In today’s briefing:
- FXI ETF: Potential Changes in the Year of the Snake
- Unloved Japan Round-Up: Some Massive Results Surprises
- SCREEN: Moderate ~teens Growth Outlook but the Stock Is Cheap
- HONG KONG ALPHA PORTFOLIO (January 2025)
- ECM Weekly (3rd Feb 2025) – Seoul Guarantee, Dr Agarwal’s, Ather Energy, Hexaware, Visen Pharma
FXI ETF: Potential Changes in the Year of the Snake
- There could be 1/2 changes to the iShares China Large-Cap (FXI) (FXI US) in March. Then there will be more changes as large Chinese companies list H-shares on the HKEX.
- Fast Entries and regular inclusion of newly listed H-shares will change the characteristics of the FXI and there could be further deviations from the Hang Seng China Enterprises Index (HSCEI INDEX).
- That will provide opportunities for index rebalance traders as well as volatility traders that are active on the iShares China Large-Cap (FXI) (FXI US) options.
Unloved Japan Round-Up: Some Massive Results Surprises
- Lixil increased operating profit by 15.7% YoY, to ¥20.6bn, compared to consensus estimates for an 18% decline. The stock trades at 80% of book value.
- TEPCO earned ¥112bn compared to a consensus forecast of a ¥3bn loss. It trades at 35% of book value.
- Lasertec increased EBIT by 122% to ¥47.7bn compared to consensus estimates for ¥27bn, and the stock trading at the lowest multiples relative to Topix in seven years.
SCREEN: Moderate ~teens Growth Outlook but the Stock Is Cheap
- Big Dec-24 due to China. Mar-25 will be weaker. FY26 growth will come only from TSMC and HBM. After a strong FY25 (~30% growth), FY26 should see growth at 10-15%.
- Accounting concerns should be over after the publication of the audit report on Jan 14 2025. The stock has started appreciating since early Jan 2025.
- Valuations are low. The stock is trading at ~11x FY26 EPS. A muted Mar-25 could limit the upside short-term, let’s wait.
HONG KONG ALPHA PORTFOLIO (January 2025)
- HK Alpha Portfolio returned -1.29% in December and outperformed the benchmark by 0.34%. The portfolio has outperformed Hong Kong indexes by 7.93% to 9.64% since its inception on 10/01/24.
- About 75% of the portfolio’s excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy or Materials.
- At month-end we sold China Cinda Asset Management (1359 HK) , Citic Ltd (267 HK) , China Galaxy Securities (H) (6881 HK) and GDS Holdings (9698 HK) .
ECM Weekly (3rd Feb 2025) – Seoul Guarantee, Dr Agarwal’s, Ather Energy, Hexaware, Visen Pharma
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, we had a look at the valuations for Dr. Agarwal’s Eye Hospital and Seoul Guarantee Insurance (031210 KS).
- On the placements front, given the holiday shortened week, there were no placements this week.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
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
