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Smartkarma Daily Briefs

Sep 14
0

Daily Brief Consumer: Duni AB, Ninebot , Haier Smart Home , Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Mellby Gård/Duni: Start of Mandatory Offer Period
  • STAR50 Index Rebalance Preview: Bigger Tracking AUM = Bigger Impact
  • Haier Smart Home (6690 HK): Healthy Growth Despite Challenges
  • The First Thing Managers Should Do Is Disclose Their Cost of Capital and Their Company’s Return

Mellby Gård/Duni: Start of Mandatory Offer Period

By Jesus Rodriguez Aguilar

  • On 14 August, Mellby Gård crossed the 30% threshold and announced a mandatory offer for all shares of Duni AB (DUNI SS) at SEK 98.6/share. The offer period started 12 September.
  • The offer represents 0.41% premium to prior day to threshold crossing. Mellby Gård doesn’t seem interested in completing a takeover, rather being able to increase its stake after offer completion.
  • The offer represents 0.41% premium, 6.8x EV/Fwd EBITDA, 11.1 Fwd P/E (vs. 5-year averages of 8.8x and 15.4x). Gross spread is 2.1%, I wouldn’t get involved above SEK 95.

STAR50 Index Rebalance Preview: Bigger Tracking AUM = Bigger Impact

By Brian Freitas

  • The review period for the December rebalance ends 31 October. We expect the changes to be announced 24 November with the implementation taking place after the close on 8 December.
  • We expect the index committee to continue using a 6-month minimum listing history resulting in one change to the index.
  • One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 2,259m. The impact on the deletion will be much larger than that on the inclusion.

Haier Smart Home (6690 HK): Healthy Growth Despite Challenges

By Osbert Tang, CFA

  • The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. 
  • We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
  • Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. 

The First Thing Managers Should Do Is Disclose Their Cost of Capital and Their Company’s Return

By Aki Matsumoto

  • While 4% of the number of companies mentioned in annual securities reports regarding P/B, half of companies have P/B of below 1x, which suggests managers still lack sense of urgency.
  • Many companies that mention P/B in their annual securities reports rely on share repurchases, and their presentation of strategies to increase cash flow is weak.
  • Clearly stating the cost of capital will lead to more appropriate ROE and ROIC targets and disclosure of specific measures to achieve them.

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Sep 14
0

Daily Brief Japan: T&K Toka Co Ltd, Takisawa Machine Tool, Z Holdings, Sumitomo Mitsui Financial Group, Otsuka Holdings, Seibu Giken , Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • T&K TOKA (4636) Gets More Interesting – A Bump Is Now A Distinct Possibility
  • Nidec (6594) Turns Vinegar to Wine as Takisawa Machine Tool (6121) Agrees To Takeover
  • T&K Toka (4636 JP): Possible Offer Scenarios as Dalton Ups Its Stake
  • Yahoo Troubles Continue for Z Holdings
  • SMFG (8316) – 75% Less JGBs than MUFG | Affiliates Show Worsening Profit | Credit Costs ~2x Vs Past
  • Otsuka Holdings (4578 JP): Strong 1H23 Result Prompts 2023 Guidance Raise; Pipeline Is Advancing
  • Seibu Giken Pre-IPO – Rapid Growth Followed by Rapid Deceleration
  • The First Thing Managers Should Do Is Disclose Their Cost of Capital and Their Company’s Return

T&K TOKA (4636) Gets More Interesting – A Bump Is Now A Distinct Possibility

By Travis Lundy

  • Last year, 20% owner Dalton approached T&K Toka Co Ltd (4636 JP) for an MBO, but walked when questioned. Then in January bid ¥1300 to double their stake to 44%.
  • They were not successful. The firm held a beauty contest. Bain won at ¥1400 despite ¥1300 getting no response and markets up big since. It’s possible not everyone was invited. 
  • Since the Bain deal announcement, the stock has mostly traded at/through terms. Now we find out Dalton has been buying (now 23.77%). This increases the chances of a bump.

Nidec (6594) Turns Vinegar to Wine as Takisawa Machine Tool (6121) Agrees To Takeover

By Travis Lundy

  • Nidec Corp (6594 JP) has had ambitions in machine tool space. They wanted to buy Takisawa Machine Tool (6121 JP) but Takisawa wouldn’t give them the time of day.
  • So Nidec announced hostile intentions and a 60-day period to negotiate. That’s done, and today they announced a now-friendly deal. 
  • This looks like an easy done deal. There is one major risk factor remaining, then another consideration when thinking about path. 

T&K Toka (4636 JP): Possible Offer Scenarios as Dalton Ups Its Stake

By Arun George

  • Nippon Active Value Fund/Michael 1925/Dalton has increased their T&K Toka Co Ltd (4636 JP) shareholding from 22.23% to 23.77% of outstanding shares (22.25% to 23.79% of ownership ratio including share options).
  • T&K Toka shares have traded above Bain’s JPY1,400 pre-conditional offer, fuelling speculation of a bump. A rival proposal at least 5% above triggers the “Counter Tender Offer” clause.
  • The four possible scenarios with declining probabilities are: Bain calls Dalton’s bluff, Bain marginally bumps, Dalton launches a rival offer or Dalton rollovers its stake into a privatised T&K Toka.

Yahoo Troubles Continue for Z Holdings

By Michael Causton

  • GTVs for Yahoo’s shopping division fell by 8% in 1Q2023. 
  • Although this was expected and gross profits did improve, the downturn reflects deeper concerns.
  • Even the group’s Zozo fashion platform are much more slowly.

SMFG (8316) – 75% Less JGBs than MUFG | Affiliates Show Worsening Profit | Credit Costs ~2x Vs Past

By Daniel Tabbush

  • SMFG can benefit like peer banks from BOJ policy change, but less so than MUFG, while at the same time, there does not appear to be a strong alpha story
  • ROE and ROA for SMFG show now expansion over the years, and this is stark contrast to MUFG, part of this appears to be due many weak subsidiaries
  • Credit costs are now averaging 23bps over the past four quarters vs 13bps during 1Q18 to 4Q19, not improving credit metrics like many others, with high write-offs.

Otsuka Holdings (4578 JP): Strong 1H23 Result Prompts 2023 Guidance Raise; Pipeline Is Advancing

By Tina Banerjee

  • In 1H23, Otsuka Holdings (4578 JP) reported revenue growth of 16% YoY to ¥947.5B, ahead of the guidance of ¥867B, as all operating segments recorded increased revenue.
  • In 1H23, revenue from pharmaceutical segment grew 21% YoY to ¥637.9B, mainly driven by the growth of the four global products, which contributed 49% of segment revenue.
  • Encouraged by a better-than-expected 1H23 result, Otsuka has raised 2023 guidance. The company has increased revenue, operating profit, and net profit guidance by 6%, 17%, and 19%, respectively.

Seibu Giken Pre-IPO – Rapid Growth Followed by Rapid Deceleration

By Sumeet Singh

  • Seibu Giken (6223 JP) (SG) is looking to raise around US$120m in its Japan IPO via selling a mix of primary and secondary shares.
  • SG sells desiccant dehumidifiers and VOC concentrators in over fifty countries globally. Its two main products accounted for over 90% of its revenue in 2022.
  • In this note, we look at the company’s past performance.

The First Thing Managers Should Do Is Disclose Their Cost of Capital and Their Company’s Return

By Aki Matsumoto

  • While 4% of the number of companies mentioned in annual securities reports regarding P/B, half of companies have P/B of below 1x, which suggests managers still lack sense of urgency.
  • Many companies that mention P/B in their annual securities reports rely on share repurchases, and their presentation of strategies to increase cash flow is weak.
  • Clearly stating the cost of capital will lead to more appropriate ROE and ROIC targets and disclosure of specific measures to achieve them.

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Sep 13
0

Daily Brief Quantitative Analysis: HK Short Interest Weekly: Tencent and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • HK Short Interest Weekly: Tencent, Li Auto, Baba, China Mobile, Evergrande

HK Short Interest Weekly: Tencent, Li Auto, Baba, China Mobile, Evergrande

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Sep 1st.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We highlight short changes in Tencent, Li Auto, Baba, China Mobile, Evergrande.

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Sep 13
0

Daily Brief Technical Analysis: Downgrading Industrials to Market Weight; Major Supports Holding; Buys in Uranium and Refiners and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Downgrading Industrials to Market Weight; Major Supports Holding; Buys in Uranium and Refiners

Downgrading Industrials to Market Weight; Major Supports Holding; Buys in Uranium and Refiners

By Joe Jasper

  • We still believe it’s possible we’ve seen the lows for this pause/pullback on the SPX, and we see low probability of meaningful correction if SPX is above 4300-4325 (1.5-year support).
  • As initially discussed in our 8/29/23 Compass, we wouldn’t be surprised to see another month+ (i.e., through the end of September, and possibly longer) of consolidation between 4325 and 4600.
  • Downgrading Industrials (XLI) to market weight due to 1.5+ year RS uptrend violation. Buys highlighted in Uranium and Energy (refiners and coal).

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Sep 13
0

Daily Brief ESG: Banijay – ESG Report – Lucror Analytics and more

By | Daily Briefs, ESG

In today’s briefing:

  • Banijay – ESG Report – Lucror Analytics

Banijay – ESG Report – Lucror Analytics

By Charles Macgregor

  • Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
  • We assess Banijay’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental pillar is “Weak”. Controversies are “Immaterial” but Disclosure is “Weak”.
  • Banijay creates and distributes content for television and multimedia platforms. It was founded in 2008 by Stephane Courbit, and has since grown through a string of acquisitions.

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Sep 13
0

Daily Brief ECM: Doosan Robotics: Strong Initial Book Building Results and more

By | Daily Briefs, ECM

In today’s briefing:

  • Doosan Robotics: Strong Initial Book Building Results
  • Innovent Biologics Placement (1801.HK) – There Is No Such Thing as a Free Lunch
  • Viva Energy Placement – News Leak Helps but It’s Still a Big One to Digest
  • ARM IPO Breakdown
  • 4Paradigm IPO: PHIP Updates
  • Doosan Robotics IPO – Updated Thoughts on Valuation – Sentiments Going Out of Control
  • Seoul Guarantee Insurance Corp IPO Preview
  • 4Paradigm IPO: The Bull Case
  • R R Kabel IPO – Peer Comp & Thoughts on Valuation – Fifth in Market Share but First in Sales Growth
  • R R Kabel Ltd IPO- Forensic Analysis

Doosan Robotics: Strong Initial Book Building Results

By Douglas Kim

  • Chosun Business Daily mentioned today that initial results of Doosan Robotics book building have been very strong. The current IPO price range is from 21,000 won to 26,000 won.
  • There is a high probability that the IPO price will be set at 26,000 won or more and close to 30,000 won.
  • Our base case valuation per share of Doosan Robotics is 42,826 won, which is 65% higher than the high end of the IPO valuation range.

Innovent Biologics Placement (1801.HK) – There Is No Such Thing as a Free Lunch

By Xinyao (Criss) Wang

  • Innovent is actually not short of money, so the Placing this time looks “strange”.If Innovent is unable to deliver performance that matches expectations, investors would reconsider its future financing needs.
  • Innovent is undergoing important transition from quantitative change to qualitative change as turning losses into profits is within reach. So, the “concept validation” of Innovent’s business model has been completed.
  • Innovent decides to place the shares at this moment reflects that its stock price is already high. Based on our forecast, there could be limited upside room for share price.  

Viva Energy Placement – News Leak Helps but It’s Still a Big One to Digest

By Sumeet Singh

  • Viva Energy Group (VEA AU)‘s parent,  Vitol, aims to raise around US$460m via selling 15% of the company
  • The news of a possible selldown was leaked overnight in the local press and hence, the stock has corrected going into the placement.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

ARM IPO Breakdown

By Douglas O’Laughlin

  • ARM prices this Wednesday and trades on Thursday.
  • I have a lot of thoughts. This will be a great post if you want to learn about ARM. 
  • So, without further adieu, let’s dive into the most important IP company in the world.

4Paradigm IPO: PHIP Updates

By Shifara Samsudeen, ACMA, CGMA

  • 4Paradigm is a pioneer and leader in enterprise AI. The company offers platform-centric AI solutions to enterprises that can be deployed on a large scale to support decision making.
  • The company’s application for HKEx IPO has been approved and this insight focuses on new data points from the company’s latest PHIP release (dated 07th Sep 2023).
  • 4Paradigm (1764934D HK) revenues have continued to expand with significant reduction in operating losses, and we remain positive on the company’s growth prospects.

Doosan Robotics IPO – Updated Thoughts on Valuation – Sentiments Going Out of Control

By Ethan Aw

  • Doosan Robotics (454910 KS) is looking to raise up to US$318m in its Korean IPO.
  • Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
  • In our previous notes, we assessed the company’s past performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we share our updated thoughts on valuation.

Seoul Guarantee Insurance Corp IPO Preview

By Douglas Kim

  • Seoul Guarantee Insurance Corp is getting ready to complete its IPO in Korea in the next several weeks. The IPO price range is from 39,500 won to 51,800 won. 
  • Market cap is from 2.8 trillion won to 3.6 trillion won. At the high end of the IPO price range, this could be the biggest IPO in Korea in 2023.
  • Many investors will be skeptical on the bankers including two overseas comps (Travelers and Coface) which have much higher valuations.

4Paradigm IPO: The Bull Case

By Arun George

  • 4Paradigm (1764934D HK), a leader in enterprise artificial intelligence (AI) in China, is pre-marketing a US$150-200 million HKEx IPO.  
  • 4Paradigm was the largest player by revenue in China’s platform-centric decision-making AI market with a market share of 22.6% in 2022, according to CIC. 
  • The bull case rests on the success in increasing key account customer numbers, net dollar expansion rates, improving revenue visibility, strong growth in application development services and reducing loss margin.

R R Kabel IPO – Peer Comp & Thoughts on Valuation – Fifth in Market Share but First in Sales Growth

By Ethan Aw

  • R R Kabel (2333180Z IN) is looking to raise up to US$238m in its India IPO.
  • R R Kabel is an Indian consumer electrical company, which primarily sells wires, cables and fast moving electrical goods (FMEG).
  • In our previous notes, we looked at the company’s past performance. In this note, we undertake a quick peer comparison and share our thoughts on valuation.

R R Kabel Ltd IPO- Forensic Analysis

By Nitin Mangal

  • R R Kabel (2333180Z IN) ‘s IPO will go live this week.
  • The company is the fifth largest player in the wires and cables market in India, having a market share of 5% overall and 7% among the branded players.
  • However, there our numerous aspects about the company and financials that warrant attention. These include RPT with promoters, misleading high CFO, promoter classification, high discounting, etc.

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Sep 13
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan: Tech Leads US Equity Decline; JAPAN X: Softbank’s ARM Done(Almost) and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan: Tech Leads US Equity Decline; JAPAN X: Softbank’s ARM Done(Almost), PayPay IPO Next?
  • The Stocks to Own in Asia – Vol. 42
  • The Stocks to Own in ASEAN – Vol. 44
  • China TMT Update-NIO/LI/XPEV/BYD/TSLA/Solar Power-All-New EC6/China Automotive Delivery Data
  • Weekly Sustainable Investing Surveyor – Week Ended September 8, 2023

Ohayo Japan: Tech Leads US Equity Decline; JAPAN X: Softbank’s ARM Done(Almost), PayPay IPO Next?

By Mark Chadwick

  • OVERSEAS:  SPX -0.6% as Tech leads Tuesday’s decline; Inflation concerns continue to weigh; UAW vs Detroit Big 3 discussion continue – strike deadline draws close; Fund managers avoid China.
  • JAPAN:  NKY Futs -0.6% Disc vs Cash; USDJPY 1471; Cabinet reshuffle day – changes in Defense and Foreign Affairs; GTX engine issue shocks Japanese partners;  Street upgrade Galore !
  • JAPAN X: Reports are that SoftBank is Explores New York Listing for PayPay Amid Rising Tech Valuations. With ARM (effectively) done and dusted, Softie likely turns to a PayPay listing

The Stocks to Own in Asia – Vol. 42

By Dr. Andrew Stotz, CFA

  • We highlight 14 stocks in Asia that look interesting to us based on our FVMR methodology
  • Portfolio changes: Four stock remains and 10 stocks are added
  • Since its inception, it has generated a before-fee total return of 134% versus the MSCI Asia ex Japan of 60%

The Stocks to Own in ASEAN – Vol. 44

By Dr. Andrew Stotz, CFA

  • We highlight 14 stocks in ASEAN that look interesting to us based on our FVMR Methodology
  • Portfolio changes: One stocks remain, and 13 stocks are added
  • Since its inception, the portfolio has generated a before-fee total return of 196% versus MSCI ASEAN’s 25%

China TMT Update-NIO/LI/XPEV/BYD/TSLA/Solar Power-All-New EC6/China Automotive Delivery Data

By Shawn Yang

  • NIO/LI: NIO to launch the all-new EC6 on Friday (+/-)
  • BYD/ TSLA /LI /XPEV/NIO: August China Automotive Delivery Data Update (+)
  • Gloated inventory in solar panel led to price collapse in Europe（/）

Weekly Sustainable Investing Surveyor – Week Ended September 8, 2023

By Water Tower Research

  • The WTR Sustainable Index underperformed the broader market, falling 3.6% W/W versus the S&P 500 Index (down 1.3%) and the Nasdaq Index (down 1.4%), but in line with the Russell 2000 Index (down 3.6%).
  • Energy Technology (14.9% of the index) contributed to the index’s underperformance, falling 3.7%, while Industrial Climate and Ag Technology (6.5% of the index) was down 2.4%, ClimateTech Mining was down 3.7% and Advanced Transportation Solutions was down 5.3%.
  • Top 10 Performers: ALLIF, NILI, GTEC, HYSR, FE, ETL, LNZA, LBNK, NGPHF, FNI

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Sep 13
0

Daily Brief Event-Driven: Poly Culture (3636 HK): Trading Wide To Terms. Get Involved. and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Poly Culture (3636 HK): Trading Wide To Terms. Get Involved.
  • KOSDAQ150 Ad Hoc Index Rebalance: VATECH (043150 KS) Replaces Lutronic (085370 KS)
  • HSTECH Index Rebalance Preview: Round-Trip Trade of US$255m in December
  • Origin Energy: ACCC’s Concerns And Brookfield’s Quid Pro Quo
  • HSCEI Index Rebalance Preview: China Unicom (762) Could Replace Zhongsheng (881)
  • EQD | S&P/ASX200 Index Looking Bearish: Resistance Levels Reset

Poly Culture (3636 HK): Trading Wide To Terms. Get Involved.

By David Blennerhassett

  • Back on the 27 June, art and culture play Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation at HK$8.88 per H-share.
  • This Offer from SOE Poly Group is by way of a Merger by Absorption, incorporating a Scheme-like vote. There is no tendering condition.
  • The pre-cons have now been fulfilled. The Composite Document, including the H Share Class meeting/EGM date and IFA opinion, is expected to be despatched on or before the 30 September. 

KOSDAQ150 Ad Hoc Index Rebalance: VATECH (043150 KS) Replaces Lutronic (085370 KS)

By Brian Freitas

HSTECH Index Rebalance Preview: Round-Trip Trade of US$255m in December

By Brian Freitas

  • With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
  • Capping changes will result in a one-way turnover of a touch below 1% and that will result in a round-trip trade of US$255m.
  • The impact on the stocks is relatively small for now but that could increase till the end of November when the stocks will be capped.

Origin Energy: ACCC’s Concerns And Brookfield’s Quid Pro Quo

By David Blennerhassett

  • After Origin Energy (ORG AU) entered into a Scheme Implementation Deed with Brookfield Asset Management/MidOcean Energy in late March, the ACCC approval process has played out in the public eye.
  • And it hasn’t been all beer and Skittles for the Offerors. Not just on competition issues. But also the perceived/apparent public benefit from Brookfield’s future commitment to renewable generation.  
  • All the while, the ACCC recently blocked ANZ (ANZ AU)’s acquisition of Suncorp Bank, and Telstra Corp (TLS AU)/TPG Telecom (TPG AU)‘s mobile network sharing deal. 

HSCEI Index Rebalance Preview: China Unicom (762) Could Replace Zhongsheng (881)

By Brian Freitas

  • Zhongsheng Group (881 HK) is a potential deletion in December and that could result in China Unicom Hong Kong (762 HK) being added to the index.
  • Estimated one-way turnover at the rebalance is 1.36% resulting in a one-way trade of HK$845m. Passives will need to trade over 1x ADV on both stocks.
  • There is a very small impact on the fair value of the HSCEI 2023 dividend futures but there will be a larger impact on the dividend futures expiring in 2024.

EQD | S&P/ASX200 Index Looking Bearish: Resistance Levels Reset

By Nico Rosti

  • The S&P/ASX 200 (AS51 INDEX) closed down last week (CC=-1), this week is rising again, we analyze the new, reset resistance levels to see how far it can go.
  • Our previous, recent insight discussed the fact that the index has been locked in a range for 2 years, an uptrend may be unfolding but it must breach 7600.
  • The current trend pattern is bearish, the index won’t rise more than 2-3 weeks, and it would probably go not very far: 7300-7400 should be the limit

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Sep 13
0

Daily Brief Credit: Morning Views Asia: China Jinmao Holdings and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: China Jinmao Holdings, Vedanta Resources

Morning Views Asia: China Jinmao Holdings, Vedanta Resources

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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Sep 13
0

Daily Brief Equity Bottom-Up: Alibaba: Daniel Zhang Shown The Door and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Alibaba: Daniel Zhang Shown The Door, Jack Ma Back In The Game
  • MUFG (8306) – Biggest JPN Bank, Lowest LDR at 48%: Most Bonds | ROE Surge to 12% May Be Sustainable
  • [Week 2] Namaste India 🙏 | Paytm (PAYTM IN) | Withdrawing Disclosures
  • Intel Foundry Chief Unveils His Strategy
  • IHI (7013) | Brace for a ¥130b Charge
  • Haitian Flavouring (603288 CH):  Weakening Moat With Further Derating Likely
  • US Judge Rules Favorably for Okada Manila Dispute with Former Spac Partner
  • Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further
  • Dollar General Corporation: Activist Interest Looms After Recent Drop! – Major Drivers
  • [KE Holdings (BEKE US, BUY, TP US$24) Update]: Our View of Gradual Property Recovery into 2024

Alibaba: Daniel Zhang Shown The Door, Jack Ma Back In The Game

By Oshadhi Kumarasiri

  • News broke yesterday that Daniel Zhang is no longer leading Alibaba (ADR) (BABA US)‘s Cloud Business unit.
  • The statement from Alibaba’s current chairman, in which he mentions that Zhang would “switch to a different approach and continue to fight alongside us at Alibaba” raises skepticism.
  • We also think that the $1.0bn Alibaba committed to a technology fund could be seen as a form of compensation to ensure Daniel Zhang’s silence.

MUFG (8306) – Biggest JPN Bank, Lowest LDR at 48%: Most Bonds | ROE Surge to 12% May Be Sustainable

By Daniel Tabbush

  • The biggest Japan banks by assets, in spotlight as near ending of negative interest rates, with lowest LDR, so highest bonds, cash, can see major benefit from YCC relief
  • Years of low ROE at 5-7% seem behind MUFG now with 12-17% in past two quarters, where leverage is not out of control, with cost improvements key
  • Loss loans down 29% over past two years, can support low credit costs, which dropped sharply from 81bps to 15bps from 3Q23 to 1Q24, possibly moving to reversals

[Week 2] Namaste India 🙏 | Paytm (PAYTM IN) | Withdrawing Disclosures

By Pranav Bhavsar

Intel Foundry Chief Unveils His Strategy

By William Keating

  • It’s a “show me the money” versus a “build it and they will come” approach
  • New fab construction will be based solely on customer commitments.
  • It’s a curiously cautious plan and highly unlikely to succeed

IHI (7013) | Brace for a ¥130b Charge

By Mark Chadwick

  • IHI’s share price has declined 16% on news that Pratt & Whitney would need to ground more planes due to problems with its PW1100 turbofan engines
  • IHI has a 15% share of the revenue and risk from this program. The new engine was expected to be a major earnings driver over the next several years
  • We believe that IHI will be forced to revise down OP guidance to a loss. The bigger impact could be on FCF and future capex plans. 

Haitian Flavouring (603288 CH):  Weakening Moat With Further Derating Likely

By Steve Zhou, CFA

  • Foshan Haitian Flavouring & Food (603288 CH), the largest condiment player in China is facing structural weakening of moat from a changed operating environment post-COVID. 
  • Both catering and home consumption segments are faced with structural growth pressures that are difficult to solve for the company. 
  • Expect further earnings weakness and derating in valuation multiple in the near term. 

US Judge Rules Favorably for Okada Manila Dispute with Former Spac Partner

By Howard J Klein

  • Japan’s Universal Entertainment’s Okada Manila casino unit removes another obstacle to its long quest to transform into a NASDAQ traded IPO.
  • Judge rules that Okada is free of any obligations to US Space 26 Capital Partners.
  • UE’s goal to take the casino public, despite expectations that the Spac will appeal, is likely to move forward toward identifying a new partner.

Recruit Holdings: Weakening Job Markets and New Pricing Model to Impact HR Tech Further

By Shifara Samsudeen, ACMA, CGMA

  • The job openings in the US declined to 8.827m in July 2023, marking the lowest since March 2021, and falling well below projected 9.465m job openings for the month.
  • On the other hand, web traffic on Recruit Holdings (6098 JP) ’s job platform Indeed has declined in July compared to June 2023 while it has improved slightly on Glassdoor.
  • HR Tech segment’s top line growth declined 9.1% YoY in 1QFY03/2024 and the company has shifted into a new pricing model which we think would further impact segment’s growth.

Dollar General Corporation: Activist Interest Looms After Recent Drop! – Major Drivers

By Baptista Research

  • Dollar General Corporation’s results were a major disappointment as the company failed to meet Wall Street’s revenue and earnings expectations.
  • Due to higher average borrowing amounts and interest rates, interest expense climbed to $84 million in Q2 from $43 million in Q2 of last year.
  • Dollar General has experienced a significant drop in its stock value this year, sparking speculation about potential activist investors eyeing the company.

[KE Holdings (BEKE US, BUY, TP US$24) Update]: Our View of Gradual Property Recovery into 2024

By Shawn Yang

  • We think the mild recovery is driven by the delayed orders in Jul. and Aug, thus expect transaction volume to be flattish MoM in Sep.
  • We think the recovery is on-track and expect Oct. volume to begin recovery and expect more meaningful rebound in Mar.-Apr. 2024, supported by 1) strong leading indicators from property agents, 
  • 2) refer to the recover trajectory in 2014-2015.  We maintain the stock as BUY rating and maintain TP at US$24/ADS.

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