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Smartkarma adds new Insight Providers to its roster, expanding the depth and breadth of its coverage
SINGAPORE, 29 May 2024: Smartkarma, the independent investment research network, is pleased to announce significant additions to its roster of Insight Providers.
The following additions further enhance the breadth and depth of global coverage available on Smartkarma, providing subscribers with actionable and data-backed insights, and offering a more comprehensive view of the global economy.
Michael Allen specializes in turnaround situations and short-ideas in the Japanese stock market. He is best known for his innovative and prescient coverage of Japanese retail companies as a sell-side analyst over a span of more than 30 years. Throughout his career, he has held leadership positions at Japan Advisory and Anova Fund, a market-neutral, sector-neutral fund.
More recently, he produced research at Macquarie Japan and Jefferies. Michael holds certificates in corporate governance from both the Board Director Training Institute of Japan and the Wharton School. His comprehensive research focuses on distressed equities in Japan, and his reports are known for their thoroughness, including forensic tests for fraudulent overstatement of assets and understatement of liabilities. Michael’s unique approach combines rigorous market and industry analysis with detailed earnings models and direct access to the analyst.
Douglas Busch is a market technician who has spent over 30 years on Wall Street. He has a diverse background, including roles in market making, proprietary trading, and foreign securities trading. Douglas specializes in independent equity research, consulting, and portfolio reviews across all asset classes in global markets. He was a nationally ranked tennis player.
His expertise lies in leveraging his deep understanding of technical indicators and market trends to offer portfolio managers actionable investment guidance and refine their timing across various asset classes, helping to uncover hidden market opportunities.
Avien Pillay is a multi-skilled investment professional with over 20 years of experience in both developed and emerging markets, particularly in the pharmaceutical sector. Throughout his career, he has held multiple roles, including Vice President of Emerging Markets at AllianceBernstein, where he co-managed a $1.5 billion fund and specialized in pharmaceuticals among other sectors. He also served as Head of Research at Old Mutual Wealth, overseeing both local and global research initiatives, and analyzed key sectors including healthcare at Cadiz Asset Management.
Avien specializes in healthcare research in both emerging and developed markets. His approach combines bottom-up and top-down analysis with a strong bias to qualitative analysis, generating actionable investment ideas.
Garvit holds an MBA in Finance and brings wide-ranging experience from a diverse professional career in consulting and finance-centered roles. As the Founder and CEO of GSBR Research, he has led the company for over 11 years, specializing in independent fundamental analysis on equities in developed markets.
GSBR Research is renowned for delivering excellence in financial modeling, initiation coverage, earnings updates, valuation, sector write-ups, and thematic research, with a proven commitment to scalability, cost-effectiveness, and quality.
Stay in the loop and check out their exclusive insights on Smartkarma.
About Smartkarma
Smartkarma is the independent investment research network that provides differentiated, independent analysis on companies, markets, and industries across the world. Smartkarma’s online platform empowers asset managers and private accredited investors who want to access market-moving, differentiated intelligence; corporates who need to maximise their outreach; and analysts who wish to reach global investors with their written reports and bespoke services. In 2021, Smartkarma received the Knowledge Enterprise Award at the Singapore FinTech Festival Global FinTech Awards. Smartkarma is backed by notable investors such as Sequoia Capital, SGX, Wavemaker Partners, Jungle Ventures, and Enterprise Singapore. Learn more at smartkarma.com
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Nvidia Up Sharply Again – Can This Last?
- Nvidia announced another sharp sales increase to $26 billion in quarterly revenues
- The company’s growth is far greater than hyperscaler CapEx growth, as standard servers yield to AI servers: Bad news for Intel & AMD
- Some of this may stem from an inventory build at the hyperscaler, which may lead to another Boom/Bust cycle similar to 2018 and 2022
2. Taiwan Dual-Listings Monitor: TSMC Spread Trading at New High Range, CHT Spread at Short Levels
- TSMC: +17% Premium; Has Remained Above 15% for Over Nearly Two Weeks
- ASE: +11.8% Premium; We Continue to View 14%+ as Range to Short From
- CHT: +0.6% Premium; Can Consider Shorting the Spread at Current Level
3. AMAT. No Beat, No Raise, No Slump. But Why?
- AMAT Q124 revenues of $6.65 billion, in line with guidance and essentially flat both QoQ and YoY. Current quarter guidance also flat sequentially
- WFE valuations are at all time record highs while revenues remain on life support from China
- If China revenues fall off before non-China returns to growth, the WFE segment could be in for a world of pain.
4. Hamamatsu Photonics (6965 JP): Look Cautiously to the Long Term
- The company has slashed FY Sep-24 guidance after missing 1H sales and profit targets by wide margins. Dividend maintained, 2-for-1 split planned and buyback under consideration.
- Capex has been cut, reflecting lower growth expectations. R&D also. Inventory adjustments will eventually be completed, but Chinese competiton will remain a problem.
- The share price has dropped 30% in the past year and 10.5% since May 8, putting the shares on 27 times EPS guidance. Still not cheap, but getting there.
5. Silicon Wafer Q124 Review, CY24 Outlook & Earthquake Risk
- Q124 silicon wafer area shipments amounted to 2,834 MSI, down 5% QoQ and down 13.2% YoY.
- In revenue terms, the top 4 global manufacturers reported revenues of $2.2 billion, down 10.4% QoQ and down 20.8% YoY.
- Taiwan’s recent earthquake did not impact Globalwafers shipments due to high inventory levels. However, tools were damaged, highlighting the risk of having so much wafer production in earthquake prone countries
6. Earnings Subsystems (MKSI, ICHR, UCTT), Semicap (ONTO, CAMT, AMAT, TOELY), and SiTime
Subsystems did the results you should expect, and MKSI did a questionable (and understandable) convertible offering that tanked shares right after.
All subsystems (except Ichor which sucks) look to be in a much better spot.
The summary is that Subsystems revenue should continue improving into the second half and that 2025 will be a strong year.
7. Vanguard (5347.TT): Planning to Announce the Construction of a 12″ Fab in Singapore in 2024.
- Vanguard should declare to established 12″ Fab in Singapore within 2014.
- Vanguard is likely to announce the establishment of 2 sets of 12″ fabs in the next 6 months.
- China is expanding 28/22nm and above technologies, and we believe it’s more appropriate for Vanguard to compete with others rather than TSMC.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Renesas (6723) – Denso Selldown Starts; Fourth Large Renesas Block in 6mos (Two More To Come)
- Today post-close, Denso Corp (6902 JP) (via BofA) announced a selldown of 78,127,800 shares of Renesas Electronics (6723 JP). This is the latest in a line of block exits.
- There was the 130mm offering in November last year by INCJ. There was 123mm shares in Jan 2024 by NEC and Hitachi. A month later, 50mm shares from Mitsubishi Electric.
- In general, they have been absorbed, but one hasn’t needed to buy in the market. Some have broken price. Here, the pricing range is aggressive.
2. Shift Up IPO Preview
- Shift Up (462870 KS) is getting ready to complete its IPO in KOSPI in June 2024. Established in 2013, Shift Up is one of the leading game developers in Korea.
- The IPO price range is 47,000 won to 60,000 won. The IPO offering amount is 340.8 billion won to 435 billion won.
- According to the bankers’ valuation, the market capitalization range of the company ranges from 2.73 trillion won to 3.4 trillion won. This is the second largest IPO in Korea YTD.
3. MODEC (6296 JP): The Current Playbook
- Since the US$535 million secondary placement announcement, Modec Inc (6269 JP)’s shares are down 15% from the undisturbed price of JPY3,320 per share (14 May).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Modec’s shares have followed the pattern of previous large placements.
- The offering will likely be priced on 22 May. Investors who have participated in previous large Japanese placements tend to secure positive returns.
4. Renesas Block – While Not Particularly Well Flagged, Recent Selldowns in the Stock Have Done Well
- Denso Corp (6902 JP) is looking to raise US$1.39bn from selling a portion of its stake in Renesas Electronics (6723 JP).
- DENSO’s selldown is a small one at just 4.3 days of ADV. While there is an overhang of around 4% of TSO, DENSO will be locked up for 270 days.
- In this note, we will talk about the placement and run the deal through our ECM framework.
5. Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues
- Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we talk about the not-so-positive aspects of the deal.
6. Shift Up IPO Valuation Analysis
- Our base case valuation of Shift Up is target price of 95,510 won, which is 59% higher than the high end of the IPO price range (60,000 won).
- We believe Shift Up deserves higher valuation multiples than its peers mainly due to higher sales growth, much higher operating margins, and higher ROE.
- Since its launch in April of this year, Stellar Blade (PS console game) has ranked first in sales in eight countries, including the United States, United Kingdom, Canada, and Japan.
7. Shift Up IPO – The Positives – All Games Have Done Well
- Shift Up plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we talk about the positive aspects of the deal.
8. Raspberry Pi IPO Preview
- Established in 2012, Raspberry Pi is getting ready to complete its IPO in London soon. Raspberry Pi provides small, single-board computers.
- Raspberry Pi is backed by Sony and ARM Holdings. Nearly 72% of the company’s sales come from commercial customers embedding its products into various consumer devices and other systems.
- The company generated sales of US$265.8 million (up 41.5% YoY) and operating profit of US$37.5 million (up 87% YoY) in 2023.
9. Lalatech Holdings: FCF Growth Accelerated, Margins Improved, Fair Value May Be North of $10B
- Lalatech Holdings, a technology based global logistics company, has updated its application for Hong Kong IPO and disclosed financial results for 2023.
- Lalatech Holdings is aiming to raise up to $1B and the company’s IPO looks imminent in the coming months as cash flow growth accelerated, while margins and profitability improved.
- My fair valuation of Lalatech Holdings is close to $10B and investors should buy into upcoming IPO given the company’s substantial scale, massive network effects and operating efficiency.
10. Go Digit IPO Trading – Low Subscription Rate, Not All Shares Are Locked Up
- Go Digit General Insurance raised around US$315m in its India IPO.
- Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
- We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: 13% One-Way Turnover & US$2.27bn Trade
- Using data from the close on 17 May, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
- There will also be capping and funding flows that will lead to a one-way turnover of 12.6% and a one-way trade of US$1.13bn.
- Shorts have increased on the potential adds and potential deletes and covering will lead to rally in some stocks while providing support in others at rebalance implementation.
2. Carlyle To Take KFC Japan (9873) Private at ¥6,500/Share – Big Win For All, a Model Transaction
- Carlyle has a deal to buy Kfc Holdings Japan (9873 JP). ¥6,500/share is a 78% premium to undisturbed as a professional holder sells in an auction to the highest bidder.
- That’s a great format for achieving a great price. And we got one. This should get done easily.
- Importantly, the Bidco is named Crispy KK. It is 100% owned by Juicy KK. Juicy KK itself is 100% owned by Crispy Holdings L.P. Someone had some fun.
3. MUFG Cross-Shareholding – At Least US$20bn of Cross-Shareholding to Sell, Taking It Slow
- Following up on our earlier cross-shareholding notes, in this note we look at Mitsubishi UFJ Financial (MUFG) (8306 JP)’s cross-shareholding.
- MUFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$19bn.
- In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.
4. L’Occitane (973 HK): Who Owns What, And When
- A fortnight ago, I sought access to L’Occitane (973 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under Chapter 571, s329 of the Securities and Futures Ordinance.
- This is the same register I discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM; and one also used by proxy solicitors.
- The register confirms what has been long rumoured about a certain shareholder activist. It is also informative for what isn’t present.
5. FSS Head’s Aggressive Remarks for Value-Up at NY Event, Incl. Short Selling Resumption Late June
- Lee Bok-hyun hopes for short selling to resume by late June. Given his influence on the Value-up policy, it’s likely to happen.
- Lee expects key tax incentives for the value-up program to be included in the July tax reform bill, showing a market-friendly stance.
- Yesterday’s New York event had a very positive atmosphere with more attendees than expected, showing genuine investor interest, likely ensuring sustained interest in Korea’s Value-up program.
6. July Short Selling Resumption in Korea: Local Market Info & Trading Considerations
- According to market information confirmed so far, the resumption is set for July 1st, and short selling will be restricted to the constituents of KOSPI 200 and KOSDAQ 150.
- The surge in trading volume likely stemmed from the return of long-short positions post-short-selling ban, leading to an overall market volume increase.
- Another critical factor is the buying pressure on value-up stocks resuming in early July. We should aim at the price impacts of intersecting long-short flows and value-up stock purchases.
7. Merger Arb Mondays (20 May) – L’Occitane, China TCM, SciClone, Malaysia Airports, I’rom, Hollysys
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK).
- Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Mimasu Semiconductor Industry (8155 JP), Boral Ltd (BLD AU).
8. EOFlow (294090 KS): Suitably Pumped
- For a company that strives to improve people’s lives, investors in EOFlow (294090 KS) shares have mostly faced a world of pain over the past year.
- After Insulet Corp (PODD US) filed a lawsuit on the 8th August 2023, accusing EOFlow of misappropriating trade secrets, patent infringement, and trademark dilution, shares declined ~88% by year-end.
- Earlier this month, the courts quashed Insulet’s preliminary injunction. EOFlow is up 200%. Insulet is up 3% (?). And Medtronic (MDT US), EOFlow’s prior suitor, is no doubt weighing options.
9. Tax-Loss Selling in Australia 2024 – A Trade Basket [Updated]
- Three weeks after instantiation of Phase 1, the ASX200 vs LiquidBasket is +1.8% if you traded the basket VWAP the next day. vs LessLiquid it is +8.5%.
- Equal weight all names in the two is +3.1%. Trade VWAP over two days it is +0.7%, +7.6%, and +2.7%. So far things are OK.
- Next week one would add another basket, then in the last week of June, one would cover and reverse the trade and hold on for 30-40 trading days or so.
10. Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives
- In late March, AZ-Com Maruwa Holdings (9090 JP) made an unsolicited (“hostile”) bid for Chilled & Frozen Logistics Holdings (9099 JP) at a near 50% premium at ¥3,000/share.
- It traded through, then C&F ran a bid solicitation process, got four bids. Since the day AFTER that announcement, the stock is up 56%. We approach Alps Logistics multiples.
- This deal doesn’t get the split price benefit that HTS and Alps Logistics did. And it is a fundamentally different logistics business. And target management dynamics are different.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Portfolio Watch: Are you paying attention to China?
- The Chinese equity trends have really been eye-catching over the past weeks and despite US efforts to flare-up the trade war via new tariffs, the trend has just continued.
- The new Chinese efforts to prop up the sentiment in the Real Estate space have so far been successful and it seems like an attempt that is a LOT more serious and sizy than what we have seen so far.
- We are no longer talking about trial balloons or minor twists.
2. EM Watch: Have Copper markets been hit by a bus full of tourists or by the Chinese economy?
- Copper markets have been on a tear in recent months and our assessment is that the positive sentiment started when Chinese copper stock data points started supporting the notion that China was “hoarding” Copper concentrate ahead of 1) a devaluation, 2) an overhaul of the electrical grid or 3) a power grab on supply chains for EVs, Solar Panels, Data centers and the likes.
- On top of this, we have seen how US officials have highlighted the option of creating a strategic reserve of Copper Cathode in the US, potentially in response to the stockpiling of refined copper seen in China (chart 1).
- Why is the Chinese copper stock not receding here? That is the question macro-managers and geopolitical pundits are asking themselves daily!
3. Positioning Watch – The real world strikes back
- Hello everyone, and welcome back to our weekly positioning watch.
- Markets have been enjoying the easier financial conditions imposed by a weaker than anticipated inflation print, although yields have found their way back to pre-CPI levels.
- The big ongoing theme in markets seems to be the renewed pressures in commodities, as real world demand for crucial metals like copper and nickel has spurred significant flows into broad commodities.
4. Steno Signals #100 – China’s MAJOR power grab on Copper supply chains
- Let me start by dwelling on the fact that Macro generalists such as myself and Thorsten Slok of Apollo suddenly spend countless hours watching Copper trends.
- It is probably a red flag in itself, but it just seems like these developments are so INCREDIBLY important for global macro- and geopolitics these months.
- We have been all over the Chinese copper story in recent months and also traded it with good luck, but we have admittedly been wrong in our call for a weaker CNY (so far).
5. Don’t Let the Bull Throw You Off!
- There is a chance for a correction in the HK markets as latecomers to the party get nervous
- All the signs are pointing to a continuation of this bull market as government support measures continue to roll out.
- Don’t get bucked off that bull by a short-term correction!
6. Technically Speaking: Hong Kong Strategy in the Secular Bull Market
- First major technical resistance for HSI and HSCEI has been met with force and a consolidation/correction begins
- Market breadth expands over last month presenting investment opportunities beyond tech and mega-cap
- Short and long term sentiment indicators going positive as most analysts continue to look in rear view mirror
7. Active GEM Funds: Top-Down Country Positioning Latest
- EMEA Momentum: EMEA is experiencing positive momentum across multiple countries, with record investments in the MENA region, strong momentum in Greece, Turkey reversing long-term declines, and Poland nearing new ownership highs.
- Asian Stall: Significant underweight in India suggests caution among investors, China weights remain depressed, Indonesia maintains a strong consensus overweight. Select ASEAN nations show signs of potential comeback.
- LATAM Overweights: Investor sentiment in LATAM remains bullish, with Brazil and Mexico seeing most funds positioned overweight. Argentina hits new highs in fund ownership driven by strong conviction in MercadoLibre.
8. Quant Signals: PCA model and Backtesting Features
- Steno Research PCA model Using a Principal Component Analysis (PCA) model to analyze assets across financial markets provides a powerful framework for investment decisions.
- By mapping out the macro anatomy of a given asset, PCA identifies key trends and underlying patterns that influence price fluctuations and market dynamics.
- In this process, we have defined what we see as the most important global macro factors, ensuring that our analysis is comprehensive and targeted.
9. Portfolio Watch: Trading the next of the rolling melt-ups
- Welcome to our weekly Portfolio Watch.
- We have had a decent week as our short bet on Utilities has started to deliver, while a continued long bet in technology (and ETH) has been the game in town in the risk asset space.
- The liquidity trajectory is slightly murky over the next 2-3 weeks before a major reversal from mid-June and onwards as the net issuance pace of T-bills will be ramped up again into July tapping liquidity from the ON RRP along the way.
10. Energy Cable: Commodities, Freight Rates and Goods Imports Are Rising…
- A soft CPI report was just what Commodities needed to take the next leg higher
- Inflation expectations fat tailed. Commodities on the move, but we still need oil. China to export inflation to Europe?
- Despite last week’s dovish inflation print, we are not sure that it is disinflation that we need to be worried about, both in the short- and long term.
- Let’s discuss three reasons for that.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. TSMC Surges As April Revenue Soars 60% YoY
- April revenue ~NT$236.02 billion, +20.9% MoM & + 59.6% YoY
- It was the company’s second highest monthly revenue ever, made all the more remarkable by the fact that it occurred during its seasonally low first half year
- Our April YoY Taiwan monthly revenue comps are flashing green across the board with just one exception, Globalwafers
2. Intel’s Foundry Chief Runs For The Hills
- In a surprise move, Intel announced that its foundry chief Stuart Pann is to retire from the company effective end of May after just over one year in the role
- He will be replaced by former IBM, Globalfoundries and Marvell executive Kevin O’Buckley, effective immediately
- Mr. O’Buckley now has the dubious distinction of being the third leader of IFS in as many years.
3. Asustek: Margin Beat, Guides More Upside; Qualcomm for AI PCs; Why Asus Confident in AI PC Up-Cycle
- Asus’s 1Q24 earnings beat consensus by 46% thanks to major increase in operating margin driven by costs optimization. Adjusted Asus brand Op profit rose 227% YoY and 98% QoQ.
- Asus will host a major AI PC launch event May 21st, with additional AI PCs launched at Computex in Taiwan June 4th. Will feature Qualcomm Inc (QCOM US) Snapdragon processors.
- Asus confident in an PC upgrade cycle and has guided for sales to rise and margins to expand in the coming quarters. We maintain our Structural Long rating for Asus.
4. Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E
- Hon Hai reported 1Q24 revenue that fell 9% YoY, however the company reiterated its guidance for significant growth in 2024E and said growth now looks stronger than guided in March.
- Hon Hai’s cloud (including servers) business didn’t grow as much as guided due to material shortages; but AI server revenue up 200% YoY and significant growth is guided for 2024E.
- The traditional server market is rebounding, to grow double digits in 2024E. Hon Hai expects to take market share in 2024. Structural Long but near-term gains could be limited.
5. Himax: Signs of Automotive Demand Rebound; Why Demand Strength Is Different Than NXP and Infineon
- Automotive display driver IC leader Himax reported 1Q24 results last week that were ahead of guidance. The company also guided for rising margins.
- Management believes 1Q24 represents a cyclical bottom for the company’s financial performance and expects automotive demand to rise in 2H24E.
- Himax rallied but remains 55% below its 2021 highs, yet its market opportunity larger than ever. Himax could be benefitting from different positioning within automotive chips than NXP & Infineon.
6. Optics Earnings (FN, ANET, COHR, LITE, AAOI)
- To make my content readable, this is an optics-only earnings update.
- I will discuss everything together and put together a high-level overview.
- The specific things I am interested in are Marvell’s ZR and custom silicon.
7. Taiwan Tech Weekly: All Eyes on Nvidia Results Next Week; Microsoft Copilot Edge AI To Be Showcased?
- Taiwan Tech and Nvidia Rally Ahead of Nvidia Earnings Next Week; Microsoft Build Conference Could Showcase Edge AI Copilot
- Hon Hai: Traditional Server Market Now Adding to AI Growth; Expects Market Share Gains in 2024E
- Asustek: Margin Beat, Guides More Upside; Qualcomm for AI PCs; Why Asus Confident in AI PC Up-Cycle
8. Screen Holdings (7735 JP): Guiding for Lower Profits in H2
- FY Mar-24 results were ahead of guidance, but management’s FY Mar-25 forecast has sales flat and profits down in the second half.
- The shares have dropped back 24% from their all-time high, bringing the forward P/E ratio down to 22X.
- China and foundry remain strong while North America and memory pick up. Guidance is probably conservative. Buy into the weakness.
9. Semiconductor Memory. Profits Return & Tailwinds Mount On Surging (& Very Similar) ASP Increases
- Q124 DRAM revenue $18.2 billion, up 6% QoQ and up 88% YoY. NAND revenue $14.1 billion, up 23.4% QoQ and 68.8% YoY
- ASP increases, HBM, NAND for enterprise SSD and looming shortages for legacy products are all mounting tailwinds for the beleaguered memory segment
- First quarter ASP increases for DRAM & NAND for Micron, SK Hynix & Samsung were almost identical. That’s quite a coincidence..
10. Silergy (6415.TT): Rebounding from the Bottom in 1Q24, It Will Witness Normal Orders Since 2Q24.
- Inventory levels were at 90 days by the end of 1Q24, returning to a normal level.
- It is expected to see consecutive QoQ growth throughout 2024, with normal orders observed since 2Q24.
- Although Chinese mature technology is advancing, current analog capacity still falls short of local demand in China.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. YUUUGE Modec (6269) Offering To Stay Listed in TSE Prime – Effectively a Re-IPO
- In March, Modec Inc (6269 JP) announced the TSE had said Modec at 29.3% (end-Dec-23) was below the required 35% tradable shares level required for continued listing on TSE Prime.
- It announced a “Basic Plan” to comply with the criteria which involved convincing one of the three major corporate holders to sell some. They needed to sell about 6%.
- Mitsui E&S has announced it will sell 32%, and 37% including greenshoe. This is overdoing it in a huge way. Mitsui E&S is getting out. This is a re-IPO.
2. Modec Placement – Deal Seems a Little Opportunistic but Not Particularly Expensive
- Mitsui E&S Holdings (7003 JP) is looking to raise approximately US$451m through a secondary follow-on offering, via selling approximately 21.9m shares (32% of TSO) of Modec Inc (6269 JP)’s stock.
- The deal is a large one to digest at 81 days of three month ADV.
- In this note, we will talk about the placement and run the deal through our ECM framework.
3. MODEC (6296 JP): A US$535 Million Secondary Offering
- Modec Inc (6269 JP) has announced a secondary offering of up to 25.2 million shares (including overallotment). The largest shareholder, Mitsui E&S Holdings (7003 JP), is the seller.
- MODEC’s goal with the secondary offering is to reconfigure its shareholder mix to have a diverse base of shareholders who support its long-term strategies and a better tradable share ratio.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will likely fall between 22 and 28 May (likely 22 May).
4. Hyundai Heavy Industries Block – Not Well Flagged and Recent Korean Deals Haven’t Done Well
- HD Korea Shipbuilding & Offshore Engineering (009540 KS) is looking to raise approximately US$258m, via selling 2.6m shares (2.9% of TSO) of HD Hyundai Heavy Industries (329180 KS) stock.
- The deal is a large one to digest at 14.6 days of three month ADV.
- In this note, we will talk about the placement and run the deal through our ECM framework.
5. Giant Biogene Placement – Has Been Doing Well but Doesn’t Need the Cash
- Giant Biogene (2367 HK) aims to raise up to US$205m via a top-up placement.
- We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
6. ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, after a stellar showing by HD Hyundai Marine Solution (443060 KS), the coming week will be a busy one for India listings.
- On the placement front, there were no major deals during the week. We did look at Asmedia Technology (5269 TT) planned GDR, and Wuxi XDC’s upcoming lockup expiry.
7. Olympus Corp (7733 JP): ¥100B Buyback Plan Offers an Attractive Exit Opportunity Amid Bleak Outlook
- Olympus Corp (7733 JP) has announced a buyback plan for up to 60M shares, representing 5.15% of outstanding shares, by spending ¥100B from May 13 to December 31, 2024.
- The company has posted mixed FY24 results, with revenue beating and operating and net profits missing guidance. Olympus has guided for just 9% revenue growth for FY25.
- Overall business outlook of the company seems to be bleak. With limited upside potential expected, it will be wise to tender shares through the company’s buyback offer.
8. ZEEKR IPO: Strong First-Day Return and Upsized Offering
- ZEEKR, a rapidly growing premium EV maker, has successfully completed its IPO and raised ~$441M. The offering was priced at the top of the range at $21 per share.
- The company sold a total of 21M ADSs, up from the initial target of 17.5M shares. ZEEKR’s stock soared more than 30% following its strong debut on NYSE on Friday.
- Geely Auto, Mobileye and CATL have acquired ~14.3M ADSs and overall investor sentiment was positive. I believe ZEEKR may succeed as a high-volume EV maker worldwide.
9. Lalatech Holdings Limited Pre-IPO – Refiling Updates – Continues to Improve, Valuation Gap Narrowing
- Lalatech Holdings is looking to raise about US$1bn in its upcoming HK IPO.
- Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.
- We have looked at the company’s past performance in our earlier notes. In this note we will talk about the updates from its refiling.
10. Aadhar Housing Finance IPO Trading – More Loved by Institutional Investors than Retail
- Aadhar Housing Finance(AHF) raised around US$360m in its India IPO, via selling a mix of primary and secondary shares.
- AHF is focused on the low income housing segments (ticket size less than INR1.5m) in India. It offers a range of mortgage-related loan products.
- We have looked at the company’s performance and valuation in our past notes. In this note, we talk about the trading dynamics.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Japan Post Holdings (6178) – Bigger Better Bullish Buyback With Caveats
- Today, Japan Post Holdings (6178 JP) announced results (and Mar25 guidance) as did its subsidiaries Japan Post Insurance (7181 JP) and Japan Post Bank (7182 JP).
- There are a number of interesting things in all the announcements/presentations but the most interesting one for JPH holders is a big buyback. Another one.
- The company has announced a ¥350bn buyback. It is larger than last year’s (¥300bn) buyback and has another important difference.
2. HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June
- We do not forecast any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June but there could be capping changes for 7 stocks.
- Capping changes will result in a one-way turnover of 7.6% leading to a round-trip trade of US$2.4bn. 17 stocks will have over 0.5x ADV to trade from passive trackers.
- Li Auto (2015 HK) will have the largest inflow while there will be big outflows from Meituan (3690 HK), Xiaomi Corp (1810 HK), JD.com (9618 HK) and Tencent (700 HK).
3. Alibaba (9988 HK): Dual Primary Listing & Potential Southbound Flows
- Along with its fiscal 2024 results, Alibaba (9988 HK) announced that they were preparing for their primary listing in Hong Kong and the conversion was expected to complete by August.
- If the conversion is completed by the end of August, Alibaba (9988 HK) could be added to Southbound Stock Connect in September and that could bring in significant flows.
- We do not forecast any passive inflows due to the change with Alibaba Group Holding (9988 HK) capped at 8% of the HSI, HSCEI and HSTECH indices.
4. ESR Group (1821 HK): Offer Musings
- Back in February this year, various media sources reported that the key shareholders of warehouse/fund management play ESR Group (1821 HK), were exploring options, including a privatisation.
- Long-Term holders Warburg Pincus and Canadian pension fund OMERS hold 14% and 10.7% respectively. ESR co-founders/directors Jeffrey Shen, Stuart Gibson, Charles de Portes, and Hwee Chiang collectively hold another ~23%.
- Shares in ESR were suspended this morning “pursuant to the Hong Kong Code on Takeovers and Mergers“.
5. KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)
- In May 2023, KDDI Corp (9433 JP) announced a ¥300bn buyback program, did nothing for two months, then announced a Tender Offer Buyback to buy shares from Toyota.
- Toyota had increased its stake years before, then KDDI bought back shares from others, so Toyota was backing its ownership down. I discussed the relationships, history, etc, here.
- This year, KDDI announced Friday with earnings that is buying back another large stake from Toyota.
6. L’Occitane (973 HK): On Activism And The Scrip Alternative
- In the 29th April HK$34/share VGO announcement, a share scrip alternative may be afforded if 10% of L’Occitane (973 HK)‘s disinterested shareholders expressed interest by the 15th May
- That pre-condition has been satisfied. However, we are none the wiser whether you receive shares of the levered-up Bidco, at some undetermined scrip ratio; or keep shares of L’Occitane as-is.
- Some shareholders, like Butler Hall, considered terms low-balled. They now have the option to rollover. But there are still other large activists on the register, whose intentions are not known.
7. Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for June
- Post market close tomorrow, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 7 June.
- There were no constituent changes to the index in March. We highlight ten profitable and eligible stocks that could be added to the index in June.
- Changes to the Hang Seng Industry Classification System (HSICS) could lead to inclusions for the Information Technology industry while there could also be inclusions for the underweighted Healthcare industry.
8. CSI Medical Service Index Rebalance Preview: Repeat of the December Rebal Could See Big Gains
- The review period ended on 30 April, there are just over 2 weeks to announcement of the changes, and implementation will be done at the close on 14 June.
- We forecast 5 potential changes for the index in June where there could be buying of 1.6-2.6x ADV on the adds and selling of 0.7-2.6x ADV on the deletes.
- At the December 2023 rebalance, the adds outperformed the deletes in the weeks prior to announcement of the changes and then spiked post-announcement. Repeat this time?
9. Japan – Another Big Round of Passive Selling
- There are 15 stocks in Japan that will be sold by passive trackers at the close on 31 May.
- Short interest has been increasing in these stocks over the last few months and there will be covering on implementation date.
- Cumulative excess volume on all stocks has risen in the last couple of months though the pace of the increase has varied.
10. ESR Group (1821 HK): Starwood Capital and SSW Partners Gauging a Privatisation Bid
- ESR Group (1821 HK) is on a trading halt. Press reports suggest a consortium featuring Starwood Capital Group and SSW Partners is considering a buyout.
- Starwood and SSW are approaching other shareholders to join the consortium. The other members are likely Warburg Pincus, OMERS, Jinchu Shen, and Hwee Chiang Lim.
- The offer is likely to be structured as a Cayman privatisation scheme. Our best guess is that an offer of at least HK$14.00 per share would be needed.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Steno Signals #99 – Freddie Mac gearing up to unleash trillions for consumption?
- Last week we learned that the so-called “excess savings pool” from the pandemic had vanished into thin air in the US, or rather that personal savings have been running sub-trend long enough to bring savings back to a normalized state.
- This does not mean that US households have run out of savings, it merely means that savings rates are running below trend, which is not out of the ordinary during late-cycle economies.
- We have recreated the study on German numbers and found much less “alarming” trends in German households, which goes to show that the methodology developed by the San Fran Fed ought to be taken with a pinch, if not even a truckload, of salt.
2. China Watch: No one has noticed that China is exporting INFLATION again..
- Welcome to our weekly EM editorial where we shed light on the most important developments in the EM space in the context of the impulses from the USD markets.
- Things are heating up in the global macro space as we are standing at crossroads.
- Is the macro momentum finally rolling over globally (including in the US) or are we amidst a potential rebound from China that wreaks havoc with the current increasingly dovish Western consensus?
3. Great Game – Why Putin fired Shoigu and Why Biden is going tough on China
- Welcome to this week’s geopolitical update, the Great Game.
- This week we’re covering Putin’s surprise sacking of Defense Minister Shoigu as well as the ongoing global EV war.
- Russian President Putin has replaced his Defense Minister Sergei Shoigu with former economic advisor and Deputy Prime Minister Andrei Beluosov.
4. Positioning Watch – How are Macro Hedge Funds positioned?
- Hello everyone, and welcome back to our weekly Positioning Watch – insights into how market participants are positioned.
- Markets are waiting patiently for the US CPI report today before placing their bets it seems, with little to no action seen yesterday and in European opening hours yesterday.
- As elaborated upon in our “Week At a Glance” on Monday, we see hawkish surprises to both headline and core inflation , which will not be good news for markets, who have seemingly returned to their hopes of rate cut(s) this year.
5. US CPI Review – Everything is soft in April
- Main Takeaways: Core inflation is still way too hot, but this report speaks well to the crowd hoping for rate cuts.
- Food and Shelter are the two dovish surprises… Both are re-accelerating in live data which will likely come into effect laterApril was super soft in real-time activity data and there isn’t much to suggest that it will continue in May, where data is on the rise again… But for now, this feeds the FCI loop in a positive sense, which will allow risk assets to ride the dovish CPI wave for now.
- US Headline CPI rose 0.31% on the month, whilst core inflation increased by 0.29%, with consensus at 0.4% and 0.3%.
6. Quant Signals: Central Bank Sentiment Indicators
- Our updated state-of-the-art Central Bank Sentiment indicators are flagging important changes in communication dynamics since the beginning of the year.
- We recently upgraded our sentiment measurement to a more fine-tuned and nuanced NLP model that effectively captures the meaning of Central Banker rhetoric and here share key findings.
- We regularly track and update our measure of positivity/negativity of Bank language contained in statements, outlooks and speeches on a scale of -1 to +1 in our DataHub for premium subscribers.
7. Five Reasons to Be Bullish
- A review of technical and sentiment conditions shows that stock prices are setting up for a sustained advance.
- The combination of strong momentum, good breadth and skeptical sentiment points to higher stock prices.
- Key risks are evidence of a disturbing relative strength by defensive sectors and an upcoming CPI report that could upend the bullish narrative.
8. China Takes It up Another Notch-Property Proposals Change the Game
- China is following the Fed’s playbook of keeping market momentum going with good news and actions
- The HK dividend scheme is a prime example of that
- The latest proposal for unsold properties will remove a major barrier to a bottom in the property market.
9. NFIB Watch: 5 KEY charts from the best survey on the US economy
- Our favorite survey out of the US economy was published earlier and it was a pretty decent report overall as the sentiment among SMEs improved, but there are a few trends worth noting in the details, so why don’t we briefly walk you through them here.
- For the first time in a long while, we see a clear net/net decrease in expectations for future price hikes.
- This is conciliatory news for Jay Powell and his ilk for H2-2024 (but not before then..)
10. Long 10Y, Short 2Y on Yield Curve Normalisation
- Fed’s decision to taper its balance sheet runoff has provided support to long-term treasuries, particularly 10-year notes, signaling a potential rise in demand and a move towards yield curve normalization.
- Recent treasury auction results reflect a divergence in demand across maturities; long-term 10-year treasuries show weaker performance compared to strong showings in shorter 3-year and 5-year maturities.
- Data-Dependent Fed is likely to be influenced by improving economic indicators, supporting a normalization of the yield curve. During normalization, the 10Y-2Y spread is the superior instrument for exposure.