Smartkarma Daily Briefs

• Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
• Highlights: Currently ten pair trade opportunities across three markets and three sectors persist.
• Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.

• The 11th national VBP officially started last week. The average price reduction of the selected products is 53%. Due to the “anchor price” mechanism, VBP is becoming increasingly rational.
• The purchasing power of the global pharmaceutical industry on Chinese assets is still far from saturated that we have reason to expect more transactions to come to Chinese pharmaceutical companies.
• Based on WuXi AppTec’s 25Q3 results, CDMO business has emerged from fundamental turning point following the recovery of overseas biotech industry, but the inflection point of CRO is lagging behind.

• QFIN shares are down ~19% MTD on regulatory concerns in China’s consumer finance sector, though the proposed credit-risk sharing rules may only modestly impact near-term RoE (1–3ppt).
• While speculation over a lower NFRA loan yield cap persists, QFIN’s current yield profile suggests limited sensitivity; any tangible financial impact will depend on actual regulation rollout.
• QFIN’s 0.9x P/B reflects overly bearish loss expectations. Even under a bear case with a 5ppt RoE reduction, the stock offers 56% upside, implying a fair value of $34.

• Nearly every comment on Japanese equities is focused on the half of the market that trades below book, but last week, Advantest, which trades at 18x book, exploded 30%.
• Searches for “AI Bubble” on google are up 90%, but Advantest’s share price exploded because it became clear that investors were underestimating demand for AI related hardware.
• Fear and Hype on both sides proved overdone. When I searched for the truth, I found only 1 red flag, 2 green, and 7 yellow.  

• Coinbase is a leading, US-based cryptocurrency exchange that has established a strong brand reputation for security and regulatory compliance in a volatile and often risky industry.
• The company’s financial performance is intrinsically linked to the cyclical and volatile nature of the cryptocurrency market, with revenues heavily dependent on transaction volumes and crypto asset prices.
• Future growth is contingent on diversifying revenue streams beyond transaction fees, with strategic initiatives focused on institutional services, the stablecoin (USDC) ecosystem, derivatives, and international expansion.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

• Revenue up 18% YoY. Cloud revenue up 26%. Commercial remaining obligation up 51%. Commercial bookings up 112%. AI capacity up 80% this year, will roughly double over next two years. 
• For a company with $300+bn revenue, that’s impressive. Slight irritant: $4bn loss on OpenAI in a quarter, 13% of net income gone. Is that the price of top line growth?
• The stock is trading at 29x forward EPS, Cloud & AI revenues are accelerating, but profits incl OpenAI loss are probably very thin. The cash cow will come years later. 

• 3Q25 revenue up 13% YoY, AWS up 20%, Operating Profit would have increased by 25% YoY but 2 one-time charges (FTC and headcount) bring OP flat YoY.
• 2025 Capex revised up from $100bn to 125bn. If Data Center capacity doubles to 2027, that means $205bn Capex in 2027. AWS revenues will double to ~$270bn? Probably yes.
• Next 2 years revenue growth and margins expansion are an AWS story. Valuations are average at 31x forward EPS. Buy more.

• Chery’s revenue growth rate plunged below 5% YoY in 3Q25 from 28% YoY in 2Q25.
• Chery’s domestic retail sales volume began to decline in September 2025.
• The company is still the number five largest car maker in China.

• Steady operations despite price softness; volumes up 8% YoY, debt down ₹3,400 Cr, margins stable around 10%.
• Capex on track; IISCO ₹33,000 Cr expansion progressing, funded via internal accruals and moderate leverage.
• Valuation reasonable; trades at ~7× EV/EBITDA and ~US$560/t EV/Ton with Positive Bias on margin recovery and balance-sheet strength.

• Nippo Ltd. is a specialized trading company with significant manufacturing capabilities, focusing on high-value-added products in the Mobility, Electronics, and Medical & Precision Devices sectors.
• The company is poised to benefit from growing demand in high-growth areas, particularly components for electric vehicles, generative AI servers, and medical equipment, which are key pillars of its medium-term strategy.
• A revised shareholder return policy, increasing the dividend payout ratio to 50%, coupled with a strong growth track record in dividends and market capitalization, signals a commitment to enhancing shareholder value.

This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.