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Smartkarma Daily Briefs

May 14
0

Daily Brief Health Care: Shanghai Bio-Heart Biological Technology and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • China Healthcare Weekly (May.12) – Three Globalization Strategies, GLP-1/Weight Loss Drug, Bio-Heart

China Healthcare Weekly (May.12) – Three Globalization Strategies, GLP-1/Weight Loss Drug, Bio-Heart

By Xinyao (Criss) Wang

  • There are three main ways for Chinese pharmaceutical companies to enter global markets, but the results are completely different. Investors are advised to make cautious judgments based on different cases. 
  • Speed is a crucial factor in the competition for drug development, but there’re precedents in history that late-comers are still able to turn things around, such as GLP-1/weight loss drugs.
  • We remain conservative about the future commercialization performance of Bio-Heart’s BRS and Iberis 2nd. However, the product launch is a catalyst for share price, which provides a good short-term trade opportunity.

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May 14
0

Daily Brief Industrials: Mitsubishi Corp, Dong Yang P&F and more

By | Daily Briefs, Industrials

In today’s briefing:

  • JAPAN BUYBACKS:  A Very Big Week
  • A Crash in 2 More Korean Stocks Related to CFD Derivatives: Margin Calls Again
  • Last Week in Event SPACE: MitCorp, Jardine Matheson, Toshiba, Japanese Foreign Inflows

JAPAN BUYBACKS:  A Very Big Week

By Travis Lundy

  • This past week, nearly 150 companies in Japan announced buyback programmes totalling ¥2.1trln. 3 Tenders, 26 ToSTNeT-3 buybacks (including at least 5 delayed starts). 
  • The median on-market buyback was 2.40% of shares, the average 2.9% (both measured as practical maxima at announcement. Median/Average % of ADV was 7.6/9.2%. 
  • My prediction that this will be a record year for stock buybacks still stands.

A Crash in 2 More Korean Stocks Related to CFD Derivatives: Margin Calls Again

By Douglas Kim

  • In this insight, we discuss two stocks in Korea, Dong Yang P&F and Shindaeyang Paper, whose share prices declined sharply on 12 May.
  • It appears that the main culprit behind their collapse in share price appears to be unwinding of the excessive leverage (especially CFD derivatives trading).
  • Post the sharp decline in their share price for DYPNF and Shindeyang Paper on 12 May, further downside is likely on these stocks in the coming weeks.

Last Week in Event SPACE: MitCorp, Jardine Matheson, Toshiba, Japanese Foreign Inflows

By David Blennerhassett

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May 13
0

Daily Brief Singapore: Flash Coffee and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Flash Coffee Closes $50m Funding, Targets Profitability by 2024

Flash Coffee Closes $50m Funding, Targets Profitability by 2024

By Tech in Asia

  • Rocket Internet-backed Flash Coffee has officially closed its series B round totaling US$50 million.
  • In a statement, the company said it would expand deeper into Indonesia, with plans to open a branch in Surabaya in July. It already has a presence in Jakarta and Bandung.
  • Besides Indonesia, Flash Coffee also operates in Singapore, Hong Kong, South Korea, Thailand, and Taiwan.

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May 13
0

Daily Brief Australia: St Barbara Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Silver Lake And Genesis Duke It Out For St Barbara’s Flagship

Silver Lake And Genesis Duke It Out For St Barbara’s Flagship

By David Blennerhassett

  • After abandoning its reverse merger, St Barbara (SBM AU) confirmed it will sell its flagship Leonora gold project to Genesis Minerals (GMD AU) for $600mn (cash and GMD scrip).
  • That transaction appeared all stitched up, until Silver Lake Resources (SLR AU) gatecrashed the party with a non-binding proposal for the Leonara asset. SBM’s board rejected the competing proposal. 
  • SLR has now tweaked terms to address SBM concerns. Back in SBM’s court. GMD has matching rights if SBM sides with SLR.

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May 13
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Daily Brief South Korea: Amorepacific Group, GigaVis and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Timing Stub Trade on Amorepacific Group with a Key Passive Inflow Event Coming Up
  • Gigavis IPO Bookbuilding Results Analysis

Timing Stub Trade on Amorepacific Group with a Key Passive Inflow Event Coming Up

By Sanghyun Park

  • AmoreG has been closely moving relative to Amorepacific Corp (090430 KS) over the past few months, but starting from mid-April, it rapidly entered a downward diversion phase.
  • It appears to have experienced greater sensitivity towards the recent tensions in Sino-Korean relations, possibly due to its higher price correlation with the Chinese market.
  • The issue lies in the timing of entry aimed at reversion, and there may be one upcoming passive inflow event that we should pay attention to in this regard.

Gigavis IPO Bookbuilding Results Analysis

By Douglas Kim

  • On 12 May, GigaVis announced its IPO price of 43,000 won, which is 8% higher than the high end of the IPO price range of 39,700 won. 
  • Our base case valuation of Gigavis is target price of 61,755 won per share, which is 44% higher than the IPO price of 43,000 won.
  • Gigavis makes automatic optical inspection equipment (AOI) and automatic optical repair equipment (AOR) for the inspection and repair process of inner layer substrates, which are core components of semiconductor substrates.

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May 13
0

Daily Brief China: Horizon Construction Development, JD.com Inc (ADR), JD Health, China SCE, Luckin Coffee, Trip.com and more

By | China, Daily Briefs

In today’s briefing:

  • Horizon Construction Development IPO: Valuation Insights
  • [JD.com (JD US, SELL, TP US$30) Target Price Change]: Painful Transition Continues Amid Margin Beat
  • [JD Health (6618 HK) Rating Change]: Strong Profitability Likely Achieved Margin Reversal
  • Weekly Wrap – 12 May 2023
  • [Luckin Coffee Inc. (LKNCY US) Company Update]: Is Cotti Coffee Charles Lu’ NeXT Computer?
  • HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade

Horizon Construction Development IPO: Valuation Insights

By Arun George

[JD.com (JD US, SELL, TP US$30) Target Price Change]: Painful Transition Continues Amid Margin Beat

By Shawn Yang

  • JD reported 1Q23 revenue in-line vs. cons., while non-GAAP net income beat cons and our est. 99% and 74%, respectively.   
  • It’s early to say whether JD is getting out of the puddle, as (1) revenue grew just 1.4% YoY in 1Q23,  (2) the effect of its management change remains uncertain.
  • We maintain SELL, but raise JD’s 2023 non-GAAP net margin from prior 3.2% to 3.34%, and raise TP to US$ 30.  

[JD Health (6618 HK) Rating Change]: Strong Profitability Likely Achieved Margin Reversal

By Shawn Yang

  • JDHealth (JDH) reported C1Q23 top line and non-IFRS operating profit 56% and 78% of our C1H23 estimates. 
  • We now take a more positive view on JDH’s ability to at manage the issue at certain periods and certain areas;
  • We raise TP from HK$44 to HK$57 and rating to BUY. Possible risks include renewed margin pressure from prescription drugs

Weekly Wrap – 12 May 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. Softbank Group
  2. Wynn Macau Ltd
  3. Central China Real Estate
  4. Seazen (Formerly Future Land)
  5. Agile Property Holdings

and more…

[Luckin Coffee Inc. (LKNCY US) Company Update]: Is Cotti Coffee Charles Lu’ NeXT Computer?

By Shawn Yang

  • Cotti Coffee has become a head-to-head competitor of Mixue’s Lucky Cup, and to a lesser degree, Luckin. 
  • But what is behind Cotti’s agenda, in our view, is its founder Charles Lu’s aspiration to return to Luckin;
  • The biggest obstacle for Charles to repeat the playbook of Steve Jobs is Chinese security regulator’s refusal, so far, to allow franchised chain to list

HSTECH Index Rebalance: Float & Capping Changes Lead to US$768m Two-Way Trade

By Brian Freitas

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May 13
0

Daily Brief Indonesia: XL Axiata and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • XL Axiata (EXCL IJ) – Convergence Blast-Off

XL Axiata (EXCL IJ) – Convergence Blast-Off

By Angus Mackintosh

  • XL Axiata reported a robust set of 1Q2023 results as the competitive environment remains rational allowing it to raise prices, whilst its convergence strategy is starting to gain traction. 
  • XL’s convergence penetration grew in 1Q2023 but the key announcement was that Link Net will become a pure fibre player whilst the retail element of fixed broadband will fall under XL.
  • XL Axiata (EXCL IJ) has seen the MAUs for its digital platform reach 26m with increased user transactions and higher spending. Valuations remain attractive on 4.1x FY2023E EV/EBITDA.

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May 13
0

Daily Brief India: Dr. Reddy’s Laboratories, S&P BSE SENSEX Index and more

By | Daily Briefs, India

In today’s briefing:

  • Dr. Reddy’s Laboratories (DRRD IN): Q4FY23 Result- Sequential Decline in Key Parameters
  • Broad-Based Improvement in India, Add Exposure/Overweight. Buys: Cyclicals in Japan, India, & Taiwan

Dr. Reddy’s Laboratories (DRRD IN): Q4FY23 Result- Sequential Decline in Key Parameters

By Tina Banerjee

  • Dr. Reddy’s Laboratories (DRRD IN) announced mixed Q4FY23 result, with revenue beating consensus and net profit missing expectations. Both revenue and net profit grew YoY but declined sequentially.
  • North America grew 27% YoY (but declined 17% QoQ) to INR25.3B, driven by new product launches, growing market share in certain existing products, and favorable Fx movement.
  • Revenue from India business increased 32% YoY and 14% QoQ to INR12.8B, driven by favorable price variance, new product launches including acquired/in-licensed products, and non-core brand divestments.

Broad-Based Improvement in India, Add Exposure/Overweight. Buys: Cyclicals in Japan, India, & Taiwan

By Joe Jasper

  • Our 2023 outlook remains unchanged as we continue to expect broad-based consolidation with $93 capping upside on MSCI ACWI (ACWI-US), while important downside targets are $86, $84, and $75-77.
  • We still recommend tactical overweight to defensives including gold miners and MSCI ACWI Staples, Health Care, and Utilities, given ACWI-US remains near the top of our expected 2023 trading range.
  • We are now starting to see broad-based improvement, particularly in Japan and India, but also in Taiwan and South Korea. Most of today’s buy recommendations are cyclicals in these countries.

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May 13
0

Daily Brief United States: Immersion Corporation, Arlo Technologies Inc, Paypal Holdings, C.H. Robinson Worldwide, Copper, Fortive Corp, Hilton Worldwide Holdings, Norfolk Southern, NOW Inc, Old Dominion Freight Line and more

By | Daily Briefs, United States

In today’s briefing:

  • IMMR: Optionality to Cash
  • ARLO: Recurring Revenue Growth, PT to $11
  • PayPal: Panicking As A Result Of Quarterly Trends And Narratives Is Not A Viable Strategy
  • C.H. Robinson Worldwide: Can Automation & Digitization Save The Day? – Major Drivers
  • Commodity and FX Impulse Moves
  • Fortive Corporation: What You Need To Know About The Q1 Success & Why It Matters – Key Drivers
  • Hilton Worldwide Holdings Inc.: A Strong Emergence From The Lull – Key Drivers
  • Norfolk Southern Corporation: Improved Network Reliability and Productivity Saving The Day? – Major Drivers
  • NOW, INC. – 1Q23 Solid Start to the Year
  • Old Dominion Freight Line Inc.: Is The Bad Result A Sign Of Trouble Or A Bargain? – Major Drivers

IMMR: Optionality to Cash

By Hamed Khorsand

  • IMMR reported first quarter results reflecting the slowdown in smartphone shipments and the benefits of the Company’s investing activity
  • Of the $150.3 million invested, at the end of March 2023, equity securities were $56.5 million of the portfolio compared to $53.3 million in December 2022
  • IMMR’s legal pursuit of patent infringing parties could become an option on the current valuation of the stock

ARLO: Recurring Revenue Growth, PT to $11

By Hamed Khorsand

  • ARLO reported a non-GAAP profit in the first quarter of 2023 after the Company implemented a price increase on its subscription plan
  • ARLO added 182 thousand paid subscribers in the quarter and ended the first quarter with more than 2 million paying subscribers
  • Service revenue has allowed for greater operating leverage with gross margin expected to rise further in future quarter with the growth in service revenue

PayPal: Panicking As A Result Of Quarterly Trends And Narratives Is Not A Viable Strategy

By Vladimir Dimitrov, CFA

  • PayPal has significant competitive advantages, and the management is making the right moves to improve them.
  • PayPal continues to slide to multi-year lows, with a mixed quarter that was perceived as a very negative one.
  • PayPal has been in a strong position in the market for the past three years.

C.H. Robinson Worldwide: Can Automation & Digitization Save The Day? – Major Drivers

By Baptista Research

  • C.H.
  • Robinson had a disappointing result in Q1 and it failed to meet the revenue expectations and earnings expectations of analysts.
  • They believe that an increased digitization and automation are critical components of providing an improved client experience and operating leverage.

Commodity and FX Impulse Moves

By Untying The Gordian Knot

  • We review some charts, starting with commodities that are precariously close to signalling a breakdown.
  • The weakness became pronounced after China’s PPI, CPI, and the disappointing Aggregate Finance data (this needs a separate section).  
  • If China’s recovery continues to be disappointing, then the deflation of exports and a long position on commodities will be a big problem for the rest of the world.

Fortive Corporation: What You Need To Know About The Q1 Success & Why It Matters – Key Drivers

By Baptista Research

  • Fortive Corporation made a solid start to the year, achieving sales, margins, and higher profitability than Wall Street expectations in the first quarter.
  • Each of their key regions experienced another quarter of rapid sales growth.
  • Precision Technologies also reported another quarter of double-digit core revenue growth or a 14% revenue increase.

Hilton Worldwide Holdings Inc.: A Strong Emergence From The Lull – Key Drivers

By Baptista Research

  • Hilton Worldwide Holdings delivered an all-around beat in its latest result as travel demand has remained robust, continuing the pattern seen in the back half of last year.
  • This resulted in both the company’s top and bottom line results closing the quarter above the high end of the management guidance.
  • The quarter’s leisure trends continued to be strong, with RevPAR outperforming the previous quarter’s performance.

Norfolk Southern Corporation: Improved Network Reliability and Productivity Saving The Day? – Major Drivers

By Baptista Research

  • Norfolk Southern Corporation delivered strong results in the quarter with revenues in accordance with analyst expectations and managed an earnings beat.
  • However, these improvements boosted the company’s network’s reliability and made it even more productive.
  • We give Norfolk Southern Corporation a ‘Hold’ rating with a revised target price.

NOW, INC. – 1Q23 Solid Start to the Year

By Water Tower Research

  • DistributionNOW’s 1Q23 revenue totaled $584 million, a 23% Y/Y increase and a 7% increase from 4Q22.
  • US revenue climbed 28% Y/Y, while International revenue climbed by 30%.
  • Canadian revenue was 1% higher.  The US contributed 73% of total revenue in the quarter.

Old Dominion Freight Line Inc.: Is The Bad Result A Sign Of Trouble Or A Bargain? – Major Drivers

By Baptista Research

  • Old Dominion Freight Line produced a highly disappointing set of results as a result of the persistent downturn in the local economy and the volume decline.
  • The revenue decline and slight deterioration in Old Dominion’s operating ratio caused the earnings per diluted share for the quarter to decline by 0.8% to $2.58.
  • We give Old Dominion Freight Line an ‘Underperform’ rating with a revised target price.

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May 13
0

Daily Brief Japan: SBI Shinsei Bank, Ushio Inc, Takeda Pharmaceutical, China SCE, SUMCO Corp, Softbank Group and more

By | Daily Briefs, Japan

In today’s briefing:

  • Smartkarma Flash Webinar | SBI Shinsei Privatisation by SBI Holdings
  • HUUUGE Ushio (6925) Buyback
  • Takeda: Conservative Guidance Is Not Something to Worry Too Much About..
  • Weekly Wrap – 12 May 2023
  • SUMCO Q1’23 Revenues of ¥109.9 Billion, -6.4% QoQ but up 10% YoY. Q2’23 Flat QoQ
  • Softbank (9984 JP): Private Company Valuations Still in Question

Smartkarma Flash Webinar | SBI Shinsei Privatisation by SBI Holdings

By Smartkarma Research

In this upcoming flash webinar, Insight Provider Travis Lundy will discuss the recent privatisation offer from SBI Holdings (8473 JP) for SBI Shinsei Bank (8303 JP). Japan’s SBI Holdings Inc said last Friday that it would take SBI Shinsei Bank private by launching a 154.2 billion yen (US$1.14 billion) tender offer, at 2,800 yen per share. Travis will go over the background and opportunities ahead of Monday’s Japan trading hours.

The Webinar will be hosted on Monday, 15 May 2023, 07:30 SGT.

Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.

HUUUGE Ushio (6925) Buyback

By Travis Lundy

  • Ushio Inc (6925 JP) reported earnings on 11 May, with revenue +17.6% on the year, OP +21.4%, and NP +8.7% on the year. Div was unchanged at ¥50/share.
  • Forecasts are for revenue +7.4%, OP -21.2%, and NP -27% (¥90.6/EPS). But importantly, the company also announced a HUUUUUGE Buyback. 
  • Buying ≦20mm shares (17.0%) spending ≦¥30bn from 29May2023 to 10May2024. That’s 13.3% at the 12 May close. How this will work is unknown. There’s less detail than one would want.

Takeda: Conservative Guidance Is Not Something to Worry Too Much About..

By Shifara Samsudeen, ACMA, CGMA

  • Takeda reported FQ4 and full-year FY03/2023 results. Reported revenue increased 9.5% YoY to ¥956.2bn (vs consensus ¥938.6bn) and OP of ¥88.6bn (vs consensus ¥144.5bn) vs an operating loss in 4QFY03/22.
  • Full-Year revenue and OP increased 12.8% and 6.4% YoY to ¥4.0trn and ¥490.5bn respectively. While reported revenue beat guidance and consensus, OP fell slightly below these two.
  • Takeda Pharmaceutical (4502 JP) ’s FY03/2024E guidance is too conservative as we think that the company has been careful not to disappoint investors if it fails to meet its own target.

Weekly Wrap – 12 May 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. Softbank Group
  2. Wynn Macau Ltd
  3. Central China Real Estate
  4. Seazen (Formerly Future Land)
  5. Agile Property Holdings

and more…

SUMCO Q1’23 Revenues of ¥109.9 Billion, -6.4% QoQ but up 10% YoY. Q2’23 Flat QoQ

By William Keating

  • Q1’23 revenues of ¥109.9 billion, better than forecasted, down 6.4% QoQ but up 10% YoY.
  • Q2’23 forecasted flat sequentially, no full year 2023 forecast provided
  • There’s a major headwind looming on the horizon for the broader silicon wafer segment…

Softbank (9984 JP): Private Company Valuations Still in Question

By Victor Galliano

  • 4QFY22 saw the best result for the Vision Funds since 3QFY21; SVF private companies saw minimal valuation write-downs last quarter, and we suspect valuations may still be too optimistically marked
  • Masa’s debts to SoftBank stand at USD5.2bn in 4QFY22; in addition, the group’s credit risk exposure to troubled company WeWork was over USD1.1bn at fiscal year end and going higher
  • Softbank shares trade at a 46% discount to the stated NAV; with the Alibaba valuation “cushion” largely consumed, the potential Arm IPO is critical but private company valuations remain questionable

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