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Smartkarma Daily Briefs

Oct 31
0

Daily Brief Industrials: Teraoka Seisakusho, Nihon M&A Center, Trimas Corp, Uponor OYJ and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Offensively Low-Priced MBO for Teraoka Seisakusho (4987) – Yet Another SmallCap Governance Disaster
  • Nihon M&A: Earnings Show Some Recovery; but Could Miss Full-Year OP Guidance
  • TRS: Scaled for Free Cash Flow
  • Aliaxis Condedes Defeat

Offensively Low-Priced MBO for Teraoka Seisakusho (4987) – Yet Another SmallCap Governance Disaster

By Travis Lundy

  • A small specialty adhesives maker – Teraoka Seisakusho (4987 JP) has had an MBO proposed and approved. At 0.54x book. NetCash+securities+2.5mos of net A/R+inventory = 99% of Takeover Market Cap.
  • Borrow 2x EBITDA, pay out the cash and securities, and this is being done at <0.3x remaining book. The takeover is 100+% bank funded. It’s ridiculous.
  • For this to get stopped, however, someone has to go activist on a smallcap where retail owns the entire float and friends and family own 55% to start.

Nihon M&A: Earnings Show Some Recovery; but Could Miss Full-Year OP Guidance

By Shifara Samsudeen, ACMA, CGMA

  • Nihon M&A Center (2127 JP) ’s 2Q revenues decreased YoY while OP remained flat. However, both revenue and OP beat consensus estimates driven by improvement in revenue per M&A transaction.
  • There was strong improvement in revenue per transaction driven by enhanced efforts and growth in no. of large deals, however, M&A revenues declined due to drop in no. of deals.
  • Nihon has so far achieved only 36% of its OP target and it seems unlikely for the company to reach its full-year OP guidance, suggesting there is further downside.  

TRS: Scaled for Free Cash Flow

By Hamed Khorsand

  • TRS reported third quarter results where the packaging business continues to stabilize from inventory destocking while the aerospace segment continues to grow as fast as possible
  • The packaging business has gone through restructuring that should lead to higher profit margin as customers begin to increase their order activity
  • Improved supply chains are aiding the sales growth in aerospace. The growth in aerospace should help push cash flow higher and offset the softness in packaging

Aliaxis Condedes Defeat

By Jesus Rodriguez Aguilar

  • The offer period for white-knight Georg Fischer AG (FI/N SW)‘s acquisition of Uponor OYJ (UNR1V FH) will end, unless extended, on 31 October. Aliaxis, which put Uponor in play, concedes defeat.
  • The waiting game has ended. Aliaxis will tender its 20% stake with €90 million capital gains (pre-tax) as consolation. GF will obtain at least 53.9% acceptances, possibly a lot more.
  • The spread has been positive for most days since mid-July, on expectations of an offer sweetening. That won’t happen now. Gross spread is +0.14%. Recommendation is tender.

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Oct 31
0

Daily Brief TMT/Internet: Nippon Electric Glass, KCE Electronics PCL, Intel Corp, NVIDIA Corp, LS Materials, Taiwan Semiconductor (TSMC), Paytm, Travelsky Technology Ltd H, Impinj Inc, WRKR and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • BIG Nippon Electric Glass (5214) Buyback, Possibly Offset by Cross-Holder Selling
  • SET50 Index Rebalance Preview: One High Probability Change; Another One Is Close
  • PC Monitor: Inventories Healthy & Intel Expects Over 100 Million AI PCs In Two Years
  • BOM Cost and CoWoS Demand Analysis on Nvidia AI GPU HGX for 2023-2025, Room to Raise Estimates
  • LS Materials IPO Valuation Analysis
  • Taiwan Tech Weekly: Wave of Key Taiwan Results; Heavyweights Samsung, AMD, Qualcomm Internationally
  • [Week 9] Namaste India 🙏 | Earnings Edition – Part II
  • Travelsky (696): Cheaper Now
  • PI: Headwinds Persist
  • Wrkr Limited – Readying for Significant Customer Uplift

BIG Nippon Electric Glass (5214) Buyback, Possibly Offset by Cross-Holder Selling

By Travis Lundy

  • Nippon Electric Glass (5214 JP) is going through a rebuilding year. Lots of restructuring expenses and I expect there will be more.
  • The company today announced the outline of its next Mid-Term Management Plan for the 5 years to 2028. It will announce details in early Feb 2024 with results. 
  • In that, there is ¥50bn of buybacks through Dec2026, of which ¥20bn will be made in the next 4mos. That is about 11-14% of ADV assuming the price jumps.

SET50 Index Rebalance Preview: One High Probability Change; Another One Is Close

By Brian Freitas

PC Monitor: Inventories Healthy & Intel Expects Over 100 Million AI PCs In Two Years

By Vincent Fernando, CFA

  • Intel’s results last week beat expectations by a wide margin, with margins recovering better than expected by the Street and guided to keep improving through 4Q23E.
  • New Meteor Lake chips for PCs, branded as ‘Intel Core Ultra’ will officially launch December 14th and are expected to drive demand for new AI-optimized PCs in 2024E.
  • Intel said that the PC industry completed its inventory digestion in 1H23, drove sequential demand growth in 3Q23, and this is expected to continue into 4Q23E.

BOM Cost and CoWoS Demand Analysis on Nvidia AI GPU HGX for 2023-2025, Room to Raise Estimates

By Andrew Lu

  • TSMC’s manufacturing value only accounts for 1/4 of H100 HGX bill of materials but HBM3 accounts for more than half;
  • ABF substrate, SXM5 module, UBB and CCL vendors should be benefited, especially for Ibiden Co Ltd (4062 JP) on ABF substrate/OAM and Elite Material (2383 TT) on OAM/UBB CCL;
  • Nvidia AI GPU likely doubling each year in next two years; Our estimates on Nvidia 2025 AI GPU EPS contribution are exceeding Bloomberg consensus earnings estimates, suggesting room to raise.

LS Materials IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of LS Materials IPO is target price of 6,628 won per share, which is 21% higher than the high end of the IPO price range.
  • We estimate LS Materials to generate sales of 155.5 billion won (down 4% YoY) and 197.2 billion won (up 26.8% YoY) in 2024. 
  • LS Materials is one of the largest players globally in the large-size ultracapacitors, which stabilize power supply and are used to replace and supplement primary batteries and lithium-ion batteries.

Taiwan Tech Weekly: Wave of Key Taiwan Results; Heavyweights Samsung, AMD, Qualcomm Internationally

By Vincent Fernando, CFA

  • Key Results This Week: Delta, Elan, ChipMOS, Nuvoton, AU Optronics in Taiwan… Plus Samsung, AMD, and Qualcomm.
  • Positive signs for the PC & mobile space have come from recent Intel, UMC, Mediatek results.
  • Top Losers: Macronix Slumps on Weak Results and Outlook, Hon Hai Slumps on China Tax & Land Probe

[Week 9] Namaste India 🙏 | Earnings Edition – Part II

By Pranav Bhavsar

  • Our earnings coverage continues for the second edition and is expected to continue for one more week.
  • At the bottom, we provide a consolidated view of all earnings tracked so far (Bullish / Bearish) and would be happy to engage on any of them.
  • We also highlight the earnings of some of the global companies that have significant operations or growth in India.

Travelsky (696): Cheaper Now

By Henry Soediarko

  • Travelsky Technology Ltd H (696 HK) share price was unjustly sold off due to flows rather than operational performance.
  • The key business is processing flights for domestic tourism, with a lesser correlation to geopolitical issues.
  • Due to the strong earnings growth, PER is adjusted from 60x to 25x. 

PI: Headwinds Persist

By Hamed Khorsand

  • Impinj reported third quarter results affirming the slowdown in sales volume for endpoint ICs with hopes the current softness comes to an end by the first quarter of 2024
  • Concurrent with the decline in demand is the increase in endpoint IC availability from competitors
  • We continue to believe the near-term fundamentals are not as strong as the stock depicts and the business is vulnerable to further headwinds, especially related to endpoint IC pricing.

Wrkr Limited – Readying for Significant Customer Uplift

By Research as a Service (RaaS)

  • Wrkr Ltd (ASX: WRK) offers compliance solutions for Australian super annuation contributions and payroll including member onboarding, super payments, messaging and employee validation.
  • The company has released its Q1 FY24 activities report, with key highlights including 43% growth in cash receipts on the previous corresponding period (pcp), 42% growth in revenue, and a cash burn runway of eight quarters before any R&D tax rebates or new customer transactions are considered.
  • Revenue has been boosted by development and planning work for major customers ART and Link Group respectively. 

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Oct 31
0

Daily Brief Industrials: Teraoka Seisakusho, Nihon M&A Center, Trimas Corp, Uponor OYJ and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Offensively Low-Priced MBO for Teraoka Seisakusho (4987) – Yet Another SmallCap Governance Disaster
  • Nihon M&A: Earnings Show Some Recovery; but Could Miss Full-Year OP Guidance
  • TRS: Scaled for Free Cash Flow
  • Aliaxis Condedes Defeat

Offensively Low-Priced MBO for Teraoka Seisakusho (4987) – Yet Another SmallCap Governance Disaster

By Travis Lundy

  • A small specialty adhesives maker – Teraoka Seisakusho (4987 JP) has had an MBO proposed and approved. At 0.54x book. NetCash+securities+2.5mos of net A/R+inventory = 99% of Takeover Market Cap.
  • Borrow 2x EBITDA, pay out the cash and securities, and this is being done at <0.3x remaining book. The takeover is 100+% bank funded. It’s ridiculous.
  • For this to get stopped, however, someone has to go activist on a smallcap where retail owns the entire float and friends and family own 55% to start.

Nihon M&A: Earnings Show Some Recovery; but Could Miss Full-Year OP Guidance

By Shifara Samsudeen, ACMA, CGMA

  • Nihon M&A Center (2127 JP) ’s 2Q revenues decreased YoY while OP remained flat. However, both revenue and OP beat consensus estimates driven by improvement in revenue per M&A transaction.
  • There was strong improvement in revenue per transaction driven by enhanced efforts and growth in no. of large deals, however, M&A revenues declined due to drop in no. of deals.
  • Nihon has so far achieved only 36% of its OP target and it seems unlikely for the company to reach its full-year OP guidance, suggesting there is further downside.  

TRS: Scaled for Free Cash Flow

By Hamed Khorsand

  • TRS reported third quarter results where the packaging business continues to stabilize from inventory destocking while the aerospace segment continues to grow as fast as possible
  • The packaging business has gone through restructuring that should lead to higher profit margin as customers begin to increase their order activity
  • Improved supply chains are aiding the sales growth in aerospace. The growth in aerospace should help push cash flow higher and offset the softness in packaging

Aliaxis Condedes Defeat

By Jesus Rodriguez Aguilar

  • The offer period for white-knight Georg Fischer AG (FI/N SW)‘s acquisition of Uponor OYJ (UNR1V FH) will end, unless extended, on 31 October. Aliaxis, which put Uponor in play, concedes defeat.
  • The waiting game has ended. Aliaxis will tender its 20% stake with €90 million capital gains (pre-tax) as consolation. GF will obtain at least 53.9% acceptances, possibly a lot more.
  • The spread has been positive for most days since mid-July, on expectations of an offer sweetening. That won’t happen now. Gross spread is +0.14%. Recommendation is tender.

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Oct 31
0

Daily Brief Health Care: TSE Tokyo Price Index TOPIX, Dr. Reddy’s Laboratories, Mankind Pharma, Shenzhen Mindray Bio-Medical Electronics, Qyuns Therapeutics and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Meaningful If “P/B Below 1x” Is a Change of Mindset that Makes Managers Decide to Take an MBO
  • Dr. Reddy’s Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets
  • Mankind Pharma Lock-Up – A US$1.1bn+ Lockup Release
  • Shenzhen Mindray Bio-Medical Electronics (300760.CH) 23Q3- Future Performance Slowdown Is Inevitable
  • Qyuns Therapeutics (荃信生物) Pre-IPO: Mixed View on Two Core Products

Meaningful If “P/B Below 1x” Is a Change of Mindset that Makes Managers Decide to Take an MBO

By Aki Matsumoto

  • Although it’s important that the quality of companies be maintained and improved through metabolism, the number of listed companies has consistently increased due to the many IPOs and few delistings.
  • Many founders used IPOs as a tax-saving measure, and many managers were not thoughtful enough to increase shareholder profits, which is why there were many IPOs and few delistings.
  • Delisting through MBO or TOB for parent and subsidiary listed subsidiaries is much more effective than “TSE request” in reducing the number of companies with P/B below 1x.

Dr. Reddy’s Laboratories (DRRD IN): Highest Ever Sales and Profit in Q2; Good Show in Key Markets

By Tina Banerjee

  • Global generics revenue increased 9% YoY to INR61 billion, mainly driven by double-digit growth in North America and Europe generic businesses, partly offset by muted growth in domestic market.
  • Revenue from North America generics increased 13% y/y to INR31.7 billion, driven by growing momentum in core portfolio, Mayne integration, and favorable Fx. Pricing environment remains stable.
  • Despite increase in SG&A and R&D expenses, EBITDA grew 13% YoY to INR 21.8 billion. Net profit increased 33% YoY to INR14.8 billion. Both EBITDA and net profit topped estimates.

Mankind Pharma Lock-Up – A US$1.1bn+ Lockup Release

By Sumeet Singh

  • A group of shareholders raised around US$530m in Mankind Pharma(MP) IPO in May 2023. The pre-IPO shareholders will be released from their lockup soon.
  • 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.
  • In this note, we will talk about the lock-up dynamics and recent updates.

Shenzhen Mindray Bio-Medical Electronics (300760.CH) 23Q3- Future Performance Slowdown Is Inevitable

By Xinyao (Criss) Wang

  • Mindray’s Q3 revenue growth slowed significantly, dragging down the overall revenue growth. This was related to China’s anti-corruption campaign, the impact of which is expected to linger for some time.
  • Our 2023 forecast is revenue up 15-18% YoY. Anti-corruption campaign would lead to declining demand and growth ceiling of domestic medical equipment market, thus negatively affecting Mindray’s future performance growth.
  • Investors may need to prepare in advance for Mindray’s future revenue growth to fall to 15%.Based on this, PE TTM of around 30 is reasonable valuation for Mindray, not undervalued.

Qyuns Therapeutics (荃信生物) Pre-IPO: Mixed View on Two Core Products

By Ke Yan, CFA, FRM

  • Qyuns Therapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$ 100m via a Hong Kong listing.
  • In this note, we examine the company’s core products, namely QX002N, an IL-17A antibody, and QX005N, an IL-4Rα antibody. We also look at the company’s management and pre-IPO investors.
  • We are of mixed views for its two core products. We also think the management and pre-IPO investors are of mediocre quality.

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Oct 31
0

Daily Brief Financials: Country Garden Holdings Co and more

By | Daily Briefs, Financials

In today’s briefing:

  • Country Garden : Not a Nickel Play

Country Garden : Not a Nickel Play

By Warut Promboon

  • Country Garden should not be a surprise. The bond price at 5 cents is based on much uncertainty.
  • We list a few caveats why the bonds at 5 cents are not investible.
  • The potential wind-up order by the Hong Kong court will be a big test of the rule of law in China.

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Oct 31
0

Daily Brief Consumer: Amorepacific Group, Mitsubishi Motors, Honasa Consumer, New Oriental Education & Techn, Panasonic Corp, Great Wall Motor, Bukalapak.com PT Tbk, Trip.com and more

By | Consumer, Daily Briefs

In today’s briefing:

  • StubWorld’s: Amorepacific’s Multi-Year Lows
  • Quiddity JPX-Nikkei 400 Rebal 2024: End-Oct 2023
  • Honasa Consumer IPO – Thoughts on Valuations
  • New Oriental Education & Technology: Back From the Dead
  • Panasonic (6752) | Panic-Sonic
  • Quiddity A/H Premium Tracker (To Oct27): Volatility Off, Spreads Still Volatile. GreatWall Q3!
  • Bukalapak (BUKA IJ) – Taking the Track Towards Profitability
  • Monthly Chinese Tourism Tracker | Tourism Recovery Derailed By Normal Seasonality | (October 2023)

StubWorld’s: Amorepacific’s Multi-Year Lows

By David Blennerhassett

  • Both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels. 
  • Preceding my comments on Amorepacific 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%.

Quiddity JPX-Nikkei 400 Rebal 2024: End-Oct 2023

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
  • A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
  • Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2024 based on trading data as of end-October 2023.

Honasa Consumer IPO – Thoughts on Valuations

By Sumeet Singh

  • Honasa Consumer is looking to raise about US$200m in its upcoming India IPO.
  • HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
  • In our previous note, we looked at the company’s past performance. In this note, we talk about the RHP updates and valuations.

New Oriental Education & Technology: Back From the Dead

By Steven Holden

  • MSCI China Funds are starting to engage with New Oriental Education & Technology after a big exodus in 2021 following China’s Tech Crackdown.
  • Since the lows of 2022, New Oriental Education has been one of the key beneficiaries of active fund rotation.
  • Previous holders such as HSBC, Mirae and BlackRock have bought back in after closing out in 2021, but there is still a long way to go to reach previous highs.

Panasonic (6752) | Panic-Sonic

By Mark Chadwick

  • Panasonic’s Q2 results showed flat consolidated sales of Y2,090 billion, with a 24% YoY increase in adjusted operating profit.
  • FY3/24 outlook was revised down with sales and operating profit reductions across segments, notably in Lifestyle and Energy
  • Our concerns include the company’s complex structure, low overall profitability, uncertainties about valuing IRA credits, and challenges stemming from economic conditions, leading to pessimism about Panasonic’s stock price

Quiddity A/H Premium Tracker (To Oct27): Volatility Off, Spreads Still Volatile. GreatWall Q3!

By Travis Lundy

  • The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • Last week the portfolio bounced back, erasing the previous week’s losses. Southbound continues to see net inflows and this week all H/A Pair sectors saw Hs outperform except Energy.
  • High-Div SOEs continue to be weak. Banks, Pharma, Industrials, and Utilities spreads continue to be Very Volatile. Quiddity Favourite Great Wall Motor (2333 HK) up 7% after Q3 results Friday.

Bukalapak (BUKA IJ) – Taking the Track Towards Profitability

By Angus Mackintosh

  • Bukalapak (BUKA IJ) 3Q2023 results confirmed that it is on track to achieving EBITDA breakeven in 4Q2023, with strong revenue growth and a significant improvement in its contribution margin.
  • The was a slight slowdown in marketplace revenue QoQ due to a high Lebaran base, mainly due to slower gaming. 4Q2023 should see a strong recovery and higher take rates. 
  • Bukalapak looks to be pressing all the right buttons but more granularity on what is driving higher take rates would be well-received . Valuations look attractive relative to peers.

Monthly Chinese Tourism Tracker | Tourism Recovery Derailed By Normal Seasonality | (October 2023)

By Daniel Hellberg

  • September outbound tourism metrics plummeted, in some cases to levels seen in Q223
  • Domestic air travel demand also fell vs August; normal seasonal patterns are dominating
  • As recovery fizzles, travel shares languish, and we see few reasons for optimism, near-term

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Oct 30
0

Most Read: Japan Post Bank, Kenedix Office Investment Co, GMO Payment Gateway, Lansen Pharmaceutical Holdings Co, Ltd., Eoflow , Kokusai Electric , L&F Co Ltd, Onewo and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us
  • KDX (8972) – The Kenedix REIT Merger After a Disastrous Index Inclusion Trade
  • Index Rebalance & ETF Flow Recap: KS200, KQ150, Yuanta Div+, LIT, HSCI, IDX, Japan Positioning
  • Lansen Pharma (503 HK): 27th November Scheme Vote
  • Weekly Deals Digest (29 Oct) – Eoflow, Haitong Intl, Hollysys, Azure, Symbio, EcoPro, Cainiao
  • ECM Weekly (29th Oct 2023) – Kokusai, J&T, Midea, Wuxi XDC, Cirrus, Cello World, Honasa, SIA
  • Ohayo Japan | Tech Rebounds but Markets in Correction; The New Lexus Concept Car
  • L&F (066970 KS): Index Implications of KOSDAQ to KOSPI Transfer
  • Onewo (2602 HK) – Full Circulation & HSCI Inclusion
  • A-H Premium Weekly (Oct 27th): Beigene, CMS, Guangzhou Auto, China Longyuan

Japan Post Bank (7182) October TOPIX FFW Upweight Upon Us

By Travis Lundy

  • Japan Post Bank (7182 JP) gets a dramatic upweight in TOPIX on Monday 30 October. There is a LOT of stock to buy. Call it US$2.2bn. 
  • Shares have to come from someplace. Basically it will all come from retail or from those who pre-positioned themselves in the stock (buying from retail). Some could come from short-sellers.
  • The stock WAS not cheap vs regional banks (what I see as their best set of comps) and the Q2 Unrealised Loss on Securities has ballooned. But care is needed.

KDX (8972) – The Kenedix REIT Merger After a Disastrous Index Inclusion Trade

By Travis Lundy

Index Rebalance & ETF Flow Recap: KS200, KQ150, Yuanta Div+, LIT, HSCI, IDX, Japan Positioning

By Brian Freitas

Lansen Pharma (503 HK): 27th November Scheme Vote

By David Blennerhassett

  • On the 17 September, specialty prescription drug manufacturer Lansen Pharmaceutical Holdings Co, Ltd. (503 HK), a perennial takeover target, finally announced an Offer.
  • Wu Zhen Tao, NED and Chairman of Lansen, made an Offer for shares not indirectly held, of HK$1.80/share, by way of a Scheme, a 26.76% premium to last close.
  • Composite Doc is now out. Court Meeting is the 27th November. Expected last day of trading is the 28 Nov. 28 December payment. IFA says fair and reasonable. Looks done.

Weekly Deals Digest (29 Oct) – Eoflow, Haitong Intl, Hollysys, Azure, Symbio, EcoPro, Cainiao

By Arun George

ECM Weekly (29th Oct 2023) – Kokusai, J&T, Midea, Wuxi XDC, Cirrus, Cello World, Honasa, SIA

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • In the IPO space, Kokusai Electric (6525 JP) provided some relief in the ECM space, even as J&T Global Express (1519 HK) didn’t do much.
  • Given the earnings seasons, there weren’t any placement during the week. We did look at Singapore Airlines (SIA SP)‘s upcoming placement lockup expiry. 

Ohayo Japan | Tech Rebounds but Markets in Correction; The New Lexus Concept Car

By Mark Chadwick

  • Overseas: SPX -0.5%, Nasdaq; +0.5%; Energy stocks weaker on poor results; US inflation still too high
  • Today: NKY Futs -1.3% v cash. JPY149.7; Weak results from Omron, Seiko, Sumi Chem
  • JapanX: Lexus’s LF-ZC concept car offers a 1,000 km range with advanced batteries, AI integration, and a commitment to luxury, signaling Toyota’s EV ambitions

L&F (066970 KS): Index Implications of KOSDAQ to KOSPI Transfer

By Brian Freitas

  • L&F Co Ltd (066970 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
  • Based on history, the approval for the transfer and the listing change could take place some time in December.
  • L&F (066970 KS) will not be short-sell eligible for 6 months or longer. That means short covering prior to index deletion and a possible overshoot in the stock price.

Onewo (2602 HK) – Full Circulation & HSCI Inclusion

By Brian Freitas

  • Onewo (2602 HK) has announced the full conversion of 1.05bn Domestic Shares and Unlisted Foreign Shares to H-shares. The increased market cap will help in HSCI inclusion.
  • Onewo (2602 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect soon after index inclusion.
  • Onewo (2602 HK) has drastically underperformed its peers since listing and the HSCI inclusion could mark a turning point for the stock.

A-H Premium Weekly (Oct 27th): Beigene, CMS, Guangzhou Auto, China Longyuan

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 119.1% as of Oct 27th.
  • The average A-H premium changed by -1.7ppt week on week, led by utilities, consumer discretionary, industrials and offset by consumer staples.
  • We highlight weekly changes in A-H premium for Beigene, China Merchants Securities, Guangzhou Auto, China Longyuan.

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Oct 30
0

Daily Brief Industrials: Cainiao Smart Logistics, CIMC Enric Holdings, Evergreen Marine Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Cainiao Smart Logistics IPO: The Bear Case
  • CIMC Enric (3899 HK): Surge in Overall New Order Momentum
  • Monthly Container Shipping Tracker | Rebound in NAM Volume Could Be Inflection Point (October 2023)

Cainiao Smart Logistics IPO: The Bear Case

By Arun George

  • Cainiao Smart Logistics (1437124D HK), a global leader in e-commerce logistics, has filed for a HKEx IPO to raise at least US$1 billion at a US$15-20 billion valuation.
  • In Cainiao Smart Logistics IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on declining global cross-border market share, China logistics decelerating growth, high related-party transactions, and FCF burn. 

CIMC Enric (3899 HK): Surge in Overall New Order Momentum

By Osbert Tang, CFA

  • CIMC Enric Holdings (3899 HK) has a solid 3Q23 with excellent new order pick-up, surging by 52.8% YoY on the back of strengths in clean energy and liquid food segments.
  • Hydrogen energy revenue is on target to reach Rmb700m in FY23. Meanwhile, management revealed that there is a slight gross margin expansion so far this year.
  • With order backlog rising 27.6% YoY to Rmb22.2bn at end-9M23, earnings outlook is well protected. Its net cash position is another credit, making its premium multiples justified.

Monthly Container Shipping Tracker | Rebound in NAM Volume Could Be Inflection Point (October 2023)

By Daniel Hellberg

  • Price momentum stagnant, but could North American volume surge be an inflection point?
  • Fuel price hasn’t risen since outbreak of violence in mideast, but no longer a tailwind, either
  • Look to Maersk results on November 3 for guidance, US inventory de-stocking commentary

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Oct 30
0

Daily Brief TMT/Internet: L&F Co Ltd, KLA-Tencor Corp, Foxconn Industrial Internet and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • L&F (066970 KS): Index Implications of KOSDAQ to KOSPI Transfer
  • KLAC. Bouncing Along The Bottom
  • Mainland Connect NORTHBOUND Flows (To 27Oct23): Net Selling Small, Foxconn & Tianqi Bought

L&F (066970 KS): Index Implications of KOSDAQ to KOSPI Transfer

By Brian Freitas

  • L&F Co Ltd (066970 KS) has applied to the KRX for a transfer from the KOSDAQ market to the KOSPI market.
  • Based on history, the approval for the transfer and the listing change could take place some time in December.
  • L&F (066970 KS) will not be short-sell eligible for 6 months or longer. That means short covering prior to index deletion and a possible overshoot in the stock price.

KLAC. Bouncing Along The Bottom

By William Keating

  • Q323 revenues of $2.40 billion, at the upper end of the guidance range, up 2% QoQ but down 12.5% YoY
  • Current quarter revenue forecast of $2.45 billion, essentially flat sequentially
  • Services revenue on track for ~8% YoY growth despite overall revenues tracking to an 8.6% YoY decline..

Mainland Connect NORTHBOUND Flows (To 27Oct23): Net Selling Small, Foxconn & Tianqi Bought

By Travis Lundy

  • This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
  • The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Wuliangye Yibin, Foxconn Industrial, and BYD. Nets are dropping.
  • Overall net NORTHBOUND selling this week was small at RMB 445mm. Foxconn Industrial Internet (601138 CH) was net bought every day despite the investigation news the previous weekend.

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Oct 30
0

Daily Brief Industrials: Cainiao Smart Logistics, CIMC Enric Holdings, Evergreen Marine Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Cainiao Smart Logistics IPO: The Bear Case
  • CIMC Enric (3899 HK): Surge in Overall New Order Momentum
  • Monthly Container Shipping Tracker | Rebound in NAM Volume Could Be Inflection Point (October 2023)

Cainiao Smart Logistics IPO: The Bear Case

By Arun George

  • Cainiao Smart Logistics (1437124D HK), a global leader in e-commerce logistics, has filed for a HKEx IPO to raise at least US$1 billion at a US$15-20 billion valuation.
  • In Cainiao Smart Logistics IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on declining global cross-border market share, China logistics decelerating growth, high related-party transactions, and FCF burn. 

CIMC Enric (3899 HK): Surge in Overall New Order Momentum

By Osbert Tang, CFA

  • CIMC Enric Holdings (3899 HK) has a solid 3Q23 with excellent new order pick-up, surging by 52.8% YoY on the back of strengths in clean energy and liquid food segments.
  • Hydrogen energy revenue is on target to reach Rmb700m in FY23. Meanwhile, management revealed that there is a slight gross margin expansion so far this year.
  • With order backlog rising 27.6% YoY to Rmb22.2bn at end-9M23, earnings outlook is well protected. Its net cash position is another credit, making its premium multiples justified.

Monthly Container Shipping Tracker | Rebound in NAM Volume Could Be Inflection Point (October 2023)

By Daniel Hellberg

  • Price momentum stagnant, but could North American volume surge be an inflection point?
  • Fuel price hasn’t risen since outbreak of violence in mideast, but no longer a tailwind, either
  • Look to Maersk results on November 3 for guidance, US inventory de-stocking commentary

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

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
Sign Up for Free