Smartkarma Daily Briefs

Jan 29

Daily Brief Financials: Tracker Fund of Hong Kong and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Further Opportunities in the Hong Kong Market

Further Opportunities in the Hong Kong Market

By Rikki Malik

If a sustainable bottom was made in January, which sectors are best to invest?
China State Owned Enterprises fit the current uncertain investment climate
The Hang Seng China Affiliated Index (red chips) provides some good ideas

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

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

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

Jan 29

Daily Brief Industrials: LS Materials , Fanuc Corp, China Communications Construction, Emcor Group Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Clarifying KOSDAQ 150 Fast Entry Confusions: LS Materials & Hyundai Hyms
Fanuc (6954) | Robot Orders Remain Weak
China Comm Const (1800 HK): New Contracts Gathering Steam
EMCOR Group: Initiation of Coverage – The Unseen Opportunity in High-Tech Manufacturing!

Clarifying KOSDAQ 150 Fast Entry Confusions: LS Materials & Hyundai Hyms

By Sanghyun Park

LS Materials completed its 15-day review but hasn’t been announced for fast entry, likely due to KRX’s Korean document disclosing the effective date starting February 1, 2024.
LS Materials will be in the June rebalancing, having not met the 6-month listing requirement for the June review, thus subject to the special entry rule.
Hyundai Hyms, surging 300% from IPO, ranks 58th by market cap, poised for KOSDAQ 150 entry. If successful, Unitest will be removed.

Fanuc (6954) | Robot Orders Remain Weak

By Mark Chadwick

Q3 net sales: ¥197.8 billion, down 10.1% YoY; operating income: ¥40.9 billion, down 22.1%; operating margin: 20.7% (-320bps YoY)
Full-Year guidance revised: Net sales up 1.8% to ¥771.5 billion; operating profit up 8.4% to ¥132.2 billion.
Positive stock reaction post-Q2 report; FY3/25 outlook cautious, especially for the Robot Division given a -30.2% YoY decline in Q4 orders.

China Comm Const (1800 HK): New Contracts Gathering Steam

By Osbert Tang, CFA

China Communications Construction (1800 HK) saw its 4Q23 new contracts increased 14%, faster than the 13.5% growth in 9M23. Full-year new contracts are 3.5% ahead of its target.
Our estimated backlog of Rmb4.26trn at end-FY23 is 25.6% higher than end-FY22. Such backlog covers 4.9x FY24F revenue, which is a 0.6pp improvement YoY.
The inclusion of market cap management as a KPI for senior SOE officials will drive return, while CSRC’s encouragement to raise payout ratio may easily push yield to over 10%.

EMCOR Group: Initiation of Coverage – The Unseen Opportunity in High-Tech Manufacturing!

By Baptista Research

This is our first report electrical and mechanical construction, and facilities services provider, EMCOR Group.
This has resulted in all-time quarterly records for revenues, gross profits, operating income, operating margin, diluted EPS, and remaining performance obligations (RPOs).
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

💡 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

Jan 29

Daily Brief Health Care: WuXi AppTec, Shouhui Tech and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

WuXi AppTec (2359.HK/603259.CH) – Behind the Plunge Is a War
Shouhui Tech Pre-IPO Tearsheet

WuXi AppTec (2359.HK/603259.CH) – Behind the Plunge Is a War

By Xinyao (Criss) Wang

The approval rate of Draft Bill is very low. So, it’s more of a “strangulation” of investment sentiment. But considering the 2024 US presidential election, similar negative proposals may resurface.
WuXi AppTec has little control over the entire situation.There’s “valuation discount” for China CXOs due to geopolitical conflicts. It’s difficult to completely rule out the possibility of “deliberate short selling”.
If look deeper, considering “sensitive situations” at present, to some extent, we may have already been in a financial war.The goal of short selling is to pick up cheap chips.

Shouhui Tech Pre-IPO Tearsheet

By Clarence Chu

Shouhui Tech (SHOU HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC, and Huatai International.
Shouhui Tech (Shouhui) is an online life and health insurance intermediary service provider in China.
According to F&S, Shouhui was the third largest online insurance intermediary in China in terms of GWPs of long-term life and health insurance in 2022, with a 7.1% market share.

💡 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

Jan 29

Daily Brief Industrials: LS Materials , Fanuc Corp, China Communications Construction, Emcor Group Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Clarifying KOSDAQ 150 Fast Entry Confusions: LS Materials & Hyundai Hyms
Fanuc (6954) | Robot Orders Remain Weak
China Comm Const (1800 HK): New Contracts Gathering Steam
EMCOR Group: Initiation of Coverage – The Unseen Opportunity in High-Tech Manufacturing!

Clarifying KOSDAQ 150 Fast Entry Confusions: LS Materials & Hyundai Hyms

By Sanghyun Park

LS Materials completed its 15-day review but hasn’t been announced for fast entry, likely due to KRX’s Korean document disclosing the effective date starting February 1, 2024.
LS Materials will be in the June rebalancing, having not met the 6-month listing requirement for the June review, thus subject to the special entry rule.
Hyundai Hyms, surging 300% from IPO, ranks 58th by market cap, poised for KOSDAQ 150 entry. If successful, Unitest will be removed.

Fanuc (6954) | Robot Orders Remain Weak

By Mark Chadwick

Q3 net sales: ¥197.8 billion, down 10.1% YoY; operating income: ¥40.9 billion, down 22.1%; operating margin: 20.7% (-320bps YoY)
Full-Year guidance revised: Net sales up 1.8% to ¥771.5 billion; operating profit up 8.4% to ¥132.2 billion.
Positive stock reaction post-Q2 report; FY3/25 outlook cautious, especially for the Robot Division given a -30.2% YoY decline in Q4 orders.

China Comm Const (1800 HK): New Contracts Gathering Steam

By Osbert Tang, CFA

China Communications Construction (1800 HK) saw its 4Q23 new contracts increased 14%, faster than the 13.5% growth in 9M23. Full-year new contracts are 3.5% ahead of its target.
Our estimated backlog of Rmb4.26trn at end-FY23 is 25.6% higher than end-FY22. Such backlog covers 4.9x FY24F revenue, which is a 0.6pp improvement YoY.
The inclusion of market cap management as a KPI for senior SOE officials will drive return, while CSRC’s encouragement to raise payout ratio may easily push yield to over 10%.

EMCOR Group: Initiation of Coverage – The Unseen Opportunity in High-Tech Manufacturing!

By Baptista Research

This is our first report electrical and mechanical construction, and facilities services provider, EMCOR Group.
This has resulted in all-time quarterly records for revenues, gross profits, operating income, operating margin, diluted EPS, and remaining performance obligations (RPOs).
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

💡 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

Jan 29

Daily Brief South Korea: LS Materials , SK Hynix and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Clarifying KOSDAQ 150 Fast Entry Confusions: LS Materials & Hyundai Hyms
SK Hynix & The Dawn Of Custom Memory Solutions

Clarifying KOSDAQ 150 Fast Entry Confusions: LS Materials & Hyundai Hyms

By Sanghyun Park

LS Materials completed its 15-day review but hasn’t been announced for fast entry, likely due to KRX’s Korean document disclosing the effective date starting February 1, 2024.
LS Materials will be in the June rebalancing, having not met the 6-month listing requirement for the June review, thus subject to the special entry rule.
Hyundai Hyms, surging 300% from IPO, ranks 58th by market cap, poised for KOSDAQ 150 entry. If successful, Unitest will be removed.

SK Hynix & The Dawn Of Custom Memory Solutions

By William Keating

SK Hynix reported Q423 revenues of 11.31 trillion won, up 25% QoQ and up 47% YoY
Operating profit of 346 billion won, marking the first quarter of profit following four straight quarters of losses.
SK Hynix is investing heavily in custom memory solutions driven by AI-related demand. It’s a far better and more profitable business model than the mainstream commodity one.

💡 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

Jan 29

Daily Brief China: Tencent, China Mobile, Tracker Fund of Hong Kong , Alibaba (ADR), WuXi AppTec, Shouhui Tech, China Communications Construction and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold
A/H Premium Tracker (To 26 Jan 2024): AH Premia Still Near Multi-Yr Wides, SOEs May See New Action
Further Opportunities in the Hong Kong Market
China Consumption Weekly (29 Jan 2024): Great Wall Motor, Huawei, Alibaba, Mixue, Nayuki
WuXi AppTec (2359.HK/603259.CH) – Behind the Plunge Is a War
Shouhui Tech Pre-IPO Tearsheet
China Comm Const (1800 HK): New Contracts Gathering Steam

HK Connect SOUTHBOUND Flows (To 26 Jan 2024); ETFs and High Div SOEs Again BIG Buys, Tech Sold

By Travis Lundy

A better week for HK stocks as A-shares rebound on National Team buying, a PBOC RRR cut, and potentially other measures to boost the market. Foreigners stopped selling; that helped.
Southbound saw decent net buying on ETFs late in the week, but otherwise the week was pretty flat in single-stock land – net buying of SOEs, selling of tech.
Net SOUTHBOUND buying was HK$4.5bn on the week, mostly through Shanghai (interestingly, 90+% of the decent NORTHBOUND buy was also through Shanghai).

A/H Premium Tracker (To 26 Jan 2024): AH Premia Still Near Multi-Yr Wides, SOEs May See New Action

By Travis Lundy

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
SOUTHBOUND flows were small positive and NORTHBOUND flows a decent buy. AH premia stopped rising. Chinese shares bounced. SOEs being bought. Tech being sold. Tencent seeing SB outflows, still.
New article in China Securities Journal hints at new measures on SOEs. Watch this space. Wouldn’t be short SOEs vs Privates on H/A basis.

Further Opportunities in the Hong Kong Market

By Rikki Malik

If a sustainable bottom was made in January, which sectors are best to invest?
China State Owned Enterprises fit the current uncertain investment climate
The Hang Seng China Affiliated Index (red chips) provides some good ideas

China Consumption Weekly (29 Jan 2024): Great Wall Motor, Huawei, Alibaba, Mixue, Nayuki

By Ming Lu

Great Wall Motor’s revenue increased by 26%, but its profit increased by less than 5% in 2023.
Huawei’s shipments increased 36% YoY in 4Q23 and was the only company to witness an increase among the top five sellers.
Jack Ma, the founder, and Mr. Joe Tsai, the chairman, purchased Alibaba’s shares.

WuXi AppTec (2359.HK/603259.CH) – Behind the Plunge Is a War

By Xinyao (Criss) Wang

The approval rate of Draft Bill is very low. So, it’s more of a “strangulation” of investment sentiment. But considering the 2024 US presidential election, similar negative proposals may resurface.
WuXi AppTec has little control over the entire situation.There’s “valuation discount” for China CXOs due to geopolitical conflicts. It’s difficult to completely rule out the possibility of “deliberate short selling”.
If look deeper, considering “sensitive situations” at present, to some extent, we may have already been in a financial war.The goal of short selling is to pick up cheap chips.

Shouhui Tech Pre-IPO Tearsheet

By Clarence Chu

Shouhui Tech (SHOU HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC, and Huatai International.
Shouhui Tech (Shouhui) is an online life and health insurance intermediary service provider in China.
According to F&S, Shouhui was the third largest online insurance intermediary in China in terms of GWPs of long-term life and health insurance in 2022, with a 7.1% market share.

China Comm Const (1800 HK): New Contracts Gathering Steam

By Osbert Tang, CFA

China Communications Construction (1800 HK) saw its 4Q23 new contracts increased 14%, faster than the 13.5% growth in 9M23. Full-year new contracts are 3.5% ahead of its target.
Our estimated backlog of Rmb4.26trn at end-FY23 is 25.6% higher than end-FY22. Such backlog covers 4.9x FY24F revenue, which is a 0.6pp improvement YoY.
The inclusion of market cap management as a KPI for senior SOE officials will drive return, while CSRC’s encouragement to raise payout ratio may easily push yield to over 10%.

💡 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

Jan 29

Daily Brief Japan: Shinko Electric Industries, Fanuc Corp, NAFCO Co Ltd, Paris Miki Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Merger Arb Mondays (29 Jan) – Shinko, JSR, Payroll, T&K Toka, Weiqiao, Hollysys, Newmark, OreCorp
Fanuc (6954) | Robot Orders Remain Weak
NAFCO (2790) – Big ToSTNeT-3 Raises Obvious Questions
Paris Miki (7455 JP) – Corrected Vision – Is This A Setup For an MBO?

Merger Arb Mondays (29 Jan) – Shinko, JSR, Payroll, T&K Toka, Weiqiao, Hollysys, Newmark, OreCorp

By Arun George

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 – Hollysys Automation Technologies (HOLI US), Probiotec Ltd (PBP AU), Shinko Electric Industries (6967 JP), Genetron Holdings Ltd (GTH US), JSR Corp (4185 JP).
Lowest spreads – Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), Pact Group Holdings (PGH AU), Benefit One Inc (2412 JP), Benesse Holdings (9783 JP), T&K Toka.

Fanuc (6954) | Robot Orders Remain Weak

By Mark Chadwick

Q3 net sales: ¥197.8 billion, down 10.1% YoY; operating income: ¥40.9 billion, down 22.1%; operating margin: 20.7% (-320bps YoY)
Full-Year guidance revised: Net sales up 1.8% to ¥771.5 billion; operating profit up 8.4% to ¥132.2 billion.
Positive stock reaction post-Q2 report; FY3/25 outlook cautious, especially for the Robot Division given a -30.2% YoY decline in Q4 orders.

NAFCO (2790) – Big ToSTNeT-3 Raises Obvious Questions

By Travis Lundy

On Friday 26 January, NAFCO Co Ltd (2790 JP) announced Q3 earnings and a large Buyback Program to run from 29 January through 31 March.
While the company is having A Very Bad Year, this buyback raises obvious questions. The size is interesting given the float and the shareholder structure.
Those interested in SmallCap Events might take a look. There are very short-term and slightly longer-term implications.

Paris Miki (7455 JP) – Corrected Vision – Is This A Setup For an MBO?

By Travis Lundy

The situation at Paris Miki has been relatively non-salutary the last many years til 2022. The stock has underperformed peers in sales growth and has dropped sales points.
The company has a decent relationship with one of its main suppliers, global eyewear giant Luxottica Group (LUX IM), which just added to their stake recently, aggressively.
The company is getting slow-kicked out of TOPIX, but revival appears in the works. It kind of looks like a setup for an MBO.

💡 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

Jan 29

Daily Brief United States: Choice Hotels Intl, Emcor Group Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Choice Hotels: The Mega Merger Moves: Inside Choice Hotels’ Bold $8 Billion Play for Wyndham!
EMCOR Group: Initiation of Coverage – The Unseen Opportunity in High-Tech Manufacturing!

Choice Hotels: The Mega Merger Moves: Inside Choice Hotels’ Bold $8 Billion Play for Wyndham!

By Baptista Research

This is our first report on global hotels major, Choice Hotels International.
The company’s CEO, Patrick Pacious, and CFO, Scott Oaksmith, provided details on their financial results and strategic initiatives, including the proposed acquisition of Wyndham Hotels & Resorts.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

EMCOR Group: Initiation of Coverage – The Unseen Opportunity in High-Tech Manufacturing!

By Baptista Research

This is our first report electrical and mechanical construction, and facilities services provider, EMCOR Group.
This has resulted in all-time quarterly records for revenues, gross profits, operating income, operating margin, diluted EPS, and remaining performance obligations (RPOs).
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

💡 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

Jan 28

Daily Brief Industrials: Fsp Technology, Korean Air Lines, Armstrong World Industries, Huntington Ingalls Industries and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Asian Dividend Gems: FSP Technology
Korean Air – Another US Example Of A Ruling Against Consolidation Raises Asiana Merger Questions
Armstrong World Industries: Initiation of Coverage – Resilience Revolution! How Their Unique Market Positioning Is Driving Exceptional Growth! – Major Drivers
Huntington Ingalls Industries: Initiation of Coverage – Why They’re Boosting Revenue Forecasts – Insights into a Booming Business! – Major Drivers

Asian Dividend Gems: FSP Technology

By Douglas Kim

While the world is trying to transition to more renewable energies, FSP Technology (Taiwan) could be a beneficiary of reliable power energy supply products.
FSP Technology’s dividend yield averaged 8.1% from 2020 to 2022. The company has a strong balance sheet. Net cash as a percentage of market cap is 40%.
FSP Technology provides power supply products used for personal computers, industrial power, renewable energy, and batteries. We used Smartkarma’s Smart Score Screener system to find Fsp Technology (3015 TT).

Korean Air – Another US Example Of A Ruling Against Consolidation Raises Asiana Merger Questions

By Neil Glynn

The US Department of Transport (DOT) has ordered the termination of Delta and Aeromexico’s joint venture from October 2024 due to access restrictions in Mexico City.
This follows the (unrelated) US blocking of JetBlue’s planned acquisition of Spirit Airlines on the grounds that it would negatively impact consumers.
Each case is different, but the US has previously voiced concerns regarding Korean Air’s planned merger with Asiana, and the bar continues to rise for M&A/JV approval globally.

Armstrong World Industries: Initiation of Coverage – Resilience Revolution! How Their Unique Market Positioning Is Driving Exceptional Growth! – Major Drivers

By Baptista Research

This is our first report on ceiling systems producer, Armstrong World Industries.
The company’s last results present an investment perspective characterized by robust sales and growth despite compromised market conditions.
Moreover, Armstrong World Industries pleasantly surpassed expectations as it did not witness any further deterioration of market activity.

Huntington Ingalls Industries: Initiation of Coverage – Why They’re Boosting Revenue Forecasts – Insights into a Booming Business! – Major Drivers

By Baptista Research

This is our first report on militiry ships design player, Huntington Ingalls Industries.
The company’s Q3 2023 earnings conference call revealed solid overall growth for the company.
According to President and CEO, Chris Kastner, the company reached record Q3 revenue, with top-line growth of 7.2% year-on-year to $2.8 billion.

💡 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

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