Smartkarma Daily Briefs

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

Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX).
Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!)
Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.

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

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?

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.

Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor

The Sep24 Nikkei 225 Review Results are out, discussed in Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT.
That lets us move to Mar25 Nikkei 225 Rebal predictions. For the moment, I see 2 IN and 2 OUT, again.
And at the moment, another Fast Retailing capping exercise looks likely, for roughly US$3bn a side to trade.

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.

Takamiya (2445 JP) – Full Report

The Company specializes in temporary construction equipment and offers a one-stop service from development and manufacturing to sales, rentals, design and installation, as well as management and logistics.
Its flagship product, the next-generation scaffolding “Iq System,” was launched in 2014 and excels in safety and ease of use.
The Company is transitioning its business to a platform-based model aimed at generating stable income with reduced rental asset intensity.

Migalo Holdings (5535 Jp) – 1Q Follow-Up

On August 7, 2024, Migalo Holdings Inc. (hereafter, the Company) announced its 1Q FY2025/3 earnings results.
Sales declined 10.6% YoY to ¥13,671 mn, and operating profit fell 56.9% YoY to ¥792 mn.
The declines in both sales and profit were anticipated, primarily due to the concentration of new property deliveries in the DX Real Estate business during the same period last year.

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Sep 05

Most Read: Ryohin Keikaku, Nomura Research Institute, Fuji Soft Inc, Seven & I Holdings, Midea Group Co Ltd A, CPMC Holdings, Ecopro HN, Nextdc Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

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) – Bain Bids More, The Market Goes Even Higher
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
Midea A/H Listing – Thoughts on A/H Premium and past A/H Listings
CPMC (906 HK): Champion Holdings Walks
Key Things to Watch in Ecopro HN’s Big Rights Offering
Midea Group H Share Listing: AH Discount Views
Australia/NZ Real Estate: Stocks With (Large) Passive Flows

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

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

Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX).
Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!)
Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.

Fuji Soft (9749 JP) – Bain Bids More, The Market Goes Even Higher

The original Target Opinion Statement for KKR’s bid at ¥8,800/share offered a glimpse at a non-binding, questionably feasible offer at a slightly higher price, which 3DIP might have rejected.
That was apparently Bain, and now we know Bain has consistently had the higher price. Fuji Soft Inc (9749 JP) handled this whole process badly, perhaps cowed by 3DIP.
Now the cat is amongst the pigeons. This is less hostile than it looks IMO. The market thinks it will be a bun fight.

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

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?

Midea A/H Listing – Thoughts on A/H Premium and past A/H Listings

By Sumeet Singh

Midea Group Co Ltd A (000333 CH) aims to raise up to US$3bn in its H-share listing, as per media reports.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the company and deal background in our previous notes. In this note, we talk about the past A/H listing and possible premiums.

CPMC (906 HK): Champion Holdings Walks

At the first close , SASAC/NCSSF-backed Champion Holdings failed to secure the 50% acceptance condition. No surprises there. What was a surprise was Champion Holdings letting the Offer lapse.
Champion Holdings could have extended the Offer to the 30th Sept, which would have achieved little. But they could have bumped terms. They did neither.
That leaves ORG Technology Co., Ltd. A (002701 CH) as the sole bidder for CPMC Holdings (906 HK) . And arguably, an unwilling bidder at that.

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

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

Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.

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

There will be passive buying in Nextdc Ltd (NXT AU) and Charter Hall (CHC AU) and selling in Vital Healthcare Property Trust (VHP NZ) at the close on 20 September.
Charter Hall (CHC AU)‘s stock price jumped following announcement of results and that was accompanied by big short covering. There should still be more positioning here.
Nextdc Ltd (NXT AU)‘s increase in cumulative excess volume came on a drop in the stock price. There could be some covering here as positioning builds up.

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Sep 05

Daily Brief Industrials: Ecopro HN, Namoi Cotton Co Operative, Carraro India Limited, Western Carriers, Srg Takamiya and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Key Things to Watch in Ecopro HN’s Big Rights Offering
Ecopro HN: Rights Offering of 200 Billion Won
Namoi Cotton (NAM AU): Louis Dreyfus Declares Offer Unconditional
Carraro India Pre-IPO Tearsheet
Western Carriers Pre-IPO-Expanding Through a Combination of Asset-Light Model and Own Infrastructure
Takamiya (2445 JP) – Full Report

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

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.

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.

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

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.

Carraro India Pre-IPO Tearsheet

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.

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

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.

Takamiya (2445 JP) – Full Report

The Company specializes in temporary construction equipment and offers a one-stop service from development and manufacturing to sales, rentals, design and installation, as well as management and logistics.
Its flagship product, the next-generation scaffolding “Iq System,” was launched in 2014 and excels in safety and ease of use.
The Company is transitioning its business to a platform-based model aimed at generating stable income with reduced rental asset intensity.

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Sep 05

Daily Brief Industrials: Ecopro HN, Namoi Cotton Co Operative, Carraro India Limited, Western Carriers, Srg Takamiya and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Key Things to Watch in Ecopro HN’s Big Rights Offering
Ecopro HN: Rights Offering of 200 Billion Won
Namoi Cotton (NAM AU): Louis Dreyfus Declares Offer Unconditional
Carraro India Pre-IPO Tearsheet
Western Carriers Pre-IPO-Expanding Through a Combination of Asset-Light Model and Own Infrastructure
Takamiya (2445 JP) – Full Report

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

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.

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.

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

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.

Carraro India Pre-IPO Tearsheet

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.

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

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.

Takamiya (2445 JP) – Full Report

The Company specializes in temporary construction equipment and offers a one-stop service from development and manufacturing to sales, rentals, design and installation, as well as management and logistics.
Its flagship product, the next-generation scaffolding “Iq System,” was launched in 2014 and excels in safety and ease of use.
The Company is transitioning its business to a platform-based model aimed at generating stable income with reduced rental asset intensity.

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Sep 05

Daily Brief Financials: Bajaj Housing Finance, Challenger Ltd, GoFintech Innovation, General Insurance Corp Of India, NU Holdings, Far East Orchard, Migalo Holdings, Tremblant Global ETF and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Bajaj Housing Finance IPO – Will Trade at a Premium
Challenger Limited Placement – Discount Isn’t Enticing Enough for a Surprise Selldown
GoFinTech (290 HK)/Jinhai Medical (2225 HK): Double Bubble Trouble
General Insurance Corp of India OFS – Large One to Digest, and a Potential Overhang to Contend With
Nubank (Nubank) – Monday, Jun 3, 2024
kopi-C with Far East Orchard’s Group CEO: ‘We’re building an enduring Singapore real estate enterprise’
Migalo Holdings (5535 Jp) – 1Q Follow-Up
Tremblant Global Etf (TOGA) – Monday, Jun 3, 2024

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.

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.

GoFinTech (290 HK)/Jinhai Medical (2225 HK): Double Bubble Trouble

Sanergy (2459 HK), a graphite electrode manufacturer, was added to the MSCI Small-Cap Index on 30th August; and was due to enter the Hang Seng Composite Index on 9th September.
However, the SFC announced a concentration warning on the 2nd September. Shares promptly cratered ~98% yesterday (the 3rd September). Expect the HSCI inclusion to now be yanked.
This Sanergy debacle should refocus investors on other heavily concentrated stocks, such as Jinhai Medical (2225 HK), in which GoFintech (290 HK) (another heavily concentrated stock) has inexplicably been buying.

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.

Nubank (Nubank) – Monday, Jun 3, 2024

Nubank is the leader in digital banking in Latin America with high potential for earnings growth and market penetration
Lower expenses and higher customer satisfaction due to digital-first approach compared to traditional banks
Cost to serve is 85% lower than competitors due to lack of physical branches, leading to high customer preference and strong growth prospects

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

kopi-C with Far East Orchard’s Group CEO: ‘We’re building an enduring Singapore real estate enterprise’

By Geoff Howie

kopi-C with Far East Orchard’s Group CEO: ‘We’re building an enduring Singapore real estate enterprise’ Nearly a decade after entering the student housing market in the United Kingdom in 2015, Singaporean real estate company Far East Orchard continues to see massive potential for growth.
Established since 1967, Far East Orchard has a track record in real estate development, investment and management across residential, commercial, hospitality and Purpose-Built Student Accommodation (“PBSA”) properties in Australia, Japan, Malaysia, Singapore, and the United Kingdom (“UK”).

Migalo Holdings (5535 Jp) – 1Q Follow-Up

On August 7, 2024, Migalo Holdings Inc. (hereafter, the Company) announced its 1Q FY2025/3 earnings results.
Sales declined 10.6% YoY to ¥13,671 mn, and operating profit fell 56.9% YoY to ¥792 mn.
The declines in both sales and profit were anticipated, primarily due to the concentration of new property deliveries in the DX Real Estate business during the same period last year.

Tremblant Global Etf (TOGA) – Monday, Jun 3, 2024

TOGA is an ETF managed by Tremblant Capital that provides low-cost and tax-efficient exposure to the consumer/tech/media/industrial sectors
Founded by Brett Barakett, TOGA is ideal for asset allocators and small fund managers seeking sector exposure without the need for dedicated research resources
While liquidity may be limited at present, it is expected to improve as awareness of the product grows, making it worth exploring for VIC members at funds interested in tax efficiency.

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Sep 05

Daily Brief TMT/Internet: Nomura Research Institute, Fuji Soft Inc, Nextdc Ltd, PC Partner, China Tower , Intel Corp, Apple , Raspberry Pi, SAIC Motor, Salesforce.Com Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

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
Australia/NZ Real Estate: Stocks With (Large) Passive Flows
PC Partner: Relocating HQ and Listing to Singapore, 81% of Market Cap Is Cash
FXI Rebalance: China Tower (788 HK) Will Replace CICC (3908 HK)
Intel. Could Things Get Any Worse? You Bet. Here’s How.
Apple Restructures App Store Amid EU Regulations, Developer Dissatisfaction, and Market Pressures
Quiddity Leaderboard F100/250 Sep 24: Announcement Day; Final Expectations
Tech Supply Chain Tracker (05-Sep-2024): UK car market rebounds, EV growth shines at LCV Show.
salesforce.com Inc: Enhanced Product Offerings and Vertical Integration Driving Our Optimism!

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

Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX).
Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!)
Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.

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

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.

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

There will be passive buying in Nextdc Ltd (NXT AU) and Charter Hall (CHC AU) and selling in Vital Healthcare Property Trust (VHP NZ) at the close on 20 September.
Charter Hall (CHC AU)‘s stock price jumped following announcement of results and that was accompanied by big short covering. There should still be more positioning here.
Nextdc Ltd (NXT AU)‘s increase in cumulative excess volume came on a drop in the stock price. There could be some covering here as positioning builds up.

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.

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

China Tower (788 HK) will replace China International Capital Corporation (3908 HK) in the iShares China Large-Cap (FXI) (FXI US) at the close on 20 September.
The appears to be a lot more positioning and short interest in China International Capital Corporation (3908 HK) compared to China Tower (788 HK).
The listing of Midea Group Co Ltd A (000333 CH) H-shares could result in another change for the ETF prior to the next scheduled rebalance in December.

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.

Quiddity Leaderboard F100/250 Sep 24: Announcement Day; Final Expectations

By Janaghan Jeyakumar, CFA

In this insight, we take a look at our final expectations for ADDs/DELs for the F100 and F250 indices during the September 2024 index rebal event.
Yesterday (3rd September) was the base date for this rebalance event and the index changes will be confirmed after market close today.
We see one change for F100 and one change for F250 during the regular rebalance but there could be another change triggered by the Network International (NETW LN) deal completion.

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.

salesforce.com Inc: Enhanced Product Offerings and Vertical Integration Driving Our Optimism!

By Baptista Research

Salesforce, a prominent leader in customer relationship management (CRM) solutions, disclosed its fiscal 2025 second-quarter financial results, articulating significant developments and prospects, particularly in AI (artificial intelligence).
The earnings call, spearheaded by Salesforce executives including Chair and CEO Marc Benioff, illustrated both promising highlights and some challenges that investors need to consider.
Positively, Salesforce reported a robust quarter with revenue marking $9.33 billion, representing an 8% increase year-over-year and adjusting for currency fluctuations, a growth of 9%.

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Sep 05

Daily Brief Energy/Materials: POSCO Holdings, Rex Minerals, Crude Oil, Natural Gas, PetroTal, Lithos Group and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles
Rex Minerals (RXM AU): Scheme Vote on 10 October
Recessionary Signals as SPX Tests Resistance; Downgrading Energy to Underweight
Rex Minerals (RXM AU): 10th Oct Vote On Salim Group’s Offer
[US Crude Oil Options Weekly 2024/35] WTI Crude Oil on a Downward Trend as Demand Concerns Persist
[US Nat Gas Options Weekly 2024/35] Henry Hub Rebounds on Hot Weather but Excess Supply Limits Gains
PetroTal Corp (AIM: PTAL): Potential Reserve Addition
Sustainable Investing Surveyor – Focus on LiTHOS Group Ltd. (LITSF)

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

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.

Rex Minerals (RXM AU): Scheme Vote on 10 October

The Rex Minerals (RXM AU) IE considers MACH Metals Australia’s A$0.47 offer fair and reasonable as it is towards the upper end of the A$0.346 to A$0.484 valuation range.
The key conditions are shareholder and FIRB approvals. FIRB approval should be forthcoming as Salim is the largest shareholder and the cordial Indonesia-Australia relations.
An attractive offer, medium retail ownership and no independent substantial shareholder ensures a done deal. At the last close and for the 30 October payment, the gross/annualised spread is 3.3%/15.9%.

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).

Rex Minerals (RXM AU): 10th Oct Vote On Salim Group’s Offer

Back on the 8th July, copper-gold play Rex Minerals (RXM AU) entered into a Scheme with MACH Australia. MACH, a wholly-owned entity of Indonesia’s Salim Group, at A$0.47/share, in cash.
That’s a 71% premium to last close and a decade-high. The Offer has unanimous board support. Apart from Rex shareholder approval, the Offer requires FIRB signing off.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 10th October. Expected implementation on the 30 October. The IE says fair & reasonable.

[US Crude Oil Options Weekly 2024/35] WTI Crude Oil on a Downward Trend as Demand Concerns Persist

By Suhas Reddy

Despite a strong start, WTI prices fell 1.7% for the week ending 30/Aug, as demand concerns outweighed the worries of supply disruptions in Libya.
WTI options Put/Call volume ratio increased to 1.72 from 1.13 the week prior as put volume increased 45.6% WoW while call volume declined 4.5%.
WTI OI PCR increased to 0.78 (30/Aug) from 0.75 (23/Aug) as call OI rose 4.5% WoW and put OI increased by 8%.

[US Nat Gas Options Weekly 2024/35] Henry Hub Rebounds on Hot Weather but Excess Supply Limits Gains

By Suhas Reddy

US natural gas prices rose 5.2% for the week ending 30/Aug, driven by warmer weather forecasts and low prices encouraging power generators to favour gas over coal.
Henry Hub Put/Call volume ratio fell to 1 from 1.34 the previous week as put volumes dropped by 38.5% WoW, while call volumes declined by 17.5%.
Put OI rose for expirations in Sep, Oct, and Nov, while call OI increased for contracts expiring in Dec, Jan, and Feb.

PetroTal Corp (AIM: PTAL): Potential Reserve Addition

By Auctus Advisors

The VS1 sand has produced ~320 bbl/d of 18.6 API oil during a brief test of a sidetrack of Well 20H.
The oil gravity is similar to that found in the VS2 reservoir.
The VS1 reservoir has not been developed to date as the company has only focused on the VS2 that has much better permeability.

Sustainable Investing Surveyor – Focus on LiTHOS Group Ltd. (LITSF)

By Water Tower Research

The WTR Sustainable Index was down 0.7% W/W versus the S&P 500 Index (up 0.2%), the Russell 2000 Index (flat) and the Nasdaq Index (down 0.7%).
Energy Technology (13.7% of the index) was down 2.2%, while Industrial Climate and Ag Technology (46.6% of the index) was up 0.4%, ClimateTech Mining was down 1.3%, and Advanced Transportation Solutions (20.3% of index) was down 1.6%.
Top 10 Performers: FSR, BNRG, ELBM, EXRO, NHHH, HCNWF, EZGO, NEOV, IONR, MXL

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Sep 05

Daily Brief Health Care: China Traditional Chinese Medicine, Zai Lab , Scilex Holding , CytoSorbents , Solventum, Sonida Senior Living and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

China TCM (570.HK) Privatization Update- Pre-Conditions Won’t Be “An Obstacle” to the Entire Process
Zai Lab (9688 HK): Vyvgart Is Not the De-Risking Tool; Future Is Still Uncertain
SCLX: Company Sets up Spinoff
CTSO: CytoSorbents reports solid 2nd quarter 2024 financial results which were above our expectations. The company remains on track to submit DrugSorb-ATR for regulatory approval in Q3 2024.
Solventum Corp (SOLV) – Monday, Jun 3, 2024
Sonida Senior Living Inc (SNDA) – Monday, Jun 3, 2024

China TCM (570.HK) Privatization Update- Pre-Conditions Won’t Be “An Obstacle” to the Entire Process

By Xinyao (Criss) Wang

We have seen positive progress of the privatization of China TCM, which is still considered an important project on the agenda. CNPGC’s new leadership is very supportive of the deal.
The SAMR process has begun. There should be no problem to meet the Pre-Conditions. If the approval process takes more time, Long Stop Date would be extended.
Considering China Resources has decided to acquire Tasly, we think the integration of TCM business by CNPGC is expected to accelerate. We remain optimistic and this deal will get up.

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.

SCLX: Company Sets up Spinoff

By Zacks Small Cap Research

SCLX is filling a much-needed area of the health care sector, that of developing non-opioid pain relief products.
The company already has commercialized products that are proven to improve patients’ lives.
The company announced a merger between a SPAC and a Scilex subsidiary that is developing a non-opioid novel injectable corticosteroid, which will set up a spinoff of the combined entity in early 2025.

CTSO: CytoSorbents reports solid 2nd quarter 2024 financial results which were above our expectations. The company remains on track to submit DrugSorb-ATR for regulatory approval in Q3 2024.

By Zacks Small Cap Research

CytoSorbents is commercializing its E.U. approved CytoSorb blood purification technology to treat life-threatening conditions in the intensive care unit and cardiac surgery.
First half 2024 product sales improved 12% from last year while product gross margins rose to 75%.
The company also seeks U.S. and Canadian approval of a second product, DrugSorb-ATR, to reduce perioperative bleeding risk in patients on blood thinners during cardiac surgery.

Solventum Corp (SOLV) – Monday, Jun 3, 2024

Solventum (SOLV) is currently undervalued compared to its competitors, trading at only 7.4x EBITDA and 9.1x EPS
SOLV has strong financial metrics with high gross margins, operating margins, EBITDA margins, and ROE
The company operates in various growth industries such as wound care, oral care solutions, healthcare information systems, and water purification, presenting a rare opportunity for potential upside of +146% if it were to trade in line with its competitors

Sonida Senior Living Inc (SNDA) – Monday, Jun 3, 2024

Sonida’s current portfolio is worth $400M
Potential acquisition value of properties over the next 12-18 months is conservatively $700-800M
Recent actions have positioned Sonida well to take advantage of upcoming opportunities in the senior living industry, poised for significant growth in the coming years

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Sep 05

Daily Brief Consumer: Ryohin Keikaku, Seven & I Holdings, Midea Group Co Ltd A, Sony Corp, Hojeon, Fast Retailing, China Tourism Group Duty Free Corp Ltd, Hyundai Motor India , Dollar General and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT
For Long-Term Investors, Seven & I Is the Better Bet
Midea Group H Share Listing: AH Discount Views
Sony’s (6758) Bold Move into Web3: What Is Soneium?
Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal
Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
China A50 ETF Rebalance: Two Adds, Two Deletes, as Expected
Hyundai Motor India: Feeling the Heat as SUV Rivals Surge
China Tourism Group (601888 CH | BUY | CNY): When Falling Knife Turns into Value Investing
Is Dollar General in Trouble? New Outlook, ‘Financially Constrained’ Customers Spark Major Concerns!

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

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.

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?

Midea Group H Share Listing: AH Discount Views

Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.

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.

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.

Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor

The Sep24 Nikkei 225 Review Results are out, discussed in Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT.
That lets us move to Mar25 Nikkei 225 Rebal predictions. For the moment, I see 2 IN and 2 OUT, again.
And at the moment, another Fast Retailing capping exercise looks likely, for roughly US$3bn a side to trade.

China A50 ETF Rebalance: Two Adds, Two Deletes, as Expected