In today’s briefing:
- 2023 High Conviction: Semiconductor Down Market
- SZSE1000 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- ChiNext/ChiNext 50 Index Rebalance: Materials & Industrials Take Spots from IT, Health Care
- Daiei Kankyo IPO – Final Thoughts on Valuation
- Growatt Technology IPO: Valuation First Look
- HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
- SONY (6758) | Regulators – Duty Calls
- Sunshine Insurance Group Pre-IPO – Peer Comparison – Fastest in One Segment, Slowest in the Other
- Doosan Bobcat Placement – Momentum Is Strong but past Deals Have Been a Mixed Bag
- JPX-Nikkei 400 Rebal 2023: End-Nov 2022
2023 High Conviction: Semiconductor Down Market
- The current semiconductor market meltdown can be expected to continue through the end of 2024
- This will reduce 2022 market growth to 5%, and will drive a decline of 19% in 2023
- Stocks will be unevenly influenced by this, with the most dramatic declines hitting makers of volume commodities, smaller declines in differentiated products, and a weak impact on older technology products.
SZSE1000 Index Rebalance: Changes & Potential MSCI/FTSE Inclusions & Exclusions
- There are 47 changes for the SZSE 1000 index that will be implemented at the close of trading on 9 December.
- We see 51 stocks being added to Shenzhen Stock Connect (47 index adds + 4 existing constituents) and 83 deletions from Stock Connect (15 index adds + 68 existing constituents).
- There could be 4 adds to the MSCI China in February and 11 adds to the FTSE All-World/All-Cap in March. Plus a bunch of deletes at the close 9 December.
ChiNext/ChiNext 50 Index Rebalance: Materials & Industrials Take Spots from IT, Health Care
- There will be 10 changes for the Chinext Price Index and 5 changes for the ChiNext 50 Index. Implementation is at the close on 9 December.
- One surprise is the inclusion of Hunan Zhongke Electric Co,Ltd. (300035 CH) in both indices. Four stocks are adds to both indices while two stocks are deletes from both indices.
- The adds have outperformed the deletes over the last 8 months but have given up some of the gains over the last month. There is a big sector skew.
Daiei Kankyo IPO – Final Thoughts on Valuation
- Daiei Kankyo (9336 JP) (DK), a waste management company, aims to raise around US$314m in its Japan IPO.
- Daiei Kankyo is involved in the waste management and related businesses in Japan. The core of its operations consists of its waste management and recycling business.
- In our previous notes, we looked at the company’s past performance and undertook a peer comparison. In this note, we talk about final valuations.
Growatt Technology IPO: Valuation First Look
- Growatt Technology (1833969D CH), a leading PV inverters manufacturer, is pre-marketing a US$1.0 billion HKEx IPO, according to press reports.
- We previously discussed the IPO in Growatt Technology IPO: The Bull Case, Growatt Technology IPO: The Bear Case and Growatt Technology IPO: Growing Watts.
- In this note, we present our forecasts and take the first look at Giant Biogene’s potential valuation range.
HSI, HSCEI, HSTECH: Rebalance Flows Post Capping (Dec 2022)
- The December rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
- The largest inflows will be on Alibaba Group, Haier Smart Home, Kuaishou Technology, Li Auto, PetroChina, Tencent, JD.com, China Resources Mixc Lifestyle Services and Tingyi Holding.
- The largest outflows will be on SMIC, NetEase, AIA Group, HSBC Holdings, China Construction Bank, Alibaba Health Information Technology, Innovent Biologics, China Mobile, Ping An Insurance and ICBC.
SONY (6758) | Regulators – Duty Calls
- The next six months will be critical for the future of the global gaming industry as Regulators carry out further investigations into the Microsoft acquisition of Activision
- This is particularly important for SONY, where games account for around one third of consolidated revenue and profits
- This is a battle for the future of subscription services and cloud streaming – Call of Duty yields unprecedented power over the industry. Regulators need to do their Duty.
Sunshine Insurance Group Pre-IPO – Peer Comparison – Fastest in One Segment, Slowest in the Other
- Sunshine Insurance Group (SIG), a life, health and P&C insurance company, aims to raise up to US$1bn in its HK IPO.
- SIG is an integrated insurance provider which offers both life and health (L&H) and property and casualty (P&C) insurance in China.
- We have looked at the company’s past performance in our previous notes. In this note, we will undertake a peer comparison.
Doosan Bobcat Placement – Momentum Is Strong but past Deals Have Been a Mixed Bag
- Doosan Bobcat Inc (241560 KS) aims to sell a US$145m block. Its recent price momentum is strong but past deals have shown mixed results.
- The deal doesn’t appear to be well flagged and is a relatively large one to digest, representing 20.9 days of its three month ADV.
- In this note, we will run the deal through our ECM framework and comment on other deal dynamics.
JPX-Nikkei 400 Rebal 2023: End-Nov 2022
- JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
- A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
- Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2023 based on trading data as of end-November 2022.
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