Daily Briefs

By Shifara Samsudeen, ACMA, CGMA

Since the announcement of the US$1.9 billion secondary placement, Socionext (6526 JP)’s shares are down -25.0% from the undisturbed price of JPY21,950 per share (5 July).
So far, Socionext’s shares have mostly followed the pattern of previous large placements. Investors participating in previous large Japanese placements tend to secure positive returns.
The offering will likely be priced on 11 July. Due to the steep share price decline, Socionext is trading at an undemanding multiple compared to global SoC peers.

TOPIX Inclusions: Who Is Ready (Jul 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.
Anycolor (5032 JP) and Lifedrink (2585 JP) have already confirmed their moves to the Prime Market and are expected to have TOPIX Inclusion Events at the end of July 2023.
More recently, Plus Alpha Consulting (4071 JP) announced their move to the Prime Market and are likely to have a TOPIX Inclusion Event at the end of August 2023.

JSR (4185 JP) Takeover – Why So Wide? FUD and Flows

By Travis Lundy

In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally.
It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too.
FUD and Flows mean that it is likely to continue to trade wide for the near future.

Recruit Holdings: Disappointing Job Data for May; More Downside Ahead

Recruit Holdings (6098 JP) ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.
The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.
Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.

Heroz (4382) – Tailoring Business Growth Opportunities

By Astris Advisory Japan

HEROZ is an AI technology company that provides advanced AI development expertise to both B2C and B2B sectors.
With a strategic focus on AI SaaS, it has embarked on a ‘buy-to-build’ strategy to develop profitable recurring revenue streams and accelerate earnings growth.
In September 2022, it consolidated VarioSecure (4494), a subsidiary offering network security services, and in August 2022 acquired Strategit, a SaaS integration development support business.

Honda Motor Co.

Honda Motor’s results were a major disappointment as the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street. but, their efforts in cost reduction and improved pricing strategies helped maintain an operating profit margin above 5%.
Additionally, they aim to provide attractive dividends to shareholders, with a significant increase per share and a share buyback program.

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Jul 11

Daily Brief ESG: Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

By Kyle Rudden

The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.
It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world’s most credible “green” economies, not a regulatory force-fix of something broken.
No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.

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Jul 11

Daily Brief Technical Analysis: Shift in Rate Dynamics and more

By Smartkarma Daily Briefs | Daily Briefs, Technical Analysis

In today’s briefing:

Shift in Rate Dynamics

Shift in Rate Dynamics

By Thomas Schroeder

US 10 year cleared the 4.90% resistance threshold as the market reprices Fed policy. This yield pop will have lasting effects.
3.85% is the key support with to supply rally energy.
Short term target comes in at 4.20% and MT resistance at 4.70% (but not in a strait line). A staircase move is expected.

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Jul 11

Daily Brief TMT/Internet: Socionext, Eoptolink Technology Inc Ltd, Chindata Group, Taiwan Semiconductor (TSMC) – ADR, Konan Technology, PhilEnergy, Alibaba (ADR), Oddity Tech , Heroz Inc, Jabil Circuit and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Socionext (6526 JP): The Current Playbook
ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance
Chindata (CD US): China Merchants Capital’s Rival Privatisation Offer
Taiwan Tech Weekly: TSMC Packaging Tech Ahead of Samsung; China Rare Earths Restrictions Plays; DRAM
Posco DX’s KOSPI Transfer Listing: Hankyung Exclusive Report
PhilEnergy IPO: Trading Strategy on the First Day of Trading
[Alibaba (BABA US, BUY, TP US$116) Target Price Change]: CMR Improves on Expanded Merchant Base
Oddity Tech IPO Valuation Analysis: Growth and Profitability, Solid Upside With Limited Risk
Heroz (4382) – Tailoring Business Growth Opportunities
Jabil Inc.: Harnessing AI to Transform the Industry – Key Drivers

Socionext (6526 JP): The Current Playbook

Since the announcement of the US$1.9 billion secondary placement, Socionext (6526 JP)’s shares are down -25.0% from the undisturbed price of JPY21,950 per share (5 July).
So far, Socionext’s shares have mostly followed the pattern of previous large placements. Investors participating in previous large Japanese placements tend to secure positive returns.
The offering will likely be priced on 11 July. Due to the steep share price decline, Socionext is trading at an undemanding multiple compared to global SoC peers.

ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance

One third of the way through the review period, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the 5 months. We’d wait for a pullback to re-enter positions.

Chindata (CD US): China Merchants Capital’s Rival Privatisation Offer

China Merchants Capital (CMC) disclosed a competing preliminary non-binding proposal to acquire Chindata Group (CD US) at US$9.20 per ADS, a 15.0% premium to Bain Capital’s US$8.00 per ADS offer.
Astonishingly, Chindata did not publicly disclose the CMC offer, which was sent to the special committee on 9 June, i.e., 34 days ago.
CMC must get Bain Capital’s support due to its 92.34% voting rights. The presence of a credible competing proposal will require Bain Capital to match CMC’s offer.

Taiwan Tech Weekly: TSMC Packaging Tech Ahead of Samsung; China Rare Earths Restrictions Plays; DRAM

By Vincent Fernando, CFA

TSMC winning with Nvidia’s business, beating Samsung due to TSMC’s advanced packaging technology; this highlights the rising importance and complexity of chip packaging.
China export restrictions for rare earths used in semiconductors highlight opportunity for U.S. and Australian rare earths producers. We identify two potential plays.
Nanya Technology Earnings: DRAM market has bottomed, sees industry improvement ahead. We see a trading Long opportunity.

Posco DX’s KOSPI Transfer Listing: Hankyung Exclusive Report

By Sanghyun Park

Posco DX has begun the selection process for its lead underwriter for its transfer to the KOSPI market and plans to complete the transfer listing within this year.
Considering the recent retail insanity witnessed in most local large-cap battery stocks, Posco DX will likely experience further intensified short-term price fluctuations with this new development as a catalyst.
The likely replacement for Posco DX’s KOSDAQ 150 spot is Konan Technology, which has become a top reserved issue in Posco DX’s GICS sector (Information Technology) in the previous review.

PhilEnergy IPO: Trading Strategy on the First Day of Trading

By Douglas Kim

PhilEnergy IPO will start trading this Friday on 14 July. We believe that PhilEnergy’s share price will surge higher on the first day of trading.
We believe PhilEnergy’s shares could OVERSHOOT by more than 200% versus the IPO price on the first day of trading, which would be more than 102,00 won or more.
Our trading strategy on PhilEnergy on the first day of trading would be to take partial profits (30-50%) if its price overshoots higher (by 200% or more than IPO price).

[Alibaba (BABA US, BUY, TP US$116) Target Price Change]: CMR Improves on Expanded Merchant Base

By Shawn Yang

We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus. For C2Q23, we raised (1) Taobao/Tmall GMV/CMR estimates due to return of merchants,
(2) International Commerce and Cainiao revenue estimates, and (3) EBITA margin estimates for all groups except cloud. We maintain our BUY rating and raise TP to US$ 116 TP,
Due to 1) merchants return to Taobao/Tmall; 2) independent listing of groups; and 3) improved incentive structure after the organizational change.

Oddity Tech IPO Valuation Analysis: Growth and Profitability, Solid Upside With Limited Risk

By Andrei Zakharov

Oddity Tech, the owner of popular and fastest-growing global brands IL MAKIAGE and SpoiledChild, set terms for an upcoming IPO. The company offers ~10.5M Class A shares.
Selling shareholders (private equity firm L. Catterton and Oran Holtzman, Co-founder & CEO) offer ~8.77M Class A shares, while Oddity Tech offers ~1.75M Class A shares.
The net proceeds from the sale of Class A shares will be ~$41M. Oddity Tech will not receive any proceeds from the sale of shares by the selling shareholders.

Heroz (4382) – Tailoring Business Growth Opportunities

By Astris Advisory Japan

HEROZ is an AI technology company that provides advanced AI development expertise to both B2C and B2B sectors.
With a strategic focus on AI SaaS, it has embarked on a ‘buy-to-build’ strategy to develop profitable recurring revenue streams and accelerate earnings growth.
In September 2022, it consolidated VarioSecure (4494), a subsidiary offering network security services, and in August 2022 acquired Strategit, a SaaS integration development support business.

Jabil Inc.: Harnessing AI to Transform the Industry – Key Drivers

Jabil delivered a strong result and managed an all-around beat in the last quarter.
The company’s growth was driven by improved profitability in electric vehicles, healthcare, renewable energy infrastructure, and cloud sectors.
The healthcare sector also presents opportunities for Jabil, with increasing interest from OEMs seeking outsourcing manufacturing solutions.

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Jul 11

Daily Brief Macro: Steno Signals #56 – The Business Cycle that Everyone Misunderstood! Here Is Why.. and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Steno Signals #56 – The Business Cycle that Everyone Misunderstood! Here Is Why..,
Inflation Watch: Last Chance Saloon for the Easy Disinflation – Watch Series
The Week That Was in ASEAN@Smartkarma – TOA’s Troubles, Indonesian Brewing, and Sido Muncul
Why isn’t Gold starting to sell off? // The Big Sugar Rush

Steno Signals #56 – The Business Cycle that Everyone Misunderstood! Here Is Why..,

By Andreas Steno

Positioning and price patterns reveal that the pain trade is higher rates- and higher equities, while the recession is slowly but surely being called off by the consensus. Here are four reasons why everyone misunderstood the recession risk and why it is still alive…
The pain trade is higher rates AND equities now
It’s been a tough week for those hoping for an actual summer lull in markets as the pain trade has shifted from being equities moving higher to rates moving higher.

Inflation Watch: Last Chance Saloon for the Easy Disinflation – Watch Series

By Andreas Steno

The June CPI report (released on Wednesday) is the final easily disinflationary report before base-effects start working against the trend for almost a quarter. Here is our chart-package on how things are going to play out..
Welcome to our chart-pack on US inflation ahead of the all-important release of the June CPI report on Wednesday.
It is last chance saloon for the disinflationistas as the base effects will turn harder to beat in the coming months but we see a good chance of an inflation surprise below the 3% handle in headline terms, which should provide us with a decent exit liquidity in long duration proxies in both bonds and equities in case.

The Week That Was in ASEAN@Smartkarma – TOA’s Troubles, Indonesian Brewing, and Sido Muncul

By Angus Mackintosh

The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across South East Asia.
The past week saw insights on TOA Paint (Thailand), Sido Muncul,Multi Bintang Indonesia, Delta Djakarta, Metro Pacific Investments Co, Amman Mineral Internasional, V.S. Industry, and Top Glove Corp.
There was also a thematic insight looking at Indonesian Consumers post the Jakarta Fair plus an insight looking at the ASEAN EV ecosystem.

Why isn’t Gold starting to sell off? // The Big Sugar Rush

By The Commodity Report

Why isn’t Gold starting to sell off? In last week’s report, we already highlighted that the golden metal stays unattractive – as the Fed will likely do more rate hikes.
The, in some parts, stronger-than-expected job market data we received last week confirmed that view once again.
We find it interesting that gold hasn’t shown more weakness yet – even as rates continue to rise again.

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Jul 11

Daily Brief Financials: Celsius Network, China SCE, Progressive Corp, SGX and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Celsius Liquidations Could Pressure Altcoin Markets
Morning Views Asia: China SCE, Hopson Development, Reliance Industries, Sino-Ocean Service
Progressive Corp.: A Closer Look at The Biggest Catalysts For Future Growth – Financial Forecasts
Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

Celsius Liquidations Could Pressure Altcoin Markets

By Kaiko

Last week, bankrupt crypto lender Celsius gained court approval to convert its altcoin holdings into more liquid BTC and ETH as part of its restructuring plan.
The company has reportedly moved some of its holdings to market maker Wintermute and stablecoin issuer Paxos.
As of end-March, Celsius held more than $2B in BTC, ETH and stETH and a mixed bag of liquid and illiquid altcoins, including $240mn of its own CEL token.

Morning Views Asia: China SCE, Hopson Development, Reliance Industries, Sino-Ocean Service

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.

China SCE
Hopson Development
Reliance Industries
Sino-Ocean Service
Vedanta Resources

Progressive Corp.: A Closer Look at The Biggest Catalysts For Future Growth – Financial Forecasts

By Shifara Samsudeen, ACMA, CGMA

Progressive Corp delivered a mixed set of results in its most recent result, with revenues above Wall Street expectations but below-par earnings.
The growth in new applications represents an increase in quotes from the current shopping in the marketplace as well as an increase in the convention.
This resulted in increasing reserves as well as reach with increases in rate.

Singapore Code of Conduct for ESG Ratings Is Less Risk and More Reward

By Kyle Rudden

The Monetary Authority of Singapore (MAS) recently launched a public consultation regarding a Code of Conduct for ESG ratings providers and ESG data product providers in Singapore.
It is the right approach for Singapore – a voluntary best-practices framework furthering one of the world’s most credible “green” economies, not a regulatory force-fix of something broken.
No surprise ratings methodology changes. No en masse upgrades/downgrades. No acute shocks to the system. Just slow and steady progress for ESG investing and finance in Singapore.

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Jul 11

Daily Brief Industrials: US Treasury (10 Yr Generic), Recruit Holdings, Plug Power Inc, Republic Services and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Shift in Rate Dynamics
Recruit Holdings: Disappointing Job Data for May; More Downside Ahead
Plug Power Inc.: Can It Become A Leader In The Green Hydrogen Revolution? – Key Drivers
Republic Services Inc.: Unlocking Profitability through Acquisitions! – Key Drivers

Shift in Rate Dynamics

By Thomas Schroeder

US 10 year cleared the 4.90% resistance threshold as the market reprices Fed policy. This yield pop will have lasting effects.
3.85% is the key support with to supply rally energy.
Short term target comes in at 4.20% and MT resistance at 4.70% (but not in a strait line). A staircase move is expected.

Recruit Holdings: Disappointing Job Data for May; More Downside Ahead

Recruit Holdings (6098 JP) ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.
The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.
Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.

Plug Power Inc.: Can It Become A Leader In The Green Hydrogen Revolution? – Key Drivers

Plug Power delivered a mixed set of results for the previous quarter, with revenues above analyst expectations but below-par earnings.
Plug Power reported $210.3 million in terms of its top-line 49% up year over year.
Regarding the application business, Plug has a remarkably stable business model compared to the other companies in the industry.

Republic Services Inc.: Unlocking Profitability through Acquisitions! – Key Drivers

Republic Services managed to exceed analyst expectations in terms of revenue as well as earnings.
They achieved revenue growth of 21%, including acquisitions and acquisition investments remain a priority for the management as they see significant opportunities in the recycling, solid waste, and environmental solutions sectors.
Their commitment to delivering exceptional customer experiences is reflected in their high customer retention rate and positive trends in Net Promoter Score.

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Jul 11

Daily Brief Consumer: Plus Alpha Consulting, Costa Group Holdings, Sheng Siong, Hyundai G.F. Holdings, Kraft Heinz Co, PDD Holdings Inc, Honda Motor Co Ltd (Adr), Interpublic Group Of Companies and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

TOPIX Inclusions: Who Is Ready (Jul 2023)
Costa – Another Bite at the Apple for Paine Schwartz?
Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play
Hyundai G.F. Holdings: A Holdco Creation With In-Kind Investment in HDS & Hyundai Green Food
The Kraft Heinz Company: Winning the Market with Their Easy Meals and Taste Elevation! – Key Drivers
PDD Holdings Inc.: 3 Major Factors Responsible For Its Recovery – Key Drivers
Honda Motor Co.
The Interpublic Group of Companies: Overcoming Challenges in Integrated Advertising & Creativity Led Solutions! – Key Drivers

TOPIX Inclusions: Who Is Ready (Jul 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.
Anycolor (5032 JP) and Lifedrink (2585 JP) have already confirmed their moves to the Prime Market and are expected to have TOPIX Inclusion Events at the end of July 2023.
More recently, Plus Alpha Consulting (4071 JP) announced their move to the Prime Market and are likely to have a TOPIX Inclusion Event at the end of August 2023.

Costa – Another Bite at the Apple for Paine Schwartz?

By David Blennerhassett

Back in October 2022, Costa Group (CGC AU), one of Australia’s largest fresh fruit and vegetable producers, was understood to have been approached by its former major shareholder, Paine Schwartz.
This was discussed in Costa Group’s Low-Hanging Fruit: Paine Schwartz Renews Interest. At the time, media reports speculated Paine Schwartz had no current intention of making a takeover bid.
Last week, Paine Schwartz made an A$3.50/share NBIO by way of a Scheme. Paine Schwartz currently holds 14.84%.

Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play

By Sameer Taneja

It attracts investors when a company’s 15-year ROCE averages over 25% (and has never gone below 20%). Sheng Siong (SSG SP) is one of those companies.
With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.
We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.

Hyundai G.F. Holdings: A Holdco Creation With In-Kind Investment in HDS & Hyundai Green Food

By Douglas Kim

Last week, Hyundai Dept Store Group announced that it will establish a single holding company structure with Hyundai G.F. Holdings controlling all of the group affiliates.
Hyundai G.F. Holdings plans to make an in-kind investment in Hyundai Department Store (HDS) to make Hyundai Green Food and Hyundai Department Store as subsidiaries.
This in-kind investment in HDS and Hyundai Green Food by Hyundai G.F. Holdings is not a deal that adds clear-cut value to Hyundai G.F. Holdings’ shareholders.

The Kraft Heinz Company: Winning the Market with Their Easy Meals and Taste Elevation! – Key Drivers

Kraft Heinz delivered a positive result and managed an all-around beat in the last quarter.
In the quarter, the company introduced It Has to be HEINZ, a new worldwide campaign that represents the brand’s first unification under a single creative approach.
We give The Kraft Heinz Company a ‘Hold’ rating with a revised target price.

PDD Holdings Inc.: 3 Major Factors Responsible For Its Recovery – Key Drivers

PDD delivered an all-around beat in the previous quarter and the company saw clear recovery trends.
Revenue increased in the quarter and contributed to a total of RMB37.6 billion.
PDD has also launched its electronic shopping season and invested millions of RMB for promoting universal and high-quality access to reading.

Honda Motor Co.

Honda Motor’s results were a major disappointment as the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street. but, their efforts in cost reduction and improved pricing strategies helped maintain an operating profit margin above 5%.
Additionally, they aim to provide attractive dividends to shareholders, with a significant increase per share and a share buyback program.

The Interpublic Group of Companies: Overcoming Challenges in Integrated Advertising & Creativity Led Solutions! – Key Drivers

By Shifara Samsudeen, ACMA, CGMA

Interpublic Group of Companies managed to exceed analyst expectations in terms of revenue as well as earnings.
The company’s organic revenue before billable expenses was down 20 basis points compared to last year’s extremely high first-quarter organic increase of 11.5%.
We give the Interpublic Group of Companies a ‘Hold’ rating with a revised target price.

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Jul 11

Daily Brief Industrials: US Treasury (10 Yr Generic), Recruit Holdings, Plug Power Inc, Republic Services and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Shift in Rate Dynamics
Recruit Holdings: Disappointing Job Data for May; More Downside Ahead
Plug Power Inc.: Can It Become A Leader In The Green Hydrogen Revolution? – Key Drivers
Republic Services Inc.: Unlocking Profitability through Acquisitions! – Key Drivers

Shift in Rate Dynamics

By Thomas Schroeder

US 10 year cleared the 4.90% resistance threshold as the market reprices Fed policy. This yield pop will have lasting effects.
3.85% is the key support with to supply rally energy.
Short term target comes in at 4.20% and MT resistance at 4.70% (but not in a strait line). A staircase move is expected.

Recruit Holdings: Disappointing Job Data for May; More Downside Ahead

Recruit Holdings (6098 JP) ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.
The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.
Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.

Plug Power Inc.: Can It Become A Leader In The Green Hydrogen Revolution? – Key Drivers

Plug Power delivered a mixed set of results for the previous quarter, with revenues above analyst expectations but below-par earnings.
Plug Power reported $210.3 million in terms of its top-line 49% up year over year.
Regarding the application business, Plug has a remarkably stable business model compared to the other companies in the industry.

Republic Services Inc.: Unlocking Profitability through Acquisitions! – Key Drivers

Republic Services managed to exceed analyst expectations in terms of revenue as well as earnings.
They achieved revenue growth of 21%, including acquisitions and acquisition investments remain a priority for the management as they see significant opportunities in the recycling, solid waste, and environmental solutions sectors.
Their commitment to delivering exceptional customer experiences is reflected in their high customer retention rate and positive trends in Net Promoter Score.

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Jul 11

Most Read: HDFC Bank, Socionext, Alibaba Group Holding , Plus Alpha Consulting, Eoptolink Technology Inc Ltd, JSR Corp, Kelun Biotech, Liontown Resources and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Socionext Placement – Valuation More Reasonable but past Secondary Offerings Have a Mixed Record
Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex
Socionext (6526 JP): The Current Playbook
Ant Group’s $6.0bn Buyback Move Casts Doubt on IPO Prospects
Plus Alpha Consulting Placement – Pulling Out All Stops for Deal Success as Insiders Are Selling
ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance
TOPIX Inclusions: Who Is Ready (Jul 2023)
JSR (4185 JP) Takeover – Why So Wide? FUD and Flows
Kelun-Biotech (科伦博泰) IPO Trading: Lukewarm Demand but Peers Have Done Well Recently
S&P/ASX Index Rebalance Preview: Potential Changes in September

Socionext Placement – Valuation More Reasonable but past Secondary Offerings Have a Mixed Record

By Sumeet Singh

Three shareholders of Socionext (6526 JP) aim to raise around US$1.4bn via selling all of their shares in Socionext.
We have covered the background of the deal in our earlier note, Socionext Placement – A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains.
In this note, we talk about the updates and look at the performance of some of the past Japan deals.

Index Rebalance & ETF Flow Recap: HSCI, HSCEI, HSI, CSI300, CSI500, SSE50, HDFC Bank, Sensex

Hang Seng has announced the conclusions of the market consultation. Primary-listed foreign stocks will be eligible for inclusion in the HSI INDEX and HSTECH INDEX from the December rebalance.
The coming week has the rebalances for the NIFTY Index, Nifty Next 50 Index, Nifty Bank Index and SENSEX Index as a result of the HDFC Limited/ HDFC Bank merger.
There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and outflows from Hang Seng H Share Index ETF (2828 HK) during the week.

Socionext (6526 JP): The Current Playbook

Since the announcement of the US$1.9 billion secondary placement, Socionext (6526 JP)’s shares are down -25.0% from the undisturbed price of JPY21,950 per share (5 July).
So far, Socionext’s shares have mostly followed the pattern of previous large placements. Investors participating in previous large Japanese placements tend to secure positive returns.
The offering will likely be priced on 11 July. Due to the steep share price decline, Socionext is trading at an undemanding multiple compared to global SoC peers.

Ant Group’s $6.0bn Buyback Move Casts Doubt on IPO Prospects

By Oshadhi Kumarasiri

China’s regulators on Friday imposed Ant Financial Services Group (6688 HK) with a fine of RMB 7.12bn. A day later, Ant Group unveiled a share buyback program worth $6bn.
The last time media created a positive narrative around Ant Group was in January 2023 when Jack Ma relinquished control of the company.
However, the media excitement was short-lived as Alibaba Group Holding (9988 HK)‘s share price quickly resumed a downward trend after rising by around 22%.

Plus Alpha Consulting Placement – Pulling Out All Stops for Deal Success as Insiders Are Selling

By Sumeet Singh

Three shareholders of Plus Alpha Consulting (4071 JP) (PAC) aim to raise around US$230m via selling over 26% of the company.
PAC was listed in 2021 and after a somewhat tepid initial performance it has been doing well over the past year.
In this note, we talk about the deal dynamics and run the deal through our ECM framework

ChiNext/ChiNext50 Index Rebalance Preview: Potential Changes & Basket Performance

One third of the way through the review period, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in December.
Passive trackers are estimated to trade around +/-0.5 days ADV on most of the potential adds/deletes, though there are some deletes that will have over 1 day ADV to sell.
The potential inclusion to one or both indices have outperformed the potential deletes by a huge margin in the 5 months. We’d wait for a pullback to re-enter positions.

TOPIX Inclusions: Who Is Ready (Jul 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.
Anycolor (5032 JP) and Lifedrink (2585 JP) have already confirmed their moves to the Prime Market and are expected to have TOPIX Inclusion Events at the end of July 2023.
More recently, Plus Alpha Consulting (4071 JP) announced their move to the Prime Market and are likely to have a TOPIX Inclusion Event at the end of August 2023.

JSR (4185 JP) Takeover – Why So Wide? FUD and Flows

By Travis Lundy

In the last week of June, Japanese government-affiliated Japan Investment Corp (“JIC”) announced it would take over JSR Corp (4185 JP). A “surprise” but perhaps not totally.
It traded tight, then it traded back out. Then worse. Then worse again. There were good reasons for this. There were perhaps less good reasons too.
FUD and Flows mean that it is likely to continue to trade wide for the near future.

Kelun-Biotech (科伦博泰) IPO Trading: Lukewarm Demand but Peers Have Done Well Recently

By Ke Yan, CFA, FRM

Kelun-Biotech raised HKD 1,259m (USD 161m) from its global offering and will list on the Hong Kong Stock Exchange on Tuesday, July 10th.
In our previous note, we looked at the company’s business lines of ADC products. We were of the view that the IPO is fairly priced, at best.
In this note, we provide an update for the IPO before trading debut.

S&P/ASX Index Rebalance Preview: Potential Changes in September