Smartkarma Daily Briefs

ACMR reported C3Q23 revenue, non-GAAP EBIT, GAAP net profit (5%), 21%, in-line vs. our est., and (3%), 63%, 49% vs. cons., respectively. Gross margin beat by +9ppts due to FX.
ACMR received a second order from a U.S. semiconductor maker, which indicates potential for significant market share gain by 2025. SK Hynix is engaging its entire product line, per management.
We maintain BUY rating and US$ 30 TP, implying 18x FY23 EV/Earnings.

Chenqi Technology Pre-IPO – Listing Would Almost Feel like a Pipe Dream

Chenqi Technology Limited (CT HK) is looking to raise US$300m in its upcoming Hong Kong IPO.
Chenqi Technology (Chenqi) is a mobility technology and service company in China, founded by the GAC Group and Tencent.
Chenqi has grown its GTV fast on the back of network expansion. However, Dida’s inability to list and Chinese regulators’ scrutiny on Didi would likely dent sentiment surrounding Chenqi.

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Nov 10

Daily Brief Industrials: Renesas Electronics, Ps Mitsubishi Construction, Ecoeye and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Renesas Electronics Placement – Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help
P.S. Mitsubishi Construction (1871 JP): Taisei’s Partial Tender Offer
Ecoeye IPO Book Building Results Analysis

Renesas Electronics Placement – Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help

By Shifara Samsudeen, ACMA, CGMA

INCJ aims to raise around US$1.8bn via a secondary sell-down in Renesas Electronics (6723 JP). This will be a clean-up trade as INCJ has been paring down its stake.
The deal is a slightly large one to digest at 12 days of three month ADV and around 6% of current mcap.
In this note, we will talk about the placement and run the deal through our ECM framework.

P.S. Mitsubishi Construction (1871 JP): Taisei’s Partial Tender Offer

By Arun George

Ps Mitsubishi Construction (1871 JP)/PSMIC announced a partial tender offer for Taisei Corp (1801 JP) at JPY1,010 per share, a 22.4% premium to the undisturbed price.
The partial offer is for a minimum of 20.4 million shares (42.94% ownership ratio) and a maximum of 23.8 million shares (50.20% ownership ratio).
Irrevocables represent a 42.94% ownership ratio, satisfying the minimum acceptance condition. The offer is attractive and represents a ten-year high. The tender offer runs from 10 November to 11 December.

Ecoeye IPO Book Building Results Analysis

By Douglas Kim

Ecoeye announced that the IPO price has been determined at 34,700 won, which is at the high end of the IPO price range. The demand ratio was 75 to 1.
An 81.1% of the IPO shares applied thought that the company’s value is more than 34,700 won per share. The IPO offering amount is 72 billion won.
Our base case valuation of Ecoeye IPO is 45,421 won per share (31% higher than the IPO price). Given the solid upside, we have a positive view of Ecoeye IPO.

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Nov 10

Daily Brief Health Care: WuXi XDC Cayman , TSE Tokyo Price Index TOPIX, Rubicon Organics and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Wuxi XDC IPO: Forecasts and Valuation
Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed
Rubicon Organics, Inc. – Water Tower Hour Recap

Wuxi XDC IPO: Forecasts and Valuation

Wuxi plans to issue 178.4m shares at an indicative IPO price range of HK$19.9-20.6 per share and will raise net proceeds of US$479m at the midpoint of the IPO price.
The company’s revenues have seen robust growth during the last 3-years driven by growth in ADC outsourcing market while margins have continued to decline.
We have valued WuXi XDC Cayman (1877628D HK) using a DCF valuation which offers price per share of HK$23.44, 15.7% higher than the midpoint of the IPO price of HK$20.25.

Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed

By Aki Matsumoto

The baseless confidence of the 177 companies that finally moved to Standard Market that their market capitalization would increase in18 months was nothing more than a waste of time.
It is fine for a company to aim to be listed on the highest prime market, but high shareholder returns and quality management must come first.
If the listing criteria for prime market was JPY100 billion market capitalization, the gap with investors who initially expected prime market before the market restructuring would have been much smaller.

Rubicon Organics, Inc. – Water Tower Hour Recap

Rubicon Organics is a leading producer of premium cannabis products in Canada.
In a challenging market, the company is differentiated by offering top-shelf, organically grown flower in the higher-margin premium market.
Interim CEO, CFO, and Director Margaret Brodie joined us on The Water Tower Hour to discuss how Rubicon is overcoming the common Canadian obstacles.

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Nov 10

Daily Brief Financials: Bank Of America, SES AI Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Investors Have Been Buried Their Head in The Sand on Billions of Unrealized HTM Losses
SES AI Corp. – 3Q23 Results

Investors Have Been Buried Their Head in The Sand on Billions of Unrealized HTM Losses

By Fern Wang

Unrealized HTM losses continued to balloon as interest rates crept higher.
What has caused SVB’s demise seems to have now been forgotten and ignored by investors.
We took a deep dive into 3 U.S. Banks, First Foundation, Wells Fargo and Bank of America on their HTM losses.

SES AI Corp. – 3Q23 Results

SES has made significant advancements in engineering and materials, particularly in the cathode, resulting in high stability and improved safety for high Ni cathodes.
The company has also developed new technologies for pouch cell engineering, electrolyte, lithium metal anode protection, and charging protocols, reducing the risks associated with thermal runaway in both Li-Metal and Li-ion batteries.
Despite the challenges and the trade-off between energy density and safety in the battery industry, SES aims to improve safety without compromising other parameters, opting for a high-energy density approach and overcoming difficulties to achieve its goal.

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Nov 10

Daily Brief Consumer: Li Auto , Doms, Inter Parfums, MGM China Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

[Li Auto Inc. (LI US, BUY, TP US$47) Target Price Change]: Li’s MEGA Can Change the MPV Landscape
DOMS Industries Pre-IPO – Strong Earnings Growth but Will Probably Peter Out
IPAR: Sales Trajectory Ahead of Estimates
Morning Views Asia: MGM China Holdings, Softbank Group, Sunny Optical Technology Group

[Li Auto Inc. (LI US, BUY, TP US$47) Target Price Change]: Li’s MEGA Can Change the MPV Landscape

Two days before Huawei and Chery releasing their Luxeed S7 sedan to rival Model 3, LI unveiled the technical details of its MPV entry MEGA;
We see MEGA taking a meaningful market share from BYD’s Denza D9, GM’s GL8, GAC’s Trumpchi M8, all selling ~10K a month. We raise MEGA’s 2024 shipment to 57K;
We raise LI’s TP from US$40 to US$47 and maintain BUY.

DOMS Industries Pre-IPO – Strong Earnings Growth but Will Probably Peter Out

By Sumeet Singh

Doms (DOMS IN) is looking to raise around US$140m in its upcoming India IPO.
DOMS is a leading player and brand in India’s stationery and art products market. It designs, manufactures, and sells a wide range of products, primarily under its flagship brand ‘DOMS’.
In this note, we look at the company’s past performance.

IPAR: Sales Trajectory Ahead of Estimates

By Hamed Khorsand

IPAR benefited from consumers continuing to purchase fragrances in the third quarter and retailers beginning to stock inventory for the holiday shopping season
IPAR reported third quarter sales of $368.0 million in line with what the Company had previously disclosed in October
IPAR has several new product introductions in 2024 and begins to generate sales from Roberto Cavalli and Lacoste brands as well, which should result in IPAR growing sales in 2024

Morning Views Asia: MGM China Holdings, Softbank Group, Sunny Optical Technology Group

By Charles Macgregor

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.

MGM China Holdings
Softbank Group
Sunny Optical Technology Group

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Nov 10

Daily Brief Thematic (Sector/Industry): [Blue Lotus Daily]: BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

[Blue Lotus Daily]: BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE
[Blue Lotus Daily]BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE
Ohayo Japan | Powell’s Concerns; Semiconductor Resurgence Through Strategic Subsidies
Affordable Luxury: A Look Into Chinese Luxury (Part II)
Earnings Season Post (ANET, AMKR, RMBS, LSCC, AMD, Advantest, SLAB, QCOM, QRVO, ENTG, SITM…)
[Blue Lotus Lodging Sector Update]: Dividend from Supply Shortage Can Continue into 2024
China Property Developers In Distress – Weekly News & Announcements Tracker | Nov 2-9, 2023

[Blue Lotus Daily]: BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE

By Ying Pan

BABA/PDD/JD/ZTO/1519.HK/: Express parcel volume grew +20% YoY during first week of 11.11 Shopping (+)
BEKE: Property Update – Mild recovery for existing home sales in October and 1st week of November
XPEV: Xpeng, Huawei dispute over Autonomous Emergency Braking (AEB) (-)

[Blue Lotus Daily]BABA/PDD/JD/ZTO/BEKE/XPEV/NIO/LI/BGNE

BABA/PDD/JD/ZTO/1519.HK/: Express parcel volume grew +20% YoY during first week of 11.11 Shopping (+)
BEKE: Property Update – Mild recovery for existing home sales in October and 1st week of November
XPEV: Xpeng, Huawei dispute over Autonomous Emergency Braking (AEB) (-)

Ohayo Japan | Powell’s Concerns; Semiconductor Resurgence Through Strategic Subsidies

By Mark Chadwick

Overseas: SPX -0.8%, Nasdaq -0.8%; All S&P sectors in the red; Walt Disney shares jumped 6.9% on a quarterly profit beat
Today: NKY Futs -0.4% v cash. JPY0151.4; BoJ preps market for higher rates. INCJ to sell shares in Renesas
JapanX: Japan’s semiconductor revival accelerates with $13.2 billion subsidies, global partnerships, and cutting-edge research, signaling a bold move to regain global dominance in chip production.

Affordable Luxury: A Look Into Chinese Luxury (Part II)

By Alexis Dwek

Thanks to the rapidly expanding middle class, increasing incomes, and a strong desire for luxury, Chinese consumers are often seen as the embodiment of the luxury industry’s promising future
However, the market has seen competition intensify: Not only are international brands competing against each other, but the rise of domestic brands has brought the competitive landscape to another level
Since this summer, investors have been concerned by a shifting Chinese landscape in the context of the current economic situation

Earnings Season Post (ANET, AMKR, RMBS, LSCC, AMD, Advantest, SLAB, QCOM, QRVO, ENTG, SITM…)

By Douglas O’Laughlin

Another week in earnings, the big theme I can point out is the continued and persistent weakness in the Industrial market.
Reminder: in a first-in-first-out (FIFO) framework, the first into the inventory correction were PCs and Smartphones.
Then, networking and data center, and we are now seeing Industrial start their inventory correction cycle. I don’t think this is the last we will hear about this.

[Blue Lotus Lodging Sector Update]: Dividend from Supply Shortage Can Continue into 2024

China hotel supply shortage haven’t fully recovered from Covid, the total hotel volume is still 11% lower than pre-Covid level in 2023, we expect a full recovery in 2024.
Due to the continue of hotel supply shortage, we think hotel groups in China can still enjoy the premium pricing in the next 6-12 months.
We think Atour has better fundamentals than Huazhu/Jinjiang/BTG, in terms of 1) hotel room scale leverage; 2) RevPAR quality; 3) upper midscale class positioning and less burden in legacy brands.

China Property Developers In Distress – Weekly News & Announcements Tracker | Nov 2-9, 2023

By Robert Ciemniak

A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
We do not verify the underlying data or provide any opinion, we only select and summarize the information; See direct links to sources

Before it’s here, it’s on Smartkarma

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Nov 10

Daily Brief ECM: Renesas Electronics Placement – Well Flagged US$1.8bn Deal and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Renesas Electronics Placement – Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help
Wuxi XDC IPO: Forecasts and Valuation
Ecoeye IPO Book Building Results Analysis
DOMS Industries Pre-IPO – Strong Earnings Growth but Will Probably Peter Out
Chenqi Technology Pre-IPO – Listing Would Almost Feel like a Pipe Dream

Renesas Electronics Placement – Well Flagged US$1.8bn Deal, Accelerated but Index Flows Should Help

By Shifara Samsudeen, ACMA, CGMA

INCJ aims to raise around US$1.8bn via a secondary sell-down in Renesas Electronics (6723 JP). This will be a clean-up trade as INCJ has been paring down its stake.
The deal is a slightly large one to digest at 12 days of three month ADV and around 6% of current mcap.
In this note, we will talk about the placement and run the deal through our ECM framework.

Wuxi XDC IPO: Forecasts and Valuation

Wuxi plans to issue 178.4m shares at an indicative IPO price range of HK$19.9-20.6 per share and will raise net proceeds of US$479m at the midpoint of the IPO price.
The company’s revenues have seen robust growth during the last 3-years driven by growth in ADC outsourcing market while margins have continued to decline.
We have valued WuXi XDC Cayman (1877628D HK) using a DCF valuation which offers price per share of HK$23.44, 15.7% higher than the midpoint of the IPO price of HK$20.25.

Ecoeye IPO Book Building Results Analysis

By Douglas Kim

Ecoeye announced that the IPO price has been determined at 34,700 won, which is at the high end of the IPO price range. The demand ratio was 75 to 1.
An 81.1% of the IPO shares applied thought that the company’s value is more than 34,700 won per share. The IPO offering amount is 72 billion won.
Our base case valuation of Ecoeye IPO is 45,421 won per share (31% higher than the IPO price). Given the solid upside, we have a positive view of Ecoeye IPO.

DOMS Industries Pre-IPO – Strong Earnings Growth but Will Probably Peter Out

By Sumeet Singh

Doms (DOMS IN) is looking to raise around US$140m in its upcoming India IPO.
DOMS is a leading player and brand in India’s stationery and art products market. It designs, manufactures, and sells a wide range of products, primarily under its flagship brand ‘DOMS’.
In this note, we look at the company’s past performance.

Chenqi Technology Pre-IPO – Listing Would Almost Feel like a Pipe Dream

Chenqi Technology Limited (CT HK) is looking to raise US$300m in its upcoming Hong Kong IPO.
Chenqi Technology (Chenqi) is a mobility technology and service company in China, founded by the GAC Group and Tencent.
Chenqi has grown its GTV fast on the back of network expansion. However, Dida’s inability to list and Chinese regulators’ scrutiny on Didi would likely dent sentiment surrounding Chenqi.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Nov 10

Daily Brief ESG: Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed

Prime Market Is Still the Market with the Most Listed Companies Even After 171 Companies Are Removed

By Aki Matsumoto

The baseless confidence of the 177 companies that finally moved to Standard Market that their market capitalization would increase in18 months was nothing more than a waste of time.
It is fine for a company to aim to be listed on the highest prime market, but high shareholder returns and quality management must come first.
If the listing criteria for prime market was JPY100 billion market capitalization, the gap with investors who initially expected prime market before the market restructuring would have been much smaller.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Nov 10

Daily Brief Equity Bottom-Up: [Li Auto Inc. (LI US and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

[Li Auto Inc. (LI US, BUY, TP US$47) Target Price Change]: Li’s MEGA Can Change the MPV Landscape
Duolingo: Rich Valuation and Limited Upside Despite Better Than Expected 3QFY23 Results
[ACM Research (ACMR US, BUY, TP US$30) Earnings Review]: Korea and US Are the Next Battlefields
Investors Have Been Buried Their Head in The Sand on Billions of Unrealized HTM Losses
Australis Oil & Gas Limited – Oil Prices and M&A on the Up
Aramco Ups Investment in Refining and Petrochemical Facilities in China
IPAR: Sales Trajectory Ahead of Estimates
Rubicon Organics, Inc. – Water Tower Hour Recap
SES AI Corp. – 3Q23 Results

[Li Auto Inc. (LI US, BUY, TP US$47) Target Price Change]: Li’s MEGA Can Change the MPV Landscape

Two days before Huawei and Chery releasing their Luxeed S7 sedan to rival Model 3, LI unveiled the technical details of its MPV entry MEGA;
We see MEGA taking a meaningful market share from BYD’s Denza D9, GM’s GL8, GAC’s Trumpchi M8, all selling ~10K a month. We raise MEGA’s 2024 shipment to 57K;
We raise LI’s TP from US$40 to US$47 and maintain BUY.

Duolingo: Rich Valuation and Limited Upside Despite Better Than Expected 3QFY23 Results

By Andrei Zakharov

Duolingo reported stronger than expected 3QFY23 results, including revenues of $137.6M (consensus: $132.2M) and net income of $2.8M. The company raised guidance for FY23 revenues and total bookings.
Stock indicated up ~9% after hours. Duolingo beat all key estimates. However, ABPDAU declined to $25.38, while net new ARR growth will slow in 4Q and the next fiscal year.
With a market cap of ~$8.2B on a fully diluted basis, Duolingo shares trade at ~14x and ~11x EV/Rev on my respective FY23/FY24 estimates, a significant premium to comparable companies.

[ACM Research (ACMR US, BUY, TP US$30) Earnings Review]: Korea and US Are the Next Battlefields

By Research as a Service (RaaS)

ACMR reported C3Q23 revenue, non-GAAP EBIT, GAAP net profit (5%), 21%, in-line vs. our est., and (3%), 63%, 49% vs. cons., respectively. Gross margin beat by +9ppts due to FX.
ACMR received a second order from a U.S. semiconductor maker, which indicates potential for significant market share gain by 2025. SK Hynix is engaging its entire product line, per management.
We maintain BUY rating and US$ 30 TP, implying 18x FY23 EV/Earnings.

Investors Have Been Buried Their Head in The Sand on Billions of Unrealized HTM Losses

By Fern Wang

Unrealized HTM losses continued to balloon as interest rates crept higher.
What has caused SVB’s demise seems to have now been forgotten and ignored by investors.
We took a deep dive into 3 U.S. Banks, First Foundation, Wells Fargo and Bank of America on their HTM losses.

Australis Oil & Gas Limited – Oil Prices and M&A on the Up

Australis Oil & Gas (ASX:ATS) is an oil and gas producer/developer, with a strategic and controlling position in the emerging Tuscaloosa Marine Shale (TMS) oil play, onshore US.
The TMS is an Eagle Ford-equivalent but early-stage oil play with gross recoverable oil potential of around 7bn barrels – this is likely to be the next big thing.
Australis represents a highly- leveraged and attractive exposure to the transformational potential of the TMS oil play.

Aramco Ups Investment in Refining and Petrochemical Facilities in China

By Caixin Global

Saudi Aramco will invest more in the refining and petrochemical businesses in China as the Saudi Arabian oil giant tries to wring more money from every barrel of oil the kingdom produces amid a global shift toward a low-carbon economy, a company executive said.
Aramco’s Senior Vice President of Strategy and Market Analysis Fahad Al-Dhubaib talked up China’s importance to the company’s business in Asia and worldwide.
“Our partnerships in China enable us to help create new pathways for growth by working with a country driving the increased integration of refining and petrochemical processes,” Al-Dhubaib told Caixin last month in a written interview.

IPAR: Sales Trajectory Ahead of Estimates

By Hamed Khorsand

IPAR benefited from consumers continuing to purchase fragrances in the third quarter and retailers beginning to stock inventory for the holiday shopping season
IPAR reported third quarter sales of $368.0 million in line with what the Company had previously disclosed in October
IPAR has several new product introductions in 2024 and begins to generate sales from Roberto Cavalli and Lacoste brands as well, which should result in IPAR growing sales in 2024

Rubicon Organics, Inc. – Water Tower Hour Recap

Rubicon Organics is a leading producer of premium cannabis products in Canada.
In a challenging market, the company is differentiated by offering top-shelf, organically grown flower in the higher-margin premium market.
Interim CEO, CFO, and Director Margaret Brodie joined us on The Water Tower Hour to discuss how Rubicon is overcoming the common Canadian obstacles.

SES AI Corp. – 3Q23 Results