Emerging Market Links + The Week Ahead (November 11, 2024)
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Emerging Market Links + The Week Ahead (November 11, 2024)
Legacy tech broke China’s stock market, who bought recklessly ballooning US debt, ending the ESG grift, Mexico's hidden Chinese trade, EM stock picks and the week ahead for emerging markets.
US elections are over and while the US stock market has continued to outperform, investors need to realize the real underlying US economy is increasingly in bad shape and still plagued by inflation (driven by reckless government spending and ballooning debt) - something I guarantee the mainstream media will start to notice by January 20th (if not sooner…).
Finally, there is the issue of tariffs. FT has reported how Mexico is grappling with its hidden Chinese trade problem (🗃️) as “patchy data will only fuel US concerns over its southern neighbour being used as a trade backdoor” (I will definitely be placing some orders on Temu in the coming weeks or months for my parents’ yard, etc. and on their behalf…).
US election impacts, China (not software) is eating the world, “infamous” Greek/Marshall Islands shipping sector, Vietnam masters East Asia blueprint, what makes India exciting for investors, etc.
BYD Company (SHE: 002594 / HKG: 1211 / SGX: HYDD / OTCMKTS: BYDDY / BYDDF) reported C3Q24 top line, non-IFRS operating income and IFRS net income 2.7%, (28%) and (12%) vs. our estimates.
Our ASP tracker showed promotional activities abated industry wide in October, boding well for profitability in C4Q24.
The announcement of the changes to the Hang Seng indices is on 22 November, the capping will use the close on 3 December and implemented at the close 6 December.
Meituan (HKG: 3690 / 83690 / FRA: 9MD / OTCMKTS: MPNGF / MPNGY)'s outperformance over the last couple of months will result in capping of the stock weight in all major indices and passives will sell stock.
We estimate passive trackers will need to sell 35m shares (US$866m; 0.64x ADV) of Meituan (3690 HK) and that number will change over the next 3 weeks depending on performance.
The online grocer reported its third consecutive quarterly profit in the three months to September, and now boasts profit margins similar to Walmart and Kroger
Dingdong (NYSE: DDL)’s revenue rose 27% in the third quarter, while it reported its third consecutive quarterly profit
The online grocer has tweaked its business formula to focus on more affluent markets, especially in the Yangtze River Delta area where it is based
The car trader’s export-oriented AutoCango.com site is rapidly building up traffic, logging 370,000 page views since its launch in March
Cango (NYSE: CANG) is aggressively building up a customer base and support services to export Chinese cars to the rest of the world, with 60,000 registered users for its AutoCango.com site
The car trader’s 3.8 billion yuan in cash and short-term investments is one of its most important assets as it looks to build up its new global and domestic businesses
Luckin Coffee (OTCMKTS: LKNCY) reported another quarter of strong growth and is now China’s leading coffee chain by a wide margin with operating margins outperforming even premium rival Starbucks Corp (NASDAQ: SBUX).
Luckin’s disruptive model—centered on affordability, convenience, and accessibility—and the competition that followed has fueled a 2.5X rise in China’s per capita coffee consumption over the past five years.
Luckin Coffee's strong growth, high operating margins, dominant market share contrasts with Starbucks, which is now adapting to changing customer preference for convenience and digital experiences.
YUM China (NYSE: YUMC) reported a 33% YoY EPS growth on the back of 5% revenue growth for 3Q2024, showcasing robust shareholder value creation despite a challenging operating environment.
YumChina's 3Q results: New store additions and Innovative products continue to fire revenue growth despite challenging business environment; Operating margins improvement helped profit growth.
The company has plans to further step up the Capital returns program - a big driver in enhancing shareholder returns.
The pet product maker’s shares are up more than tenfold since February, even as it reported its revenue fell 15.6% in its latest fiscal year through June
Dogness International Corp (NASDAQ: DOGZ)’ revenue fell to $14.8 million in its fiscal year through June, as it reported a second consecutive annual loss
The pet product maker’s stock has soared since February, including a more than sevenfold gain since it raised $5 million through a private placement in May
The polysilicon maker said it lost nearly 3 billion yuan in the first three quarters of the year, but hopes to rebound as it starts to put more of its idle capacity back to use
GCL Technology Holdings Ltd (HKG: 3800 / FRA: 3GY / OTCMKTS: GCPEF) said it lost nearly 1.5 billion yuan in the third quarter, suffering as its material costs remained below prices for its finished polysilicon products
The company is partnering with the UAE’s sovereign fund as it eyes the Middle East as a potential contributor to rebounding from its current slump
Since ORG Technology Co Ltd (SHE: 002701) needs to pay a high price, it certainly hopes that the effect of the acquisition is 1+1>2, otherwise it is equivalent to failure considering the future debt payment.
We’re unsure if the situation on Zhang Wei's side will change. If afterwards integration falls short of expectations, ORG may “deliberately slow down the progress”, which is a risk point.
Considering the complexity of this deal, we recommend investors do more comprehensive and deeper thinking. Due to risks behind, we certainly hope to obtain higher returns (at least 20% annualized).
The property company is battling to get its house in order after posting big losses, hoping to capitalize on a tentative market revival
Vanke (SHE: 000002 / HKG: 2202 / FRA: 18V / OTCMKTS: CHVKF / CHVKY) swung from profit to a deep loss of 17.94 billion yuan in the first three quarters of the year, despite efforts to steamline its business and maximize income
The company reported stronger demand during the National Day holiday period in October, logging sales subscriptions worth 10.22 billion yuan
The biopharmaceutical company had planned to sell a 20% stake in its international unit to the group’s founder, but the cheap price sparked a crisis of market confidence
Innovent Biologics (HKG: 1801 / FRA: 6IB / OTCMKTS: IVBXF / IVBIY) said its intention was to demonstrate executives’ commitment to the overseas business, but the deal was dropped after a backlash over pricing
The biopharma group has covered losses amounting to 600 million yuan at the Fortvita unit over the past two years, but the business was valued at just 570 million yuan for the proposed transaction
Potential 4.6x P/E with net cash representing 72% of the market cap.
I bought shares in Hong Kong restaurant operatorFairwood Holdings Ltd (HKG: 0052 / OTCMKTS: FRWDF) in late December 2022. At the time, the city’s COVID-19 restrictions had just been removed, and the Hong Kong-China border was about to open, too.
But since that point, Fairwood’s share price has continued lower:
This begs the question: what the hell happened?
The answer is that Hong Kong’s restaurant industry has faced incredible challenges throughout COVID-19 and even until today.
The brewer’s Asia unit is being tripped up by slowing business in its largest regional market where a slowing economy is leading to growing consumer caution
Macau casino operator Galaxy Entertainment (HKG: 0027 / OTCMKTS: GXYEF) reported third quarter net revenue that was up 10.5 percent year-on-year.
Such net revenue was just under HKD10.67 billion (US$1.37 billion), the group said in a Thursday statement to the Hong Kong Stock Exchange, regarding unaudited highlights of its business for the three months to September 30.
Casino operator Galaxy Entertainment (HKG: 0027 / OTCMKTS: GXYEF) “lost circa 40 basis points” quarter-on-quarter to 18.7 percent, in terms of share of gross gaming revenue (GGR) in the Macau market, suggested a Thursday note from Seaport Research Partners.
“While Galaxy [Entertainment] experienced a poor September, reflected in the third-quarter results, fourth quarter was off to a very strong start with Galaxy [Entertainment] achieving over 20 percent market share, although we expect this to drop in November and December,” wrote analyst Vitaly Umansky in the memo.
Galaxy Entertainment reported on Thursday third-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of HKD2.94 billion (US$378.3 million), up 6.2 percent from the prior-year period, but down 7.4 percent sequentially.
Lui Che Woo (pictured in a file photo), the founder and chairman of Macau casino operator Galaxy Entertainment (HKG: 0027 / OTCMKTS: GXYEF) , died on November 7, said the company in a Monday statement. The announcement said Mr Lui “passed away peacefully at the age of 95 on 7 November 2024”.
Mr Lui, who also chaired Hong Kong-listed property developer K Wah International Holdings Ltd (HKG: 0173 / FRA: KW2 / OTCMKTS: KWHAF), ranked 7th in this year’s “Hong Kong’s 50 Richest People” list, published by Forbes magazine.
Global casino resort developer and operator Melco Resorts & Entertainment Ltd (NASDAQ: MLCO)swung back to a profit of nearly US$27.3 million in the three months to September 30, compared to a US$16.3-million loss in the third quarter 2023.
That was on total operating revenues that grew by 15.5 percent to nearly US$1.18 billion, compared to the prior-year period. The company gave the information in a Tuesday announcement via the United States, where the group lists its American depository shares.
The firm’s casino revenues rose 16.3 percent year-on-year, to just under US$944.4 million.
Melco Resorts & Entertainment Ltd (NASDAQ: MLCO)’s Macau property earnings before interest, taxation, depreciation and amortisation (EBITDA) could rise 6.6 percent sequentially in the fourth quarter, on a hold-adjusted basis, to US$251 million, says JP Morgan Securities LLC.
That would be helped by the institution’s forecast that Melco Resorts’ Macau property-level net revenues will grow 1.2 percent quarter-on-quarter, to reach just over US$1.00 billion in the three months to December 31.
CBRE Capital Advisors Inc thinks Macau fourth-quarter property net revenues for the group will be almost flat sequentially, at US$997.3 million, as per a Tuesday memo from analysts John DeCree and Max Marsh.
The outlook of Macau casino operator SJM Holdings (HKG: 0880 / FRA: 3MG1 / KRX: 025530 / OTCMKTS: SJMHF / SJMHY)’s current corporate family credit rating, and the rating on its backed senior unsecured bonds, remains ‘stable’, says Moody’s Investors Service Inc. It adds that the gaming group’s present elevated level of financial leverage is mitigated by the growing earnings from SJM Holdings’ Cotai property, Grand Lisboa Palace, and by better cash flow.
That is according to the institution’s latest update issued on Tuesday.
Coupang, Inc. (NYSE: CPNG)—Korea's #1 ecommerce platform—keeps growing, WOW members still increasing spend, developing offerings progressing
Coupang reported 3Q24 earnings and the stock fell -12% after the release.
Lastly, they dropped a press release noting that Bom Kim set up a 10b5-1 plan to sell 15mn shares (and he will separately donate 2mn). They note it is in part to satisfy tax obligations. After these sales he will still own just under ~9% of the company or ~158mn shares.
On 4 November, [security solutions software]Wins Co (KOSDAQ: 136540) announced a tender offer of 1,364,416 shares (10% of outstanding shares) at a tender offer price of 16,000 won per share.
The tender offer period will last from 5 to 24 November. Once the tender offer buyback is completed, the company also plans to cancel the shares.
The company is deeply undervalued with cheap valuation multiples. It has P/E of 7.2x and EV/EBITDA of 1.1x based on 2023 financials.
KT&G Corp (KRX: 033780) announced a new shareholder return policy worth a total of 3.7 trillion won, including 2.4 trillion won in dividends and 1.3 trillion won in treasury shares buybacks by 2027.
On an annual basis, the total shareholder returns from 2025 to 2027 would be about 1.2 trillion won, which represents about 8.8% of the company's current market cap.
This is better than the one the company provided last year. KT&G also reported solid results in 3Q 2024 driven by excellent results in core tobacco business.
Three major reasons why Samsung Electronics (KRX: 005930 / LON: BC94 / FRA: SSUN / OTCMKTS: SSNLF)is our 2025 high conviction pick include attractive valuations, reduced concerns about inheritance tax overhang, and higher likely total shareholder returns.
Given that 2025 will be the last year of major inheritance tax payment for the Lee family, this reduced overhang could act as a positive sentiment on Samsung Electronics.
Pressures on Samsung to announce material improvement to shareholder returns are coming not just from existing shareholders but also from the Korean government due to Korea Corporate Value Up program.
Three major investment highlights of Samsung Electronics (KRX: 005930 / LON: BC94 / FRA: SSUN / OTCMKTS: SSNLF) include attractive valuations, reduced concerns about inheritance tax overhang, and higher likely total shareholder returns.
Given that 2025 will be the last year of major inheritance tax payment for the Lee family, this reduced overhang could act as a positive sentiment on Samsung Electronics.
Pressures on Samsung to announce material improvement to shareholder returns are coming not just from existing shareholders but also from the Korean government due to Korea Corporate Value Up program.
The tender offer involves 3,561,954 shares of Hyundai Ezwel, at the tender offer price of 7,000 won per share (15.7% higher than the closing price on 9 November).
On Monday (11 November), Hyundai Ezwel's share price could reach about 1-3% below the tender offer price (about 6,800 won to 6,930 won) in the first few minutes of trading.
Hyundai Mobis (KRX: 012330) is a strong turnaround story and it has sharply outperformed KOSPI and other major Hyundai Motor Group stocks in the past three months.
In this insight, we discuss three major reasons why are remain positive on Hyundai Mobis.
The combined value of Hyundai Mobis' 21.9% stake in Hyundai Motor and stakes in other companies is worth 16.7 trillion won, which represents 73% of Hyundai Mobis' current market cap.
On 7 November, it was reported that E&I Holdings (company's largest shareholder) plans to conduct a tender offer of 18,937,913 common shares of Koentec, representing 37.88% of its outstanding shares.
E&I Holdings plans to purchase all the shares of [industrial waste treatment company]Koentec (KOSDAQ: 029960) and delist the company.
There have been three small cap tender offers in Korea in the past week which suggests more smaller Korean companies trying to unlock higher value through the tender offer strategy.
Gradiant Corp(KOSDAQ: 035080) announced a tender offer, buyback, and cancellation of 3,571,428 shares (25% of outstanding shares) at 14,000 won per share (16% higher than current price).
The total amount of this deal is worth 50 billion won. The tender offer period is from 11 November to 5 December.
In our view, this tender offer, buyback, and cancellation of nearly 25% of outstanding shares is a major positive catalyst that should boost its share price.
In this insight, we discuss the alpha generation through companies that announced share buybacks in the Korean stock market in September and October 2024.
On average, the share buyback announcements by 25 companies represented 1.9% of their outstanding shares.
MNC Solution is getting ready to complete its IPO in KOSPI in December 2024. MNC Solution specializes in motion control components for the defense industry.
Total offering amount ranges from 240 billion won to 280 billion won. At the high end of the IPO price range, the company's expected market cap is 882 billion won.
The company generated operating profit of 16.9 billion won (up 100.9% YoY). It has one of the strongest sales and profit growth among recent IPOs in Korea.
Third-quarter net income at Paradise Co Ltd (KOSDAQ: 034230), an operator of foreigner-only casinos in South Korea, dipped 55 percent year-on-year to KRW19.66 billion (US$14.20 million), while group-wide casino sales registered a 27.1-percent year-on-year decline.
That is according to a Friday filing to the Korea Exchange, and the company’s supplementary materials on its performance for the three months to September 30.
Metrodata Electronics (IDX: MTDL) saw a steady 13% increase in profits in 3Q2024 but this masks a sharp sequential rebound in 3Q2024 from both ICT and Solutions & Consulting.
The key driver for the ICT segment came from the telco segment, whilst the S&C segment was driven by financial services and the corporate segment, with 55% recurrent segment revenues.
Outlook for 4Q2024 looks positive for S&C with momentum picking up with the new government has taken office. MTDL is increasing exposure to AI now at 7% of S&C sales.
Astra International (IDX: ASII / FRA: ASJA / OTCMKTS: PTAIF) booked a solid set of 9M2024 results, despite softness in the auto market, where it gained market share, facing off new competitors with its hybrid offerings.
The decline in net income from autos was offset by all other segments, with financing being the largest offset but heavy equipment also saw strong performance from contracting and gold.
Astra International sees a more positive outlook for autos, both 2W and 4W in 2025, despite new EV entrants and will continue to invest in growth areas. High conviction Buy.
RFM Corporation (PSE: RFM) is one of the major players in the food and beverage industry in the Philippines, with well-known brands in pasta, flour, milk, ice cream, and bread.
From 2019 to 2023, the company's dividend yield averaged 6.9% and its dividend payout averaged 72.7%.
A major reason why the company's profits and cash flow is consistent is due to its loyal customer base that repeatedly purchase the company's products.
Genting Singapore (SGX: G13 / FRA: 36T / OTCMKTS: GIGNF / GIGNY), the operator of the Resorts World Sentosa casino resort (pictured), reported a net profit after taxation of SGD79.4 million (US$59.8 million) for the three months to September 30, down 63.3 percent from a year earlier. Such profit fell by 27.5 percent relative to the second-quarter result, said the casino operator in a Thursday filing.
Earlier this month, Genting Singapore said Andrew MacDonald had “stepped down” from his position as chief casino officer at Resorts World Sentosa Pte Ltd, the entity that runs the casino resort complex.
On Thursday the company also gave some updates on its new non-gaming elements, including its expansion project, called “RWS 2.0”.
Samuel Yin Shao Yang, an analyst at Maybank Investment Bank Bhd, said in a Friday memo: “Earnings missed our expectations on a combination of lower-than-expected VIP volume and mass-market gross gaming revenue, coupled with higher-than-expected bad debts.”
He further noted: “Chinese account for the majority of VIPs but gambling debts are not enforceable in China.”
Banking group JP Morgan had said in a Thursday memo: “We think a meaningful step down in VIP” during the third quarter, “for both operators, came primarily from China VIPs, reflecting the increased scrutiny on cross-border gambling – e.g., warning from the China embassy in March 2024 – and deteriorating high-end consumer sentiment.”
🌏 Grab Holdings Limited (NASDAQ: GRAB) - Superapp inSE Asia for mobility, deliveries, & digital financial services to millions of Southeast Asians. 🇼🏷️
Shopee[Sea Limited (NYSE: SE)] has recently released its 11.11 promotion videos. Unlike a few years ago, Shopee did not bring in big international names such as Jackie Chan and Cristiano Ronaldo this time.
This year, Shopee released different videos for different markets it operates in, catering to many of the local preferences and inviting locally-famous celebrities. The key messages, including “free shipping”, “lowest prices”, and “free returns”, were amplified.
Moreover, Shopee had different start time and duration for the 11.11 promotion in different markets, perhaps based on the different consumption habits across markets.
Now, let’s take a look at the differences in Shopee’s 11.11 ads across markets
Despite these headwinds, several REITs have employed measures to help mitigate the negative impact on their distributions.
These include asset enhancement initiatives (AEIs) and capital recycling.
AEIs help to renovate and refurbish an asset to make it more attractive to tenants while capital recycling frees up capital that can be redeployed into higher-quality properties.
Here are four Singapore REITs that used these methods to ward off macroeconomic troubles.
Mapletree Logistics Trust (SGX: M44U / OTCMKTS: MAPGF), or MLT, is an industrial REIT with a portfolio of 186 properties across eight countries.
Frasers Centrepoint Trust (SGX: J69U / OTCMKTS: FRZCF), or FCT, is a retail REIT with a portfolio of nine retail suburban malls and an office building.
These three stocks have seen profits rise year on year and could be an attractive addition to your investment portfolio.
Here are three Singapore companies that recently reported higher year-on-year profits and this trio of stocks could be perfect for your buy watchlist.
Sheng Siong Group (SGX: OV8 / OTCMKTS: SHSGF)is one of the largest supermarket chains in Singapore and operates a chain of 74 outlets across the island.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD / OTCMKTS: MCRNF), or MMH, manufactures high-precision tools and parts for the wafer fabrication and assembly processes of the semiconductor industry.
Japfa Ltd (SGX: UD2 / FRA: 1O4) is a vertically-integrated agri-food company that produces feed for poultry, swine, and aquaculture.
Deepak Fertilisers & Petro (NSE: DEEPAKFERT / BOM: 500645) reported impressive financial results for Q2 FY25 with a 13% YoY growth in revenue, a 73% increase in EBITDA, and margin expansion to 18%.
Company is operating at ~98% Capacity utilisation and also planning capex of 4500 Crores.
Management emphasised the company's ongoing transition from commodity to specialty products across business segments. This strategic shift aims to enhance margins, cater to evolving customer needs, and strengthen market leadership.
Despite headwinds in the textile sector, GHCL Textiles Ltd (NSE: GHCLTEXTIL / BOM: 543918) recorded a 17.5% YoY revenue growth and margin 9.5% in Q2FY25.
Adding 25,000 spindles to augment production capacity and broaden the product basket, strategically targeting both domestic and international markets.
Targeting Rs. 2200-2300 Cr of topline and 18-20% of EBITDA Margin in 3-4 years.
[Infrastructure Development company] Spml Infra Ltd (NSE: SPMLINFRA / BOM: 500402)successfully restructuring its debt with NARCL and paid off ~30% of its debt from arbitral award as well as cash.
Promoters infused funds in last 3 years to strengthen the Balance Sheet to pay off the debt as well as bidding for upcoming projects.
Current order book of 2000Cr will be completed in 2-3 years, planning to bid for more than 10,000Cr worth of order.
Swiggy (1255298D IN) IPO is an issue of INR 113.3 bn, consisting of fresh issue of INR 45 bn and OFS of 175 mn shares ~INR 68.3 bn.
Swiggy has ramped up fast in the last three years, with a sharp reduction in losses. When seen against Zomato Limited(NSE: ZOMATO / BSE: ZOMATO), Swiggy needs to be more aggressive, especially in Quick Commerce.
As far as forensic takeaways are concerned, the company witnesses high employee attritions, disclosure & presentation jiggles, potential capital allocation woes, experienced cash embezzlements, etc.
Swiggy (1255298D IN) 's USD 1.35 Bn IPO opens for subscription today, November 6th, and runs until Friday, November 8th.
As a popular food and grocery delivery platform in India, Swiggy has a strong brand, innovative approach, solid moat and is positioned well to leverage the sector’s growth potential.
Despite the IPO’s valuation discount vis-a-vis Zomato Limited(NSE: ZOMATO / BSE: ZOMATO), the elevated overall valuations and unfavourable risk/reward profile may not make it an attractive investment option for investors with a low-to-moderate risk appetite.
🌐 Gold Fields (NYSE: GFI) - One of the world's largest gold mining firms. 9 operating mines in Australia, Peru, South Africa & Ghana (including the Asanko JV) & 2 projects in Canada & Chile. 🇼🏷️
Tenaris S.A. (NYSE: TS) is a leading European manufacturer of pipes and related services for the world's energy industry and certain other industrial applications.
Tenaris is a leading global manufacturer of seamless steel pipes for the oil and gas industry, playing a crucial role in the energy supply chain. Their high-quality products help companies boost production efficiency, making their strong market position impressive in such a specialized and regulated field.
Tenaris has returned about $459 million to shareholders through dividends and spent around $985 million on a share buyback program. With a dividend yield of approximately 4.19%, it's an attractive option, especially given its low debt and strong cash reserves.
I have no issue with MELI prioritizing investments in user growth, infrastructure, and service diversification over immediate profitability. In fact, I welcome it. While Wall Street analysts might focus on short-term metrics , MELI’s management (which does not issue quarterly guidance) has emphasised long-term positioning over the past 25 years, aiming for sustained success in the Latin American e-commerce and fintech markets. It’s worth remembering that only 15% of commerce is currently conducted online in Latin America.
🌐 Corporación América Airports (NYSE: CAAP) - Leading private airport operator in the world. Operating 53 airports in 6 countries (Argentina, Brazil, Uruguay, Ecuador, Armenia & Italy). 🏷️
🇲🇽 🇵🇷 🇨🇴 Grupo Aeroportuario del Sureste (ASUR) (NYSE: ASR) - operates 9 airports in the southeast of Mexico + the main airport in San Juan, Puerto Rico & six airports in Colombia. 🇼🏷️
China is making it easier for foreign investors to directly acquire long-term stakes in Chinese mainland-listed companies, in the nation’s latest bid to revive sluggish foreign investment.
An update to the regulations governing strategic investments was released Friday by six agencies, including the Ministry of Commerce and the securities regulator.
The update lowered the requirements for investments, aiming to guide more high-quality foreign capital to invest in listed companies, according to a Q&A accompanying the updated regulations, which are effective from Dec. 2.
The share trading frenzy that gripped China at the end of September and early October exposed some uncomfortable truths for the Shanghai Stock Exchange (SSE) and the country’s securities firms — technical shortcomings in antiquated systems that are in desperate need of an overhaul.
Glitches and delays in processing orders on Sept. 27 through the SSE’s trading systems and crashes in brokerages’ trading software left many investors angry and complaining of losses. The surge in activity was triggered by a Politburo meeting the previous day pledging more monetary and fiscal stimulus to bolster flagging economic growth. Markets were already experiencing an explosion of trading in the wake of a briefing by the central bank and other financial regulators on Sept. 24, where they announced a package of support measures to bolster the stock and property markets.
There are three certainties in life: death, taxes and China stimulus disappointing.
For the latest example look no further than the plan revealed this morning by the National People’s Congress Standing Committee, which approved a 10 trillion yuan ($1.4 trillion) debt swap package for local authorities to refinance “hidden” local debt onto public balance sheets. Funds for that program - telegraphed last month but without a price tag or timeframe - will be provided through 2028, they said, after the move was authorized by the nation’s top lawmaking body.
The details of the 10 trillion (but really 12 trillion program) are as follows:
A one-off increase in the 6tn yuan local government debt issuance, over 3 years (2024-26);
4tn yuan special LGB issuance under the annual quota, over 5 years (2024-29); and
Additionally, the government will guarantee to pay back 2tn yuan implicit debt related to shantytown redevelopment due in 2029 and after.
But local authorities have struggled to service those liabilities in recent years as the property crisis wiped out land sales they relied on for revenue. Officials at the briefing said the outstanding value of so-called hidden debt was 14.3 trillion yuan as of the end of 2023, far short of the International Monetary Fund’s estimate of at about 60 trillion yuan.
China unveiled a 10 trillion yuan ($1.4 trillion) package Friday for its local governments to deal with their immense hidden debt.
The package shows how the central government is getting more serious about defusing the risks that the off-the-books debt poses to the financial system.
The standing committee of the National People’s Congress (NPC), China’s top legislature, approved an additional quota of 6 trillion yuan for local governments to bring their hidden debt onto the books, Xu Hongcai, a deputy director of the NPC’s financial and economic affairs committee, announced at a press briefing that day.
A Lesson in Irrationality, Rational Decision-Making, and Behavioral Biases in Investing
China’s NPC Standing Committee meeting will conclude tomorrow, with announcements expected soon on the size of the economic stimulus. This generates a wave of noise and speculation. In light of this, I’ve chosen not to follow the crowd or add to the noise, but instead to focus on misconceptions and behavioral biases.
We've known the ESG grift has been coming to a screeching halt for years now, with major investment banks and companies dropping their initiatives while the GOP goes on a rampage to try root out the faux-virtue signaling.
But now with President Trump once again taking the White House, one investment bank is advising ESG fund managers to "keep their lawyers very close", as the full scale death of ESG may very well be on the door step, according to Yahoo Finance.
Yahoo reports that Trump's victory has already hit green sector stocks, with wind-energy companies among the hardest hit. Beyond potential bans and obstructive policies, the ESG sector faces rising legal risks.
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):
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):
We are a blank check company based in Hong Kong. (Incorporated in the British Virgin Islands)
We intend to search for target companies in the environmental, sustainability and governance (ESG) and material technology sectors. We plan to acquire one or more companies with a total enterprise value of between $100 million and $600 million.
Claudius Tsang, our CEO, CFO and chairman of the board of directors, has over 20 years of experience in capital markets, with a strong track record of success in private equity, M&A transactions and PIPE investments, with a focus on Greater China and other emerging markets. Mr. Tsang is a former partner in Franklin Templeton, where he was the co-head of private equity of North Asia.
(Note: A SPAC III Acquisition Corp. priced its SPAC IPO on Thursday night, Nov. 7, 2024, in sync with the terms in the prospectus – 5.5 million units at $10.00 each – to raise $55.0 million. Each unit consists of one share of common stock and one right to receive one-tenth (1/10) of a share of common stock upon consummation of the initial business combination.)
(Background: A SPAC III Acquisition Corp. filed its F-1 on Oct. 1, 2024, and disclosed the terms for its SPAC IPO: The company is offering 5.5 million units at $10.00 each to raise $55.0 million. Under the original terms – which were later revised – each unit consisted of one share of common stock and one right to receive one-fourth (1/4) of a share of common stock upon consummation of the initial business combination.)
We are a newly organized blank check company. (Incorporated in the Cayman Islands)
Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region. Because of our significant ties to China, we may pursue opportunities in China (including Hong Kong and Macau).
(Note: Horizon Space Acquisition II Corp. unveiled the terms for its SPAC IPO: 6.0 million units at $10.00 each to raise $60.0 million. Each unit consists of one ordinary share and one right to receive one-tenth (1/10) of one ordinary share. Each 10 rights entitle the holder thereof to receive one ordinary share upon the consummation of our business combination. We will not issue fractional shares upon the conversion of the rights. As a result, you must hold rights in multiples of ten in order to receive shares for all of your rights upon the consummation of a business combination.).
BrilliA Inc.BRIA A.G.P. (Alliance Global Partners), 2.5M Shares, $4.00-4.00, $10.0 mil, 11/18/2024 Week of
(Incorporated in the Cayman Islands)
BrilliA was incorporated on July 14, 2023, in the Cayman Islands. BrilliA is the holding company of (i) Bra Pro, which was incorporated in the British Virgin Islands on December 14, 2011, and, (ii) through its subsidiary BrilliA Singapore, MAP, which was incorporated in Indonesia on December 8, 2015. As of the reorganization on April 30, 2024, both Bra Pro and MAP are direct and indirect subsidiaries of BrilliA.
Bra Pro operates primarily as a sales and marketing entity, focusing on maintaining customers relationships and managing orders for lingerie and apparel from these customers. Based on the preferences of these customers, Bra Pro then directly engages with third-party manufacturers, sourcing materials, and establishing supply contracts with them. Bra Pro’s revenue stream comes from payments made by these customers. Bra Pro is a premier supplier of ladies’ intimate apparel worldwide. Some of the key customers of Bra Pro include Fruit of the Loom Inc, Hanes Brands Inc, Jockey International, Hennes & Mauritz, Canadelle and Li & Fung. MAP serves as Bra Pro’s fulfilment partner, overseeing the execution of Bra Pro’s customers’ orders. MAP’s services entail leading the design and prototyping phases of the lingerie and apparel design based on Bra Pro’s customer’s preferences, and ensuring the quality of products manufactured by third-party manufacturers. Bra Pro compensates MAP for these fulfillment services.”
Over the years, Bra Pro together with MAP, has evolved from operating as an Original Design Manufacturer (“ODM”) into a comprehensive cross border solution provider for ladies’ intimate products, including sourcing the lingerie and apparel raw materials, design, sampling, fitting, production, and logistics management for Bra Pro’s customers. This shared expertise between Bra Pro and MAP enabled their continued success in providing ladies’ intimates to customers.
After this offering, we plan to diversify our Group’s business through the licensed brand, DIANA. We believe that developing the DIANA line of lingerie and other apparel products could provide us with a good opportunity to obtain higher margins from our operations since we will be directly involved in selling the products to customers. Further, it allows us to have more control over the development and design of our products which can be used to reinforce our existing customers’ belief in our design capabilities. Our plans include offering high-quality, fashionable lingerie to customers and expanding our product range to include sleepwear, baby wear, active wear, and period panties. Additionally, we intend to establish boutique retail stores in Indonesia, Singapore, other ASEAN countries and Europe under the DIANA brand, enhancing our direct customer engagement and brand control. Through DIANA, we aim to attain recognition as a lingerie company and retail brand known for exceptional craftsmanship, innovative designs, inclusivity, and ethical practices. Our vision revolves around providing innovative, affordable, high-quality lingerie products that elevate customer satisfaction while fostering opportunities for employee growth.
Note: Net income and revenue are in U.S. dollars for the fiscal year that ended March 31, 2024.
(Note: BrilliA Inc. filed its F-1 on Sept. 12, 2024, and disclosed the terms for its IPO: The company is offering 2.5 million shares at a price range of $4.00 to $5.00 to raise $11.25 million, if priced at the $4.50 mid-point of its range. In the F-1 filing, however, BrilliA says the assumed IPO price is $4.00 – the low end of its range. If the IPO is priced at $4.00, the proceeds will be $10.0 million. The IPO Profile on IPOScoop is using the company’s assumed IPO price of $4.00. Background: BrilliA submitted confidential IPO documents to the SEC on March 7, 2024.)
We believe we are a leading sports education provider in Singapore based on the following: (i) in 2023, we were the largest service provider of the SwimSafer Program based on the number of assessment bookings, accounting for approximately 30% of market share; and (ii) we are one of the few swim education providers in Singapore that provides both services to students under training programs funded by the Singapore Government and provision of customized private swimming training services.
We offer general swimming lessons to children and adults, with ladies-only swimming lessons available, as well as aquatic sports classes such as water polo, competitive swimming and lifesaving. We believe in imparting the correct swim stroke techniques and skills to all of our students so that they can learn to swim within the shortest time span in a variety of strokes, ranging from freestyle, breaststroke, butterfly, survival backstroke and side kick. We are one of the largest providers of swimming lessons to children enrolled in public schools under the MOE (Ministry of Education) in Singapore through the SwimSafer program. We have been offering private swimming lessons to children, youth and adults under our brand “Fitness Champs” since 2012. We aim to make swimming an enjoyable and affordable sport for children and adults, for water safety and as a way of keeping fit and healthy.
Note: Net income and revenue are for the 12 months that ended June 30, 2024.
(Note: Fitness Champs Holdings Limited filed its F-1 on Sept. 9, 2024, and disclosed the terms for its IPO – 2.0 million shares at a price range of $4.00 to $5.00 to raise $9.0 million.)
Ming Shing Group HoldingsMSW Alexander Capital/ Revere Securities, 1.5M Shares, $5.50-7.50, $9.8 mil, 11/18/2024 Week of
Our mission is to become the leading wet trades works services provider in Hong Kong. We strive to provide quality services that comply with our customers’ quality standards, requirements, and specifications. (Incorporated in the Cayman Islands)
We are an exempted company incorporated under the laws of the Cayman Islands on August 2, 2022. As a holding company with no material operations of our own, we conduct our business through our wholly owned Hong Kong Operating Subsidiaries, MS (HK) Engineering Limited, and MS Engineering Co. Limited.
We mainly engage in wet trades works, such as plastering works, tile laying works, brick laying works, floor screeding works and marble works. We are an established wet trade works subcontractor with, according to the Frost & Sullivan report, a market share of approximately 0.4% in 2021.
MS (HK) Engineering Limited is a registered subcontractor and a registered specialist trade contractor under the Registered Specialist Trade Contractors Scheme of the Construction Industry Council and undertakes both private and public sector projects, while MS Engineering Co., Limited mainly focuses on private-sector projects.\
Note: Net income and revenue figures are in U.S. dollars for the year that ended March 31, 2024.
(Note: Ming Shing Group Holdings revived its IPO plans by filing a new F-1 on Aug. 28, 2024, in which it disclosed the terms for its IPO: 1.5 million shares at a price range of $5.50 to $7.50 to raise $9.75 million – and disclosed a change in its joint book-runners’ team. Alexander Capital is a new joint book-runner, replacing R.F. Lafferty & Co., to work with Revere Securities. Note: Ming Shing Group’s IPO terms – stated in the Aug. 28, 2024, SEC filing – are the same terms that were in the F-1/A filing on May 9, 2024.)
(Note: Ming Shing Group Holdings withdrew its plans for its IPO in a letter to the SEC dated Aug. 27, 2024. Ming Shing Group had filed its F-1 and disclosed the terms for its IPO on June 23, 2023.)
(Note: Ming Shing Group Holdings added R.F. Lafferty & Co. as a joint book-runner, according to an F-1/A filing dated June 24, 2024. R.F. Lafferty & Co. will work with joint book-runner Revere Securities.)
(Note: Ming Shing Group Holdings changed its price range to $5.50 to $7.50 – from $5.00 to $8.00 – and kept the number of shares at 1.5 million to raise $9.75 million, according to an F-1/A filing dated May 9, 2024. Background: Ming Shing Group Holdings updated Its IPO’s terms in an F-1/A filing on April 29, 2024: 1.5 million shares – up from 1.25 million shares previously – and set the price range at $5.00 to $8.00 – to raise $9.75 million.)
(Note: Ming Shing Group Holdings slashed the size of its IPO by 66.7 percent to 1.25 million shares – down from 3.75 million shares – in an F-1/A filing dated March 28, 2024, which did not disclose a price range. Under its earlier F-1/A filings, Ming Shing Group disclosed that its stock would be offered at an assumed IPO price of $4.00. The Hong Kong-based company also disclosed in its March 28, 2024, filing that it has changed its sole book-runner to Revere Securities from Pacific Century Securities. Background: Ming Shing Group Holdings filed an F-1/A dated Sept. 22, 2023, in which it disclosed its proposed IPO stock symbol for its NASDAQ listing: MSW. Ming Shing Group filed its F-1 and disclosed terms for its IPO on June 23, 2023.)
We manufacture skincare products, including anti-aging products and exfoliation products. Our product line covers almost 200 items.
We sell our skincare and beauty products in our own stores and through a network of franchisees throughout China.
Our operating subsidiaries specialize in providing skincare and cosmetic products under our brand name “Park Ha” in China. Our operating subsidiaries develop our proprietary beauty products and offer complimentary after-sales beauty services in our physical stores. Park Ha Jiangsu, in addition to operating our two physical stores, is the research and development center focusing on skincare products development and improvement for sensitive skin. Xinzhan leads the marketing and promotional efforts and is the entity in charge of our franchising business. Park Ha Shanghai is a training center for our franchisee staff. As part of our value-added service for our products, our directly operated and franchise stores offer “light beauty experience,” a quick complimentary after-sales beauty service performed in the stores. Light beauty experience is offered to our customers as an effective way to demonstrate how our products are used in order to deliver the best results.
Note: Net income and revenue are for the 12 months that ended March 31, 2024.
(Note: Park Ha Biological Technology cut the price range of its small IPO to $4.00 to $6.00 – down from $5.00 to $7.00 originally – and kept the number of shares at 1.2 million shares – according to an F-1/A filing dated Oct. 9, 2024. Background: Park Ha Biological Technology filed its F-1 on Aug. 26, 2024, and disclosed the terms for its IPO: The company is offering 1.2 million shares at a price range of $5.00 to $7.00 to raise $7.0 million.)
YSX Tech Co., Ltd.YSXT Kingswood Capital Partners, 1.3M Shares, $4.00-6.00, $6.3 mil, 11/18/2024 Week of
We, through the YSX Operating Companies, provide comprehensive business solutions to enterprise customers, mainly insurance companies and brokerages, in China. (Incorporated in the Cayman Islands)
The YSX Operating Companies possess in-depth knowledge of the Chinese insurance industry accumulated from years of servicing their customers, and specialize in auto insurance aftermarket value-added services, software development and information technology services, as well as other scenario-based customized services, such as customer development services. For fiscal year 2023, the YSX Operating Companies provided the aforementioned services to a total of 52 clients, including 26 insurance company customers and 10 insurance brokerage customers, some of which are well-known established companies in China, such as PICC Property and Casualty Company Limited (“PICC”), China Ping An Property Insurance Co., Ltd (“Ping An”), CPIC (China Pacific Insurance (Group) Co Ltd (“CPIC”), and China United Insurance Group Company Ltd (“CUIG”). Currently, the YSX Operating Companies primarily operate in Xinjiang Province and Guangdong Province in China, where the majority of their customers are located.
Note: Net income and revenue are in U.S. dollars for the fiscal year that ended March 31, 2024.
(Note: YSX Tech Co., Ltd. filed an F-1/A dated Sept. 5, 2024, and disclosed that Kingswood Capital Partners is now the sole book-runner; US Tiger Securities is no longer involved with this IPO.)
(Note: YSX Tech Co., Ltd. filed its F-1 and disclosed the terms for its IPO on June 18, 2024: The company is offering 1.25 million shares at a price range of $4.00 to $6.00 to raise $6.25 million. Background: YSX Tech submitted confidential IPO documents to the SEC on Sept. 15, 2023.)
Consumer electronic devices have a limited life, but some rest idle with meaningful useful life left. We help make every minute of recycled consumer electronic devices’ lives count with our expertise in quickly connecting their demands and supplies, thereby facilitating the circular economy in the consumer electronic devices business and reducing waste.
CORPORATE HISTORY AND STRUCTURE
Creative Global Technology Holdings Limited is a Cayman exempted company formed on January 11, 2023. (Incorporated in the Cayman Islands)
In March 2023, CGT Holdings completed a reorganization of its corporate structure. CGT Holdings owns 100% equity interest in Creative Global Technology (BVI) Limited (“CGT BVI”), a BVI holding company formed on January 12, 2023. On March 9, 2023, CGT BVI became the 100% owner of CGTHK.
CGTHK, the operating entity conducting substantially all of our business operations, was founded under the laws of Hong Kong in 2016. Since its formation, CGTHK has been engaged in the business of sourcing pre-owned consumer electronic devices (mainly smartphones, tablets, and laptops) from suppliers in the U.S., Japan, and some other developed countries, pursuant to the orders placed by wholesalers that will sell these goods in Southeast Asia and other areas. Although CGTHK has been expanding into the retail and leasing of consumer electronic devices business since 2021, the traditional wholesale of pre-owned electronic devices business still accounted for over 90% of CGTHK’s revenue in 2022.
CGT Holdings is not an operating company but is a Cayman Islands holding company with operations conducted by its wholly owned subsidiary, CGTHK, and this structure involves unique risks to investors. Investors in CGT Holdings’ Ordinary Shares are not purchasing equity interests in CGT Holdings’ Hong Kong operating entity but instead are purchasing equity interests in a Cayman Islands holding company.
**Note: Net income and revenue figures are for the 12 months that ended March 31, 2024.
(Note: Creative Global Technology Holdings Limited disclosed that Benjamin Securities is the sole book-runner of its IPO, replacing Alexander Capital, according to an F-1/A filing dated Sept. 11, 2024. The IPO’s terms remained the same: 1.25 million shares at a price range of $4.00 to $5.00 to raise $5.63 million, according to this filing.)
(Note: Creative Global Technology Holdings Limited disclosed that it has reapplied to the NASDAQ to list its stock, in an F-1/A filing dated July 17, 2024, which listed Alexander Capital as the sole book-runner of its IPO. Background: Creative Global Technology Holdings Limited disclosed that it applied to the CBOE BzX Exchange to list its stock in the IPO – a change from NASDAQ – according to an F-1/A filing dated April 8, 2024.)
(Note: Creative Global Technology Holdings Limited reduced its IPO’s size to 1.25 million shares – down from 2.0 million shares – and kept the price range at $4.00 to $5.00 – to raise $5.63 million ($5.625 million) in an F-1/A filing dated March 22, 2024.)
(Note: Creative Global Technology Holdings Limited cut its IPO in half in an F-1/A filing dated Oct. 20, 2023, by slashing the number of ordinary shares to 2.0 million shares – down from 4.0 million shares originally – and kept the price range at $4.00 to $5.00 to raise $$9.0 million. In that Oct. 20, 2023, filing, Creative Global Technology Holdings Limited also changed its sole book-runner to Prime Number Capital, replacing Revere Securities. Background: Creative Global Technology Holdings Limited filed its F-1 on July 19, 2023, and disclosed terms for its IPO: 4.0 million shares at $4.00 to $5.00 to raise $18.0 million.)
Brazil Potash Corp.GRO Cantor/ Bradesco BBI/ Freedom Capital Markets/Roth Capital Partners, 4.3M Shares, $15.00-18.00, $70.1 mil, 11/21/2024 Thursday
We are a pre-revenue mining company focused on potash, a major fertilizer. (Incorporated in Ontario, Canada)
We are a mineral exploration and development (E&D) company with a potash mining project, known as the Autazes Project, located in the state of Amazonas, a state in Brazil. We are a pre-revenue company that has not yet begun any mining operations. We are focused on getting the required permits and environmental licenses to start construction on the mining site. We plan to extract and process potash ore from an underground mine and sell the potash fertilizer within Brazil. We intend to cut the country’s heavy reliance on imported potash.
Our technical operations are based in Autazes, Amazonas, Brazil, and Belo Horizonte, Minas Gerais, Brazil. Our corporate office is in Toronto, Ontario, Canada.
Once our operations commence, our operating activities will be focused on the extraction and processing of potash ore from our underground mine and selling and distributing the processed potash in Brazil.
Note: Net loss and zero revenue are for the 12 months that ended June 30, 2024.
(Note: Brazil Potash Corp. disclosed the terms for its IPO in an F-1/A filing dated Oct. 23, 2024: The company is offering 4.25 million shares at a price range of $15.00 to $18.00 to raise $70.13 million. Background: Brazil Potash Corp. filed its F-1 for its IPO on Aug. 20, 2024, without disclosing terms for its IPO. Background: Brazil Potash Corp. submitted a confidential IPO filing to the SEC in late 2022.)
🏁 Emerging Market ETF Launches
Climate change and ESG are some recent flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:
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Emerging Market Links + The Week Ahead (November 11, 2024) was also published on our website under the Newsletter category.
