Category

Thematic (Sector/Industry)

Dec 29
0

Daily Brief Thematic (Sector/Industry): China Consumer Discretionary: Reducing The Underweight and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • China Consumer Discretionary: Reducing The Underweight
  • China Baowu Steel Officially Takes Over Sinosteel
  • Sunny Optical & Largan – Innovation Quantity Versus Quality

China Consumer Discretionary: Reducing The Underweight

By Steven Holden

  • Active China funds are rotating back in to the Consumer Discretionary sector.  Holding weights bottomed out in early 2022, with an increasing number of managers re-positioning themselves as overweight
  • Large increases in ownership across key stocks underpin the sector rotation.  Pinduoduo saw an +8.4% increase in the percentage of funds invested, Trip.com Group +6.7% and NIO Inc +5.88%
  • If the rhetoric is that China is oversold here, then Consumer Discretionary stocks appears well placed to benefit from further inflows.

China Baowu Steel Officially Takes Over Sinosteel

By Caixin Global

  • Beijing-based Sinosteel Corp. was restructured and merged into China Baowu Steel Group Corp. Ltd.
  • Baowu Steel Group took Sinosteel into its stewardship in October 2020 as the SASAC-owned company ran into debt trouble.
  • Formed after the reorganization of the former Baosteel and Wuhan Iron and Steel in 2016, China Baowu has carried out a series of strategic mergers and restructurings in recent years, becoming the world’s largest steelmaker.

Sunny Optical & Largan – Innovation Quantity Versus Quality

By Pyari Menon

  • Sunny Optical (2382 HK)  and Largan Precision (3008 TT) dominate the compact lens module market, but analysis of data from technical publications suggests very different strategies.
  • After lagging Largan significantly till 2016, Sunny Optical now leads in number of innovations, though the impact and quality of the innovations still materially lags Largan
  • Besides overcapacity the primary risk for the industry is whether at some some stage the benefits of “next-gen” lens modules fall below the “Noticeable Difference” threshold.

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Dec 28
0

Daily Brief Thematic (Sector/Industry): Asia Casino Sector: Our Model Portfolio Guidance for 2023 Divides Macau and ASEAN Weightings and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Asia Casino Sector: Our Model Portfolio Guidance for 2023 Divides Macau and ASEAN Weightings
  • Evergrande Reports Narrowing Differences in Debt Restructuring Talks
  • Our Three Best Calls in 2022: Review and Outlook for 2023

Asia Casino Sector: Our Model Portfolio Guidance for 2023 Divides Macau and ASEAN Weightings

By Howard J Klein

  • Our macro analysis concludes a 60%.40% weighting of stocks in favor of ASEAN picks.
  • Central reason: Lingering mixed signals on China covid policies remaining unclear.
  • Pent up demand will eventually break through as travel bans ease,but timing is key to make choices on Macau centric stocks.

Evergrande Reports Narrowing Differences in Debt Restructuring Talks

By Caixin Global

  • Debt-laden developer China Evergrande Group said disagreements are narrowing among parties involved in discussions of its offshore debt restructuring plan as talks continue to push toward a consensus.
  • China Evergrande, which defaulted on its first offshore bond a year ago, failed to deliver a restructuring plan it had promised by the end of July. 
  • In its most recent update on the negotiations Tuesday, the company said there is still great uncertainty on repayment given the company’s massive debts and challenging business situation.

Our Three Best Calls in 2022: Review and Outlook for 2023

By Osbert Tang, CFA

  • Our positive calls on Fu Shou Yuan (1448 HK) and Air China Ltd (753 HK) and negative call on Conch Environment (587 HK) have generated the best wins in 2022.
  • These calls achieved returns of 56.8%, 34.2% and 43.5%, respectively, which we think are remarkable given the losses of 16.3% for HSI and 19.3% for HSCEI YTD.
  • In 2023, we expect Fu Shou Yuan continue to do well and Conch Environment to remain under pressure. It may be prudent to take some profit on Air China.  

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Dec 27
0

Daily Brief Thematic (Sector/Industry): The Bubble Isn’t Where You Think It Is and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • The Bubble Isn’t Where You Think It Is

The Bubble Isn’t Where You Think It Is

By Superfluous Value

  • Just a short pre-Christmas note today. A number of market pundits have been giving the all clear to jump back in the pool now that crypto has been nuked and Peleton et al are down 80%+.
  • Yes, those were bubbles of the more ridiculous variety, but the S&P 500 is still dangerously expensive and growth stocks are not the sole reason.
  • Under the hood, the index is stuffed with mature industrial and consumer businesses still trading well above their historical norms.

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Dec 26
0

Daily Brief Thematic (Sector/Industry): China Healthcare Weekly (Dec.25) – OK Lens VBP and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • China Healthcare Weekly (Dec.25) – OK Lens VBP, Angelalign, Extraordinary 2022 for Pharmaceuticals
  • The Innovations Portfolios – Week Five

China Healthcare Weekly (Dec.25) – OK Lens VBP, Angelalign, Extraordinary 2022 for Pharmaceuticals

By Xinyao (Criss) Wang

  • Medical Insurance Bureau of Hebei released the document on centralized procurement of OK lens, which was the first detailed rules about OK lens VBP in China.
  • The results of orthodontic material centralized procurement of 16 provincial alliance led by Shaanxi were released. We analyzed the direct impacts on Angelalign Technology (6699 HK) and the outlook.
  • Even from the perspective of the whole process of the development of China’s pharmaceutical industry after the reform and opening up, 2022 is an extraordinary year for the pharmaceutical industry.

The Innovations Portfolios – Week Five

By Pyari Menon

  • We again write about one stock each from the large, mid and small cap portfolios, briefly giving the reasons behind their inclusion.
  • The three companies we write about this week are Nestle SA (NESN VX) , Regeneron Pharmaceuticals (REGN US) and Masimo Corp (MASI US) 
  • For the five weeks ended 23 Dec the combined innovation portfolio was -1.4%, versus DJIA -1.6%, S&P500 -3.0%, Nasdaq -5.8% & MSCI-ACWI-ETF -2.2%, all in US$ terms.

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Dec 24
0

Daily Brief Thematic (Sector/Industry): 2022 in Rear Mirror View: Top Performers From My Global Healthcare Coverage Universe and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • 2022 in Rear Mirror View: Top Performers From My Global Healthcare Coverage Universe
  • GEM Banks; Conviction Calls for 2023
  • Micron Earnings Give Semi Market Outlook

2022 in Rear Mirror View: Top Performers From My Global Healthcare Coverage Universe

By Tina Banerjee

  • As we are heading into 2023, let us look back on the performance of some of our global healthcare stocks recommended throughout 2022.
  • Four stocks on which I am bullish, generated more than 50% return since their recommendations. 10 stocks on which I am bearish plunged more than 20%.
  • For 2023, investors should continue to focus on established healthcare companies, having strong and flexible balance sheet with muti-year revenue visibility.

GEM Banks; Conviction Calls for 2023

By Victor Galliano

  • Among bigger cap GEM banks, we pick four longs and two shorts as our conviction calls for 2023
  • Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, China Construction Bank and BanColombia; we also have a special mentions category for Banco Itau and Nubank
  • Our key sells are ICICI Bank from India and digital bank Jago from Indonesia

Micron Earnings Give Semi Market Outlook

By Jim Handy

  • Micron’s earnings call gives a good advanced warning of similar companies’ reports
  • The company’s downturn is the worst in the past 13 years
  • Not all chip companies will suffer this downturn, and few will do as badly as commodity memory makers.  Tool makers will feel the impact next year.

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Dec 23
0

Daily Brief Thematic (Sector/Industry): Global Exchanges – Conviction Picks for 2023 and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Global Exchanges – Conviction Picks for 2023
  • Investment Maxims Are Not One-Size-Fits-All

Global Exchanges – Conviction Picks for 2023

By Victor Galliano

  • We stick with our core theme for exchanges of growing post-trading revenues, as well as capitalising on “big data” in financial transactions and data services, as we head into 2023
  • We identify four relative value opportunities in exchanges; HKEx, LSEG, MexBolsa and Deutsche Borse feature positively multiple times in our value screens and they are all diversifying revenue streams
  • We stick with Coinbase as the exchange to avoid, in our view; its revenue streams are heavily exposed to low volumes of crypto transactions, and recent events highlight counterparty risk

Investment Maxims Are Not One-Size-Fits-All

By Investment Talk

  • “Of course that’s your contention. You’re a first-year investor.
  • You just got finished reading some deep value historian, Ben Graham probably, you’re gonna be convinced of net-nets until next month when you get to Warren Buffett, then you’re gonna be talking about how Graham’s ideas are antiquated and that you simply have to buy and hold quality, letting time arbitrage do its thing.
  • That’s gonna last until next year, you’re gonna be in here regurgitating Fisher and Lynch, talkin’ about, you know, the importance of placing more emphasis on qualitative analysis in your investment process

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Dec 22
0

Daily Brief Thematic (Sector/Industry): Overview of My Winners and Losers in 2022…And 5 High Conviction Ideas Going into 2023 and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Overview of My Winners and Losers in 2022…And 5 High Conviction Ideas Going into 2023
  • Good Morning Japan |Stocks (Finally) Catch a Break; Cyclicals Rebound; And..we Resume in 2023 !
  • Payment Companies – 2022 in Review, Our High Conviction Calls for 2023
  • China’s Export Outlook 2023: How Port, Shipping and Logistics Fare?
  • Korea Biotech: A Pair Trade Between Celltrion Healthcare (091990 KS) And SK Bioscience (302440 KS)

Overview of My Winners and Losers in 2022…And 5 High Conviction Ideas Going into 2023

By Nicolas Van Broekhoven

  • The 2022 vintage of “5 High Conviction Ideas” had the weakest performance since 2017, with only China Shineway posting a positive return
  • Olam, Rex and Starhub all declined approximately 16% in FY22
  • Our 2023 vintage will hopefully perform better with 4 out of 5 favorites in the commodity space

Good Morning Japan |Stocks (Finally) Catch a Break; Cyclicals Rebound; And..we Resume in 2023 !

By Mark Chadwick

  • OVERSEAS: SPX +1.5%. Reflex US Rally post recent sell-off. Energy, Industrials, Tech lead in the Beta rally; Cons Confidence BTE; Nike +12% rpt inspires; Micron -ve after hrs
  • JAPAN: Futs flat vs Cash. USDJPY supported at ¥132  (for now); BOJ related/JGB  rates aside dominate narrative;  INBOUND tourists return;  Decarb spend to accelerate; Debt rating D/G for Rakuten
  • DAILY NUGGET: Yōkoso!  Japan. The November tourist numbers saw a doubling MoM to 934,500 visitors. However, the Chinese visitors are not here yet. It likely takes some time…

Payment Companies – 2022 in Review, Our High Conviction Calls for 2023

By Victor Galliano

  • Once again, our shorts – especially Kakao Pay and Paytm – were more successful than our longs, given the protracted turbulent market conditions
  • For 2023, we favour Visa in the card network megacaps, adding Wise to the buys and we stick with PagSeguro; we drop Nexi from the buy list
  • Among our shorts, we stick with our negative view on DLocal, given its high take-rate and demanding valuations, and we stay negative on Kakao Pay due to its fundamental over-valuation

China’s Export Outlook 2023: How Port, Shipping and Logistics Fare?

By Osbert Tang, CFA

  • Weaker OECD demand, diversification of supply chain out of China, lesser room for Rmb depreciation and high base effects all suggest challenging export environment for China in 2023. 
  • We expect 5-10% drop in China’s export in next year, against consensus of 0.2% growth. Except ASEAN, exports to all major trading partners are already deep in negative in Nov.
  • Long-Haul container shipping is the most disastrous, while port and logistics sectors are less vulnerable. We think SITC International (1308 HK) and Sinotrans (598 HK) will fare better than others.

Korea Biotech: A Pair Trade Between Celltrion Healthcare (091990 KS) And SK Bioscience (302440 KS)

By Tina Banerjee

  • Here we present a pair trade idea on Korea biotech companies. Investors can accumulate Celltrion Healthcare (091990 KS) and short SK Bioscience (302440 KS).
  • Celltrion Healthcare has a vast portfolio of biosimilars, which have dominant market positioning. The company is expanding geographical presence. US launch of Humira biosimilar is the major upcoming catalyst.
  • SK Bioscience is a late entrant in the overcrowded COVID-19 vaccine market. The company has temporarily halted production of its COVID-19 vaccine due to falling demand.

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Dec 21
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan |Shock and Awe – BOJ Sends Ripple Though Markets in Kuroda’s Parting Shot and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |Shock and Awe – BOJ Sends Ripple Though Markets in Kuroda’s Parting Shot
  • Macau 2.0: What Investors Need to Know About the New State of Play

Good Morning Japan |Shock and Awe – BOJ Sends Ripple Though Markets in Kuroda’s Parting Shot

By Mark Chadwick

  • OVERSEAS:  SPX +0.1%, eakes out gains; BOJ takes the spotlight as Kuroda delivers “SHOCK AND AWE” (or just bad communication); TSLA at 2 year low-we are focused on deliveries
  • JAPAN:  NKY Futs vs Cash -0.9% – mainly due to yen strengthening; BOJ’s change reverberates across markets;  Positive 3Q Takashimaya preview positive read for Inbound; Courts support Nuke restarts
  • DAILY NUGGETS: The BOJ has started on the path towards policy normalisation, SIX MONTHS EARLY. No issues with the move – the shift was poorly communicated, or rather, NOT COMMUNICATED. 

Macau 2.0: What Investors Need to Know About the New State of Play

By Howard J Klein

  • The new concession laws go into effect January 1st. They are far less punitive than feared but still continue to bear uncertainties for the six licensed peers in the sector.
  • All will respond positively to the early phase of post pandemic GGR recovery. All are attractively priced now. A portfolio position is warranted as prices remain near 5 yr lows.
  • The central question: Will the US$12 already pledged by the six concessionaires as the price of renewal elevate Macau to a world class tourist destination?

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Dec 20
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan | No Shortage of Equity Negative News; BOJ to Stay Pat; Bullish 2023 ? and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan | No Shortage of Equity Negative News; BOJ to Stay Pat; Bullish 2023 ?
  • Interpretation of China’s Central Economic Work Conference for 2023
  • Weekly Stock Bullfinder – Week of 12/19

Good Morning Japan | No Shortage of Equity Negative News; BOJ to Stay Pat; Bullish 2023 ?

By Mark Chadwick

  • OVERSEAS:  SPX down 4 in a row, -20%YTD;  Higher UST Yields and Negative Homebuilder print pressure equities; Chief Twit’s followers want him out;  China hints strong economic support in 2023
  • JAPAN:  BOJ to stay pat; JP FY23 Budget largest ever; Kawasaki Kisen to lift ShrHldr Returns; Subaru gives up on PHVs;  Toyota CEO thinks mkt not ready for EVs
  • DAILY NUGGET: We take a look at the upcoming boom in Hydrogen in the push to decarbonise; Our preferred play is MHI (7011)

Interpretation of China’s Central Economic Work Conference for 2023

By Xinyao (Criss) Wang

  • The annual Central Economic Work Conference was held to plan for 2023. We analyzed our interpretation. Sometimes we need to be “romantic” to understand some basic assumptions.
  • China’ll be more committed to economic growth after the big shift in COVID policy. However, we may face a situation where both domestic and external demand would weaken next year.
  • When paying attention to changes, we should see whether the external environment supports such changes. For investors, our advice is that many things should be done according to the trend.

Weekly Stock Bullfinder – Week of 12/19

By Weekly Stock Bull Finder

  • “Fed economic projections published December 2021: In 2022 the Fed funds rate will be less than 1% & GDP growth will be 4%.
  • In December 2022 the Fed funds rate is now 4.25% and 2022 GDP growth they now show is at 0.5%. Why is anybody still listening to these people?
  • Nobody is asking for perfection which is impossible, but the Fed has again, and they’ve done this multiple times including last year with inflation, produced forecasts not even remotely close to reality. Their forecasts are meaningless with zero predictive value.

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Dec 19
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities
  • China Makes U-Turn on COVID Policy – Here Are the Direct Impacts and Investment Opportunities
  • China Private Higher Education Sector Is Recovering
  • China COVID Policy: Near-Term Pains for Consumer Discretionary
  • The Innovations Portfolios – Week Four

Good Morning Japan |Argentina and Messi Triumph! Recession Fears Persist – No Break for Equities

By Mark Chadwick

  • OVERSEAS:  WCUP: Argentina/Messi prevail; SPX -2.1%WoW on recession narrative; SPX option expiry exacerbates moves;  Calls for new TESLA CEO; GS to cut 8% of workforce;  Covid spreads in China
  • JAPAN:  NKY Futs at -0.9% vs Cash;  Defense Bill Approved – no tax hike till 2024; Lawson’s Seijo Ishii IPO postponed; Renesas suspends China ops on Covid; Decarbonization-related investments unabated
  • DAILY NUGGET:  We look a the another attempt of the Japanese government at regional revitalization. Smells of pork barrel spending to us.

China Makes U-Turn on COVID Policy – Here Are the Direct Impacts and Investment Opportunities

By Xinyao (Criss) Wang

  • China’s relaxation of COVID-19 control measures is much faster than expected. Due to rising infection rate and mortality rate, China would bear some pressure in the short term. 
  • We analyzed the direct impacts due to COVID policy shift and related investment opportunities. The hardest time of three-year COVID-19 has passed.The playbook of the pandemic is about to end.
  • With the new leadership taking office, China will be more committed to economic growth after the Two Sessions. Starting from 2023H2, China could formulate independent financial/monetary policies. China will change. 

China Private Higher Education Sector Is Recovering

By Xin Yu, CFA

  • On December 14, the CPC Central Committee and the State Council issued the Outline of the Strategic Plan for Expanding Domestic Demand (2022-2035), supporting private education in China.
  • Private higher education is a necessary complement to the public higher education in China.
  • Private higher education sector is an attractive sector for investing now.

China COVID Policy: Near-Term Pains for Consumer Discretionary

By Osbert Tang, CFA

  • While China’s U-turn on COVID policy is expected to bring consumption rebound in 2023, the near-term surge in infections will weigh negatively on retail sales in Dec and Jan.
  • Residents are spending more time at home in the first wave, with subways and shopping malls empty. We think this will cast negativity on 4Q22 and 1Q23 consumer discretionary profit.
  • It is prudent to take some monies off the table, particularly F&B stocks like Haidilao (6862 HK), Xiabuxiabu (520 HK) and Helen’s (9869 HK) which have almost doubled from trough.

The Innovations Portfolios – Week Four

By Pyari Menon

  • We again write about one stock each from the large, mid and small cap portfolios, briefly giving the reasons behind their inclusion.
  • The three companies we write about this week are Mastercard (MA US) , Vertex Pharmaceuticals (VRTX US) and Pearson Plc (PSON LN) 
  • For the four weeks ended 16 Dec the combined innovation portfolio was -1.1%, versus DJIA -2.4%, S&P500 -2.8%, Nasdaq -4.0% & MSCI-ACWI-ETF -2.3%, all in US$ terms.

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