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Smartkarma Daily Briefs

Daily Brief TMT/Internet: Hollysys Automation Technologies, PCCW Ltd, Hygon Information Technology C, Eoptolink Technology , Baidu, Glosel , Taiwan Semiconductor (TSMC) – ADR, SelectAstro Pvt , Eventbrite Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • 2024 High Conviction: Buy Hollysys
  • StubWorld: Rumoured Interest In PCCW’s Fibre
  • CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
  • ChiNext/​​ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
  • [Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future
  • Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
  • TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY
  • Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges
  • Wavemaker Partners joins Indian astrology app VAMA’s US$1.5M seed round | e27
  • EB: Brightening Up the Portfolio, Initiating with Buy


2024 High Conviction: Buy Hollysys

By David Blennerhassett

  • Despite Hollysys Automation (HOLI US) receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. 
  • But Hollysys’ board stonewalled the SGM, pinning its reason – and a proposed injunction – on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. 
  • That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.

StubWorld: Rumoured Interest In PCCW’s Fibre

By David Blennerhassett

  • Reportedly, Chinese investors, as well as Middle Eastern sovereign wealth funds, have expressed interest in acquiring a “significant ” minority stake in PCCW Ltd (8 HK)‘s fibre ops. 
  • Preceding my comments on PCCW 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%.

CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon

By Brian Freitas

  • There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.
  • This is yet another index inclusion for Hygon Information Technology C (688041 CH) – the stock continues to move higher on expected passive buying over the next two weeks.
  • Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.

ChiNext/​​ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now

By Brian Freitas

  • There will be 6 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 8 December.
  • There is a lot of overlap between the adds and deletes across both indices with the one-way trade across both indices estimated to be CNY 2.4bn.
  • The adds and deletes have drifted lower over the last few months. However, the adds have outperformed the deletes significantly in the last month.

[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future

By Ying Pan

  • Baidu reported revenue/non-GAAP operating profit/GAAP net income inline/7.72%/66.1% vs. our estimation.
  • We believe short term cyclical and medium term AIGC-led upswing in advertising can bridge Baidu’s long-term business, which we do see them difficult to monetize.
  • We maintain a BUY rating and adjusted TP to US$157, implying a 14.6x PE. It is currently trading at 11.4x PE in 2024.

Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)

By Travis Lundy

  • Today, Macnica Fuji Electronics Hol (3132 JP) (Macnica Holdings) announced that it would launch a tender offer to buy 100% of Glosel (9995 JP), a semiconductor trading company. 
  • Glosel is special because it has three main assets. 1) 61% of net assets are inventory (<3mo), 2) 34% of net assets are net receivables (<3mos), 3) 8+% is securities.
  • For that, Glosel’s Board decided 0.71x book was OK. Nah. The register is reasonably wide open, and this is a delayed start. Someone might get noisy, but < 50/50 bet.

TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY

By Patrick Liao

  • TSMC is expected to experience growth of ~15% YoY in 2024F.
  • TSMC’s N3 is expected to dominate the market in 2024F, with applications in CPU, GPU, smartphone SoC, and more.
  • We also estimate that the N2 pilot run will begin in 4Q24.

Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges

By Vincent Fernando, CFA

  • TSMC: 8.2% Premium — Still Best to Wait for Better Levels
  • ASE: 6.4% Premium — Wait for 5% as the Level to Go Long the Spread
  • ChipMOS: -0.5% Discount — Stay Long the Spread if You Started at -2.0%

Wavemaker Partners joins Indian astrology app VAMA’s US$1.5M seed round | e27

By e27

  • Singapore-based early-stage VC firm Wavemaker Partners has led the US$1.5 million seed extension investment round for VAMA, a one-stop virtual platform providing easy access to an array of services for one’s religious and spiritual journey.
  • This marks Wavemaker’s maiden investment in an India-incorporated startup.
  • The deep-tech investor infused US$1.1 million into the startup, while the rest came from existing investors, such as Lisa Gokongwei-Cheng and Harit Nagpal.

EB: Brightening Up the Portfolio, Initiating with Buy

By Hamed Khorsand

  • We are initiating coverage of Eventbrite (EB) with a Buy Rating and $12 target.
  • Eventbrite benefits from social change where in-person meet ups are celebrated more so than virtual events.
  • Eventbrite fills the void of online dating apps. The popularity of online dating apps is dwindling, and Eventbrite should benefit from this growing trend.

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Daily Brief Health Care: Sinocelltech Group , Dentium, TSE Tokyo Price Index TOPIX, AFT Pharmaceuticals, Oryzon Genomics, MariMed, OSE Immuno and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Sinocelltech Group (688520.CH) – Magical Leaps in Valuation Are Hard to Sustain
  • Dentium (145720 KS): Economic Health of China Is the Key to Bring Back Smiles
  • Unification of Quarterly Securities Reports with Financial Summary to TSE Is Generally Appropriate
  • AFT Pharmaceuticals – Global growth despite tough macro environment
  • Oryzon Genomics – Key €45m funding to back strategic priorities
  • MariMed, Inc. – Closes $58.7 Million Debt Refinancing
  • OSE Immunotherapeutics – Collaboration bolsters upcoming Tedopi Phase III


Sinocelltech Group (688520.CH) – Magical Leaps in Valuation Are Hard to Sustain

By Xinyao (Criss) Wang

  • The real value of Sinocelltech Group (688520 CH)’s pipeline will be greatly discounted because in the current context of fierce homogeneous competition, the commercialization performance of latecomers will be bleak.
  • Through frequent capital operations, in two and a half years, valuation of Sinocelltech was successfully raised by nearly 300 times. However, the Company’s owner’s equity is negative, with delisting risk. 
  • The SSE STAR Market has been full of bubble if compared with HKEX. Sinocelltech has been severely overvalued. We think the reasonable market value of Sinocelltech is around RMB15-20 billion.

Dentium (145720 KS): Economic Health of China Is the Key to Bring Back Smiles

By Tina Banerjee

  • Dentium (145720 KS) earns more than 50% of its total revenue from China. The company’s revenue from China reported a CAGR of 32% during 2018–2022.
  • Despite concern over China slowdown and lower ASP due to VBP, in 3Q23, Dentium reported 12% YoY revenue growth in China, similar growth rate reported in 2Q23, driven by volume.
  • Economic slowdown is lingering over the global as well as Chinese dental implant sector, especially the premium brands. Dentium is positioned at the upper price portion within the value segment.  

Unification of Quarterly Securities Reports with Financial Summary to TSE Is Generally Appropriate

By Aki Matsumoto

  • Since there’s little opposition to the argument that quarterly securities reports should no longer be mandatory, securities reports in 1Q/3Q are almost identical content to the disclosures to TSE.
  • To ensure the reliability of the financial statements submitted to TSE, which are replacing current statutory documents, the requirement of review by auditor could be a solution to the problem.
  • In this review, the addition of the cash flow statement and segment information in 1Q and 3Q financial statements is very useful and a step forward.

AFT Pharmaceuticals – Global growth despite tough macro environment

By Edison Investment Research

AFT Pharmaceuticals reported solid H124 top-line growth, driven by strong momentum in the Asian and international markets. H124 revenues of NZ$83.6m grew 27.2% from H123, bolstered by 171.4% and 47.8% y o y growth in international and Asian markets. Although margins came in softer than expected (operating margin of 3.9% vs 5.3% in H123) with increased upfront launch, marketing and R&D spending, particularly in the domestic ANZ markets, management expects margins to recover in H2 as the business scales in these newly launched markets. Given the H1 run rate and seasonality (H2-weighted business model), we raise our top-line estimates for FY24 and FY25 but temper near-term operating profit expectations, in line with management’s FY24 operating profit guidance of NZ$22–24m. Longer term, we anticipate a lift from the recent FDA approval of Maxigesic IV. As a result of these adjustments, our valuation resets to NZ$723m or NZ$6.90/share, up from NZ$644m or NZ$6.14/share previously.


Oryzon Genomics – Key €45m funding to back strategic priorities

By Edison Investment Research

Oryzon has secured funding of up to €45m through a revised convertible bond financing agreement with Nice & Green, a Switzerland-based institutional investor, which is anticipated to extend Oryzon’s cash runway to end-FY25. The new agreement supplants the previous €20m convertible bond agreement with Nice & Green, out of which €8m was pending withdrawal. We consider this announcement to be a critical development, especially in light of the overall macroeconomic environment. Management is expected to share top-line readouts from its lead asset (Phase IIb PORTICO trial in patients with borderline personality disorder) in Q124.


MariMed, Inc. – Closes $58.7 Million Debt Refinancing

By Water Tower Research

  • MariMed closed a $58.7 million secured credit facility with a US chartered bank on November 17, 2023.
  • The refinancing will result in a $4.7 million reduction to principal and interest expense in the first 12 months and $3.5 million annually for the next four years.
  • MariMed estimates its new weighted average cost of debt is now about 8%, down from more than 11% previously.

OSE Immunotherapeutics – Collaboration bolsters upcoming Tedopi Phase III

By Edison Investment Research

OSE Immunotherapeutics (OSE) has announced a collaboration with GenDx for the development and validation of a companion diagnostic screening test to support its upcoming Phase III trial for Tedopi, an oncology vaccine for non-small cell lung cancer (NSCLC) in the second-line setting. The simple blood sample and next-generation sequencing test is intended to identify HLA-A*02 positive NSCLC patients who are more likely to respond to Tedopi epitopes. As GenDx is a leading molecular diagnostics company with experience in the human leukocyte antigen (HLA) field, the development of this companion diagnostic test should accelerate the enrolment of eligible patients. OSE’s registrational pivotal clinical trial is to commence in 2024.


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Daily Brief Financials: Korea Stock Exchange Kospi Index, ZEEKR, Korea Stock Exchange KOSPI 200, Bitcoin Pro, Funding Societies Pte Ltd, Lendela and more

By | Daily Briefs, Financials

In today’s briefing:

  • Breaking Down Korean Regulators’ Official Details on New Short Selling System
  • Zeekr Pre-IPO – Quick Note – Recent Filing Updates – 007, Earnings on Track
  • EQD | KOSPI 200 Stalling: Where to Go LONG on the Pullback?
  • Crypto Markets Take Center Stage
  • Funding Societies raises US$7.5M debt financing from Norway’s state-owned Norfund | e27
  • SG-based Lendela raises $5m to fuel expansion in Asia Pacific


Breaking Down Korean Regulators’ Official Details on New Short Selling System

By Sanghyun Park

  • Concerning the newly imposed 90-day mandatory repayment period for institutional investors, the elimination of the recall risk during this period is not included in this improvement plan.
  • The right to re-establish the same short-selling position after the 90-day repayment period is unlimited. We should pay attention to the potential of this creating new trading events.
  • Institutions borrowing stocks from overseas are not subject to the 105% collateral ratio. However, everyone is subject to the 90-day repayment period, even for investors who borrow stocks from overseas.

Zeekr Pre-IPO – Quick Note – Recent Filing Updates – 007, Earnings on Track

By Sumeet Singh

  • ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the updates from its recent filings.

EQD | KOSPI 200 Stalling: Where to Go LONG on the Pullback?

By Nico Rosti

  • The KOSPI 200 INDEX has been rising for 4 weeks, it’s OVERBOUGHT and may soon perform a quick pullback, followed possibly by another rally.
  • The upcoming pullback is likely to be short-lived, in this insight we analyze where the pullback can reach, and where it should be possible to go LONG again.
  • The price area to watch is 330-326: if the index reaches there, the LONG trade odds will be good (assuming the uptrend will continue into the end of the year).

Crypto Markets Take Center Stage

By Delphi Digital

  • BTC is up ~140% since its bottom 1yr ago. Prior instances imply BTC is in the early innings of a new bull cycle with most of its expected gains ahead.
  • Market breadth is expanding as we are seeing industry wide participation in recent weeks.
  • Onchain borrowing activity is picking up, as are average lending rates and utilization rates on stablecoins, which are some of the most popular assets to borrow during market uptrends.

Funding Societies raises US$7.5M debt financing from Norway’s state-owned Norfund | e27

By e27

  • Digital finance platform for SMEs in Southeast Asia, Funding Societies (Modalku in Indonesia), has secured US$7.5 million in debt funding from Norwegian government-owned development financial institution (DFI) Norfund.
  • The fintech lender will channel the funds via its tailored financing solutions to the SME segments across all five markets.
  • This is Norfund’s first debt transaction with a fintech SME lender in Southeast Asia.

SG-based Lendela raises $5m to fuel expansion in Asia Pacific

By Tech in Asia

  • Lending platform Lendela said it hit profitability in Singapore and Hong Kong, as well as doubled its revenue growth in the past year.
  • The Singapore-based company is now looking to expand its presence across Asia Pacific.
  • To bankroll these plans, Lendela has secured US$5 million in a series A funding round led by Chocolate Ventures.

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Daily Brief Consumer: Asahi Group Holdings, Lvmh Moet Hennessy Louis Vuitton, Trip.com, Drive Lah Ventures Holding , China Education Group, Vitesco Technologies Group, Arcs Co Ltd, Britvic PLC and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Asahi Group (2502 JP): The Current Playbook
  • Income Statement Analysis of Global Luxury Brand Korea Operations and Luxury Brand Spending Slowdown
  • Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)
  • Drive Lah banks $5m in funding led by ComfortDelGro
  • China Education Group (839 HK): Not so Encouraging in the near Term
  • Schaeffler/Vitesco: Sweetened Offer Considered Low by the Board
  • Arcs’ Online Expansion with Amazon a Worry for Rakuten and Aeon
  • Britvic – Brand portfolio proving resilient


Asahi Group (2502 JP): The Current Playbook

By Arun George

  • Since the US$1.3 billion secondary placement announcement, Asahi Group Holdings (2502 JP)’s shares are down -6.2% from the undisturbed price of JPY5,804 per share (16 November).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asahi’s shares have followed the pattern of previous large placements. 
  • The offering will likely be priced on 28 November. Investors participating in previous large Japanese placements tend to secure positive returns.

Income Statement Analysis of Global Luxury Brand Korea Operations and Luxury Brand Spending Slowdown

By Douglas Kim

  • In this insight, we provide the income statement comparisons of the eight largest global luxury brand Korea operations including Louis Vuitton Korea, Prada Korea, Ralph Lauren Korea, and Moncler Korea.
  • In 2022, Korea spent $16.8 billion in luxury goods, representing per capita consumption of $325 per person, surpassing the United States ($280 per person) and China ($55 per person). 
  • Luxury brand spending in Korea is often a leading indicator of global luxury brand spending. Luxury brand spending in Korea has been weak this year and this continued in 3Q23.

Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)

By Daniel Hellberg

  • In October, the sluggish recovery in outbound tourism demand continued
  • Outbound capacity growth also timid; but domestic recovery is mostly complete
  • As growth stock, Trip.com’s disappointed; maybe it can attract value investors?

Drive Lah banks $5m in funding led by ComfortDelGro

By Tech in Asia

  • Drive Lah ComfortDelGro seems to be increasing its involvement in the automotive startup space this year.
  • The Singapore-based taxi firm backed mobility-focused impact fund Shift4Good in January and battery recycling startup Neu Battery Materials in July.
  • Most recently, ComfortDelGro invested US$2 million in Drive Lah.

China Education Group (839 HK): Not so Encouraging in the near Term

By Osbert Tang, CFA

  • China Education Group (839 HK) appears to be facing the headwinds from higher USD interest rate and reduction in capitalised interest. The intangible write-off is another drag on FY23.
  • Newly registered students increased 17.8% for FY24. With better average fees, this will help the topline. Our concerns are high finance and operating costs will erode revenue growth.
  • Consensus is overly aggressive and there are risks of downgrade. Earnings may re-accelerate in the future, but weaker 1H FY24F keeps us on the sideline in the short term. 

Schaeffler/Vitesco: Sweetened Offer Considered Low by the Board

By Jesus Rodriguez Aguilar

  • On 27 November, Schaeffler (SHA GR) increased the cash consideration for Vitesco Technologies Group (VTSC GR) by 3.3% to €94.00/share, an implied equity value of €3,762 million, implied EV of €3,416 million.
  • Although this may not include a takeover premium, and optically the multiple seems low at 3.4x EV/Fwd NTM EBITDA, I update my TP to €94. 
  • A higher counteroffer or another sweetening seems unlikely. I believe it should not be difficult for Schaeffler to achieve 75% acceptances, thus the deal will likely go through.

Arcs’ Online Expansion with Amazon a Worry for Rakuten and Aeon

By Michael Causton

  • Amazon Netsuper is competing head to head with Rakuten’s online food platform in an online food sector that has grown 80% in four years
  • Last month Amazon confirmed that Arcs, one of the largest supermarkets in Japan and the biggest in northern Japan, will join Life, Valor and Seijo Ishii in using its system.
  • Arcs’ online supermarket was already growing strongly but the tie-up with Amazon will take it to the next level, helping to compete with Aeon and Rakuten.

Britvic – Brand portfolio proving resilient

By Edison Investment Research

Britvic reported robust FY23 results despite the weaker consumer environment, reflecting the resilience of its brand portfolio. Price/mix offset limited volume declines resulting in revenue growth of 6.6%, despite unfavourable summer weather and tougher comparators. Inflationary pressures were mitigated through pricing actions and cost discipline, as adjusted EBIT grew 6% at a margin of 12.5%. Investment in its existing brand portfolio and the recent addition of two bolt-on acquisitions in high growth categories underpins management’s confidence heading into FY24.


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Daily Brief Singapore: Drive Lah Ventures Holding , Funding Societies Pte Ltd, Lendela and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Drive Lah banks $5m in funding led by ComfortDelGro
  • Funding Societies raises US$7.5M debt financing from Norway’s state-owned Norfund | e27
  • SG-based Lendela raises $5m to fuel expansion in Asia Pacific


Drive Lah banks $5m in funding led by ComfortDelGro

By Tech in Asia

  • Drive Lah ComfortDelGro seems to be increasing its involvement in the automotive startup space this year.
  • The Singapore-based taxi firm backed mobility-focused impact fund Shift4Good in January and battery recycling startup Neu Battery Materials in July.
  • Most recently, ComfortDelGro invested US$2 million in Drive Lah.

Funding Societies raises US$7.5M debt financing from Norway’s state-owned Norfund | e27

By e27

  • Digital finance platform for SMEs in Southeast Asia, Funding Societies (Modalku in Indonesia), has secured US$7.5 million in debt funding from Norwegian government-owned development financial institution (DFI) Norfund.
  • The fintech lender will channel the funds via its tailored financing solutions to the SME segments across all five markets.
  • This is Norfund’s first debt transaction with a fintech SME lender in Southeast Asia.

SG-based Lendela raises $5m to fuel expansion in Asia Pacific

By Tech in Asia

  • Lending platform Lendela said it hit profitability in Singapore and Hong Kong, as well as doubled its revenue growth in the past year.
  • The Singapore-based company is now looking to expand its presence across Asia Pacific.
  • To bankroll these plans, Lendela has secured US$5 million in a series A funding round led by Chocolate Ventures.

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Daily Brief Australia: CommsChoice Group Ltd, Pureprofile Ltd, Qantm Intellectual Property and more

By | Australia, Daily Briefs

In today’s briefing:

  • Comms Group Limited – Valuation Gap Widening Despite Solid Trading
  • Pureprofile Ltd – FY24 Revenue and EBITDA Margin Guidance in Line
  • QANTM Intellectual Property Ltd -FY24-To-Date Trading Well Ahead of Last Year


Comms Group Limited – Valuation Gap Widening Despite Solid Trading

By Research as a Service (RaaS)

  • Comms Group Ltd (ASX:CCG), a global IT and communications services group, has provided some updated trading commentary as part of its AGM presentation.
  • Unaudited Q1 FY24 revenue was $13.6m, 50% of our H1 FY24 estimate, and unaudited EBITDA $1.5m, 50% of our H1 FY24 EBITDA estimate, placing RaaS H1 FY24 estimates on track.
  • Large opportunities are expected to close in the Global division over coming quarters, and along with additional Vodafone revenue is expected to boost the H2 FY24 result. 

Pureprofile Ltd – FY24 Revenue and EBITDA Margin Guidance in Line

By Research as a Service (RaaS)

  • Pureprofile Ltd (ASX:PPL) is a data analytics and consumer insights company underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers.
  • At the company’s AGM yesterday, management provided guidance for FY24 revenue and EBITDA margin.
  • The revenue guidance range is for $46m to $51m while the EBITDA margin guidance range is from 7% to 9%, including the impact of cash-based short-term performance incentives for key executives and personnel. 

QANTM Intellectual Property Ltd -FY24-To-Date Trading Well Ahead of Last Year

By Research as a Service (RaaS)

  • QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys, and Sortify.tm.
  • It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market, and has a diversified mix of local and foreign clients (~45%/55% split; ~50% US$ revenue).
  • The company has provided a trading update at its annual general meeting (AGM) noting that revenue and earnings (EBITDA) to the end of October were well ahead of last year and ahead of budget. 

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Daily Brief South Korea: Korea Stock Exchange Kospi Index, EcoPro Materials, Korea Stock Exchange KOSPI 200, Dentium and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Breaking Down Korean Regulators’ Official Details on New Short Selling System
  • Ecopro Materials: Overshooting Share Price and Upcoming End of Lockup in December
  • EQD | KOSPI 200 Stalling: Where to Go LONG on the Pullback?
  • Dentium (145720 KS): Economic Health of China Is the Key to Bring Back Smiles


Breaking Down Korean Regulators’ Official Details on New Short Selling System

By Sanghyun Park

  • Concerning the newly imposed 90-day mandatory repayment period for institutional investors, the elimination of the recall risk during this period is not included in this improvement plan.
  • The right to re-establish the same short-selling position after the 90-day repayment period is unlimited. We should pay attention to the potential of this creating new trading events.
  • Institutions borrowing stocks from overseas are not subject to the 105% collateral ratio. However, everyone is subject to the 90-day repayment period, even for investors who borrow stocks from overseas.

Ecopro Materials: Overshooting Share Price and Upcoming End of Lockup in December

By Douglas Kim

  • In this insight, we discuss the upcoming end of lockup in December for Ecopro Materials and why we believe Ecopro Materials’ share price will be much lower in 6-12 months. 
  • A combination of the potential inclusion in KOSPI Fast Entry plus the temporary ban on short selling of stocks in Korea has helped to push up Ecopro Materials’ share price.
  • However, despite this sharp share price run-up, we think the risk-reward is horrible on this stock in terms of bigger downside risk in the next 6-12 months. 

EQD | KOSPI 200 Stalling: Where to Go LONG on the Pullback?

By Nico Rosti

  • The KOSPI 200 INDEX has been rising for 4 weeks, it’s OVERBOUGHT and may soon perform a quick pullback, followed possibly by another rally.
  • The upcoming pullback is likely to be short-lived, in this insight we analyze where the pullback can reach, and where it should be possible to go LONG again.
  • The price area to watch is 330-326: if the index reaches there, the LONG trade odds will be good (assuming the uptrend will continue into the end of the year).

Dentium (145720 KS): Economic Health of China Is the Key to Bring Back Smiles

By Tina Banerjee

  • Dentium (145720 KS) earns more than 50% of its total revenue from China. The company’s revenue from China reported a CAGR of 32% during 2018–2022.
  • Despite concern over China slowdown and lower ASP due to VBP, in 3Q23, Dentium reported 12% YoY revenue growth in China, similar growth rate reported in 2Q23, driven by volume.
  • Economic slowdown is lingering over the global as well as Chinese dental implant sector, especially the premium brands. Dentium is positioned at the upper price portion within the value segment.  

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Daily Brief China: PCCW Ltd, Hygon Information Technology C, Eoptolink Technology , ZEEKR, Baidu, Wuxi Lead Intelligent Equipmen, Full Truck Alliance , Trip.com, China Water Affairs, China Education Group and more

By | China, Daily Briefs

In today’s briefing:

  • StubWorld: Rumoured Interest In PCCW’s Fibre
  • CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
  • ChiNext/​​ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
  • Zeekr Pre-IPO – Quick Note – Recent Filing Updates – 007, Earnings on Track
  • [Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future
  • Wuxi Lead GDR Listing – Early Look – Another One in the Pipeline, Will Be Net Cash Post-Deal
  • 2024 High Conviction: Full Truck Alliance | Strong Top Line, Margins in Q3 | Worth US$9.5 on 21x PER
  • Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)
  • Morning Views Asia: China Water Affairs
  • China Education Group (839 HK): Not so Encouraging in the near Term


StubWorld: Rumoured Interest In PCCW’s Fibre

By David Blennerhassett

  • Reportedly, Chinese investors, as well as Middle Eastern sovereign wealth funds, have expressed interest in acquiring a “significant ” minority stake in PCCW Ltd (8 HK)‘s fibre ops. 
  • Preceding my comments on PCCW 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%.

CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon

By Brian Freitas

  • There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.
  • This is yet another index inclusion for Hygon Information Technology C (688041 CH) – the stock continues to move higher on expected passive buying over the next two weeks.
  • Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.

ChiNext/​​ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now

By Brian Freitas

  • There will be 6 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 8 December.
  • There is a lot of overlap between the adds and deletes across both indices with the one-way trade across both indices estimated to be CNY 2.4bn.
  • The adds and deletes have drifted lower over the last few months. However, the adds have outperformed the deletes significantly in the last month.

Zeekr Pre-IPO – Quick Note – Recent Filing Updates – 007, Earnings on Track

By Sumeet Singh

  • ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$500m in its US listing.
  • Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
  • We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the updates from its recent filings.

[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future

By Ying Pan

  • Baidu reported revenue/non-GAAP operating profit/GAAP net income inline/7.72%/66.1% vs. our estimation.
  • We believe short term cyclical and medium term AIGC-led upswing in advertising can bridge Baidu’s long-term business, which we do see them difficult to monetize.
  • We maintain a BUY rating and adjusted TP to US$157, implying a 14.6x PE. It is currently trading at 11.4x PE in 2024.

Wuxi Lead GDR Listing – Early Look – Another One in the Pipeline, Will Be Net Cash Post-Deal

By Clarence Chu

  • Wuxi Lead Intelligent Equipmen (300450 CH) is looking to raise around US$300m in its upcoming Switzerland GDR listing.
  • As per media reports, Wuxi Lead was said to be looking to raise US$495m via a Swiss GDR issuance, having secured approval to sell up to 78.3m shares.
  • Given the decline in its share price over the year, the eventual deal size could come to around US$300m as of its current last close.

2024 High Conviction: Full Truck Alliance | Strong Top Line, Margins in Q3 | Worth US$9.5 on 21x PER

By Daniel Hellberg

  • Full Truck Alliance reported strong growth in Q3, from the right sources
  • Improved sales mix & progress on expense control lifted core margins
  • With 22% upside to US$9.5 based on 21x PER, our high conviction pick

Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)

By Daniel Hellberg

  • In October, the sluggish recovery in outbound tourism demand continued
  • Outbound capacity growth also timid; but domestic recovery is mostly complete
  • As growth stock, Trip.com’s disappointed; maybe it can attract value investors?

Morning Views Asia: China Water Affairs

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.


China Education Group (839 HK): Not so Encouraging in the near Term

By Osbert Tang, CFA

  • China Education Group (839 HK) appears to be facing the headwinds from higher USD interest rate and reduction in capitalised interest. The intangible write-off is another drag on FY23.
  • Newly registered students increased 17.8% for FY24. With better average fees, this will help the topline. Our concerns are high finance and operating costs will erode revenue growth.
  • Consensus is overly aggressive and there are risks of downgrade. Earnings may re-accelerate in the future, but weaker 1H FY24F keeps us on the sideline in the short term. 

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Daily Brief United States: Hollysys Automation Technologies, Bitcoin Pro, Eventbrite Inc, Servicenow Inc, MariMed and more

By | Daily Briefs, United States

In today’s briefing:

  • 2024 High Conviction: Buy Hollysys
  • Crypto Markets Take Center Stage
  • EB: Brightening Up the Portfolio, Initiating with Buy
  • ServiceNow, Inc: Global Funds Ramp Up Exposure
  • MariMed, Inc. – Closes $58.7 Million Debt Refinancing


2024 High Conviction: Buy Hollysys

By David Blennerhassett

  • Despite Hollysys Automation (HOLI US) receiving a myriad of proposals over the past three years, nothing moved forward.  Calling an SGM to spill the board would change that status quo. 
  • But Hollysys’ board stonewalled the SGM, pinning its reason – and a proposed injunction – on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys. 
  • That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.

Crypto Markets Take Center Stage

By Delphi Digital

  • BTC is up ~140% since its bottom 1yr ago. Prior instances imply BTC is in the early innings of a new bull cycle with most of its expected gains ahead.
  • Market breadth is expanding as we are seeing industry wide participation in recent weeks.
  • Onchain borrowing activity is picking up, as are average lending rates and utilization rates on stablecoins, which are some of the most popular assets to borrow during market uptrends.

EB: Brightening Up the Portfolio, Initiating with Buy

By Hamed Khorsand

  • We are initiating coverage of Eventbrite (EB) with a Buy Rating and $12 target.
  • Eventbrite benefits from social change where in-person meet ups are celebrated more so than virtual events.
  • Eventbrite fills the void of online dating apps. The popularity of online dating apps is dwindling, and Eventbrite should benefit from this growing trend.

ServiceNow, Inc: Global Funds Ramp Up Exposure

By Steven Holden

  • Global Fund exposure in ServiceNow, Inc. hits all-time high with 20.6% of funds invested. Funds move to overweight.
  • Positive Rotation Across All Metrics Driven by Growth and Aggressive Growth Managers.
  • Positioning relative to technology sector peers suggests room for even broader market penetration.

MariMed, Inc. – Closes $58.7 Million Debt Refinancing

By Water Tower Research

  • MariMed closed a $58.7 million secured credit facility with a US chartered bank on November 17, 2023.
  • The refinancing will result in a $4.7 million reduction to principal and interest expense in the first 12 months and $3.5 million annually for the next four years.
  • MariMed estimates its new weighted average cost of debt is now about 8%, down from more than 11% previously.

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Daily Brief Japan: Asahi Group Holdings, T&K Toka Co Ltd, Recruit Holdings, Glosel , Arcs Co Ltd, TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, Japan

In today’s briefing:

  • Asahi Group (2502 JP): The Current Playbook
  • T&K Toka (4636 JP): Bain Decision Time as Progress Made on a Pre-Condition
  • Recruit Holdings (6098) | 2024 High Conviction
  • Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
  • Arcs’ Online Expansion with Amazon a Worry for Rakuten and Aeon
  • Unification of Quarterly Securities Reports with Financial Summary to TSE Is Generally Appropriate


Asahi Group (2502 JP): The Current Playbook

By Arun George

  • Since the US$1.3 billion secondary placement announcement, Asahi Group Holdings (2502 JP)’s shares are down -6.2% from the undisturbed price of JPY5,804 per share (16 November).
  • Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asahi’s shares have followed the pattern of previous large placements. 
  • The offering will likely be priced on 28 November. Investors participating in previous large Japanese placements tend to secure positive returns.

T&K Toka (4636 JP): Bain Decision Time as Progress Made on a Pre-Condition

By Arun George

  • T&K Toka Co Ltd (4636 JP) has satisfied the precondition of selling its Hangzhou Toka Ink stake to hold less than 30%. The offer is targeted for early January.
  • Due to Dalton’s stake building, the shares have consistently traded above Bain’s pre-conditional JPY1,400 offer. Bain can either launch the tender with unchanged terms or bump the offer.
  • A bump is likely as, despite the irrevocables, satisfying the minimum acceptance condition is challenging. The Board will struggle to recommend the offer if the shares remain above terms. 

Recruit Holdings (6098) | 2024 High Conviction

By Mark Chadwick

  • We are bullish on Recruit at the current share price and believe that the stock has around 40% upside potential to our fair value estimate of Y7,700.
  • We believe that investors have been overly concerned with the cyclical slowdown in the job market as it normalizes from the post-Covid recovery
  • Indeed.com remains a disruptor in the HR recruiting market and the potential monetization of this asset is significantly under-appreciated by the market.

Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)

By Travis Lundy

  • Today, Macnica Fuji Electronics Hol (3132 JP) (Macnica Holdings) announced that it would launch a tender offer to buy 100% of Glosel (9995 JP), a semiconductor trading company. 
  • Glosel is special because it has three main assets. 1) 61% of net assets are inventory (<3mo), 2) 34% of net assets are net receivables (<3mos), 3) 8+% is securities.
  • For that, Glosel’s Board decided 0.71x book was OK. Nah. The register is reasonably wide open, and this is a delayed start. Someone might get noisy, but < 50/50 bet.

Arcs’ Online Expansion with Amazon a Worry for Rakuten and Aeon

By Michael Causton

  • Amazon Netsuper is competing head to head with Rakuten’s online food platform in an online food sector that has grown 80% in four years
  • Last month Amazon confirmed that Arcs, one of the largest supermarkets in Japan and the biggest in northern Japan, will join Life, Valor and Seijo Ishii in using its system.
  • Arcs’ online supermarket was already growing strongly but the tie-up with Amazon will take it to the next level, helping to compete with Aeon and Rakuten.

Unification of Quarterly Securities Reports with Financial Summary to TSE Is Generally Appropriate

By Aki Matsumoto

  • Since there’s little opposition to the argument that quarterly securities reports should no longer be mandatory, securities reports in 1Q/3Q are almost identical content to the disclosures to TSE.
  • To ensure the reliability of the financial statements submitted to TSE, which are replacing current statutory documents, the requirement of review by auditor could be a solution to the problem.
  • In this review, the addition of the cash flow statement and segment information in 1Q and 3Q financial statements is very useful and a step forward.

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