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Smartkarma Daily Briefs

Jan 18
0

Daily Brief Singapore: AEM, Yanlord Land and more

By | Daily Briefs, Singapore

In today’s briefing:

  • AEM: When Inventory Fell off the Truck On the Way to Penang…
  • Morning Views Asia: Yanlord Land

AEM: When Inventory Fell off the Truck On the Way to Penang…

By Nicolas Van Broekhoven

  • AEM had a bizarre announcement on Sunday evening the 14th of January 2024: inventory was “lost” on the way to Penang from its Singapore factory.
  • Given AEM’s stellar corporate governance reputation up until now, this raises more than a few eyebrows: how is this even possible? 
  • 4Q23 results, due in a month, will feature a large restatement of FY23 results and lead to a major earnings loss. Any recovery is delayed into FY25.

Morning Views Asia: Yanlord Land

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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Jan 18
0

Daily Brief United States: S&P 500 INDEX, LuxUrban Hotels , Freshworks, Couchbase , Veralto , Geopark Ltd, Sps Commerce, CCC Intelligent Solutions Hold and more

By | Daily Briefs, United States

In today’s briefing:

  • EQD | SPX DAILY LONG Reversal Probability Increasing
  • LuxUrban Hotels (LUXH) : The Bed Sheets Should Be Made Out Of Red Flags
  • Freshworks Inc: Initiation of Coverage – 4 Reasons Responsible For Their Future Growth! – Major Drivers
  • Couchbase Inc (BASE) – Wednesday, Oct 18, 2023
  • Veralto Corp -Spn (VLTO) – Wednesday, Oct 18, 2023
  • GeoPark Limited (NYSE: GPRK): Further exploration success in Colombia
  • SPS Commerce Inc.: Initiation of Coverage – Its Bold Moves for Unstoppable Organic and Inorganic Growth! – Major Drivers
  • CCC Intelligent Solutions: Initiation of Coverage – Tech Takeover: How CCC Is Leading the Digital Transformation in Insurance! – Major Drivers

EQD | SPX DAILY LONG Reversal Probability Increasing

By Nico Rosti

  • The S&P 500 INDEX at the moment has lost its momentum and is pulling back towards the Q2 (4751) and Q3 (4713) support levels, where it would be DAILY OVERSOLD.
  • A DAILY reversal could happen today or tomorrow from prices between 4750 and 4700.
  • This trade is a quick scalp, the goal is to profit from a 1-bar reversal, after that we cannot predict the market direction, so caution is advised.

LuxUrban Hotels (LUXH) : The Bed Sheets Should Be Made Out Of Red Flags

By Bleecker Street Research

  • LuxUrban Hotels (NASDAQ: LUXH) is a Miami-based hotel lessee and operator.
  • Founded in 2017, LuxUrban (then called CorpHousing Inc) initially focused on the short-term corporate housing market, leasing and then re-leasing houses to business travelers.
  • The pandemic severely impacted demand in that market and in 2021 LuxUrban exited the corporate rentals space.

Freshworks Inc: Initiation of Coverage – 4 Reasons Responsible For Their Future Growth! – Major Drivers

By Baptista Research

  • This is our first report on Freshworks Inc, a renowned customer service software player.
  • Increased free cash flow along with a rise in the free cash flow margin to 14% likewise surpassed estimates.
  • In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Couchbase Inc (BASE) – Wednesday, Oct 18, 2023

By Value Investors Club

Key points (machine generated)

  • Couchbase offers a distributed, NoSQL database as an alternative to traditional relational databases, with three main products: Couchbase Server, Couchbase Mobile, and Capella.
  • The company is transitioning to a hosted model, similar to successful companies like MongoDB, ElasticSearch, and Hashicorp, which is expected to accelerate growth and improve efficiency.
  • If the transition is successful, Couchbase could see a potential upside of over 25% IRR and benefit from the advantages of NoSQL databases in managing unstructured data, dynamic schemas, and scaling efficiently.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Veralto Corp -Spn (VLTO) – Wednesday, Oct 18, 2023

By Value Investors Club

Key points (machine generated)

  • Veralto, a recent spin-off from Danaher, is focused on providing water and product quality solutions.
  • The company can now concentrate on its core business and leverage its advanced technology and strong global brands.
  • With a solid financial profile and a presence in attractive end markets, Veralto is well-positioned to meet the growing demand for water analytics and treatment solutions.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

GeoPark Limited (NYSE: GPRK): Further exploration success in Colombia

By Auctus Advisors

  • The Perico-1 exploration well at CPO-5 encountered hydrocarbons in the Barco (Guadalupe) formation.
  • The well is currently producing 650 bbl/d of 14 deg API oil with 8% water cut.
  • This is an important well that confirms the extension of the Llanos-34 Guadalupe play into CPO-5 and is probably derisking further prospects.

SPS Commerce Inc.: Initiation of Coverage – Its Bold Moves for Unstoppable Organic and Inorganic Growth! – Major Drivers

By Baptista Research

  • This is our first report on SPS Commerce, the provider of on-demand supply chain management solutions.
  • The company’s total revenue increment by 18% in the quarter was notable, and the recurring revenue showed a promising 20% increase.
  • In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

CCC Intelligent Solutions: Initiation of Coverage – Tech Takeover: How CCC Is Leading the Digital Transformation in Insurance! – Major Drivers

By Baptista Research

  • This is our first report on CCC Intelligent Solutions Holdings, Inc., an automobile claims solution provider.
  • The company delivered a strong performance in the third quarter of 2023, marked by a significant increase in revenues and robust customer growth.
  • For the third quarter, CCC generated a total revenue of $221 million, noting an increase of about 11% year-over-year, above the guidance range.

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Jan 18
0

Daily Brief India: Axis Bank Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Is Axis Capital an Investment Bank or a Hedge Fund?

Is Axis Capital an Investment Bank or a Hedge Fund?

By Hemindra Hazari

  • Axis Capital is a 100% subsidiary of Axis Bank Ltd (AXSB IN) and one of its businesses is structured finance
  • The Sojo Infotel is a high-risk transaction undertaken by Axis Capital which was underwritten by the company with the implicit support of the bank as per the credit rating agency
  • When the transaction was done it was 50% of Axis Capital’s equity and default risk is high as the redemption date is on March 25, 2024

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Jan 18
0

Daily Brief China: Weiqiao Textile Co, Mixue Group, HSBC Holdings, Luckin Coffee, Perfect Medical Health, Prudential , Guming Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake
  • MIXUE Group Pre-IPO – The Positives – Leading by a Mile
  • HSBC – Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More
  • Weiqiao Textile (2698 HK): Pre-Cons Done. Payment (Perhaps) Late March
  • [Luckin Coffee(LKNCY US, BUY, TP US$43) TP Change]: Weak Earnings in 4Q23 but Better Outlook in 2024
  • Perfect Medical: Updates, Stock at 10% Dividend Yield Post Correction
  • APAC Insurers Series (#4): How We See the 3 Insurance Stocks in 2024
  • MIXUE Group Pre-IPO – The Negatives – Declining GMV Share
  • Pre-IPO Guming Holdings – The Current Market Position Is Not Secure

Weiqiao Textile (2698 HK): Pre-Condition Satisfied as Prudence Edges Towards a Blocking Stake

By Arun George

  • Weiqiao Textile Co (2698 HK)’s offer pre-condition is satisfied. Prudence has increased its shareholding to 3.39% of the outstanding shares (9.79% of H Shares), marginally short of a blocking stake.  
  • The HK$3.50 offer has been declared final, which rules out a bump. Therefore, Prudence’s strategy could be to play the gross spread or to block the deal.
  • The Shandong Luoxin Pharmaceutical (8058 HK) precedent supports the gross spread play view. However, unlike the precedent, Prudence is marginally short of a blocking stake in Weiqiao Textile.  

MIXUE Group Pre-IPO – The Positives – Leading by a Mile

By Sumeet Singh

  • Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO. 
  • MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
  • In this note, we talk about the positive aspects of the deal.

HSBC – Gap of USD15bn on Carrying Value Vs Fair Value of BoCom, as China Economy Weakens More

By Daniel Tabbush

  • HSBC holds 19% of BoCom and still carries it with a value of USD23.3bn despite the stock market valuation putting it closer to USD8.1bn on YE22 figures.
  • The bank cites its Value In Use testing as the justifiable reason for this gap, and this testing will include major assumptions like discount rates and long term growth rates.
  • Goodwill and other intangible charges were USD10.6bn in FY08, USD3.4bn in FY16, and USD7.4bn in FY19 for HSBC.

Weiqiao Textile (2698 HK): Pre-Cons Done. Payment (Perhaps) Late March

By David Blennerhassett

  • Back on the 4th December, Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation at HK$3.50 per H-share, a chunky 104.68% premium to last close and around a six-year high
  • Pre-Conditions – regulatory approval from NDRC, MoC and SAFE – have now been fulfilled. The Composite Doc is expected to be dispatched on or before the 24 January. 
  • This Offer is a Merger by Absorption incorporating a Scheme-like vote. There is no tendering condition. Prudence Investment Management, which has now built a 9.79% stake, will be supportive.

[Luckin Coffee(LKNCY US, BUY, TP US$43) TP Change]: Weak Earnings in 4Q23 but Better Outlook in 2024

By Eric Wen

  • In 4Q23, we expect Luckin Coffee revenue to increase 93% YoY to RMB7.1bn, and expect GPM/OPM to decline (5.8)/(1.3) ppt YoY to 19.0%/8.2%, respectively.
  • We cut 4Q23 operating income by 12%. In 2024, we raised our revenue estimate by 5% due to the speed up of new store opening schedule.
  • Furthermore, as price competition eased, we expect Luckin to offer less low-priced drinks, thus driving up OPM in 2024.

Perfect Medical: Updates, Stock at 10% Dividend Yield Post Correction

By Sameer Taneja

  • Negative China sentiment from where Perfect Medical Health (1830 HK) derives about 15-20% of its revenue is causing the company’s share price performance to remain lackluster. 
  • Stock trades on a 10% dividend yield with 15% of the market capitalization in cash, despite the outlook for HK, where it derives >75% of its revenue, is slightly better.
  • With a 10-year average ROE of the business >40% and a 10.8x PE for FY24e, this stock is a dividend gem worth exploring. 

APAC Insurers Series (#4): How We See the 3 Insurance Stocks in 2024

By Alec Tseung

  • PICC P&C’s Q3 underwriting profitability deteriorated due to typhoon/catastrophe-related losses in both motor and non-motor business.
  • Samsung Life’s new business growth momentum continued in Q3’23; new business CSM margin slightly improved QoQ.
  • Prudential disclosed limited details in its Q3 results but we can see the growth trend of new business volume and profits continuing in the quarter.

MIXUE Group Pre-IPO – The Negatives – Declining GMV Share

By Sumeet Singh

  • Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
  • MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
  • In this note, we talk about the not-so-positive aspects of the deal.

Pre-IPO Guming Holdings – The Current Market Position Is Not Secure

By Xinyao (Criss) Wang

  • Guming generates revenue mainly from the sales of goods/equipment to its franchisees (or ToB business). So, Guming’s future growth depends significantly on its ability to operate and expand store network.
  • China’s freshly-made beverage market is highly competitive. Guming is unlikely to catch up with MIXUE, but Guming will be overtaken by the rest players if it fails to compete effectively.
  • Due to Guming’s business model, investors’re hard to see the real picture of Guming solely based on its revenue/profits. Guming’s valuation should be higher than Nayuki but lower than MIXUE.

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Jan 18
0

Daily Brief Japan: Anycolor , Yamae Group Holdings, TSE Tokyo Price Index TOPIX, Hisamitsu Pharmaceutical Co and more

By | Daily Briefs, Japan

In today’s briefing:

  • TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)
  • Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong
  • Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital
  • Hisamitsu Pharmaceutical (4530 JP): OTC Business Is on Strong Footing; FY24 Guidance Raise

TOPIX Jan FFW Change – Visional (4194), Anycolor (5032), Furuya Metal (7826)

By Travis Lundy

  • Late last week, the TSE announced the changes in FFW for companies which have FY-end in the calendar Q2. Changes at 30 Jan close also include Phased Weighting Changes.
  • There are two additions and 61 upweights (including net effect of PWR/PWIs). There are 456 down-weights with two-way flows of about US$1bn. There is a tiny funding trade.
  • Visional (4194 JP) and Furuya Metal (7826 JP) are the two adds. Other large dollar upweights are Asahi Intecc (7747 JP) and Anycolor (5032 JP). 

Yamae Group Placement – Would Result in a Large Dilution, Although Its Momentum Has Been Strong

By Clarence Chu

  • Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
  • We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
  • That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

Investors Expect a Feasible Management Strategy Rather than an Accurate Cost of Capital

By Aki Matsumoto

  • Although there’s range in the cost of capital, a sense of level is shared among investors, so even if a company estimates lower, it will be found to be incorrect.
  • The essential problem isn’t scrutiny of the cost of capital, but rather that many companies produce low returns. Investors are skeptical that companies produce returns above their cost of capital.
  • If stock prices do not rise, investors will continue to demand that companies improve their management, attributing this to the negative gap between the cost of capital and return.

Hisamitsu Pharmaceutical (4530 JP): OTC Business Is on Strong Footing; FY24 Guidance Raise

By Tina Banerjee

  • Hisamitsu Pharmaceutical Co (4530 JP) has reported double-digit revenue and net profit growth in Q3FY24, mainly driven by 21% YoY growth in Salonpas focused OTC pharmaceutical products.
  • The company attributes OTC product revenue growth to aggressive sales promotion activities in Japan and overseas, recovery of domestic economic activity and inbound demand, and impact of the weaker yen.
  • Encouraged by Salonpas revenue recovery, Hisamitsu has raised FY24 guidance. The company has revised FY24 revenue guidance upward by 7% to ¥141 billion (up 10% YoY) from ¥132 billion.

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Jan 17
0

Daily Brief Utilities: Citicore Renewable Energy and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Citicore Renewable Energy Pre-IPO Tearsheet

Citicore Renewable Energy Pre-IPO Tearsheet

By Clarence Chu

  • Citicore Renewable Energy (CREC PM) is looking to raise around US$200m in its upcoming Philippines IPO. The bookrunners on the deal are UBS, and BDO Capital.
  • Citicore Renewable Energy (CREC) is a pure-play renewable energy platform focused on developing and operating renewable energy projects in the Philippines.
  • As per Lantau, the firm was the second largest solar energy generator in the Philippines, in terms of installed solar capacity.

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Jan 17
0

Daily Brief Energy/Materials: Gold, ASP Isotopes , Pharos Energy, Valeura Energy Inc and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Rising on Geopolitical Tides, Gold Braces for Pressure in 2024
  • ASP Isotopes: New Alliance With PET Labs
  • Pharos Energy Plc (LSE: PHAR): Reducing net debt by a further US$10 mm
  • Valeura Energy Inc (Tsx: Vle/Otcqx: Vlerf)

Rising on Geopolitical Tides, Gold Braces for Pressure in 2024

By Pranay Yadav

  • Geopolitical risk has driven a resurgence in gold with price 1.5% higher following heightened tensions in the middle-east. 
  • In a soft-landing scenario in 2024, gold faces downside risk from investor rotation to other assets.  
  • Options metrics point to bullish positioning in gold, central bank demand remains a strong driver in H2 2023.

ASP Isotopes: New Alliance With PET Labs

By Baptista Research

  • In the evolving landscape of isotope production, ASP Isotopes stands poised for significant growth.
  • With production scalability and a substantial interest backlog, ASP Isotopes is on the cusp of substantial free cash flow realization in 2024.
  • Currently undervalued, the stock presents a rare opportunity for early investors to capitalize on ASP Isotopes’ anticipated market ascendancy and potential to redefine secure isotope supply chains globally.

Pharos Energy Plc (LSE: PHAR): Reducing net debt by a further US$10 mm

By Auctus Advisors

  • FY23 production was 6,508 boe/d, which is the middle of the production guidance of 6.35-6.75 mboe/d.
  • This includes 5,127 boe/d for Vietnam (guidance of 5.0-5.3 mboe/d) and 1,381 boe/d in Egypt (guidance of 1.35-1.45 mbbl/d).
  • While the production guidance is below our expectations of 6.8 mboe/d, the net capex forecast is also below our numbers (US$30 mm).

Valeura Energy Inc (Tsx: Vle/Otcqx: Vlerf)

By Auctus Advisors

  • 4Q23 production was 19,165 bbl/d (we expected ~21,300 boe/d) with minimal production at Wassana and declining production at Jasmine only partially offset by growing production at Nong Yao.
  • The capex programme includes US$50 mm for Jasmine and US$47 mm for the new Nong Yao C development.
  • YE23 net cash and YE24 net cash forecast Valeura held ~US$150.9 mm in net cash at YE23.

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Jan 17
0

Daily Brief Industrials: Benefit One Inc, LS Materials , Befesa , Hyundai Hyms , Korean Air Lines, Airports of Thailand, Orient Overseas International, easyJet PLC and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Benefit One (2412): The Plot Thickens
  • Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
  • KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
  • Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
  • Hyundai Hyms IPO Bookbuilding Results Analysis
  • Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition
  • Airport of Thailand (AOT): Near Term Gain
  • Orient Overseas Intl (316 HK): Is It Time for a Reversal?
  • European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

Benefit One (2412): The Plot Thickens

By Travis Lundy

  • Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
  • Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February. 
  • The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 

Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

By Arun George

  • Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
  • The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
  • The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high. 

KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

By Brian Freitas

Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
  • There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
  • For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.

Hyundai Hyms IPO Bookbuilding Results Analysis

By Douglas Kim

  • Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
  • A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
  • Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading. 

Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition

By Neil Glynn

  • The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
  • Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
  • In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

Airport of Thailand (AOT): Near Term Gain

By Henry Soediarko

  • Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
  • Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months,  AOT earnings could lag their peers.
  • Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

By Osbert Tang, CFA

  • The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
  • There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
  • OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 

European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

By Neil Glynn

  • ​Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
  • EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
  • Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.

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Jan 17
0

Daily Brief TMT/Internet: Alchip Technologies, Flowing Cloud Technology, Globalwafers, China Unicom Hong Kong, Alibaba (ADR), Silergy Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year
  • Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud
  • GlobalWafers (6488.TT): 1Q24F Outlook Could Be a Bit Downside, but 2Q24F Could Be Picking Upward.
  • StubWorld: Unicom’s “Hs” Are Still Cheap
  • Aequitas 2024 Asia IPO Pipeline – US ADRs
  • Silergy (6415.TT): Nothing Fundamental Changed in Reality; Semiconductor Cycle Shall Be Bottomed Up.

Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum over the past Year

By Clarence Chu

  • Alchip Technologies (3661 TT) is looking to raise US$415m in its GDR offering. As per the firm, the proceeds from the GDR offering will be used to purchase raw materials.
  • Offering 3.7m GDRs, the deal wouldn’t be a very large one for the firm to digest at just 1.6 days of its three month ADV.
  • The deal is very well flagged one and momentum on the stock has been very strong.

Hang Seng Internet & IT Index Rebalance Preview: ZX Inc Could Replace Flowing Cloud

By Brian Freitas

GlobalWafers (6488.TT): 1Q24F Outlook Could Be a Bit Downside, but 2Q24F Could Be Picking Upward.

By Patrick Liao

  • The Globalwafers (6488 TT) outlook for 1Q24F is likely to show a slightly negative QoQ revenue trend. However, we anticipate a positive direction from 2Q24F onwards.  
  • We have a relatively high conviction for 2024F compared to 2023, indicating upside potential for the Memory and Logic sectors.
  • The supply of 12″ raw wafers remains constrained among the top market players, and overcoming this constraint won’t be easy.  

StubWorld: Unicom’s “Hs” Are Still Cheap

By David Blennerhassett

  • China Unicom Hong Kong (762 HK) remains inexpensive with respect to parent China United Network A (600050 CH) – its hybrid domestic A-share twin – and to peers.
  • Preceding my comments on Unicom, are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Aequitas 2024 Asia IPO Pipeline – US ADRs

By Sumeet Singh

  • In this note, we will look at the Asia Pacific IPO pipeline for 2024, following up with US ADRs, after having looked at HK, India, Japan and Korea earlier.
  • This list has been compiled on a best effort basis from tracking the company filings and through various other sources
  • The deals you see in this note are only a part of our full IPO pipeline tracker. Feel free to drop us a message for additional information on these IPOs.

Silergy (6415.TT): Nothing Fundamental Changed in Reality; Semiconductor Cycle Shall Be Bottomed Up.

By Patrick Liao

  • The factor of seasonality will be evolved in 1Q24F, but 2Q24F should be picking up most likely.
  • The Semiconductor cycle shall be reaching the bottom and no more correction, to our expectation.  
  • The recent changes of Silergy’s management didn’t affect the reality.  

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Jan 17
0

Daily Brief Industrials: Benefit One Inc, LS Materials , Befesa , Hyundai Hyms , Korean Air Lines, Airports of Thailand, Orient Overseas International, easyJet PLC and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Benefit One (2412): The Plot Thickens
  • Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?
  • KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping
  • Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa
  • Hyundai Hyms IPO Bookbuilding Results Analysis
  • Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition
  • Airport of Thailand (AOT): Near Term Gain
  • Orient Overseas Intl (316 HK): Is It Time for a Reversal?
  • European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

Benefit One (2412): The Plot Thickens

By Travis Lundy

  • Today, the day before the previously extended M3 Inc (2413 JP) Partial Tender Offer for Benefit One Inc (2412 JP) was due to expire, M3 extended it another 20 days.
  • Dai Ichi Life Insurance (8750 JP) several days ago extended their expected start date by weeks – from mid-January to early February. 
  • The wording in the new document from M3 is curious. It bears examination. As does the strategy positioning and choice of each of the participants. 

Benefit One (2412 JP): Who Will Blink First as M3 Extends the Closing Date?

By Arun George

  • Ahead of the 17 January close, M3 Inc (2413 JP) has extended the close of its offer to 15 February due to a request from Benefit One Inc (2412 JP).
  • The merger arb situation has four parties with different priorities – the Board, Pasona Group (2168 JP), Dai Ichi Life Insurance (8750 JP) (with a pre-conditional JPY2,123 offer) and M3.
  • The Board and Pasona want the highest possible price. M3’s inability to table a revised offer suggests that Dai-ichi Life has set the bar too high. 

KOSDAQ150 Index Rebalance Preview: Potential Adds Soaring; Short Sell Ban Not Helping

By Brian Freitas

Quiddity Leaderboard DAX/MDAX Mar 24: Lufthansa, Zalando, Telefonica, Befesa

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
  • There are currently no changes expected for the DAX changes but Deutsche Lufthansa (LHA GR) and Fresenius Medical Care & (FME GR) are quite close to becoming ADDs.
  • For the MDAX index, there could an intra-review change in January 2024 and then one more change in the March 2024 index rebal event.

Hyundai Hyms IPO Bookbuilding Results Analysis

By Douglas Kim

  • Hyundai Hyms reported excellent IPO bookbuilding results. IPO price has been determined at 7,300 won per share, which is 16% higher than the high end of the IPO price range.
  • A total of 2,099 institutional investors participated in this IPO book building. The demand ratio was 681 to 1. Hyundai Hyms IPO will start trading on 26 January.
  • Given the solid upside, we expect investors to push up the share price above the high end of our IPO sensitivity analysis (9,092 won) in the first day of trading. 

Korean Air – US Blocking of JetBlue/Spirit Continues Trend of M&A Opposition

By Neil Glynn

  • The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
  • Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
  • In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

Airport of Thailand (AOT): Near Term Gain

By Henry Soediarko

  • Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
  • Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months,  AOT earnings could lag their peers.
  • Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

Orient Overseas Intl (316 HK): Is It Time for a Reversal?

By Osbert Tang, CFA

  • The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
  • There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
  • OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 

European Airlines – LCCs Unlikely to Pass Through Fuel Tailwinds in 2024

By Neil Glynn

  • ​Early three-month and six-month fare levels largely remain above prior year for the full service carriers (FSCs) and low cost carriers (LCCs)
  • EasyJet’s 2024 PBT can reach £600m, Ryanair FY25 net income can near-€2.5bn following €2.0bn in FY24, while Wizz Air can exceed €500m net income in FY25.
  • Wizz has the strongest potential to demonstrate its ability to improve EBITDAR/ASK by managing capacity, which may provide insight into future prospects as operations normalize/developmental routes mature.

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