Daily Briefs

Midea Group Co Ltd A (000333 CH) has launched its H Share listing at HK$52.00-54.80 per share. Pricing will be on 13 September, and the listing on 17 September.
We previously discussed the listing in Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health and Midea Group H Share Listing: AH Discount Views.
Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.

7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign

By Travis Lundy

Late last week, the Nikkei reported Seven & I Holdings (3382 JP) would send a letter to Couche-Tard saying they reviewed ACT’s Proposal and deemed it “inadequate.” Indeed it was.
7&i then published the Board’s letter, saying 7&i remained open to discussions but ACT’s Offer “grossly undervalued” 7&i’s intrinsic value and lacked in other areas. ACT responded with a “letter.”
But ACT’s “letter” was a press release aimed not at 7&i but the public. 7&i released a terse response today. ACT is the suitor. It needs to act like it.

Midea A/H Listing – Bigger Deal, Better Pricing

By Sumeet Singh

Midea Group Co Ltd A (000333 CH) aims to raise up to US$3.5bn in its H-share listing, the deal is somewhat larger than what was being spoken about earlier.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the deal background in our previous notes. In this note, we talk about valuations.

Midea Group: Quick Overview of HK Offer, Post-Issue Valuations. Attractive.

By Devi Subhakesan

Midea Group Co Ltd A (000333 CH) is offering 492.1 million shares in Hong Kong, priced between HKD52 and HKD54.8 per share.The valuation looks attractive.
Nearly one-third of the Hong Kong share offering has already been subscribed by cornerstone investors.
Midea’s strong market share in home appliances, consistent revenue growth, margin expansion, and appealing return ratios make a compelling investment case.

Seven & I Says Not Enough to Alimentation Couche-Tard, Warns of US FTC Barriers

By Oshadhi Kumarasiri

Last Friday, Seven & I Holdings (3382 JP) issued a response to Alimentation Couche-Tard (ATD CN)’s non-binding acquisition proposal.
At $14.86 per share, Seven & I’s special committee stated that the offer significantly undervalues the company.
The response also highlighted that the proposal fails to address the numerous and substantial regulatory challenges the transaction would encounter from U.S. competition authorities.

SENSEX Index Rebalance Preview: Trent Could Replace Bajaj Finserv; BUT F&O Adds Could Change That

As things stand, Trent Ltd (TRENT IN) could replace Bajaj Finserv (BJFIN IN) in the S&P BSE SENSEX Index (SENSEX INDEX) at the close on 20 December.
Addition to the F&O list could see Zomato (ZOMATO IN) added to the index instead. That could then result in two changes to the S&P BSE SENSEX Index in December.
Trent Ltd (TRENT IN) is also an inclusion to the NIFTY Index (NIFTY INDEX) later this month and the pool of shares available for active investors is getting smaller.

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 7)

By David Mudd

ETF flows showed subdued activity during the week although the Southbound Connect platform had a minor outflow.
Great Wall Motor (2333 HK) and China Feihe (6186 HK) both had positive news sentiment helping their share prices rally on better earnings announcements.
New World Development (17 HK) announced a major asset impairment write-down sending its stock to historic lows. China Tourism Group Duty Free (1880 HK) disappointed on 2Q24 sales and profits.

P N Gadgil Jewellers IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation

By Akshat Shah

P N Gadgil Jewellers (1742652D IN) is looking to raise up to US$132m in its India IPO.
P N Gadgil Jewellers (PNGJ) is an Indian organized jewellery player. Its product offerings include traditional as well as modern and functional jewellery designs, in gold, diamond, silver and platinum.
Previously, we talked about the company’s historical performance. In this note, we provide a summary of its RHP updates and share our quick thoughts on peer comparison and valuation.

Nongfu Spring (9633 HK): Trading At Below 20x Forward PE With 15% NP 3-Year CAGR

By Steve Zhou, CFA

Nongfu Spring (9633 HK)‘s valuation has come down to a much more reasonable 20x forward PE with expected net profit CAGR of 15% for the next 3 years.
The derating is largely due to the negative media portrayal of the company’s Nongfu brand since February 2024, resulting in a -18% decline in its water business in 1H24.
Unsweetend tea business on the other hand has continued to shine, growing 59% yoy in sales in 1H24, while operating profit of the segment surged 63% yoy.

Some More Thoughts on Dollar General

By MBI Deep Dives

After Dollar General’s (DG) disastrous earnings couple of weeks ago, I was quite concerned about their prospects in the near-term.
However, a week later after digesting through Dollar Tree (DLTR) as well as DG management’s explanation in the Goldman Sachs Retailing Conference, I have updated some of my thoughts about DG…in the positive direction.
Nonetheless, I have decided to abide by my decision not to inject more capital to DG, but to increase my notional exposure to DG via long-dated call options.

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Sep 10

Daily Brief Health Care: Terumo Corp, Shanghai Henlius Biotech , Nanosonics Ltd, Tonix Pharmaceuticals Holding, Evaxion Biotech A/S, Oryzon Genomics, Basilea Pharmaceutica Ag and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind
Terumo (4543 JP): The Current Playbook
Shanghai Henlius Biotech (2696.HK) Privatization Update – Some New Information Worth the Attention
Nanosonics Ltd (NAN AU): Steering Back to Growth Trajectory; Outlook Is Improving
TNXP: Mpox Declared a Public Health Emergency of International Concern by World Health Organization
EVAX: Positive Test Data for Two Treatments
Oryzon Genomics – First patient dosed in new AML combination study
Basilea Pharmaceutica – H2 rewards continue: US$25m Cresemba milestone

Terumo Placement Follow-Up – Correction Has Been Inline with Recent Cross-Shareholding Unwind

By Clarence Chu

A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 JP).
We have covered the background of the deal in our earlier note, Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics.
In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.

Terumo (4543 JP): The Current Playbook

Since the US$1.4 billion secondary placement announcement, Terumo Corp (4543 JP)’s shares are down 3.5% from the undisturbed price of JPY2,771 per share (29 August).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Terumo’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 10 September. Despite Kokusai and Honda’s disappointing performance, the average large Japanese placement tends to generate positive returns.

Shanghai Henlius Biotech (2696.HK) Privatization Update – Some New Information Worth the Attention

By Xinyao (Criss) Wang

Fosun Pharma will make every effort to promote the success of this privatization. The management has disclosed the afterwards arrangements- Henlius and Fosun Pharma will further expand/integrate in the future.
Henlius’ revenue is expected to reach RMB6 billion in 2024 and RMB8-9 billion in next 2-3 years. Even if the privatization fails, things are still manageable due to strong fundamentals.
Fosun Pharma will not stop its capital operation against Henlius, but the plans of re-listing could be based on a new entity. So, the Cash Alternative is a better choice.

Nanosonics Ltd (NAN AU): Steering Back to Growth Trajectory; Outlook Is Improving

By Tina Banerjee

Nanosonics Ltd (NAN AU) reported significant turnaround, with recording H2FY24 revenue of A$90M, up 14% over the first half, driven by 20% increase in capital revenue in H2 over H1.
For FY25, Nanosonics guided for accelerated revenue growth of 8–12%, driven by growing capital revenue with greater unit volumes and increasing recurring revenue aligned with growth in installed base.
The company expects FY25 gross profit margin of 77–79% versus 77.9% in FY24, on higher production volumes in FY25 after reducing inventory in FY24.

TNXP: Mpox Declared a Public Health Emergency of International Concern by World Health Organization

By Zacks Small Cap Research

In August 2024, the World Health Organization (WHO) declared mpox a public health emergency of international concern.
The number of cases of mpox in the Democratic Republic of Congo (DRC) has totaled more than 15,600 this year with 537 deaths.
In the past month, over 100 laboratory confirmed cases of Clade 1b have been reported in neighboring countries of the DRC.

EVAX: Positive Test Data for Two Treatments

By Zacks Small Cap Research

EVAX is a clinical stage company that has proprietary AI models designed to more efficiently and more accurately target much-needed treatments.
The company has two streams of possible revenue: from the treatments themselves and from the licensing of the AI technology.
The company announced that two of its vaccine candidates had positive testing data that furthers our belief in the ability of Evaxion to bring multiple life-changing products to market.

Oryzon Genomics – First patient dosed in new AML combination study

By Edison Investment Research

Oryzon Genomics has announced the commencement of patient dosing in the investigator-initiated Phase Ib trial evaluating iadademstat as a combination treatment in first-line acute myeloid leukemia (AML). The study, which aims to recruit c 24 patients, is sponsored by Oregon Health & Science University (OHSU). It is designed to evaluate the safety, tolerability and optimal dose of iadademstat when administered alongside standard-of-care treatments venetoclax and azacitidine. It will also test for preliminary efficacy. Oryzon has previously generated encouraging results when investigating iadademstat in combination with azacitidine for newly diagnosed AML patients (ALICE trial) and this new study will explore potential further synergies of the broader combination.

Basilea Pharmaceutica – H2 rewards continue: US$25m Cresemba milestone

By Edison Investment Research

H224 continues to be a rewarding period for Basilea Pharmaceutica, with the announcement of a third successive milestone payment for Cresemba in the last month following strong sales performance (+24% y-o-y growth in in-market sales to US$489m for the 12 months ending March 2024). The latest milestone (US$25m/CHF21m) was triggered by license partner Pfizer exceeding a predetermined sales threshold in Europe. In total, Cresemba has raked in upwards of CHF34m in milestone payments in the year to date (with c CHF32m in H224 thus far), and we expect a further c CHF5m before year-end based on the most recent guidance from management. Beyond Cresemba, we expect the key focus areas for Basilea in H224 to be finalising a US commercialisation partner for Zevtera and the initiation of the first Phase III study for fosmanogepix (in candidemia/invasive candidiasis).

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Sep 10

Daily Brief Financials: Haitong Securities Co Ltd (H), K Bank, Bajaj Housing Finance, Hotel Property Investments, USD, Midea Real Estate Holding , NIFTY Index, Solana, Martin Currie Portfolio Invest and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Guotai Junan (2611 HK) & Haitong (6837 HK) Merger Creates China’s Major Player
K Bank IPO – The Biggest IPO in Korea in 2024
Bajaj Housing Finance IPO- Forensic Analysis
Hotel Property (HPI AU) Rejects Charter Hall’s A$3.65/Share Offer
The Story Behind K-Bank Leaking Pricing Details Before the IPO Prospectus Dropped
Global FX & Rates: US rates and FX market after a rollercoaster Friday
Midea Real Estate (3990 HK): Now Trading Ex-In-Specie
EQD | The NIFTY Potential Upside From Here
Prasad Mahadik: Is Solana Going Modular?
Martin Currie Global Portfolio Trust – Lower rates should be beneficial for performance

Guotai Junan (2611 HK) & Haitong (6837 HK) Merger Creates China’s Major Player

By David Blennerhassett

Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK), two of China’s leading state-backed brokerages, intend to merger via a share swap, subject to regulatory approvals.
Via a Merger by Absorption. GJS will issue new A and H shares to Haitong shareholders. The ratio hasn’t been firmed. Upon completion, the MergeCo creates China’s largest securities entity.
A merger is welcome – possibly mandated – amid challenging capital markets and a tightening regulatory backdrop.

K Bank IPO – The Biggest IPO in Korea in 2024

By Douglas Kim

K Bank is the biggest IPO in Korea in 2024. The IPO price range is from 9,500 won to 12,000 won. It is offering 82 million shares in this IPO.
According to the bankers’ valuation, the expected market cap of the company is from 4.0 trillion won to 5.0 trillion won.
The IPO deal size is 779 billion (US$579 million) to 984 billion won (US$732 million).

Bajaj Housing Finance IPO- Forensic Analysis

By Nitin Mangal

Bajaj Housing Finance (BHF IN) upcoming IPO is worth INR 65.6 bn, comprising of fresh issue worth INR 35.6 bn and offer for sale worth INR 30 bn.
The company reports strong KPIs and has been better than peers in several aspects. AUM growth is strong and is driven by Developer Financing and Lease Rental Discounting.
There are few important cautions regarding the NHB observations and assignments.

Hotel Property (HPI AU) Rejects Charter Hall’s A$3.65/Share Offer

By David Blennerhassett

Pub play Hotel Property Investments (HPI AU) has announced – and summarily rejected – a A$3.65/share cash Offer from Charter Hall Retail Reit (CQR AU).
Terms are a 14.8% premium to the undisturbed share price on March 28; following which a 14.8% “strategic interest” (@ A$3.35/share) was acquired by CQR and Charter Hall (CHC AU).
The Offer is subject to a 50.1% acceptance hurdle. The Offer should be open for acceptances around the 23 September.

The Story Behind K-Bank Leaking Pricing Details Before the IPO Prospectus Dropped

By Sanghyun Park

To justify a higher multiple, K-Bank is comparing itself to international internet banks, with KakaoBank as the only local peer. Differences in market conditions could complicate this comparison.
This might explains why K-Bank is cautiously testing the market by announcing the rights issue first and delaying the prospectus, amid regulatory crackdowns on inflated IPOs.
Controversy over high multiples from overseas peers and KakaoBank’s legal discount will be key in setting K-Bank’s IPO pricing.

Global FX & Rates: US rates and FX market after a rollercoaster Friday

By At Any Rate

Markets experienced significant volatility in response to comments from New York Fed presidents and Governor Waller, resulting in pricing of around 30 basis points for the September meeting
Labor market data suggests softening, with revisions showing a decline in private sector payroll growth, indicating a shift towards imminent Fed easing
Opportunities in Treasuries lie in steepeners, with a focus on front end steepening and potential for further broadening of the steepening trend as the Fed moves towards easing.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Midea Real Estate (3990 HK): Now Trading Ex-In-Specie

By David Blennerhassett

Back on the 23 June 2024, property developer Midea Real Estate Holding (3990 HK) announced the in-specie distribution of its core ops, either in unlisted scrip, or HK$5.90/share in cash.
The in-specie involved distributing 97.8% of Midea’s assets (involved in property development and sales); accounting for 95% of revenue and ~91% of profit. All figures as at FY23.
Midea went ex yesterday, closing down just HK$4.87/share. Midea, ex-in-specie, is currently trading at a trailing 0.6x P/B, and 2.3x PER. Pricing looks full.

EQD | The NIFTY Potential Upside From Here

By Nico Rosti

The NIFTY Index closed down last week, but if the rally restarts from here it would be good to analyse the pattern trend, to estimate how high it could go.
The current WEEKLY pattern favors uptrend that last for 2 or 3 weeks up in a row, on average, and up to 5 consecutive weeks up in a row.
Some additional reasoning is necessary to highlight the strongest resistance levels, we will do it in the insight.

Prasad Mahadik: Is Solana Going Modular?

By The Delphi Podcast

Austin from Solana tweeted about Solana’s new network extensions
Kyle Samani discussed how Solana rollups will differ from Ethereum’s
Prasad observed developments in Solana rollups, including SVM separation and new apps like Magic Block and Spicenet.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Martin Currie Global Portfolio Trust – Lower rates should be beneficial for performance

By Edison Investment Research

Martin Currie Global Portfolio Trust’s (MNP’s) performance was negatively affected in 2022 by the shift in interest rate expectations as US rates quickly moved up from 0.25% to 5.50%, in response to rising prices. Now, with inflation coming down, the consensus view is that US interest rates will soon be lowered, which should be beneficial for the valuation of long-duration growth stocks. Also, Zehrid Osmani, MNP’s manager since October 2018, has a proven track record of successful stock picking during periods when the stock market is driven by company fundamentals rather than when investor focus is on macroeconomic developments. Hence, Osmani has a high degree of confidence that there are better times ahead for MNP’s performance.

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Sep 09

Daily Brief Quantitative Analysis: China & HK Strategy: Sell in September and Go Away and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

China & HK Strategy: Sell in September and Go Away, Really?
KRX Foreign Holding Weekly (Sep 6th): Samsung Electronics, Sk Hynix, Kia Corp.
TWSE Foreign Holding Weekly (Sep 6th): Yageo, Shin Kong Financial, TSMC, Mediatek, Ctbc Financial
TWSE Short Interest Weekly (Sep 6th): TSMC, Cathay Financial, Visual Photonics Epitaxy, Innolux

China & HK Strategy: Sell in September and Go Away, Really?

By Osbert Tang, CFA

The HSI has declined 3% MTD, but based on history, there is more downside risk. Over the last 10 years, the Index has only returned positively in two September.
October is also not good, and the Index declined an average of 1.9% in the month since 2019. However, November and December are normally the best-performing ones.
Prudent investors should stay conservative until October. By the end of next month, there are opportunities to increase position to take hold of the potential year-end rally.

KRX Foreign Holding Weekly (Sep 6th): Samsung Electronics, Sk Hynix, Kia Corp.

By Ke Yan, CFA, FRM

We analyzed the changes in foreign holdings of KRX stocks as of Sep 6th which has an aggregated holding worth USD545.5bn.
We estimate that foreign flows to be outflows of USD1,276mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight changes of foreign holdings in Samsung Electronics, Sk Hynix, Kia Corp..

TWSE Foreign Holding Weekly (Sep 6th): Yageo, Shin Kong Financial, TSMC, Mediatek, Ctbc Financial

By Ke Yan, CFA, FRM

We analyzed the changes in foreign holdings of TWSE Stocks as of Sep 6th which has an aggregated holding worth USD928.2bn.
We estimate that foreign flows to be outflows of USD2,648mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
We highlight changes of foreign holdings in Yageo, Shin Kong Financial, TSMC, Mediatek, Ctbc Financial, Quanta Computer, Unimicron Technology.

TWSE Short Interest Weekly (Sep 6th): TSMC, Cathay Financial, Visual Photonics Epitaxy, Innolux

By Ke Yan, CFA, FRM

We analyzed the changes in short interest of TWSE Stocks as of Sep 6th which has an aggregated short interest worth USD19.8bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
We highlight short interest changes in TSMC, Cathay Financial, Visual Photonics Epitaxy, Innolux, Formosa Petrochemical, Ctbc Financial, Shin Kong Financial, Alchip Technologies.

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Sep 09

Daily Brief ESG: Parent-Subsidiary Listing Issues Lead to Reasons Why ROE Is Not Increasing and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Parent-Subsidiary Listing Issues Lead to Reasons Why ROE Is Not Increasing

Parent-Subsidiary Listing Issues Lead to Reasons Why ROE Is Not Increasing

By Aki Matsumoto

The most significant reason for decreasing parent-subsidiary listings is the presence of overseas investors who have long pointed out the problems with this issue. This TSE’s request will support them.
The issue of parent-subsidiary listing is whether the listed parent should incorporate the profitability of equity-method affiliate/listed subsidiary to enhance its profitability, or effectively use its assets by divesting them.
If extending to equity-method affiliates, there are many companies that haven’t made progress in reviewing their business portfolios, and this is where the fundamental issue of ROE not increasing lies.

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Sep 09

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Volatile Week Ahead and more

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

In today’s briefing:

Ohayo Japan | Volatile Week Ahead
Japan Morning Connection: US Export Curbs Tighten on China
Global Tech Weekly – Focus on AI, Semis, China V U.S., Software V Hardware. AI Party Ending?
Improvement in Solar and Battery Technology

Ohayo Japan | Volatile Week Ahead

By Mark Chadwick

U.S. stocks slumped Friday, capping a volatile week as weak August jobs data fueled concerns about the economy
Seiren: Hong Kong’s activist fund Oasis Management acquired a 6.28% stake in Seiren, becoming its third-largest shareholder
Toyota announced plans to produce next-generation EV batteries at new plants in Fukuoka and Hyogo prefectures.

Japan Morning Connection: US Export Curbs Tighten on China

By Andrew Jackson

The US released its framework for further semiconductor related export restrictions to China late last week, including access to quantum computers and components, chipmaking tools including gate all-around (GAA) technologies.
US homebuilders jumped after a survey showed new home orders rebounded sharply in August ahead of the expected rate cuts in September.
Plenty of positive headlines for Alimentation Couche-Tard’s bid for 7&I, including comments that they are confident financing the deal in cash, and ready and willing to advance friendly discussions.

Global Tech Weekly – Focus on AI, Semis, China V U.S., Software V Hardware. AI Party Ending?

By Neil Campling

Generative AI seen through the lens of corporate earnings shows a lack of ROI or growth drivers in applications Broadcom (AVGO US)Hewlett Packard Enterprise (HPE US) Alphabet (GOOGL US)
U.S. semi equipment restrictions to China could negatively impact Tokyo Electron, ASML results in 2025 ASML Holding NV (ASML NA)Tokyo Electron Device (2760 JP)
Flagship global Tech conference in NYC suggests interest has picked up in global software above hardware in a notable shift

Improvement in Solar and Battery Technology

By Alex Ng

Recent improvements in solar and battery technologies have been driven by advances in materials science, manufacturing techniques, and system efficiency.
Solid-State batteries replace the liquid electrolyte in traditional lithium-ion batteries with a solid electrolyte, energy density, and charging speeds. They are seen as a game-changer, especially for electric vehicles.
Both solar and battery technologies are becoming cheaper, making renewable energy more accessible and economically viable.

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Sep 09

Daily Brief Credit: Morning Views Asia: China Vanke and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Morning Views Asia: China Vanke

Morning Views Asia: China Vanke

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

China Vanke

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Sep 09

Daily Brief Event-Driven: S&P500/400/600 Index Rebalance: Dell and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight
S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed
KRX Sector Rebalance Shocker: Massive Flow Impact on Hankook & Company
Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
Haitong Securities (6837 HK): Evaluating the Potential Merger with GTJA (2611 HK)
Merger Arb Mondays (09 Sep) – Shinko, Fuji Soft, Pasco, GA Pack, CPMC, Latin Res, Capitol, PSC, Rex
Quiddity TDIV/50/100 Sep 24 Rebal: 100% Hit Rate; Perfectly Positioned for Our Trade
HK Connect SOUTHBOUND Flows (To 6 Sep 2024); Weak Data
Taiwan Top 50 ETF Rebalance: Rallying PharmaEssentia To Replace Sliding Nanya Tech
A/H Premium Tracker (To 6 Sep 2024): SB Buying of H Underperformance, AH Premia Up

S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight

There are 3 changes for the S&P 500 INDEX, 8 changes for the S&P Midcap400 Index and 15 changes for the S&P SmallCap600 Index at the September rebalance.
Dell Technologies (DELL US) and Palantir Technologies (PLTR US) were finally added to the S&P 500 INDEX (SPX INDEX) and there is huge size to trade in the stocks.
There will also be big buying in Apple (AAPL US) following a float increase driven by Berkshire Hathaway Inc Cl A (BRK/A US) selling last quarter.

S&P/ASX Index Rebalance (Sep 2024): Two Big Surprises; Positioning Is Mixed

There are 2 changes for the S&P/ASX100 Index, 3 changes for the S&P/ASX 200 (AS51 INDEX) and 16 adds/ 8 deletes for the S&P/ASX300 Index.
The two big surprises are the inclusion of Guzman Y Gomez (GYG AU) and Yancoal Australia (YAL AU) in the S&P/ASX 200 (AS51 INDEX) and S&P/ASX300 Index.
The adds to the indices have outperformed the deletes over the last few months and there could be profit-taking in the next few days.

KRX Sector Rebalance Shocker: Massive Flow Impact on Hankook & Company

By Sanghyun Park

Hankook & Company is unexpectedly entering Autos, the only large-cap inclusion, likely getting a significant weight and facing a massive flow impact.
Like BBIG, this single-day flow event driven by one or two ETFs means smaller front-running impact, but names like Hankook & Company could see early positioning due to massive flows.
I’ll position in big impact names two days before the ETF rebalance trading. I’ll then go long on a basket of those with over 0.5x ADTV at Wednesday’s close.

Midea Group (300 HK): IPO Open Now; Upcoming Index Flows

The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.

Haitong Securities (6837 HK): Evaluating the Potential Merger with GTJA (2611 HK)

On 6 September, Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) entered a legally binding agreement to merge through absorption and share exchange.
The high-profile merger aligns with the Chinese government’s ambition to reform the brokerage sector and create world-class investment banks. The merger would result in the largest China broker by assets.
In this note, we evaluate the potential share exchange ratio and the risks to satisfying the conditions for implementing the potential merger.

Merger Arb Mondays (09 Sep) – Shinko, Fuji Soft, Pasco, GA Pack, CPMC, Latin Res, Capitol, PSC, Rex

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Malaysia Airports Holdings (MAHB MK), Greatview Aseptic Packaging (468 HK).
Lowest spreads: Fuji Soft Inc (9749 JP), Tohokushinsha Film (2329 JP), Second Chance Properties (SCE SP), Fancl Corp (4921 JP), Descente Ltd (8114 JP), C.I. TAKIRON Corporation (4215 JP).

Quiddity TDIV/50/100 Sep 24 Rebal: 100% Hit Rate; Perfectly Positioned for Our Trade

By Janaghan Jeyakumar, CFA

The ADDs/DELs for the TDIV, T50, and T100 indices for the September 2024 index rebal event was confirmed after market close on Friday 6th September 2024.
There will be one change for the T50 index and four separate changes for the T100 index. One of the T100 changes will also trigger a TDIV index deletion.
In this insight, we have presented our final estimates for the index flows for ADDs/DELs and capping flows for the TDIV index.

HK Connect SOUTHBOUND Flows (To 6 Sep 2024); Weak Data

By Travis Lundy

SOUTHBOUND was a net buyer this week, again, after a small net sell week broke the 28-week buying streak. This week, over four days, it was +HK$9.3bn.
ETFs were a net buy this week; CCB, ICBC, Meituan, China Mobile, as well as BYD, Nonfu Spring, and ANTA Sports stand out among net buys. Sells were small.
This week sees Alibaba Group Holding (9988 HK) eligible for SOUTHBOUND buying. And what was supposed to be the HSI/HSCEI/HSTECH rebals Friday are pushed to Monday (link here).

Taiwan Top 50 ETF Rebalance: Rallying PharmaEssentia To Replace Sliding Nanya Tech

Pharmaessentia Corp (6446 TT) will replace Nanya Technology (2408 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 20 September.
Shorts have been covering positions in Pharmaessentia Corp (6446 TT) while there has been a surge in new short positions in Nanya Technology (2408 TT).
Cumulative excess volume in Pharmaessentia Corp (6446 TT) has flattened out as momentum has stalled while there has been a surge in cumulative excess volume for Nanya Technology (2408 TT).

A/H Premium Tracker (To 6 Sep 2024): SB Buying of H Underperformance, AH Premia Up

By Travis Lundy

Repeat of last week: Miserable economic data continues. Trade geopol is mixed. Territorial geopol getting more serious. SOUTHBOUND gross volumes and net back up, but not high.
AH Premia rose slightly as HK-listed shares underperformed mainland share indices. Hs underperform their As consistently compared to relative index performance.
It is not clear what impetus there might be for better H performance.

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Sep 09

Daily Brief ECM: Pre-IPO Midea Group H Share (PHIP Updates) – Some Points Worth the Attention and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Pre-IPO Midea Group H Share (PHIP Updates) – Some Points Worth the Attention
ECM Weekly (9th Sep 2024) – Midea, Bajaj Housing, Carote, Western Digital, Challenger, CICT, Premier
Hive Box Holdings Pre-IPO, Part 2: Segments, P&L, Balance Sheet & CF, Key Drivers, & More Questions

Pre-IPO Midea Group H Share (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

China’s home appliance industry is facing challenges. Even with large-scale “trade in” activities, its expansion effect on market size still appears limited, making it difficult to trigger significant growth momentum.
However, Midea still achieved strong performance growth in 24H1. Both revenue and net profit showed double-digit growth rates. Midea’s business expansion and product profitability are much better than peers.
Performance drivers are overseas business and air conditioners. Our forecast is Midea’s 2024 net profit would reach about RMB37 billion. Valuation of Midea could be higher than Haier Smart Home.

ECM Weekly (9th Sep 2024) – Midea, Bajaj Housing, Carote, Western Digital, Challenger, CICT, Premier

By Sumeet Singh

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, we looked at Midea Group Co Ltd A (000333 CH) and Bajaj Housing Finance (BHF IN), which are two relatively large listings coming up.
Placement were flowing through again this week, across the region.

Hive Box Holdings Pre-IPO, Part 2: Segments, P&L, Balance Sheet & CF, Key Drivers, & More Questions

By Daniel Hellberg

A change in depreciation policy boosted reported profits in Jan-May 2024
But Adjusted EBITDA margins have declined consistently in recent periods
Among our growing list of questions: why hasn’t Hive Box grown faster?

💡 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

Sep 09

Daily Brief Equity Bottom-Up: Weekly Consumer Tales: India Festive Season: Hyundai Slows and more

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

In today’s briefing:

Weekly Consumer Tales: India Festive Season: Hyundai Slows, Toyota Aces. First Cry Fails to Cheer
HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024
JNBY Design (3306 HK): A Cash Cow
Autodesk Inc.: Expansion into Digital Transformation Solutions & Use Of AI-ML To Drive Growth! – Major Drivers
Elastic N.V.: An Insight Into Their Pricing Strategy & Our Revenue & Profitability Projections! – Major Drivers
China Consumption Weekly (9 Sep 2024): Tesla, NIO, PDD, Anta, 361 Degree
Affirm Holdings: Expanded Adoption of Wallet Partnerships & Other Major Drivers
Nutanix Inc.: Increased Demand for Private Cloud Solutions Driving Our Optimism! – Major Drivers
Burlington Stores Inc.: Leveraging Physical and Digital Growth Opportunities! – Major Drivers
Brown-Forman Corporation: Can They Sustain Their Competitive Advantage With Brand Power? – Major Drivers

Weekly Consumer Tales: India Festive Season: Hyundai Slows, Toyota Aces. First Cry Fails to Cheer

By Devi Subhakesan

Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
Hyundai Motor India’s August dispatch volumes were down 8% versus previous year – mostly due to sluggish demand for hatchback segment amd intense competition in the SUV segment.
Toyota Motor (7203 JP) is on a fast track in India recording high double digit volume growth thanks mainly to successful launch of rebadged Suzuki models.

HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024

By Sameer Taneja

We compile a list of ten high-yielding/net cash or low-net debt stocks in the apparel/footwear value chain. Just because HK has become a pariah for investors, trailing dividend yields are approaching 6-20%.
We track recent developments of these companies; for given their low valuations any incremental recoveries could spark huge share price returns.
Crystal International (2232 HK), Stella International (1836 HK), and Yue Yuen Industrial Holdings (551 HK) stand out – they have had positive inflections in their earnings/dividend payouts and capital allocation.

JNBY Design (3306 HK): A Cash Cow

By Osbert Tang, CFA

JNBY Design Ltd (3306 HK) is successful in capturing China’s niche designer fashion segment. Its FY24 net profit surged 36.4%, despite the challenging retail market.
Gross margin reached a record high of 67.3% in 2H24 on higher purchases from loyal members. Operating cash flow surged 70.7% YoY, affirming its status as a cash cow.
Including special dividends, FY24 payout ratio was 95%. At 75% ordinary payout for FY25, it sits on a 10.9% yield. Net cash equals 22% of the share price.

Autodesk Inc.: Expansion into Digital Transformation Solutions & Use Of AI-ML To Drive Growth! – Major Drivers

Autodesk, Inc. concluded its second quarter of Fiscal Year 2025 with robust results, characterized by a 13% revenue growth in constant currency, which has led to an upward revision of the full-year guidance.
This reflects not only the success of the recent launch of their new transaction model in North America but also anticipates a similar introduction in Western Europe come September.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Elastic N.V.: An Insight Into Their Pricing Strategy & Our Revenue & Profitability Projections! – Major Drivers

Elastic N.V. reported an 18% year-over-year growth in total revenue, with cloud revenue experiencing a 30% increase.
The non-GAAP operating margin was 10.7%, aligning with the company’s performance exceeding its revenue and profitability guidance.
A key strategy highlighted was their “land, expand, and consolidate” approach, which has led to growth in customers spending over $100,000 to more than 1,370.

China Consumption Weekly (9 Sep 2024): Tesla, NIO, PDD, Anta, 361 Degree

By Ming Lu

In August, Tesla’s shipments grew by 3% YoY, while top domestic producers’ shipments grew over 30% YoY.
The revenues of two domestic sneaker makers, 361 Degree and Anta, increased by 19% YoY and 14% YoY in 1H24.
In 2Q24, NIO’s deliveries and revenue increased by 144% YoY and 99% YoY, but its losses were still significant.

Affirm Holdings: Expanded Adoption of Wallet Partnerships & Other Major Drivers

Affirm Holdings recently reported its Fourth Quarter Fiscal 2024 Earnings and the management emphasized the company’s robust performance both in terms of growth and profitability for the fiscal year.
The discussion underlined Affirm’s management’s ability to leverage technological advancements, particularly in artificial intelligence and machine learning, to maintain control over credit outcomes, which they describe as an intentional result of their strategies.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Nutanix Inc.: Increased Demand for Private Cloud Solutions Driving Our Optimism! – Major Drivers

Nutanix’s fourth quarter and fiscal year 2024 earnings results mark a period of solid performance and strategic progress.
During the fourth quarter, Nutanix exceeded its financial guidance, achieving revenue of $548 million, which represents an increase of 11% year-over-year.
This growth was supported by substantial free cash flow generation and the acquisition of significant new customers, the highest in three years.

Burlington Stores Inc.: Leveraging Physical and Digital Growth Opportunities! – Major Drivers

Burlington Stores, Inc. reported robust financial results for the fiscal second quarter of 2024, highlighted by significant growth in total sales and improvements in gross margin.
The positive performance can be largely attributed to strategic store expansions and efficient supply chain management.
The company opened 36 new stores, taking the total to 1,057 locations, and reported a 5% increase in comparable store sales, surpassing the guided range of flat to 2%.

Brown-Forman Corporation: Can They Sustain Their Competitive Advantage With Brand Power? – Major Drivers