Smartkarma Daily Briefs

Hooker Furniture results highlighted the past week in the furniture/furnishings space.
Hooker reported EPS of $0.65 on sales of $116.8 million, both ahead of FactSet consensus estimates of $0.28 and $116.3 million, respectively.
A year ago, Hooker reported EPS of $0.42.

Weekly Sustainable Investing Surveyor – Week Ended December 8, 2023

The WTR Sustainable Index was down by 0.4% W/W versus the S&P 500 Index (up 0.2%), the Russell 2000 Index (up 1.0%), and the Nasdaq Index (up 0.5%).
Energy Technology (13.2% of the index) was down by 3.8%, while Industrial Climate and Ag Technology (50.5% of the index) was up 1.1%, ClimateTech Mining was down 1.6%, and Advanced Transportation Solutions was down 1.8%.
Top 10 Performers: VIEW, CPTN, LILM, ALTA, SPI, FE, WBX, PEV, EGT, CMC

The Highlights – Cannabis News for the Week Ending December 8, 2023

It was another strong week for cannabis stocks, with the US cannabis MSOS ETF and the global YOLO ETF gaining 7.65% and 5.65%, respectively.
MSOS is now +7.62% YTD and +53.91% since the HHS recommended Schedule III on August 29, 2023.
The MSOS ETF had $29,340,300 in inflows this week. Some large investors are waiting for the DEA response prior to pushing in their chips, but others are comfortable increasing allocations in advance.

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

Dec 12

Daily Brief ECM: Rept Battero IPO: Valuation Insights and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Rept Battero IPO: Valuation Insights
DOMS Industries Ltd IPO- Forensic Analysis
Mankind Pharma Placement – Its Expensive, but at Least It’s High Quality
DOMS Industries IPO – Thoughts on Valuation – Isn’t Cheap, Neither Are Its Peers Cheap
IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show

Rept Battero IPO: Valuation Insights

REPT BATTERO Energy (1998104D CH), a leading EV battery manufacturer, has launched an HKEx IPO to raise up to US$306 million. Pricing is on 14 December.
We previously discussed the IPO in Rept Battero IPO: The Bull Case and Rept Battero IPO: The Bear Case.
There are no cornerstone investors. Our valuation analysis suggests that the IPO price range is unattractive. Therefore, we would pass on the IPO.

DOMS Industries Ltd IPO- Forensic Analysis

By Nitin Mangal

Doms (DOMS IN) IPO opens for subscription soon. The INR 12 bn IPO includes INR 3.5 bn fresh issue and the remaining as offer for sale.
The company is a prominent player in the Indian stationary market and has one of the most diverse product portfolio with a market share of 12% in F23.
DOMS ticks right in majority of the boxes when it comes to operations and B/S health. One must still be cautious regarding dependence on FILA group, and faster depreciating rates.

Mankind Pharma Placement – Its Expensive, but at Least It’s High Quality

A group of shareholders is looking to raise around US$600m via selling a 6.9% stake in Mankind Pharma.
MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
We have looked at the IPO and lock-up release earlier. In this note, we talk about the other deal dynamics.

DOMS Industries IPO – Thoughts on Valuation – Isn’t Cheap, Neither Are Its Peers Cheap

Doms (DOMS IN) is looking to raise around US$140m in its 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’.
We have looked at the company’s past performance in our earlier note. In this note, we talk about valuations.

IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show

By Ethan Aw

IMotion Automotive Technology (1812706D CH) is looking to raise about US$100m in its upcoming HK IPO, after downsizing from an earlier reported float of US$300m.
The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series.
We had covered the company’s performance and PHIP updates in our earlier notes. In this note, we talk about its refiled PHIP updates.

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

Dec 12

Daily Brief Credit: China South City – Event Flash – Restructuring Updates And H1 FY 2023-24 Results – Lucror Analytics and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

China South City – Event Flash – Restructuring Updates And H1 FY 2023-24 Results – Lucror Analytics
Morning Views Asia: China South City, NagaCorp Ltd

China South City – Event Flash – Restructuring Updates And H1 FY 2023-24 Results – Lucror Analytics

We believe China South City’s (CSC) proposed bond extension is overall acceptable to bondholders. The company plans to continue paying coupons in cash, albeit at a reduced coupon rate. In addition, the absence of a haircut would preserve bondholders’ claims.

We note negatively that the amortisation payments would only begin in 2026. This reflects the company’s very tight liquidity, considering its failure to pay the coupon in November 2023 and the dismal H1/23-24 results. Moreover, CSC is not proposing to add new credit enhancement measures, even though the latest extension has demonstrated the failure of the existing keepwell deed and asset pledge to ensure offshore debt repayment.

CSC has ceased disclosure of quarterly contracted sales since 2022, and we believe it has now fully shifted business focus to commercial properties. However, the company’s commercial properties were affected by a depressed macro market and lower demand for leasing, and we do not foresee a related turnaround in the near future. Liquidity was extremely weak, with Cash/ST Debt of only 9% as of end-September.

Morning Views Asia: China South City, NagaCorp Ltd

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 South City
NagaCorp Ltd

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

Dec 12

Daily Brief TMT/Internet: Softbank Group, Hollysys Automation Technologies, Torex Semiconductor, Japan Business Systems and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Softbank (9984 JP): Adding a Strengthening JPY to the Mix
Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid
2Q Follow-Up – Torex Semiconductor (6616 JP)
Closing HOLI, PBR-A and 1669
4Q Follow-Up – Japan Business Systems (5036 JP)

Softbank (9984 JP): Adding a Strengthening JPY to the Mix

By Victor Galliano

In 1HFY23, a weak JPY – with it having depreciated from JPY132 to JPY149 to the USD – has actively supported the group’s valuation, contributing 12% to SoftBank group’s NAV
The BoJ is looking to tighten monetary policy, whilst all other major central banks are set to cut rates; under this scenario, it is likely for the JPY to strengthen
Softbank shares trade at a 51%+ stated NAV discount yet we believe that there is downside risk to at least Arm’s high valuations, which could tighten the discount significantly

Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid

Hollysys Automation Technologies (HOLI US) has agreed to be acquired by Ascendent Capital, the largest shareholder, for US$26.50, a 16.7% premium to the last close.
The Board’s claims of realising the highest shareholder value are not credible. The Board fails to explain why Ascendent’s offer is superior to Recco’s, although both have the same value.
Deal fatigue (the process first started in December 2020) and the 42% premium to the undisturbed price suggests meeting the simple majority threshold for a statutory merger is achievable.

2Q Follow-Up – Torex Semiconductor (6616 JP)

Multiple signs are flashing that the reset phase of the silicon cycle is beginning to rebound.
On November 28, WSTS (World Semiconductor Trade Statistics) announced its Fall forecast for 2023 and 2024, marking the first upward revision in the current down cycle, revising up both 2023 to a single-digit decline, and revising up 2024 growth to +13.1%, due to better-than-expected demand in Apr-Jun and Jul-Sep.
Quarterly worldwide billings data shows the YoY percentage decline marked the bottom in Jan- Mar at -21.3% YoY, shrinking to only -4.5% in the Jul-Sep quarter.

Closing HOLI, PBR-A and 1669

By Turtles all the way down

News came out today that Hollysys (HOLI) is being acquired by Ascendant for $26.5/share . So I sold my shares for $24.74 today.
And closing this at $24.88. Only a 7% spread, and there could be some delays before this closes.
Was a nice trade and a 43% gain since dedicating a full write-up to it in July this year.

4Q Follow-Up – Japan Business Systems (5036 JP)

Among priority measures for FY24/9, JBS management is particularly focused on rolling out global licensing business for major enterprise customers, as well as strengthening cloud AI proposal capabilities.
The strategic business alliance concluded with Crayon Group at the end of August enables JBS to offer global support services to customers outside the coverage of JBS overseas offices.
The two partners will also collaborate on developing AI and security solutions mainly for Microsoft Products.

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

Dec 12

Daily Brief Industrials: Yamazen Corp, iMotion Automotive Technology, Yunda Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show
Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target

By Travis Lundy

On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe).
It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of shares out.
But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer.

IMotion Automotive Pre-IPO – Refiled PHIP Updates – Lack of Competitive Edge Starting to Show

By Ethan Aw

IMotion Automotive Technology (1812706D CH) is looking to raise about US$100m in its upcoming HK IPO, after downsizing from an earlier reported float of US$300m.
The company possesses advanced full-stack R&D capabilities including self-developed algorithms and hardware-software co-design capabilities. It provides two AD domain controller product lines, and the self-designed iDC series.
We had covered the company’s performance and PHIP updates in our earlier notes. In this note, we talk about its refiled PHIP updates.

Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

By Daniel Hellberg

Recently, Yunda Holding has lost volume share to rival STO Express
One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
For Yunda, this dynamic adds to intense near-term pressure on margins

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

Dec 12

Daily Brief Event-Driven: Denso Corp Placement – Quick Update – In Better Shape Now and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains
A Review of Tender Offers of Korean Companies in 2023
Exploring the Possibility of an LG Energy Solution Block Deal
Softbank (9984 JP): Adding a Strengthening JPY to the Mix
SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications
Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover
Costa Group (CGC AU): Wide Spread Ahead of the 30 January Vote
Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid
Costa Group’s Shareholder Vote Set. Get Involved
KKR/Smart Metering Systems: Agreed Cheap Offer

Denso Corp Placement – Quick Update – In Better Shape Now, Size Concern Remains

On 28th Nov 2023, Toyota Motor (7203 JP) announced that it would sell around 9.4% of Denso Corp (6902 JP) in order to reduce its cross-shareholding.
The shares hadn’t corrected much till our last note on 7th Dec 2023, they have since corrected by 6% .
We have covered the deal background and deal dynamics in our earlier notes. In this note, we talk about the recent share price movement, as compared to prior deals.

A Review of Tender Offers of Korean Companies in 2023

By Douglas Kim

We review the major tender offers of Korean companies in 2023. Some of the major M&A tender offers that have closed this year include Osstem Implant and SM Entertainment.
Among the 15 companies targeted for tender offers, there are 5 companies including Osstem Implant, SM Entertainment, Lutronic Corp where the purpose of the tender offers is for M&A.
There were a total of 18 companies that submitted tender offer results announcements in 2023 (as of 11 December), up 157% YoY.

Exploring the Possibility of an LG Energy Solution Block Deal

By Sanghyun Park

The prevailing sentiment in Yeouido signals a shift of companies, originally preparing for EB issuances, toward block deals. Local brokerages are competing to identify potential block deals involving major issuers.
The local market anticipates LG Chem opting for a short-term block deal, considering the potential reduction of the LG Energy stake below 80% to alleviate global minimum corporate tax burdens.
Timing is a challenge, but based on corrections before July’s EB issuance, we could proactively plan for January. Abundant liquidity in LG Energy’s futures eases trading instrument concerns.

Softbank (9984 JP): Adding a Strengthening JPY to the Mix

By Victor Galliano

In 1HFY23, a weak JPY – with it having depreciated from JPY132 to JPY149 to the USD – has actively supported the group’s valuation, contributing 12% to SoftBank group’s NAV
The BoJ is looking to tighten monetary policy, whilst all other major central banks are set to cut rates; under this scenario, it is likely for the JPY to strengthen
Softbank shares trade at a 51%+ stated NAV discount yet we believe that there is downside risk to at least Arm’s high valuations, which could tighten the discount significantly

SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications

By Brian Freitas

Sigma Healthcare (SIG AU) has announced a potential merger with Chemist Warehouse Group (CWG) to create a leading healthcare wholesaler, distributor and retail pharmacy franchisor.
With a market cap of ~A$8.5bn and a free float market cap of ~A$4bn, the merged company will make the cut for inclusion in the S&P/ASX 200 (AS51 INDEX).
Inclusion in the S&P/ASX 100 Index looks just out of reach at the moment as does inclusion in some large global indices.

Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover

By David Blennerhassett

Privately-Held Chemist Warehouse’s (CWG) “transformational merger” with pharmaceutical wholesaler and franchisor Sigma Healthcare (SIG AU) will result in CWG’s shareholders holding 85.75% of the merged company.
CWG shareholders will receive A$700mn in cash plus new Sigma shares. Sigma will also undertake a $400mn equity raising to fund working capital needs.
Sigma has the backing of its largest shareholder HMC. The risk to completion pivots off ACCC approval.

Costa Group (CGC AU): Wide Spread Ahead of the 30 January Vote

The Costa Group Holdings (CGC AU) IE considers Paine Schwartz Partners’ A$3.20 offer fair and reasonable as it is towards the upper end of its A$2.62-3.28 valuation range.
The scheme requires China SAMR and European Commission approvals. SAMR approval poses a timing risk but the scheduling of the scheme meeting reflects PSP’s confidence in securing the approvals.
While not a knockout bid, the profit warning should help sway the retail vote in favour of the scheme. At the last close, the gross spread was 8.1%.

Hollysys (HOLI US): Questionable Process Results in Ascendent’s Winning US$26.50 Bid

Hollysys Automation Technologies (HOLI US) has agreed to be acquired by Ascendent Capital, the largest shareholder, for US$26.50, a 16.7% premium to the last close.
The Board’s claims of realising the highest shareholder value are not credible. The Board fails to explain why Ascendent’s offer is superior to Recco’s, although both have the same value.
Deal fatigue (the process first started in December 2020) and the 42% premium to the undisturbed price suggests meeting the simple majority threshold for a statutory merger is achievable.

Costa Group’s Shareholder Vote Set. Get Involved

By David Blennerhassett

On the 22 September, Costa Group Holdings (CGC AU) backed Paine Schwartz Partners’ (PSP) revised (and reduced) A$3.20/share best and final Offer.
Costa’s Scheme Meeting has now been tabled for the 30 December, with implementation expected on the 26 February. The IE is supportive and Costa’s board unanimously recommends the transaction.
This appears done. Key conditions are Costa’s shareholder vote and SAMR approval. I can’t see SAMR getting into a bind over berries.

KKR/Smart Metering Systems: Agreed Cheap Offer

By Jesus Rodriguez Aguilar

KKR takes advantage of a the depressed share price of Smart Metering Systems (SMS LN) that operates a stable, cash generating and misunderstood defensive business with revenues linked to inflation.
KKR offers 955p (+8.31875p/share declared divi), a 40% premium 40%, 15x EV/24e EBITDA. 0.1% irrevocable undertakings is negligible (top ten shareholders own c.54%). A counteroffer and/or sweetening is possible.
Spread is 0.45%/1.52% (gross/annualised, assuming settlement by 29 March, including declared dividend). Turnover has been high since announcement. Risk/return seems attractive. Recommendation is long SMS LN.

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

Dec 12

Daily Brief Equity Bottom-Up: Li Ning (2331 HK): Buying A HKD2.2bn Office Building – Now A Corporate Governance Discount? and more

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

In today’s briefing:

Li Ning (2331 HK): Buying A HKD2.2bn Office Building – Now A Corporate Governance Discount?
Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target
GoTo (GOTO IJ) – TikTok Taking Tokopedia
2Q Follow-Up – Torex Semiconductor (6616 JP)
Closing HOLI, PBR-A and 1669
4Q Follow-Up – Japan Business Systems (5036 JP)
Pharmaron Beijing (3759.HK/300759.CH) – Share Price Would Continue to Underperform
Beiersdorf: Success Based On Strong Portfolio Of Internationally Leading Brands
[Week 13] Namaste India | Whirlpool’s Tax Woes
Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

Li Ning (2331 HK): Buying A HKD2.2bn Office Building – Now A Corporate Governance Discount?

By Steve Zhou, CFA

Li Ning (2331 HK) announced yesterday that the company has acquired a HK office project, the Harbour East, from Henderson Land, for a total consideration of HKD2.2bn.
The acquisition is quite unexpected given that Li Ning has had a clean corporate governance track record.
The company now trades at 11x foward PE, assuming no growth in 2023 and 2024 earnings. It is now a value stock, though the visibility is very low.

Yamazen Secondary Offer (8150 JP) – 5 Banks Sell To Make This a Future Activism Target

By Travis Lundy

On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe).
It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of shares out.
But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer.

GoTo (GOTO IJ) – TikTok Taking Tokopedia

By Angus Mackintosh

GoTo Gojek Tokopedia (GOTO IJ) has announced that it will sell a controlling 75.01% stake in Tokopedia to TikTok in order to create Indonesia’s leading e-commerce platform.
There had been earlier indications that a deal was in the offing but the size of TikTok’s stake was surprising plus it has committed to invest US$1.5bn in Tokopedia.
GoTo will retain a 24.99% non-dilutive stake and will receive an ongoing revenue stream from Tokopedia in line with its scale and growth contributing directly to its EBITDA.

2Q Follow-Up – Torex Semiconductor (6616 JP)

Multiple signs are flashing that the reset phase of the silicon cycle is beginning to rebound.
On November 28, WSTS (World Semiconductor Trade Statistics) announced its Fall forecast for 2023 and 2024, marking the first upward revision in the current down cycle, revising up both 2023 to a single-digit decline, and revising up 2024 growth to +13.1%, due to better-than-expected demand in Apr-Jun and Jul-Sep.
Quarterly worldwide billings data shows the YoY percentage decline marked the bottom in Jan- Mar at -21.3% YoY, shrinking to only -4.5% in the Jul-Sep quarter.

Closing HOLI, PBR-A and 1669

By Turtles all the way down

News came out today that Hollysys (HOLI) is being acquired by Ascendant for $26.5/share . So I sold my shares for $24.74 today.
And closing this at $24.88. Only a 7% spread, and there could be some delays before this closes.
Was a nice trade and a 43% gain since dedicating a full write-up to it in July this year.

4Q Follow-Up – Japan Business Systems (5036 JP)

Among priority measures for FY24/9, JBS management is particularly focused on rolling out global licensing business for major enterprise customers, as well as strengthening cloud AI proposal capabilities.
The strategic business alliance concluded with Crayon Group at the end of August enables JBS to offer global support services to customers outside the coverage of JBS overseas offices.
The two partners will also collaborate on developing AI and security solutions mainly for Microsoft Products.

Pharmaron Beijing (3759.HK/300759.CH) – Share Price Would Continue to Underperform

By Xinyao (Criss) Wang

Pharmaron’s performance has shown a clear downward trend this year, and the growth in 23Q4 may be even lower. That means this year’s results could fall short of management’s expectations.
The essence of unsatisfactory profit margin is due to low capacity utilization/management efficiency.The underlying reason is the sharp decline in drug R&D demand due to the deterioration of financing environment.
Pharmaron seems ill-prepared in peptide CDMO, and its performance would further lag behind Wuxi AppTec in the future. Pharmaron may not be able to contribute alpha during industry downturns.

Beiersdorf: Success Based On Strong Portfolio Of Internationally Leading Brands

By Alexis Dwek

The investment case revolves around the Company’s strong long-term fundamentals
An attractive and complementary skincare-focused brand portfolio centred on flagship Nivea brand in the mass segment, Eucerin in the growing dermocosmetics category and La Prairie in the higher-margin luxury segment.
Less expensive option than L’Oréal to gain exposure to an attractive skincare portfolio. The Company’s business model should prove resilient in a more challenging marker environment

[Week 13] Namaste India | Whirlpool’s Tax Woes

By Pranav Bhavsar

The broader sentiment remains positive, with markets primarily driven by participation from foreign investors, wise to increase the trailing stop at 20,600 for any possible change in trend.
We have already highlighted the weak operational performance of Whirlpool of India (WHIRL IN) , the company’s tax woes continue.
Names covered in this insight include Whirlpool of India (WHIRL IN) , Thyrocare Technologies (THYROCAR IN), Paytm (PAYTM IN) and Flywire Corp (FLYW US)

Beyond ASP Declines, Additional Dynamic Undermines Yunda | We Explain Roles of STO, BABA, CaiNiao

By Daniel Hellberg

Recently, Yunda Holding has lost volume share to rival STO Express
One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
For Yunda, this dynamic adds to intense near-term pressure on margins

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

Dec 12

Daily Brief Health Care: Sigma Healthcare, Mankind Pharma, Pharmaron Beijing and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications
Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover
Mankind Pharma Placement – Its Expensive, but at Least It’s High Quality
Pharmaron Beijing (3759.HK/300759.CH) – Share Price Would Continue to Underperform

SIG/CWG Merger: Back Door Entry to the ASX200; Other Index Implications

By Brian Freitas

Sigma Healthcare (SIG AU) has announced a potential merger with Chemist Warehouse Group (CWG) to create a leading healthcare wholesaler, distributor and retail pharmacy franchisor.
With a market cap of ~A$8.5bn and a free float market cap of ~A$4bn, the merged company will make the cut for inclusion in the S&P/ASX 200 (AS51 INDEX).
Inclusion in the S&P/ASX 100 Index looks just out of reach at the moment as does inclusion in some large global indices.

Sigma Healthcare (SIG AU): Chemist Warehouse’s Reverse Takeover

By David Blennerhassett

Privately-Held Chemist Warehouse’s (CWG) “transformational merger” with pharmaceutical wholesaler and franchisor Sigma Healthcare (SIG AU) will result in CWG’s shareholders holding 85.75% of the merged company.
CWG shareholders will receive A$700mn in cash plus new Sigma shares. Sigma will also undertake a $400mn equity raising to fund working capital needs.
Sigma has the backing of its largest shareholder HMC. The risk to completion pivots off ACCC approval.

Mankind Pharma Placement – Its Expensive, but at Least It’s High Quality

A group of shareholders is looking to raise around US$600m via selling a 6.9% stake in Mankind Pharma.
MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
We have looked at the IPO and lock-up release earlier. In this note, we talk about the other deal dynamics.

Pharmaron Beijing (3759.HK/300759.CH) – Share Price Would Continue to Underperform

By Xinyao (Criss) Wang

Pharmaron’s performance has shown a clear downward trend this year, and the growth in 23Q4 may be even lower. That means this year’s results could fall short of management’s expectations.
The essence of unsatisfactory profit margin is due to low capacity utilization/management efficiency.The underlying reason is the sharp decline in drug R&D demand due to the deterioration of financing environment.
Pharmaron seems ill-prepared in peptide CDMO, and its performance would further lag behind Wuxi AppTec in the future. Pharmaron may not be able to contribute alpha during industry downturns.

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

Dec 12

Daily Brief Financials: China South City, Record PLC, SES AI Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

China South City – Event Flash – Restructuring Updates And H1 FY 2023-24 Results – Lucror Analytics
Morning Views Asia: China South City, NagaCorp Ltd
Record – Underlying growth and pipeline are attractive
SES AI Corp. – Battery World on December 12 at 9:00 Am ET

China South City – Event Flash – Restructuring Updates And H1 FY 2023-24 Results – Lucror Analytics

Morning Views Asia: China South City, NagaCorp Ltd

China South City
NagaCorp Ltd

Record – Underlying growth and pipeline are attractive

By Edison Investment Research

In H124, Record posted steady management fee growth of 3% y-o-y to £19.6m as the company benefited from a higher assets under management equivalent (AUME) base. Total revenues, however, were down 3% as performance fees in H123 outweighed those earned in H124. Profit before tax was down 17% y-o-y to £6.3m as Record incurred costs related to its expansion and modernisation initiatives. In line with its progressive dividend policy, Record increased its dividend by 5% y-o-y to 2.15p per share. After four years as CEO, Leslie Hill announced her retirement and will be succeeded by Dr Jan Witte (CEO of the subsidiary Record Currency Management) at the end of FY24 in March. He has also been appointed to the board as executive director with effect from 1 January 2024. Leslie will maintain her share ownership in Record and will assist senior management in Record’s transition phase.

SES AI Corp. – Battery World on December 12 at 9:00 Am ET