported revenues reached $1.66 billion, showing a 6% increase compared to the previous year.

Copart’s Revolutionary Edge: Tapping into the Vehicle Miles Traveled Surge! – Major Drivers

Copart, Inc. delivered their first-quarter fiscal 2025 results amidst significant environmental challenges and dynamic industry trends.
The firm exhibited strong performance, particularly in their insurance segment and response to natural disasters, while also experiencing some cost increases related to capacity expansion and hurricane preparation.
A critical highlight was Copart’s adept response to consecutive hurricanes in the southeastern United States, notably Hurricanes Helane and Milton.

Dell Technologies: An Insight Into Expansion Beyond Endpoint Security & Storage Opportunities! – Major Drivers

Dell Technologies Inc. reported solid results for the fiscal year 2025 third quarter, demonstrating both strengths and challenges across its various segments.
The company achieved a revenue of $24.4 billion, marking a 10% increase year-over-year, driven by strong growth in its Infrastructure Solutions Group (ISG) thanks to robust demand for AI servers and traditional servers.
Diluted earnings per share (EPS) reached $2.15, reflecting a 14% rise, while cash flow from operations was $1.6 billion.

Crypto Crisp: Indeed, Ethereum Shines Again

By Mads Eberhardt

In Crypto Moves #44 from September 19, we stated that Ethereum would shine again.
This prediction appears to be steadily materializing.
Since the U.S. Presidential election, Ethereum has regained some of the ground it has lost against Bitcoin during the year.

[US Crude Oil Options Weekly 2024/48] WTI Drops on Easing Supply Concerns

WTI futures dropped 4.6% for the week ending 29/Nov, driven by easing Middle East tensions and higher US gasoline and distillate inventories.
WTI options Put/Call volume ratio fell to 0.82 from 0.87 (22/Nov) last week, as call volume fell by 17.9% WoW and put volume dropped by 22.4%.
WTI OI PCR inched up to 0.88 from 0.86 compared to last week. Call OI rose by 1.3% WoW, while put OI increased by 4.5%.

Guess? Inc.: The Role of Rag & Bone Acquisition & Other Major Drivers

Guess, Inc. reported its third-quarter fiscal 2025 results amidst several positive strides and challenges.
The company’s revenue grew by 13% to $739 million, primarily driven by the acquisition and integration of rag & bone and a modest increase from its core business.
However, the stronger U.S. dollar affected revenues negatively, alongside weakened performance in some regions.

Agilent Technologies: Pharma Market Expansion As A Key Growth Catalyst! – Major Drivers

Agilent Technologies, Inc. recently reported its fourth quarter results for fiscal year 2024.
The company generated revenues of $1.701 billion, marking roughly 1% growth in reported figures, with core growth remaining flat despite challenging market conditions.
Notably, Agilent’s total company book-to-bill ratio exceeded one, indicating a steady market recovery and positioning for continued improvement into 2025.

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Dec 04

Daily Brief China: Meituan, Lifestyle China, Baidu , Greatview Aseptic Packaging, Baidu, Hang Seng Index, New World Development, Mao Geping Cosmetics and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
Lifestyle China (2136 HK): Thomas Yau Scheme Expected
Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (December 2)
Greatview Aseptic Packaging (468.HK) – Newjf Already Has an Upper Hand
Baidu Inc.: Generative AI & Search Transformation Driving Our Bullishness! – Major Drivers
EQD | The Come Back Of The Hang Seng
[Meituan (3690 HK, BUY, TP HK$165) TP Change]: C3Q24 Review: Buy or Leave?
Lucror Analytics – Morning Views Asia
Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)

The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.

Lifestyle China (2136 HK): Thomas Yau Scheme Expected

Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).
Lifestyle Props’ listing was cancelled in 2023; and Thomas Yau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov.
Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Yau holds 74.9%. No prizes for guessing what comes next.

Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?

By Arun George

Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.
We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (December 2)

By David Mudd

Hong Kong market breadth stays strong despite market pullback in November. Mainland investors continue to increase exposure to HK market through Southbound Connect platform.
Baidu (9888 HK) , Baidu (BIDU US) , the global leader in Robotaxis, was granted a license to start operating its autonomous cars in Hong Kong.
Vitasoy Intl Holdings (345 HK) shares surged on takeover rumours after Yeo Hiap Seng (YHS SP) increased its stake to more than 12% allowing them to call a Board meeting.

Greatview Aseptic Packaging (468.HK) – Newjf Already Has an Upper Hand

By Xinyao (Criss) Wang

Newjf’s Yuan Xunjun and Guo Xiaohong are both lawyers. They should be more familiar with the Pre-Condition requirements. Newjf has obtained SAMR clearance and we think Newjf will fulfill Pre-Conditions.
Bi Hua and Hong Gang’s “new initiative” based on Nov.28 announcement may not necessarily succeed, since Newjf has a lot of room for rebuttal here and its Offer is attractive.
Greatview’s chairman and Cloudview are in discussions with financial advisers to make a counterbid.Considering that this may be a “noise”,we recommend prioritizing Newjf’s Offer before any higher Offer from Greatview.

Baidu Inc.: Generative AI & Search Transformation Driving Our Bullishness! – Major Drivers

Baidu’s third-quarter 2024 financial performance presents a complex picture, showcasing both opportunities and challenges that shape the company’s investment thesis.
The company reported total revenues of RMB 33.6 billion, reflecting a 3% decline year-over-year.
However, Baidu Core’s revenue remained stable at RMB 26.5 billion.

EQD | The Come Back Of The Hang Seng

By Nico Rosti

In a previous insight we presented a forecast where the Hang Seng Index could bounce after a 2-3 weeks pullback. The index started to rally from there.
Currently the index is up for 2 consecutive weeks and from the charts and models that we will present here, you can see that it has room to go higher.
Right now the index has not even reach the 25% (price) resistance level, and this confirms the bullish view.

[Meituan (3690 HK, BUY, TP HK$165) TP Change]: C3Q24 Review: Buy or Leave?

By Ying Pan

Meituan reported C3Q24 revenue/non-IFRS operating profit 2%/12% above consensus, thanks to rising monetization and cost reduction. C4Q24 guidance, however, missed expectation due to low ASP mix and expansion;
We see the following as positive catalysts: (1) consumption stimulus in 2025 that will likely include service coupons, (2) market share gains, (3) overseas expansion in Mid-East bearing quick fruits.
We therefore opt to keep Meituan on our TOP BUY list and maintain TP at HK$165.

Lucror Analytics – Morning Views Asia

In today’s Morning Views publication we comment on developments of the following high yield issuers: New World Development, Indofood CBP, Azure Power, Adani Green Energy, Meituan
In the US, treasuries climbed in a holiday-shortened session on Friday, with yields falling 8-10 bps across the curve. The yield on the 2Y UST dropped 8 bps to 4.15%, while that on the 10Y UST declined 10 bps to 4.17%.
Equities rallied, with the S&P 500 rising 0.6% to a new record high of 6,032.

Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable

Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

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Dec 04

Daily Brief Japan: Sanrio, Rakuten, AViC , Japan Lifeline, Tsubakimoto Kogyo, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Sanrio (8136 JP) – Kitty Behaving Badly
Lucror Analytics – Morning Views Asia
ａｖｉｃ (9554 Jp) – Quality Company with High Growth, Profit Margin, and ROE
Japan Lifeline Co., Ltd (7575 JP): Research Update
Tsubakimoto Kogyo (8052 Jp) – Executed a Share Buyback of 450,000 Shares
In the Dissolution of the Parent-Subsidiary Listing, the Second Step Is Key for the Parent Company

Sanrio (8136 JP) – Kitty Behaving Badly

By Travis Lundy

Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.

Lucror Analytics – Morning Views Asia

By Nippon Investment Bespoke Research UK

In today’s Morning Views publication we comment on developments of the following high yield issuers: China Water Affairs, Shui On Land, Rakuten Group, Vedanta Resources
In the US, the November ISM manufacturing index came in above estimates at 48.4 (47.5 e / 46.5 p). The prices paid component fell to 50.3 (55.2 e / 54.8 p), while the new orders component rose to 50.4 (48.0 e / 47.1 p).
Separately, the November (final) US manufacturing PMI climbed to 49.7 (47.3 p), above the preliminary estimate of 48.8.

ａｖｉｃ (9554 Jp) – Quality Company with High Growth, Profit Margin, and ROE

By Sessa Investment Research

Under its mission of “Creating a new view of the world with the AViC Team as the business driver,” AViC (hereafter, the Company) provides a full range of services related to digital marketing, from strategy development to execution.
In addition, the Company strives for and ensures “quality growth” by maintaining and improving profitability while pursuing sustainable business growth.
One of the Company’s distinguishing characteristics is its high productivity compared to competitors.

Japan Lifeline Co., Ltd (7575 JP): Research Update

Japan Lifeline [JLL] produced historical semi-annual earnings with FY24 1H OP of ¥6,260mil (+14.4% YoY) on sales of ¥27,985mil (+11.4% YoY), which landed above expectation.
Despite this robust performance, JLL has not revised its full-year FY24 guidance as the 2H presents with several potential earnings risks such as 1) fewer operating days, which will impact device sales, 2) an increase in outsourced products reducing GPM, 3) the possibility of a change in the competitive landscape for one of JLL’s core products.
The company’s shareholder return policy is the higher of (1) a pay-out ratio of 40% or (2) a Dividend on Equity [DOE] of 5%.

Tsubakimoto Kogyo (8052 Jp) – Executed a Share Buyback of 450,000 Shares

By Sessa Investment Research

Tsubakimoto Kogyo announced at 10:00 a.m. on November 29, 2024 that it had completed its share buyback, which it announced following the previous day’s market close.
The Company explained that the reason for the share buyback is to improve shareholder returns and capital efficiency and to enable the implementation of an agile and flexible capital policy.
In its Q2 FY2025/3 earnings briefing held on October 31, 2024, the Company reported results that fell slightly short of plan, leading to a temporary drop in its share price.

In the Dissolution of the Parent-Subsidiary Listing, the Second Step Is Key for the Parent Company

By Aki Matsumoto

The measure to implement 100% inclusion or separation of subsidiary profits from parent company profits is only the first step, and this alone won’t reflect positively on the stock price.
The key is the second phase of measures to strengthen the parent company’s overall ability to generate cash flow by investing in highly profitable businesses after restructuring its business portfolio.
Hitachi is one of the few cases where it quickly implemented the second phase and reflected growth in corporate value in its stock price through realization of cash flow expansion.

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Dec 04

Most Read: Kioxia Holdings , Korea Stock Exchange Kospi Index, Sanrio, Phison Electronics, Persistent Systems, Goodman Group, HKBN Ltd, Meituan, Auckland Intl Airport and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float
Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?
Sanrio (8136 JP) – Kitty Behaving Badly
TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform
NIFTY200 Momentum30 Index Rebalance Preview: 65% One-Way Turnover and US$1.6bn Trade
Goodman Group (GMG AU) Placement: Limited Index Flows
Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight
HKBN (1310 HK): China Mobile’s “Fair” Tendering Offer
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
Auckland Airport (AIA NZ) Placement: Potential Index Flows

Kioxia (285A) IPO: Index Entry Timeline & Overhang from Plans to Increase Float

Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.

Breaking: Korea Drops Martial Law, Local Markets in Turmoil—What’s the Short-Term Trade Play Here?

By Sanghyun Park

Martial law has been declared 11 times since 1945, but this is the first since Korea’s post-‘90 democratization.
The Martial Law Command’s first proclamation blocks parliament, raising legal questions about its constitutionality and making any immediate attempt to end martial law uncertain.
Defense and telecom stocks could outperform short-term due to martial law, making them strong trading targets to watch.

Sanrio (8136 JP) – Kitty Behaving Badly

By Travis Lundy

Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.

TIP Customized Taiwan Select High Div Index Rebalance Preview: US$2.8bn Trade as Adds Outperform

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.

NIFTY200 Momentum30 Index Rebalance Preview: 65% One-Way Turnover and US$1.6bn Trade

There could be 19 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December. There are some stocks from the new F&O inclusions.
If all changes are on expected lines, one-way turnover is estimated at 65.2% and that will result in a one-way trade of INR 71bn (US$837m).
The potential inclusions have outperformed the potential deletions since the start of July. The pace picked up over the last month as we neared the end of the review period.

Goodman Group (GMG AU) Placement: Limited Index Flows

China Investment Corp owns 7.84% of Goodman Group (GMG AU) and is looking to sell 50.4m shares (2.64% of shares out) at a price range of A$37.55-37.6/share, a tiny discount.
Goodman Group (GMG AU) has run away from its peers over the last couple of years and there could be a move lower in the stock following the placement.
There will be limited passive buying in the short-term coinciding with the placement. There will be some more passive buying in February.

Goodman Group Placement – Large Shareholder Looking to Raise US$1.2bn but Discount Is Tight

CIC is looking to raise around US$1.2bn, via selling around 2.6% of its stake in Goodman Group (GMG AU) , via a block trade.
Goodman’s shares have performed exceptionally well over the past year, driven by its pivot towards data centers.
In this note, we will talk about the placement and run the deal through our ECM framework.

HKBN (1310 HK): China Mobile’s “Fair” Tendering Offer

China Mobile (941 HK) was a logical suitor for HKBN Ltd (1310 HK). A non-PRC (or government-affiliated) corporation taking over a media/broadband/telco in Hong Kong is probably a non-starter.
China Mobile has a made a pre-conditional voluntary Offer at HK$5.23/share, a 40.97% premium to undisturbed. The price is final.
Pre-Cons are the usual suspects (NDRC, Mofcom & SASAC). The Offer itself conditional on a 50% acceptance hurdle, with 24.96% in the bag. The intention is to maintain HKBN’s listing.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)

The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.

Auckland Airport (AIA NZ) Placement: Potential Index Flows