Daily BriefsMost Read

Most Read: Oriental Land, China Tourism Group Duty Free Corp Ltd, AMTD Digital, Zomato, GS Engineering & Construction, Pinduoduo, SK REITs, EVOC Intelligent Technology Company Limited H and more

In today’s briefing:

  • Nikkei 225 Index Rebalance Preview: Consultation Conclusions & Potential Changes in Sep & March
  • Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved
  • China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation
  • AMTD Digital: Irrational Frenzy 2.0
  • Zomato Placement – Opportunistic Selldown, Momentum Hasn’t Been the Greatest
  • AMTD Digital: The Biggest Bubble in 2022
  • KOSPI Size Index Series Rebalancing in September: Eight Strong Targets
  • Pinduoduo: Community Group Buying Is Facing Multiple Challenges
  • SK REITs Issues a Rights Offering Worth 210 Billion Won
  • EVOC Subject to a Third Privatisation Attempt?

Nikkei 225 Index Rebalance Preview: Consultation Conclusions & Potential Changes in Sep & March

By Brian Freitas

  • With the review period for the September rebalance of the Nikkei 225 (NKY INDEX) complete, we take a look at the potential inclusions and exclusions for the index.
  • The conclusions of the market consultation have been announced and that will mean we switch to a semi-annual rebalance. So we take a look at potential changes in March 2023.
  • The announcement of the changes for the next rebalance should be made in the first week of September and will be implemented at the close on 30 September.

Nikkei 225 Sep22 Annual Review; Data Final, Predictions Unch’d; Strategy Involved

By Travis Lundy

  • The data is largely unchanged since the Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out set of predictions published 15 days ago.
  • The consultation results are out. They are as expected too. This has the hallmarks of a VERY well-signalled trade. But it’s a biggie. The funding trade alone is ¥600bn.
  • Because of the data, market conditions, and the variability of choice at the edges, I believe that warrants particular strategy.

China Tourism Group A/H Listing – Updates from Revised Filing and Quick Thoughts on Valuation

By Sumeet Singh

  • China Tourism Group Duty Free Corporation Limited (CDF) now aims to raise US$2-3bn in its H-share listing in Hong Kong.
  • As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
  • In this note, we will talk about the recent updates from its revised filings and revisit valuations.

AMTD Digital: Irrational Frenzy 2.0

By Arun George

  • AMTD Digital (HKD US) shares are up 230x since its listing at US$7.80 per ADS on 15 July. Its market cap is a staggering US$334 billion.
  • AMTD Idea Group (AMTD US) accounts for 99.4% of the voting power. In January 2022, it increased its AMTD Digital shareholding to 97.1% of outstanding shares at US$1.2 billion valuation.
  • AMTD Digital’s financials are uninspiring and cannot justify the share price ramp. No sane valuation methodology can support the share price.    

Zomato Placement – Opportunistic Selldown, Momentum Hasn’t Been the Greatest

By Clarence Chu

  • Uber (UBER US) is looking to raise US$420m in its share sale in Zomato (ZOMATO IN). The selldown will be a clean-up sale.
  • Uber had earlier inherited its stake in Zomato in 2020 when it sold UberEats India to the latter. 
  • We had earlier flagged the possibility of a selldown given that most of Zomato’s investors would come off their respective one-year lockups. 

AMTD Digital: The Biggest Bubble in 2022

By Douglas Kim

  • AMTD Digital is the biggest bubble of 2022, which is ready to pop. AMTD Digital provides digital solutions platform in Asia.
  • AMTD Digital currently has a market cap of US$371 billion (US$2,002 per ADS share) (as of 1:40PM NYC time). The company’s market cap is more than JPMorgan Chase & Co.
  • No doubt, AMTD Digital is the biggest bubble in 2022 and the bursting of this huge bubble will also devastate (mostly) retail investors in the US. 

KOSPI Size Index Series Rebalancing in September: Eight Strong Targets

By Sanghyun Park

  • Eight stocks are highly likely to migrate with a substantial passive flow. Compared to the early phase of the screening period, GS Engineering & Construction newly made the list.
  • Most names should show a quite substantial passive flow (x ADTV). In particular, KCC Corp and BGF Retail deserve our special attention for their expected passive impact.
  • The flow occurs on high potential migration stocks about 20 days before the effective date. So I would start building Long/Short Basket positions with the above eight names around mid-August.

Pinduoduo: Community Group Buying Is Facing Multiple Challenges

By Oshadhi Kumarasiri

  • Community group buying is starting to face multiple headwinds from funding shortages to excessive price competition.
  • Even though Pinduoduo (PDD US) is yet to announce any job cuts or scaling back of operations, we think the operating environment shouldn’t be much different from competitors.
  • With QoQ revenue growth at a standstill and sales and marketing cost cutting almost fully exhausted, we think the current consensus expectations are too optimistic and bound for a correction.

SK REITs Issues a Rights Offering Worth 210 Billion Won

By Douglas Kim

  • SK REITs (395400 KS) announced today that it will conduct a rights offering worth 210 billion won, representing 25% of its current market cap of 829 billion won.
  • The rights offering will allow SK REITs to acquire SK U Tower. The rights offering price is 5,060 won, which is 5.4% discount to the current price of 5,350 won.
  • We would subscribe to this SK REITs rights offering. The SK U Tower in Bundang has excellent location and it has SK Hynix as the main tenant.

EVOC Subject to a Third Privatisation Attempt?

By Arun George

  • EVOC Intelligent Technology Company Limited H (2308 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 1 August.
  • It is likely that after two failed attempts, Mr Chen Zhi Lie, the ultimate controlling shareholder, will try a third time to privatise EVOC.
  • The previous offer of HK$1.50 per H Share in 2020 marginally missed the 90% minimum acceptance condition. Expect a similar structure with a likely slightly higher offer price.  

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