In this briefing:
- Last Week in GER IPO Research: Leong Hup, China Tobacco, Futu and Weimob
- No Slowing in Core CPI In December; 2019 U.S. Inflation Outlook
- DBS Sell Barrier Within Decline Call
- HK Connect Discovery Weekly: China Tower, Tencent, New China Life (2019-01-11)
- The GER Weekly EVENTS Wrap: Don Quijote, M1, Healius and Upcoming M&A Catalysts
1. Last Week in GER IPO Research: Leong Hup, China Tobacco, Futu and Weimob
We slide into 2019 with GER’s recap of our latest IPO research. This week, we talk chicken as Arun initiates on the IPO Malaysian poultry producer Leong Hup International (LEHUP MK). Secondly, Venkat initiates on China Tobacco International (GHALPZ CH) with a cautious view. In addition, Arun initiates on online broker Futu Holdings Ltd (FHL US) and we remind of Arun’s valuation piece on Weimob.com (2013 HK) .
Quote of the week
Are you insane?
-Sky news presenter to UK MP Boris Johnson ahead of the Brexit parliament vote planned for today
Best of luck for the week and new year- Rickin, Venkat and Arun
2. No Slowing in Core CPI In December; 2019 U.S. Inflation Outlook
With the second in our series of insights outlining various aspects of our U.S. macro projections for 2019, we discuss the outlook for inflation over the next year. The December CPI report showed no evidence of slowing in core inflation momentum. Our thesis on inflation is that accommodative Fed policy makes it easier for firms to pass on rising costs—both core finished goods prices and wage growth picked up by about a half percentage point in 2018 versus 2017, with increases accelerating toward the end of the year. We also had further evidence of improved business pricing power last week, which we believe points to core inflation continuing to move higher in 2019.
3. DBS Sell Barrier Within Decline Call
This is a follow up with fresh levels from our insight DBS Top and Decline Call to See More Fallout in 2019 .
Descending price wedge has and will dominate tactical swing cycles on the way down with fresh evidence of a bearish flat maturing and a tactical negative to test the lower end of the descending range. DBS is knocking on fresh sell resistance currently.
Relative stance also shows continued deterioration versus the STI barring an upside break of pattern resistance. Expected bottoming cycle due in May 2019 followed by a perform into year-end.
Indicator bear divergences are being unwound but we are starting to see basing bull divergence form in the daily MACD cycle.
4. HK Connect Discovery Weekly: China Tower, Tencent, New China Life (2019-01-11)
In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.
We split the stocks eligible for the Hong Kong Connect trade into three groups: those with a market capitalization of above USD 5 billion, those with a market capitalization between USD 1 billion and USD 5 billion, and those with a market capitalization between USD 500 million and USD 1 billion.
We see the Financials sector led the outflow by mainland investors last week with 201 million USD of net selling. We also highlight a few companies this week: China Tower (788 HK), Tencent Holdings (700 HK), New China Life Insurance (1336 HK), and Ping An Good Doctor (1833 HK).
5. The GER Weekly EVENTS Wrap: Don Quijote, M1, Healius and Upcoming M&A Catalysts
In this week’s GER M&A wrap, we highlight the dwindling likelihood of a follow-on deal for Don Quijote Holdings (7532 JP) , which is now trading below terms. Secondly, we take a contrarian view on the M1 Ltd (M1 SP) deal and contend there is less likely to be a bidding war. Finally, we update on rejected by Healius (HLS AU) and provide a comprehensive list of upcoming catalysts for near-term M&A deals.
The rest of our event-driven research can be found below.
Best of luck for the new week – Rickin, Venkat and Arun
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
