Consumer

In this insight, we discuss a pair trade between LG Corp (003550 KS) (go long) and LG Electronics (066570 KS) (go short).
LG Electronics is likely to have continued weakening results, due to rising interest rates on the household disposable income in major countries.
Our base case valuation analysis of LG Corp suggests an implied price of 93,905 won per share, representing 19% upside from current levels.

The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point

It is useful for statutory documents disclosing a company’s medium-to-long-term management strategy to include information on “human capital,” which plays a role in sustainable growth.
If the mandatory timing of the information to be disclosed in annual securities report is accelerated, there is risk that the information will be similar to that of other companies.
The government should not stick to 2023 for the mandatory inclusion in annual securities reports, but should give companies time to encourage them to deepen what they include.

General Mills Inc: Major Drivers

General Mills delivered a mixed result for the previous quarter, failing to meet market expectations on the revenue front but delivering an earnings beat.
The HMM cost savings, along with gains from pricing mix, offset inflation, deleverage, and the other types of operating costs benefitted General Mills’ bottom-line and helped deliver an earnings beat.
The good news was that General Mills’ service levels increased slightly.

McCormick & Co.: Major Drivers

McCormick had a disappointing quarter with a 3% top-line growth from the same quarter last year, just on par with expectations.
The management remains focused on managing inventory levels and removing inefficiencies across the supply chain.
High meat prices had an influence on grilling-related items compared to last year, although grilling is remains popular compared to pre=pandemic levels.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 18

Daily Brief Consumer: Stock Exchange of Thailand SET 50 Index, Tesla Motors, Fast Retailing and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Thailand SET50 and SET100: Quiddity Index Rebalance Primer
EQD | Tesla (TSLA US): How to Play Earnings Via Options
Fast Retailing – The New Medium-Term Plan For Europe Is As Ambitious As The North America Plan

Thailand SET50 and SET100: Quiddity Index Rebalance Primer

By Janaghan Jeyakumar, CFA

Thailand SET Index (SET INDEX) is a composite index which represents the price movement for all common stocks trading on the SET.
SET50 and SET100 indices are calculated, respectively, from the stock prices of the top 50 and 100 listed companies on SET in terms of market capitalization and liquidity.
In this insight, we take a look at the selection criteria and the historical price performance of past Rebalance Events.

EQD | Tesla (TSLA US): How to Play Earnings Via Options

By Simon Harris

TS LA reports earnings on October 19th, and we analyse expected moves using the options market
Stock has suffered some production issues, but we think company has potential to beat the lowered estimates
We identify some option strategies to play the event with goof risk/reward

Fast Retailing – The New Medium-Term Plan For Europe Is As Ambitious As The North America Plan

By Oshadhi Kumarasiri

Fast Retailing (9983 JP)’s 4QFY22 was yet again a surprise to the upside as revenue grew 23.2% YoY to ¥536.0bn while OP grew 24.3% YoY to ¥26.2bn.
Having rallied close to 60% following an earnings beat in 3QFY22, we were bearish on the company expecting weak guidance for FY23, but the company surprised with optimistic FY23 guidance.
With China struggling to maintain the historical growth momentum and North-America falling short of its medium-term plan, we anticipate downside to Fast Retailing’s FY23 guidance over the next 12 months.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 17

Daily Brief Consumer: Shandong Fengxiang, Yashili International Holdings, Tokyo Stock Exchange Tokyo Price Index Topix, Alibaba Group, Xinhua Winshare and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Fengxiang’s Judical Auction Successful, MGO Upcoming
Weekly Deals Digest (16 Oct) – Yashili, Kingston, Elmo, Pushpay, DTAC/True, Giant Biogene, Betagro
In-Depth Approach Is Necessary for Companies Seeking Further Communication with Overseas Investors
China Internet Weekly (17Oct2022): Alibaba, JD, Tencent, 37, S.F., YTO
Fengxiang (9977 HK): Unconditional MGO Imminent
Xinhua Winshare (811 HK): Revisiting a Solid Yield Play Fully Backed by Net Cash

Fengxiang’s Judical Auction Successful, MGO Upcoming

A successful bidder (identity unknown at the time of writing) has emerged for Shandong Fengxiang (9977 HK) controlling shareholder’s 70.92% stake at the base bid price of RMB1,372.2 million.
As the bidder will hold 30% or more of the voting rights, it will result in an MGO at RMB1.383 per share (HK$1.526 at the median BOC FX of 0.9056).
The transfer of the sale shares is subject to completion procedures. Our best guess is the offer completes end-January 2023. At the last close, the gross spread is 15.6%.

Weekly Deals Digest (16 Oct) – Yashili, Kingston, Elmo, Pushpay, DTAC/True, Giant Biogene, Betagro

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – Giant Biogene Holding (GBH HK) pre-marketing a US$500 million HKEx IPO. Betagro (BTG TB) closes its books early for its THB17.4 billion (US$462 million) IPO.
Event-Driven developments – Kingston Financial (1031 HK), Yashili International Holdings (1230 HK), China Vast Industrial Urban Development (6166 HK), Elmo Software (ELO AU), Pushpay Holdings (PPH NZ), DTAC/True.

In-Depth Approach Is Necessary for Companies Seeking Further Communication with Overseas Investors

TSE published “English Disclosure Practice Guide” for companies with the aim of promoting disclosure in English for communicating with foreign investors, who have significant presence in TSE and Japanese companies.
The purpose of English-language disclosure is to attract investment from overseas investors and improve valuations, but there is mismatch between information needs of overseas investors and English-language disclosure of companies.
While this handbook is helpful for companies attempting to disclose in English for the first time, in-depth approach may be necessary for companies that need further communications with overseas investors.

China Internet Weekly (17Oct2022): Alibaba, JD, Tencent, 37, S.F., YTO

By Ming Lu

Two logistics companies expected that their net profits to rise significantly in 3Q22.
Alibaba’s Freshippo closed its community group purchase business after many small companies did.
Tencent gave up on acquiring Black Shark, a mobile game handset producer.

Fengxiang (9977 HK): Unconditional MGO Imminent

Shandong Fengxiang (9977 HK) is a company engaged in chicken breeding, slaughtering, and processing.
Its controlling shareholder with 70.9% of shares out, via domestic shares, was unable to meet its debts, and had been forced into a judicial auction to sell its holding.
The auction has completed. This forced stake sale should trigger an MGO, one that is likely to be unconditional. Expect an official announcement shortly.

Xinhua Winshare (811 HK): Revisiting a Solid Yield Play Fully Backed by Net Cash

By Osbert Tang, CFA

Including dividends, Xinhua Winshare (811 HK) has returned 26.8% since end-2019, significantly outperformed the market. We expect it to maintain a secured 7% dividend yield in next two years.
Without any outstanding borrowings, it has net cash of HK$5.23 at end-1H22. This equals to 103.5% of share price. Such a strong financial position means dividend stream can be sustained.
Its businesses of textbook and supplementary materials publication and distribution are well insulated from economic slowdown. It does not face the same regulatory risks given its ownership by local SASAC.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 16

Daily Brief Consumer: Kingston Financial, LOTTE Corporation, Plenus Co Ltd, Diageo PLC, Unilever PLC and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?
MSCI Korea November SAIR: Three Adds & Four Deletes
Plenus (9945) To Go Private in MBO – Looks Like a Done Deal
Diageo ADR: Initiation of Coverage – Portfolio Split
Unilever ADR: Initiation of Coverage – Recent Strategic Shift

Kingston’s All-Time Lows to Draw an Offer from Mrs Chu?

Kingston Financial (1031 HK) entered a trading halt pending an announcement under the Hong Kong Code on Takeovers and Mergers on 14 October. The shares are at all-time lows.
It is likely that Pollyanna Chu Yuet Wah (CEO and co-founder), the largest shareholder representing 75.61% of ordinary shares (80.09% of diluted shares), is seeking to privatise Kingston.
As privatisation through a Bermuda scheme involves the headcount test, a decent premium is required – an offer at the 1-year average price of HK$0.33 implies a 63% premium.

MSCI Korea November SAIR: Three Adds & Four Deletes

By Sanghyun Park

As the recent share price volatility has grown, there have been significant changes in those on the borderline at the MSCI November SAIR.
Additions: Hyundai Mipo Dockyard (010620), LOTTE Corp (004990), and Ecopro (086520) & Deletions: Meritz Financial Group (138040), Amorepacific Group (002790), SK Chemicals (285130), and Green Cross (006280).
We must wait on many names until the end, making the price impact more dramatic than usual, as the flow can be concentrated after the announcement.

Plenus (9945) To Go Private in MBO – Looks Like a Done Deal

By Travis Lundy

Kyushu-Based food services business and restaurant operator Plenus Co Ltd (9945 JP) announced Friday that its main holder had announced a Tender Offer. The Board voted to support the effort.
The Tender Offer is at ¥2,640/share, a 37.5% premium to last, and which is just higher than the highest closing price since listing.
This looks like a deal easy to get done. Decent premium, well above book, lifetime high on a low vol stock, not an awful multiple, and founder+cross-holders have 50%.

Diageo ADR: Initiation of Coverage – Portfolio Split

This is our first report on global alcoholic beverage major, Diageo.
Volume increased by 10%, while price/mix growth increased by 11 points, with pricing contributing to the balanced growth of the mid-single digits.
Overall, they are well positioned for the spirits category’s sustained premiumization and market share increases within the overall beverage alcohol market.

Unilever ADR: Initiation of Coverage – Recent Strategic Shift

This is our first report on global consumer goods giant, Unilever.
The company had a decent performance in 2021 and its growth continues to build in its first-half performance.
Unilever also uses its extensive market experience to deal with inflation.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 15

Daily Brief Consumer: Kingston Financial, Blink Charging Co, Meta Platforms (Facebook), Garrett Motion and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Kingston Financial (1031 HK): What Will Chu Choose To Do?
Liquidity Risk Short Candidates: Blink Charging, Natera, Axonics, Enviva
What Are the Prospects for a Meta Rebound?
GTX: The Macro Adjustment

Kingston Financial (1031 HK): What Will Chu Choose To Do?

Hong Kong brokerage Kingston Financial (1031 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code.
Chu Yuet Wah is the largest shareholder with 74.6% of shares out.
Shares are down 98% from the January 2018 peak. A chunky premium may be on the cards if a firm Offer unfolds.

Liquidity Risk Short Candidates: Blink Charging, Natera, Axonics, Enviva

By Eric Fernandez, CFA

Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
Today we are flagging Blink Charging., Natera, Axonics, and Enviva.

What Are the Prospects for a Meta Rebound?

By Aaron Gabin

Meta now trades at 14x P/E and 6x fwd EV/EBITDA…valuation inline with Paramount and Warner Brothers Discovery. This is nuts!
While the drumbeat of competitive concerns and self inflicted wounds has piled up in the past month, even core Facebook is not in a death spiral of engagement.
META is investing in new ad tech and ad formats, and has the ability to cut significant opex from its budget that could yield 10-20% upside to current 2023 consensus.

GTX: The Macro Adjustment

By Hamed Khorsand

Continued improvement in automobile inventory levels should benefit Garrett Motion (GTX)
GTX has experienced a decline in turbochargers sold over the past year due to supply chain issues causing carmakers to have lumpy ordering rates.
Ahead of the second quarter results, we had highlighted the foreign exchange headwind the weaker Euro could play. The Euro continued to depreciate versus the US Dollar in the third quarter

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 14

Daily Brief Consumer: Fast Retailing, Melco International Development, Suzuki Motor, The Keepers Holdings, Inc., Euromoney Institutional Invest, Alibaba Group, CJ ENM, Tokyo Stock Exchange Tokyo Price Index Topix, Piktina and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Fast Retailing (9983) | Fantastic Execution at Fantastical Valuation
StubWorld: Macau Plays Need To Up Non-Gaming Game
Suzuki (7269) | Small Cars at Tiny Valuations
Keepers Holdings: Global Market Weakness Creates Opportunity
Becketts/Euromoney Institutional Investor: Spread
Alibaba, JD.Com, Longfor Group, and Country Garden
Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)
Review of TSE Market Reclassification Requires a Big Cleanup, Not a Small Cleanup as It Should Be
Vietnamese Fashion Recommerce Firm Raises US$1 Million

Fast Retailing (9983) | Fantastic Execution at Fantastical Valuation

By Mark Chadwick

We were Bearish on Fast Retailing, mainly due to valuation concerns against global peers. That view still stands.
We expected cautious guidance reflecting a harsh macro environment. Fast surprised with bullish guidance. That could be a risk.
We highlight the key slides from the results presentation and re-iterate our view that Fast should not trade at such a premium to its global peers

StubWorld: Macau Plays Need To Up Non-Gaming Game

Reportedly Macau authorities are not satisfied with some concessionaire proposals from gaming firms and require them to increase investment into non-gaming facilities under a concession retendering process
Preceding my comments on some of the gaming plays such as Melco International Development (200 HK) and Genting Bhd (GENT MK) are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Suzuki (7269) | Small Cars at Tiny Valuations

By Mark Chadwick

We are bullish on the share price of Suzuki given its exposure to secular growth in India
The ex-Maruti business is recovering as supply chain constraints ease.
We see at least 25% upside to the share price and believe the non-Maruti business is significantly undervalued

Keepers Holdings: Global Market Weakness Creates Opportunity

By Sameer Taneja

The Keepers Holdings, Inc. (KEEPR PM) correction in share price by 23% from the peak provides an opportunity with the stock trading at 7.4x/6.1x PE FY22e/23e (excluding Bodegas W&H earnings).
The company will release its Q3 2022 earnings in early November, and we expect revenue and earnings growth to be >25% YoY.
We also eagerly await more color on accretion to earnings from a 50% stake in Bodegas W&H post which we expect the stock to be even cheaper.

Becketts/Euromoney Institutional Investor: Spread

By Jesus Rodriguez Aguilar

The scheme is just pending court sanction and the remaining regulatory approval, with closing reasonably expected to happen in Q4 2022.
I believe Euromoney is going cheap, but the current debt markets make it harder to raise money/counterbid. Euromoney is trading at 16.3x EV/Fwd EBIT vs. RELX at 17.3x.
The shares are liquid. Gross spread is 1.3%, with estimated annual return of 7.9% assuming settlement by 15 December. Long.

Alibaba, JD.Com, Longfor Group, and Country Garden

By Untying The Gordian Knot

Country Garden 2031 USD bond closed at 17.00. It is pricing a near-inevitable default.
Longfor Group-rated BBB- maturing in 2032, is trading at 54.25, yielding 12.6%.
The bonds are down 50% since their peak near 109 in February 2021. it is getting into a crisis of confidence mode.

Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE.
CJ ENM’s valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023.
The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.

Review of TSE Market Reclassification Requires a Big Cleanup, Not a Small Cleanup as It Should Be

Prime market was conceived as a market for institutional investors to invest in, but the problem is that little has changed in substance as a result of the market reclassification.
The current discussion hasn’t raised any debate on raising the market cap-threshold for prime market. To keep up appearances as a global market, TSE will proceed with disclosure in English.
TSE will probably set 5-year exit deadline for companies that don’t meet the listing criteria within the next year, and will prepare a market for those companies.

Vietnamese Fashion Recommerce Firm Raises US$1 Million

By Tech in Asia

Piktina, an online marketplace for secondhand clothes in Vietnam, has raised US$1 million in seed funding
Founded in June, Piktina connects buyers and sellers of secondhand goods, targeting both individuals who want to free up their closets and businesses that specialize in pre-owned fashion items.
The recommerce platform was established by Phuong Nguyen, the former CEO of Vietnamese ride-hailing firm Be Group, and Huyen Trinh, also a former Be Group executive.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 12

Daily Brief Consumer: Lock&Lock, NagaCorp Ltd, Taste Gourmet Group, J Front Retailing, Adastria Co Ltd, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Lock & Lock – Announces Dividends Worth 25% of Market Cap
Asia Casino Sector: We Are Raising Guidance on Nagacorp to Strong Buy and Overweight
Taste Gourmet: Buybacks And Recovery Into Q2 2023
J Front Retailing (3086) | Still in the Bargain Basement
Adastria Signs Forever 21, New Growth Through Licensing?
The Resolution of Human Rights Issues Should Not Be a Means to a Purpose

Lock & Lock – Announces Dividends Worth 25% of Market Cap

After the market close today, Lock&Lock announced that it will pay out dividends per share of 1,653 won worth 83 billion won, representing 25% of the company’s market cap.
The shareholders date of record that could receive the dividends is as of 30 September 2022.
Although the high dividend payment should benefit the existing shareholders, we are not sure on the company’s ability to continue to maintain high dividend payout ratio.

Asia Casino Sector: We Are Raising Guidance on Nagacorp to Strong Buy and Overweight

By Howard J Klein

A recent dip in the shares against an accelerating revenue recovery trend signals a stronger buy signal not yet broadly recognized by the market.
Performance to date augers well for a considerable upside by 4Q22 to 1Q23.
Gains achieved in all customer segments: main floor mass, premium mass as well as VIP.

Taste Gourmet: Buybacks And Recovery Into Q2 2023

By Sameer Taneja

Taste Gourmet Group (8371 HK) is a play on the HK recovery with a promising outlook in the long-term at 5.7x/4.3x FY23/24e PE (10.5%/14.1% dividend yield assuming 60% payout).
The company recently initiated a buyback mandate on the 20th of September for (10% of outstanding shares) and has repurchased 2.2% of outstanding shares so far.
We believe the company will report strong earnings for its quarterly release on November 11th and payout a good dividend which will be a further catalyst for rerating.

J Front Retailing (3086) | Still in the Bargain Basement

By Mark Chadwick

J. Front is a key beneficiary of improving consumption post-pandemic and a return of inbound tourism.
Q2 sales rose 4.8% on the year. 2H sales guidance +2% YoY looks too conservative given full resumption of inbound tourism.
We believe the stock still represents good value at 0.9x book value.

Adastria Signs Forever 21, New Growth Through Licensing?

By Michael Causton

Adastria’s growth has been sporadic in recent years as it adjusts to maturity and saturation in core apparel markets.It has diversification projects but these will take time to develop.
It thinks it can find faster growth by franchising and licensing with already well-known brands, starting with Forever 21.
It also has a new business providing apparel collections to General Merchandise Retailers, starting with Izumi.

The Resolution of Human Rights Issues Should Not Be a Means to a Purpose

If discussion doesn’t proceed from the starting point that respect for rights should be for the coexistence of humankind, not for the maintenance of corporate activities, it will get confused.
Although human rights were included in the 2021 revision of the Corporate Governance Code in the Principles of Sustainability, it is not thought to have been effective.
The repeated human rights violation scandals at companies and the fact that these companies have human rights policies in place infers that this is a deeply rooted problem in society.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 11

Daily Brief Consumer: Nissan Motor, Hisense Home Appliances Group Co., Ltd. H, Fast Retailing, Lotte Confectionery, Meihua Holdings Group Co A, K Car, SAMG Entertainment and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Renault & Nissan – Capital Manoeuvres In the Dark
Hisense (921 HK/000921 CH) Nonsense
Fast Retailing – FY23 Guidance Could Knock Some Sense into Market
KOSPI200 Index Rebalance Preview: Few Changes, Big Impact
SSE180 Index Rebalance Preview: Stock Connect & MSCI/FTSE Eligibility
K Car Lockup – Small Stock with a Big Lockup – Money Recouped, Any Price Is a Good Price to Sell
SAMG Entertainment IPO Preview

Renault & Nissan – Capital Manoeuvres In the Dark

By Travis Lundy

In April, a Bloomberg story said Renault SA (RNO FP) might sell shares in Nissan Motor (7201 JP) to support its investment in EVs. They might sell to Nissan, others.
Renault shares popped hard, this two months after CEO Luca de Meo had said Renault might split, investing in and listing its EV business separately. But since then? Crickets.
Over the weekend, we have news talks are coming to a head. My feeling? The results won’t be pretty – a messy agreement which inspires nobody, but probably still works.

Hisense (921 HK/000921 CH) Nonsense

Back on the 21 October 2016, Hisense Home Appliances Group Co., Ltd. H (921 HK) announced it would invest RMB1.7bn of “idle” funds into wealth management products, or ~HK$1.43/share.
Between 16 September 2022 and 8 October, Hisense announced it has invested HK$1.13bn of idle funds in wealth management products.
Hisense reckons the investment is “beneficial for enhancing efficiency of use of idle self-owned funds“. But if truly idle, they should be returned to shareholders.

Fast Retailing – FY23 Guidance Could Knock Some Sense into Market

By Oshadhi Kumarasiri

Although we are not expecting a major miss for Fast Retailing (9983 JP) in FQ4, we believe FY23 guidance could be disappointing to prompt a substantial correction in FY23 consensus.
China is continuously failing to live up to the company’s expectations and the only factors holding Uniqlo’s share price from breaking-down are the North America growth and the Yen depreciation.
Those too are now under threat, with a looming recession and Fed rate hikes failing to curb inflation.

KOSPI200 Index Rebalance Preview: Few Changes, Big Impact

90% of the way through the review period of the Kospi 200 Index December rebalance, we see two potential changes to the index. There is another potential inclusion failing liquidity.
This rebalance is expected to have the lowest turnover as compared to any of the Kospi 200 Index rebalances over the last few years. Partly lower markets, partly no IPOs.
That said, passive trackers are estimated to need to trade over 10 days of ADV on one of the potential adds and both potential deletes.

SSE180 Index Rebalance Preview: Stock Connect & MSCI/FTSE Eligibility

Nearing the end of the review period, we expect there will be 18 changes to the SSE180 Index in December. The first-order impact on the stocks is not large.
Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
We see 6 of the potential/close adds being added to the MSCI China Index in February and 8 of the potential/close adds being added to the FTSE All-World/All-Cap in March.

K Car Lockup – Small Stock with a Big Lockup – Money Recouped, Any Price Is a Good Price to Sell

By Sumeet Singh

K Car completed its IPO in South Korea in Oct 21. It raised around US$300m after having downsized the offering and cut the asking price to below the IPO range.
K Car is a used car marketplace and dealership operating in South Korea.
In this note, we will talk about the recent updates and the upcoming lockup expiry.

SAMG Entertainment IPO Preview

SAMG Entertainment is getting ready for an IPO on the KOSDAQ market. SAMG Entertainment is a leading children animation and digital contents focused entertainment company targeting young children.
The IPO offering amount is from 37.8 billion won to 46.7 billion won. The book building for the institutional investors starts on 1 November.
The company operates 42 Youtube channels including 15 domestic channels and 27 overseas channels. The total number of subscribers for these 42 Youtube channels exceeds 39 million.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 10

Daily Brief Consumer: Varun Beverages Ltd, Tata Motors Ltd, Lifestyle International Holdings, System1 and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

MSCI India November SAIR: Potential Changes with Big Flow & Impact
SENSEX Index Rebalance Preview: Market Consultation on Derivative Linkage & Impact
Merger Arb Mondays (10 Oct) – Lifestyle, Yashili, Eagle Cement, O2Micro, DTAC/True, Nearmap, PTB
Advertisement Apocalypse

MSCI India November SAIR: Potential Changes with Big Flow & Impact

We see 9 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR. There are a few stocks close to the cutoffs.
Inclusion in the index will require passive trackers to buy 7-14 days of ADV on the stocks. That increases to 18-55 days of delivery volume.
There appears to be significant pre-positioning on a lot of the potential adds and the shareholding pattern as of end September should provide a better picture.

SENSEX Index Rebalance Preview: Market Consultation on Derivative Linkage & Impact

AIPL has commenced a market consultation on amending the index universe to only include stocks that are a part of the Futures & Options (F&O) segment of the market.
This is likely driven by a bunch of Adani-group companies that are at the cusp of index inclusion and are not a part of the F&O market.
Post implementation of the change, Tata Motors Ltd (TTMT IN) is a likely inclusion to the index in December, though that depends on Dr. Reddy’s Laboratories (DRRD IN) being deleted.

Merger Arb Mondays (10 Oct) – Lifestyle, Yashili, Eagle Cement, O2Micro, DTAC/True, Nearmap, PTB