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Smartkarma Daily Briefs

Sep 06
0

Daily Brief Industrials: Pasco Corp, Carrier Global , Magellan Aerospace and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Pasco (9232 JP): Secom (9735 JP) And Itochu (8001 JP) Tender Offer a Done Deal
  • Shares of Cooling Firms Have Turned Red Hot on Record Setting Scorching Heat
  • Finding the Next Takeout in Canadian Small-Caps – Part Three

Pasco (9232 JP): Secom (9735 JP) And Itochu (8001 JP) Tender Offer a Done Deal

By Arun George

  • Pasco Corp (9232 JP) has recommended a tender offer from Secom Co Ltd (9735 JP) and Itochu Corp (8001 JP) at JPY2,140, 31.4% premium to the undisturbed price of JPY1,629.
  • The tender offer runs from 6 September to 22 October (30 business days), with payment commencing on 28 October. It represents a 10-year high. 
  • This a done deal as the offeror represents a 71.66% ownership ratio, higher than the two-thirds of voting rights required to implement a squeeze-out through share consolidation.  

Shares of Cooling Firms Have Turned Red Hot on Record Setting Scorching Heat

By Srinidhi Raghavendra

  • July 2024 ranked as the warmest July in NOAA’s 175-year global record. Land & sea surface temperatures were above average across the planet barring few exceptions.
  • July had the 2nd smallest sea ice coverage in 46-years at 8.49 million square miles. There is a 77% chance that 2024 will rank as the warmest year on record.
  • Heating, Ventilation, and Air Conditioning (“HVAC”) stocks continue to rise on strong demand as temperatures peak across the planet.

Finding the Next Takeout in Canadian Small-Caps – Part Three

By Atrium Research

  • Since our last note in May, there have been 10 additional takeouts in Canadian small-caps, most of which coming in a significant premiums.
  • The new acquisitions largely fit within the framework outlined in previous reports.
  • Our potential takeouts portfolio is up 43% since inception (November 2023) and 17% since our last note, compared to the TSX up 18% and 3% respectively.

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Sep 06
0

Daily Brief Industrials: Pasco Corp, Carrier Global , Magellan Aerospace and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Pasco (9232 JP): Secom (9735 JP) And Itochu (8001 JP) Tender Offer a Done Deal
  • Shares of Cooling Firms Have Turned Red Hot on Record Setting Scorching Heat
  • Finding the Next Takeout in Canadian Small-Caps – Part Three

Pasco (9232 JP): Secom (9735 JP) And Itochu (8001 JP) Tender Offer a Done Deal

By Arun George

  • Pasco Corp (9232 JP) has recommended a tender offer from Secom Co Ltd (9735 JP) and Itochu Corp (8001 JP) at JPY2,140, 31.4% premium to the undisturbed price of JPY1,629.
  • The tender offer runs from 6 September to 22 October (30 business days), with payment commencing on 28 October. It represents a 10-year high. 
  • This a done deal as the offeror represents a 71.66% ownership ratio, higher than the two-thirds of voting rights required to implement a squeeze-out through share consolidation.  

Shares of Cooling Firms Have Turned Red Hot on Record Setting Scorching Heat

By Srinidhi Raghavendra

  • July 2024 ranked as the warmest July in NOAA’s 175-year global record. Land & sea surface temperatures were above average across the planet barring few exceptions.
  • July had the 2nd smallest sea ice coverage in 46-years at 8.49 million square miles. There is a 77% chance that 2024 will rank as the warmest year on record.
  • Heating, Ventilation, and Air Conditioning (“HVAC”) stocks continue to rise on strong demand as temperatures peak across the planet.

Finding the Next Takeout in Canadian Small-Caps – Part Three

By Atrium Research

  • Since our last note in May, there have been 10 additional takeouts in Canadian small-caps, most of which coming in a significant premiums.
  • The new acquisitions largely fit within the framework outlined in previous reports.
  • Our potential takeouts portfolio is up 43% since inception (November 2023) and 17% since our last note, compared to the TSX up 18% and 3% respectively.

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Sep 06
0

Daily Brief Health Care: D.Western Therapeutics Institute Inc., Cyberdyne Inc, Neuren Pharmaceuticals, Agilent Technologies, Ainos and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • D. Western Therapeutics Institute (4576 JP) – News Flash – Sep 5, 2024
  • CYBERDYNE (7779 JP) – Overseas Initiatives Driving Sales and Reducing Losses
  • Neuren Pharmaceuticals (NEU AU): Ready to Fly Again After a Breather
  • Agilent Technologies: A Tale Of Geographic Diversification and Emerging Market Growth! – Major Drivers
  • Ainos, Inc. – Adding Coronavirus Treatment and Prevention to Veldona Patent Portfolio

D. Western Therapeutics Institute (4576 JP) – News Flash – Sep 5, 2024

By Sessa Investment Research

  • DWTI announced that the first transplant was performed in a domestic Phase II clinical study of DWR-2206 (Indication: bullous keratopathy, see Note 1 below), a regenerative medicine cell product being developed jointly by DWTI and ActualEyes Inc., and as a result of the follow-up monitoring, the safety of DWR-2206 has been confirmed in order to proceed to a second and subsequent transplants.
  • This study is being conducted to evaluate the safety and efficacy of DWR-2206 transplants in patients with bullous keratopathy.
  • The first transplant took place in July 2024, and the patient’s progress since the transplant has been smooth. 

CYBERDYNE (7779 JP) – Overseas Initiatives Driving Sales and Reducing Losses

By Astris Advisory Japan

  • Q1 FY3/25 results reported 10.5% sales growth YoY and declining operating losses, driven by a combination of treatment service growth in the Americas and cost reduction efforts.
  • Operating units of the key HAL Medical Lower Limb Type grew 8.3% YoY to 481 units worldwide, indicating moderate but sustained growth YoY at home and overseas.
  • Overseas sales made up 71% of the total, demonstrating the company’s focus on geographic expansion. 

Neuren Pharmaceuticals (NEU AU): Ready to Fly Again After a Breather

By Tina Banerjee

  • Neuren Pharmaceuticals (NEU AU) shares corrected ~14% over the last one month, as Daybue reported disappointing performance in U.S. and partner reduced 2024 revenue guidance for Daybue.
  • Muted U.S. performance of Daybue in 1H24 seems to be short-lived and the drug is expected to accelerate in 2H24 and beyond.
  • In 2Q24, the rate of new patient starts was 12% higher than the previous quarter and the rate of discontinuations was 46% lower than in the previous quarter. 

Agilent Technologies: A Tale Of Geographic Diversification and Emerging Market Growth! – Major Drivers

By Baptista Research

  • Agilent Technologies showed resilience in its Q3 2024 earnings, despite facing challenges with a 4.4% revenue decline and continued pressure in sectors like biopharma.
  • The company reported $1.578 billion in revenues and an earnings per share (EPS) of $1.32, surpassing the upper end of its guidance by $0.04.
  • This performance highlights robust operational management and strategic agility in an environment where many sectors are facing budget constraints.

Ainos, Inc. – Adding Coronavirus Treatment and Prevention to Veldona Patent Portfolio

By Water Tower Research

  • Veldona patent granted in Taiwan for treatment and prevention of coronavirus infection, securing 20 years of patent protection.
  • The invention patent covers the method and composition of a Veldona-based therapeutic approach to stimulate the immune system by dosing Veldona through sublingual and/or buccal administration to reduce the risk of symptomatic coronavirus infections.
  • Sublingual and/or buccal administration allows Veldona to be rapidly absorbed by the oral mucosa, enabling more effective treatment and better drug compliance. 

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Sep 06
0

Daily Brief Financials: New World Development, Robinhood Markets , Bajaj Finance Ltd, Shui On Land and more

By | Daily Briefs, Financials

In today’s briefing:

  • We Need To Talk About New World (17 HK)
  • S&P MidCap 400 September 2024 Forecasts: Highest Score to the HOOD, CVNA, LPLA, ENTG, ENSG and MLI
  • Narrative and Numbers | Consumer & MSME Finance | FY24
  • Shui On Land – Earnings Flash – H1 FY 2024 Results – Lucror Analytics

We Need To Talk About New World (17 HK)

By David Blennerhassett

  • 0.08x P/B. That’s where New World Development (17 HK) is currently trading. Less than half the P/B of the next comparable real estate peer.
  • So, what’s going on? Announcing an expected HK$19-20bn loss for FY24 last week didn’t help matters. Shares are down 14% this week and 85% since Covid.
  • Landlords need to drastically cut rents to jumpstart the retail sector. That translates to further impairment losses for property developers. 

S&P MidCap 400 September 2024 Forecasts: Highest Score to the HOOD, CVNA, LPLA, ENTG, ENSG and MLI

By Dimitris Ioannidis

  • S&P MidCap 400 additions by transition require market cap, float cap, sector balance, liquidity and earnings as parameters for inclusion.
  • The highest combined score from the parameters is given to CVNA, HOOD, LPLA and ENTG which makes them acceptable candidates for addition. 
  • Ensign Group (ENSG US) and Mueller Industries (MLI US) have the highest probability of being added out of the migrations. Market cap of migration candidates is estimated to be insufficient.

Narrative and Numbers | Consumer & MSME Finance | FY24

By Pranav Bhavsar

Shui On Land – Earnings Flash – H1 FY 2024 Results – Lucror Analytics

By Leonard Law, CFA

Shui On Land’s (SOL) H1/24 results were weak, as the company reported reduced earnings, higher net debt and weaker leverage. Positively, rental income continued to grow. As a result, recurring operating income from rentals and property management covered 0.9x of interest expense for LTM June (FY 2023: 0.8x). In addition, asset values were stable, with consolidated investment properties covering 1.7x of net debt. We expect cash flows to improve in H2/24, supported by the planned delivery of two projects.  

That said, liquidity is poor. We view negatively management’s cautious tone during the earnings call. Going forward, we believe that SOL could seek to monetise its 100% stake in its property investment and management arm, Shui On Xin Tian Di. In addition, the company may raise fresh funding by further increasing the LTV on its investment property portfolio to the maximum of 45%, albeit this is uncertain (depending on its arrangements with banks). SOL may also carry out more asset sales.

Meanwhile, we believe that the company may be considering potential liability management exercises for the USD bonds in the event it fails to obtain sufficient financing for repayment.

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Sep 05
0

Daily Brief ESG: For the Time Being and more

By | Daily Briefs, ESG

In today’s briefing:

  • For the Time Being, Stronger Shareholder Returns Are an Incentive for the Stock Price to Rise

For the Time Being, Stronger Shareholder Returns Are an Incentive for the Stock Price to Rise

By Aki Matsumoto

  • While cash flow has improved, companies haven’t found promising investment opportunities. Continuation of a rigid dividend policy is another factor that further increases cash on hand.
  • Given that the already high level of cash on hand is expected to build further in the current fiscal year, there is room to increase shareholder returns considerably.
  • For many companies, it is not easy to find new sources of investment other than through M&A, and shareholder returns are the most effective way to reduce cash.

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Sep 05
0

Daily Brief Technical Analysis: Recessionary Signals as SPX Tests Resistance; Downgrading Energy to Underweight and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Recessionary Signals as SPX Tests Resistance; Downgrading Energy to Underweight

Recessionary Signals as SPX Tests Resistance; Downgrading Energy to Underweight

By Joe Jasper

  • Price action on SPX is extremely similar to prior major topping patterns in April 2000 and August 2007, which is why we recommended reducing risk near 5670-5783 last week.
  • Additional similarities to 2000/2007 (other than price action) include the Fed cutting rates, recession indicators such as the Sahm rule and Schannep Recession Indicator (SRI) triggered, and yield curve un-inverting.
  • SPX resistance is in the 5670-5783 range; if a major top is happening, that is where it would start from (using the 2000 and 2007 tops as comparisons).

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Sep 05
0

Daily Brief ECM: Key Things to Watch in Ecopro HN’s Big Rights Offering and more

By | Daily Briefs, ECM

In today’s briefing:

  • Key Things to Watch in Ecopro HN’s Big Rights Offering
  • Midea Group H Share Listing: AH Discount Views
  • Bajaj Housing Finance IPO – Will Trade at a Premium
  • Carraro India Pre-IPO Tearsheet
  • Challenger Limited Placement – Discount Isn’t Enticing Enough for a Surprise Selldown
  • Western Carriers Pre-IPO-Expanding Through a Combination of Asset-Light Model and Own Infrastructure
  • General Insurance Corp of India OFS – Large One to Digest, and a Potential Overhang to Contend With
  • Carote Limited Pre-IPO – PHIP Updates – Recent Growth Led by International Markets

Key Things to Watch in Ecopro HN’s Big Rights Offering

By Sanghyun Park

  • Ecopro HN announced a ₩200 billion rights issue, offering 5.67 million shares (a 40% capital increase) with a stockholder allocation rate of 0.3 per share.
  • The extended timeline likely results from the issuer’s 20% discount push, with Daishin, an underdog banker, extending it to boost subscriptions despite risking price stability.
  • The strategy is to time entry when the stock rights and subscription costs create a solid spread versus the spot price, despite increased volatility making price predictions harder.

Midea Group H Share Listing: AH Discount Views

By Arun George

Bajaj Housing Finance IPO – Will Trade at a Premium

By Sumeet Singh

  • Bajaj Housing Finance (BHF IN) is looking to raise around US$800m in its India IPO.
  • BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
  • In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.

Carraro India Pre-IPO Tearsheet

By Akshat Shah

  • Carraro India Limited (810618Z IN) is looking to raise about US$216m in its upcoming India IPO. The deal will be run by Axis, Nuvama and BNP Paribas.
  • Carraro India Limited (CIL), is a technology driven integrated supplier that develops complex engineering products and solutions for its original equipment manufacturer (OEM) customers.
  • CIL primarily manufactures axles and transmission systems for agricultural tractors and construction vehicles such as backhoe loaders, soil compactors, cranes, self-loading concrete mixers and small motor graders.

Challenger Limited Placement – Discount Isn’t Enticing Enough for a Surprise Selldown

By Clarence Chu

  • AP Liberty (Apollo) is looking to raise US$318m from trimming its stake in Challenger Ltd (CGF AU).
  • Apollo’s stake in the firm dates back to Jul 2021, when the investor first acquired a 18% stake in the firm for A$720m. 
  • In this note, we run the deal through our ECM framework and comment on deal dynamics.

Western Carriers Pre-IPO-Expanding Through a Combination of Asset-Light Model and Own Infrastructure

By Akshat Shah

  • Western Carriers (1489172D IN) is looking to raise about US$100m in its upcoming India IPO.
  • Western Carriers (India) Limited (WCIL) was the largest private, multimodal, rail focused, 4PL asset-light logistics company in India in terms of container volumes in FY22, as per 1Lattice.
  • In this note, we talk about the company’s historical performance.

General Insurance Corp of India OFS – Large One to Digest, and a Potential Overhang to Contend With

By Clarence Chu

  • The GoI is looking to raise up to US$600m from selling its stake in General Insurance Corp Of India (GICRE IN).
  • Earlier in Apr 2024, there were media reports indicating that the GoI planned to offload a 10% stake in the insurer over multiple tranches.
  • In this note, we run the deal through our ECM framework and comment on deal dynamics.

Carote Limited Pre-IPO – PHIP Updates – Recent Growth Led by International Markets

By Clarence Chu

  • Carote Ltd (CARO HK) is looking to raise around US$120m in its upcoming Hong Kong IPO.
  • Carote Ltd is a distributor of kitchenware products. Expanding its lineup of products, Carote aims to meet its customers’ varied kitchen scenarios and enhance their culinary experience.
  • We had looked at the firm’s past performance in an earlier note. In this note, we discuss its PHIP updates.

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Sep 05
0

Daily Brief Thematic (Sector/Industry): SEBI’s F&O Criteria Revision & Its Impact and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • SEBI’s F&O Criteria Revision & Its Impact
  • Ohayo Japan | S&P 500 Struggles to Find Footing in September
  • # 55 India Insight: Motherson Plans QIP, Tata Consumer Merger, Adani Power Invest INR 18,000 Crore
  • Tokyo Morning Connection: NKY225 Rebalance Decision, Likely Dip Buying After Yesterdays Rout
  • Hotchips Conference Sparknotes

SEBI’s F&O Criteria Revision & Its Impact

By Nimish Maheshwari

  • SEBI has overhauled F&O eligibility criteria, introducing stricter norms for stock inclusion and exclusion for more active stocks. 
  • As per calculation, New criteria will include 80 stocks and exclude 18 to 23, impacting market liquidity and stability.
  • This will lead to the creation of a more robust, transparent, and liquid for the F&O Market.

Ohayo Japan | S&P 500 Struggles to Find Footing in September

By Mark Chadwick

  • U.S. stocks finished mostly lower on Wednesday, with the S&P 500 and Nasdaq ending down for the fourth time in the past five sessions
  • Nvidia, the U.S. chipmaker, will invest several billion yen in Sakana AI, a Japanese AI startup co-founded by former Google researchers.
  • Biden to block Nippon Steel’s $14.9 billion acquisition of U.S. Steel (X: -17%) on national security grounds

# 55 India Insight: Motherson Plans QIP, Tata Consumer Merger, Adani Power Invest INR 18,000 Crore

By Sudarshan Bhandari

  • Samvardhana Motherson Plans $1 Billion QIP for Debt Reduction or Acquisition.
  • Tata Consumer Ltd. Products Merges Three Subsidiaries to Streamline Operations 
  • Adani Power to Invest INR 18,000 Crore to Triple Kawai Plant Capacity

Tokyo Morning Connection: NKY225 Rebalance Decision, Likely Dip Buying After Yesterdays Rout

By Andrew Jackson

  • NKY225 rebalance decision was made yesterday: Ryohin Keikaku and NRI replaced Nippon Paper and DIC. A focus on sector balance should continue to be positive for future consumer goods candidates.
  • With US markets stabilizing there are several names with strong fundamental drivers which look attractive as buy the dip candidates after yesterdays heavy selling.
  • US job opening data below street estimates increases likelihood that Fed will start with a 50 bps cut this month. Should help the likes of Shin Etsu and Sumitomo Forestry.

Hotchips Conference Sparknotes

By Douglas O’Laughlin

  • Hot Chips this year was primarily about AI chips (per the theme of every semiconductor conference as of late).
  • The most impactful presentation by far was the Broadcom CPO presentation, SuperMicro water cooling, MTIA, and some honorable mentions to Enfabrica and Dojo/Mojo from Tesla.
  • The biggest disappointment was AMD, which presented nothing incremental and, of course, the CPU announcements.

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Sep 05
0

Daily Brief Event-Driven: Sep24 Nikkei 225 Review Results:  A Slightly Baffling 2 IN and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Sep24 Nikkei 225 Review Results:  A Slightly Baffling 2 IN, 2 OUT
  • Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped
  • Fuji Soft (9749 JP): KKR’s Cop-Out as It Launches at Unchanged Terms, Next Move Bain
  • For Long-Term Investors, Seven & I Is the Better Bet
  • Australia/NZ Real Estate: Stocks With (Large) Passive Flows
  • Ecopro HN: Rights Offering of 200 Billion Won
  • Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal
  • FXI Rebalance: China Tower (788 HK) Will Replace CICC (3908 HK)
  • POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles
  • Namoi Cotton (NAM AU): Louis Dreyfus Declares Offer Unconditional

Sep24 Nikkei 225 Review Results:  A Slightly Baffling 2 IN, 2 OUT

By Travis Lundy

  • Today, the Nikkei Index Committee decided to delete Nippon Paper (3863) for low liquidity, and DIC (4631) for sector over-representation, and added Nomura Research Institute (4307) and Ryohin Keikaku (7453).
  • The only auto-delete was Nippon Paper. The DIC delete was “discretionary.” But they could have done a third. Why did they not do a third change? I do not know.
  • The whole shebang should be ¥350-375bn a side. At current price, Fast Retailing is set for another capping (selling) event in March 2025. And there is one shoo-in then too.

Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped

By Brian Freitas

Fuji Soft (9749 JP): KKR’s Cop-Out as It Launches at Unchanged Terms, Next Move Bain

By Arun George

  • In response to the potential Bain competing offer for Fuji Soft Inc (9749 JP), KKR has waived the precondition and launched its offer at unchanged JPY8,800 per share.
  • Bain’s due diligence ends on 20 September, and it aims to submit a binding proposal in October. This timeline will thwart KKR’s offer, which closes on 21 October.
  • KKR’s offer launch at unchanged terms is delaying the inevitable and will have to bump to succeed. A potential bidding war is likely to push the offer price to JPY10,500. 

For Long-Term Investors, Seven & I Is the Better Bet

By Michael Causton

  • The Couche-Tard “friendly bid” raises more questions than it answers: Is it real? What does CT really want? Can it afford it? Will the Japanese government let it through?
  • We remain sceptical about a bid – if it happens – succeeding. Either way, Seven & Eleven Japan looks to be the much better retailer.
  • It has been selling 25-40% more than competitors in the world’s toughest CVS market and looks set to extract more value in Japan/overseas than anyone else could so why sell?

Australia/NZ Real Estate: Stocks With (Large) Passive Flows

By Brian Freitas

Ecopro HN: Rights Offering of 200 Billion Won

By Douglas Kim

  • On 4 September, Ecopro HN announced that it plans to conduct a rights offering capital raise of about 200 billion won. 
  • The company plans to issue 5.67 million new shares and the expected rights offering price is 35,300 won (23% lower than current price). 
  • We would not subscribe to this rights offering mainly due to lofty valuations, declining sales and profit growth, continued negative free cash flow, and concerns about excessive shares dilution. 

Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal

By Douglas Kim

  • A group of minority investors started to go activist on Hojeon (111110 KS), demanding that the company increase its treasury share buybacks/cancellations, dividends, and cut CEO’s salary.
  • This coalition of minority investors has threatened to sell their shares to a competitor (Hansae) if the company does not abide by their demands.
  • Hojeon has attractive valuations and are trading at low multiples. It had P/E of 5x, EV/EBITDA of 3.4x, and P/B of 0.5x in 2023.

FXI Rebalance: China Tower (788 HK) Will Replace CICC (3908 HK)

By Brian Freitas

POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles

By Sanghyun Park

  • Key watchpoints: Will POSCO cancel the 3.4% treasury shares in Q4 and how will they replenish cash reserves after paying ₩1.5 trillion? Their moves could set trends.
  • POSCO might cancel these shares to boost their value-up index weight. This could drive up the stock price, giving them an opening to improve their cash position through equity financing.
  • Expect a short-term stock pivot with value-up index and ETFs driving inflows and price pops. After this, equity financing may signal stock peaks, with POSCO and others leading the trend.

Namoi Cotton (NAM AU): Louis Dreyfus Declares Offer Unconditional

By David Blennerhassett

  • Louis Dreyfus Company (LDC) and Olam (OLG SP)‘s Olam Agri have been going toe-to-toe over Namoi Cotton (NAM AU) since the 1st February. LDC has now declared its Offer unconditional. 
  • It’s an interesting move. Namoi is trading through LDC’s A$0.67/share Offer terms. But unlike Olam’s Offer, LDC now has FIRB and ACCC under its belt.
  • Currently trading at Olam’s A$0.70/share terms. All eyes are on ACCC giving Olam the green light. Or not.

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Sep 05
0

Daily Brief Equity Bottom-Up: Sony’s (6758) Bold Move into Web3: What Is Soneium? and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Sony’s (6758) Bold Move into Web3: What Is Soneium?
  • PC Partner: Relocating HQ and Listing to Singapore, 81% of Market Cap Is Cash
  • Intel. Could Things Get Any Worse? You Bet. Here’s How.
  • Apple Restructures App Store Amid EU Regulations, Developer Dissatisfaction, and Market Pressures
  • Hyundai Motor India: Feeling the Heat as SUV Rivals Surge
  • China Tourism Group (601888 CH | BUY | CNY): When Falling Knife Turns into Value Investing
  • Zai Lab (9688 HK): Vyvgart Is Not the De-Risking Tool; Future Is Still Uncertain
  • [Atour (ATAT US, BUY, TP US$36) Review]: Retail Business Bigger and Longer than Market Thinks
  • Tech Supply Chain Tracker (05-Sep-2024): UK car market rebounds, EV growth shines at LCV Show.
  • Is Dollar General in Trouble? New Outlook, ‘Financially Constrained’ Customers Spark Major Concerns!

Sony’s (6758) Bold Move into Web3: What Is Soneium?

By Mark Chadwick

  • Sony launches Soneium, a blockchain platform developed with Startale Labs, as a Layer 2 Ethereum solution to enhance transaction speed and scalability.
  • Soneium aims to bridge Web2 and Web3, leveraging Sony’s vast intellectual property in entertainment and technology for broad consumer adoption.
  • Backed by Sony’s resources, Soneium focuses on user-friendly blockchain technology, offering financial and technical support through its Soneium Spark incubation program.

PC Partner: Relocating HQ and Listing to Singapore, 81% of Market Cap Is Cash

By Nicolas Van Broekhoven

  • PC Partner showed a significant improvement in its 1H24 results YoY.
  • The company will be relocating HQ to Singapore and move its primary listing from HK to Singapore. If this move is successful, it will improve AI chips allocation from Nvidia.
  • Why Singapore? PC Partner is preparing itself for a future where China/USA political relationship does not improve.

Intel. Could Things Get Any Worse? You Bet. Here’s How.

By William Keating

  • Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
  • The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
  • Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock

Apple Restructures App Store Amid EU Regulations, Developer Dissatisfaction, and Market Pressures

By Uttkarsh Kohli

  • Apple’s App Store contributed to the $85.2 billion service segment revenue in 2023, with an impressive gross margin of 70.2%, making it a crucial profit driver within Apple’s Services segment.
  • The restructuring splits the App Store division into two teams: one to oversee the traditional App Store, and another to manage new, legally mandated alternative app distribution channels. 
  • Developers who choose to bypass the App Store may incur a substantial Core Technology Fee, potentially amounting to hundreds of thousands of dollars, reflecting the cost of maintaining Apple’s ecosystem.

Hyundai Motor India: Feeling the Heat as SUV Rivals Surge

By Devi Subhakesan

  • Hyundai Motor India reported an 8% decline in monthly dispatch volumes ahead of India’s festive season, coinciding with a sharp increase in shipments by competitors in the SUV space.
  • Mahindra & Mahindra (MM IN) , Toyota Kirloskar Motor ( Toyota Motor (7203 JP) JV), and Kia Corp (000270 KS) each posted high double-digit volume growth in August.
  • Overall, India’s domestic Passenger Vehicle sales growth for the April-August period has slowed year-on-year after two years of strong post-COVID momentum.

China Tourism Group (601888 CH | BUY | CNY): When Falling Knife Turns into Value Investing

By Mohshin Aziz

  • China Tourism Group Duty Free Corp Ltd (601888 CH) (CTG) share price on downtrend due to negative sentiment, increased competition, and Chinese being more frugal in their consumption  
  • 2024 and 2025 consensus earnings declined by -2%/-17%, but CTG will deliver +16% YoY earnings growth in 2025. CTG remains a growths stock, a fact we think many investors forget!  
  • We revise our target price to CNY71.3 pegged to 18.5x FY25 PE (1.5 standard deviation below mean). We think the share price decline is overdone and ignores its strong fundamentals.  

Zai Lab (9688 HK): Vyvgart Is Not the De-Risking Tool; Future Is Still Uncertain

By Tina Banerjee

  • Zai Lab (9688 HK) recorded Vyvgart revenue of $10M, $13M, and $23M in 4Q23, 1Q24, and 2Q24, respectively. The company raised 2024 Vyvgart revenue guidance to $80M from $70M earlier.
  • Despite strong momentum from Vyvgart, Zai Lab still has a lot of pain points. Decelerating revenue growth from Zejula is one of them.
  • Due to its in-licensing business model, Zai Lab has lower gross profit margin of 64–65%, compared with ~80% for a typical innovator biotech company.

[Atour (ATAT US, BUY, TP US$36) Review]: Retail Business Bigger and Longer than Market Thinks

By Eric Wen

  • Atour (ATAT) reported C2Q24 revenue 2.2%/8.3% higher than our est./cons., and non-GAAP NI 6.8%/12.3% higher than our est./ cons, driven by stronger hotel supply chain sales and better retail efficiency.
  • We keep 2024 revenue growth estimate at 53% YoY vs. the uplift company guidance at 48%-52% YoY. Potential catalysts are stronger off-season travel,old hotel renovation scheme, and new brand launch.
  • We keep TP unchanged at US$36/ADS and maintain the BUY rating.

Tech Supply Chain Tracker (05-Sep-2024): UK car market rebounds, EV growth shines at LCV Show.

By Tech Supply Chain Tracker

  • UK car market sees resurgence as electric vehicles gain popularity at LCV Show, driving up sales and interest in sustainable options.
  • SAIC Motor struggles with falling profits and tariffs on electric vehicles, putting financial strain on the company’s operations.
  • IEDC fosters stronger economic ties between Taiwan and the region through a new office opening, promoting business opportunities and enhancing cooperation.

Is Dollar General in Trouble? New Outlook, ‘Financially Constrained’ Customers Spark Major Concerns!

By Baptista Research

  • Dollar General’s shares have plummeted after the company slashed its sales and profit forecasts for the full year, highlighting the financial struggles of its lower-income customers.
  • The retailer, which primarily serves rural areas, now expects fiscal 2024 same-store sales growth of 1.0% to 1.6%, down from its previous forecast of 2% to 2.7%.
  • Earnings per share are projected to be between $5.50 and $6.20, significantly lower than the prior estimate of $6.80 to $7.55.

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