Smartkarma Daily Briefs

Earnings season wrapping up — Hon Hai & Asustek recently reported… Some AI names rallied hard but our Nvidia L/S trade still working
Hon Hai’s margin expansion story is finally starting to be realized. Stock’s perceived political risk could be an opportunity.
How Asustek plans to take the lead globally in AI PCs; Gaming PCs will be the first key battleground. MSI could be an interesting play on Asustek’s recent strong performance.

Takashimaya: At Last a Revival in Department Store Profits

By Michael Causton

Takashimaya saw a strong increase in sales in 1H2023, helping profit rise to record levels with much of the growth coming from clothing and expects similar for the full year.
Unlike many rivals, the department store is not at all sanguine about the prospects for continued growth in luxury sales and the inbound tourist market – calling it a bubble.
It is instead emphasising profit growth over higher sales by targeting locals through store upgrades and better cost performance clothing – while also closing stores that are no longer viable.

Hon Hai (2317.TT): If the Market Is Unchanged, and It Will Be Slightly Upside in 2024 Market.

By Patrick Liao

The 4Q23F results will be higher than 3Q23, but lower than 4Q22.
If the market is unchanged, and it will be slightly upside in 2024F market.
For the target of GM 10% is still unchanged in 2025F.

How Asustek Plans to Take the Lead Globally in AI PCs; Gaming PCs First Key Battleground

Asustek reported results on November 13th that beat analyst expectations thanks to a major margin rebound. The stock soared post results.
Asus plans to be the first company globally to release an AI PC, leveraging extensive AI R&D across different devices as well as its leading market share in gaming PCs.
However, gaming PC competitor MSI is already moving fast; Shows how gaming PCs are likely to be the first AI PC battleground. Long Asustek, remains preferred over Acer.

Hon Hai’s Margin Expansion Story Finally Starting to Be Realized? Results Imply Yes

Hon Hai beat expectations yesterday when it reported thanks to higher than expected margins. Gross margin rose to its highest level since 2018, hitting 6.7%.
The company has maintained its 2025E 10% gross margin target and implied that 2024 will see significant margin improvement as new higher margin businesses ramp up revenue contribution.
Two key market concerns: News of Chinese government investigation and political risk given Mr. Gou running for president. Company said operations continue as normal. Hon Hai remains a Structural Long.

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Nov 15

Daily Brief Macro: US Inflation: First Take! and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

US Inflation: First Take!
UK CPI Watch: No Path to 2% Unless Inflation Deflates on a Monthly Basis
US CPI Reaction Nugget: Further Fuel for the Market Rally
Great Game – 3 Reasons Why Trump Will Win – And 1 Reason He Won’t
UK: Resilience Defies Doves

US Inflation: First Take!

By Jeroen Blokland

Disinflation Lives! US consumer prices were unchanged in October. As a result, headline inflation dropped to 3.2%. Core inflation declined to 4.0%, the lowest level in two years.
However, like last month, the underlying data look less upbeat. The 3-month annualized Core Services excluding Housing CPI has risen for four(!) consecutive months and reached 4.9% in October.
The disinflation narrative remains intact, opening the door for the Fed to proactively lower interest rates. But it remains doubtful whether Powell & Co. are truly inclined to do so.

UK CPI Watch: No Path to 2% Unless Inflation Deflates on a Monthly Basis

By Andreas Steno

Welcome to our short and chart-packed preview of UK inflation out tomorrow morning.
Extreme base effects are at play in October due to energy price revisions in October 2022
Housing and household services are about to turn negative year over year

US CPI Reaction Nugget: Further Fuel for the Market Rally

By Elias Lisberg Glistrup

We just had the October inflation data from the US, and our projections were spot on.
0% MoM and 3.23% YoY, is a sign of successful cooling but also that tailwinds from base-effects are long gone.
As we rightly called, the energy component has collapsed, and while the category doesn’t contribute much (in its separate bracket) it does however feed into most of the other.

Great Game – 3 Reasons Why Trump Will Win – And 1 Reason He Won’t

By Mikkel Rosenvold

While the internet seems totally preoccupied with the San Francisco summit between Xi and Biden, I find other news and analysis much more interesting right now.
This week saw the release of a major New York Times/Siena Poll of the 2024 Presidential Election – and some of the results were outright shocking.
I’m now at a point where a Trump win next November looks very likely to me.

UK: Resilience Defies Doves

By Phil Rush

The UK unemployment rate remained at 4.2% again, contrary to consensus expectations that may still be extrapolating the spurious earlier trend or revision-prone payrolls.
Demand may be softening for new workers, but wages seem excessive because of structural issues more than cyclical ones, which means the problem can persist.
We believe the BoE stopped hiking prematurely, but it is unlikely to hike again soon. Resilient activity and persistent excess inflation would discourage cuts instead.

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Nov 15

Daily Brief Energy/Materials: Pan American Silver, Wheaton Precious Metals and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Pan American Silver – Q323: La Colorada continues to underperform
Wheaton Precious Metals – Teeing up to hit long-term targets

Pan American Silver – Q323: La Colorada continues to underperform

Pan American’s Q3 results did not bring any major surprises at the group level, with lower EBITDA of US$159m, down 22% q-o-q, mainly a result of the continuing underperformance of La Colorada and lower-than-expected gold grades at El Penon. Yet the company reported flat (quarter-on-quarter) net operating cash flow of US$115m and broadly reiterated its FY23 operating guidance. We have revised downwards our near-term earnings estimates on the back of the results. However, our valuation has increased from US$22.0/share to US$22.7 due to updated longer-term gold price expectations. Although the shares have reacted negatively to the results, we expect a stronger Q4, while the commodity prices remain supportive against the backdrop of higher geopolitical risks.

Wheaton Precious Metals – Teeing up to hit long-term targets

Wheaton Precious Metals’ (WPM’s) Q323 profits exceeded our prior forecasts by US$4.0m (or 3.4%) at the pre-tax level and by US$4.2m (or 3.6%) at the post-tax level, driven by very strong production performances at Salobo and Constancia in particular. Production during the quarter amounted to 154,800oz gold equivalent ounces (GEOs) compared to our prior estimate of 151,919oz, as a consequence of which our FY23 production forecast remains within the company’s 600–660koz GEO guidance range, while our adjusted EPS forecast has changed by less than 1% (notwithstanding the cessation of lead and zinc concentrate production at Aljustrel until Q225).

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Nov 15

Daily Brief Industrials: Benefit One Inc, Singapore Airlines, ZEEKR, Grab Holdings , SCG Decor PCL, NOW Inc, Azul SA, Braemar Shipping Services PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics
Benefit One (2412 JP): M3’s Partial Tender Offer
Singapore Airlines: Supply Dislocations Will Underpin Strong Profits for Much Longer
ZEEKR IPO: The Bull Case
Grab Holdings (GRAB US) – Steering and Batching Towards Profitability
SCG Decor Pre-IPO – Titan in the ASEAN Decor Surface Segment, Although Hints of a Slowdown Ahead
NOW, Inc. – Resilient Model Withstands Industry Headwinds
Azul – ESG Report – Lucror Analytics
Braemar – FY23 and H124 results to be released

Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics

By Travis Lundy

Today after the close with Benefit One Inc (2412 JP) reporting earnings, M3 Inc (2413 JP) announced a Partial Tender Offer to buy 81.21-83.31mm shares of Benefit One at ¥1600/share.
That cleans out Pasona, which owns 81.21mm shares. Or does it… Shareholder structure dynamics and the problems they cause later bear some detailed examination.
This one is going to be a fun special sit.

Benefit One (2412 JP): M3’s Partial Tender Offer

Benefit One Inc (2412 JP) announced a partial tender offer from M3 Inc (2413 JP) at JPY1,600 per share, a 40.0% premium to the undisturbed price.
The transaction facilitates Pasona Group (2168 JP)‘s exit. The offer is for a minimum of 81.2 million shares (51.16% ownership ratio) and a maximum of 87.3 million shares (55.00%).
Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The offer is light vs. historical multiples and share prices.

Singapore Airlines: Supply Dislocations Will Underpin Strong Profits for Much Longer

By Mohshin Aziz

Dearth of international flights from Chinese and Russian carriers — 2nd & 3rd biggest global aviation market, will distort supply, underpins strong yields and profitability.
SIA’s cost management is superior thanks to high asset utilisation, stable SGD vs. the USD, and access to attractive financing. SIA’s competitors severely lack these attributes.
We forecast FY24 net profit of SGD2.4b (+13.1% YoY) and peg it to 10x PE to derive a TP of SGD8.07, +30% UPSIDE potential.

ZEEKR IPO: The Bull Case

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has filed for a US$500 million IPO to list on the NYSE.
ZEEKR has launched three models – the luxury shooting brake coupe ZEEKR 001, the luxury pure electric MPV – ZEEKR 009 and the new luxury versatile SUV – ZEEKR X.
The bull case rests on bestselling premium BEVs, rapid vehicle sales growth, rising gross margin, debt-free balance sheet and a favourable cash conversion cycle.

Grab Holdings (GRAB US) – Steering and Batching Towards Profitability

By Angus Mackintosh

Grab‘s 3Q2023 results demonstrate a high degree of success in achieving a delicate balance between growth and profitability, with significant progress across all verticals, and a broadening of product offerings.
The company turned adjusted EBITDA breakeven for the first time in 3Q2023, through lower incentives, cost efficiencies, and lower regional corporate costs, with further progress towards FCF breakeven in 4Q2023.
Grab remains confident about the outlook with guidance revised upwards, with the company looking at some potentially interesting M&A, which should be earnings accretive and beneficial to the ecosystem.

SCG Decor Pre-IPO – Titan in the ASEAN Decor Surface Segment, Although Hints of a Slowdown Ahead

By Clarence Chu

SCG Decor PCL (SCGD TB) is looking to raise around US$180m in its Thailand IPO.
SCG Decor (SCGD) is Siam Cement Group’s flagship company in the decor surfaces and sanitaryware business.
In this note, we look at the firm’s past performance.

NOW, Inc. – Resilient Model Withstands Industry Headwinds

By Water Tower Research

DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023.
3Q23 US revenue was $448 million, 3% higher than 3Q22 despite an 11% fall in the average rig count.
On a per rig basis, US 3Q23 revenue averaged ~$689,000, a 20% Y/Y gain

Azul – ESG Report – Lucror Analytics

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Azul’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.
Founded in 2008, Azul SA is a Brazilian airline offering the largest number of flights and destinations in the domestic market.

Braemar – FY23 and H124 results to be released

Braemar announced today that it would be releasing its FY23 results and its 2023 Annual Report and Accounts on 16 November, followed by its H124 results for the period to 31 August on 29 November. This unusual situation follows the suspension of the shares in July, pending an investigation into a historical transaction. It will be seeking a relisting of the shares after the FY23 announcement.

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Nov 15

Daily Brief Health Care: Lunit , Livzon Pharmaceutical Group, Keymed Biosciences, Aspira Women’s Health, Basilea Pharmaceutica Ag and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

KOSDAQ150 Rebalance in December 2023 Highlighted by Locals
Livzon Reloads Diagnostic Spin-Off
Keymed Biosciences (2162.HK) – Looking Forward to the Next Leap in Valuation
Aspira Women’s Health, Inc. – Reports 3Q23 Results
Basilea Pharmaceutica – Incremental acquisition to arsenal; new guidance

KOSDAQ150 Rebalance in December 2023 Highlighted by Locals

By Douglas Kim

This article discusses the potential inclusions and exclusions of KOSDAQ150 rebalance in December 2023 (especially those that are highlighted by the locals).
The potential inclusion candidates include Lunit, Shinsung Delta Tech, and JNTC. The eight potential inclusion candidates are up on average 122% YTD, sharply outperforming KOSDAQ in the same period.
Stocks that are expected to be excluded in the KOSDAQ150 index include Aju IB Investment, HFR, Danal, and Sangsangin.

Livzon Reloads Diagnostic Spin-Off

By David Blennerhassett

Back in late 2020, Livzon Pharmaceutical Group (1513 HK) proposed spinning off 39.4%-held Livzon Diagnostics on Chinext. After numerous filings with the regulators … crickets.
Livzon has now proposed listing Livzon Diagnostics on the National Equities Exchange and Quotations with an intention of transitioning listed shares to the Beijing Stock Exchange (BSE).
The CSRC recently introduced a raft of initiatives to spur investor interest in the BSE. After all-but-abandoning the prior listing, Livzon looks to be cashing in on this recent excitement.

Keymed Biosciences (2162.HK) – Looking Forward to the Next Leap in Valuation

By Xinyao (Criss) Wang

Abrocitinib/Upadacitinib/Dupilumab will all exert great pressure on the future commercialization space of CM310 in China. If Keymed doesn’t run head-to-head trials with dupilumab, CM310’s internationalization outlook would be gloomy.
Compared with IL-4 that has been almost occupied by dupilumab, Keymed has more opportunity on TSLP. Even with Keymed-AstraZeneca deal, our valuation of CMG901 is cautious based on our analysis.
The current valuation of Keymed is not cheap. The next big catalyst to share price is a new license-out deal with MNC on CM310/CM326, marking the beginning of qualitative changes.

Aspira Women’s Health, Inc. – Reports 3Q23 Results

By Water Tower Research

Aspira Women’s Health reported 3Q23 financial results, mostly in line with our estimates.
Revenue of $2.2 million was below our estimate, but good expense control is in place and is expected to continue.
Our estimates for 2023 and 2024 remain in line with our prior estimates.

Basilea Pharmaceutica – Incremental acquisition to arsenal; new guidance

Basilea has bolstered its drug pipeline with the in-licensing of fosmanogepix, a broad-spectrum antifungal candidate, from Amplyx Pharmaceuticals (a Pfizer affiliate). Fosmanogepix is a clinical-stage, potentially first-in-class broad-spectrum antifungal treatment and Basilea plans to initiate Phase III trials in mid-2024. Deal consideration includes $37m in upfront payments and milestones of up to $496m ($110m to Pfizer, and $396m from previous agreements), of which the majority relates to regulatory and commercial milestone events, and tiered single-digit royalties. We view this as a favourable transaction for Basilea and note that it is in line with the company’s previously disclosed plans to expand its late-stage product pipeline. In our view, fosmanogepix represents a promising near-term commercial opportunity as the legacy portfolio matures, provided that the data continue to be supportive. As part of this new update, management has also provided revised full-year 2023 financial guidance. We will update our model and valuation to reflect this deal. Our 2023 and 2024 estimates are under review.

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Nov 15

Daily Brief TMT/Internet: iSoftStone Information Technology Group, Sea , Taiwan Semiconductor (TSMC), Hon Hai Precision Industry, Asustek Computer, Media and Games Invest and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

CSI500 Index Rebalance Preview: Potential Adds Starting to Close the Gap
Sea Ltd: A Detour Back to the Land of Losses
Taiwan Tech Weekly: AI Names Rally But Nvidia Long/Short Still Working; Hon Hai & Asustek Take-Aways
Hon Hai (2317.TT): If the Market Is Unchanged, and It Will Be Slightly Upside in 2024 Market.
How Asustek Plans to Take the Lead Globally in AI PCs; Gaming PCs First Key Battleground
Hon Hai’s Margin Expansion Story Finally Starting to Be Realized? Results Imply Yes
MGI – Media and Games Invest – Building a major global adtech player

CSI500 Index Rebalance Preview: Potential Adds Starting to Close the Gap

By Brian Freitas

With the review period for the December rebalance of the CSI500 Index complete, we forecast 50 changes (the maximum permitted) for the index at the close on 8 December.
Estimated one-way turnover is 9.66% at the December rebalance resulting in a one-way trade of CNY 6.36bn. There are 29 stocks with over 1 day of ADV to trade.
The potential deletes have outperformed the potential adds over the last 6 months though there has been a narrowing of the gap recently. Position for a further narrowing.

Sea Ltd: A Detour Back to the Land of Losses

By Oshadhi Kumarasiri

Looks like Sea (SE US) decided to take a detour back to the land of losses this quarter.
But it’s not a massive issue. They’ve maintained close to 7% QoQ revenue growth, so things should be okay.
Investors likely won’t delve into the details further to uncover the substantial costs hidden behind that apparent growth.

Taiwan Tech Weekly: AI Names Rally But Nvidia Long/Short Still Working; Hon Hai & Asustek Take-Aways

Earnings season wrapping up — Hon Hai & Asustek recently reported… Some AI names rallied hard but our Nvidia L/S trade still working
Hon Hai’s margin expansion story is finally starting to be realized. Stock’s perceived political risk could be an opportunity.
How Asustek plans to take the lead globally in AI PCs; Gaming PCs will be the first key battleground. MSI could be an interesting play on Asustek’s recent strong performance.

Hon Hai (2317.TT): If the Market Is Unchanged, and It Will Be Slightly Upside in 2024 Market.

By Patrick Liao

The 4Q23F results will be higher than 3Q23, but lower than 4Q22.
If the market is unchanged, and it will be slightly upside in 2024F market.
For the target of GM 10% is still unchanged in 2025F.

How Asustek Plans to Take the Lead Globally in AI PCs; Gaming PCs First Key Battleground

Asustek reported results on November 13th that beat analyst expectations thanks to a major margin rebound. The stock soared post results.
Asus plans to be the first company globally to release an AI PC, leveraging extensive AI R&D across different devices as well as its leading market share in gaming PCs.
However, gaming PC competitor MSI is already moving fast; Shows how gaming PCs are likely to be the first AI PC battleground. Long Asustek, remains preferred over Acer.

Hon Hai’s Margin Expansion Story Finally Starting to Be Realized? Results Imply Yes

Hon Hai beat expectations yesterday when it reported thanks to higher than expected margins. Gross margin rose to its highest level since 2018, hitting 6.7%.
The company has maintained its 2025E 10% gross margin target and implied that 2024 will see significant margin improvement as new higher margin businesses ramp up revenue contribution.
Two key market concerns: News of Chinese government investigation and political risk given Mr. Gou running for president. Company said operations continue as normal. Hon Hai remains a Structural Long.

MGI – Media and Games Invest – Building a major global adtech player

MGI – Media and Games Invest (MGI) has been steadily gaining market share in a difficult trading environment. It is now the leading mobile open web supply-side platform (SSP) on both Android and iOS in North America; second on Android and fifth on iOS in EMEA. Continuing weak advertising pricing means that FY23 revenue guidance was pulled back at the interims, but careful cost management should ensure EBITDA is flat over FY22, with an annualised cost-saving programme of €10m also put in place. MGI’s fundamentals are positive, with its vertical integration giving an efficient market proposition and earlier acquisitions providing a sound basis for its connected TV offering. The withdrawal of personal identifiers on Google should give further impetus, which we feel is not yet reflected in the rating.

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Nov 15

Daily Brief Industrials: Benefit One Inc, Singapore Airlines, ZEEKR, Grab Holdings , SCG Decor PCL, NOW Inc, Azul SA, Braemar Shipping Services PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics
Benefit One (2412 JP): M3’s Partial Tender Offer
Singapore Airlines: Supply Dislocations Will Underpin Strong Profits for Much Longer
ZEEKR IPO: The Bull Case
Grab Holdings (GRAB US) – Steering and Batching Towards Profitability
SCG Decor Pre-IPO – Titan in the ASEAN Decor Surface Segment, Although Hints of a Slowdown Ahead
NOW, Inc. – Resilient Model Withstands Industry Headwinds
Azul – ESG Report – Lucror Analytics
Braemar – FY23 and H124 results to be released

Big M3 (2413) Partial TOB As Pasona Sells Control of Benefit One (2412): Really Interesting Dynamics

By Travis Lundy

Today after the close with Benefit One Inc (2412 JP) reporting earnings, M3 Inc (2413 JP) announced a Partial Tender Offer to buy 81.21-83.31mm shares of Benefit One at ¥1600/share.
That cleans out Pasona, which owns 81.21mm shares. Or does it… Shareholder structure dynamics and the problems they cause later bear some detailed examination.
This one is going to be a fun special sit.

Benefit One (2412 JP): M3’s Partial Tender Offer

Benefit One Inc (2412 JP) announced a partial tender offer from M3 Inc (2413 JP) at JPY1,600 per share, a 40.0% premium to the undisturbed price.
The transaction facilitates Pasona Group (2168 JP)‘s exit. The offer is for a minimum of 81.2 million shares (51.16% ownership ratio) and a maximum of 87.3 million shares (55.00%).
Irrevocables from Pasona represent a 51.16% ownership ratio, satisfying the minimum acceptance condition. The offer is light vs. historical multiples and share prices.

Singapore Airlines: Supply Dislocations Will Underpin Strong Profits for Much Longer

By Mohshin Aziz

Dearth of international flights from Chinese and Russian carriers — 2nd & 3rd biggest global aviation market, will distort supply, underpins strong yields and profitability.
SIA’s cost management is superior thanks to high asset utilisation, stable SGD vs. the USD, and access to attractive financing. SIA’s competitors severely lack these attributes.
We forecast FY24 net profit of SGD2.4b (+13.1% YoY) and peg it to 10x PE to derive a TP of SGD8.07, +30% UPSIDE potential.

ZEEKR IPO: The Bull Case

ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has filed for a US$500 million IPO to list on the NYSE.
ZEEKR has launched three models – the luxury shooting brake coupe ZEEKR 001, the luxury pure electric MPV – ZEEKR 009 and the new luxury versatile SUV – ZEEKR X.
The bull case rests on bestselling premium BEVs, rapid vehicle sales growth, rising gross margin, debt-free balance sheet and a favourable cash conversion cycle.

Grab Holdings (GRAB US) – Steering and Batching Towards Profitability

By Angus Mackintosh

Grab‘s 3Q2023 results demonstrate a high degree of success in achieving a delicate balance between growth and profitability, with significant progress across all verticals, and a broadening of product offerings.
The company turned adjusted EBITDA breakeven for the first time in 3Q2023, through lower incentives, cost efficiencies, and lower regional corporate costs, with further progress towards FCF breakeven in 4Q2023.
Grab remains confident about the outlook with guidance revised upwards, with the company looking at some potentially interesting M&A, which should be earnings accretive and beneficial to the ecosystem.

SCG Decor Pre-IPO – Titan in the ASEAN Decor Surface Segment, Although Hints of a Slowdown Ahead

By Clarence Chu

SCG Decor PCL (SCGD TB) is looking to raise around US$180m in its Thailand IPO.
SCG Decor (SCGD) is Siam Cement Group’s flagship company in the decor surfaces and sanitaryware business.
In this note, we look at the firm’s past performance.

NOW, Inc. – Resilient Model Withstands Industry Headwinds

By Water Tower Research

DNOW’s business has been resilient in the face of a declining US rig count through the first three quarters of 2023.
3Q23 US revenue was $448 million, 3% higher than 3Q22 despite an 11% fall in the average rig count.
On a per rig basis, US 3Q23 revenue averaged ~$689,000, a 20% Y/Y gain

Azul – ESG Report – Lucror Analytics

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Azul’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.
Founded in 2008, Azul SA is a Brazilian airline offering the largest number of flights and destinations in the domestic market.

Braemar – FY23 and H124 results to be released

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Nov 15

Daily Brief Consumer: Ajinomoto Co, Amara Holdings, ZEEKR, Haier Smart Home , Takashimaya, Pure Gym Limited, Tele Columbus AG and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Ajinomoto Placement – Share Buyback Should Aid Group Selling
Amara Holdings (AMA SP): Albert Teo Family/Dymon Asia’s Unconditional S$0.60 Offer
Zeekr Pre-IPO – The Negatives – Remains Highly Dependent on Geely
Haier Smart Home (6690 HK): Stays Smart
Amara (AMA SP): Teo Family’s Lifetime High Offer
Takashimaya: At Last a Revival in Department Store Profits
Puregym – ESG Report – Lucror Analytics
Tele Columbus – ESG Report – Lucror Analytics

Ajinomoto Placement – Share Buyback Should Aid Group Selling

By Clarence Chu

A group of shareholders are looking to raise US$444m by trimming their respective stakes in Ajinomoto Co (2802 JP) via an extended secondary follow-on.
While the selldown doesn’t seem particularly well flagged, it won’t be a very large one to digest at just eight days of three month ADV.
In a bid to cushion the selldown, Ajinomoto plans to buyback its stock to the tune of 10m shares, which would amount to 80% of the base shares on offer.

Amara Holdings (AMA SP): Albert Teo Family/Dymon Asia’s Unconditional S$0.60 Offer

Amara Holdings (AMA SP) has disclosed a voluntary unconditional offer from Dymon Asia and the Albert Teo Family at S$0.60 per share, a 30.4% premium to the last close price.
On 17 June, Amara received a written notification from Mr Albert Teo Hock Chuan (CEO) and Ms Susan Teo Geok Tin (Company Secretary) that they are mulling an offer.
The offer price is final. The offer is attractive and marginally below the ten-year high. Hitting the 90% compulsory acquisition threshold implies a minority acceptance rate of 79.3%.

Zeekr Pre-IPO – The Negatives – Remains Highly Dependent on Geely

By Sumeet Singh

ZEEKR, 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.
In this note, we talk about the not-so-positive aspects of the deal.

Haier Smart Home (6690 HK): Stays Smart

By Osbert Tang, CFA

Haier Smart Home (6690 HK) is less exposed to China’s real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.
We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months.
More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).

Amara (AMA SP): Teo Family’s Lifetime High Offer

By David Blennerhassett

Back in mid-June, hotel and investment property play Amara Holdings (AMA SP) gained 38% over three consecutive days on news of a possible Offer from its controlling shareholders.
The Teo family controls ~51% of shares out. No price was mentioned. This development was discussed in Amara Holdings Gains On Possible Offer.
After shares were halted on the 10th November, Amara has now announced a best-and-final unconditional cash Offer at S$0.60/share, a chunky 53.8% to undisturbed and a lifetime high.

Takashimaya: At Last a Revival in Department Store Profits

By Michael Causton

Takashimaya saw a strong increase in sales in 1H2023, helping profit rise to record levels with much of the growth coming from clothing and expects similar for the full year.
Unlike many rivals, the department store is not at all sanguine about the prospects for continued growth in luxury sales and the inbound tourist market – calling it a bubble.
It is instead emphasising profit growth over higher sales by targeting locals through store upgrades and better cost performance clothing – while also closing stores that are no longer viable.

Puregym – ESG Report – Lucror Analytics

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess PureGym’s ESG as “Adequate”, in line with its Social and Governance scores. The company has a “Weak” score for the Environmental pillar. Controversies are “Immaterial”, but Disclosure is “Weak”.
PureGym is the second-largest gym and fitness operator in Europe by number of gyms

Tele Columbus – ESG Report – Lucror Analytics

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Tele Columbus’ ESG as “Adequate”, in line with its Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Adequate”.
Tele Columbus (TC) is Germany’s third-largest cable operator, offering cable TV, broadband Internet and fixed-line telephony services.

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Nov 15

Daily Brief Financials: Mitsubishi UFJ Financial (MUFG), DGB Financial Group, Aroundtown , Regional REIT Ltd, JDC Group AG, CDL Hospitality Trusts, National Australia Bank and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

I Like Big Bank Buybacks And I Cannot Lie
Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea
Quiddity Leaderboard DAX Dec 23: Aroundtown, Siltronic, ProSiebenSat.1, and Duerr
Regional REIT – Underlying progress but leasing remains subdued
JDC Group – Banking on a strong Q4
10 in 10 with CDL Hospitality Trusts – Taking a Long-Term View on Singapore
NAB – Maturing Debt AUD40bn | At Top of Rate Cycle | With High Unseasoned Loans, CRE Loans

I Like Big Bank Buybacks And I Cannot Lie

By Travis Lundy

Today, Sumitomo Mitsui Financial Group (8316 JP) and Mitsubishi UFJ Financial (MUFG) (8306 JP) reported H1 earnings. Mizuho Financial Group (8411 JP) reported yesterday.
Mizuho raised full-year NP guidance by ~5%, passing the Street. SMFG raised its FY NP guidance 12.2%, also beating the Street. MUFG didn’t raise guidance but H1 saw 71% progress.
Today, SMFG raised its div, and both SMFG (¥150bn) and MUFG (¥400bn) announced buybacks. Cross-holding unwind progress is waaay lower than we’d like, but capital stronger as a result.

Step-By-Step Guide to Spot Companies Postponing Dividend Base Date to April in Korea

By Sanghyun Park

We can check this on KIND, KRX’s disclosure site. As an example, SK Inc. disclosed this information on July 26, two weeks before the dividend record date, August 10.
We can capture this information in English without the need for Korean. The disclosure title we must hunt is “Decision on Closure of Shareholder’s Registry (including Record Date) for Dividends.”
The critical aspect here is that we need to identify disclosures from companies that still use the year’s last trading day as the dividend base date.

Quiddity Leaderboard DAX Dec 23: Aroundtown, Siltronic, ProSiebenSat.1, and Duerr

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the names leading the race to become ADDs/DELs for the DAX, MDAX, and SDAX Indices in the December 2023 Rebalance.
I do not see any changes for the DAX index in December 2023 but Deutsche Lufthansa (LHA GR) is not very far away from triggering a change.
Separately, I see two changes for the MDAX index and two changes for the SDAX index.

Regional REIT – Underlying progress but leasing remains subdued

Regional REIT’s (RGL’s) Q323 trading update includes details of further leasing events, at rents ahead of market levels, and continuing asset sales, at or above book value. However, with the balance of occupiers remaining cautious, as economic prospects are assessed, rent roll and occupancy weakened. Supported by the strong ‘return to the office’, RGL continues to expect an acceleration in leasing, to provide the underpinning for its efforts to reduce gearing while maintaining income and dividends.

JDC Group – Banking on a strong Q4