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Smartkarma Daily Briefs

Jul 30
0

Daily Brief Financials: Nice Information Service Co, Rothschild & Co and more

By | Daily Briefs, Financials

In today’s briefing:

  • KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)
  • Concordia/Rothschild: Start of Offer Period

KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)

By Brian Freitas

Concordia/Rothschild: Start of Offer Period

By Jesus Rodriguez Aguilar

  • The simplified tender offer for Rothschild & Co (ROTH FP) opened on 24 July and will last until 8 September (inclusive). The ex-dividend offer price is €38.60.
  • The offer represents 7.22x NTM Fwd P/E (ex-dividend), rather low for the top European M&A player and a high quality business. Merchant Banking division could have a lot of upside.
  • The enlarged family concert has bought shares in the market and has now c.66%. I anticipate the offer to go according to plan. Gross spread is nil.

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Jul 30
0

Daily Brief South Korea: Nice Information Service Co, Eoflow , SK Hynix, Oci Co Ltd and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)
  • (Mostly) Asia-Pac Weekly Risk Arb Wrap: Talon Energy, Pacific Current, Toshiba, Eoflow, 111 Inc
  • SK Hynix. Making HBM While AI Shines
  • OCI Holdings Announces a Tender Offer to Buy 45% Stake in OCI Co

KOSDAQ150 Ad Hoc Index Rebalance: Hydro Lithium (101670) Could Replace Nice Information (030190)

By Brian Freitas

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Talon Energy, Pacific Current, Toshiba, Eoflow, 111 Inc

By David Blennerhassett

SK Hynix. Making HBM While AI Shines

By William Keating

  • SK Hynix’s Q2’23 revenue increased ~50% QoQ with bit shipment growth of ~35% for DRAM, ~50% for NAND
  • AI-Driven demand for DDR5 & HBM pushed DRAM QoQ ASP growth into positive territory for the first time in 9 months. 
  • But it’s still stormy weather ahead as mainstream DRAM, along with NAND ASPs continue their downward slide

OCI Holdings Announces a Tender Offer to Buy 45% Stake in OCI Co

By Douglas Kim

  • On 28 July, OCI Holdings (010060 KS) announced that it plans to conduct a tender offer to purchase up to 45% stake in OCI Co (456040 KS). 
  • The tender offer price of OCI Co is 139,000 won. The method of this tender offer is to issue new common shares of OCI Holdings.
  • In the short term (one month), we expect OCI Co’s shares to outperform OCI Holdings shares. This deal is structured to mainly benefit the OCI Group’s insiders.

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Jul 30
0

Daily Brief Consumer: MOG Holdings, Dali Foods Group and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT
  • Dali Foods (3799 HK): Scheme Vote on 23 August

Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT

By Brian Freitas

  • The changes to the LQ45/IDX30 were announced last week and will be implemented Monday. The PSE also announced that there would be no changes for the PCOMP INDEX in August.
  • There are a bunch of review cutoffs on Monday, most notably for the Nikkei 225 (NKY INDEX), STAR50 INDEX, the NIFTY family of indices and the KRX New Deal indices.
  • There were inflows to China focused ETFs and outflows from Taiwan and Korea focused ETFs during the week.

Dali Foods (3799 HK): Scheme Vote on 23 August

By Arun George

  • Dali Foods Group (3799 HK)‘s scheme document is out with the court meeting scheduled for 23 August. The IFA considers the HK$3.75 per share offer to be fair and reasonable. 
  • Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
  • Sector sentiment has modestly weakened. This looks done. At the last close and for the 8 September payment, the gross and annualised spread is 3.6% and 34.8%, respectively.

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Jul 30
0

Daily Brief China: MOG Holdings, Genscript Biotech, Dali Foods Group, Tencent and more

By | China, Daily Briefs

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT
  • China Healthcare Weekly (Jul.28) – Starting Point of New Prosperity, MNCs Change Strategy, Genscript
  • Dali Foods (3799 HK): Scheme Vote on 23 August
  • ECM Weekly (30th July 2023) – Tryt, Genda, Cinema XXI, Abacus, Robosense, Qiniu, Muthoot, LianLian

Index Rebalance & ETF Flow Recap: LQ45/IDX30, FXI, New Deal, KOSPI, KQ150, LG Energy, IN Float, TTMT

By Brian Freitas

  • The changes to the LQ45/IDX30 were announced last week and will be implemented Monday. The PSE also announced that there would be no changes for the PCOMP INDEX in August.
  • There are a bunch of review cutoffs on Monday, most notably for the Nikkei 225 (NKY INDEX), STAR50 INDEX, the NIFTY family of indices and the KRX New Deal indices.
  • There were inflows to China focused ETFs and outflows from Taiwan and Korea focused ETFs during the week.

China Healthcare Weekly (Jul.28) – Starting Point of New Prosperity, MNCs Change Strategy, Genscript

By Xinyao (Criss) Wang

  • AD (Alzheimer Disease) and RNAi are one of the most valuable breakthroughs in global pharmaceutical industry in recent years. We think they may bring the next round of biopharmaceutical prosperity.
  • MNCs have begun to adjust their strategic business model in China. Licensing cooperation and equity investments in China biotech companies are expected to become a new trend.
  • We can’t expect too much from Genscript Biotech (1548 HK) just because Legend Bio’s CAR-T product has good sales performance. Genscript could underperform based on our analysis.

Dali Foods (3799 HK): Scheme Vote on 23 August

By Arun George

  • Dali Foods Group (3799 HK)‘s scheme document is out with the court meeting scheduled for 23 August. The IFA considers the HK$3.75 per share offer to be fair and reasonable. 
  • Key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
  • Sector sentiment has modestly weakened. This looks done. At the last close and for the 8 September payment, the gross and annualised spread is 3.6% and 34.8%, respectively.

ECM Weekly (30th July 2023) – Tryt, Genda, Cinema XXI, Abacus, Robosense, Qiniu, Muthoot, LianLian

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, the coming week will see Cinema XXI listing.
  • Given that we are in the middle of earnings season, there were no new placements this week.

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Jul 30
0

Daily Brief India: Cipla Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • 2023 High Conviction Update: Cipla (CIPLA IN)- Stellar Q1FY24 Performance; Margin Guidance Raised

2023 High Conviction Update: Cipla (CIPLA IN)- Stellar Q1FY24 Performance; Margin Guidance Raised

By Tina Banerjee

  • Cipla Ltd (CIPLA IN) reported better-than-expected Q1FY24 result, with revenue growing 18% YoY, driven by India and the U.S., both of which reported record high revenue.  
  • Stellar performance across all markets drove EBITDA to multi-quarter highs. EBITDA margin expanded 230 bps YoY and 310 bps QoQ to 23.6%. Net profit increased 45% YoY to INR10 billion.
  • Cipla expects the average revenue run rate of $210–215M from its U.S. business in the coming quarters. For FY24, management has raised EBITDA margin guidance to 23% from 22%.

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Jul 30
0

Daily Brief Japan: NTT (Nippon Telegraph & Telephone) and more

By | Daily Briefs, Japan

In today’s briefing:

  • Last Week in Event SPACE: NTT, Delta Electronics, Fortescue Metals, Nomura Real Estate

Last Week in Event SPACE: NTT, Delta Electronics, Fortescue Metals, Nomura Real Estate

By David Blennerhassett

  • NTT (9432 JP) will likely buy back more shares than previously expected as the government sells shares down. Buy dips vs peers KDDI and Softbank Corp. This is a long-term tilt.
  • There are some doubts over the fate of Delta Electronics Thai (DELTA TB)‘s SET50 membership, at present, but it should escape deletion in December 2023. 
  • Don’t punt Fortescue Metals (FMG AU) on the off-chance of a change of control in the wake pf the Forrest split. If anything, there might be a leakage of shares.

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Jul 29
0

Daily Brief Quantitative Analysis: Hong Kong Buybacks Weekly (Jul 28th): Aia and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • Hong Kong Buybacks Weekly (Jul 28th): Aia, Dexin Ser, Deewin
  • ASX Short Interest Weekly (Jul 21st): BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside

Hong Kong Buybacks Weekly (Jul 28th): Aia, Dexin Ser, Deewin

By Ke Yan, CFA, FRM

  • We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Jul 28th based on HKEx daily reports.
  • In the past 7 days, the top 3 companies that repurchased the most shares from the market were AIA (1299 HK), Dexin Ser (2215 HK), Deewin (2418 HK).
  • In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent (700 HK), AIA (1299 HK), Kuaishou Technology (1024 HK).

ASX Short Interest Weekly (Jul 21st): BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of ASX Stocks as of Jul 21st (reported today) which has an aggregated short interest worth USD16.3bn.
  • We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
  • We highlight short interest changes in BHP, ANZ, Endeavour, South32, Mineral Resource, Igo, Woodside Energy, Northern Star Re, Whitehaven Coal.

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Jul 29
0

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

By | Daily Briefs, ESG

In today’s briefing:

  • Nobian – ESG Report – Lucror Analytics
  • Aeropuertos Argentina 2000 – ESG Report – Lucror Analytics
  • EVOCA – ESG Report – Lucror Analytics
  • Cable Onda – ESG Report – Lucror Analytics
  • Employee Stock Compensation Plans Need to Be Designed to Increase Employee Engagement
  • Hapag-Lloyd – ESG Report – Lucror Analytics

Nobian – 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 Nobian’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.
  • Nobian is a leading integrated European chemicals manufacturer and supplier in the energy-salt-chlorine value chain.

Aeropuertos Argentina 2000 – 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 Aeropuertos Argentina 2000’s ESG as “Adequate”, in line with its Social, Environmental and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.
  • Aeropuertos Argentina 2000 (AA2000) is Argentina’s largest airport operator. In 1998, it was granted a 30-year concession by the national government for the use, operation and management of 37 airports, out of a total of 56 in the country.

EVOCA – 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 EVOCA’s ESG as “Adequate”. The company has “Adequate” Governance and Social scores, but a “Weak” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”.
  • EVOCA (formerly N&W Vending) is a manufacturer of professional coffee machines, as well as machines for hot & cold beverages and snacks.

Cable Onda – 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 Cable Onda’s ESG as “Adequate”. The score mirrors our “Adequate” ESG assessment for parent Millicom. The parent discloses ESG-related information on a consolidated basis, without meaningful details for its opco issuers of USD bonds, Cable Onda (Panama), Comcel (Guatemala) and Telecel (Paraguay).
  • Millicom’s ESG is “Adequate”, reflecting “Adequate” Social and Environmental scores, along with a “Strong” score for the Governance pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

Employee Stock Compensation Plans Need to Be Designed to Increase Employee Engagement

By Aki Matsumoto

  • Employee motivation is reflected in the fact that employee salaries have barely increased in 10 years (employee engagement in Japan has been 5% for four consecutive years).
  • First, employee salaries must be increased. Even during deflation, the consumption tax has been raised twice in the past decade, and the national burden rate has also increased.
  • When introducing employee stock compensation plan, it will be necessary to make sure that the plan is not only designed to supplement employee pay, but also to increase employee engagement.

Hapag-Lloyd – 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 view Hapag-Lloyd’s ESG as “Adequate”. The company’s “Adequate” Environmental score offsets its “Strong” Social and Governance scores, as the Environmental pillar carries the highest weightage in our assessment. Controversies are “Immaterial” and Disclosure is “Adequate”. 
  • Following a wave of consolidations and its merger with UASC, Hapag-Lloyd has become the fifth-largest provider of container shipping services globally, with its market share of 8% placing the company behind Maersk/Hamburg Sud, Mediterranean Shipping Company, Cosco-OOCL and CMA CGM-NOL.

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Jul 29
0

Daily Brief Credit: Weekly Wrap – 28 Jul 2023 and more

By | Credit, Daily Briefs

In today’s briefing:

  • Weekly Wrap – 28 Jul 2023
  • SK Hynix – Earnings Flash – Q2 FY 2023 Results – Lucror Analytics

Weekly Wrap – 28 Jul 2023

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

  1. 21Vianet Group
  2. SK Hynix
  3. Yuexiu Property
  4. Nameson Holdings
  5. China Jinmao Holdings

and more…

SK Hynix – Earnings Flash – Q2 FY 2023 Results – Lucror Analytics

By Trung Nguyen

SK Hynix has reported weak Q2/23 results as expected. While the Q2 results registered a recovery on account of an improvement in the memory semiconductor market, the recovery was from a very low base in Q1. Performance remained abysmal compared to last year, with revenue falling by half y-o-y and EBITDA plunging 92%. The financial risk profile continued to be very weak, with large negative FCF, fast-increasing debt and soft earnings.

We believe there is a high level of optimism in AI-related companies, including SK Hynix. Despite the weak results (with some signs of recovery from a low base), the company’s share price surged yesterday.

We maintain our forecasts. Considering the industry downturn, we expect FY 2023 EBITDA to decline c. 80-85% y-o-y, with significantly negative FCF. Moreover, debt should spike c. 50% to cover the negative FCF and fund the USD 2 bn payment for Solidigm. This will likely bring Debt/EBITDA to stressed levels (e.g. 7-8x) at year-end. That said, we expect improvement from FY 2024, on the back of an industry recovery.

We see a high likelihood of downgrades by the agencies in the next 1.5 years. SK Hynix is rated Baa2 (negative)/BBB- (negative)/BBB (stable) by Moody’s/S&P/Fitch. We expect the company to hit the negative rating triggers, given the industry decline and debt-funded acquisition of Solidigm.

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Jul 29
0

Daily Brief ECM: Broad General Holding Pre-IPO Tearsheet and more

By | Daily Briefs, ECM

In today’s briefing:

  • Broad General Holding Pre-IPO Tearsheet
  • Initial Thoughts on the HD Hyundai Global Service IPO in 2024 – Impact on HD Hyundai

Broad General Holding Pre-IPO Tearsheet

By Clarence Chu

  • Broad General Holding (BG HK) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The bookrunners on the deal are Deutsche Bank and Everbright Securities.
  • Broad General Holding is a private investment fund manager with a focus on serving high network individuals (HNWIs).
  • As per F&S, the firm was the second largest private investment fund manager in China focused on serving HNWIs in terms of total AUM as of Dec 22.

Initial Thoughts on the HD Hyundai Global Service IPO in 2024 – Impact on HD Hyundai

By Douglas Kim

  • HD Hyundai Global Service is getting ready to complete its IPO in 2024.
  • The local media currently estimates the value of HD Hyundai Global Service to be about 2 trillion won to 3 trillion won.
  • According to our NAV analysis, it suggests a base case valuation of 75,260 won per share for HD Hyundai, representing a 22% upside from current levels.

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