Smartkarma Daily Briefs

Agilent Technologies Q1 2024 earnings were decent.
Mike McMullen, the outgoing President and CEO of Agilent, announced his retirement and new CEO-elect, Padraig McDonnell took charge of the company.
Agilent reported Q1 revenue of $1.66 billion, which represents a decrease of 6.4% against the same period the previous year.

Henry Schein Inc: Investment in Future Growth and Specialty Business Outlook! – Major Drivers

Henry Schein’s financial results for the fourth quarter and full year of 2023 demonstrated a robust recovery from a significant cybersecurity incident, showcasing the resilience of their business model and the steadfast loyalty of their customers.
Notably, Henry Schein reported strong growth in its technology and value-added services businesses, a key strategic focus for the company.
Global sales of implants and biomaterials also showed significant growth, largely driven by strategic acquisitions that expanded the company’s offering and market presence.

Intra-Cellular Therapies Inc.: Initiation Of Coverage – 6 Major Drivers

This is our first report on biopharma major, Intra-Cellular Therapies.
The company reported solid progress in its Q4 and FY2023 results, marking a year characterized by steady growth across the company.
Central to the year’s success was the establishment of CAPLYTA as a vital treatment option for bipolar depression and schizophrenia.

MariMed, Inc. – Poised for Growth in 2024

By Water Tower Research

MariMed reported 4Q revenue of $38.9 million, which was exactly in line with our estimate.
This represents a 0.26% increase Q/Q and an 8.66% improvement Y/Y. Gross margins were 44.47%, a gain of 1.80% sequentially and 0.34% Y/Y.
Revenue was helped by a full contribution from the Thrive Dispensary in Casey, Illinois and beginning operations at the Mt. Vernon, Illinois manufacturing facility.

Penumbra Inc: Initiation Of Coverage – A Tale Of Cautious Innovation! – Major Drivers

This is our first report on Penumbra, a global healthcare major.
The company reported its fourth quarter and annual earnings on its conference call.
The company made a revenue of USD 284.7 million in Q4, marking a year-over-year increase of 28.7%, while their annual revenues for 2023 reached USD 1,058.5 million, a 25% increase compared to 2022.

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Mar 08

Daily Brief Financials: China Vanke (H), Sasseur REIT, Sun Hung Kai Properties, Nikkei 225, CIMB Group Holdings, Ethereum, NB Private Equity Partners, Bancorp Inc/The and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

China Vanke: Should Investors Be Worried?
Sasseur REIT (SGX: CRPU) – A Play On China Consumption Via The Operations-Focused Outlet Sector
HK RE Series (2): Market Is Still Bearish but Bottom Is Near, Few Things Needed for Re-Rating
EQD | Nikkei 225 Pullback: Buy-The-Dip Opportunity
Malaysian Banks Screener; Value Pick CIMB Has Momentum, Maybank Is the Quality Pick
Crypto Moves #18 – The Least Speculative Crypto Bull Market
NB Private Equity Partners (NBPE): Value creation in a higher-rate environment
Bancorp Inc (TBBK) – Thursday, Dec 7, 2023

China Vanke: Should Investors Be Worried?

By Fern Wang

China Vanke has caused jitters as it was reported to be closely watched by some insurers as it seeks to rollover some of its debt with insurers.
It is reported that it has sufficient funding to repay its bond due on March 11th and is lining up a HK$1.5 billion syndication loan.
Vanke warrants close monitoring as there is no sign of turning in its reducing contract sales, deteriorating cash position, shrinking financing ability.

Sasseur REIT (SGX: CRPU) – A Play On China Consumption Via The Operations-Focused Outlet Sector

By Robert Ciemniak

The Smartkarma Corporate Webinar | Sasseur REIT: A Glimpse into China’s Outlet Industry on Feb 29 explored the Oulet sector with Sasseur REIT, a Singapore REIT focused on China Outlets.
Sasseur REIT is 57.85% owned by the Sasseur Group operating China outlets since 2008, with 4 outlets in 3 major Tier-2 cities currently in the REIT, with room for expansion.
Sasseur REIT is a play on China consumption and outlet operations. 2023 EMA rental income +10.7% Y/Y. The 9.1% dividend yield stands out, at a relatively low aggregate leverage.

HK RE Series (2): Market Is Still Bearish but Bottom Is Near, Few Things Needed for Re-Rating

By Jacob Cheng

Markets continue to be extremely bearish on HK/China, we look at the latest property market fundamentals and macro indicators, as well as company updates of our top picks
In the latest budget, the HK government just announced to scrap all spicy measures on property market and eased mortgage policy
With government support, we view the bottom of physical market is near. For further re-rating, we need interest rate to go down, as well as resumed fund flows.

EQD | Nikkei 225 Pullback: Buy-The-Dip Opportunity

By Nico Rosti

The Nikkei 225 INDEX is initiating a pullback that should be a buy-the-dip opportunity.
The first buyable area for a LONG trade, this week, is 39600 and 39300 (this week) and down to 38100 (next week).
The index should restart its rally after the pullback, and there is a good chance the pullback won’t last for more than 1-2 weeks.

Malaysian Banks Screener; Value Pick CIMB Has Momentum, Maybank Is the Quality Pick

By Victor Galliano

Of the six Malaysian banks screened, we keep quality play Maybank on the buy list and switch our prior buy RHB for CIMB
CIMB is our value pick for its undemanding PE and PBV whilst second from top in post-provision profitability; its credit quality is improving, a positive trend we expect will continue
We maintain quality pick Maybank as a buy for its relatively undemanding valuations, and strong balance sheet credentials in terms of credit quality and capital adequacy

Crypto Moves #18 – The Least Speculative Crypto Bull Market

By Mads Eberhardt

The cryptocurrency market is probably the most speculative, largely because it has not had enough time for price discovery, lacks consistent and measurable metrics, and has seen minimal institutional involvement.
The crypto market is unique for its overwhelming number of retail investors compared to institutional ones, a rarity in most other markets where institutions lead the way.
This dynamic has led to significant volatility, primarily driven by the emotional reactions of retail investors, more so than in any other market.

NB Private Equity Partners (NBPE): Value creation in a higher-rate environment

By Hardman & Co

In this note, we explore how the sources of value creation have evolved and how NBPE’s GP partners are expected to organically and inorganically generate incremental EBITDA growth to offset higher interest costs.
Long-term target returns for new deals on the NB platform are unchanged, despite the short-term interest rate noise.
This note builds on the drivers of historical superior EBITDA (see 2023 CMD: value creation from growing companies).

Bancorp Inc (TBBK) – Thursday, Dec 7, 2023

By Value Investors Club

Author recommends shorting TBBK due to stretched valuation, unsustainable earnings, vulnerable loan book, and signs of aggressive accounting
TBBK benefits from a cheap deposit base and generates revenue through transaction fees on prepaid cards and interest income from lending activities
TBBK competes with various financial institutions in specialty lending lines such as real estate bridge loans, SBLOC, IBLOC, advisor financing, small business loans, and direct lease financing

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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Mar 08

Daily Brief Consumer: Oriental Land, JD.com Inc (ADR), Ryohin Keikaku, Li Auto , Fu Shou Yuan, Paradise Co Ltd, Vinda International, Coupang , Domino’s Pizza, Celsius Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large
JD.com (JD US): Improved Shareholder Return Is Key
Ryohin Keikaku (7453): Q1 FY08/24 Update
Quiddity HSTECH Jun 24 Leaderboard: Capping Flows Li Auto, Meituan, and XPeng
Fu Shou Yuan (1448 HK): Proposing a Special Dividend
Paradise Announces A Switch in Listing from KOSDAQ to KOSPI
Vinda (3331 HK): Offer Now Open
Coupang Inc: Amplifying Luxury Retail Reach With The Farfetch Acquisition! – Major Drivers
Domino’s Pizza: Is Its Improving Supply Chain Profitability Enough To Warrant A Bullish Rating? – Major Drivers
Celsius CEO Explains How They Win in Energy Drinks

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large

Keisei Electric Railway Co (9009 JP) is looking to raise up to US$553m from selling a 1% stake in Oriental Land (4661 JP).
Palliser Capital, has been pushing Keisei Electric Railway to reduce its stake in OLC to unlock shareholder value owing to the wide discrepancy between carrying/market value of the former’s investment.
Selling just 1% of shares outstanding, the deal wouldn’t be a very large one to digest, representing 4.7 days of OLC’s three month ADV.

JD.com (JD US): Improved Shareholder Return Is Key

By Steve Zhou, CFA

JD.com Inc (ADR) (JD US) reported a set of better-than-expected 4Q23 results yesterday, as the ADR rose 16% last night in US trading session.
The improvement in net profit margin showed that being more price competitive did not lead to lower margins.
I believe the key takeaway, aside from the resilient 4Q23 results and solid 2024 outlook, is the much improved shareholder return measures.

Ryohin Keikaku (7453): Q1 FY08/24 Update

By Shared Research

Ryohin Keikaku (7453 JP) offers products covering all aspects of daily life.
For FY08/23, Ryohin Keikaku reported consolidated operating revenue of JPY581.4bn , operating profit of JPY33.1bn, recurring profit of JPY36.2bn, and net income attributable to owners of the parent of JPY22.1bn.
The company’s full-year FY08/24 forecast calls for operating revenue of JPY640.0bn, operating profit of JPY48.0bn, recurring profit of JPY46.0bn and net income attributable to shareholders of the parent of JPY33.3bn.

Quiddity HSTECH Jun 24 Leaderboard: Capping Flows Li Auto, Meituan, and XPeng

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the June 2024 index rebal event.
While there are no expected ADDs/DELs for HSTECH in June 2024, some index members like Li Auto (2015 HK), Meituan (3690 HK), and XPeng (9868 HK) could experience capping flows.

Fu Shou Yuan (1448 HK): Proposing a Special Dividend

By Osbert Tang, CFA

Fu Shou Yuan (1448 HK) is likely to declare a special dividend in its FY23 result announcement as indicated in its board meeting notification.
Net cash at end-1H23 amounted to 14.5% of its current share price, providing room for imagination of the amount of special dividends.
Besides raising its yield, returning excess cash should raise its ROE. This will also demonstrate the management’s confidence on the outlook and its financial position.

Paradise Announces A Switch in Listing from KOSDAQ to KOSPI

By Douglas Kim

On 7 March, Paradise Co Ltd (034230 KS) announced that it plans to switch its listing from KOSDAQ to KOSPI.
Paradise will be excluded from KOSDAQ150 when it makes the switch to KOSPI. However, it is not certain if and when the company will be included in KOSPI200.
All in all, we would argue that the valuations are not especially appealing for Paradise, despite the sharp pick-up in business in 2023.

Vinda (3331 HK): Offer Now Open

By David Blennerhassett

PRC regulatory approvals were satisfied on the 4th March for the Tanoto family’s HK$23.50 pre-conditional Offer for Vinda International (3331 HK).
The Circular has been dispatched, and the Offer is now open for acceptances.
With a 50% minimum acceptance condition and irrevocables of 72.624% (plus Tanoto’s 7.69% direct stake), this should turn unconditional on or before the 19th March

Coupang Inc: Amplifying Luxury Retail Reach With The Farfetch Acquisition! – Major Drivers

Coupang Inc., an e-commerce giant based in South Korea, has reportedly shown significant advancements and growth in their latest fourth quarter earnings.
They boasted a year of accelerating growth, record profits and notably expanded free cash flows in business, with the creation of the ‘wow’ moments for customers deemed as the foundation to their long-term growth, profitability and in turn, shareholder value.
Customer growth and revenues notably accelerated every quarter in 2023, with active customers growing 16% year-over-year.

Domino’s Pizza: Is Its Improving Supply Chain Profitability Enough To Warrant A Bullish Rating? – Major Drivers

Domino’s Pizza had a strong Q4 which the company attributes to its new “Hungriest for MORE” strategy, focusing on increased sales, store growth, and profits.
Throughout the earnings call, the company pointed at positive U.S. same-store sales and transaction growth in both delivery and carryout, signaling strong momentum in the business.
In 2023, Domino’s added over 60 new franchisees to its system, the most in 15 years, highlighting the company’s expansion strategy.

Celsius CEO Explains How They Win in Energy Drinks

By Odd Lots

Bloomberg Audio Studios podcasts Radio News with hosts Weisenthal and Tracy Alloway
Discussion on energy drinks like Celsius and their rise in popularity
Interview with John Fieldley, President and CEO of Celsius holdings, discussing the competitive energy drink market and distribution strategies

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Mar 08

Most Read: Keisei Electric Railway Co, Fast Retailing, Oriental Land, Shenzhen New Industries Biomedical Engineering-A, JSR Corp, Shinko Electric Industries, Taiwan Semiconductor (TSMC), Wiwynn Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”
Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN
StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback
Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large
CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows
JSR (4185) – Reporters Reportedly Report Conditions Such That JIC Deal Could Come Soon
Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now
Emerging Markets Ex-China: Looking Back… And Forward
JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval
Wiwynn GDRs Early Look – US$1.3bn Taiwan GDR Would Be Easily Digested

Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”

Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback.
Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It’s pretty clear.

Sep24 Nikkei 225 Rebal – 2 ADDs, 2 DELETEs Maybe, but Rebals Tougher, and Fastie+TEL Are the FUN

Now that the March 2024 Nikkei 225 Rebalance is decided, we have a model for the Sep 2024 Review. As previously discussed on Smartkarma, actual name changes get tough now.
As of now, there should be two ADDs and two DELETEs. They might not occur. But there are two other situations which create interesting dynamics around big names.
The dynamics of Fast Retailing and Tokyo Electron promise more fun than the actual name changes in September 2024. It impacts how you trade Nikkei vs TOPIX and tech internals.

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback

By David Blennerhassett

Keisei Electric (9009 JP) has been an outperformer since activist fund Palliser Capital called on the company sell some Oriental Land (4661 JP) shares. It has now announced another buyback.
Preceding my comments on Keisei Electric 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%.

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large

Keisei Electric Railway Co (9009 JP) is looking to raise up to US$553m from selling a 1% stake in Oriental Land (4661 JP).
Palliser Capital, has been pushing Keisei Electric Railway to reduce its stake in OLC to unlock shareholder value owing to the wide discrepancy between carrying/market value of the former’s investment.
Selling just 1% of shares outstanding, the deal wouldn’t be a very large one to digest, representing 4.7 days of OLC’s three month ADV.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

By Brian Freitas

With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

JSR (4185) – Reporters Reportedly Report Conditions Such That JIC Deal Could Come Soon

JSR Corp (4185 JP) saw its stock pop Monday when an article in a Japanese paper said the Tender Offer would start “within the month.”
Investors went from “concerned about delay or worse” to “anticipating resolution.” Then Wednesday just before the close the stock popped as media outlets reportedly reported no SAMR approval was required.
There has been no comment from either JIC or JSR but the discount to terms has gone from 6.9% last Friday to a 1.7% discount now.

Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now

Seven weeks ago I wrote about Shinko Electric Industries (6967 JP)‘s changing Break/Gap Risk as comps had gained. Shinko was cheap to its main comp and peers vs Announcement Date.
Since then, Shinko is +4.1% and direct peer Ibiden Co Ltd (4062 JP) is -14.5%. This has erased Shinko’s underperformance since announcement, and shrunk a 9% spread to 3.3% yesterday.
With the spread tighter and tech showing some weakness, I’d be happy unwinding at yesterday’s closing spread (3.3%).

Emerging Markets Ex-China: Looking Back… And Forward

By Brian Freitas

We first wrote about the iShares Emerging Markets ex-China (EMXC US) ETF 3 years ago when AUM was less than US$500m. AUM now stands at US$11bn.
IShares Emerging Markets ex-China (EMXC US) has outperformed iShares Emerging Markets (EEM US) and iShares Emerging Markets Asia (EEMA US) with lower volatility and a lower drawdown.
With the Chinese economy misfiring and markets under pressure, we could see a further shift in positioning away from China and that means inflows to other Emerging Markets.

JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval

By Arun George

JSR Corp (4185 JP) has filed a solid response to SUNY RF’s lawsuit. SUNY RF will counter with a response by 13 March.
The response suggests that SUNY RF’s lawsuit will not be harmed if JIC proceeds with TOB, which is the strongest indication that JIC is comfortable taking on the litigation risk.
A media article stating that SAMR has allowed JIC to withdraw its merger control filing helps explain the current tight spread. However, the article needs to be treated with caution.

Wiwynn GDRs Early Look – US$1.3bn Taiwan GDR Would Be Easily Digested

Wiwynn Corp (6669 TT) is looking to raise up to US1.3bn in its upcoming global depository receipts (GDRs) offering.
Wiwynn recently reported its board’s resolution to issue up to 17m new shares in the form of GDRs for purchasing overseas raw materials, debt repayment, investing overseas and others.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

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Mar 08

Daily Brief ESG: From the Reality of 4% and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

From the Reality of 4%, Mandatory English Disclosure of Annual Securities Reports Is a High Hurdle

From the Reality of 4%, Mandatory English Disclosure of Annual Securities Reports Is a High Hurdle

By Aki Matsumoto

TSE has published a proposal to require simultaneous disclosure of financial statements and timely disclosure information in both Japanese and English from April 2025 (for March fiscal year end companies).
The elimination of time gap between disclosure of financial statements in Japanese and English and the expansion of English-language disclosure of timely disclosure information are advances resulting from this revision.
As TSE continues to consider expanding the range of documents covered, the focus is on when English-language disclosure of annual securities reports, which cover all important information, will become mandatory.

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Mar 08

Daily Brief Thematic (Sector/Industry): Ohayo Japan | US & Euro Stocks Hit Record Highs and more

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

In today’s briefing:

Ohayo Japan | US & Euro Stocks Hit Record Highs

Ohayo Japan | US & Euro Stocks Hit Record Highs

By Mark Chadwick

The Dow Jones Industrial Average rose 0.34% to 38,791, while the S&P 500 hit a new record close, climbing 1.03% to 5,157
Speculation over the Bank of Japan’s policy shift triggers yen’s strengthening, leading to a sell-off in export-oriented stocks.
Japan’s largest labor confederation announced on Thursday that wage increase demands from its member unions have reached a 31-year high

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Mar 08

Daily Brief ECM: Oriental Land Co Placement – Relatively Small One to Digest and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large
Angel Robotics: IPO Valuation Analysis
NLC India OFS – Another GoI-PSU Selldown, Well Flagged Coupled with Strong Momentum
Shanghai REFIRE Group Pre-IPO Tearsheet
Lianlian DigiTech IPO: PHIP Updates

Oriental Land Co Placement – Relatively Small One to Digest, Overhang Might Not Be as Large

Keisei Electric Railway Co (9009 JP) is looking to raise up to US$553m from selling a 1% stake in Oriental Land (4661 JP).
Palliser Capital, has been pushing Keisei Electric Railway to reduce its stake in OLC to unlock shareholder value owing to the wide discrepancy between carrying/market value of the former’s investment.
Selling just 1% of shares outstanding, the deal wouldn’t be a very large one to digest, representing 4.7 days of OLC’s three month ADV.

Angel Robotics: IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Angel Robotics is target price of 20,277 won per share, which represents a 35% upside from the high end of the IPO price range.
We estimate sales of 9 billion won in 2024 (up 75.2% YoY) and 14.9 billion won in 2025 (up 65.3% YoY). Our estimates are more conservative than the company’s estimates.
We like the strong sales growth of Angel Robotics. Many investors are likely to view this positively in this IPO. LG Electronics and Samsung Electronics are customers of Angel Robotics.

NLC India OFS – Another GoI-PSU Selldown, Well Flagged Coupled with Strong Momentum

The GoI is looking to raise up to US$248m from selling its stake in Neyveli Lignite (NLC IN).
This seems to be part of the GoI’s ongoing divestment drive across PSUs, with the recent selldowns in other PSUs having done well.
The GoI had also sold some stake in the firm earlier in Oct 2017.

Shanghai REFIRE Group Pre-IPO Tearsheet

By Sumeet Singh

Shanghai REFIRE Group (SRG) is looking to raise around US$100m in its upcoming Hong Kong IPO. The bookrunner for the deal is CICC.
SRG designs, develops, manufactures, and sells hydrogen fuel cell systems, hydrogen production systems, and related components, as well as provides fuel cell engineering and technical services.
According to Frost & Sullivan (F&S), it ranked first in the hydrogen fuel cell system market in China, with a market share of 25.9%.

Lianlian DigiTech IPO: PHIP Updates

By Arun George

Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has begun pre-marketing an HKEx IPO. It previously targeted a US$500 million raise.
We previously discussed the IPO in LianLian DigiTech IPO: The Bull Case and LianLian DigiTech IPO: The Bear Case.
The PHIP reinforces the bear case of operating losses, an unconvincing path to profitability, and a volatile FCF with a deteriorating balance sheet.

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Mar 08

Daily Brief Event-Driven: Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door” and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”
JSR (4185) – Reporters Reportedly Report Conditions Such That JIC Deal Could Come Soon
Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now
JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval
Karuna Therapeutics Inc (KRTX.US) – This Company Is Worth Bristol Myers Squibb Paying a High Premium
Quiddity HSTECH Jun 24 Leaderboard: Capping Flows Li Auto, Meituan, and XPeng
Azure Min (AZS AU): Trading Wide Ahead Of 8th April Vote
Quiddity HSCEI Jun 24 Flow Expectations: Many Reasons to Follow the Developments Closely
Paradise Announces A Switch in Listing from KOSDAQ to KOSPI
Telefonica/Telefonica Deutschland Holding AG: Delisting Offer

Oriental Land (4661) Placement by Keisei Rail (9009) Says “That’s the Door”

Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback.
Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It’s pretty clear.

JSR (4185) – Reporters Reportedly Report Conditions Such That JIC Deal Could Come Soon

JSR Corp (4185 JP) saw its stock pop Monday when an article in a Japanese paper said the Tender Offer would start “within the month.”
Investors went from “concerned about delay or worse” to “anticipating resolution.” Then Wednesday just before the close the stock popped as media outlets reportedly reported no SAMR approval was required.
There has been no comment from either JIC or JSR but the discount to terms has gone from 6.9% last Friday to a 1.7% discount now.

Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now

Seven weeks ago I wrote about Shinko Electric Industries (6967 JP)‘s changing Break/Gap Risk as comps had gained. Shinko was cheap to its main comp and peers vs Announcement Date.
Since then, Shinko is +4.1% and direct peer Ibiden Co Ltd (4062 JP) is -14.5%. This has erased Shinko’s underperformance since announcement, and shrunk a 9% spread to 3.3% yesterday.
With the spread tighter and tech showing some weakness, I’d be happy unwinding at yesterday’s closing spread (3.3%).

JSR Corporation (4185 JP): Response to SUNY RF Lawsuit and Rumours of SAMR Approval

By Arun George

JSR Corp (4185 JP) has filed a solid response to SUNY RF’s lawsuit. SUNY RF will counter with a response by 13 March.
The response suggests that SUNY RF’s lawsuit will not be harmed if JIC proceeds with TOB, which is the strongest indication that JIC is comfortable taking on the litigation risk.
A media article stating that SAMR has allowed JIC to withdraw its merger control filing helps explain the current tight spread. However, the article needs to be treated with caution.

Karuna Therapeutics Inc (KRTX.US) – This Company Is Worth Bristol Myers Squibb Paying a High Premium

By Xinyao (Criss) Wang

Due to large patient population and strong clinical demand for new therapies, the future commercialization prospects of effective drugs in the field of schizophrenia would be relatively certain and promising.
Our forecast on the peak sales of KarXT is about US$10 billion. In other words, at this peak sales level, BMS is able to recover the US$14 billion in cost.
Karuna’s P/B is much higher than peers. If investors already have Karuna in portfolio, they may consider taking profits in time.But another rally is possible when KarXT is officially approved.

Quiddity HSTECH Jun 24 Leaderboard: Capping Flows Li Auto, Meituan, and XPeng

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the June 2024 index rebal event.
While there are no expected ADDs/DELs for HSTECH in June 2024, some index members like Li Auto (2015 HK), Meituan (3690 HK), and XPeng (9868 HK) could experience capping flows.

Azure Min (AZS AU): Trading Wide Ahead Of 8th April Vote

By David Blennerhassett

Back on the 19th Dec, Sociedad Quimica y Minera (SQM/B CI)/Hancock offered Azure Minerals (AZS AU) shareholders A$3.70/share by way of a Scheme, a ~52% premium to the undisturbed price.
Creasy Group (12.64%) and Delphi Group (10.15%) gave irrevocables. Mineral Resources (MIN AU)‘s 14.5% stake was unclear; but they exited on the 21 Feb. “Arbitrageurs should arb. Corporations should Corp“.
The Transaction Booklet is now out with a Scheme Meeting on the 8th April. The IE says fair. Expected implementation on the 18 April.

Quiddity HSCEI Jun 24 Flow Expectations: Many Reasons to Follow the Developments Closely

By Janaghan Jeyakumar, CFA

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in June 2024.
Based on the current data, I see two low-conviction ADDs and two low-conviction DELs.

Paradise Announces A Switch in Listing from KOSDAQ to KOSPI

By Douglas Kim

On 7 March, Paradise Co Ltd (034230 KS) announced that it plans to switch its listing from KOSDAQ to KOSPI.
Paradise will be excluded from KOSDAQ150 when it makes the switch to KOSPI. However, it is not certain if and when the company will be included in KOSPI200.
All in all, we would argue that the valuations are not especially appealing for Paradise, despite the sharp pick-up in business in 2023.

Telefonica/Telefonica Deutschland Holding AG: Delisting Offer

By Jesus Rodriguez Aguilar

Telefonica SA (TEF SM) has decided to make a €2.35/share cash takeover offer to acquire the 5.65% stake in its German unit Telefonica Deutschland Holding (O2D GR) that it does not own.
The bidder and parent company, Telefonica, have informed Telefonica Deutschland that, except for FY 2023 dividend, they do not plan to support the distribution of dividends for future financial years.
The Bidder will apply for delisting thus the shares will soon become illiquid. Accept offer.

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Mar 08

Daily Brief Equity Bottom-Up: JD.com (JD US): Improved Shareholder Return Is Key and more

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

In today’s briefing:

JD.com (JD US): Improved Shareholder Return Is Key
China Vanke: Should Investors Be Worried?
Ryohin Keikaku (7453): Q1 FY08/24 Update
Sasseur REIT (SGX: CRPU) – A Play On China Consumption Via The Operations-Focused Outlet Sector
Fu Shou Yuan (1448 HK): Proposing a Special Dividend
Grab Holdings: Initiation Of Coverage – What Is Their Core Business Strategy? – Major Drivers
HK RE Series (2): Market Is Still Bearish but Bottom Is Near, Few Things Needed for Re-Rating
SITC International (1308 HK): Bidding Farewell to the Trough
Malaysian Banks Screener; Value Pick CIMB Has Momentum, Maybank Is the Quality Pick
Zoom Video Communications: Incorporating AI Capabilities to Improve Customer Engagement and Productivity! – Major Drivers

JD.com (JD US): Improved Shareholder Return Is Key

By Steve Zhou, CFA

JD.com Inc (ADR) (JD US) reported a set of better-than-expected 4Q23 results yesterday, as the ADR rose 16% last night in US trading session.
The improvement in net profit margin showed that being more price competitive did not lead to lower margins.
I believe the key takeaway, aside from the resilient 4Q23 results and solid 2024 outlook, is the much improved shareholder return measures.

China Vanke: Should Investors Be Worried?

By Fern Wang

China Vanke has caused jitters as it was reported to be closely watched by some insurers as it seeks to rollover some of its debt with insurers.
It is reported that it has sufficient funding to repay its bond due on March 11th and is lining up a HK$1.5 billion syndication loan.
Vanke warrants close monitoring as there is no sign of turning in its reducing contract sales, deteriorating cash position, shrinking financing ability.

Ryohin Keikaku (7453): Q1 FY08/24 Update

By Shared Research

Ryohin Keikaku (7453 JP) offers products covering all aspects of daily life.
For FY08/23, Ryohin Keikaku reported consolidated operating revenue of JPY581.4bn , operating profit of JPY33.1bn, recurring profit of JPY36.2bn, and net income attributable to owners of the parent of JPY22.1bn.
The company’s full-year FY08/24 forecast calls for operating revenue of JPY640.0bn, operating profit of JPY48.0bn, recurring profit of JPY46.0bn and net income attributable to shareholders of the parent of JPY33.3bn.

Sasseur REIT (SGX: CRPU) – A Play On China Consumption Via The Operations-Focused Outlet Sector

By Robert Ciemniak

The Smartkarma Corporate Webinar | Sasseur REIT: A Glimpse into China’s Outlet Industry on Feb 29 explored the Oulet sector with Sasseur REIT, a Singapore REIT focused on China Outlets.
Sasseur REIT is 57.85% owned by the Sasseur Group operating China outlets since 2008, with 4 outlets in 3 major Tier-2 cities currently in the REIT, with room for expansion.
Sasseur REIT is a play on China consumption and outlet operations. 2023 EMA rental income +10.7% Y/Y. The 9.1% dividend yield stands out, at a relatively low aggregate leverage.

Fu Shou Yuan (1448 HK): Proposing a Special Dividend

By Osbert Tang, CFA

Fu Shou Yuan (1448 HK) is likely to declare a special dividend in its FY23 result announcement as indicated in its board meeting notification.
Net cash at end-1H23 amounted to 14.5% of its current share price, providing room for imagination of the amount of special dividends.
Besides raising its yield, returning excess cash should raise its ROE. This will also demonstrate the management’s confidence on the outlook and its financial position.

Grab Holdings: Initiation Of Coverage – What Is Their Core Business Strategy? – Major Drivers

This is our first report on transportation and fintech platform provider, Grab Holdings Inc.
The company had a pivotal year in 2023, delivering on key goals and achieving profitability in adjusted EBITDA since the third quarter and earning a positive net profit in the fourth quarter.
The company experienced a series of enhancements, including a successful rebuild of their mobility business which had been vastly impacted by the pandemic.

HK RE Series (2): Market Is Still Bearish but Bottom Is Near, Few Things Needed for Re-Rating

By Jacob Cheng

Markets continue to be extremely bearish on HK/China, we look at the latest property market fundamentals and macro indicators, as well as company updates of our top picks
In the latest budget, the HK government just announced to scrap all spicy measures on property market and eased mortgage policy
With government support, we view the bottom of physical market is near. For further re-rating, we need interest rate to go down, as well as resumed fund flows.

SITC International (1308 HK): Bidding Farewell to the Trough

By Osbert Tang, CFA

The 72.5% decline in SITC International (1308 HK)‘s FY23 earnings is disappointing but should already reflected in the share price given the profit warning. Instead, this may be the trough.
Spot freight rates for key intra-Asia routes have already recovered since 3Q23, with the YTD level higher than the 2H23 average. The 1H24 result may show a sequential rebound.
Even assuming flat YoY earnings in FY24, it still sits on a 9% dividend yield. The projected ROE of over 24% and net cash position mean 1.6-1.7x P/B undemanding.

Malaysian Banks Screener; Value Pick CIMB Has Momentum, Maybank Is the Quality Pick

By Victor Galliano

Of the six Malaysian banks screened, we keep quality play Maybank on the buy list and switch our prior buy RHB for CIMB
CIMB is our value pick for its undemanding PE and PBV whilst second from top in post-provision profitability; its credit quality is improving, a positive trend we expect will continue
We maintain quality pick Maybank as a buy for its relatively undemanding valuations, and strong balance sheet credentials in terms of credit quality and capital adequacy

Zoom Video Communications: Incorporating AI Capabilities to Improve Customer Engagement and Productivity! – Major Drivers