Daily Briefs

In this insight, we discuss near-term momentum trading opportunities among the top 50 stocks in KOSPI with highest short interest ratios.
Given the recent temporary ban on stock short selling in Korea, there is likely to be increased volatility in the stock market.
We have identified 10 companies in particular that have high short interest ratios, among the worst performing stocks YTD, but with strongest share price performance in the past two days.

Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban

By Shifara Samsudeen, ACMA, CGMA

Ecopro Materials reported disappointing IPO book building results. IPO price has been finalized at 36,200 won, which is at the low end of the IPO price range.
The demand ratio was 17.2 to 1 which was low. Total IPO offering amount was 419 billion won. Ecopro Materials will start trading on 17 November.
Our base case valuation of Ecopro Materials is target price of 37,436 won per share, which is 3.4% higher than the IPO price. We remain negative on this IPO.

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Nov 08

Daily Brief China: WuXi XDC Cayman , DPC Dash, Sichuan Baicha Baidao Industrial, Hygon Information Technology C, Remegen , Hang Seng Index, Greentown China and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

WuXi XDC Cayman IPO – Decent Upside from IPO Range, Bulk of the Deal Taken up by Marquee Investors
DPC Dash (1405 HK): Recipe for Multibagger
WuXi XDC Cayman IPO: Robust Top Line Growth but Margins Remain Under Pressure
Sichuan Baicha Baidao Pre-IPO – The Positives – Riding on Franchise Store Expansion
WuXi XDC IPO Valuation Analysis: Premium Multiples Reflect 100%+ Top-Line Growth
SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out
Remegen (9995.HK/688331.CH) – The Survival Problem Is Becoming Imminent
EQD | The Hang Seng Index May Go Higher
Morning Views Asia: Delta Dunia Makmur, ENN Natural Gas, Greentown China

WuXi XDC Cayman IPO – Decent Upside from IPO Range, Bulk of the Deal Taken up by Marquee Investors

By Clarence Chu

WuXi XDC Cayman (1877628D HK) is looking to raise US$470m in its Hong Kong IPO.
WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
In this note, we will look at the deal dynamics and share our final thoughts on valuation.

DPC Dash (1405 HK): Recipe for Multibagger

By Eric Chen

We believe the company is well positioned in China’s rapidly growing pizza market thanks to its strong brand and superior store economics.
Despite stock rally post 1H23 results, market still underestimates its earnings for both near and long term. We expect RMB250 million net profit for 2024 versus break-even by consensus.
History suggests DPC Dash has recipe for attractive stock return driven by its highly visible growth that can shield it from macro situations, which is desperately needed by China investors.

WuXi XDC Cayman IPO: Robust Top Line Growth but Margins Remain Under Pressure

WuXi XDC Cayman (1877628D HK) is a leading contract research, development and manufacturing organisation (CRDMO) focused on the global antibody-drug conjugate (“ADC”) and broader bioconjugate market.
The company has announced the terms for its HKEx IPO and plans to raise proceeds of around US$470m through the IPO.
Wuxi XDC’s revenues have seen robust growth during the last 3-years driven by growth in ADC market while margins have continued to decline.

Sichuan Baicha Baidao Pre-IPO – The Positives – Riding on Franchise Store Expansion

By Sumeet Singh

Sichuan Baicha Baidao Industrial (SBBI) is looking to raise up to US$300m in its upcoming HK IPO.
SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.6%.
In this note, we talk about the positive aspects of the deal.

WuXi XDC IPO Valuation Analysis: Premium Multiples Reflect 100%+ Top-Line Growth

By Andrei Zakharov

WuXi XDC set terms for an upcoming IPO: the fast-growing CRDMO offers 178.4M shares at the price range of HK$19.90-HK$20.60, implying a market cap of ~HK$23.9B (~$3B) at the midpoint.
Cornerstone investors agreed to subscribe and buy ~116M shares, assuming the IPO price of HK$20.25 at the midpoint. WuXi XDC shares will begin trading on Friday, November 17.
My PT of HK$25.57 implies a ~26% upside to the IPO price at the midpoint. WuXi XDC’s premium multiples reflect 100%+ top-line growth and the company’s leadership position.

SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out

By Brian Freitas

With the review period complete, we see 9 stocks in inclusion zone and 10 in deletion zone. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 4.7% at the December rebalance leading to a one-way trade of CNY 3.86bn. Index arb balances could increase the impact on the stocks.
Apart from being added to the SSE50 Index, Hygon Information Technology (688041 CH) could also be added to other local/global indices over the next few weeks and months.

Remegen (9995.HK/688331.CH) – The Survival Problem Is Becoming Imminent

By Xinyao (Criss) Wang

Although RemeGen’s 23Q1-Q3 sales was better-than-expected, the Company is difficult to achieve management’s performance guidance for 2023. Since RemeGen’s commercialization logic has “undeniable flaws”, net loss would be further widened.
Cash balance of RemeGen was just RMB600 million by 23Q3, which is not enough to cover its high R&D/SG&A expenses. If RemeGen cannot secure sufficient financing timely, risks are significant.
The current valuation and investors’ expectations for RemeGen largely rely on the potential license-out deal of RC18. However, we remain caution until RC18 has sufficient evidence to win head-to-head trial.

EQD | The Hang Seng Index May Go Higher

By Nico Rosti

The Hang Seng Index closed last week at 17664.12 (CC=+2), currently rallying this week, but there is a chance for a short-lived pullback (i.e. closing this week down).
The current global equities bounce should continue for the entire month of November: the HSI may continue rallying for +2 weeks (if it does not close down this week).
Price targets to watch for the end of the rally (i.e. shortable) are between 18300 and 18700.

Morning Views Asia: Delta Dunia Makmur, ENN Natural Gas, Greentown China

By Charles Macgregor

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.

Delta Dunia Makmur
ENN Natural Gas
Greentown China

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Nov 08

Daily Brief United States: Hollysys Automation Technologies, iShares Russell 2000 ETF, Cambium Networks and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Hollysys (HOLI US): Ascendent Capital Joins the Fray
Just Another Counter-Trend Rally, or Something More? DXY and Treasury Yields Breaking Key Supports
Cambium Networks Corporation – New CEO Working to Streamline the Company

Hollysys (HOLI US): Ascendent Capital Joins the Fray

Ascendent Capital has made a non-binding proposal for Hollysys Automation Technologies (HOLI US) at US$26.00 per share, a 4.0% premium to the MBO and Recco proposal of US$25.00 per share.
Ascendent has also become the largest shareholder by securing 13.69% of outstanding shares at an average price of A$20.84 per share. Ascendant is supportive of the special meeting request.
The Board has tried several delaying tactics, but the emergence of Ascendant ramps up the pressure on the Board to conduct a transparent sale process and address shareholder concerns.

Just Another Counter-Trend Rally, or Something More? DXY and Treasury Yields Breaking Key Supports

By Joe Jasper

We believe there is significant evidence that the broad equity market has bottomed, and a year-end rally has begun. This report elaborates on this main point
Last week (10/31/23) we discussed how the $SPX and $QQQ did not display decisive breakdowns, and that a break above 4165-4200 and $350-$355, respectively, would be bullish, that’s what happened
Additionally, we discussed how risk/reward favored buyers with the $IWM testing 1.5-year support at $162-$163, a logical spot for small-caps to bounce, especially when we considering persistent bullish breadth divergences.

Cambium Networks Corporation – New CEO Working to Streamline the Company

By Water Tower Research

Cambium Networks (CMBM) is a leading mid-market wireless solutions provider.
Growth is being driven by 5G and new 6 GHz products. The company believes its strengths are its RF algorithms and software.
The cnMaestro X network management solution makes significant use of AI and lies at the center of the company’s product suite.

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Nov 08

Daily Brief Japan: Kokusai Electric , Sankyo Co Ltd, Suruga Bank Ltd, Nintendo, CMIC Holdings, TSE Tokyo Price Index TOPIX, Shofu Inc, Ono Pharmaceutical and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

TOPIX Inclusions: Who Is Ready (Nov 2023)
Sankyo (6417) – Second Go-Round for a BIG Buyback
Japan H1 Bank Earnings: Last Minute Update; Suruga Bank Reacts Well
Nintendo (7974) | Stock Performance Ahead ‘Switch 2’ Speculation
CMIC Holdings (2309 JP): MBO Tender Offer at JPY2,650
The Problem Is that Companies that Don’t Want to Do Discloser in English Are Listed on Prime Market
Shofu (7979 JP) – Competitive Advantage Driving Predictability in Earnings Growth
Ono Pharmaceutical (4528 JP): Record H1 Earnings; Forxiga Is Flying High; FY24 Guidance Updated

TOPIX Inclusions: Who Is Ready (Nov 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Our main pre-event candidate CELSYS (3663 JP) has outperformed TOPIX by ~12.6% since 1 Sep (when it was highlighted) and 6 Nov 2023.
There are three TOPIX Inclusion events confirmed for the end of November and two other interesting pre-event names we are closely monitoring.

Sankyo (6417) – Second Go-Round for a BIG Buyback

Back in late September, Sankyo Co Ltd (6417 JP) announced a 10mm share buyback along with a new dividend policy. Only 4.22mm shares showed up to sell.
The largest holder – Exec Chair Busujima-san – sold 2.22mm shares under his own name and his company’s name. Hikari Tsushin, which had been selling in the market, didn’t participate.
Now Sankyo has launched another 10mm share ToSTNeT-3 buyback tomorrow (8 Nov) AM at ¥6,099/share. They may not complete. But they may continue buying later. They have oodles of cash.

Japan H1 Bank Earnings: Last Minute Update; Suruga Bank Reacts Well

I wrote Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down – Opportunity Abounds, Still last week mentioning the trends in guidance revisions.
Since then, five have reported H1. +20%, +53%, +23% vs guidance; +25.6%, and +28.2% vs Last Year. Eight more have added new guidance, weighted average H1 up 48%.
Four more report tomorrow, eight on Thurs, 43 on Friday. The Top 5 are all next Mon/Tues. Watch for comments about portfolio restructuring efforts in H2 as market yields rise.

Nintendo (7974) | Stock Performance Ahead ‘Switch 2’ Speculation

By Mark Chadwick

Nintendo’s Q2 results show solid performance but still fall short of expectations, with a conservative full-year profit outlook
The impending release of “Switch 2” in 2H24 raises questions about the company’s ability to replicate the original Switch’s success
We see the current 11x EV/EBIT as fair for the stock and do not anticipate a valuation breakout until the market can assess the credentials of “Switch 2”

CMIC Holdings (2309 JP): MBO Tender Offer at JPY2,650

CMIC Holdings (2309 JP) has recommended an MBO tender offer of JPY2,650 per share, a 55.9% premium to the undisturbed price (7 November).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 41.29% ownership ratio.
Irrevocables to accept represent a 23.29% ownership ratio. While the offer is light vs. peer multiples, the minimum acceptance condition requires a 35.1% minority acceptance rate, which is doable.

The Problem Is that Companies that Don’t Want to Do Discloser in English Are Listed on Prime Market

By Aki Matsumoto

Companies disclosing in English increased to 97.2% in 2023 prime market. However, only 15% of overseas investors responded “satisfied,” indicating a continuing mismatch between disclosure content and investor needs.
TSE will prioritize the documents according to whether disclosure requires immediacy, and divide companies into mandatory companies and effort companies according to the size and foreign ownership of a company.
However, disclosure in English of lower priority documents would be more difficult. Separating companies would allow the prime market to include companies that don’t need to interact with global investors.

Shofu (7979 JP) – Competitive Advantage Driving Predictability in Earnings Growth

By Astris Advisory Japan

Q1-2 FY3/2024 results were in line with upwardly-revised company guidance, with gross margins reaching 60.4% and a record-high quarterly level of 61.0% for Q2 FY3/2024.
This was driven by overseas growth for Shofu’s competitive Chemical Products (CAD/CAM resin materials and restorative filling materials) and a forex tailwind, with overseas sales making up 57.6% of total sales.
We have raised our earnings estimates for FY3/2024 and beyond to reflect Shofu continuing to gain market share overseas, and the resultant improvement in the sales mix

Ono Pharmaceutical (4528 JP): Record H1 Earnings; Forxiga Is Flying High; FY24 Guidance Updated

By Tina Banerjee

Ono Pharmaceutical (4528 JP) reported double-digit growth in revenue, operating profit, and net profit in H1FY24. Opdivo recorded revenue of ¥75B (+7% YoY). Forxiga revenue jumped 36% YoY to ¥36B.
Encouraged by strong performance of Forxiga and receipt of lump-sum income associated with the patent litigation settlement, Ono has raised FY24 guidance by mid-to-high single-digit percentage across all the parameters.
The company aims to overcome Opdivo patent cliff and accelerate growth by launching multiple products in the U.S. and Europe with large addressable markets.

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Nov 08

Most Read: Tencent, Descente Ltd, Posco ADR, Will Semiconductor Shan, China Vanke (H), WuXi XDC Cayman , Kokusai Electric , Sankyo Co Ltd, Suruga Bank Ltd, Hollysys Automation Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
Descente (8114) : Itochu Still Buying and ANTA Gives You Earnings Hints
Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban
Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
China Vanke (2202 HK): Short Term Trading Opportunity Post Conference Call
WuXi XDC Cayman IPO – Decent Upside from IPO Range, Bulk of the Deal Taken up by Marquee Investors
TOPIX Inclusions: Who Is Ready (Nov 2023)
Sankyo (6417) – Second Go-Round for a BIG Buyback
Japan H1 Bank Earnings: Last Minute Update; Suruga Bank Reacts Well
Hollysys (HOLI US): Ascendent Capital Joins the Fray

Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

By Brian Freitas

Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.

Descente (8114) : Itochu Still Buying and ANTA Gives You Earnings Hints

Descente Ltd (8114 JP) saw Itochu report it had continued its streak of consecutive days of buying, extending it to 115. Now they own 44.1% of voting rights.
ANTA gave hints to the progress of Descente China in the Interim Results, and Q3 Operational Update. Descente analysts are 20% ahead of guidance, but they’re probably low still.
Descente reports Q2 tomorrow. I expect the numbers and presentation to surprise at the Net Profit level. I expect a forecast revision.

Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban

By Sanghyun Park

Given Korea’s blanket ban on short-selling, we should concentrate on the likelihood of these ADRs being significantly discounted compared to their underlying shares.
It should persist for an extended period, highlighting the importance of continuously monitoring ADR spreads over the next 2-3 months to seize the opportune entry timing.
Since all these carry single-stock futures, a flexible setup targeting this spread can be designed, ideally incorporating currency hedges.

Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise

By Clarence Chu

Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan.
In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg.
The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.

China Vanke (2202 HK): Short Term Trading Opportunity Post Conference Call

By Steve Zhou, CFA

China Vanke (H) (2202 HK) saw a major drop in bond and stock prices recently, due to fear of default.
Yesterday, the company held a conference call, with representatives from Shenzhen SASAC and Shenzhen Metro (major shareholder of Vanke and owned by Shenzhen SASAC) participating in the call.
The strong support shown by Shenzhen SASAC/Shenzhen Metro represents a good short-term buying opportunity, for both Vanke stock and bonds.

WuXi XDC Cayman IPO – Decent Upside from IPO Range, Bulk of the Deal Taken up by Marquee Investors

By Clarence Chu

WuXi XDC Cayman (1877628D HK) is looking to raise US$470m in its Hong Kong IPO.
WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
In this note, we will look at the deal dynamics and share our final thoughts on valuation.

TOPIX Inclusions: Who Is Ready (Nov 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Our main pre-event candidate CELSYS (3663 JP) has outperformed TOPIX by ~12.6% since 1 Sep (when it was highlighted) and 6 Nov 2023.
There are three TOPIX Inclusion events confirmed for the end of November and two other interesting pre-event names we are closely monitoring.

Sankyo (6417) – Second Go-Round for a BIG Buyback

Back in late September, Sankyo Co Ltd (6417 JP) announced a 10mm share buyback along with a new dividend policy. Only 4.22mm shares showed up to sell.
The largest holder – Exec Chair Busujima-san – sold 2.22mm shares under his own name and his company’s name. Hikari Tsushin, which had been selling in the market, didn’t participate.
Now Sankyo has launched another 10mm share ToSTNeT-3 buyback tomorrow (8 Nov) AM at ¥6,099/share. They may not complete. But they may continue buying later. They have oodles of cash.

Japan H1 Bank Earnings: Last Minute Update; Suruga Bank Reacts Well

I wrote Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down – Opportunity Abounds, Still last week mentioning the trends in guidance revisions.
Since then, five have reported H1. +20%, +53%, +23% vs guidance; +25.6%, and +28.2% vs Last Year. Eight more have added new guidance, weighted average H1 up 48%.
Four more report tomorrow, eight on Thurs, 43 on Friday. The Top 5 are all next Mon/Tues. Watch for comments about portfolio restructuring efforts in H2 as market yields rise.

Hollysys (HOLI US): Ascendent Capital Joins the Fray

Ascendent Capital has made a non-binding proposal for Hollysys Automation Technologies (HOLI US) at US$26.00 per share, a 4.0% premium to the MBO and Recco proposal of US$25.00 per share.
Ascendent has also become the largest shareholder by securing 13.69% of outstanding shares at an average price of A$20.84 per share. Ascendant is supportive of the special meeting request.
The Board has tried several delaying tactics, but the emergence of Ascendant ramps up the pressure on the Board to conduct a transparent sale process and address shareholder concerns.

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Nov 08

Daily Brief Industrials: Doosan Fuel Cell , Amaero International Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Momentum Trading Opportunities Among Top 50 Stocks in KOSPI With Highest Short Interest Ratios
Amaero International Ltd – AGM Confirms Firming Timeline for Production and Revenue

Momentum Trading Opportunities Among Top 50 Stocks in KOSPI With Highest Short Interest Ratios

By Research as a Service (RaaS)

In this insight, we discuss near-term momentum trading opportunities among the top 50 stocks in KOSPI with highest short interest ratios.
Given the recent temporary ban on stock short selling in Korea, there is likely to be increased volatility in the stock market.
We have identified 10 companies in particular that have high short interest ratios, among the worst performing stocks YTD, but with strongest share price performance in the past two days.

Amaero International Ltd – AGM Confirms Firming Timeline for Production and Revenue

Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
The company is developing a 1,000+-tonne a year critical metals alloy powder manufacturing facility in Tennessee, USA, and provided confirmation at its Annual General Meeting last week that it anticipated that on just one eight-hour shift a day the first EIGA gas atomiser, dedicated to the refractory alloy powder, C103 (niobium 89%, hafnium 10%, -titanium 1%), should be able to generate north of A$100m a year in revenue.
The Chairman and CEO Hank Holland also noted that as demand for C-103 ramps, Amaero will utilise excess production capacity to produce high-value, specialty alloy powders for next-generation defence systems.

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Nov 08

Daily Brief Financials: Suruga Bank Ltd, WuXi XDC Cayman , OCBC, SBFC Finance Limited, Greentown China, Hang Seng Index, Muthoot Microfin, Target Healthcare REIT PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Japan H1 Bank Earnings: Last Minute Update; Suruga Bank Reacts Well
WuXi XDC Cayman IPO: Robust Top Line Growth but Margins Remain Under Pressure
OCBC – 10 Nov Results | Credit Costs +150% Then +250% | ~4% Loans Greater China CRE | Insurance Risk
[Week 10] Namaste India 🙏 | Earnings Edition – Final Part
Morning Views Asia: Delta Dunia Makmur, ENN Natural Gas, Greentown China
EQD | The Hang Seng Index May Go Higher
Muthoot Microfin Pre-IPO – Accelerating Profitability Growth
Target Healthcare REIT – DPS growth from a sustainable base

Japan H1 Bank Earnings: Last Minute Update; Suruga Bank Reacts Well

By Shifara Samsudeen, ACMA, CGMA

I wrote Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down – Opportunity Abounds, Still last week mentioning the trends in guidance revisions.
Since then, five have reported H1. +20%, +53%, +23% vs guidance; +25.6%, and +28.2% vs Last Year. Eight more have added new guidance, weighted average H1 up 48%.
Four more report tomorrow, eight on Thurs, 43 on Friday. The Top 5 are all next Mon/Tues. Watch for comments about portfolio restructuring efforts in H2 as market yields rise.

WuXi XDC Cayman IPO: Robust Top Line Growth but Margins Remain Under Pressure

WuXi XDC Cayman (1877628D HK) is a leading contract research, development and manufacturing organisation (CRDMO) focused on the global antibody-drug conjugate (“ADC”) and broader bioconjugate market.
The company has announced the terms for its HKEx IPO and plans to raise proceeds of around US$470m through the IPO.
Wuxi XDC’s revenues have seen robust growth during the last 3-years driven by growth in ADC market while margins have continued to decline.

OCBC – 10 Nov Results | Credit Costs +150% Then +250% | ~4% Loans Greater China CRE | Insurance Risk

By Daniel Tabbush

In past 2 quarters OCBC (OCBC SP) saw its credit costs rise 150% YoY and then 250% YoY. For almost all of the preceding 8 quarters YoY growth was negative.
It holds 3.8% of total loans in Greater China CRE, a sector that has seen visible deterioration in some banks, like Standard Chartered (STAN LN) and HSBC Holdings (HSBA LN).
Great Eastern Holdings (GE SP) is seeing weakness in main revenue lines, with worsening policy claims. Its profit delta this year is distorted from the base effect.

[Week 10] Namaste India 🙏 | Earnings Edition – Final Part

By Pranav Bhavsar

While the earnings season continues, this will be the final dedicated earnings edition.
For reference, the previous earnings editions are [Week 8] Namaste India 🙏 | Earnings Edition – Part I & [Week 9] Namaste India 🙏 | Earnings Edition – Part II
At the bottom, we provide a consolidated view of all earnings (~ 50) tracked so far and we would be happy to engage in discussions on any of them.

Morning Views Asia: Delta Dunia Makmur, ENN Natural Gas, Greentown China

By Charles Macgregor

Delta Dunia Makmur
ENN Natural Gas
Greentown China

EQD | The Hang Seng Index May Go Higher

By Nico Rosti

The Hang Seng Index closed last week at 17664.12 (CC=+2), currently rallying this week, but there is a chance for a short-lived pullback (i.e. closing this week down).
The current global equities bounce should continue for the entire month of November: the HSI may continue rallying for +2 weeks (if it does not close down this week).
Price targets to watch for the end of the rally (i.e. shortable) are between 18300 and 18700.

Muthoot Microfin Pre-IPO – Accelerating Profitability Growth

By Ethan Aw

Muthoot Microfin (1363943D IN) is looking to raise up to US$163m in its upcoming India IPO.
Muthoot Microfin (MMF) is a microfinance institution providing micro-loans to women customers with a focus on the rural regions of India.
MMF has undergone fast network expansion, which allowed the firm to nearly double its AUM over the track record period.

Target Healthcare REIT – DPS growth from a sustainable base

By Edison Investment Research

Target Healthcare REIT’s mid-year rebasing of DPS sought to establish a base for growth on a fully covered basis. With FY23 results in line with previous indications, and progress continuing, the company has increased the quarterly rate of DPS by 2% from Q124. With rent collection restored, we expect rental growth, development completions and fixed debt costs to support continued, progressive, fully covered dividend growth.

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Nov 08

Daily Brief TMT/Internet: Kokusai Electric , Hollysys Automation Technologies, Nintendo, Hygon Information Technology C, Telefonica Deutschland Holding, Novatek Microelectronics Corp, Vanguard Intl Semiconductor, DataTec Ltd, Cambium Networks and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TOPIX Inclusions: Who Is Ready (Nov 2023)
Hollysys (HOLI US): Ascendent Capital Joins the Fray
Nintendo (7974) | Stock Performance Ahead ‘Switch 2’ Speculation
SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out
Telefonica/Telefonica Deutschland Holding AG: Offer for Minorities
Novatek (3034.TT): It’s Likely Quarterly Sales Will Return to Normal Seasonality in 2024F.
Vanguard (5347.TT): The Smartphone and Computing/NB/TV Sectors Have Turned to Normal.
Datatec – On track for better performance in FY24
Cambium Networks Corporation – New CEO Working to Streamline the Company

TOPIX Inclusions: Who Is Ready (Nov 2023)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Our main pre-event candidate CELSYS (3663 JP) has outperformed TOPIX by ~12.6% since 1 Sep (when it was highlighted) and 6 Nov 2023.
There are three TOPIX Inclusion events confirmed for the end of November and two other interesting pre-event names we are closely monitoring.

Hollysys (HOLI US): Ascendent Capital Joins the Fray

Ascendent Capital has made a non-binding proposal for Hollysys Automation Technologies (HOLI US) at US$26.00 per share, a 4.0% premium to the MBO and Recco proposal of US$25.00 per share.
Ascendent has also become the largest shareholder by securing 13.69% of outstanding shares at an average price of A$20.84 per share. Ascendant is supportive of the special meeting request.
The Board has tried several delaying tactics, but the emergence of Ascendant ramps up the pressure on the Board to conduct a transparent sale process and address shareholder concerns.

Nintendo (7974) | Stock Performance Ahead ‘Switch 2’ Speculation

By Mark Chadwick

Nintendo’s Q2 results show solid performance but still fall short of expectations, with a conservative full-year profit outlook
The impending release of “Switch 2” in 2H24 raises questions about the company’s ability to replicate the original Switch’s success
We see the current 11x EV/EBIT as fair for the stock and do not anticipate a valuation breakout until the market can assess the credentials of “Switch 2”

SSE50 Index Rebalance Preview: Five Potential Changes; Hygon Stands Out

By Brian Freitas

With the review period complete, we see 9 stocks in inclusion zone and 10 in deletion zone. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 4.7% at the December rebalance leading to a one-way trade of CNY 3.86bn. Index arb balances could increase the impact on the stocks.
Apart from being added to the SSE50 Index, Hygon Information Technology (688041 CH) could also be added to other local/global indices over the next few weeks and months.

Telefonica/Telefonica Deutschland Holding AG: Offer for Minorities

By Jesus Rodriguez Aguilar

Telefonica SA (TEF SM) surprised everyone with a €2.35/share voluntary cash offer for the minorities in Telefonica Deutschland Holding (O2D GR), 37.6% premium, 4.4x EV/Fwd EBITDA (vs.5.1x Telefonica), €1970 million value.
The premium is attractive, c.31% premium to median IBES consensus TP, so I believe the offer will succeed. There will be no additional acceptance period. Spread is +0.17%.
Telefonica will add 7% more leverage at a time it is seeking the opposite: on the cards are some sort of divestment of Virgin Media O2 or a dividend cut.

Novatek (3034.TT): It’s Likely Quarterly Sales Will Return to Normal Seasonality in 2024F.

By Patrick Liao

It’s likely that quarterly sales will return to normal seasonality in 2024F, and the Smartphone demand has shown some signs of recovery.
Revenue/ GM/ OPM are declined 8.6%/ 2.7%/ 2.7% in 4Q23F, but we consider the end market might be recovery.
The OLED penetration rate in smartphones is 42.5% in 2023F , and it’s anticipated that Novatek Microelectronics Corp (3034 TT) will exceed the market in terms of OLED sales.

Vanguard (5347.TT): The Smartphone and Computing/NB/TV Sectors Have Turned to Normal.

By Patrick Liao

It remains cautiously optimistic for the 2024 outlook despite limited order visibility.
The Vanguard wafer shipment has decreased by 8-10% QoQ, with the ASP declining by 0-2% QoQ. The GM for 4Q23F is projected to be 22-24%.
The smartphone and computing/NB/TV sectors have returned to normal levels.

Datatec – On track for better performance in FY24

By Edison Investment Research

Datatec reported a strong performance in H124, with revenue up 15% y-o-y, adjusted EBITDA up 2% and underlying EPS up 336%. As supply chain issues have eased, the company has been able to reduce its backlog from previously elevated levels. Datatec expects improved performance in all divisions in FY24. While the company closely manages working capital, higher revenues and a gradual reduction in supplier extended payment terms drive our higher net debt forecasts. Our estimates are broadly unchanged at a group level, with adjustments at a divisional level to reflect Westcon strength and uncertainty in Latin America, and higher operating profitability offsetting increased interest costs.

Cambium Networks Corporation – New CEO Working to Streamline the Company

By Water Tower Research

Cambium Networks (CMBM) is a leading mid-market wireless solutions provider.
Growth is being driven by 5G and new 6 GHz products. The company believes its strengths are its RF algorithms and software.
The cnMaestro X network management solution makes significant use of AI and lies at the center of the company’s product suite.

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

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✓ Company Data and News
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Nov 08

Daily Brief Industrials: Doosan Fuel Cell , Amaero International Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Momentum Trading Opportunities Among Top 50 Stocks in KOSPI With Highest Short Interest Ratios
Amaero International Ltd – AGM Confirms Firming Timeline for Production and Revenue

Momentum Trading Opportunities Among Top 50 Stocks in KOSPI With Highest Short Interest Ratios

By Research as a Service (RaaS)

In this insight, we discuss near-term momentum trading opportunities among the top 50 stocks in KOSPI with highest short interest ratios.
Given the recent temporary ban on stock short selling in Korea, there is likely to be increased volatility in the stock market.
We have identified 10 companies in particular that have high short interest ratios, among the worst performing stocks YTD, but with strongest share price performance in the past two days.

Amaero International Ltd – AGM Confirms Firming Timeline for Production and Revenue

Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
The company is developing a 1,000+-tonne a year critical metals alloy powder manufacturing facility in Tennessee, USA, and provided confirmation at its Annual General Meeting last week that it anticipated that on just one eight-hour shift a day the first EIGA gas atomiser, dedicated to the refractory alloy powder, C103 (niobium 89%, hafnium 10%, -titanium 1%), should be able to generate north of A$100m a year in revenue.
The Chairman and CEO Hank Holland also noted that as demand for C-103 ramps, Amaero will utilise excess production capacity to produce high-value, specialty alloy powders for next-generation defence systems.

💡 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

Nov 08

Daily Brief Energy/Materials: Posco ADR, EcoPro Materials, Rent.com.au Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban
Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban
Rent.com.au Ltd – Portal Back on Track, Capital Raise to Support RentPay

Trading Opportunities Targeting Potential ADR Discount Increases from Korea’s Short-Selling Ban

By Sanghyun Park

Given Korea’s blanket ban on short-selling, we should concentrate on the likelihood of these ADRs being significantly discounted compared to their underlying shares.
It should persist for an extended period, highlighting the importance of continuously monitoring ADR spreads over the next 2-3 months to seize the opportune entry timing.
Since all these carry single-stock futures, a flexible setup targeting this spread can be designed, ideally incorporating currency hedges.

Trading Strategy of Ecopro Materials IPO Post Book Building Results and Short Selling Ban