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Smartkarma Daily Briefs

Daily Brief Financials: Rakuten Bank, Industrials REIT, JDC Group AG, Regional REIT Ltd and more

By | Daily Briefs, Financials

In today’s briefing:

  • Rakuten Bank IPO: First Day Trading
  • Blackstone/Industrial REIT: Final Agreed Offer
  • JDC Group – Strong results in a difficult market
  • Regional REIT – Covered dividend with a 12% yield

Rakuten Bank IPO: First Day Trading

By Oshadhi Kumarasiri

  • It appears that Rakuten Bank (5838 JP) received a significant number of subscriptions at the revised offer range, leading the company to set the IPO price at ¥1,400 per share.
  • The grey market trading suggests that shares are currently trading close to the lower end of the previous IPO price range, indicating a potential upside of 20% on the debut.
  • The IPO has potential to rise beyond 20% on debut. However, in the event that it does not pop more than 100%, we would looking to buy more shares.

Blackstone/Industrial REIT: Final Agreed Offer

By Jesus Rodriguez Aguilar

  • Blackstone launches a recommended 168p/share cash offer (via a scheme of arrangement) for Industrials REIT, which needs funding to increase its portfolio (and scale) and lower its blended cost ratio. 
  • The asset class seems attractive in an economic upturn. The offers represents a 42% premium, 1.04x to latest reported NTA, 1.2x P/23e BVPS; 22.1x Fwd P/E (source IBES). 
  • The offer should succeed, although irrevocables are just 6.3% (plus 22.4% letters of intent). Spread is 0.89%/4.52% (gross/annualised). While not terribly exciting, I would be long, in case of sweetening.

JDC Group – Strong results in a difficult market

By Edison Investment Research

JDC Group (JDC) reported FY22 results that were in line with the preliminary results published on 9 March. After slower than expected growth in H222, JDC expects 2023 revenue growth to accelerate again to 17% at the midpoint of guidance and the EBITDA margin to improve. Nevertheless, we have lowered our 2023 and 2024 revenue estimates by 5% and 6% and our EBITDA estimates by 7% and 12%, respectively, due to a lower FY22 base. JDC trades at an FY24e EV/EBITDA multiple of 12.0x on consensus estimates, which we believe is very undemanding for what is essentially a fast-scaling platform business. Our DCF calculation provides a valuation of €32.51/share (versus €36.40/share previously).


Regional REIT – Covered dividend with a 12% yield

By Edison Investment Research

Regional REIT (RGL) delivered a good income performance in FY22, led by strong leasing (well above pre-pandemic levels) and continued strong rent collection. DPS of 6.6p was fully covered and we forecast the same for FY23. Market-wide valuation yield widening reduced NAV and increased gearing, but RGL notes that it has ample headroom available across its debt facilities, which are fixed at a cost of 3.5%. In this note we explain why we think DPS is sustainable and review some of the key issues that appear to be weighing on the valuation.


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Daily Brief United States: Gold, Micron Technology, Walgreens Boots Alliance, Nike, Ethereum, Chevron Corp, Incyte Corp, Carnival Corp, Carmax Inc, Otis Worldwide Corp and more

By | Daily Briefs, United States

In today’s briefing:

  • Soft commodities dominate 2023 – US orange crop falls to 86-year low
  • Micron Technology: How This DRAM & NAND Leader Is Surviving In A Challenging Market – Key Drivers
  • Walgreens Boots Alliance Inc.: Advancements In Healthcare & Key Drivers
  • Nike Inc.: Continued Franchise Expansion
  • ETH’s Big Post-Shapella Rally
  • Chevron Corporation: U.S. Production Growth & Other Developments
  • Incyte Corporation: Continued Diversification In Derma & Oncology – Key Drivers
  • Carnival Corporation: Improving Liquidity For The Cruise Leader – Key Drivers
  • CarMax Inc.: A Mixed Bag Auto Retail Player – Key Drivers
  • Otis Worldwide: Equipment Growth & Acceleration Of Service Portfolio – Key Drivers

Soft commodities dominate 2023 – US orange crop falls to 86-year low

By The Commodity Report

  • USDA on Tuesday pegged the 2022-2023 U.S. orange crop at 62.25 million boxes (2.57 million tonnes), an 86-year low and down 23% on the year.
  • That is less than 20% of U.S. output in the record 1997-1998 season.
  • Florida, which has previously accounted for more than 80% of the annual U.S. orange crop, is seen producing an 87-year low of 16.1 million boxes, down 61% on the year.

Micron Technology: How This DRAM & NAND Leader Is Surviving In A Challenging Market – Key Drivers

By Baptista Research

  • Micron Technology’s results in the quarter were disastrous as the company failed to meet the revenue expectations of Wall Street and reported wider-than-expected losses.
  • Total fiscal revenue was down, whereas DRAM revenue represented 74% of the total revenue.
  • Revenue from the Mobile Business Unit was up and Embedded Business Unit revenue was down.

Walgreens Boots Alliance Inc.: Advancements In Healthcare & Key Drivers

By Baptista Research

  • Walgreens Boots Alliance produced a strong second quarter which happened to be an all-around beat.
  • Also, this quarter served as a turning point in their transition to the healthcare industry.
  • Besides that, Boots had a fantastic quarter in the international segment, achieving retail comp growth of 16% over the same period last year.

Nike Inc.: Continued Franchise Expansion

By Baptista Research

  • Nike delivered another strong quarter with revenue growth across all geographies, channels, and brands.
  • It had strong digital growth, fueled by increased traffic on its apps and mobile.
  • In APLA, the brand momentum of Nike continues to fuel strong growth.

ETH’s Big Post-Shapella Rally

By Kaiko

  • Last week, the Shapella upgrade went live without a hitch, enabling millions of staked ETH to be withdrawn.
  • While Ethereum’s Merge upgrade last September was more of a “buy the rumor sell the news” type of event, Shapella appears to have had the opposite impact on price.
  • ETH spot prices dropped by nearly 18% post-Merge while they are up 11% since Shapella, despite fears of mass selling. 

Chevron Corporation: U.S. Production Growth & Other Developments

By Baptista Research

  • Chevron had a decent year in 2022, with improved financial performance, increased production of traditional energy, and progress in developing lower carbon businesses.
  • The company had a mixed result in the last quarter as it surpassed the revenue expectations of Wall Street but delivered lower-than-expected earnings.
  • The company generated decent free cash flows, surpassing its previous high in 2021 by over $15 billion, resulting in a strong dividend increase and a buyback of almost 4% of its shares.

Incyte Corporation: Continued Diversification In Derma & Oncology – Key Drivers

By Baptista Research

  • Incyte Corporation generated strong financial performance in the last quarter and managed an all-around beat.
  • Revenues from the commercialized items in the company’s current portfolio increased by 18% year over year.
  • We give Incyte Corporation a ‘Hold’ rating with a revised target price.

Carnival Corporation: Improving Liquidity For The Cruise Leader – Key Drivers

By Baptista Research

  • Carnival Corporation had a decent quarter with revenues above expectations and narrower-than-expected losses.
  • The company’s onboard and other revenue continued at a high pace consistent with the second half of 2022, reflecting ongoing consumer strength and the quality of its onboard product.
  • It is intended to give amazing facts personalized to Carnival Cruise Line guests in order to increase revenue yields and margins.

CarMax Inc.: A Mixed Bag Auto Retail Player – Key Drivers

By Baptista Research

  • CarMax delivered a mixed result in the fourth quarter as it failed to meet revenue expectations of Wall Street but managed an earnings beat.
  • CarMax Auto Finance generated $1.9 billion, resulting in a penetration of 44.7% net of 3-day payoffs.
  • The weighted average contract rate paid to new clients was 10.9%, an increase of 110 basis points from the third quarter and 270 basis points from the same time the previous year.

Otis Worldwide: Equipment Growth & Acceleration Of Service Portfolio – Key Drivers

By Baptista Research

  • Otis entered the year with good momentum and delivered an all-around beat with improved organic growth in its last result as it continues to execute its four strategic pillars – advancing digitization, accelerating service portfolio growth, and sustaining new equipment growth while focusing on and empowering the organization.
  • Strong service performance, particularly on price and volume, was partially offset by commodities in new equipment, mixed headwinds, and higher corporate costs.
  • The pricing on new equipment orders in the quarter rose, led by the Americas, with a solid performance in APAC and EMEA.

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Daily Brief Consumer: Anta Sports Products, Nitori Holdings, Genting Bhd, ZJLD Group, Oishi Group PCL, Tokyo Stock Exchange Tokyo Price Index Topix, Nike, Seven & I Holdings, Walgreens Boots Alliance and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Anta Sports Placement – A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good
  • Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch
  • StubWorld: Genting Berhad Is Cheap
  • ZJLD Group IPO – Sentiment Could See a Positive Shift, Mid-Bottom End Digestible
  • ZJLD Group IPO: Valuation Insights
  • Oishi Group (OISHI TB): IFA Recommends the THB59.00 Delisting Offer
  • Maintaining Labor Productivity by Cutting Working Hours Was Effective but Risks Should Be Considered
  • Nike Inc.: Continued Franchise Expansion
  • Seven & I: The Biggest Barrier to Change Has Gone
  • Walgreens Boots Alliance Inc.: Advancements In Healthcare & Key Drivers

Anta Sports Placement – A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good

By Sumeet Singh

  • Anta Sports Products (2020 HK)  aims to raise around US$1.5bn in its top-up placement. 
  • Anta hasn’t specified what it aims to do with the money that it’s looking to raise, furthermore, it’s already net cash.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch

By Travis Lundy

  • With 3.5 months left in the dataset, the data is pretty close to settled. The interesting bits are elsewhere. There are three auto DELETEs and two auto ADDs. Maybe.
  • One auto-ADD is Toshiba, which may have a deal on it. That leaves two to add for sector balance. That could be Nitori (9843 JP) and Zozo (3092 JP).
  • Friday’s move on Fast Retailing brings in the issue of the new capping function. That would be a different US$2bn selldown. Lots of gory details here. 

StubWorld: Genting Berhad Is Cheap

By David Blennerhassett

  • Genting Bhd (GENT MK)‘s implied stub and the simple ratio (GENT / Genting Singapore (GENS SP)) are at multi-year lows.
  • Preceding my comments on Genting are the weekly setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

ZJLD Group IPO – Sentiment Could See a Positive Shift, Mid-Bottom End Digestible

By Clarence Chu

  • ZJLD Group (ZJLD HK) is looking to raise around US$811m in its Hong Kong IPO.
  • ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu.
  • In this note, we will look at deal dynamics and share our thoughts on valuation.

ZJLD Group IPO: Valuation Insights

By Arun George


Oishi Group (OISHI TB): IFA Recommends the THB59.00 Delisting Offer

By Arun George

  • The Oishi Group PCL (OISHI TB) IFA opines that shareholders approve Thai Beverage (THBEV SP)’s delisting tender offer of THB59.00 per share at the EGM on 3 May.
  • The offer is conditional on Oishi shareholder approval which requires 75% approval by total outstanding shares and <10% rejection by total outstanding shares.
  • The offer is attractive to the IFA’s fair value of THB53.48-56.42 per share. At last close and the end-July completion, the gross and annualised spread is 2.2% and 8.1%, respectively.

Maintaining Labor Productivity by Cutting Working Hours Was Effective but Risks Should Be Considered

By Aki Matsumoto

  • Many companies have worked to ensure labour productivity by curbing personnel costs by reducing work hours and shifting from full-time to part-time workers, as well as by controlling depreciation.
  • Maintaining labor productivity by converting to part-time and reducing working hours of full-time employees has been an effective measure to ensure operating profits margins, but it also carries risks.
  • Personnel cost/sales have bottomed out in 2018 and are on the rise. With cost structures changing dramatically after the economic reopening, controlling labor costs will be more difficult than ever.

Nike Inc.: Continued Franchise Expansion

By Baptista Research

  • Nike delivered another strong quarter with revenue growth across all geographies, channels, and brands.
  • It had strong digital growth, fueled by increased traffic on its apps and mobile.
  • In APLA, the brand momentum of Nike continues to fuel strong growth.

Seven & I: The Biggest Barrier to Change Has Gone

By Michael Causton

  • Seven & I has announced major restructuring of its struggling Ito-Yokado GMS chain – a company that big investors have long demanded be sold off entirely. 
  • The latest round of cuts had to wait until the company’s founder finally passed away, although are likely not going to be the last.
  • Seven & I has long had a coherent plan to rationalise – but was just waiting for the founder to pass – with a series of disposals now likely.

Walgreens Boots Alliance Inc.: Advancements In Healthcare & Key Drivers

By Baptista Research

  • Walgreens Boots Alliance produced a strong second quarter which happened to be an all-around beat.
  • Also, this quarter served as a turning point in their transition to the healthcare industry.
  • Besides that, Boots had a fantastic quarter in the international segment, achieving retail comp growth of 16% over the same period last year.

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Daily Brief TMT/Internet: Hang Seng China Enterprises Index, Money Forward, Taiwan Semiconductor (TSMC) – ADR, Micron Technology, BlackBerry Ltd, Vection Technologies Ltd, Ethereum, Paycom Software, Pinterest Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Hang Seng CEI (HSCEI) – Pending Confirmation of Bullish Breakout and Textbook 7770/80 Q2 2023 Target
  • Money Forward: Lower S&M Spending in 1Q Drives Losses Down
  • Taiwan Tech Weekly: TSMC Cutting Capex, Earnings This Week; Suppliers ASML & Lam Also Will Report
  • Micron Technology: How This DRAM & NAND Leader Is Surviving In A Challenging Market – Key Drivers
  • BlackBerry Limited: IoT Diversification And IVY Ecosystem Development – Key Drivers
  • Vection Technologies – Rapid H2 growth de-risks ambitious FY23 target
  • ETH’s Big Post-Shapella Rally
  • Paycom Software: Leveraging Its Marketing and Technology Investments – Key Drivers
  • Pinterest Inc: Managing The Social Media Slowdown – Key Drivers

Hang Seng CEI (HSCEI) – Pending Confirmation of Bullish Breakout and Textbook 7770/80 Q2 2023 Target

By David Coloretti, CMT

  • At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. 1) Response to key levels. 2) Price action. 3) Momentum confirmation.
  • A prominent bottom below 5000 in Q4 2022 set up an impulsive multi-month uptrend and LT uptrend bias. Our 2023 target at 9450/70 reflects this major bottom.
  • 2023 has delivered a tangible downward correction. Since mid-February a Head and Shoulders Bottom has formed. A break above the neckline at 7085 targets 7770/80 in Q2 2023.

Money Forward: Lower S&M Spending in 1Q Drives Losses Down

By Shifara Samsudeen, ACMA, CGMA

  • MF reported 1QFY11/2023 results on Friday. Revenue increased 43.0% YoY to ¥6.8bn (vs consensus ¥6.5bn) while operating losses dropped to ¥1.59bn vs ¥1.65bn in 1QFY11/22 (vs consensus ¥2.0bn).
  • The company’s S&M spending is the lowest during first quarter of the year, which drove losses down. However, the company has guided for higher S&M spending in 2Q.
  • Our analysis on Money Forward (3994 JP) BO SAAS vs Non-BO SAAS shows that non-BO businesses’ GPM has continued to decline suggesting that these non-BO businesses only help inflate revenues.

Taiwan Tech Weekly: TSMC Cutting Capex, Earnings This Week; Suppliers ASML & Lam Also Will Report

By Vincent Fernando, CFA

  • TSMC is cutting its 2023E capex plans by 12% according to Taiwan’s EDN. The company will also report earnings this Thursday.
  • TSMC suppliers ASML and Lam Research will also be reporting this week. Realtek will report this week as well.
  • Delta Thailand valuation still precarious relative to Delta Taiwan. Apple has continued to outperform the Quanta & Pegatron pair.

Micron Technology: How This DRAM & NAND Leader Is Surviving In A Challenging Market – Key Drivers

By Baptista Research

  • Micron Technology’s results in the quarter were disastrous as the company failed to meet the revenue expectations of Wall Street and reported wider-than-expected losses.
  • Total fiscal revenue was down, whereas DRAM revenue represented 74% of the total revenue.
  • Revenue from the Mobile Business Unit was up and Embedded Business Unit revenue was down.

BlackBerry Limited: IoT Diversification And IVY Ecosystem Development – Key Drivers

By Baptista Research

  • BlackBerry delivered a mixed result in a challenging macro environment.
  • Blackberry IoT closed out with strong year-over-year revenue growth.
  • In the quarter, Blackberry secured an overall 36 new design wins and in multiple auto domains, QNX is winning.

Vection Technologies – Rapid H2 growth de-risks ambitious FY23 target

By Edison Investment Research

Vection Technologies reported a 60% uplift in its total contract value (TCV) to A$16m from the TCV metric announced at the half year, driven by new contract wins, upsells from existing clients and recognising delayed contracts from Q223. Delivering rapid contract growth in H223 instils further confidence in management’s FY23 revenue guidance of A$24–26m for its IntegratedXR technology stack, reflected in the 9% rise in share price following the announcement. As illustrated by our previous note, promising pilot projects, including a potential A$30m tender in the defence sector, should bolster the company’s growth trajectory. A proven track record of converting c 100% of TCV into revenue by year-end further de-risks the group’s FY23 growth target and our forecasts, which are unchanged.


ETH’s Big Post-Shapella Rally

By Kaiko

  • Last week, the Shapella upgrade went live without a hitch, enabling millions of staked ETH to be withdrawn.
  • While Ethereum’s Merge upgrade last September was more of a “buy the rumor sell the news” type of event, Shapella appears to have had the opposite impact on price.
  • ETH spot prices dropped by nearly 18% post-Merge while they are up 11% since Shapella, despite fears of mass selling. 

Paycom Software: Leveraging Its Marketing and Technology Investments – Key Drivers

By Baptista Research

  • Paycom reported strong financial results in 2022, with four consecutive quarters of revenue growth of 30% or more.
  • The company’s Q4 revenue was up 30% year-on-year, bringing the full-year 2022 revenue to $1.375 billion, also up 30% year-on-year.
  • Paycom is poised to take advantage of the upward market trend in 2023, as its revenue growth is predominantly driven by clients with more than 2,000 employees.

Pinterest Inc: Managing The Social Media Slowdown – Key Drivers

By Baptista Research

  • Pinterest ended 2022 on a mixed note as its revenues were below Wall Street expectations.
  • Given the softening ad market, Pinterest delivered revenue of $877 million in Q4 but it did manage an earnings beat.
  • Overcoming pandemic challenges and achieving increased user engagement, Pinterest has achieved MAUs of 445 million, higher than in the third quarter.

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Daily Brief Energy/Materials: Ecopro Co Ltd, Genesis Minerals, Merdeka Battery Materials, Gold, Chevron Corp, Treatt PLC, KEFI Minerals PLC, Phillips 66, Riley Exploration Permian and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences
  • Genesis To Acquire St Barbara’s Flagship As Merger Cancelled
  • Merdeka Battery Materials IPO Trading – Earnings Might Be Long Drawn Out but Should Perform Fine
  • Soft commodities dominate 2023 – US orange crop falls to 86-year low
  • Chevron Corporation: U.S. Production Growth & Other Developments
  • Treatt – Strong revenue growth, profit in line
  • KEFI Gold and Copper – New timings
  • Phillips 66: Expansion Of The NGL Value Chain – Key Drivers
  • Riley Exploration Permian – Capital Flexibility

MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences

By Brian Freitas

  • The review period for the price cutoff for the MSCI May Quarterly Comprehensive Index Review (QCIR) starts today. MSCI should choose a day from this week to compute market cap.
  • The most changes (especially adds) are expected in mainland China following an expansion of the universe for inclusion of stocks in Northbound Stock Connect.
  • There are stocks in India where there will be FIF changes triggering large flows and there are things to watch on some stocks in Korea and China.

Genesis To Acquire St Barbara’s Flagship As Merger Cancelled

By David Blennerhassett

  • Gold miner St Barbara Ltd (SBM AU)’s reverse merger with Genesis Minerals (GMD AU) always had a whiff of biting off more than they could chew. That’s now validated.
  • St Barbara has confirmed it will sell its flagship Leonora gold project to Genesis for $600mn (in cash and GMD scrip). The reverse merger has been cancelled.
  • Post transaction, St Barbara will hold up to ~19.5%,  and be left with no debt and ~$197m in cash. Genesis will emerge with no debt, and ~$175mn cash (pre-transaction costs). 

Merdeka Battery Materials IPO Trading – Earnings Might Be Long Drawn Out but Should Perform Fine

By Ethan Aw

  • Merdeka Battery Materials (2012725D IJ) raised around US$591m in its Indonesian IPO.
  • It has the largest resource globally in terms of contained nickel at the Konawe Nickel Mine (the SCM Mine), according to Wood Mackenzie. 
  • In this note, we will talk about the trading dynamics and valuation.

Soft commodities dominate 2023 – US orange crop falls to 86-year low

By The Commodity Report

  • USDA on Tuesday pegged the 2022-2023 U.S. orange crop at 62.25 million boxes (2.57 million tonnes), an 86-year low and down 23% on the year.
  • That is less than 20% of U.S. output in the record 1997-1998 season.
  • Florida, which has previously accounted for more than 80% of the annual U.S. orange crop, is seen producing an 87-year low of 16.1 million boxes, down 61% on the year.

Chevron Corporation: U.S. Production Growth & Other Developments

By Baptista Research

  • Chevron had a decent year in 2022, with improved financial performance, increased production of traditional energy, and progress in developing lower carbon businesses.
  • The company had a mixed result in the last quarter as it surpassed the revenue expectations of Wall Street but delivered lower-than-expected earnings.
  • The company generated decent free cash flows, surpassing its previous high in 2021 by over $15 billion, resulting in a strong dividend increase and a buyback of almost 4% of its shares.

Treatt – Strong revenue growth, profit in line

By Edison Investment Research

After the usual slower start to the year, Treatt has had a strong Q2; H123 sales growth was 8.5% at constant currency. Momentum is expected to continue into H2, with current sales growth mainly skewed to price as Treatt continues to recover increased costs, though there was also a small contribution from an improvement in mix. Citrus continued to perform strongly as Treatt pursues its strategy of moving away from the lower-margin products. We raise our FY23 sales forecasts to reflect the strong revenue growth but leave our profit forecasts broadly unchanged at this stage, though we see upside risk to forecasts.


KEFI Gold and Copper – New timings

By Edison Investment Research

Notwithstanding the trials and tribulations that it has had to deal with in Ethiopia in recent years, KEFI believes that it is finally nearing the end of its approvals odyssey. Being first mover and also traversing the country’s turbulent swing to democracy has cost the company unpredictability, time and money. However, the new mining minister is reported to be serious – to the point of being enthusiastic – about developing KEFI’s Tulu Kapi project and the three substantive pre-conditions for final approval (the two banks having equal protections in the country, government installation of elevated security and the right for KEFI to administer its own banking and capital servicing arrangements) have been met or (in the case of the third) appear in the process of formalisation. With respect to security, KEFI reports that a disciplined formation of the Ethiopian Federal military has been deployed to secure mine sites throughout the country, including Tulu Kapi. In the meantime, the company has continued to upgrade and develop its assets in Saudi Arabia.


Phillips 66: Expansion Of The NGL Value Chain – Key Drivers

By Baptista Research

  • Phillips 66 had a disappointing quarter failing to meet Wall Street expectations in terms of revenues as well as earnings.
  • The management managed to strengthen their financial position by retiring debt and resuming their share repurchase program with their cash flow production.
  • After completion, the management anticipates having an 87% economic interest in DCP Midstream by the second quarter of 2023.

Riley Exploration Permian – Capital Flexibility

By Water Tower Research

  • Riley is well-positioned to execute its strategy that aims to drive shareholder returns through a combination of growth in production and proved reserves from reinvesting a portion of cash flow into the asset base and using the balance to maintain a conservative balance sheet and return cash to shareholders.
  • The recent $330 million acquisition of assets in New Mexico’s Yeso Trend added a second core area and provides management greater flexibility to allocate capital to maximize operational efficiency.
  • The Yeso Trend produces from conventional reservoirs that have similar drilling and completion characteristics to the San Andres formation in Riley’s legacy Champions assets.

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Daily Brief Industrials: Capita PLC, Qantm Intellectual Property, Otis Worldwide Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Quiddity Leaderboard for UK F100/​​250 June 23: 20+ Days to Buy for Top-Ranked F250 Potential ADDs
  • QANTM Intellectual Property (ASX:QIP) – Registering Potential Operating Leverage
  • QANTM Intellectual Property Ltd – Registering Potential Operating Leverage
  • Otis Worldwide: Equipment Growth & Acceleration Of Service Portfolio – Key Drivers

Quiddity Leaderboard for UK F100/​​250 June 23: 20+ Days to Buy for Top-Ranked F250 Potential ADDs

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for F100 and F250 in the run up to the June 2023 Rebalance.
  • Based on latest prices, there could be one change for F100 and four changes in F250 between now and the June 2023 Rebalance including Mediclinic International (MDC LN)‘s intra-review change. 
  • Many of the high-ranked F250 potential additions could have very high impact according to our estimates.

QANTM Intellectual Property (ASX:QIP) – Registering Potential Operating Leverage

By Research as a Service (RaaS)

  • Initiation of Coverage with a DCF valuation of $1.57/share. QIP is trading at a 60% discount to its nearest peer, IPH (ASX:IPH)
  • Key areas of focus  are completing its business transformation programme and expanding geographically.
  • Success will lead to EBITDA margin expansion, greater exposure to Asia, and a growing exposure to automated and IP technology.

QANTM Intellectual Property Ltd – Registering Potential Operating Leverage

By Research as a Service (RaaS)

  • QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
  • It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with 16.5% market share (H1 FY23) in its key patents segment (68% of revenue) and a diversified mix of local and foreign clients (~45%/55% split; ~50% US$ revenue).
  • QIP produces ~$97m service revenue (3.7% five-year CAGR) primarily via various workstreams underlying the patent and trade marks lifecycles, and has a history of profitability and cash flow generation which facilitates high dividend pay-outs. 

Otis Worldwide: Equipment Growth & Acceleration Of Service Portfolio – Key Drivers

By Baptista Research

  • Otis entered the year with good momentum and delivered an all-around beat with improved organic growth in its last result as it continues to execute its four strategic pillars – advancing digitization, accelerating service portfolio growth, and sustaining new equipment growth while focusing on and empowering the organization.
  • Strong service performance, particularly on price and volume, was partially offset by commodities in new equipment, mixed headwinds, and higher corporate costs.
  • The pricing on new equipment orders in the quarter rose, led by the Americas, with a solid performance in APAC and EMEA.

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Daily Brief Health Care: Max Healthcare Institute, ADICON Holdings Limited, Ergomed Plc, Incyte Corp and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Max Healthcare (MAXHEALTH IN): Improving Operating Parameters; Well-Positioned for Long-Term Growth
  • ADICON Holdings IPO: The Bull Case
  • Ergomed – Solid FY22 marked by broad-based growth
  • Incyte Corporation: Continued Diversification In Derma & Oncology – Key Drivers

Max Healthcare (MAXHEALTH IN): Improving Operating Parameters; Well-Positioned for Long-Term Growth

By Tina Banerjee

  • Max Healthcare Institute (MAXHEALT IN) reported improved occupancies, revenues, EBITDA and other operating and financial parameters in Q3FY23 versus year-ago period.   
  • The company recorded highest-ever EBITDA – both in terms of absolute value and margins, EBITDA per bed, ARPOB, and ROCE for the third consecutive quarter in FY23.
  • During the last three-year, Max had revenue and EBITDA CAGR of 12% and 59%, respectively. Consensus expects the company to report double-digit revenue and EPS growth through FY25.

ADICON Holdings IPO: The Bull Case

By Arun George

  • ADICON Holdings Limited (ADI HK) is pre-marketing an HKEx IPO to raise up to US$400 million, according to press reports.
  • Adicon is the third largest independent clinical laboratories (ICL) service provider in China, with an 8.6% market share of the non-COVID-19 testing market in 2021, according to Frost & Sullivan.
  • The key elements of the bull case rest on the growing non-COVID-19 testing addressable market, improving market sentiment, strong non-COVID-19 testing growth, stable EBITDA margin and cash generation. 

Ergomed – Solid FY22 marked by broad-based growth

By Edison Investment Research

Ergomed reported FY22 results broadly in line with our expectations. Group revenues grew 22.5% y-o-y to £145.3m, underpinned by sustained demand for both the CRO and PV segments and supported by the ADAMAS acquisition and foreign exchange benefit. Adjusted EBITDA rose 11.5% y-o-y, although margins were comparatively lower (19.5% versus 21.4% in FY21) due to previously flagged incremental investments in technology and senior management hires. The order book remained robust at £295m (up 23.1% over FY21), boding well for medium-term sales potential. Year-end net cash of £19.1m was an improvement over the £12m reported in H122 (after the £24.2m net cash purchase of ADAMAS in February 2022) and, with £80m in undrawn credit facilities, Ergomed remains well-capitalised to fund future growth. We make minor adjustments to our estimates and roll forward our model. We upgrade our valuation slightly to 1,577p/share from 1,573p/share previously.


Incyte Corporation: Continued Diversification In Derma & Oncology – Key Drivers

By Baptista Research

  • Incyte Corporation generated strong financial performance in the last quarter and managed an all-around beat.
  • Revenues from the commercialized items in the company’s current portfolio increased by 18% year over year.
  • We give Incyte Corporation a ‘Hold’ rating with a revised target price.

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Daily Brief Industrials: Capita PLC, Qantm Intellectual Property, Otis Worldwide Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Quiddity Leaderboard for UK F100/​​250 June 23: 20+ Days to Buy for Top-Ranked F250 Potential ADDs
  • QANTM Intellectual Property (ASX:QIP) – Registering Potential Operating Leverage
  • QANTM Intellectual Property Ltd – Registering Potential Operating Leverage
  • Otis Worldwide: Equipment Growth & Acceleration Of Service Portfolio – Key Drivers

Quiddity Leaderboard for UK F100/​​250 June 23: 20+ Days to Buy for Top-Ranked F250 Potential ADDs

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for F100 and F250 in the run up to the June 2023 Rebalance.
  • Based on latest prices, there could be one change for F100 and four changes in F250 between now and the June 2023 Rebalance including Mediclinic International (MDC LN)‘s intra-review change. 
  • Many of the high-ranked F250 potential additions could have very high impact according to our estimates.

QANTM Intellectual Property (ASX:QIP) – Registering Potential Operating Leverage

By Research as a Service (RaaS)

  • Initiation of Coverage with a DCF valuation of $1.57/share. QIP is trading at a 60% discount to its nearest peer, IPH (ASX:IPH)
  • Key areas of focus  are completing its business transformation programme and expanding geographically.
  • Success will lead to EBITDA margin expansion, greater exposure to Asia, and a growing exposure to automated and IP technology.

QANTM Intellectual Property Ltd – Registering Potential Operating Leverage

By Research as a Service (RaaS)

  • QANTM Intellectual Property Ltd (ASX:QIP) owns a group of intellectual property (IP) services businesses operating under the independent brands of Davies Collison Cave (DCC), FPA Patent Attorneys and Sortify.tm.
  • It is a major player in the mature and regulated Australian patent, trade marks and IP legal services market with 16.5% market share (H1 FY23) in its key patents segment (68% of revenue) and a diversified mix of local and foreign clients (~45%/55% split; ~50% US$ revenue).
  • QIP produces ~$97m service revenue (3.7% five-year CAGR) primarily via various workstreams underlying the patent and trade marks lifecycles, and has a history of profitability and cash flow generation which facilitates high dividend pay-outs. 

Otis Worldwide: Equipment Growth & Acceleration Of Service Portfolio – Key Drivers

By Baptista Research

  • Otis entered the year with good momentum and delivered an all-around beat with improved organic growth in its last result as it continues to execute its four strategic pillars – advancing digitization, accelerating service portfolio growth, and sustaining new equipment growth while focusing on and empowering the organization.
  • Strong service performance, particularly on price and volume, was partially offset by commodities in new equipment, mixed headwinds, and higher corporate costs.
  • The pricing on new equipment orders in the quarter rose, led by the Americas, with a solid performance in APAC and EMEA.

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Daily Brief Utilities: SJVN and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • SJVN Limited (SJVN IN): Renewable Energy Play; Installed Capacity To Double in 12-18 Months.

SJVN Limited (SJVN IN): Renewable Energy Play; Installed Capacity To Double in 12-18 Months.

By Mohit Surana

  • Fundamentally strong company with track record of high profitability and efficient operations. 
  • Installed power generation capacity will more than double to ~5,500 MW by FY24 and another 4-5x by FY30. 
  • Potential for DPS to improve from a trailing 1.70 INR to INR 2.50 by FY24, implying an attractive dividend yield of 7.5%. 

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Most Read: Ecopro Co Ltd, Rakuten Bank, Anta Sports Products, Arclands Corporation, Nitori Holdings, Lotte Shopping Co, Genting Bhd, ZJLD Group, Genesis Minerals and more

By | Daily Briefs, Most Read

In today’s briefing:

  • MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences
  • Rakuten Bank (5838) IPO – Let’s Go! (Part 2)
  • Anta Sports Placement – A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good
  • Arclands (9842) Overpays for Arclands Service Holdings (3085)
  • Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch
  • Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review
  • StubWorld: Genting Berhad Is Cheap
  • ZJLD Group IPO – Sentiment Could See a Positive Shift, Mid-Bottom End Digestible
  • ZJLD Group IPO: Valuation Insights
  • Genesis To Acquire St Barbara’s Flagship As Merger Cancelled

MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences

By Brian Freitas

  • The review period for the price cutoff for the MSCI May Quarterly Comprehensive Index Review (QCIR) starts today. MSCI should choose a day from this week to compute market cap.
  • The most changes (especially adds) are expected in mainland China following an expansion of the universe for inclusion of stocks in Northbound Stock Connect.
  • There are stocks in India where there will be FIF changes triggering large flows and there are things to watch on some stocks in Korea and China.

Rakuten Bank (5838) IPO – Let’s Go! (Part 2)

By Travis Lundy

  • SBI Sumishin Net Bank (7163 JP) lowered its listing price vs what were already lowered expectations from a year prior. Then Rakuten Bank (5838 JP) lowered its IPO range. 
  • SBI Sumishin dilly-dallied around IPO price for three days then went nuts, rising 40% as of Friday morning. Rakuten Bank’s IPO looks dirt cheap now. 
  • But it is worthwhile comparing it on a spectrum of OTHER Japanese banks and neobanks. 

Anta Sports Placement – A Large Deal to Digest with Unknown Use of Proceeds but Track Record Is Good

By Sumeet Singh

  • Anta Sports Products (2020 HK)  aims to raise around US$1.5bn in its top-up placement. 
  • Anta hasn’t specified what it aims to do with the money that it’s looking to raise, furthermore, it’s already net cash.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

Arclands (9842) Overpays for Arclands Service Holdings (3085)

By Travis Lundy

  • On Friday Arcland Sakamoto (9842 JP) and restaurant franchise subsidiary Arcland Service (3085 JP), which it launched in 1993 and IPOed in 2007, announced they had agreed to merge. 
  • Arcland SHD runs 18 restaurant brands, of which Katsuya is most well-known, with a total of 750 or so restaurants managed globally. It has grown consistently.
  • The merger ratio is at an all-time high for Arcland SHD. This should be a done deal but I might expect some complaints. I think Arclands is probably overpaying. 

Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch

By Travis Lundy

  • With 3.5 months left in the dataset, the data is pretty close to settled. The interesting bits are elsewhere. There are three auto DELETEs and two auto ADDs. Maybe.
  • One auto-ADD is Toshiba, which may have a deal on it. That leaves two to add for sector balance. That could be Nitori (9843 JP) and Zozo (3092 JP).
  • Friday’s move on Fast Retailing brings in the issue of the new capping function. That would be a different US$2bn selldown. Lots of gory details here. 

Aiming for Price Movement Patterns with Low Market Exposure in MSCI Korea May Review

By Sanghyun Park

  • We should aim for price movement patterns with relatively low market exposure. One of them is the post-effective upward price movement of deletions.
  • The relative price performance for one week after the implementation compared to KOSPI 200 was consistently positive, ranging from 2.41% to 6.82%.
  • Given the recent price movement of four deletion candidates, there is again a high possibility that the price distortion caused by MSCI flow will revert after the effective date.

StubWorld: Genting Berhad Is Cheap

By David Blennerhassett

  • Genting Bhd (GENT MK)‘s implied stub and the simple ratio (GENT / Genting Singapore (GENS SP)) are at multi-year lows.
  • Preceding my comments on Genting are the weekly setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

ZJLD Group IPO – Sentiment Could See a Positive Shift, Mid-Bottom End Digestible

By Clarence Chu

  • ZJLD Group (ZJLD HK) is looking to raise around US$811m in its Hong Kong IPO.
  • ZJLD Group (ZJLD) is a Chinese liquor company primarily producing baijiu.
  • In this note, we will look at deal dynamics and share our thoughts on valuation.

ZJLD Group IPO: Valuation Insights

By Arun George


Genesis To Acquire St Barbara’s Flagship As Merger Cancelled

By David Blennerhassett

  • Gold miner St Barbara Ltd (SBM AU)’s reverse merger with Genesis Minerals (GMD AU) always had a whiff of biting off more than they could chew. That’s now validated.
  • St Barbara has confirmed it will sell its flagship Leonora gold project to Genesis for $600mn (in cash and GMD scrip). The reverse merger has been cancelled.
  • Post transaction, St Barbara will hold up to ~19.5%,  and be left with no debt and ~$197m in cash. Genesis will emerge with no debt, and ~$175mn cash (pre-transaction costs). 

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