Category

Multi Strategy

Brief Multi-Strategy: London Shanghai Stock Connect – The Dampest of Squibs. Inteqres Viewpoint and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. London Shanghai Stock Connect – The Dampest of Squibs. Inteqres Viewpoint

1. London Shanghai Stock Connect – The Dampest of Squibs. Inteqres Viewpoint

Image 41514005621582821543929

Despite the fanfare only one Chinese company listed (and raised money) in London after the announcement of the London Shanghai Connect.  There have been no listing of Chinese Depository Receipts by companies listed in London.  This is starting to look like a white elephant.  We have reviewed the successful Depository Receipt programmes around the world and conclude that the pull to issue Chinese Depository Receipts is only weak at present.  We do think that companies are reviewing the option of issuing CDRs but there is no intense pressure to do so.  By following the factors we have identified, authorities and exchanges could build a more successful programme.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: London Shanghai Stock Connect – The Dampest of Squibs. Inteqres Viewpoint and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. London Shanghai Stock Connect – The Dampest of Squibs. Inteqres Viewpoint
  2. Malaysia’s Political Turmoil Takes a New Twist

1. London Shanghai Stock Connect – The Dampest of Squibs. Inteqres Viewpoint

Image 41514005621582821543929

Despite the fanfare only one Chinese company listed (and raised money) in London after the announcement of the London Shanghai Connect.  There have been no listing of Chinese Depository Receipts by companies listed in London.  This is starting to look like a white elephant.  We have reviewed the successful Depository Receipt programmes around the world and conclude that the pull to issue Chinese Depository Receipts is only weak at present.  We do think that companies are reviewing the option of issuing CDRs but there is no intense pressure to do so.  By following the factors we have identified, authorities and exchanges could build a more successful programme.

2. Malaysia’s Political Turmoil Takes a New Twist

When we visited Malaysia in January it became more and more obvious that the reversal in its Austrian stress indicator (ASI) fortunes was much more to do with political in-fighting than economic factors.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: How Long Does It Take To Change One’s Behavior? Why Does This Matter in the Post COVID-19 World? and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. How Long Does It Take To Change One’s Behavior? Why Does This Matter in the Post COVID-19 World?
  2. Governments and Policies Adapting to Critical Known Unknown
  3. Costs of and Response to COVID-19
  4. Covid-19: RBI Has Gone All-Out-Attack
  5. China Auto Parts A Shares: Parts Of The Future

1. How Long Does It Take To Change One’s Behavior? Why Does This Matter in the Post COVID-19 World?

Buffett 2

The main subject of this report is as follows: “How Long Does It Take To Change One’s Behavior? Why Does This Matter in the Post COVID-19 World?” Certainly, COVID-19 will change the way people behave. The longer that COVID-19 lasts and the longer that millions of people are under lockdown, their behaviors will change further, potentially making them into a habit and this would have a tremendous impact on the global economy. 

We are specifically interested in this topic because as millions of people around the world undergo “lockdown” for a period of one to three months, this could have an enormous behavior change once this lockdown period ends.

The change in behavior patterns (especially related to consumer spending) in the post COVID-19 world would also have a big impact on whether the global economy/stock market can turn around quickly (such as after the Great Financial Recession in 2008/2009) or whether the turnaround lasts longer (such as after the Internet tech/crash lasting for nearly 3 years from 2000 to 2002). 

2. Governments and Policies Adapting to Critical Known Unknown

Chart%203c

We argued in Lack of US market & macro volatility both reassuring and troubling that “the market’s willingness to look through domestic political and geopolitical events suggests that only a significant exogenous or endogenous shock currently beyond markets’ radar screens (an “unknown unknown”) is likely to really move the needle”.

That unknown unknown, a “black swan” event, has turned out to be a global viral pandemic on a scale not seen since the Spanish influenza pandemic of 1918-1919.

The coronavirus outbreak is now three months old but governments, central banks, corporates and households still face a critical known unknown, in our view, namely the total number people who had the coronavirus, acquired immunity and are no longer contagious and who currently carry the coronavirus and are thus potentially infectious.

This includes people who have not been clinically tested – more than 99.9% of the world’s population. We estimate that only 3.3 million people (4 out of every 10,000) have been tested for coronavirus, although testing data are patchy and often released with a lag. The main reason so few people have been tested is the still limited capacity to rapidly and reliably test a very large number of people.

In econometric terms that is a very small sample from which to extrapolate country-wide trends. One implication is that the actual mortality rate may be far smaller than reported.

The high number of tests-per-capita conducted in countries such as South Korea has been posited as an explanation for their relatively low number of coronavirus-related deaths. However, other factors have likely been at play, including the timing of clinical tests, demographics, national health systems’ capacity to treat infected patients and the timing and efficacy of self-isolation and self-distancing policies, including country “lockdowns”.

For now what policy-makers know they don’t know will likely continue to influence country-specific containment plans, as well as domestic measures to support economic growth while ensuring the functioning of financial markets.

3. Costs of and Response to COVID-19

Capture

As the epicentre of the coronavirus pandemic shifts from Europe to the US and the number of deaths and infection cases reach new highs, the costs of the crisis are beginning to be revealed. In Singapore economic activity contracted in 1Q20 at a faster pace than at the worst point during the GFC while Chinese industrial profits were down 38% in the first two months of the year. Despite this we are cautiously optimistic that Asian economic activity led by China will pick-up in the second half of the year. We are much more worried about advanced economies where policy mis-management threatens to tip the world economy into recession.

4. Covid-19: RBI Has Gone All-Out-Attack

The RBI took a gigantic stride to combat the Covid-19 pandemic along with the government, as highlighted by the seventh bi-monthly monetary policy statement 2019-20. The MPC meet outcome had fired from all the possible cylinders, giving a much needed impetus to steady the economy.

5. China Auto Parts A Shares: Parts Of The Future

Image?1584917132

China has been the fastest growing auto market in the world. Over the last 2-3 years China’s auto component industry is going through a tumultuous period – not only due to the volatility in demand (due to the auto downturn last year and corona-related lockdowns this year), but also due to two mega-trends that are providing risks and opportunities to the industry – NEVs and autonomous driving. In addition, there are 3 other less-discussed drivers of change in the industry   (emerging localization requirements, junior JV partners becoming leaders in their own right, international expansion). We look at the key A-share (MSCI A-share) listed players in the industry through the lens of these five trends/drivers of change. 

We prefer Passenger vehicle(PV) part suppliers over commercial vehicle (CV)part suppliers.  Among PV parts suppliers, our top buy is Changzhou Xingyu (601799.CH), followed by Ningbo Joyson Electronic(600699.CH),Fuyao Glass (600660.CH/3606.HK) and Huayu Auto (600741.CH). Our main underweight Wanfeng Auto Wheel (002085.CH). In Commercial vehicle (CV) part segment, we prefer Wanxiang Qianchao (000559.CH) and Linglong Tyre (601966.CH). We suggest investors to avoid  Weifu High-Tech (000581.CH).

What’s Original?

The recent tumult in the auto sector creates significant opportunities and risks for the companies involved – however companies/equities that are driving these trends are largely listed in the A-share market.  Lack of market communication, limited financial and operational disclosure and low breadth of analyst coverage in these markets has meant that there are quite a few underappreciated companies in these markets which have been overlooked by international investors.

While companies like Ningbo Joyson and Fuyao Glass enjoy some international investor recognition, we believe under-appreciated stocks like Wanxiang Qianchao and Linglong tyres are not well-covered by the market and this report provides a rationale for investors to look further into those names. We also highlight the risks to (relatively) popular names like Weifu Hi-tech (due to structural issues in the industry) and Wanfeng Auto wheel (due to management pursuing non-core acquisitions).

Note that in this report, we do not include the possible impact from Coronavirus on the industry and companies. This is because 1) it’s difficult to quantify the impact at current moment; 2) even if coronavirus impact might last for months, it’s still a relative short period compared to the 5-year time horizon we focus on. In addition, once coronavirus is gone, market demand on autos and auto parts would rebound quickly. 

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: Malaysia’s Political Turmoil Takes a New Twist and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. Malaysia’s Political Turmoil Takes a New Twist

1. Malaysia’s Political Turmoil Takes a New Twist

When we visited Malaysia in January it became more and more obvious that the reversal in its Austrian stress indicator (ASI) fortunes was much more to do with political in-fighting than economic factors.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: Malaysia’s Political Turmoil Takes a New Twist and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. Malaysia’s Political Turmoil Takes a New Twist
  2. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures

1. Malaysia’s Political Turmoil Takes a New Twist

When we visited Malaysia in January it became more and more obvious that the reversal in its Austrian stress indicator (ASI) fortunes was much more to do with political in-fighting than economic factors.

2. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures

Image?1582779689

United Hampshire US REIT (UHUS) aims to raise up to US$325m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. 

The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery & necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.

In my previous note, United Hampshire US REIT IPO – E-Commerce Resistant Maybe but Still Not Doing Great, I looked at the company’s past performance and highlighted some of the issues.

In this note, I’ll talk about valuations and run the deal through our ECM framework

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: Malaysia’s Political Turmoil Takes a New Twist and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. Malaysia’s Political Turmoil Takes a New Twist
  2. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures
  3. Pair Trade Set-Ups in Korea (Closing the Gap)

1. Malaysia’s Political Turmoil Takes a New Twist

When we visited Malaysia in January it became more and more obvious that the reversal in its Austrian stress indicator (ASI) fortunes was much more to do with political in-fighting than economic factors.

2. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures

Image?1582779689

United Hampshire US REIT (UHUS) aims to raise up to US$325m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. 

The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery & necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.

In my previous note, United Hampshire US REIT IPO – E-Commerce Resistant Maybe but Still Not Doing Great, I looked at the company’s past performance and highlighted some of the issues.

In this note, I’ll talk about valuations and run the deal through our ECM framework

3. Pair Trade Set-Ups in Korea (Closing the Gap)

Orion

In this insight, we provide visual set-ups of the Korean stubs related pair-trades. We have included 38 pair trade set-ups of all the major Korean stubs related pairs (including regular and quasi holdcos and their respective opcos). We have noticed in the past that the pair trade strategy can particularly bear fruits after/during periods when the market volatility is relatively high, which is the case right now so it may be worthwhile to pay particular attention to some of these pair trades. 

We have provided 3 months price chart comparisons of all the 38 pair trade set-ups below. Of these, the five set-ups that are particularly noteworthy (the ones that have shown the biggest gap in the past 3 months) are as follows:

  • LG Corp vs. LG Chem
  • Hanjin Kal vs. Korean Air Lines 
  • Halla Holdings vs. Mando Corp 
  • SK Telecom vs. SK Hynix 
  • Hanwha Solutions vs. Hanwha Corp

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: Governments and Policies Adapting to Critical Known Unknown and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. Governments and Policies Adapting to Critical Known Unknown
  2. Costs of and Response to COVID-19
  3. Covid-19: RBI Has Gone All-Out-Attack
  4. China Auto Parts A Shares: Parts Of The Future
  5. Korean Air Lines: COVID-19 Could Lead to Breach of Debt Covenants

1. Governments and Policies Adapting to Critical Known Unknown

Chart%203c

We argued in Lack of US market & macro volatility both reassuring and troubling that “the market’s willingness to look through domestic political and geopolitical events suggests that only a significant exogenous or endogenous shock currently beyond markets’ radar screens (an “unknown unknown”) is likely to really move the needle”.

That unknown unknown, a “black swan” event, has turned out to be a global viral pandemic on a scale not seen since the Spanish influenza pandemic of 1918-1919.

The coronavirus outbreak is now three months old but governments, central banks, corporates and households still face a critical known unknown, in our view, namely the total number people who had the coronavirus, acquired immunity and are no longer contagious and who currently carry the coronavirus and are thus potentially infectious.

This includes people who have not been clinically tested – more than 99.9% of the world’s population. We estimate that only 3.3 million people (4 out of every 10,000) have been tested for coronavirus, although testing data are patchy and often released with a lag. The main reason so few people have been tested is the still limited capacity to rapidly and reliably test a very large number of people.

In econometric terms that is a very small sample from which to extrapolate country-wide trends. One implication is that the actual mortality rate may be far smaller than reported.

The high number of tests-per-capita conducted in countries such as South Korea has been posited as an explanation for their relatively low number of coronavirus-related deaths. However, other factors have likely been at play, including the timing of clinical tests, demographics, national health systems’ capacity to treat infected patients and the timing and efficacy of self-isolation and self-distancing policies, including country “lockdowns”.

For now what policy-makers know they don’t know will likely continue to influence country-specific containment plans, as well as domestic measures to support economic growth while ensuring the functioning of financial markets.

2. Costs of and Response to COVID-19

Capture

As the epicentre of the coronavirus pandemic shifts from Europe to the US and the number of deaths and infection cases reach new highs, the costs of the crisis are beginning to be revealed. In Singapore economic activity contracted in 1Q20 at a faster pace than at the worst point during the GFC while Chinese industrial profits were down 38% in the first two months of the year. Despite this we are cautiously optimistic that Asian economic activity led by China will pick-up in the second half of the year. We are much more worried about advanced economies where policy mis-management threatens to tip the world economy into recession.

3. Covid-19: RBI Has Gone All-Out-Attack

The RBI took a gigantic stride to combat the Covid-19 pandemic along with the government, as highlighted by the seventh bi-monthly monetary policy statement 2019-20. The MPC meet outcome had fired from all the possible cylinders, giving a much needed impetus to steady the economy.

4. China Auto Parts A Shares: Parts Of The Future

Image 15760872721584096125915

China has been the fastest growing auto market in the world. Over the last 2-3 years China’s auto component industry is going through a tumultuous period – not only due to the volatility in demand (due to the auto downturn last year and corona-related lockdowns this year), but also due to two mega-trends that are providing risks and opportunities to the industry – NEVs and autonomous driving. In addition, there are 3 other less-discussed drivers of change in the industry   (emerging localization requirements, junior JV partners becoming leaders in their own right, international expansion). We look at the key A-share (MSCI A-share) listed players in the industry through the lens of these five trends/drivers of change. 

We prefer Passenger vehicle(PV) part suppliers over commercial vehicle (CV)part suppliers.  Among PV parts suppliers, our top buy is Changzhou Xingyu (601799.CH), followed by Ningbo Joyson Electronic(600699.CH),Fuyao Glass (600660.CH/3606.HK) and Huayu Auto (600741.CH). Our main underweight Wanfeng Auto Wheel (002085.CH). In Commercial vehicle (CV) part segment, we prefer Wanxiang Qianchao (000559.CH) and Linglong Tyre (601966.CH). We suggest investors to avoid  Weifu High-Tech (000581.CH).

What’s Original?

The recent tumult in the auto sector creates significant opportunities and risks for the companies involved – however companies/equities that are driving these trends are largely listed in the A-share market.  Lack of market communication, limited financial and operational disclosure and low breadth of analyst coverage in these markets has meant that there are quite a few underappreciated companies in these markets which have been overlooked by international investors.

While companies like Ningbo Joyson and Fuyao Glass enjoy some international investor recognition, we believe under-appreciated stocks like Wanxiang Qianchao and Linglong tyres are not well-covered by the market and this report provides a rationale for investors to look further into those names. We also highlight the risks to (relatively) popular names like Weifu Hi-tech (due to structural issues in the industry) and Wanfeng Auto wheel (due to management pursuing non-core acquisitions).

Note that in this report, we do not include the possible impact from Coronavirus on the industry and companies. This is because 1) it’s difficult to quantify the impact at current moment; 2) even if coronavirus impact might last for months, it’s still a relative short period compared to the 5-year time horizon we focus on. In addition, once coronavirus is gone, market demand on autos and auto parts would rebound quickly. 

5. Korean Air Lines: COVID-19 Could Lead to Breach of Debt Covenants

Koreanair a

In this report, we analyze Korean Air Lines (003490 KS) with regards to the global COVID-19 outbreak which is likely to lead to a breach of debt covenants resulting in a need for a massive capital raise and government bailout. 

South Korea’s government has already pledged loans of 300 billion won ($250 million) for the entire airlines in Korea. However, this is a TINY amount compared to the total amount needed to save this industry. This is also less than 1% of the $60 billion that the U.S. government has promised to its own air transport industry. 

Going forward, a question mark about Korean Air is guessing which airliner that the Korean government will bail out since it seems clear that it will not be able to bail out all the airlines in Korea. Because of the dire situation right now, there has also been an idea of a potential merger  between Korean Air Lines (003490 KS) and Asiana Airlines (020560 KS)

COVID-19 is a beast that will likely have the greatest-ever negative impact on the global airline industry in the past century. Many airlines are likely to become bankrupt in the next couple of years. There will be an intense industry consolidation. Korean Air faces an enormous challenge in the midst of this global COVID-19 pandemic, which is likely to lead to a breach of debt covenants resulting in a need for a massive capital raise and government bailout.

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: Malaysia’s Political Turmoil Takes a New Twist and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. Malaysia’s Political Turmoil Takes a New Twist
  2. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures
  3. Pair Trade Set-Ups in Korea (Closing the Gap)
  4. Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future

1. Malaysia’s Political Turmoil Takes a New Twist

When we visited Malaysia in January it became more and more obvious that the reversal in its Austrian stress indicator (ASI) fortunes was much more to do with political in-fighting than economic factors.

2. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures

Image?1582779689

United Hampshire US REIT (UHUS) aims to raise up to US$325m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. 

The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery & necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.

In my previous note, United Hampshire US REIT IPO – E-Commerce Resistant Maybe but Still Not Doing Great, I looked at the company’s past performance and highlighted some of the issues.

In this note, I’ll talk about valuations and run the deal through our ECM framework

3. Pair Trade Set-Ups in Korea (Closing the Gap)

Orion

In this insight, we provide visual set-ups of the Korean stubs related pair-trades. We have included 38 pair trade set-ups of all the major Korean stubs related pairs (including regular and quasi holdcos and their respective opcos). We have noticed in the past that the pair trade strategy can particularly bear fruits after/during periods when the market volatility is relatively high, which is the case right now so it may be worthwhile to pay particular attention to some of these pair trades. 

We have provided 3 months price chart comparisons of all the 38 pair trade set-ups below. Of these, the five set-ups that are particularly noteworthy (the ones that have shown the biggest gap in the past 3 months) are as follows:

  • LG Corp vs. LG Chem
  • Hanjin Kal vs. Korean Air Lines 
  • Halla Holdings vs. Mando Corp 
  • SK Telecom vs. SK Hynix 
  • Hanwha Solutions vs. Hanwha Corp

4. Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future

Figure%204

  • Primary supplies covered 83% of 2018 demand, secondary the remaining 17%
  • Primary production reduced by 7,100/t pa by producer cuts
  • Forecast that Primary and Secondary supplies sufficient to meet 100% of 2020 demand
  • Global nuclear generation to fall from 2675.4 to 1897.4TWh over next 30-years
  • NAC Kazatomprom JSC (KAP LI) will increasingly dominate global primary supply
  • US$24.60/lb U3O8 (Spot price ) implies 76% to 87% of producers covering “operating costs”
  • Substantial inventories exist on current marginal demand, sufficient for 300 years
  • Expect long-term prices to stabilise at ~US$16-19/lb U3O8
  • Carbon-free economy impossible without wide-spread re-adoption of nuclear power

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures
  2. Pair Trade Set-Ups in Korea (Closing the Gap)
  3. Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future

1. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures

Image?1582779689

United Hampshire US REIT (UHUS) aims to raise up to US$325m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. 

The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery & necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.

In my previous note, United Hampshire US REIT IPO – E-Commerce Resistant Maybe but Still Not Doing Great, I looked at the company’s past performance and highlighted some of the issues.

In this note, I’ll talk about valuations and run the deal through our ECM framework

2. Pair Trade Set-Ups in Korea (Closing the Gap)

Orion

In this insight, we provide visual set-ups of the Korean stubs related pair-trades. We have included 38 pair trade set-ups of all the major Korean stubs related pairs (including regular and quasi holdcos and their respective opcos). We have noticed in the past that the pair trade strategy can particularly bear fruits after/during periods when the market volatility is relatively high, which is the case right now so it may be worthwhile to pay particular attention to some of these pair trades. 

We have provided 3 months price chart comparisons of all the 38 pair trade set-ups below. Of these, the five set-ups that are particularly noteworthy (the ones that have shown the biggest gap in the past 3 months) are as follows:

  • LG Corp vs. LG Chem
  • Hanjin Kal vs. Korean Air Lines 
  • Halla Holdings vs. Mando Corp 
  • SK Telecom vs. SK Hynix 
  • Hanwha Solutions vs. Hanwha Corp

3. Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future

Figure%204

  • Primary supplies covered 83% of 2018 demand, secondary the remaining 17%
  • Primary production reduced by 7,100/t pa by producer cuts
  • Forecast that Primary and Secondary supplies sufficient to meet 100% of 2020 demand
  • Global nuclear generation to fall from 2675.4 to 1897.4TWh over next 30-years
  • NAC Kazatomprom JSC (KAP LI) will increasingly dominate global primary supply
  • US$24.60/lb U3O8 (Spot price ) implies 76% to 87% of producers covering “operating costs”
  • Substantial inventories exist on current marginal demand, sufficient for 300 years
  • Expect long-term prices to stabilise at ~US$16-19/lb U3O8
  • Carbon-free economy impossible without wide-spread re-adoption of nuclear power

You are currently reading Executive Summaries of Smartkarma Insights.

Want to read on? Explore our tailored Smartkarma Solutions.

Brief Multi-Strategy: United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures and more

By | Daily Briefs, Multi Strategy

In this briefing:

  1. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures
  2. Pair Trade Set-Ups in Korea (Closing the Gap)
  3. Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future
  4. Uranium: 30% Decline in Demand Over Next 30 Years

1. United Hampshire US REIT IPO – Yield Looks Enticing but Falls Short on Multiple Measures

Image?1582779689

United Hampshire US REIT (UHUS) aims to raise up to US$325m in its Singapore IPO. UHUS will invest in  grocery-anchored and necessity-based retail properties, and self-storage facilities, located in the U.S. 

The initial portfolio consists of 22 assets with an aggregate net lettable area (NLA) of 3.17m sqft on the East Coast of the U.S. The portfolio comprises 18 grocery & necessity properties with a total NLA of 2.86m sq ft and four self-storage properties with a total NLA of 0.31m sq ft. The aggregate purchase consideration payable is US$582.5m.

In my previous note, United Hampshire US REIT IPO – E-Commerce Resistant Maybe but Still Not Doing Great, I looked at the company’s past performance and highlighted some of the issues.

In this note, I’ll talk about valuations and run the deal through our ECM framework

2. Pair Trade Set-Ups in Korea (Closing the Gap)

Orion

In this insight, we provide visual set-ups of the Korean stubs related pair-trades. We have included 38 pair trade set-ups of all the major Korean stubs related pairs (including regular and quasi holdcos and their respective opcos). We have noticed in the past that the pair trade strategy can particularly bear fruits after/during periods when the market volatility is relatively high, which is the case right now so it may be worthwhile to pay particular attention to some of these pair trades. 

We have provided 3 months price chart comparisons of all the 38 pair trade set-ups below. Of these, the five set-ups that are particularly noteworthy (the ones that have shown the biggest gap in the past 3 months) are as follows:

  • LG Corp vs. LG Chem
  • Hanjin Kal vs. Korean Air Lines 
  • Halla Holdings vs. Mando Corp 
  • SK Telecom vs. SK Hynix 
  • Hanwha Solutions vs. Hanwha Corp

3. Primary & Secondary Supply Sufficient to Sate Global Uranium Demand for the Foreseeable Future

Figure%204

  • Primary supplies covered 83% of 2018 demand, secondary the remaining 17%
  • Primary production reduced by 7,100/t pa by producer cuts
  • Forecast that Primary and Secondary supplies sufficient to meet 100% of 2020 demand
  • Global nuclear generation to fall from 2675.4 to 1897.4TWh over next 30-years
  • NAC Kazatomprom JSC (KAP LI) will increasingly dominate global primary supply
  • US$24.60/lb U3O8 (Spot price ) implies 76% to 87% of producers covering “operating costs”
  • Substantial inventories exist on current marginal demand, sufficient for 300 years
  • Expect long-term prices to stabilise at ~US$16-19/lb U3O8
  • Carbon-free economy impossible without wide-spread re-adoption of nuclear power

4. Uranium: 30% Decline in Demand Over Next 30 Years

Figure%2014

  • Nuclear plant closures will outnumber newly constructed within 18-24 months
  • Plant closures the West to on outstrip new construction facilities in the East
  • Modelled global nuclear power generation demand to 2050
  • Global nuclear generation to fall from 2675.4 to 1897.4TWh over next 30-years
  • China has only commenced a single power plant in past four years
  • Forecasts for US, UK, France, China, Japan, Korea, Germany, Russia, Taiwan, Canada and India
  • NAC Kazatomprom JSC (KAP LI) will increasingly dominate global primary production

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