Category

Daily Briefs

Sep 28
0

Most Read: EcoPro Materials, Korea Stock Exchange KOSPI 200, Haitong International Securities Group, System Information, SK Square , Kokusai Electric , HMM Co., Ltd., Doosan Robotics, Cainiao Smart Logistics and more

By | Daily Briefs, Most Read

In today’s briefing:

  • EcoPro Materials: IPO & Index Inclusion
  • Information Received Through KRX Officials Regarding Changes in the KOSPI 200 Methodology
  • Haitong Int’l Securities (665 HK): Possible Offer From Parent
  • System Information Co (3677 JP) “MBO” By Bain an Exit Trade for Founder+CEO+Employees
  • SK Square: M&A of 11st – Alibaba Out and Qoo10 In?
  • Kokusai Electric IPO – Don’t Worry, This’ll Be Fine Too
  • Seizing a Trading Opportunity Aimed at HMM’s New Stock Listing Date
  • Doosan Robotics (454910 KS): Listing & Index Inclusion Timeline
  • Cainiao Pre-IPO – The Postivies – Evolving into a Global Player, Decent Revenue Growth
  • Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

EcoPro Materials: IPO & Index Inclusion

By Brian Freitas

  • EcoPro Materials (ECO123 KS) was founded in 2017 and specializes in manufacturing cathode material precursors, a core material for lithium secondary cells.
  • EcoPro Materials (ECO123 KS) could raise between US$387m-US$492m, valuing the company between US$1.9bn-US$2.42bn. Float will depend on voluntary lock-ups and allocation to strategic investors.
  • Inclusion in global indices is likely to take place between February to June, while the highest probability of Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion is in December 2024.

Information Received Through KRX Officials Regarding Changes in the KOSPI 200 Methodology

By Sanghyun Park

  • The official announcement from KRX regarding the KOSPI 200 rebalancing rule change is expected to be released shortly after the end of October.
  • The rule change will take effect beginning with this year’s December rebalancing. An official from KRX has communicated that we can confidently regard this as confirmed.
  • It is essential to be aware that during this December review, there exists a significant potential for generating substantial price fluctuations within a narrow timeframe.

Haitong Int’l Securities (665 HK): Possible Offer From Parent

By David Blennerhassett

  • Haitong International Securities Group (665 HK) (HITSEC) is suspended pursuant to Hong Kong’s Code on Takeovers and Mergers.
  • The rumour doing the rounds is that Haitong Securities Co Ltd (A) (600837 CH) (HSC) may take private its 73.4%-held Hong Kong-listed investment banking unit.
  • HITSEC’s share performance since 1Q18 has been tragic. Financials have been dire since 2H20.  But expect a punchy premium if HTS does seek to take HITSEC private. 

System Information Co (3677 JP) “MBO” By Bain an Exit Trade for Founder+CEO+Employees

By Travis Lundy

  • The stock is down more than 50% from its high 3yrs ago. The founder is 79. The CEO is 75. Employees and former directors own another 10%.
  • This is an exit vs an MBO. And the Target Side negotiating the exit were rolled by Bain. This is NOT an expensive purchase. Bain’s equity check is 2.3x EBIT.
  • But it probably gets done anyway unless someone gets noisy. For that, they’d have to buy a 10-15% stake I expect. 

SK Square: M&A of 11st – Alibaba Out and Qoo10 In?

By Douglas Kim

  • On 27 September, Maeil Business Daily reported that SK Square signed an MOU with Qoo10 to pursue a joint management of 11st. 
  • It appears that Alibaba may have been reviewing this deal but it is no longer interested in pursuing 11st.
  • A deal between Qoo10 and 11st could occur, but this is not certain, which means some of the cash proceeds to FI would need to be burdened by SK Square.

Kokusai Electric IPO – Don’t Worry, This’ll Be Fine Too

By Mio Kato

  • Early last year there were articles suggesting that KKR would IPO Kokusai Electric at a valuation of about ¥700bn. 
  • A year plus later the company is now set to IPO for something on the order of ¥436bn. 
  • We are sure KKR is breathing a sigh of relief that they didn’t unload shares 60% higher and can now offer other investors some “value”.

Seizing a Trading Opportunity Aimed at HMM’s New Stock Listing Date

By Sanghyun Park

  • Should the stock conversion decision be reached this week, the new shares will be listed on the 15th of the upcoming month. So, they will officially debut on October 16th.
  • On the day of the new share listing during the immediate previous case, the price dropped by 2.36%, and on the very next trading day, it declined by 3.72%.
  • Given the present dilution rate of 30%, there is a higher probability of even more pronounced price movements in the same direction.

Doosan Robotics (454910 KS): Listing & Index Inclusion Timeline

By Brian Freitas

Cainiao Pre-IPO – The Postivies – Evolving into a Global Player, Decent Revenue Growth

By Sumeet Singh

  • Cainiao Smart Logistics ,  Alibaba Group Holding (9988 HK)’s logistics linked arm, is planning to raise at least US$1bn in its Hong Kong IPO.
  • Cainiao is the largest provider of cross-border e-commerce logistics services globally and a leader in China logistics services, according to CIC.
  • In this note, we talk about the positive aspects of the deal.

Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

By Oshadhi Kumarasiri

  • Alibaba (ADR) (BABA US)‘s logistics arm, Cainiao Smart Logistics (1437124D HK), filed for an IPO with HKEX yesterday, aiming to raise $1bn to $2bn.
  • Although efficient, Cainiao may face business challenges, as the majority of logistics costs and revenues stem from services outsourced to logistics partners.
  • Despite the proposed IPO, we believe that Cainiao will always operate in the shadow of Alibaba’s primary e-commerce business.

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Sep 27
0

Daily Brief Event-Driven: Rakuten Bank (5838) One Month Later and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Rakuten Bank (5838) One Month Later
  • EcoPro Materials: IPO & Index Inclusion
  • Toyo Construction (1890 JP): YFO’s Potential Revised Offer at JPY1,255
  • Hong Kong CEO & Director Dealings (26 Sept): Kwoks Buying Sun Hung Kai; ED Selling Yantai North
  • Quiddity Leaderboard SE600 Dec 23: 7 Changes Possible Including Two Intra-Review Changes
  • Seizing a Trading Opportunity Aimed at HMM’s New Stock Listing Date
  • Quiddity Leaderboard-DAX Dec 23: One MDAX Change and Three SDAX Changes Possible
  • EQD | KOSPI 200 Index Getting OVERSOLD
  • Onewo IPO Lock-Up – US$1bn+ Lockup Release, Parent Could Still Sell

Rakuten Bank (5838) One Month Later

By Travis Lundy

  • On 31 August, I published Rakuten Bank (5838) – 4 Months On, Volume Decay and RB’s Place Among Banks. It’s up 40.6% since the day after I wrote, reasons unclear.  
  • TOPIX Banks Index is up 10.4% since then, with post-BOJ meeting price movements indicating a kind of momiai.
  • For Rakuten Bank, while growth means it may not be “expensive” it is no longer dirt cheap. And I cannot identify the culprit, so time to take profits. 

EcoPro Materials: IPO & Index Inclusion

By Brian Freitas

  • EcoPro Materials (ECO123 KS) was founded in 2017 and specializes in manufacturing cathode material precursors, a core material for lithium secondary cells.
  • EcoPro Materials (ECO123 KS) could raise between US$387m-US$492m, valuing the company between US$1.9bn-US$2.42bn. Float will depend on voluntary lock-ups and allocation to strategic investors.
  • Inclusion in global indices is likely to take place between February to June, while the highest probability of Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) inclusion is in December 2024.

Toyo Construction (1890 JP): YFO’s Potential Revised Offer at JPY1,255

By Arun George

  • YFO has returned with a potential tender offer price of JPY1,255 per share for Toyo Construction (1890 JP), 25.5% above its previous offer of JPY1,000 per share.
  • The offer is conditional on due diligence access to confirm the feasibility of the medium-term management plan and no material accounting, tax, or legal issues.
  • The due diligence will take a month, with the offer expected to commence in late December. Expect due diligence access as the revised offer represents a 10-year high. 

Hong Kong CEO & Director Dealings (26 Sept): Kwoks Buying Sun Hung Kai; ED Selling Yantai North

By David Blennerhassett

  • The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
  • Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
  • The key stocks mentioned in this regular insight are Sun Hung Kai Properties (16 HK) and Yantai North Andre Juice H (2218 HK).

Quiddity Leaderboard SE600 Dec 23: 7 Changes Possible Including Two Intra-Review Changes

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELETEs for the SE600 and EURSTX Indices for the December 2023 Rebalance.
  • There could be up to seven index changes in the run up to the December 2023 rebalance.
  • This includes a couple of intra-review index changes that could be triggered by the Dechra Pharmaceuticals (DPH LN) and Chr Hansen Holding A/S (CHR DC) takeover situations.

Seizing a Trading Opportunity Aimed at HMM’s New Stock Listing Date

By Sanghyun Park

  • Should the stock conversion decision be reached this week, the new shares will be listed on the 15th of the upcoming month. So, they will officially debut on October 16th.
  • On the day of the new share listing during the immediate previous case, the price dropped by 2.36%, and on the very next trading day, it declined by 3.72%.
  • Given the present dilution rate of 30%, there is a higher probability of even more pronounced price movements in the same direction.

Quiddity Leaderboard-DAX Dec 23: One MDAX Change and Three SDAX Changes Possible

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELETEs for the DAX, MDAX, and SDAX Indices in the September 2023 Rebalance.
  • I currently do not see any index changes for DAX but Fresenius Medical Care & (FME GR) and Zalando (ZAL GR) are close to being an ADD and DELETE respectively.
  • I see one change for the MDAX index. Separately, there could be up to three SDAX change in the run up to the December 2023 review including one intra-review change.

EQD | KOSPI 200 Index Getting OVERSOLD

By Nico Rosti

  • The KOSPI 200 INDEX closed down last week (CC=-1) and is currently down this week as well (CC=-2 to be confirmed on Friday), currently approaching Q3 support at 324.
  • Based on Market Reversal Matrix time/price models, if this week the KOSPI closes down at <=324, the index will have a >75% probability to close the next week up.
  • Going LONG is not without risk at this stage: this pattern is not bullish, the correction could reach <300, based on the models, but the index is getting OVERSOLD.

Onewo IPO Lock-Up – US$1bn+ Lockup Release, Parent Could Still Sell

By Sumeet Singh

  • Onewo (2602 HK) (OST) had raised around US$730m in its Hong Kong IPO in Sep 2022. Its one-year lockup is set to expire soon.
  • OST is a property management service provider in China, primarily owned by China Vanke (H) (2202 HK).
  • In this note, we will talk about the lock-up dynamics and updates since our last note.

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Sep 27
0

Daily Brief ESG: Need to Increase Human Capital Investment as Soon as Possible to Move to High Value-Added Businesses and more

By | Daily Briefs, ESG

In today’s briefing:

  • Need to Increase Human Capital Investment as Soon as Possible to Move to High Value-Added Businesses

Need to Increase Human Capital Investment as Soon as Possible to Move to High Value-Added Businesses

By Aki Matsumoto

  • The question is whether companies can achieve results by increasing investment to secure and train human resources who can contribute to transitioning to a business that produces high value-added products.
  • Regarding the disclosure of human capital, many issues remain, such as the lack of unified definition of the required items and the inability to use this data as comparable data.
  • Percentage of women in managerial positions is more serious. The lack of on-the-job training for women is an on-going issue that makes the path to future managerial positions more difficult.

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Sep 27
0

Daily Brief Technical Analysis: U.S. Dollar (DXY) And Treasury Yields Breaking Out; Growing Number of Index/Sector Breakdowns and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • U.S. Dollar (DXY) And Treasury Yields Breaking Out; Growing Number of Index/Sector Breakdowns

U.S. Dollar (DXY) And Treasury Yields Breaking Out; Growing Number of Index/Sector Breakdowns

By Joe Jasper

  • We’ve expected to see 4300-4325 act as major support on SPX, while also expecting consolidation between 4300-4325 support and 4600 resistance until the end of September, and possibly longer.
  • Still possible this 4300-4325 support holds, but odds of a deeper pullback to SPX 4165-4200/the 200-day MA have increased following major breakouts in the U.S. dollar (DXY) and Treasury yields 
  • Also adding to concerns: 1+ year uptrend violations on $IWO/$IWP, and breakdowns below 34,280 on the Dow, $180 on IWM, $472 on SOXX, $81 on ITB, and $104-$105 on XLI

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Sep 27
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan: US Stocks Slide; Japan X: Gender Diversity and Overboarding A Dual Challenge and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan: US Stocks Slide; Japan X: Gender Diversity and Overboarding A Dual Challenge
  • Japan Banks – Accelerating Domestic Credit | JGB Yields Higher | Provisions -79% QoQ & -58% YoY
  • Around China Housing In 80 Seconds – Visualizing The 2012-2023 Monthly Data
  • US Banks –  Snapshots Ahead of 3Q23 Results
  • Weekly Sustainable Investing Surveyor – Week Ended September 22, 2023

Ohayo Japan: US Stocks Slide; Japan X: Gender Diversity and Overboarding A Dual Challenge

By Mark Chadwick

  • OVERSEAS: SPX -1.5%; weak consumer confidence; weak new home sales; and Dimon warning of 7% rates
  • JAPAN: NKY futs -1.3% vs cash; JPY 149.1/$. Kao to sell-off brands on cosmetics slump
  • JAPAN X: The issue of overboarding in Japan is becoming a big problem, more so given needs to diversify the board

Japan Banks – Accelerating Domestic Credit | JGB Yields Higher | Provisions -79% QoQ & -58% YoY

By Daniel Tabbush

  • What’s new is that Japan’s domestic credit growth is accelerating, and it’s now better than in Singapore, for instance; accelerating to 2.51% YoY in July from 0.77% February low
  • Loan growth and higher JGB yields, both matter for net interest income, and margins. Two year JGB yields are 0.035% on 22 September compared with -0.075% on 30 June.
  • Profit delta can rise further for Japan’s banks due to better NPLs, with the largest banks’ credit costs/loans moving to 5bps in 1Q24, vs 21bps in 4Q22, 11bps in 1Q23

Around China Housing In 80 Seconds – Visualizing The 2012-2023 Monthly Data

By Robert Ciemniak

  • Through a set of 4 quick animations of city-level data (70 cities), we illuminate the dynamics of new home prices in China over the past 12 years
  • This helps put the current (since mid-2021) downturn in context and build intuition about the components of the aggregate declines, including the by-city-tier breakdown
  • We point out a number of key data caveats and traps in the interpretation of the data sets

US Banks –  Snapshots Ahead of 3Q23 Results

By Victor Galliano

  • We focus in on three key issues – unrealized losses on bond holdings, commercial real estate exposure and deposit movements – ahead of US banks’ release of 3Q23 results
  • Current US Treasury yields imply further erosion of US banks’ adjusted CET1 ratios; we estimate that accumulated unrealized securities losses accounted for 25% of system total equity to June 2023
  • Bank system deposits are declining, but not alarmingly; CRE exposure is a key potential credit risk for the US banks; we like Capital One and we are cautious on Zions

Weekly Sustainable Investing Surveyor – Week Ended September 22, 2023

By Water Tower Research

  • The WTR Sustainable Index underperformed the broader market, falling 5.3% W/W versus the S&P 500 Index (down 2.9%), the Russell 2000 Index (down 3.8%), and the Nasdaq Index (down 3.3%).
  • Energy Technology (14.6% of the index) contributed to the index’s underperformance, falling 7.5%, while Industrial Climate and Ag Technology (46.5% of the index) was down 2.7%, ClimateTech Mining was down 8.0%, and Advanced Transportation Solutions was down 7.2%.
  • Top 10 Performers: CLIR, NHHH, BRDS, NILI, FPX, ATLX, GIGA, ABML, WAVE, LTBR

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Sep 27
0

Daily Brief ECM: Kokusai Electric IPO: The Bull Case and more

By | Daily Briefs, ECM

In today’s briefing:

  • Kokusai Electric IPO: The Bull Case
  • IDFC First Bank Early Look – Likely to Be an Accretive Deal but Not Particularly Cheap
  • Tian Tu Capital IPO – Even with a Wide Price Range, Upside Seems Limited
  • Entero Healthcare Solutions Pre-IPO Tearsheet
  • Three IPO Candidates of the Dongwon Group (StarKist, Dongwon Loex, and Dongwon Home Food)
  • Bajaj Finance US$1bn QIP Early Look -Doesn’t Really Need the Raise, All past Deals Have Done Well

Kokusai Electric IPO: The Bull Case

By Arun George

  • Kokusai Electric (6525 JP) is a speciality manufacturer of semiconductor production equipment. KKR & (KKR US) seeks to raise about US$750 million through listing Kokusai.   
  • Kokusai has the leading market share in the batch deposition equipment market and the second largest market share in the treatment equipment market, according to TechInsights and Gartner.
  • The key elements of the bull case rest on a leading market share, strong IP, healthy forward revenue indicators, increasing recurring service revenue, solid gross margin trends and modest leverage.

IDFC First Bank Early Look – Likely to Be an Accretive Deal but Not Particularly Cheap

By Ethan Aw

  • IDFC First Bank Limited (IDFCBK IN) plans to launch a Qualified Institutional Placement (QIP) of up to INR30bn (US$362m) in Oct 23, as per media reports. 
  • On 22nd Sep 23, IFR had reported that IDFC First Bank is looking to launch a Qualified Institutional Placement (QIP) to raise up to INR30bn (US$362m) in Oct 23. 
  • In this note, we will talk about the possible placement and other deal dynamics.

Tian Tu Capital IPO – Even with a Wide Price Range, Upside Seems Limited

By Clarence Chu

  • Tian Tu Capital (1390587D CH) is looking to raise up to US$253m in its Hong Kong IPO.
  • Tian Tu Capital (TTC) is a private equity/venture capital investor and fund manager with a focus on Chinese consumer brands and companies.
  • In this note, we will look at the updates since our last note and share our thoughts on valuation.

Entero Healthcare Solutions Pre-IPO Tearsheet

By Clarence Chu

  • Entero Healthcare Solutions Limited (2294842D IN)  is looking to raise US$200m in its upcoming India IPO. The bookrunners on the deal are ICICI Securities, DAM Capital, Jefferies, JM Financial, SBI Capital.
  • Entero Healthcare Solutions (Entero) is a healthcare products distributor in India.
  • As per the CRISIL report in the DRHP, Entero is amongst the top three healthcare products distributors in India in terms of FY22 revenue.

Three IPO Candidates of the Dongwon Group (StarKist, Dongwon Loex, and Dongwon Home Food)

By Douglas Kim

  • It was reported in the local Korean media that the Dongwon Group is considering on listing three private companies including Starkist, Dongwon Loex, and Dongwon Home Food.
  • Prior to their IPOs, Dongwon Group is reviewing the potential of selling partial stakes in these companies in pre-IPO investments.
  • One of the major purposes of the IPOs would be to gain access to more capital which could be used by the Dongwon Group to acquire HMM. 

Bajaj Finance US$1bn QIP Early Look -Doesn’t Really Need the Raise, All past Deals Have Done Well

By Sumeet Singh

  • Bajaj Finance Ltd (BAF IN), one of India’s largest NBFCs, aims to raise up to US$1bn via a QIP.
  • Bajaj Finance is an NBFC offering auto, consumer and home loans, along with other products as well.
  • In this note, we talk about the deal dynamics and recent updates.

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Sep 27
0

Daily Brief Credit: Morning Views Asia: Vedanta Resources and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Vedanta Resources, Yuexiu Property

Morning Views Asia: Vedanta Resources, Yuexiu Property

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.

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Sep 27
0

Daily Brief Equity Bottom-Up: Sea Ltd (SE US) – Glass Half Full Again? and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Sea Ltd (SE US) – Glass Half Full Again?
  • StubWorld: CK Infra Vs. Power Assets
  • Disco (6146 JP): Rolling Over
  • Kanzhun (2076 HK): A Monitor of Job Market in China
  • Ryobi (5851) | Re-Rating as Die-Casting Becomes Gigacasting
  • Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power
  • Gree (000651 CH):  Resilient Fundamentals; Rerating Potential In A Low Interest Rate Environment
  • Adidas: All The Ingredients To Win
  • Celltrion (068270 KP): Improving Base Business Is Being Overlooked by Mr. Market Amid Merger Noises
  • COSCO Shipping Energy (1138 HK): Clearly Over-Optimistic

Sea Ltd (SE US) – Glass Half Full Again?

By Angus Mackintosh

  • The news that the Indonesian Government will target social commerce in Indonesia, as well as placing additional scrutiny on imported products sold through digital channels will impact TikTok hard.
  • TikTok Shop will not be allowed to operate in Indonesia in its present guise given the requirement to split social media and e-commerce, which will benefit peers Shopee and Tokopedia.
  • Sea Ltd through Shopee will be the biggest beneficiary given it will require less promotional spending in Indonesia and it has also re-entered the Indian market with FreeFire. 

StubWorld: CK Infra Vs. Power Assets

By David Blennerhassett

  • Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH. 
  • Preceding my comments on CKI/PAH are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Disco (6146 JP): Rolling Over

By Scott Foster

  • After more than doubling between early April and the end of August, Disco has dropped back. The outlook for demand and valuations suggest potential downside of 20%. 
  • Operating profit was down 21% YoY in the June quarter on a 10% decline in sales. Management is guiding for 18% and 32% declines this quarter. 
  • Over-Optimistic expectations regarding the pace and degree of cyclical recovery are being squeezed out of the share price. 

Kanzhun (2076 HK): A Monitor of Job Market in China

By Ming Lu

  • Kanzhun or Boss Zhipin, is the largest online recruiting platform for white collar workers.
  • Users exceeded servers’ capacity for the third time this year.
  • The positive signal is that recruiters began to grow in 2Q23.

Ryobi (5851) | Re-Rating as Die-Casting Becomes Gigacasting

By Mark Chadwick

  • Ryobi is a global manufacturer of high-quality aluminum die castings used for transmission cases, engine parts, and other vehicle parts
  • Ryobi has recently gained market attention following an announcement that the company will produce large electric-vehicle body parts using “gigacasting”
  • The stock is expected to benefit from EV adoption with improved earnings and increased market recognition

Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

By Oshadhi Kumarasiri

  • Japanese inflation, which peaked at 4.3% in January 2023, gradually decreased to 3.5%, 3.2%, 3.3%, 3.3%, and 3.2% in the subsequent months of 2023.
  • Inflation rates remained stable for most items, excluding Fuel, Electricity, Water, and fresh vegetables, indicating the persistence of cost-push inflation.
  • In this insight, we analyze the recent quarterly performance of Yakult, Nissin, and Seven & I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.

Gree (000651 CH):  Resilient Fundamentals; Rerating Potential In A Low Interest Rate Environment

By Steve Zhou, CFA

  • Gree Electric Appliances (000651 CH) trades at the lowest valuation multiple among the three major home appliance companies in China, at 7x forward PE and 7% forward yield.
  • Investment case rests on stable earnings growth and high dividend payout and yield, which works well in a low interest rate environment in China.
  • Resiliency of earnings for Gree is under-appreciated by the market, making rerating possible.

Adidas: All The Ingredients To Win

By Alexis Dwek

  • Adidas has all the ingredients to win: “a great brand, credibility, authenticity, innovation, collaborations, talented people, and a global network”.
  • Adidas operates in a highly attractive industry as it benefits from a structural growth from sports, which is playing an increasingly important role in more and more people’s lives
  • Although 2023 is a transition year, the following years are very promising in terms of sales, margins, and earnings development.

Celltrion (068270 KP): Improving Base Business Is Being Overlooked by Mr. Market Amid Merger Noises

By Tina Banerjee

  • As Celltrion (068270 KP) approaches merger clarity, focus will shift to its base business, which remains solid. In Q2 2023, biosimilar, the flagship business, reported a 10% YoY growth.
  • Operating profit margin expanded 440bps YoY to 34.9%. Margins are expected to improve further through increasing contribution from high-margin products such as Yuflyma (Humira biosimilar) and Remsima SC.
  • Celltrion expects to receive approval for Remsima SC in the U.S. by end of October, which should act as a major catalyst. By 2030, merged entity targets revenue of KRW12T.

COSCO Shipping Energy (1138 HK): Clearly Over-Optimistic

By Osbert Tang, CFA

  • Cosco Shipping Energy Transportation (1138 HK) has rallied sharply on strong earnings recovery, but this is too excessive. We think unrealistic expectation has been built on 2H23 earnings.
  • Over the last three months, the spot VLCC rate has collapsed by 90%, indicating a weakened demand outlook. The resilient share price has clearly not yet factored in this movement. 
  • The recent surge in crude oil is driven by supply, not demand, factors. This has led to a 14% increase in bunker price which will heighten CSET’s fuel bill.  

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Sep 27
0

Daily Brief Crypto: The JPEX Debacle Placed Hong Kong’s Ambition to Become a Global Virtual Assets Centre in Doubt and more

By | Crypto, Daily Briefs

In today’s briefing:

  • The JPEX Debacle Placed Hong Kong’s Ambition to Become a Global Virtual Assets Centre in Doubt

The JPEX Debacle Placed Hong Kong’s Ambition to Become a Global Virtual Assets Centre in Doubt

By Fern Wang

  • JPEX may be the biggest financial fraud in Hong Kong’s history, impacting government’s ambition to become a global centre for virtual assets
  • SFC appeared to have no direct jurisdiction and powerless in the protection of investors in the JPEX case
  • Web 3.0 and Virtual Assets are rapidly evolving, regulators may need to take a more dynamic approach in regulating such activities

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Sep 27
0

Daily Brief Macro: Global Liquidity Will Be Hit By Sell-Off in Treasuries and more

By | Daily Briefs, Macro

In today’s briefing:

  • Global Liquidity Will Be Hit By Sell-Off in Treasuries
  • USDJPY – An Opportunistic Currency Trade
  • The Great Game: Why Russia is Really Cutting Diesel Exports
  • EUR Inflation Watch: Another Couple of Months of EASY Disinflation on the Cards
  • FOMC Goldilocks Projections Overlook Fiscal Drag & Student Loan Repayments
  • The Energy Cable #39: A Maturing Bull Market

Global Liquidity Will Be Hit By Sell-Off in Treasuries

By Michael J. Howell

  • US Treasury term premia, a key component of yields, are starting to move higher from their recent extreme lows
  • Potentially they could jump 100bp higher, forcing 10yr US Treasuries to test 5½%.  US Fed may be powerless to stop this move
  • Problem is higher Treasury coupon supply and lower foreign demand

USDJPY – An Opportunistic Currency Trade

By Jeroen Blokland

  • As observed elsewhere, inflation in Japan is sticky and the country is importing a considerable amount of inflation due to its weakening currency.
  • While too early to tweak monetary policy again, to limit currency volatility as much as possible, hinting at a less accommodative policy now would be opportune.
  • The Japanese Finance Minister appears to be anticipating potential Yen intervention.

The Great Game: Why Russia is Really Cutting Diesel Exports

By Mikkel Rosenvold

  • Welcome to this week’s Great Game which follows in the footsteps of our overall energy and oil theme this week.
  • In this piece, we will dive into some of the hotspots and political drivers behind the developments in the oil markets, both short-term and long-term.
  • Tanks and ThreshersLast week, markets were stunned by the Russian decision to cut off exports of diesel, marine fuels and other fuels.

EUR Inflation Watch: Another Couple of Months of EASY Disinflation on the Cards

By Andreas Steno

  • It’s time for the monthly preliminary inflation numbers from Europe again and we are yet to fear a YoY re-acceleration in European numbers.
  • Base effects are massive over the course of September and October, but there are signs of a cyclical pick-up in EUR-flation from late Q4 and onwards as well.
  • Conclusions up front:– Energy-inflation will bottom in November in Europe and goods inflation will likely follow– Services inflation will likely start to look very weak already this month, leaving a surprise in EUR-flation likely.

FOMC Goldilocks Projections Overlook Fiscal Drag & Student Loan Repayments

By Prasenjit K. Basu

  • FOMC’s median Goldilocks projections entail faster growth, lower inflation, but rates staying higher for longer. With the fiscal booster, real GDP is likely to grow over 4%QoQsaar in Q3CY23. 
  • A 25bp hike on 1st Nov’23, coupled with fiscal retrenchment (as spending restraints kick in), and resumed student loan repayments eating into PCE, will cause an abrupt contraction in Q4CY23. 
  • With USD set to stay strong (as ECB and BoE face less tightening pressure), net exports will be a drag too, and a short US recession will last into Q1CY24.

The Energy Cable #39: A Maturing Bull Market

By Ulrik Simmelholt

  • The oil market consensus is getting very uniform as everyone and their mother has figured out that there is an obvious supply deficit through Q4.
  • Is it time to switch focus in energy markets to better risk/rewards than long oil bets?
  • We take a look at oil, natural gas and uranium bets in this weeks Energy Cable newsletter.

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