Emerging Market Links + The Week Ahead (August 14, 2023)
El Niño vulnerability index, China's pharma/health care crackdown, US-China breakup in charts, Luckin is rising, Starbucks Vietnam failures, EM stock picks & the week ahead for emerging markets.
As I suspected and mentioned in last week’s week, Caixin is now reporting that Chinese authorities have uncovered the risk of “systemic corruption” in Guangdong province’s pharmaceutical sector. This includes misconduct by drug makers in sales and promotion activities, medical equipment procurement in local hospitals, and ethical concerns involving partnering health institutions.
While getting rid of corruption is in everyone’s interest over the long term, investors in Chinese pharma, health care and medical equipment stocks should get ready for a bumpy year or two of crackdowns in those sectors.
Meanwhile, El Niño will heavily impact agricultural production and electricity generation in many emerging markets (e.g. India, Africa, etc.) while a few (e.g. Argentina) will actually benefit. Likewise, countries with smaller fiscal buffers are also vulnerable to more severe food supply or energy disruptions that will fuel inflation.
The good news? It looks like emerging markets who hiked rates early may avoid recession.
Emerging Market Stock Pick Tear Sheets
$ = behind a paywall
Cogna Educação (BVMF: COGN3 / OTCQX: COGNY): One of the World's Largest Private Education Providers
Business Day TV Daily Stock Picks (July 2023) Partially $
Includes: Quilter PLC, Super Group, FirstRand, Naspers/Prosus, Netcare Limited, Life Healthcare Group Holdings, Aspen Pharmacare Holdings Limited, Grindrod Limited, Hyprop Investments, Absa Group, Mondi, Super Group, Attacq, Sasol, Motus Holdings, Combined Motor Holdings (CMH), Zeda, NEPI Rockcastle, SA Government Bonds, Artificial Intelligence (AI), Pepkor, Kumba Iron Ore, City Lodge, Anglo American, Standard Bank, Richemont, AngloGold Ashanti, Anglo American PLC, Impala Platinum, Adcock Ingram Holdings Limited, DRD Gold, Hosken Consolidated Investments (HCI), Equites Property Fund, Kap Ltd, Thungela Resources, LIG Nex1 Co & Italtile
Emerging Market Stock Pick Tear Sheets (July 16-Aug 13, 2023)
Education stocks Afya, Arco Platform, Vitru, Vasta Platform, Cogna Educação, ADvTECH, Curro Holdings, Stadio Holdings, YDUQS, CIRA Education, etc + China/HK, India, Korea & South Africa stock picks.
Emerging Market Stock Picks / Stock Research
$ = behind a paywall
Charts of the Day: China’s year of tech layoffs (Caixin) $
China’s largest internet companies slashed their workforces in 2022 as they grappled with a slowing domestic economy and the aftermath of an industrywide regulatory clampdown.
Six out of China’s 10 biggest tech enterprises by market value, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd., cut the number of employees by 4% to 10% last year, according to Caixin calculations based on annual reports.
Haier Smart Home 690D Quick Pitch (20/80 Analysis) (Continuous Compounding)
Haier Smart Home (HKG: 6690 / SHA: 600690 / FRA: 690D) makes white goods, or major home appliances. Think refrigerators, dishwashers, laundry machines, A/C units, and water heaters & purifiers. Not only does Haier have the largest market share domestically, but Haier is the global leader of the major home appliance industry.
Haier Smart Home is a Tri-listed stock. It’s stock trades on the Shanghai (A shares), Hong Kong (H shares), and Frankfurt stock exchanges (D shares). The D shares trade at a 60% discount to the mainline. In this stock pitch, I will go over my investment thesis on investing in the D shares trading on the German line.
Hygeia adds another top hospital to its cancer-care chain (Bamboo Works)
China’s biggest group of private cancer hospitals has gone on another buying spree, acquiring a well-established hospital in the country’s northwest to expand its brand
Hygeia Healthcare Holdings (HKG: 6078 / FRA: 50I / OTCMKTS: HYHHF) paid 1.66 billion yuan for all the shares in Chang’an Hospital, which has a track record of profitability
Since the start of the Covid pandemic, the company has raised the quality of its acquisition targets and boosted the value of its goodwill
Daqo gets scorched by tumbling polysilicon prices (Bamboo Works)
The maker of the key ingredient used in solar panel production announced the departure of its top two officials as it reported its revenue fell 50% in the second quarter
Daqo New Energy’s (NYSE: DQ) revenue fell by half in the second quarter, as increased production wasn’t enough to offset a nearly two-thirds drop in polysilicon prices
The company announced the departure of its two top officials, hinting that major changes could be in store, including a possible privatization
Keep, China’s largest fitness app, bet big during the pandemic. Will it pay off? (The China Project)
Keep Inc.’s (HKG: 3650) is no regular sports app. It is more of a social media platform akin to Xiaohongshu, only fitness-focused. But while it achieved early success and continues to harbor big ambitions, it's finding out just how unforgiving the Chinese ecommerce market can be.
Luckin overtakes Starbucks in China sales for first time — thanks to ‘pseudo’ coffee (The China Project)
In racing past Starbucks, Luckin (OTCMKTS: LKNCY) has not only dethroned a foreign brand that’s been synonymous with coffee for more than two decades in China, it has also declared a new chapter of its business as it tries to move on from its scandal-riddled past.
According to local media reports, there are a host of factors contributing to Luckin’s accelerated growth in the post-pandemic world. But above all, it’s the competitive pricing that wins the day for the Chinese coffee chain, as local consumers have to tighten their purse strings in the face of economic headwinds.
Doubling down on its pricing strategy, Luckin launched a month-long promotion in June centered around 9.9 yuan ($1.38) coffee drinks. In the first week of the campaign, the company sold over 39 million caffeine beverages. Throughout the month, the promotion brought in more than 50 million customers for Luckin.
Starbucks, on the other hand, maintained its premium image, with most of its products priced above 30 yuan ($4.7).
Fosun Tourism rides Club Med rebound into bumper profits (Bamboo Works)
Fosun Tourism’s (HKG: 1992 / OTCMKTS: FSNGF) business volume rose 24% in the first six months of 2023, similar to revenue gains for global hotel operators like Hilton and Marriott
The company has revived Club Med eight years after buying the chain, allowing it to boost room prices well above pre-pandemic levels
China lifts bans on group tours to US, Japan and other key markets (Reuters) (Archived Article)
Prior to the pandemic, mainland Chinese tourists spent more than any other country's tourists when abroad, clocking up a combined $255 billion in 2019 with group tours estimated to account for roughly 60% of that.
It was the third list of countries to receive approvals. The first batch approved in January included 20 countries such as Thailand, Russia, Cuba and Argentina. The second batch in March included 40 countries, among them Nepal, France, Portugal and Brazil.
Shares in firms in the latest group of countries with large exposure to Chinese travel demand jumped on the news. Gains for South Korean casino operators were particularly striking with Grand Korea Leisure (KRX: 114090) and Paradise (KOSDAQ: 034230) surging 21% and 17% respectively.
Paradise: Boost from End of Ban of Chinese Group Tours to Korea Vs Inspire Resort Opening in Incheon (Smart Karma) $
Paradise (KOSDAQ: 034230) is one of the largest foreigners only casino operators in Korea which should benefit from the end of the ban of Chinese group tours to Korea.
However, Paradise will face additional competition from the opening of the new Inspire Entertainment Resort in Incheon which is expected to open by the end of 2023.
Paradise is likely to benefit from a combination of higher earnings and valuation multiples in the coming months.
Himax: Sees Rebound in China Automotive Display Demand, Expects Dominant Market Share to Continue (Smart Karma) $
Himax Technologies (NASDAQ: HIMX) reported 2Q23 results -- Showing a previously-guided margin drop due to the one-off impact of the exit from long-term capacity commitments.
Positive developments -- Inventory levels improved further, China's automotive industry demand is rebounding from lows, and the company should maintain its already-dominant market share in automotive display drivers.
Long Himax -- Himax continues to represent structural exposure to dramatically increasing display content in vehicles. The stock's previous all-time high is double the current level.
Sembcorp Industries Reported a 56% Jump in Net Profit and Upped its Dividend: 5 Highlights from the Utility Giant’s Latest Earnings (The Smart Investor)
Sembcorp Industries (SGX: U96 / FRA: SBOA / OTCMKTS: SCRPF)
The blue-chip utility group is building up its renewables capacity and sees good prospects ahead.
Here are five highlights from SCI’s latest financial report.
A mixed set of earnings
Growing its renewables capacity
A weaker performance for Integrated Urban Solutions
Good prospects for Conventional Energy
Slightly higher interim dividend declared
StarHub Reports Higher Revenue Across All its Divisions: 5 Highlights from the Telco’s Latest Earnings (The Smart Investor)
StarHub (SGX: CC3 / FRA: RYTB / OTCMKTS: SRHBY / SRHBF)
The telco saw overall higher revenue and profitability and has declared a S$0.025 interim dividend.
Let us dig deeper into the telco’s earnings report to tease out five interesting highlights.
An improved set of results
Higher mobile subscriber base with lower churn
Consolidating MyRepublic’s broadband subscribers
Higher ARPU for the Entertainment division
Revised guidance for 2023
Get Smart: Delivering on its DARE+ initiatives
Bukalapak (BUKA IJ) - A Virtuous Circle to Profitability (Smart Karma) $
Bukalapak (IDX: BUKA / FRA: 5E9 / OTCMKTS: BKLPF) [Indonesian e-commerce company] continues to demonstrate the effectiveness of circular nature of its business model in 2Q2023, with demand from its O2O business fueling growth in its marketplace, creating a flywheel effect.
Although TPV growth slowed slightly in 2Q2023, revenues saw much stronger growth, especially its marketplace business, which booked much higher take-rates driven by its specialty verticals, including gaming and gadgets.
Bukalapak will continue to benefit from expanding take rates as specialty, such as AlloFresh feed in more SKUs and new verticals gain traction. Valuations remain attractive on 0.85x FY2023E EV/Sales.
TVS Supply Chain Solutions IPO - RHP Updates, Peer Comparison & Thoughts on Valuation (Smart Karma) $
TVS Supply Chain Solutions (1915741D IN) is looking to raise up to US$110m in its India IPO, after downsizing from an earlier float of up to US$500m.
TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer.
In our previous note, we looked at the company’s past performance. In this note, we talk about RHP updates, undertake a peer comparison and provide our thoughts on valuation.
First Majestic Silver - LATAM Stocks Investment Analysis #19 (LATAM Stocks)
First Majestic (NYSE: AG) is a precious metals mining company with 3 producing mines in Mexico and a portfolio of mining assets in Mexico and Nevada.
That being said, I have serious concerns about First Majestic. The most important of which is their Jerritt Canyon acquisition. The Jerritt Canyon mine is a gold mine in Nevada. First Majestic acquired the mine in March of 2021 and two years later, in March of 2023, suspended operations.
This acquisition was an expensive failure. The mine was responsible for many of the financial issues present in First Majestic’s 2021 and 2022 financial statements.
Consistent dilution has been another issue for First Majestic shareholders.
However, now that the Jerritt Canyon project is in the rear view mirror, I believe First Majestic is back on the right track.
Exit in Public #16: Performance pós-IPO de empresas tech LatAm (Exit in Public)
Note: In Portuguese (use a browser translator). Contains several useful infographics, such as these:
Podcast Ep 14 | Heineken: Stay a Local Global Brand by Facilitating, Not Dictating
Note: Heineken Malaysia (KLSE: HEIM) is a listing for the Malaysia business and the parent company has stakes in other emerging market brewers + may have other local units listed in other markets…
In this episode of Branding Over Wine, Obabiyi Fagade, commercial development manager of global brands at Heineken, shares how the iconic Dutch beer brand cultivates this flexible yet consistent brand identity in 190 different countries all over the world.
Here, Obabiyi reveals that Heineken’s identity in Northern Europe is actually quite different from its identity in Nigeria, which are both quite different from the one in the US.
Further Suggested Reading
$ = behind a paywall
China’s regulators flag ‘systemic corruption’ risk in drug sector (Caixin) $
Chinese authorities uncovered the risk of “systemic corruption” in Guangdong province’s pharmaceutical sector, including misconduct by drugmakers in sales and promotion activities, medical equipment procurement in local hospitals, and ethical concerns involving partnering health institutions, an official audit report obtained by Caixin revealed.
A team from the National Audit Office, the country’s top audit watchdog, conducted a special investigation between May and July into the provincial sector’s production, sale and use of drugs and medical consumables.
China drugmakers axe IPO plans as they face scrutiny in anti-graft drive (Reuters) (Archived Articles)
A growing number of healthcare companies in China are shelving their initial public offering (IPO) plans as its stock exchanges have stepped up scrutiny of the pharmaceutical industry's business practices amid an escalating anti-corruption drive.
Healthcare stocks have already slumped in China since the government in late July launched a year-long anti-graft campaign, targeting what it said was the rampant practice of bribing of doctors in drug and medical equipment sales.
Underscoring the toughness of the latest crackdown, at least 168 hospital chiefs have been investigated on suspicion of violating laws and regulations, double the number in 2022, healthcare information provider Saibailan reported.
How U.S. and China Are Breaking Up, in Charts (Wall Street Journal) (Archived Article)
Americans keep buying less from China, dropping its share of imports to a 20-year low
China’s loss of share in U.S. imports isn’t the result of a dramatic change in imports from any one product or country. Instead, slow-moving supply chain shifts across dozens of industries and nations are driving the trend.
Starbucks Vietnam: Why the US chain cannot crack a coffee-loving nation (BBC)
Starbucks accounted for just 2% of Vietnam's $1.2bn (£934m) coffee-drinking market in 2022, according to Euromonitor International. And its footprint in the country isn't expanding rapidly. It has 92 stores, which works out to less than one for every million people. By comparison, Thailand and Indonesia have about seven and two respectively.
Starbucks, however, uses 100% Arabica beans. The company told the BBC this was done to achieve "a flavour that can be subtle but also complex".
But 97% of the coffee Vietnam consumes every year - about 200,000 tonnes, or 2kg per person - is of the Robusta variety.
Cost is a big reason why Vietnamese people hesitate to go to Starbucks, even to enjoy the novelty of it. A medium-sized drink at Starbucks with none of the add-ons costs about 90,000 Vietnamese Dong (£2.9; $3.8;). That's prohibitive in a country where the average monthly wage is only around $345.
Argentina radical rightwinger shakes up presidential race with primary win | Financial Times (FT) (Archived Article)
Milei, a former television personality and one-term congressional representative who has called for extreme austerity and dollarising Argentina’s economy, won 30.1 per cent of the vote, surpassing pollsters’ average forecast of 20 per cent, with 96 per cent of votes counted.
That put his Freedom Advances party ahead of centre-right force Together for Change, with 28.3 per cent, and the ruling populist coalition Union for the Homeland, whose candidate is centrist economy minister Sergio Massa, which earned 27.2 per cent.
How El Nino threatens emerging market economies (Reuters)
Note: From our June 26th post: Southeast Asia Plantations: El Niño’s Back, with a Vengeance? (Smartkarma) $ + Time for Coffee ETF On El Nino-Driven Shortage?
Below are five charts showing the impact El Nino - when waters in the central and eastern Pacific are warmer than usual - could have on key emerging markets.
There are, however, exceptions - Argentina had a record soy harvest in previous El Nino episodes, according to Morgan Stanley. "El Nino tends to be negative in EM, though Argentina is an exception," the bank's Fernando Sedano wrote in a note, adding "Argentina is likely the only net winner of El Nino."
But the El Nino impact on agricultural production and electricity generation could complicate disinflation, and lead to higher-for-longer rates. "Colombia and Peru are the most exposed countries, followed by Chile and Brazil to a lesser extent," said BofA's Latam local market strategist Antonio Gabriel.
"Mexico seems mostly isolated," Gabriel added.
Charts of the Week: Early hikers, NFP revisions and aggressive asset allocation (Macrobond)
Earnings Calendar
Note: Investing.com has a full calendar for most global stock exchanges BUT you may need an Investing.com account, then hit “Filter,” and select the countries you wish to see company earnings from. Otherwise, purple (below) are upcoming earnings for US listed international stocks (Finviz.com):
Economic Calendar
Click here for the full weekly calendar from Investing.com containing frontier and emerging market economic events or releases (my filter excludes USA, Canada, EU, Australia & NZ).
Election Calendar
Frontier and emerging market highlights (from IFES’s Election Guide calendar):
ArgentinaReferendumAug 13, 2023 (d) ConfirmedEcuador Ecuadorian Presidency Aug 20, 2023 (t) Confirmed Apr 11, 2021
Ecuador Ecuadorian National Congress Aug 20, 2023 (t) Confirmed Feb 7, 2021
Ecuador Referendum Aug 20, 2023 (t) Confirmed Feb 5, 2023
Zimbabwe Zimbabwean National Assembly Aug 23, 2023 (d) Confirmed Jul 30, 2018
Zimbabwe Zimbabwean Presidency Aug 23, 2023 (d) Confirmed Jul 30, 2018
Singapore Singaporean Presidency Sep 13, 2023 Confirmed Sep 23, 2017
Slovakia Slovakian National Council Sep 30, 2023 (t) Confirmed Feb 29, 2020
Pakistan Pakistani National Assembly Oct 14, 2023 (t) Date not confirmed Jul 25, 2018
Argentina Argentinian Chamber of Deputies Oct 22, 2023 (d) Confirmed Oct 24, 2021
Argentina Argentinian Senate Oct 22, 2023 (d) Confirmed Nov 14, 2021
Argentina Argentinian Presidency Oct 22, 2023 (d) Confirmed Aug 13, 2023
Ukraine Ukrainian Supreme Council Oct 29, 2023 (d) Confirmed Jul 21, 2019
Poland Polish Sejm Oct 31, 2023 (t) Confirmed Oct 13, 2019
Poland Polish Senate Oct 31, 2023 (t) Confirmed Oct 13, 2019
Poland Referendum Oct 31, 2023 (t) Date not confirmed Sep 6, 2015
Chile Referendum Dec 17, 2023 (t) Confirmed Sep 4, 2022
Indonesia Indonesian Regional Representative Council Feb 14, 2024 (t) Confirmed Apr 17, 2019
Indonesia Indonesian Presidency Feb 14, 2024 (t) Confirmed Apr 17, 2019
Indonesia Indonesian House of Representatives Feb 14, 2024 (t) Confirmed Apr 17, 2019
South Korea South Korean National Assembly Apr 10, 2024 (t) Confirmed Apr 15, 2020
Emerging Market IPO Calendar/Pipeline
Frontier and emerging market highlights from IPOScoop.com and Investing.com (NOTE: For the latter, you need to go to Filter and “Select All” countries to see IPOs on non-USA exchanges):
Maison Solutions MSS, 3.0M Shares, $4.00-4.00, $12.0 mil, 8/14/2023 Week of
Maison Solutions is a specialty Asian grocery retailer. (Incorporated in Delaware)
We are a fast-growing specialty grocery retailer offering traditional Asian food and merchandise to modern U.S. consumers, in particular to members of Asian-American communities. We are committed to providing Asian fresh produce, meat, seafood, and other daily necessities in a manner that caters to traditional Asian-American family values and cultural norms, while also accounting for the new and faster-paced lifestyle of younger generations and the diverse makeup of the communities in which we operate. To achieve this, we are developing a center-satellite stores network.
Our merchandise includes fresh and unique produce, meats, seafood and other groceries which are staples of traditional Asian cuisine and which are not commonly found in mainstream supermarkets, including a variety of Asian vegetables and fruits such as Chinese broccoli, bitter melon, winter gourd, Shanghai baby bok choy, longan and lychee; a variety of live seafood such as shrimp, clams, lobster, geoduck, and Alaska king crab, and Chinese specialty products like soy sauce, sesame oil, oyster sauce, bean sprouts, Sriracha, tofu, noodles and dried fish. With an in-house logistics team and strong relationships with local and regional farms, we are capable of offering high-quality specialty perishables at competitive prices.
Our multi-pronged approach allows us to provide customers with multiple shopping channels, including integrated online and offline operations, according to Maison Solutions Inc.’s website.
“Customers can place orders on our mobile app “FreshDeal24,” or through our WeChat Applet “Good Luck to Home” for either home delivery or in-store pickup,” the company’s website says.
*Note: Revenue and net income are for the 12 months that ended April 30, 2023.
(Note: Maison Solutions Inc. cut its IPO’s size by 25 percent to 3.0 million shares – down from 3.75 million shares – and kept the assumed IPO price at $4.00 – to raise $12.0 million, according to a post-effective amendment dated Aug. 1, 2023. In that same SEC filing, the company updated its financial statements for the year that ended April 30, 2023. Maison Solutions Inc. filed an S-1/A dated June 2, 2023, in which it increased the size of its IPO – to 3.75 million shares – up from 3.0 million shares – and kept the assumed IPO price at $4.00 – to raise $15 million. Under the new terms, Maison Solutions will raise 25 percent more than the $12 million in estimated IPO proceeds under its original terms. Background: Maison Solutions filed its S-1 on May 22, 2023, after submitting confidential IPO documents to the SEC on Dec. 23, 2022.)
Nature Wood Group Limited NWGL, 0.9M Shares, $9.00-11.00, $9.2 mil, 8/14/2023 Week of
We are a holding company incorporated in the British Virgin Islands.
We are a global leading vertically integrated forestry company headquartered in Macau, a Special Administrative Region (S.A.R.) of China. We focus on FSC (Forest Stewardship Council) business operations. Our operations cover both up-stream forest management and harvesting, and down-stream wood-processing and distribution. We offer a broad line of products, including logs, decking, flooring, sawn timber, recycled charcoal, synthesized charcoal, machine-made charcoal and essential oils, primarily through our sales network in Europe, South Asia, South America, North America and China. According to the Frost & Sullivan Report, we are (i) the second-largest wood products export supplier; (ii) the second-largest wood products export supplier certified by the FSC; and (iii) the largest decking product supplier in Peru, in terms of export value in 2021. We are also the largest oak export supplier and the second-largest hardwood export supplier in France, in terms of export volume in 2021.
Our Group owns concession rights of forests in Peru which covered an area of approximately 615,333 hectares as of March 17, 2023. As of March 17, 2023, approximately 13.67% and 1.66% of our Forests are covered by Cumaru and Estoraque, respectively. Cumaru and Estoraque are valuable hardwood timber which produce strong and durable wood that are well suited for high value markets. In particular, Cumaru is commonly used for producing flooring, decking and other construction materials, while Estoraque is commonly used for producing flooring and furniture.
To ensure the sustainability of our forest resources, we establish a set of harvesting rules and operating standards. For instance, we typically only harvest timber meeting the minimum stem circumference requirements. Our standard of forestry operations was recognized by the FSC, an independent accreditation body that is dedicated to promoting responsible and sustainable forest management.
According to the Frost & Sullivan Report, we are one of the few forestry companies that have successfully implemented FSC-certified operations, including forest management, harvesting and manufacturing of wood products. We commenced our FSC business operations in 2016, when Grupo Maderero Amaz S.A.C., a subsidiary of our Group, first obtained FSC Chain of Custody (CoC) certification and began to sell FSC-certified products. As at the date of this prospectus, five subsidiaries of our Group (including Choi Chon Investment Company Limited, E&T Forestal S.A.C., Grupo Maderero Amaz S.A.C., Nuevo San Martin S.A.C. and Latinoamerican Forest S.A.C) have obtained FSC CoC certifications. We also have built a professional forest management team to implement FSC forest management. Our forest management team is led by our head of forest engineer who is qualified to carry out FSC forest management and the key members of our team have an average of over 8 years of experience in FSC forest management. According to the Frost & Sullivan Report, FSC-certified products can be sold at a premium of around 5% to 15% over non-FSC-certified products.
With the growing public concern about environmental protection, consumers are more willing to pay a premium to buy “green” products that are certified by reputable accreditation bodies or ecolabel organizations. As such, products certified by the FSC, one of the world’s most trusted accreditation body, have received wide acceptance across the world, especially the United States and Europe. Revenue generated from sales of FSC-certified products increased by 162.8% from approximately $3.7 million for the year ended December 31, 2020 to approximately $9.9 million for the year ended December 31, 2021, which further increased by 13.7% to approximately $11.2 million for the year ended December 31, 2022, which accounted for approximately 10.0%, 20.7% and 20.3% of our revenue of the respective periods. We believe that such growing trend will continue in the future.
Some of the logs we harvested will be sold to customers immediately after harvesting, others will be processed into a wide variety of products, such as decking and flooring, in our wood processing facilities. As at the date of this prospectus, our Group owns two facilities in Peru, and the Peru base has a monthly log-processing capacity of more than 6,000 m3 and a monthly export volume of up to 65 containers (approximately 1,560 m3).
To further capture the benefit of vertical integration of our manufacturing operation and to secure a stable supply of our wood materials, we sourced logs and semi-finished air-dried planks from local forest owners in Peru, and flooring and decking through sourcing from Gabon. In addition, we source logs through timber auctions or local forest owners in France. To secure a stable supply of logs, our forest management team would assist forest owners in Peru and France with forest management and harvest planning. Similar to logs harvested from our Forests, logs we procured from third parties are either sold directly to customers or further processed in our processing facilities.
We perform the manufacturing process for certain of our products at our Peru base and outsource part of the manufacturing process to third party manufacturers in Peru. We also provide original design manufacturer (ODM) services by combining our in-house product design and development expertise with our ODM partners. For the years ended December 31, 2022, 2021, and 2020, approximately 18.4%, 18.2% and 20.8% of our revenue from our products was generated from our ODM business respectively.
For the years ended December 31, 2022, 2021, and 2020, we generated revenue of approximately $55.3 million, $47.7 million and $37.5 million, respectively. Revenue from sales of logs, flooring and decking and sawn timber accounted for 50.2%, 21.7%, 24.9% and 3.2% of our total revenue for the year ended December 31, 2022 respectively, accounted for 44.4%, 25.0%, 25.2% and 5.4% of our total revenue for the year ended December 31, 2021 respectively, and accounted for 43.9%, 34.4%, 17.5% and 4.2% of our total revenue for the year ended December 31, 2020 respectively.
(Note: Nature Wood Group Limited disclosed terms for its IPO in an F-1/A filing dated Aug. 4, 2023: 915,000 American Depositary Shares (ADS) at $9.00 to $11.00 to raise $9.15 million. Each ADS represents eight ordinary shares. Nature Wood Group Limited filed its F-1 on April 25, 2023.)
SIMPPLE Ltd. SPPL, 1.6M Shares, $5.00-6.00, $8.9 mil, 8/14/2023 Week of
We are a property tech (PropTech) business in Singapore. (Incorporated in the Cayman Islands)
Headquartered in Singapore, SIMPPLE LTD. is an advanced technology solution provider in the emerging property-technology (“PropTech”) space, focused on helping facility owners and managers manage their facilities autonomously. Over the past five years, the Company has developed a proprietary ecosystem solution that automates workflow and the workforce in areas such as building maintenance, security surveillance and janitorial services. The products and services under the SIMPPLE Ecosystem are:
– SIMPPLE Software (A software platform comprising modules related to quality management, workflow management and people management)
– SIMPPLE PLUS (Robotic solutions in Cleaning and Security domains as well as IoT Devices and peripherals)
– SIMPPLE.AI (Next generation facilities management Autonomic Intelligence Engine that automates workflow processes in a built environment setting)
In addition, the Company offers professional services, such as set-up and installation and systems consultation, to its clients. On average, the solutions the Company offers increase customer efficiency in asset maintenance, while also reducing insurance costs.
We were founded in 2016, and our initial focus was on the development of a robotic cleaning solution. As cleaning operations usually cover a large area of space, the then-existing robotic solutions and machinery were bulky and not fit for Singapore’s infrastructure. Through the design and development of minimal human intervention cleaning robotics, we were able to build a solution to match the specific facility cleaning needs of Singapore’s skyscraper- dominant environment. We understood that robotics should not be a standalone solution. Instead, we realized the merits of a fully automated Smart Building model with the integration of robotic solutions. We believe that our ecosystem-focused solution will create more value to building owners and facility managers as often times, data inputs alone are insufficient for efficient operations. Decision-making logic and intelligent task allocation to deployable assets must be built into the platform solution in order to achieve autonomous operations within a facility.
The SIMPPLE Ecosystem has market penetration across various industries in Singapore, including being adopted by 209 out of 432, or slightly less than half of the schools in Singapore as of April 2021. Out of the 29 hospitals in Singapore as of 2021, 7 hospitals have adopted the SIMPPLE Ecosystem in the past. Furthermore, 4 out of 6 autonomous universities in Singapore, and leading property developers and facilities services companies in Singapore have also adopted the SIMPPLE Ecosystem in the past.
**Note: Revenue and net loss figures are in U.S. dollars (converted from Singapore dollars) for the year ended June 30, 2022.
(Note: SIMPPLE Ltd. raised the price range of its micro-cap IPO to $5.00 to $6.00 – up from $4.00 to $5.00 – and kept the number of shares at 1.625 million shares – to raise $8.94 million, according to an F-1/A filing dated July 12, 2023. Background: SIMPPLE Ltd. cut its IPO in an F-1/A dated May 17, 2023, to 1.625 million shares (1,625,000 shares) – down from 2.0 million shares – and kept the price range at $4.00 to $5.00 – to raise $7.31 million. SIMPPLE Ltd. filed its F-1 on March 31, 2023, and disclosed terms for its IPO: 2.0 million shares at $4.00 to $5.00 to raise $9.0 million. The company submitted confidential IPO documents to the SEC on Sept. 30, 2022.)
Elephant Oil Corp. ELEP, 1.7M, $4.00-5.00, $7.5 mil, 8/15/2023 Tuesday
We are an independent oil and gas exploration stage company, led by an experienced management and technical team, which is focused on under-explored regions in Africa. Our current asset portfolio includes an exploration license onshore in the Republic of Benin (“Benin”), as well as an exploration license onshore in the Republic of Namibia (“Namibia”). As of the date of this prospectus, we have not drilled any wells. Additionally, the Company continues to review other potential assets for expansion.
**Note: Revenue and net loss figures are for the year that ended June 30, 2022.
(Note: Elephant Oil Corp. slightly increased the size of its IPO in an S-1/A filing dated July 21, 2023, to 1.67 million shares from 1.56 million shares and kept the price range at $4.00 to $5.00 to raise $7.52 million. Previously: Elephant Oil Corp. increased the size of its IPO again in an S-1/A filing dated June 1, 2023: The IPO was increased to 1.56 million shares (1,555,556 shares) and the price range was kept at $4.00 to $5.00 – to raise $7.0 million – an increase of about $120,000 in the IPO’s estimated proceeds. Background: Elephant Oil Corp. increased its IPO’s size in an S-1/A filing dated March 30, 2023, to 1.53 million shares (1,527,778 shares) and kept the price range at $4.00 to $5.00 to raise $6.88 million ($6,875,001). Elephant Oil Corp. cut its IPO’s size by about 24 percent and changed the IPO’s structure by removing the warrants in an S-1/A filing dated March 9, 2023: The IPO now consists of 1.44 million shares at $4.00 to $5.00 to raise $6.48 million. Previously, the IPO’s terms were 1.83 million units – with each unit consisting of one share of common stock and one warrant to buy one share – at a price range of $4.15 to $5.15 – to raise $8.5 million. The IPO’s terms have been revised numerous times – see background note below. The S-1 was filed March 25, 2022; confidential IPO documents were filed on Dec. 21, 2021.)
(Background: The IPO has been on hold since mid-February, when the deal did not get done after tentatively setting a pricing date during the week of Feb. 13, 2023. Elephant Oil Corp. filed an S-1/A on Dec. 6, 2022, to cut the size of its unit IPO – to 1.83 million units (1,827,957 units) from 2.58 million units (2,580,645 units) – and kept the price range at $4.15 to $5.15 – to raise $8.5 million. In terms of estimated IPO proceeds, the new terms represent a cut of 29.2 percent. The company updated its IPO plans with a placeholder filing dated Jan. 6, 2023. The IPO’s initial terms were 3.23 million units at $4.15 to $5.15 to raise $15.02 million, disclosed in an S-1/A filing on Aug. 12, 2022.)
Solowin Holdings, Ltd.SWIN, 2.5M, $4.00-4.00, $10.0 mil, 8/16/2023 Wednesday
(Incorporated in the Cayman Islands)
Solowin is an exempted limited liability company incorporated under the laws of the Cayman Islands on July 23, 2021. As a holding company with no material operations of its own, Solowin conducts its operations primarily through its wholly owned subsidiary, Solomon JFZ, a limited liability corporation incorporated in Hong Kong.
Solomon JFZ is one of the few Chinese investor-focused versatile securities brokerage companies in Hong Kong. It offers a wide spectrum of products and services through its advanced and secured one-stop electronic platform. Solomon JFZ currently is primarily engaged in providing (i) securities related services, (ii) investment advisory services, (iii) corporate consultancy services and (iv) asset management services to the customers. It is licensed with the Hong Kong Securities and Futures Commission (“HKSFC”) and a participant of the Hong Kong Stock Exchange to carry out regulated activities including Type 1 (Dealing in Securities), Type 4 (Advising on Securities), Type 6 (Advising on Corporate Finance) and Type 9 (Asset Management). Solomon JFZ strictly follows the requirements of the HKSFC for internal regulation and risk control to maximize the safety of investors’ assets. It provides online account opening and trading services via its Front Trading and Back-office Clearing systems, in conjunction with Solomon Pro – a highly integrated application accessible via any mobile device, tablet, or desktop, all of which are licensed from third parties. With strong financial and technical capabilities, Solomon JFZ has been providing brokerage services to global Chinese investors residing both inside and outside the PRC and institutional investors in Hong Kong, and have been recognized and appreciated by users and industry professionals.
Solomon JFZ’s trading platform allows investors to trade over 10,000 listed securities and their derivative products listed on the Hong Kong Stock Exchange (HKSE), New York Stock Exchange (NYSE), Nasdaq, Shanghai Stock Exchange and Shenzhen Stock Exchange. In addition, it provides Hong Kong IPO underwriting, Hong Kong IPO Public Offer application and International Placing subscription, Hong Kong IPO margin financing services, Hong Kong Pre-IPO securities trading and US IPO subscription. Hong Kong IPO margin financing services refer to loans offered by a licensed financial institution to clients for the purpose of purchasing securities in an IPO before the issuers are listed on the Hong Kong Stock Exchange. The loan, commonly referred to as an IPO loan, enables clients to invest more than the required deposit of 5% or 10% of funds. The loan, which is short-term, interest-bearing, typically covers 90% or 95% of the investment amount and is repaid right after the allotment result release. Once the investor is allotted shares cost over the required deposit and a part of loan is used for the shares, the shares can be sold and the proceeds are utilized to repay the loan of the financial institution, with any remaining balance going to the investor. Our customers may also use Solomon JFZ’s platforms to trade various listed financial products, such as ETFs, Warrants and Callable Bull/Bear Contracts. Beside securities related service, Solomon JFZ also offers asset management services as an investment manager. Our High-Net-Worth customers may also subscribe private fund products through Solomon JFZ.
Our clients are mostly Chinese investors residing in Asia as well as institutional clients in Hong Kong, Australia and New Zealand. As of March 31, 2023, we had more than 20,000 users, including more than 15,400 clients who are users and have opened trading accounts with Solomon JFZ. We classify those who have registered on Solomon JFZ’s platform as users and those users who have opened accounts on Solomon JFZ’s platform as clients. We currently have over 1,500 active clients, who have assets in their trading accounts.
As of March 31, 2023, Solomon JFZ’s operations mainly consisted of four business segments: (i) securities related services, (ii) investment advisory services, (iii) corporate consultancy services and (iv) asset management services to the customers.
Note: Revenue and net income are in U.S. dollars for the fiscal year that ended March 31, 2023.
(Note: Solowin Holdings, Ltd. cut the size of its IPO by 33 percent to 2.5 million shares – down from 3.75 million shares – and kept the assumed IPO price at $4.00 on a price range of $4.00 to $6.00 to raise $10 million, according to an F-1/A filing dated July 7, 2023. The company filed its F-1 on April 28, 2023, without disclosing terms. Its original terms were 3.0 million shares on a $4.00-to-$6.00 price range to raise $15.0 million, according to an F-1/A filing dated May 22, 2023. The deal’s size was increased to 3.75 million shares at $4.00 to $6.00 to raise $18.75 million, in an F-1/A filing dated June 15, 2023. Solowin Holdings had submitted confidential IPO documents to the SEC on Dec. 23, 2022.)
Gamer Pakistan Inc. GPAK, 1.7M Shares, $4.00-5.00, $8.0 mil, 8/21/2023 Week of
We are an early-stage esports company focused on developing and organizing esports events in Pakistan. (Incorporated in Delaware)
We are a development-stage interactive esports event promotion and product marketing company, founded in November 2021. Our initial focus is on creating college, inter- university and professional esports events for both men’s and women’s teams, particularly esports opportunities with colleges and universities in Pakistan. The Government of Pakistan’s 2021-22 Pakistan Economic Survey estimated that from 2020-21 there were approximately 500,000 students enrolled in technical and vocational education, approximately 760,000 in degree-awarding colleges, and 1.96 million students in universities.1 Though the foregoing likely will remain our focus for at least 12 months, over time, we intend to expand the range of our esports offerings, expand to other markets and eventually consider live sports. We will endeavor to integrate competitive events that include our teams and leagues with regional and global teams and leagues sponsored by others.
Pakistan is a large market for esports. Pakistan is the fifth most populous country in the world, with a current population estimated to be approximately 231 million persons. The median age in Pakistan is 22.8 years, and 35.1% of the population is urban (77,437,729). Mobile cellular subscriptions have grown at an astounding rate in Pakistan, with 79.51% of the inhabitants having a mobile cellular subscription in 2020 compared to only 0.22% in 2000. Approximately 36.8 million persons in Pakistan have been estimated to play video games in 2022, and the number is expected to increase to 50.9 million by 2026.
We plan to conduct our operations in Pakistan through K2 Gamer (PVT) Ltd. (“K2 Gamer”), and Elite Sports Pakistan Pvt. Ltd. (“ESP”), each a company duly incorporated under the laws of Pakistan. Pursuant to agreements with the three owners of K2 Gamer, we acquired 90% ownership of K2 Gamer on July 10, 2023 when the transfer was approved by the Securities and Exchange Commission of Pakistan (“SECP”). We will account for the transfer as an acquisition of a business under the provisions of ASC 805. To date all activities have been conducted by K2 Gamer and ESP, and not the Company, although the Company has received public recognition as a sponsor for many of the tournaments.
As a result of the assignment to K2 Gamer by ESP of all of its rights with respect to the exploitation of esports, ESP is an affiliate of K2 Gamer and, as a result of the acquisition by us of 90% of the stock of K2 Gamer, ESP now is our affiliate as well. For purposes of this prospectus, we have assumed, except where otherwise stated, that K2 Gamer has been our subsidiary and that ESP has been our affiliate during the periods mentioned. Mr. Muhammed Jamal Qureshi is an owner of K2 Gamer and ESP as well as CEO and a director of K2 Gamer and ESP.
Esports are the competitive playing of video games by amateur and professional teams or individuals for cash and other prizes. Esports typically take the form of organized, multiplayer video games that include real-time strategy and competition, including virtual fights, first-person shooter and multiplayer online battle arena games. The games are played on dedicated hardware (consoles), personal computers (PCs), or a range of mobile devices including smart phones and tablets. Unlike games of chance or luck, esports are defined as competitive games of skill, timing, knowledge, experience, practice, attention and teamwork. Tournaments can be held using consoles, PCs, mobile devices, or a combination of the foregoing. Competitors participate at large in-person events, small in-person events and virtually from home or computer cafes.
Between November 2021 and November 2022, we organized and held 27 separate championships, including the first “Annual University Esports National Tournament and Championship on June 30 through July 1 of 2022. In December 2022 we held the week-long inaugural National Esports Free Fire Championship. During 2023, K2 Gamer and/or ESP are expected to organize and conduct at least 18 championships. There were no paying sponsors for these championships, as a result of which we recognized no revenue from them. We believe that we will be able to gain paying sponsors as the championships gain popularity.
*Note: Revenue and net loss figures are for the year ended Dec. 31, 2022.
(Note: Gamer Pakistan Inc. filed its S-1 on July 12, 2023, and disclosed terms for its IPO: 1.7 million shares at $4.00 to $5.00 to raise $8.0 million. Selling stockholders are offering up to 2.9 million shares (2,290,429 shares) of common stock. The company will NOT receive any proceeds from the sale of the selling stockholders’ shares.)
Emerging Market ETF Launches
Climate change and ESG are clearly the latest flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:
05/18/2023 - Putnam Emerging Markets ex-China ETF PEMX - Value + growth stocks
05/11/2023 - JPMorgan BetaBuilders Emerging Markets Equity ETF BBEM - Large + midcap stocks
03/16/2023 - JPMorgan Active China ETF JCHI - Active, equity, China
03/03/2023 - First Trust Bloomberg Emerging Market Democracies ETF EMDM - Principles-based
1/31/2023 - Strive Emerging Markets Ex-China ETF STX - Passive, equity, emerging markets
1/20/2023 - Putnam PanAgora ESG Emerging Markets Equity ETF PPEM - Active, equity, ESG, emerging markets
1/12/2023 - KraneShares China Internet and Covered Call Strategy ETF KLIP - Active, equity, China, options overlay, thematic
1/11/2023 - Matthews Emerging Markets ex China Active ETF MEMX - Active, equity, emerging markets
12/13/2022 - GraniteShares 1.75x Long BABA Daily ETF BABX - Active, equity, leveraged, single stock
12/13/2022 - Virtus Stone Harbor Emerging Markets High Yield Bond ETF VEMY - Active, fixed income, junk bond, emerging markets
9/22/2022 - WisdomTree Emerging Markets ex-China Fund XC - Passive, equity, emerging markets
9/15/2022 - KraneShares S&P Pan Asia Dividend Aristocrats Index ETF KDIV - Passive, equity, Asia, dividend strategy
9/15/2022 - OneAscent Emerging Markets ETF OAEM - Active, Equity, emerging markets, ESG
9/9/2022 - Emerge EMPWR Sustainable Select Growth Equity ETF EMGC - Active, equity, emerging markets
9/9/2022 - Emerge EMPWR Unified Sustainable Equity ETF EMPW - Active, equity, emerging markets
9/8/2022 - Emerge EMPWR Sustainable Emerging Markets Equity ETF EMCH - Active, equity, emerging markets, ESG
7/14/2022 - Matthews China Active ETF MCH - Active, equity, China
7/14/2022 - Matthews Emerging Markets Equity Active ETF MEM - Active, equity, emerging markets
7/14/2022 - Matthews Asia Innovators Active ETF MINV - Active, equity, Asia
6/30/2022 - BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF XEMD - Passive, fixed income, emerging markets
5/2/2022 - AXS Short CSI China Internet ETF SWEB - Active, inverse, thematic
4/27/2022 - Dimensional Emerging Markets High Profitability ETF DEHP - Active, equity, emerging markets
4/27/2022 - Dimensional Emerging Markets Core Equity 2 ETF DFEM - Active, equity, emerging markets
4/27/2022 - Dimensional Emerging Markets Value ETF DFEV - Active, equity, emerging markets
4/27/2022 - iShares Emergent Food and AgTech Multisector ETF IVEG - Passive, equity, thematic [Mostly developed markets]
4/21/2022 - FlexShares ESG & Climate Emerging Markets Core Index Fund FEEM - Passive, equity, ESG
4/6/2022 - India Internet & Ecommerce ETF INQQ - Passive, equity, thematic
2/17/2022 - VanEck Digital India ETF DGIN - Passive, India market, thematic
2/17/2022 - Goldman Sachs Access Emerging Markets USD Bond ETF GEMD - Passive, fixed income, emerging markets
1/27/2022 - iShares MSCI China Multisector Tech ETF TCHI - Passive, China, technology
1/11/2022 - Simplify Emerging Markets PLUS Downside Convexity ETF EMGD - Active, equity, options strategy
1/11/2022 - SPDR Bloomberg SASB Emerging Markets ESG Select ETF REMG - Passive, equity, ESG
Emerging Market ETF Closures/Liquidations
Frontier and emerging market highlights:
07/07/2023 - Emerge EMPWR Sustainable Emerging Markets Equity ETF - EMCH
06/23/2023 - Invesco PureBeta FTSE Emerging Markets ETF - PBEE
06/16/2023 - AXS Short China Internet ETF - SWEB
04/11/2023 - SPDR Bloomberg SASB Emerging Markets ESG Select ETF - REMG
3/30/2023 - Invesco BLDRS Emerging Markets 50 ADR Index Fund - ADRE
3/30/2023 - Invesco BulletShares 2023 USD Emerging Markets Debt ETF - BSCE
3/30/2023 - Invesco BulletShares 2024 USD Emerging Markets Debt ETF - BSDE
3/30/2023 - Invesco RAFI Strategic Emerging Markets ETF - ISEM
2/17/2023 - Direxion Daily CSI 300 China A Share Bear 1X Shares - CHAD
1/13/2023 - First Trust Chindia ETF - FNI
12/28/2022 - Franklin FTSE Russia ETF - FLRU
12/22/2022 - VictoryShares Emerging Market High Div Volatility Wtd ETF CEY
8/22/2022 - iShares MSCI Argentina and Global Exposure ETF AGT
8/22/2022 - iShares MSCI Colombia ETFI COL
6/10/2022 - Infusive Compounding Global Equities ETF JOYY
5/3/2022 - ProShares Short Term USD Emerging Markets Bond ETF EMSH
4/7/2022 - DeltaShares S&P EM 100 & Managed Risk ETF DMRE
3/11/2022 - Direxion Daily Russia Bull 2X Shares RUSL
1/27/2022 - Legg Mason Global Infrastructure ETF INFR
1/14/2022 - Direxion Daily Latin America Bull 2X Shares LBJ
Check out our emerging market ETF lists, ADR lists (updated) and closed-end fund (updated) lists (also see our site map + list update status as some ETF lists are still being updated as of Summer 2022).
I have changed the front page of www.emergingmarketskeptic.com to mainly consist of links to other emerging market newspapers, investment firms, newsletters, blogs, podcasts and other helpful emerging market investing resources. The top menu includes links to other resources as well as a link to a general EM investing tips / advice feed e.g. links to specific and useful articles for EM investors.
Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.
Emerging Market Links + The Week Ahead (August 14, 2023) was also published on our website under the Newsletter category.