Category

Daily Briefs

Nov 26
0

Daily Brief Health Care: Sichuan Biokin Pharmaceutical, TSE Tokyo Price Index TOPIX, Classys and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month
  • Investors Will Again Demand Concrete Measures to Raise ROE and Boost Shareholder Returns in FY3/2025
  • Classys (214150 KS): Record High Quarterly Performance in Q3; 2024 to Continue to Be Radiant

STAR50 Index Rebalance: Big Impact Expected; Inclusion Up 40% in One Month

By Brian Freitas

Investors Will Again Demand Concrete Measures to Raise ROE and Boost Shareholder Returns in FY3/2025

By Aki Matsumoto

  • The carryback of pension obligations and expenses resulting from higher bond yields is a factor in the increase in operating profit.
  • While this’ll lead to higher EPS, which should lead to higher dividends and more room for stock price appreciation, there’s concern that inflating the B/S will lead to stagnant ROE.
  • In addition, since FY3/2024 profits will be boosted by pension financing factors unrelated to the core business, lower profit growth rate in FY3/2025 will put pressure on the stock price.

Classys (214150 KS): Record High Quarterly Performance in Q3; 2024 to Continue to Be Radiant

By Tina Banerjee

  • Classys (214150 KS) reported solid performance in 3Q23, with revenue and operating profit growing 45% and 41%, YoY, respectively, mainly driven by export in devices and domestic sales of consumables.  
  • Despite being an offseason, Q3 2023 witnessed increase in both the number of countries selling the new product Ultraformer MPT and the monthly average domestic sales of Volnewmer.
  • Continued improvement in equipment sale and increasing consumables contribution should drive growth in 2024. Entry into the U.S. and China will be the key for re-rating of the stock.   

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Nov 26
0

Daily Brief TMT/Internet: Hygon Information Technology C, Xiaomi Corp, Uchi Technologies, Tencent, Semiconductor Manufacturing In and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • CES China Semiconductor Chips Index Rebalance: Another Inclusion for Hygon
  • Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, Div+, Top50, ASX, FXI, Xiaomi, Tata Tech
  • Uchi Technologies (UCHI MK): Solid Q3 2023,ROE >30%/Div Yield >7%
  • ECM Weekly (26th Nov 2023) – Zeekr, Cirrus, Tata Tech, IREDA, FedBank, Juniper, GS Yuasa, AZ Com
  • SSE50 Index Rebalance: Five Changes; Adds & Deletes Moving in Lockstep
  • HK Connect SOUTHBOUND Flows (To 24 Nov 23); ETF Buying Offsets Broad Selling, Especially in Tech

CES China Semiconductor Chips Index Rebalance: Another Inclusion for Hygon

By Brian Freitas

  • There are 3 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 8 December.
  • Hygon Information Technology C (688041 CH) will be added to a global index in a week and then there will be multiple index inflows at the close on 8 December.
  • After underperforming from May to September, the adds have gained ground on the deletes over the last two months and there could be further outperformance over the next two weeks.

Index Rebalance & ETF Flow Recap: HSI, HSCEI, HSTECH, HSCI, Div+, Top50, ASX, FXI, Xiaomi, Tata Tech

By Brian Freitas

  • The capping for the Hang Seng family of indices will use closing prices from 28 November while implementation will take place at the close on 1 December.
  • The changes for the next S&P/ASX 200 (AS51 INDEX) rebalance will be announced after the close of trading on 1 December.
  • It was another week of inflows for the iShares Emerging Markets (EMXC US) to take units outstanding to a new high.

Uchi Technologies (UCHI MK): Solid Q3 2023,ROE >30%/Div Yield >7%

By Sameer Taneja

  • Uchi Technologies (UCHI MK) reported a 15% YoY revenue growth/ 27% YoY operating profit growth led by constant USD revenue growth of 10% YoY and 4.5% MYR depreciation. 
  • Profit grew only 3.5% YoY due to an increase in the effective tax rate from 2.8% to 21.0% as the company’s tax holidays lapsed earlier this year.
  • Trading 12x PE, 7.5% dividend yield (based on a 90% payout), >30% ROE, and more than 10% of the market cap in cash; this a stock to explore. 

ECM Weekly (26th Nov 2023) – Zeekr, Cirrus, Tata Tech, IREDA, FedBank, Juniper, GS Yuasa, AZ Com

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • In the IPO space, Tata Technologies didn’t disappoint Tata Group fans, at least on the subscription front.
  • The placements continued to flow in this week as well in Japan.

SSE50 Index Rebalance: Five Changes; Adds & Deletes Moving in Lockstep

By Brian Freitas

  • There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 8 December. There is over 1x ADV to trade on some stocks.
  • We estimate a one-way turnover of 5.4% at the December rebalance leading to a one-way trade of CNY 4.85bn. Index arb activity could add to the impact on the stocks.
  • The adds, deletes and SSE50 Index (SSE50 INDEX) have moved nearly in lockstep since May and the passive flows could move things around a bit.

HK Connect SOUTHBOUND Flows (To 24 Nov 23); ETF Buying Offsets Broad Selling, Especially in Tech

By Travis Lundy

  • This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
  • SOUTHBOUND flows the last several weeks clearly indicated a momentum move. The top net sells were all down. The top buys were all up. We saw a pause, then continued.
  • SOUTHBOUND sees more net selling this week of stocks. Last week ETF selling turned flows negative. This week, ETF flows flattered the net sell. Tech still being sold.

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Nov 26
0

Daily Brief Energy/Materials: T&K Toka Co Ltd, JSR Corp, Origin Energy, Techem GmbH and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • T&K TOKA (4636 JP): Imminent TOB Launch? Imminent Bump Needed?
  • Last Week in Event SPACE: JSR, Prosus/Tencent, Hollysys, Tata Consultancy, Geely, EOFlow
  • Weekly Deals Digest (26 Nov) – JSR, Taisho, Origin, OreCorp, Eoflow, Hollysys, Zeekr, Tata Tech
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Origin Energy, Healius, OreCorp, Haitong Int., Taisho Pharma
  • Techem – ESG Report – Lucror Analytics

T&K TOKA (4636 JP): Imminent TOB Launch? Imminent Bump Needed?

By Travis Lundy

  • In August, T&K Toka Co Ltd (4636 JP) announced a TOB by Bain with a clearance hurdle of selling a 3.51% stake in Hangzhou Toka Ink (SH:688571) before launch.
  • Friday, the company announced that they put up a 3.6% stake for auction, with the sale to be executed that day. That likely triggers an early launch of the TOB.
  • The TOB Price is offensively cheap at 0.63x “official” book, and 0.53x book adjusted for equity affiliate price. The shares have traded through terms since launch. This should get bumped.

Last Week in Event SPACE: JSR, Prosus/Tencent, Hollysys, Tata Consultancy, Geely, EOFlow

By David Blennerhassett

Weekly Deals Digest (26 Nov) – JSR, Taisho, Origin, OreCorp, Eoflow, Hollysys, Zeekr, Tata Tech

By Arun George

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Origin Energy, Healius, OreCorp, Haitong Int., Taisho Pharma

By David Blennerhassett

Techem – ESG Report – Lucror Analytics

By Charles Macgregor

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).

We assess Techem’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

International energy services provider Techem offers consumption-based billing services in the sub-metering industry.

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Nov 26
0

Daily Brief Industrials: Singapore Airlines and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Singapore Airlines:

Singapore Airlines:

By Neil Glynn

  • Following 2Q24 , our operating profit of S$2.9bn and a net profit of S$2.6bn, stand considerably higher than consensus of S$2.5bn and S$2.3bn respectively. 
  • SIA’s continue to suffer more inflation than most peers (ex-Qantas). However, 1H24 illustrated that continued restoration of capacity is diluting pressure and narrowing the gap to peers.
  • The true test for SIA will be management of normalizing profitability beyond FY24. We model operating profit of S$1.8bn/net profit of S$1.5bn in FY25, versus consensus of S$1.5bn/S$1.2bn.

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Nov 26
0

Daily Brief Financials: KB Financial, Dalian Wanda Commercial Properties and more

By | Daily Briefs, Financials

In today’s briefing:

  • ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion for Major Korean Banks in 2024
  • Wanda Unit Seeks Extension for $600 Million Dollar Bonds

ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion for Major Korean Banks in 2024

By Douglas Kim

  • The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. 
  • The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). 
  • Major Korean banks may need a “Hail Mary” pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. 

Wanda Unit Seeks Extension for $600 Million Dollar Bonds

By Caixin Global

  • The property management unit of Dalian Wanda Group Co. wants to push back the maturity of a $600 million bond by nearly a year, highlighting the property conglomerate’s deepening liquidity crunch.

  • Dalian Wanda Commercial Management Group Co. said Tuesday that it is seeking to delay the payment on the 7.25% note by 11 months due to liquidity pressures.

  • The 10-year dollar-denominated notes, issued by its subsidiary Wanda Properties International Co., are set to mature on Jan. 29, 2024, Wanda Commercial, the guarantor of the bond, said in a filing to the Hong Kong stock exchange.

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Nov 26
0

Daily Brief Consumer: ZEEKR, Great Wall Motor, BYD and more

By | Consumer, Daily Briefs

In today’s briefing:

  • ZEEKR IPO Valuation Analysis: Next BYD or Tesla?
  • A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold
  • Mainland Connect NORTHBOUND Flows (To 24 Nov 23): Chongqing Changan (Bought) Vs BYD (Sold)

ZEEKR IPO Valuation Analysis: Next BYD or Tesla?

By Andrei Zakharov

  • ZEEKR is expected to IPO in December. The company plans to raise up to $1B and Geely Auto may purchase additional shares of ZEEKR in a concurrent private placement.
  • I have a favorable view of the upcoming ZEEKR U.S. IPO and value ZEEKR shares using a 50/50 blend of EV/Sales analysis and long-term discounted cash flows analysis.
  • ZEEKR’s last round was a $750M Series A in February 2023 at a $13B post-money valuation. My ~$21B target valuation suggests 61% potential upside vs. last round valuation of $13B.

A/H Premium Tracker (To 24 Nov 23): H Down Vs A, SOUTHBOUND Selling Continues, Tech Still Sold

By Travis Lundy

  • The New and Better (17 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • Hs with H/A pairs under-perform their As on average. H/A Pair intracorrelation is up and A premia continue to trend better.
  • SOUTHBOUND and NORTHBOUND were net sells overall. Everybody sold tech.

Mainland Connect NORTHBOUND Flows (To 24 Nov 23): Chongqing Changan (Bought) Vs BYD (Sold)

By Travis Lundy

  • This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
  • The same few names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Zhongji Innolight, etc, but the nets are changing (and Chongqing Changan)
  • Last week, NORTHBOUND were again net sellers (RMB -3.16bn), but Shanghai saw net buys. The top two flows were Chongqing Changan Automobile Company (200625 CH) to buy, BYD to sell.

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Nov 26
0

Daily Brief Australia: Origin Energy and more

By | Australia, Daily Briefs

In today’s briefing:

  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Origin Energy, Healius, OreCorp, Haitong Int., Taisho Pharma

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Origin Energy, Healius, OreCorp, Haitong Int., Taisho Pharma

By David Blennerhassett

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Nov 26
0

Daily Brief Singapore: Singapore Airlines and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Singapore Airlines:

Singapore Airlines:

By Neil Glynn

  • Following 2Q24 , our operating profit of S$2.9bn and a net profit of S$2.6bn, stand considerably higher than consensus of S$2.5bn and S$2.3bn respectively. 
  • SIA’s continue to suffer more inflation than most peers (ex-Qantas). However, 1H24 illustrated that continued restoration of capacity is diluting pressure and narrowing the gap to peers.
  • The true test for SIA will be management of normalizing profitability beyond FY24. We model operating profit of S$1.8bn/net profit of S$1.5bn in FY25, versus consensus of S$1.5bn/S$1.2bn.

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Nov 26
0

Daily Brief South Korea: KB Financial, Classys and more

By | Daily Briefs, South Korea

In today’s briefing:

  • ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion for Major Korean Banks in 2024
  • Classys (214150 KS): Record High Quarterly Performance in Q3; 2024 to Continue to Be Radiant

ELS Losses Related to Hong Kong H-Index Could Top Nearly 3 Trillion for Major Korean Banks in 2024

By Douglas Kim

  • The FSS has launched a formal investigation into KB Kookmin bank due to potentially massive losses related to the HSCEI linked ELS products. 
  • The three major listed banking groups (KB Financial, Shinhan Financial, and Hana Financial) could be burdened with nearly 86% of the HSCEI linked ELS losses (close to 2.6 trillion won). 
  • Major Korean banks may need a “Hail Mary” pass to avoid this disaster. Such positive outlook would include sharply rising HSCEI index in 2024, similar to what happened in 2016. 

Classys (214150 KS): Record High Quarterly Performance in Q3; 2024 to Continue to Be Radiant

By Tina Banerjee

  • Classys (214150 KS) reported solid performance in 3Q23, with revenue and operating profit growing 45% and 41%, YoY, respectively, mainly driven by export in devices and domestic sales of consumables.  
  • Despite being an offseason, Q3 2023 witnessed increase in both the number of countries selling the new product Ultraformer MPT and the monthly average domestic sales of Volnewmer.
  • Continued improvement in equipment sale and increasing consumables contribution should drive growth in 2024. Entry into the U.S. and China will be the key for re-rating of the stock.   

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Nov 26
0

Daily Brief United States: ZEEKR and more

By | Daily Briefs, United States

In today’s briefing:

  • ZEEKR IPO Valuation Analysis: Next BYD or Tesla?

ZEEKR IPO Valuation Analysis: Next BYD or Tesla?

By Andrei Zakharov

  • ZEEKR is expected to IPO in December. The company plans to raise up to $1B and Geely Auto may purchase additional shares of ZEEKR in a concurrent private placement.
  • I have a favorable view of the upcoming ZEEKR U.S. IPO and value ZEEKR shares using a 50/50 blend of EV/Sales analysis and long-term discounted cash flows analysis.
  • ZEEKR’s last round was a $750M Series A in February 2023 at a $13B post-money valuation. My ~$21B target valuation suggests 61% potential upside vs. last round valuation of $13B.

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