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Smartkarma Daily Briefs

Apr 10
0

Daily Brief Credit: Morning Views Asia: Tata Motors ADR and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Tata Motors ADR, Xiaomi Corp
  • Melco Resorts – Event Flash – Proposing USD 500 Mn 8NC3 Notes Issuance – Lucror Analytics
  • Morning Views Asia: Pakuwon Jati, Sunny Optical Technology Group

Morning Views Asia: Tata Motors ADR, Xiaomi Corp

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Melco Resorts – Event Flash – Proposing USD 500 Mn 8NC3 Notes Issuance – Lucror Analytics

By Leonard Law, CFA

Melco Resorts and Entertainment (MLCO) announced yesterday that it is planning to issue USD 500 mn in 8NC3 notes. In addition, subsidiary Studio City has initiated a tender offer to repurchase up to USD 100 mn of the STCITY 6.0 ’25s. We view positively MLCO’s proposed bond issuance and the maturity extension of its credit facilities, as well as Studio City’s tender offer, as they demonstrate management’s proactive approach in managing the company’s debt maturities. The transactions will significantly reduce MLCO’s refinancing risk in FY 2025, as the company would have c. USD 1.5 bn of availability under its credit facilities that can be used to help repay the USD 1.0 bn MPEL 4.875 ’25s due in June 2025. Moreover, management has committed to prioritise debt reduction over dividend payments in FY 2024.

We view the price talk of 7.75-7.875% as fair.

Morning Views Asia: Pakuwon Jati, Sunny Optical Technology Group

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Apr 10
0

Daily Brief ECM: HD Hyundai Marine Solution IPO Valuation Analysis and more

By | Daily Briefs, ECM

In today’s briefing:

  • HD Hyundai Marine Solution IPO Valuation Analysis
  • WT Micro Placement – Another Well-Flagged Taiwan GDR Offering, This One Is Easier to Digest
  • ZEEKR IPO: Latest Updates as the IPO Process Restarts
  • OceanaGold Philippines IPO – Small yet Asking for a Lot
  • Afcons Infrastructure Limited Pre-IPO Tearsheet
  • Kayou Pre-IPO – The Negatives – Unexplained 9M23 Slump

HD Hyundai Marine Solution IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of HD Hyundai Marine Solution is target price of 98,254 won per share, representing an 18% upside from the high end of the IPO price range.
  • The company’s ROE averaged 67% in 2022 and 2023. In comparison, the comps’ ROE averaged 10.6% in the same period. [HD Hyundai Marine Solution > Comps]
  • Our base case valuation is based on 24.7x P/E (comps’ average) using our estimated net profit of 178.7 billion won for the company in 2024. 

WT Micro Placement – Another Well-Flagged Taiwan GDR Offering, This One Is Easier to Digest

By Clarence Chu

  • WT Microelectronics (3036 TT) is looking to raise US$341m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
  • The deal is a very well flagged one, and will be a relatively small one to digest at just 4.8 days of the stock’s three month ADV.
  • In this note, we run the deal through our ECM framework and comment on the deal dynamics.

ZEEKR IPO: Latest Updates as the IPO Process Restarts

By Arun George

  • ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has restarted its IPO process to raise US$500 million by listing on the NYSE.
  • We previously discussed the IPO in ZEEKR IPO: The Bull Case and ZEEKR IPO: The Bear Case. 
  • The latest SEC filings reinforce the bear case due to weak industry sentiment, rapidly slowing growth, ongoing operating losses and volatile FCF. 

OceanaGold Philippines IPO – Small yet Asking for a Lot

By Ethan Aw

  • OceanaGold Philippines (OGCP000D PM) is looking to raise up to US$140m in its Philippines IPO.
  • OceanaGold Philippines (OGPI) is a producer of gold and copper in the Philippines, and a subsidiary of OceanaGold Corporation, a Toronto Stock Exchange (TSX) listed gold mining and exploration company.
  • In this note, we talk about the company’s historical performance and share our quick thoughts on valuation.

Afcons Infrastructure Limited Pre-IPO Tearsheet

By Clarence Chu

  • Afcons Infrastructure Limited (6595396Z IN) is looking to raise US$840m in its upcoming India IPO. The bookrunners are Jefferies, Nomura, ICICI Securities, SBI Capital, DAM Capital, and Nuvama Wealth.
  • Afcons Infrastructure Limited (Afcons) is the flagship infrastructure engineering and construction company of the Shapoorji Pallonji group.
  • As per the Fitch report, the firm was one of India’s largest international infrastructure companies as per the 2023 ENR top international contractors ranking, based on FY23 international revenue.

Kayou Pre-IPO – The Negatives – Unexplained 9M23 Slump

By Sumeet Singh

  • Kayou is looking to raise up to US$500m in its upcoming HK IPO.
  • Kayou is a Chinese pan-entertainment product retailer of toys, with trading cards in particular as its core product.
  • In this note, we talk about the not-so-positive aspects of the deal.

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Apr 10
0

Daily Brief Event-Driven: The TOPIX Big April Basket Flows:  ¥200bn a Side Including Many Multi-ADV Flows and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • The TOPIX Big April Basket Flows:  ¥200bn a Side Including Many Multi-ADV Flows
  • Quiddity Leaderboard CSI 300/​​500 Jun 24: SHORTs Down 11% Vs Index Since Mid-Feb; Change the Hedge
  • S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to June
  • KT’s Foreign Room Below 7.5%, Weight Down-Adjustment Expected in May, Resulting in 3x ADTV Outflow
  • Quiddity Leaderboard SSE50/180 Jun 24: Past Trades Successful but Time to Unwind Some
  • China TCM (570.HK) – Latest Updates on Privatization and the Potential Merger with Taiji Group
  • Itochu Targets Fashion E-Commerce Via Jade Takeover of Magaseek
  • Industrivärden Q1 2024, NAV Evolution and Discount
  • EQD | KOSPI 200 WEEKLY Buy-The-Dip Opportunity

The TOPIX Big April Basket Flows:  ¥200bn a Side Including Many Multi-ADV Flows

By Travis Lundy

  • Every year in April there is an interesting phenomenon with TOPIX. It is what Janaghan Jeyakumar, CFA calls “The Big April Basket.” The TSE re-assesses Liquidity Factor Coefficients.
  • It also does a FFW change, and this year it has Phased Weight Reductions for those slowly leaving TOPIX and PWR re-inclusions for those identified last October as going back.
  • Janaghan had 18 “High Conviction” LF removals. All were hits. They are upweights. Then there are 34 changes to FFW coefficients.

Quiddity Leaderboard CSI 300/​​500 Jun 24: SHORTs Down 11% Vs Index Since Mid-Feb; Change the Hedge

By Janaghan Jeyakumar, CFA

  • CSI 300 represents the 300 largest stocks by marketcap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500. There is subjectivity.
  • Here we look at potential ADDs/DELs for the CSI 300/500 rebalance in June 2024. With 93% of time passed, I expect 11 changes for CSI300, 50 for CSI 500. 
  • Some names have changed since my last insight, but the long/short trades recommended eight weeks ago gained 11.26% since. We make small changes this time.

S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to June

By Brian Freitas

  • With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
  • The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
  • There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.

KT’s Foreign Room Below 7.5%, Weight Down-Adjustment Expected in May, Resulting in 3x ADTV Outflow

By Sanghyun Park

  • KT’s foreign ownership declined since January, below 7.5% by last month. If it remains, the adjustment factor halves to 0.25, impacting KT’s Global Index weight.
  • With the May review screening date estimated for April 17th, swift reversal of foreign inflows seems improbable. Thus, KT’s adjustment factor dropping to 0.25 is likely.
  • This could lead to an outflow of 1.6M shares, approximately 3x ADTV. Given the prolonged price impact on telcos, exploring a long-short setup with SKT might be prudent.

Quiddity Leaderboard SSE50/180 Jun 24: Past Trades Successful but Time to Unwind Some

By Janaghan Jeyakumar, CFA

  • SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
  • In this insight, we take a look at our expectations for potential index changes for SSE 50 and SSE 180 during the June 2024 index rebal event.
  • According to my estimates, the SSE 50 expected ADDs and DELs could see US$1.7bn index buying and US$828mn index selling respectively (leaving nearly $900mm of funding sales to do).

China TCM (570.HK) – Latest Updates on Privatization and the Potential Merger with Taiji Group

By Xinyao (Criss) Wang

  • Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.
  • The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.
  • We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.

Itochu Targets Fashion E-Commerce Via Jade Takeover of Magaseek

By Michael Causton

  • Jade Group has acquired Magaseek and will merge the online mall with its own fashion e-commerce platform, Locondo and hopes to create a growing rival to Zozo.
  • Magaseek was founded by Itochu 20 years ago, and the deal underlines Itochu’s growing influence over Jade as a proxy for its ambitions in fashion e-commerce and distribution.
  • However, Jade Group has seen little organic growth for its Locondo platform in recent years, and while its acquisitions have added scale, integration has been haphazard.

Industrivärden Q1 2024, NAV Evolution and Discount

By Jesus Rodriguez Aguilar

  • As of end of Q1, NAV was SEK 166.8 billion (SEK 386/share). NAV increased by 11% due to a sharp decrease in leverage, while the portfolio value rose by 6%.
  • Industrivärden C shares are trading at a 5.5% discount to NAV (vs. 8.8% average for the last 5 years). It seems risky to bet on a further discount reduction.
  • My target NAV is SEK 173,116 million (SEK 400.8/share). My TP for the C shares of Industrivärden, assuming a 5% discount to NAV, is SEK 361.7.

EQD | KOSPI 200 WEEKLY Buy-The-Dip Opportunity

By Nico Rosti

  • The KOSPI 200 INDEX is currently pulling back for a 2nd week in a row.
  • This could be an opportunity to go LONG,  if the pullback is limited to this (or at most the next) week closing down and reaching targets between 365 and 338.
  • If the index goes down for 3 weeks and reached below 343 caution is advised: the pullback may be larger than expected in that case.

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Apr 10
0

Daily Brief Equity Bottom-Up: Taiwan Tech Weekly: TSMC Wins Major U.S. Support; Nanya Results; UMC Rush Orders and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Taiwan Tech Weekly: TSMC Wins Major U.S. Support; Nanya Results; UMC Rush Orders
  • [#21] Namaste India 🙏 | Business Updates and Earnings Playbook
  • China Pair Trade Idea: Long Air China (753 HK), Short CSA (1055 HK)
  • Unilever (ULVR) To Separate Its Ice Cream Business
  • 10 in 10 – All about Singapore Depository Receipts (SDRs)
  • TAL Education Group: Initiation Of Coverage – What Is Its Real Business Strategy And What Is The Impact Of AI On Its Business? – Major Drivers
  • Full Report – Golf Digest Online (3319 JP)
  • Cardonomics
  • Alpha Metallurgical Resources Inc.: Initiation Of Coverage – What Are The Geopolitical Factors Influencing Coal Markets? – Major Drivers
  • Masimo Corporation: Initiation Of Coverage – Expansion into Hearables and Wearables Market! – Major Drivers

Taiwan Tech Weekly: TSMC Wins Major U.S. Support; Nanya Results; UMC Rush Orders

By Vincent Fernando, CFA

  • TSMC (2330.TT; TSM.US): US$6.6bn from US CHIPS Act; the Earthquake Impact and the 2nd Japanese Fab. 
  • Memory Monitor: Nanya’s Results to Provide Latest Color on DRAM Post Earthquake; Short Int Rising 
  • UMC (2303.TT; UMC.US): Some Rush Orders Coming in and 2Q24F Could Post Positive QoQ. 

[#21] Namaste India 🙏 | Business Updates and Earnings Playbook

By Pranav Bhavsar

  • Market momentum continues to be strong. As we head into earnings season, the momentum is likely to continue.
  • Strong operational updates Info Edge India (INFOE IN); Aavas Financiers Ltd (AAVAS IN) & Sula Vineyards (SULA IN).  
  • The overall market sentiment, represented by the average revisions across all sectors, is nearly flat, with a slight positive revision for FY1E at 0.02% and essentially stable for FY2E.

China Pair Trade Idea: Long Air China (753 HK), Short CSA (1055 HK)

By Osbert Tang, CFA

  • Air China Ltd (H) (753 HK) had 15.4% interest-bearing debt denominated in USD, vs. 21.3% for China Southern Airlines (1055 HK), making it less exposed to Rmb depreciation. 
  • Recovery of international traffic and routes will help to lower unit costs. Air China’s unit costs for FY23 were Rmb4.0445, whereas CSA’s were only Rmb3.2000.
  • There is more upside for Air China’s load factor which was down 7.8pp YoY in FY23, compared with -4.7pp for CSA. 

Unilever (ULVR) To Separate Its Ice Cream Business

By Garvit Bhandari

  • Unilever announced plans to separate its ice cream business into a separate publicly listed company (SpinCo), potentially via a spin-off transaction.
  • Post separation, Unilever will focus on four core businesses: beauty and wellbeing, personal care, home care, and nutrition. The separation is expected to be completed by the end of 2025.
  • The separation will allow Unilever to allocate capital and resources more efficiently towards higher growth categories with significant potential to scale.

10 in 10 – All about Singapore Depository Receipts (SDRs)

By Geoff Howie

10 in 10 – All about Singapore Depository Receipts (SDRs)

TAL Education Group: Initiation Of Coverage – What Is Its Real Business Strategy And What Is The Impact Of AI On Its Business? – Major Drivers

By Baptista Research

  • TAL Education Group (TAL) reported net revenues of USD 373.5 million for its third quarter fiscal year 2024, exhibiting an increase of 60.5% and 63.7% in U.S. dollar and RMB terms.
  • Despite the impressive revenue growth, profitability remained a concern with non-GAAP loss from operations and non-GAAP net loss attributable to TAL amounting to USD 10.2 million and USD 1.9 million, respectively.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Full Report – Golf Digest Online (3319 JP)

By Sessa Investment Research

  • On the surface, FY23/12 consolidated OP -68% YoY, profit ATOP -53%, and FY24/12 initial guidance for a profit ATOP net loss may appear to indicate a challenging earnings environment.
  • However, closer examination reveals steady earnings improvement, and the new MTP through FY26/12 targets recouping major overseas growth investments.
  • The table below shows sequential improvement in the amount change YoY for Group EBITDA, OP and profit ATOP every quarter, with profits at all 9 levels posting YoY gains in the 4Q.

Cardonomics

By The Mikro Kap

  • Given that it has already been 6 months since I first bought Card Factory and the stock is currently trading only slightly above my average purchase price, I decided to send you guys a short and sweet thesis on why I believe $CARD.L is an attractive opportunity.
  • Card Factory is a greeting card and other “celebration essentials” retailer operating primarily in the UK.
  • What is unique about the Northern Europeans, particularly the British, is their habit of buying greeting cards. It is ingrained in their culture

Alpha Metallurgical Resources Inc.: Initiation Of Coverage – What Are The Geopolitical Factors Influencing Coal Markets? – Major Drivers

By Baptista Research

  • Alpha Metallurgical Resources, a supplier of metallurgical products for the steel industry, closed its fourth quarter with adjusted EBITDA of $266 million and achieved over $1 billion in adjusted EBITDA for the year.
  • This is the second consecutive year in which the company attained such a milestone despite facing considerable challenges during the year.
  • Alpha highlighted the robustness of its management approach which included proactive identification of issues and proactive response plans that ensured minimal impact on performance.

Masimo Corporation: Initiation Of Coverage – Expansion into Hearables and Wearables Market! – Major Drivers

By Baptista Research

  • Masimo Corporation had a mixed Q4 and fiscal year 2023 earnings call, reporting both positive results and some challenges.
  • The company generated over $2 billion in consolidated revenues, with healthcare revenues reaching $1.28 billion.
  • In addition, Masimo saw strong growth in its hearables business and reported a record number of contract wins.

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Apr 10
0

Daily Brief Macro: Israel-Iran War Coming? and more

By | Daily Briefs, Macro

In today’s briefing:

  • Israel-Iran War Coming?
  • Introduction: Initiation of Coverage in the Materials Sector
  • Positioning Watch – Reflation bets are back in
  • Monday Macro: Thoughts on the Next 15 Months
  • HEM: Rolling Precariously
  • UK Politics: Plague On Both Your Houses
  • The Evolving and Varying Demographic Imprint

Israel-Iran War Coming?

By Mikkel Rosenvold

  • Welcome to this week’s Great Game, where we cover current geopolitical events relevant to your portfolio!
  • Situation: Israel attacked the Iranian embassy in Damascus, Syria, killing several high ranking Republican Guard officers, and the whole region is now anticipating the Iranian response.
  • Meanwhile, Israel and Hamas are making little progress in their truce talks in Cairo while Israel has withdrawn from smaller areas in Southern Gaza amidst heavy diplomatic pressure from the US.

Introduction: Initiation of Coverage in the Materials Sector

By Sameer Taneja

  • Investics Research will initiate coverage of the materials sector in April 2024, starting with iron ore and then gold, coal, and steel in subsequent months (in that order).
  • The areas of coverage on asset classes will encompass the underlying commodity and the associated equities. 
  • Areas of differentiation would include in-depth coverage of all equities (small/mid and large cap) and actionable tactical ideas on the commodity.

Positioning Watch – Reflation bets are back in

By Andreas Steno

  • Hello everyone, and welcome back to our weekly positioning/sentiment overview.
  • The mood in equity markets is still good, with major indices stabilizing at levels far above all time highs despite taking some time to swallow hawkish comments from Fed officials.
  • Markets seemingly don’t care about the repricing of Fed rates until they hear it from Powell’s mouth or until they get a feeling of true pivot (on the pivot).

Monday Macro: Thoughts on the Next 15 Months

By Adventurous Investor

  • I want to start this Monday’s Macro with a very top-down discussion before digging into helpful market data.
  • Here’s the thought – we’re entering a potentially dangerous, extended 12-to-15-month period for big macro debates.
  • What matters for markets globally is what happens in the US, and what matters in the US is what the US Federal Reserve is thinking.

HEM: Rolling Precariously

By Phil Rush

  • Despite resilient data, there is market skepticism regarding the effectiveness of policy.
  • Increasing unemployment rates could necessitate interest rate reductions.
  • The Bank of England may delay cuts until February 2025 due to excess demand and inflation, while the Federal Reserve and European Central Bank may delay until September 2024.

UK Politics: Plague On Both Your Houses

By Alastair Newton

  • Recent opinion polls suggest a potential record defeat for the Conservative Party in the upcoming general election.
  • There is a risk that the Labour Party and particularly the Conservatives may misinterpret the results.
  • Both parties could potentially draw incorrect conclusions from the election outcome.

The Evolving and Varying Demographic Imprint

By Thomas Lam

  • The profile and composition of demographics, all else equal, are likely to be a persistent headwind for advanced economies
  • The impact of demographics on the Japan economy has been eye-catching for the last two decades through 2020
  • But the other advanced economies, all else equal, can potentially experience greater demographic headwinds than Japan through 2030

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Apr 09
0

Daily Brief Industrials: Shinsung Delta Tech, Hainan Jinpan Smart Technology, Amaero International Ltd, Fluence Corp, Odyssey Marine Exploration and more

By | Daily Briefs, Industrials

In today’s briefing:

  • KOSDAQ150 Index Rebalance Preview: Potential Adds Still Outperforming
  • STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform
  • Amaero Internaitonal (ASX:3DA) RaaS Interview Transcript 8 April 2024
  • Amaero International Ltd – Binding off-take agreement boosts strategic C103 position
  • Fluence Corp Ltd – Watershed complete, growth strategy in play
  • Odyssey Marine Exploration, Inc. – Urgency Around Seabed Mining Increases

KOSDAQ150 Index Rebalance Preview: Potential Adds Still Outperforming

By Brian Freitas

  • With nearly 85% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
  • Prior to the June rebalance, C&C International (352480 KS) will replace CanariaBio (016790 KS) in the index following CanariaBio being listed as an Administrative Issue and an Investment Attention Issue.
  • The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index since the start of the review period. Lighten positions ahead of the end of the review period.

STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform

By Brian Freitas

  • The review period for the June rebalance ends 30 April. We expect the changes to be announced 31 May with the implementation taking place after the close on 14 June.
  • We forecast 10 changes for the index, including migrations between the STAR 100 Index and the SSE STAR50 (STAR50 INDEX). 
  • Excluding the migrations, the potential adds have outperformed the potential deletes over the last few months and that could continue as we head to the end of the review period.

Amaero Internaitonal (ASX:3DA) RaaS Interview Transcript 8 April 2024

By Research as a Service (RaaS)

  • Interview discusses the offtake agreement and opportunity to expand beyond the current arrangement, the $20m capital raised and outlook for future funding needs, update on strategic equity/debt in the US and milestones to expect over the next six months.

Amaero International Ltd – Binding off-take agreement boosts strategic C103 position

By Research as a Service (RaaS)

  • Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors, developing a critical metals alloy powder manufacturing facility in Tennessee, USA. The company has secured a binding offtake agreement for the supply of C103 additive manufacturing powder, a key milestone in the development of its critical metals powder manufacturing presence in the US. Concurrently, Amaero has raised $20m by way of a placement to institutional investors, which the company anticipates will be the last equity capital raise in the Australian market.
  • Going forward, Amaero says it intends to seek equity capital from strategic US investors.
  • We continue to incorporate Amaero’s guidance that it expects to report an EBITDA loss of $14m in CY2024 and to break-even in CY2025.

Fluence Corp Ltd – Watershed complete, growth strategy in play

By Research as a Service (RaaS)

  • Fluence Corporation (ASX:FLC) provides water and wastewater treatment, and reuse solutions, for the municipal, commercial, and industrial markets worldwide.
  • The company has a proven suite of products and expertise, both proprietary and otherwise, which it has used to deliver more than 850 projects globally.
  • After some historical missteps, FLC has now been completely rejuvenated through the appointment of a highly regarded and proven US-based management team and reinvigorated board.

Odyssey Marine Exploration, Inc. – Urgency Around Seabed Mining Increases

By Water Tower Research

  • Industry needs batteries and batteries need metals. As numerous studies have concluded, even with slightly slower than previously anticipated growth in EV adoption and renewable energy (wind and solar) buildout, demand for metals going into lithium batteries is expected to exceed current estimates for said metals’ production as early as 2026-28.
  • The implied need to find and develop sufficient new resources of these metals to satisfy the expected demand has become a major focus for battery and auto OEMs, as well as governments set on the path to electrification of their economies.
  • More plentiful, less harmful. Many industry and investment banks’ reports also conclude that traditional terrestrial resources in the development or even exploration phase currently are not sufficient to meet the expected demand, suggesting other unconventional resources require commercial development.

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Apr 09
0

Daily Brief Energy/Materials: Azure Minerals, Bangchak Corporation, ADX Energy Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Azure Minerals (AZS AU): FIRB Approval Concerns Are Overdone
  • SET50 Index Rebalance Preview: Three Potential Changes in June
  • ADX Energy (ASX: ADX): Restarting production at Anshof

Azure Minerals (AZS AU): FIRB Approval Concerns Are Overdone

By Arun George

SET50 Index Rebalance Preview: Three Potential Changes in June

By Brian Freitas

ADX Energy (ASX: ADX): Restarting production at Anshof

By Auctus Advisors

  • The Permanent Production Facility (PPF), with a capacity of 3,000 bbl/d of liquids, has been commissioned and the Anshof-3 well has recommenced production at a rate of 134 bbl/d with no water.
  • The operation has been undertaken in line with expectations and within budget.
  • The oil production rate at Anshof-3 is 16% above the rate prior to shut-in.

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Apr 09
0

Daily Brief Health Care: Aster DM Healthcare Ltd, Ansell Ltd, NKMax, Gland Pharma Ltd, Natera Inc, Roivant Sciences Ltd, BenQ BM Holding Cayman Corp and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Aster DM Healthcare’s Special Dividend & Restructuring
  • Ansell Placement – Undertaking a Large Acquisition as Sector Headwinds Remain
  • Special Changes in KOSDAQ 150: Deletion (NKMAX) + Addition (GI Innovation)
  • Gland Pharma Ltd (GLAND IN): Business Recovery Seems To Be Overlooked by Mr. Market
  • Natera Inc.: Initiation Of Coverage – Can It Successfully Leverage The Invitae Acquisition? – Major Drivers
  • Roivant Sciences Ltd.: Initiation Of Coverage – Acquisition Of New Programs To Diversify In Biosciences! – Major Drivers
  • BenQ BM Holding Cayman Corp Pre-IPO Tearsheet

Aster DM Healthcare’s Special Dividend & Restructuring

By Nimish Maheshwari

  • Aster DM Healthcare Ltd (ASTERDM IN) completes a significant restructuring, separating its India and GCC operations, with a consortium led by Fajr Capital acquiring a 65% stake in Aster GCC. 
  • The substantial cash consideration received provides financial flexibility for further investments, debt reduction, or strategic opportunities.
  • Explore the implications of Aster’s restructuring on shareholder value, with a special dividend of INR 110 to INR 120 per share planned.

Ansell Placement – Undertaking a Large Acquisition as Sector Headwinds Remain

By Clarence Chu

  • Ansell Ltd (ANN AU) is looking to raise US$262m in its primary follow-on to partially fund its acquisition of KCPPE.
  • Despite the firm having been on an acquisition spree, it remains uncertain to us if the market has been factoring in such a large one. 
  • The deal would be a large one to digest, representing 52.5 days of the stock’s three month ADV.

Special Changes in KOSDAQ 150: Deletion (NKMAX) + Addition (GI Innovation)

By Douglas Kim

  • On 8 April, the Korea Exchange announced special changes to KOSDAQ 150. NKMAX will be excluded from KOSDAQ 150 and it will be replaced by GI Innovation.
  • NKMAX was designated as “administrative issue” and “investment attention issue” on 8 April 2024, which resulted in the Korea Exchange deciding to remove this stock from KOSDAQ 150. 
  • We believe that this inclusion of GI Innovation in KOSDAQ 150 is likely to further positively impact its share price.

Gland Pharma Ltd (GLAND IN): Business Recovery Seems To Be Overlooked by Mr. Market

By Tina Banerjee

  • Gland Pharma Ltd (GLAND IN) reported mid-single-digit revenue and EPS growth in its base business (ex-Cenexi) during 9M FY24. The company is confident to end FY24 on a high note.
  • Gland Pharma starts FY25 on a strong note with gaining U.S. approval for eribulin mesylate injection, used for breast cancer that has spread to other parts of the body.
  • Over the next 12–15 months, Gland Pharma is poised for enhanced geographical foot-print in Europe through Cenexi. The addressable CDMO business opportunity is estimated at €4B.

Natera Inc.: Initiation Of Coverage – Can It Successfully Leverage The Invitae Acquisition? – Major Drivers

By Baptista Research

  • Natera, Inc.’s latest quarterly earnings reveal positive growth prospects and the firm’s commitment to maintaining momentum in their healthcare ventures.
  • The company saw a rise in revenue, reaching $311 million for Q4, a substantial growth of 43% over the same period in 2022.
  • Furthermore, its full-year revenues were reported at $1.08 billion, up by more than 30% compared to the previous year.

Roivant Sciences Ltd.: Initiation Of Coverage – Acquisition Of New Programs To Diversify In Biosciences! – Major Drivers

By Baptista Research

  • This is our first report on Roivant.
  • The company’s Q3 2023 earnings were decent and the neutral positives can be highlighted from the continuous growth of VTAMA, ROIV’s best-selling branded topical in psoriasis, recording over 300,000 prescriptions and revenues of $20.7 million.
  • Additionally, the pipeline for Roivant has compelling developments, with brepocitinib showing promising potential in orphan rheumatology.

BenQ BM Holding Cayman Corp Pre-IPO Tearsheet

By Clarence Chu

  • BenQ BM Holding Cayman Corp (2228515D KY) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC and Citigroup.
  • BenQ BM Holding Cayman Corp (BenQ BM) is a general hospital operator.
  • As of Dec 2023, BenQ BM owned and operated two hospitals, with a total combined GFA of approximately 380,000 sqm and 1,850 registered beds.

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Apr 09
0

Daily Brief TMT/Internet: Samsung Electronics, Taiwan Semiconductor (TSMC), Maxlinear Inc Class A, Nanya Technology, Naspers , MultiChoice Group, Ubiquiti Inc. and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Samsung Electronics: Block Deal Sale of 5.2 Million Shares by Lee Boo-Jin
  • Samsung Electronics Placement – Better Timing This Time Around
  • TSMC (2330.TT; TSM.US): US$6.6bn from US CHIPS Act; the Earthquake Impact and the 2nd Japanese Fab.
  • Beaten Down Semiconductor Could be AI Play
  • Memory Monitor: Nanya’s Results to Provide Latest Color on DRAM Post Earthquake; Short Int Rising
  • Naspers (NPN) X Prosus (PRX): Performance for Q1 2024, Gains Driven by Tencent, NAV Growth
  • Canal+/Multichoice Group: Agreed Offer
  • UI: Product Rollouts Fuel for Optimism

Samsung Electronics: Block Deal Sale of 5.2 Million Shares by Lee Boo-Jin

By Douglas Kim

  • After the market close on 8 April, it was reported that Lee Boo-Jin will sell 5,247,140 shares of Samsung Electronics in a block deal (up to 443 billion won).
  • The expected block deal sale price is 83,700 to 84,500 won per share, which represents a discount rate of up to 0.95% compared to the closing price on 8 April. 
  • We are positive on this block deal sale and on Samsung Electronics. We would take the deal. 

Samsung Electronics Placement – Better Timing This Time Around

By Sumeet Singh

  • KEB Hana Bank, on behalf of Lee Boo-Jin, is looking to raise up to US$325m via selling 0.1% of  Samsung Electronics (005930 KS).
  • The deal appears to be somewhat well flagged and the company recently reported better operating numbers for 1Q24.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

TSMC (2330.TT; TSM.US): US$6.6bn from US CHIPS Act; the Earthquake Impact and the 2nd Japanese Fab.

By Patrick Liao

  • Today, the U.S. Department of Commerce and TSMC Arizona have signed a non-binding preliminary memorandum of terms for US$6.6 billion in direct funding under the CHIPS and Science Act.
  • We estimate the impact of the earthquake on April 3rd should result in a loss of within 0.5% in 2Q24F, which means it should not affect our 2Q24F revenue expectations.
  • TSMC’s 1st Japan Fab is expected to commence pilot production in February, and the 2nd Fab is projected to begin production of N6/N7 in 2027F.

Beaten Down Semiconductor Could be AI Play

By Douglas O’Laughlin

  • Maxlinear has probably been among this semiconductor cycle’s worst companies, if not the worst.
  • I think that it might be time to give them a fresh look.
  • Maxlinear was founded in 2003 in Carlsbad, California, by eight engineers. Today, Kishore Seendripu (CEO/Chairmen) and Curtis Ling (CTO) are still founders and work at the company. Maxlinear is a fabless company focused on mixed-signal products in the semiconductor industry.

Memory Monitor: Nanya’s Results to Provide Latest Color on DRAM Post Earthquake; Short Int Rising

By Vincent Fernando, CFA

  • DRAM producer Nanya Tech will report its 1Q24E results on April 10th.
  • While Micron has said it is evaluating the impact of the Taiwan earthquake on its operations and has halted price discussions with clients, Nanya could provide latest DRAM outlook color.
  • Short interest has spiked ahead of Nanya’s results; We note that the company has a large revenue and margin rebound it needs to deliver on to meet 2024E consensus.

Naspers (NPN) X Prosus (PRX): Performance for Q1 2024, Gains Driven by Tencent, NAV Growth

By Charlotte van Tiddens, CFA

  • Naspers and Prosus outperformed the benchmark by a large margin, ending the quarter up 7.3% and 6.7%, respectively. The Capped SWIX finished the quarter down 2.3%.
  • Tencent was up 3.5% in HKD and 6.5% in ZAR.
  • Tencent currently makes up 74% of Prosus’ NAV, down 1 percentage point from 75% at the start of the year.

Canal+/Multichoice Group: Agreed Offer

By Jesus Rodriguez Aguilar

  • MultiChoice Group (MCG SJ) and Canal+ announced a cooperation agreement (with exclusivity period) regarding Canal+’s mandatory offer at ZAR 125/share (c. $1.9 billion), 67% premium, 6.7x EV/25e EBITDA.
  • On both multiples and DCF, the offer seems fair. My fair value estimate (DCF-based) is ZAR 122.68/share (WACC 16.5%, 2.4% implied perpetuity growth rate).
  • Considering the 133% share decline from March-November 2023, shareholders must be relieved by the offer and will surely tender. My TP is ZAR 125. Gross spread is 5.7%. Buy.

UI: Product Rollouts Fuel for Optimism

By Hamed Khorsand

  • Product introductions remained a core part of Ubiquiti’s (UI) business in calendar first quarter with more product rollouts in the period
  • The new products come at a time when Ubiquiti has ample inventory, which should bode well for revenue growth as VARs, Ubiquiti’s primary customers
  • Ubiquiti has managed to offset the slowdown in service provider from enterprise customers and we continue to believe this trend continued to be the case in the March quarter.

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Apr 09
0

Daily Brief Industrials: Shinsung Delta Tech, Hainan Jinpan Smart Technology, Amaero International Ltd, Fluence Corp, Odyssey Marine Exploration and more

By | Daily Briefs, Industrials

In today’s briefing:

  • KOSDAQ150 Index Rebalance Preview: Potential Adds Still Outperforming
  • STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform
  • Amaero Internaitonal (ASX:3DA) RaaS Interview Transcript 8 April 2024
  • Amaero International Ltd – Binding off-take agreement boosts strategic C103 position
  • Fluence Corp Ltd – Watershed complete, growth strategy in play
  • Odyssey Marine Exploration, Inc. – Urgency Around Seabed Mining Increases

KOSDAQ150 Index Rebalance Preview: Potential Adds Still Outperforming

By Brian Freitas

  • With nearly 85% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
  • Prior to the June rebalance, C&C International (352480 KS) will replace CanariaBio (016790 KS) in the index following CanariaBio being listed as an Administrative Issue and an Investment Attention Issue.
  • The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index since the start of the review period. Lighten positions ahead of the end of the review period.

STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform

By Brian Freitas

  • The review period for the June rebalance ends 30 April. We expect the changes to be announced 31 May with the implementation taking place after the close on 14 June.
  • We forecast 10 changes for the index, including migrations between the STAR 100 Index and the SSE STAR50 (STAR50 INDEX). 
  • Excluding the migrations, the potential adds have outperformed the potential deletes over the last few months and that could continue as we head to the end of the review period.

Amaero Internaitonal (ASX:3DA) RaaS Interview Transcript 8 April 2024

By Research as a Service (RaaS)

  • Interview discusses the offtake agreement and opportunity to expand beyond the current arrangement, the $20m capital raised and outlook for future funding needs, update on strategic equity/debt in the US and milestones to expect over the next six months.

Amaero International Ltd – Binding off-take agreement boosts strategic C103 position

By Research as a Service (RaaS)

  • Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors, developing a critical metals alloy powder manufacturing facility in Tennessee, USA. The company has secured a binding offtake agreement for the supply of C103 additive manufacturing powder, a key milestone in the development of its critical metals powder manufacturing presence in the US. Concurrently, Amaero has raised $20m by way of a placement to institutional investors, which the company anticipates will be the last equity capital raise in the Australian market.
  • Going forward, Amaero says it intends to seek equity capital from strategic US investors.
  • We continue to incorporate Amaero’s guidance that it expects to report an EBITDA loss of $14m in CY2024 and to break-even in CY2025.

Fluence Corp Ltd – Watershed complete, growth strategy in play

By Research as a Service (RaaS)

  • Fluence Corporation (ASX:FLC) provides water and wastewater treatment, and reuse solutions, for the municipal, commercial, and industrial markets worldwide.
  • The company has a proven suite of products and expertise, both proprietary and otherwise, which it has used to deliver more than 850 projects globally.
  • After some historical missteps, FLC has now been completely rejuvenated through the appointment of a highly regarded and proven US-based management team and reinvigorated board.

Odyssey Marine Exploration, Inc. – Urgency Around Seabed Mining Increases

By Water Tower Research

  • Industry needs batteries and batteries need metals. As numerous studies have concluded, even with slightly slower than previously anticipated growth in EV adoption and renewable energy (wind and solar) buildout, demand for metals going into lithium batteries is expected to exceed current estimates for said metals’ production as early as 2026-28.
  • The implied need to find and develop sufficient new resources of these metals to satisfy the expected demand has become a major focus for battery and auto OEMs, as well as governments set on the path to electrification of their economies.
  • More plentiful, less harmful. Many industry and investment banks’ reports also conclude that traditional terrestrial resources in the development or even exploration phase currently are not sufficient to meet the expected demand, suggesting other unconventional resources require commercial development.

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