Smartkarma Daily Briefs

At end-March, Toyo Construction (1890 JP) started playing hardball against YFO. They rejected the EGM call; they sent a letter to METI crying “FEFTA Breach!”, and raised the div BIGLY.
The new div at ¥63/share was meant to get the share price over ¥1,000/share so the YFO bid at that price would not be meaningful. So far, no luck.
But YFO, which had threatened to propose a new slate, came out today with a list of nine, including two who would be executive directors. 👀👀

Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma

In May 2022, Yamada Denki (9831 JP) announced a very large buyback. GINORMOUS – in fact – at 23.9% of shares out ex-Treasury if maximum shares were bought.
So far, YDH is 83.5% through, and at the recent pace, they will end it 8 May having bought 183-184mm shares (21.9% of TSO) spending 86.6% of funds allocated.
That’s why the announcement lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.

Softbank (9984 JP) – Focus on the SVFs, Are the Private Companies Appropriately Marked?

By Victor Galliano

Softbank Vision Funds 1 and 2 were the biggest combined holdings at December 2022, accounting for 30% of group equity value; SVF private companies accounted for 73% of equity value
To December-end 2022, public companies in SVF2 were marked down by 52% versus investment cost, whereas SVF2 private companies were marked down by a more modest 33% versus investment cost
We believe that SVF2 private company valuations are at risk of further markdowns in 4QFY22 results, with many of these investments made close to the period of peak pandemic valuations

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief Financials: Tetragon Financial Group Ltd/F and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Tetragon Financial Group – Navigating challenging times

Tetragon Financial Group – Navigating challenging times

By Edison Investment Research

Tetragon Financial Group (Tetragon) published its annual results on 3 March, posting a 1.0% net asset value (NAV) per share total return (TR) in US dollar terms in FY22. In last year’s adverse environment, Tetragon outperformed public equity markets (the MSCI AC World index was down 18%), despite results being below its annual target (ROE of 10–15%). It is continuing distributions to shareholders through NAV-accretive share buybacks (US$72m in 2022) as well as cash dividends (US$24m in 2022), with a current dividend yield of 4.3%.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief Industrials: Keppel Infrastructure Trust, Toyo Construction, Collplant Biotechnologies and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering
YFO Goes Hard for Board Spill – Independents AND Executives
10 in 10 with H2G Green – The Pivot to Green Hydrogen

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering

Keppel Infrastructure Trust (KIT SP) is looking to raise S$125m (US$96m) in its primary placement.
The proceeds in the deal will be used to partially pay down its bridge loan, the latter used in a series of acquisitions made by the REIT in 2022.
Including the preferential offering, the deal would be a large one to digest at 9.4% of the REIT’s current mcap and 89.3 days of three month ADV.

YFO Goes Hard for Board Spill – Independents AND Executives

At end-March, Toyo Construction (1890 JP) started playing hardball against YFO. They rejected the EGM call; they sent a letter to METI crying “FEFTA Breach!”, and raised the div BIGLY.
The new div at ¥63/share was meant to get the share price over ¥1,000/share so the YFO bid at that price would not be meaningful. So far, no luck.
But YFO, which had threatened to propose a new slate, came out today with a list of nine, including two who would be executive directors. 👀👀

10 in 10 with H2G Green – The Pivot to Green Hydrogen

By Geoff Howie

10 in 10 with H2G Green – The Pivot to Green Hydrogen

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief Consumer: Alibaba Group, Yamada Denki, ZJLD Group, Oishi Group PCL, Anta Sports Products, British American Tobacco PLC, Collplant Biotechnologies , Pointerra Ltd, Colgate Palmolive Co, XWELL and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Alibaba (9988 HK): “Department One” in Reorganization
Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma
ZJLD Group (6979 HK): Index Inclusion Possibility & Timelines
Oishi Group: IFA Backs ThaiBev’s Offer
Anta Sports (2020 HK): Our View After Placement
British American Tobacco: New Category Growth
10 in 10 with H2G Green – The Pivot to Green Hydrogen
Pointerra – Investment in Human Capital Signals a Step-Change
Colgate-Palmolive Co: Improved Focus On Pet Nutrition & Whitening – Key Drivers
4Q22 Results Slightly Better than Expected; Business Transformation Continues in 2023

Alibaba (9988 HK): “Department One” in Reorganization

By Ming Lu

Alibaba broke down Taobao Tmall Center, the most important department, into three departments.
Industry Development Department One is actually “other businesses” after the reorganization.
Following Department One will help investors to understand Alibaba’s financials.

Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma

In May 2022, Yamada Denki (9831 JP) announced a very large buyback. GINORMOUS – in fact – at 23.9% of shares out ex-Treasury if maximum shares were bought.
So far, YDH is 83.5% through, and at the recent pace, they will end it 8 May having bought 183-184mm shares (21.9% of TSO) spending 86.6% of funds allocated.
That’s why the announcement lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.

ZJLD Group (6979 HK): Index Inclusion Possibility & Timelines

By Brian Freitas

ZJLD Group (ZJLD HK) is looking to raise between US$775m-US$933m (including the oversubscription option) in its IPO by selling 564.3m shares at a price range of HK$10.78-HK$12.98/share.
ZJLD Group (ZJLD HK) will not get Fast Entry to any indices but should be added to the HSCI and Stock Connect in September.
Peer performance has not been great this year and that could weigh on the ZJLD Group (ZJLD HK) listing.

Oishi Group: IFA Backs ThaiBev’s Offer

By David Blennerhassett

On the 10th March, Thai Beverage (THBEV SP) proposed taking 79.66%-held Oishi Group PCL (OISHI TB) private, at an Offer price of THB 59/share, a 26.9% premium to last close.
This Delisting Offer requires a shareholder vote which will take place on the 3<May. Payment may occur mid-to-late August.
In its report yesterday, the IFA reckons “that the shareholders should approve of the voluntary delisting“.

Anta Sports (2020 HK): Our View After Placement

By Osbert Tang, CFA

The new share placement of Anta Sports Products (2020 HK) has caught the market by surprise, but we think long-term story for the company should not be affected.
With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated.
An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta’s 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth.

British American Tobacco: New Category Growth

By Research as a Service (RaaS)

British American Tobacco delivered decent financial results and successfully navigated a progressively challenging macro environment.
In New Categories, the company delivered strong revenue growth driven by Geo expansion, innovation, and share growth.
British American Tobacco launched the first connected Vapour device of the Group, Vuse ePod2 plus, that drives increased pod consumption.

10 in 10 with H2G Green – The Pivot to Green Hydrogen

By Geoff Howie

10 in 10 with H2G Green – The Pivot to Green Hydrogen

Pointerra – Investment in Human Capital Signals a Step-Change

Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using, and sharing massive 3D point clouds and datasets.
The company has taken a highly manual, slow, and cost-prohibitive process and turned it into a fast, efficient workflow solution for 3D data, enabling digital asset management from any device in any location.
The Pointerra3D suite of solutions spans target sectors including survey and mapping; architecture, engineering, and construction (AEC); utilities; transport; resources; and defence and intelligence.

Colgate-Palmolive Co: Improved Focus On Pet Nutrition & Whitening – Key Drivers

Colgate entered 2023 on a positive note with decent top-line momentum and delivered an all-around beat in the last result.
The company saw good growth in organic sales in four categories which include double-digit growth in organic sales in Pet Nutrition.
Colgate, is launching the Optic White Pro Series and its new MPS whitening technology all over the world.

4Q22 Results Slightly Better than Expected; Business Transformation Continues in 2023

By Water Tower Research

XWELL reported 2022 results that were slightly better than preliminary results issued on March 30.
Revenues for the quarter were $7.5 million, with $4.5 million coming from the spa business (XpresSpa and Treat), $2.6 million from the CDC program and the one remaining XpresCheck location, and $.5 million from HyperPointe.
While 1Q is usually a slower quarter for the travel industry, we expect the company to continue to focus on improving the profitability of its spa business primarily through the closure of a few stores that don’t contribute to profitability.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief Industrials: Keppel Infrastructure Trust, Toyo Construction, Collplant Biotechnologies and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering
YFO Goes Hard for Board Spill – Independents AND Executives
10 in 10 with H2G Green – The Pivot to Green Hydrogen

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering

Keppel Infrastructure Trust (KIT SP) is looking to raise S$125m (US$96m) in its primary placement.
The proceeds in the deal will be used to partially pay down its bridge loan, the latter used in a series of acquisitions made by the REIT in 2022.
Including the preferential offering, the deal would be a large one to digest at 9.4% of the REIT’s current mcap and 89.3 days of three month ADV.

YFO Goes Hard for Board Spill – Independents AND Executives

By Shifara Samsudeen, ACMA, CGMA

At end-March, Toyo Construction (1890 JP) started playing hardball against YFO. They rejected the EGM call; they sent a letter to METI crying “FEFTA Breach!”, and raised the div BIGLY.
The new div at ¥63/share was meant to get the share price over ¥1,000/share so the YFO bid at that price would not be meaningful. So far, no luck.
But YFO, which had threatened to propose a new slate, came out today with a list of nine, including two who would be executive directors. 👀👀

10 in 10 with H2G Green – The Pivot to Green Hydrogen

By Geoff Howie

10 in 10 with H2G Green – The Pivot to Green Hydrogen

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief TMT/Internet: HKBN Ltd, Taiwan Semiconductor (TSMC), KT Corp Sp Adr, Domain Holdings Australia, Softbank Group, PDD Holdings Inc, Rovio Entertainment, Nreal.ai, First Solar Inc, Paychex Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

HKBN (1310 HK): China Mobile Is the Latest to Show Interest
TSMC: Crowded Trade?
Targeting the Widening of KT Corp ADR Premium Amid MSCI Inclusion
Quiddity Leaderboard ASX Jun 23: DHG Could Underperform Peers
Softbank (9984 JP) – Focus on the SVFs, Are the Private Companies Appropriately Marked?
[PDD Holdings Inc. (PDD US, BUY, TP US$95) Earnings Preview]: BUY on Expected Margin Beat
Sega Sammy Holdings/Rovio Entertainment: Agreed Offer
Nreal: AR/MR Technology Player Recognised for Affordable Glasses
First Solar Inc: A Strong Start To 2023 – Key Drivers
Paychex Inc.: Strong Margin Expansion & Other Drivers

HKBN (1310 HK): China Mobile Is the Latest to Show Interest

By Arun George

Reuters reported that China Mobile (600941 CH) is exploring a potential buyout of HKBN Ltd (1310 HK). The shares surged 12.3% to HK$6.57, above I Squared’s rumoured HK$6.00 offer.
To get an idea of the appropriate offer price, we examine shareholding dealings from substantial shareholders. Our analysis suggests that a scheme offer of around HK$8.50 would likely be required.
PAG is also a rumoured bidder. The flurry of interest around HKBN suggests a good probability that one of the bidders will come through with a formal offer.

TSMC: Crowded Trade?

By Steven Holden

Taiwan Semiconductor (TSMC) is by far the most dominant stock holding among active EM investors.
TSMC is owned by 87.5% of EM funds with an average weight of 6.1%, it is also the largest portfolio holding for 64.5% of managers.
Despite high levels of positioning, there are no obvious signs that managers are scaling back positions. The risk of not holding TSMC may be greater than playing the contrarian.

Targeting the Widening of KT Corp ADR Premium Amid MSCI Inclusion

By Sanghyun Park

We should expect significant changes in KT’s ADR premium approaching the implementation date as foreign institutions leading the passive flow for MSCI Korea constituents have typically preferred ADRs.
Looking at the previous two occasions, the ADR disparity widened from the midpoint of the review period. And this trend continued for a while after the implementation.
Although KT’s ADR disparity has not yet significantly expanded, we may witness a similar pattern this time as well, given that it has been continuously moving in the premium recently.

Quiddity Leaderboard ASX Jun 23: DHG Could Underperform Peers

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run up to the June 2023 Rebalance.
Based on the latest data, I do not expect any changes for ASX 20, ASX 50, and ASX 100.
I expect Neuren Pharmaceuticals (NEU AU) to be added to ASX 200 and Domain Holdings Australia (DHG AU) to be deleted from ASX 200.

Softbank (9984 JP) – Focus on the SVFs, Are the Private Companies Appropriately Marked?

By Victor Galliano

Softbank Vision Funds 1 and 2 were the biggest combined holdings at December 2022, accounting for 30% of group equity value; SVF private companies accounted for 73% of equity value
To December-end 2022, public companies in SVF2 were marked down by 52% versus investment cost, whereas SVF2 private companies were marked down by a more modest 33% versus investment cost
We believe that SVF2 private company valuations are at risk of further markdowns in 4QFY22 results, with many of these investments made close to the period of peak pandemic valuations

[PDD Holdings Inc. (PDD US, BUY, TP US$95) Earnings Preview]: BUY on Expected Margin Beat

By Shawn Yang

We expect PDD to report 1Q23’s revenue and non-GAAP net income 6.1% and 23.8% ahead of consensus, respectively.
PDD entered an adjustment period, reflected in lower S&M expenditure both overseas and domestically, which has led to declining PDD DAU and moderating growth of Temu’s GMV and losses.
We raise our PDD’s 2023’s EPS estimate by 14%~ to reflect better-than-expected cost control. We maintain PDD’s BUY rating and US$ 95 TP, implying 21x 2023 P/E.

Sega Sammy Holdings/Rovio Entertainment: Agreed Offer

By Jesus Rodriguez Aguilar

Sega with better reputation and deeper pockets than Playtika, announces a €9.25/share recommended cash offer; 63% premium to Playtika’s announcement; it represents 2.1x EV/Fwd Revenue, 12.3x EV/Fwd EBITDA, 21.6x Fwd P/E.
Acceptance condition is over 90%, and irrevocables are 49.1%, so 80.4% of the float is needed, which is high. I value Rovio using DCF (9% WACC, 1.5% perpetuity growth rate).
My fair value base case estimate is €8.80/share (€9.45/bull case). I thus update my TP to €9.25. Spread is 0.59%/1.22% (gross/annualised), which is not massive.

Nreal: AR/MR Technology Player Recognised for Affordable Glasses

Founded in 2017 in Beijing, Nreal.ai (1690070D CH) is an Augmented Reality (AR)/ mixed reality (MR) technology company that develops and sells AR glasses.
The company’s glasses have received wide recognition as they are designed to be lightweight, comfortable and affordable, making them more accessible to consumers.
The company has raised more than USD240m in funding and as per the company, we could expect an IPO over the next 18-24 months.

First Solar Inc: A Strong Start To 2023 – Key Drivers

First Solar entered 2023 with an improved financial, operational, and commercial position with increased R&D, new international and domestic capacity coming online as well as a new Series 7 product.
The company commenced initial production at its next-generation Series 7 factory in Ohio will continue to ramp this year.
Furthering its manufacturing program, First Solar recently announced an innovative 3.5-gigawatt Series 7 factory in Alabama and also a 0.9-gigawatt rise to nameplate capacity at its Ohio factories.

Paychex Inc.: Strong Margin Expansion & Other Drivers

Paychex produced strong financial results, with third-quarter total revenue growth of 8% and adjusted diluted earnings per share growth of 12%.
It managed to deliver an all-around beat Revenue for Management Solutions climbed 7% to $1 billion because of new product attachments and auxiliary HR services.
The continued high demand for their ERTC service accounted for about 1% of the quarter’s revenue growth.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief Energy/Materials: Whitehaven Coal, Ecopro Co Ltd, PetroChina, Rio Tinto PLC, Vale SA and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Whitehaven Coal: Production Guide Down, Solid Support From Buybacks, 80% Annualized OCF Yield in Q3!
Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2023
PetroChina Co Ltd (857 HK) – 5.28 Target Achieved (+13%) In 8 Trading Days
Rio Tinto: Expansion Plans
Vale SA.: Cost Reduction

Whitehaven Coal: Production Guide Down, Solid Support From Buybacks, 80% Annualized OCF Yield in Q3!

By Sameer Taneja

Whitehaven Coal (WHC AU) guided down production in an update released yesterday by 5-10% from a range of 19-20 mnt to 18-19 mnt for FY23.
Net cash increased 300 mn AUD QoQ from 2.5 bn to 2.7 bn AUD representing 44% of market capitalization with 1.2 bn AUD of operating cash flow alone in Q3!
We agree an OCF yield of 80% (1.2 bn*4 qtrs on a six bn mkt cap) is unsustainable; the capital allocation possible on this name is mind-boggling.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2023

By Douglas Kim

In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 2Q 2023.
Of the 38 pair trades, 21 of them involved holdcos outperforming opcos YTD and 17 of them involved opcos outperforming holdcos in the same period.
We highlight 38 pair trades that involve Korean holdcos and opcos.

PetroChina Co Ltd (857 HK) – 5.28 Target Achieved (+13%) In 8 Trading Days

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.
On 31 March 2023 we published a bullish recommendation in PetroChina Co Ltd (857 HK), targeting an initial 13% upswing from 4.68 to 5.28. Longer term scope identified to 6.50/6.80.
Initial target at 5.28 (+13%) was achieved on 17 April 2023 (8 trading days). We continue to highlight strong evidence of LT bullish trend change targeting 6.50/6.80 (+40%) multi-quarter.

Rio Tinto: Expansion Plans

Rio Tinto’s business remained resilient in the last quarter and the company successfully entered the year with quite a good operational momentum, particularly in Pilbara iron ore.
However, accelerating cost inflation and lower prices throughout the year led to margin compression.
At Simandou, Rio Tinto incorporated the infrastructure joint venture with its various partners and the government of Guinea.

Vale SA.: Cost Reduction

Vale SA delivered an all-around beat in its last results with a strong performance in iron ore solutions and a strong price realization.
Also, in Vale’s energy transition material business, the nickel production was steady, with production and sales up, driven by the excellent performance of its Sudbury mines which successfully delivered very high production rates.
Vale is developing a first-of-its-kind plant in North America and Canada to produce nickel sulphate from low-carbon nickel from Canadian refineries.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief Health Care: Mankind Pharma, Biomarin Pharmaceutical, Bristol Myers Squibb Co, LianBio and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Mankind Pharma Pre-IPO – RHP Updates – A Mixed Bag
BioMarin Pharmaceutical Inc.: A Story Of Two Possible Game Changers & Generics Competition – Key Drivers
Bristol-Myers Squibb.: Pipeline Progress & Cancer Breakthroughs – Key Drivers
LianBio (LIAN US): 2023 Is Going to Be Data Heavy; Current Cash Runway Raises Commercialization Hope

Mankind Pharma Pre-IPO – RHP Updates – A Mixed Bag

By Sumeet Singh

Mankind Pharma (MP) is now looking to raise around US$500m in its upcoming India IPO.
MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
We have looked at various aspects of the deal in our earlier notes. In this note, we talk about the updates from its recently filed RHP.

BioMarin Pharmaceutical Inc.: A Story Of Two Possible Game Changers & Generics Competition – Key Drivers

BioMarin gave a mixed performance in the quarter and failed to meet the revenue expectations of Wall Street despite delivering a double-digit top-line growth.
Its total revenues for the quarter showed an increase despite the continued erosion of the KUVAN market in the US.
Moreover, lower KUVAN product revenues are mostly because of generic competition due to the loss of market individuality in the US.

Bristol-Myers Squibb.: Pipeline Progress & Cancer Breakthroughs – Key Drivers

Bristol-Myers Squibb reported another strong quarter which happened to be an all-around beat.
The sales of Global Opdivo reflect robust demand for its newly launched and also a core indication of double-digit growth.
Moreover, Bristol-Myers launched all nine new medicines, which include three first-in-class products.

LianBio (LIAN US): 2023 Is Going to Be Data Heavy; Current Cash Runway Raises Commercialization Hope

By Tina Banerjee

LianBio (LIAN US) is expected to report pivotal data from late-stage trials of its drug candidates as well as file for marketing approval for mavacamten in China in 2023.
Lead candidate mavacamten has potential blockbuster opportunity in China. LianBio has entered into commercialization agreement with Pfizer for sisunatovir in Mainland China, Hong Kong, Macau, and Singapore.
With current cash position sufficient to fund operations through the end of 2024, LianBio is well positioned to become a commercial-stage company.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Most Read: Ecopro Co Ltd, Nitori Holdings, Anta Sports Products, Alibaba Group, HKBN Ltd, Keppel Infrastructure Trust, Taiwan Semiconductor (TSMC), KT Corp Sp Adr, Toyo Construction, Yamada Denki and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May 2023 QCIR: Potential Changes & Things to Watch as Review Period Commences
Nikkei 225 Sep 2023 Rebalance Gets Interestinger – Possible Fast Retailing Cap and Zozo Stretch
Anta Sports (2020 HK) Placement: Limited Passive Inflows
Alibaba (9988 HK): “Department One” in Reorganization
HKBN (1310 HK): China Mobile Is the Latest to Show Interest
Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering
TSMC: Crowded Trade?
Targeting the Widening of KT Corp ADR Premium Amid MSCI Inclusion
YFO Goes Hard for Board Spill – Independents AND Executives
Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma

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.

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

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.

Anta Sports (2020 HK) Placement: Limited Passive Inflows

By Brian Freitas

Anta Sports Products (2020 HK) has completed a top-up placement of 119m shares at a price of HK$99.18/share, an 8.84% discount to the last close of the stock.
The placement has raised HK$11.8bn (US$1.52bn) and the proceeds will be used for the repayment of loans and for daily operational needs.
There will be small passive inflows in the stock at the close on 20/21 April and some small inflows in August/September.

Alibaba (9988 HK): “Department One” in Reorganization

By Ming Lu

Alibaba broke down Taobao Tmall Center, the most important department, into three departments.
Industry Development Department One is actually “other businesses” after the reorganization.
Following Department One will help investors to understand Alibaba’s financials.

HKBN (1310 HK): China Mobile Is the Latest to Show Interest

By Arun George

Reuters reported that China Mobile (600941 CH) is exploring a potential buyout of HKBN Ltd (1310 HK). The shares surged 12.3% to HK$6.57, above I Squared’s rumoured HK$6.00 offer.
To get an idea of the appropriate offer price, we examine shareholding dealings from substantial shareholders. Our analysis suggests that a scheme offer of around HK$8.50 would likely be required.
PAG is also a rumoured bidder. The flurry of interest around HKBN suggests a good probability that one of the bidders will come through with a formal offer.

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering

Keppel Infrastructure Trust (KIT SP) is looking to raise S$125m (US$96m) in its primary placement.
The proceeds in the deal will be used to partially pay down its bridge loan, the latter used in a series of acquisitions made by the REIT in 2022.
Including the preferential offering, the deal would be a large one to digest at 9.4% of the REIT’s current mcap and 89.3 days of three month ADV.

TSMC: Crowded Trade?

By Steven Holden

Taiwan Semiconductor (TSMC) is by far the most dominant stock holding among active EM investors.
TSMC is owned by 87.5% of EM funds with an average weight of 6.1%, it is also the largest portfolio holding for 64.5% of managers.
Despite high levels of positioning, there are no obvious signs that managers are scaling back positions. The risk of not holding TSMC may be greater than playing the contrarian.

Targeting the Widening of KT Corp ADR Premium Amid MSCI Inclusion

By Sanghyun Park

We should expect significant changes in KT’s ADR premium approaching the implementation date as foreign institutions leading the passive flow for MSCI Korea constituents have typically preferred ADRs.
Looking at the previous two occasions, the ADR disparity widened from the midpoint of the review period. And this trend continued for a while after the implementation.
Although KT’s ADR disparity has not yet significantly expanded, we may witness a similar pattern this time as well, given that it has been continuously moving in the premium recently.

YFO Goes Hard for Board Spill – Independents AND Executives

At end-March, Toyo Construction (1890 JP) started playing hardball against YFO. They rejected the EGM call; they sent a letter to METI crying “FEFTA Breach!”, and raised the div BIGLY.
The new div at ¥63/share was meant to get the share price over ¥1,000/share so the YFO bid at that price would not be meaningful. So far, no luck.
But YFO, which had threatened to propose a new slate, came out today with a list of nine, including two who would be executive directors. 👀👀

Yamada Denki (9831) Buyback Almost Done and Odd Dividend “Cut”, and a Lightbulb Dilemma

In May 2022, Yamada Denki (9831 JP) announced a very large buyback. GINORMOUS – in fact – at 23.9% of shares out ex-Treasury if maximum shares were bought.
So far, YDH is 83.5% through, and at the recent pace, they will end it 8 May having bought 183-184mm shares (21.9% of TSO) spending 86.6% of funds allocated.
That’s why the announcement lowering the March 2023 div to ¥12/share vs ¥18/share last year was just weird. And bodes badly. We need a lightbulb moment for a lightbulb dilemma.

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

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Apr 19

Daily Brief ECM: Keppel Infrastructure Trust Placement – Very Well Flagged and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering
Mankind Pharma Pre-IPO – RHP Updates – A Mixed Bag
BioMarin Pharmaceutical Inc.: A Story Of Two Possible Game Changers & Generics Competition – Key Drivers
FactSet Research Systems Inc.: Collaboration On Continuus Technologies & Other Developments
Paychex Inc.: Strong Margin Expansion & Other Drivers

Keppel Infrastructure Trust Placement – Very Well Flagged, Should Expect Some Short Covering

Keppel Infrastructure Trust (KIT SP) is looking to raise S$125m (US$96m) in its primary placement.
The proceeds in the deal will be used to partially pay down its bridge loan, the latter used in a series of acquisitions made by the REIT in 2022.
Including the preferential offering, the deal would be a large one to digest at 9.4% of the REIT’s current mcap and 89.3 days of three month ADV.

Mankind Pharma Pre-IPO – RHP Updates – A Mixed Bag

By Sumeet Singh

Mankind Pharma (MP) is now looking to raise around US$500m in its upcoming India IPO.
MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
We have looked at various aspects of the deal in our earlier notes. In this note, we talk about the updates from its recently filed RHP.

BioMarin Pharmaceutical Inc.: A Story Of Two Possible Game Changers & Generics Competition – Key Drivers

BioMarin gave a mixed performance in the quarter and failed to meet the revenue expectations of Wall Street despite delivering a double-digit top-line growth.
Its total revenues for the quarter showed an increase despite the continued erosion of the KUVAN market in the US.
Moreover, lower KUVAN product revenues are mostly because of generic competition due to the loss of market individuality in the US.

FactSet Research Systems Inc.: Collaboration On Continuus Technologies & Other Developments

FactSet Research Systems delivered a mixed set of results for the last quarter.
The company’s organic ASV plus professional services growth increased by 9.1% year over year, driven by solid client growth and its sales team’s effective implementation of its pricing increase in the Americas.
We give FactSet Research Systems a ‘Hold’ rating with a revised target price.

Paychex Inc.: Strong Margin Expansion & Other Drivers