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Smartkarma Daily Briefs

Daily Brief Australia: Nitro Software Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Nitro Attracts a Competing Offer from KKR’s Alludo

Nitro Attracts a Competing Offer from KKR’s Alludo

By Arun George

  • Nitro Software Ltd (NTO AU) has received a competing proposal from Alludo. The offer is A$2.00 via a scheme or an off-market takeover at A$2.00, with a 50.1% minimum acceptance condition.
  • Unsurprisingly, the Board rejected Potentia’s A$1.80 per share off-market takeover offer. Potentia has three options – lift its offer, do nothing or sell into Alludo’s offer. 
  • While Alludo’s offer is 11.1% above Potentia’s offer, it is far from a knockout bid. Therefore, there is a good chance that Potentia returns with improved terms.

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Daily Brief India: Global Health (Medanta), Wpil Ltd, Trent Ltd, Go Digit General Insurance, AMI Organics Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Global Health IPO – Small Player but Attractive
  • WPIL Ltd- Forensic Analysis
  • Trent Ltd: Trending Multi-Brand, Multi-Format Retailer. Value Fashion to Home Grocery
  • Go Digit General Insurance Pre-IPO – The Positives – Has Been Growing a Lot Faster than the Industry
  • Ami Organics Ltd: Forensic Analysis

Global Health IPO – Small Player but Attractive

By Ethan Aw

  • Global Health (Medanta) (GH IN) is looking to raise approximately US$268m in its upcoming India IPO.  
  • Global Health (GH) is a hospital network that operates under the Medanta brand. The firm currently has five hospitals in operation and one more planned for development.
  • We have looked at the background of the deal in our earlier notes. In this note, we will talk about the peer comparison and valuations.

WPIL Ltd- Forensic Analysis

By Nitin Mangal

  • Wpil Ltd (WPI IN) is principally engaged the business of pumps & pumping systems. The company recently has also started construction contracts related to water supply and irrigation.
  • Key forensic takeaways include transactions with related parties and promoters, receivables related concerns, auditor woes, etc.
  • Additionally, it is also noticed that WPIL does not exhibit strong disclosure norms in its annual report. Key disclosures regarding receivables, fixed assets, goodwill remain translucent.

Trent Ltd: Trending Multi-Brand, Multi-Format Retailer. Value Fashion to Home Grocery

By Devi Subhakesan

  • Trent Ltd (TRENT IN), one of India’s leading apparel retailers led by the Tatas, is on an accelerated growth path helped by its recently expanded apparel retail chain, Zudio.
  • Zudio sells value fashion through its own stores targeted at India’s burgeoning youth that is high on aspiration while low on budget, a hitherto severely underserved category.
  • Star Bazaar, Trent’s grocery retail JV with Tesco PLC (TSCO LN), is also beginning to gain traction and has the potential to expand and grow its presence across the country.

Go Digit General Insurance Pre-IPO – The Positives – Has Been Growing a Lot Faster than the Industry

By Sumeet Singh

  • Go Digit General Insurance is looking to raise about US$503m in its upcoming India IPO. The deal will be run by ICICISec, MS, Axis, Edelweiss, HDFC Bank and IIFL.
  • Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
  • In this note, we talk about the positive aspects of the deal.

Ami Organics Ltd: Forensic Analysis

By Nitin Mangal

  • AMI Organics Ltd (AMIORG IN)  is engaged in business of drugs intermediate chemicals and related activities.
  • Key forensic takeaways include bizarre accounting especially pertaining to JV, no provisioning on debtors and working capital woes, and mystery towards transfer from CWIP.
  • There are governance related concerns surrounding related parties, churn in top management, etc that should also not be overlooked.

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Daily Brief South Korea: HPSP, SillaJen Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • KOSDAQ150 Index Rebalance Preview: Big Churn in IT, Healthcare Stocks
  • End of Mandatory Lock-Up Periods for 54 Companies in Korea in November 2022

KOSDAQ150 Index Rebalance Preview: Big Churn in IT, Healthcare Stocks

By Brian Freitas

  • With the review period complete, we see 11 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
  • Most of the potential changes are high probability ones, but there are some stocks that are very close to market cap and liquidity cutoffs.
  • The impact of passive trading will be much higher on the potential deletes as compared to the potential inclusions, though trade notionals are higher for the potential adds.

End of Mandatory Lock-Up Periods for 54 Companies in Korea in November 2022

By Douglas Kim

  • We discuss end of the mandatory lock-up periods for 54 stocks in Korea in November 2022, among which 2 are in KOSPI and 52 are in KOSDAQ.
  • These 54 stocks on average could be subject to further selling pressures in November and could underperform relative to the market. 
  • Among these 54 stocks, the top 5 market cap stocks include Enchem, Sebit Chem, DearU, Sillajen, and Sampyo Cement. They could be exposed to greater selling pressures in November. 

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Daily Brief Indonesia: Kino Indonesia, Mitra Keluarga Karyasehat Tbk, Bank Central Asia and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Kino Indonesia (KINO IJ) – Staples with a Discretionary Edge
  • Mitra Keluarga Karyasehat Tbk (MIKA IJ) – Higher Volumes Lower Intensity
  • Bank Central Asia (BBCA IJ) – Demonstrating Digital Prowess

Kino Indonesia (KINO IJ) – Staples with a Discretionary Edge

By Angus Mackintosh

  • Kino Indonesia (KINO IJ) is one of Indonesia’s most interesting staples players with a strong share in a number of segments within beverages and personal care which dominate its sales.
  • The company has seen a decent rebound in its beverages business as mobility has improved but continues to face some headwinds from higher input costs and packaging for personal care. 
  • Kino Indonesia (KINO IJ) has been selectively increasing prices to offset higher costs and is seeing an improvement in sales of some of its more discretionary products. 

Mitra Keluarga Karyasehat Tbk (MIKA IJ) – Higher Volumes Lower Intensity

By Angus Mackintosh

  • Mitra Keluarga‘s 3Q2022 results reflected the changing environment with patient volumes higher and back above COVID levels but treatment intensity came down YoY in 3Q2022 given last year’s Delta base.
  • MIKA continues to expand its hospital numbers through greenfield and brownfield expansions with three new hospitals due to open in the next 12 months plus it is open to M&A.
  • Mitra Keluarga’s treatment intensity should start to improve over the next few quarters given management’s focus on this plus easier YoY comparisons. Valuations remain attractive versus historical levels. 

Bank Central Asia (BBCA IJ) – Demonstrating Digital Prowess

By Angus Mackintosh

  • Bank Central Asia (BBCA IJ) released a robust set of 9M2022 results driven by loan growth across all segments together with low-cost CASA funding and falling provisioning.
  • The bank demonstrated its leadership in transactional banking with total transactions growing +48% YoY, with 89% in volume terms and 59% in value terms through mobile and internet banking. 
  • Bank Central Asia (BBCA IJ) continues to be a core holding and trades at a premium to its peers for good reason and it has already demonstrated its digital prowess.

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Daily Brief United States: PNM Resources, Coca Cola Co, Crude Oil, Netgear Inc, AXT Inc, Visa, 3 M Co, Kraft Heinz Co, MSCI Inc, Otis Worldwide Corp and more

By | Daily Briefs, United States

In today’s briefing:

  • Iberdrola/PNM Resources: One to Watch
  • The Coca-Cola Co: Major Drivers
  • The Commodity Report #75
  • NTGR: Retail Headwinds Is Not the Story
  • AXTI: Inventory Balloon Pop
  • Visa Inc: Collaboration With FTX & Other Drivers
  • 3M Co: Acquisition of Treo Solutions & Other Drivers
  • Kraft Heinz Inc: New Plant-Based Offerings & Other Drivers
  • ISSB Affirms Scope 3 Emissions Reporting Requirements and Investor-Centric Focus
  • Otis Worldwide Corp: New Contracts For Gen 2 & Other Drivers

Iberdrola/PNM Resources: One to Watch

By Jesus Rodriguez Aguilar

  • Iberdrola SA has not abandoned its strategic plan in the United States, which includes the acquisition of PNM Resources through its American subsidiary Avangrid Inc.
  • Iberdrola is convinced that the transaction will be unblocked in the coming weeks, either because the appeal prospers or because of changes in the regulator.
  • I retain my TP of $50.3 cash takeout price (consideration offered by Avangrid/Iberdrola) vs. my $49.8/share median implied valuation. My TP represents 8.5% upside plus a 2.9% dividend yield.

The Coca-Cola Co: Major Drivers

By Baptista Research

  • Despite a macroeconomic environment that remained difficult in the third quarter, Coca-Cola managed to deliver yet another all-around beat.
  • Utilizing their customer-centric marketing strategy, they are rapidly connecting consumption occasions with passion points through digital engagement.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

The Commodity Report #75

By The Commodity Report

  • With the beginning of this week’s newsletter, I probably won’t make any new friends in my home country.
  • What makes me sad is that literally nobody is speaking about the untapped natural gas reserves we have underground in Germany that are indeed accessible.
  • A short calculation: In 2021 Russia delivered 55 billion cubic meters to Germany or 55% of the total German gas consumption.

NTGR: Retail Headwinds Is Not the Story

By Hamed Khorsand

  • NTGR reported third quarter results showcasing continued growth in its SMB and service provider product lines while the retail channel remained challenged. 
  • NTGR has been transitioning away from the lower end of the Wi-Fi router market, but a contracting market has extended out the timeframe of depleting channel inventory
  • NTGR’s growth driver are primarily its Pro AV switches and 5G hotspots, which continue to outperform our expectations

AXTI: Inventory Balloon Pop

By Hamed Khorsand

  • AXTI slightly beat its downward adjusted third quarter guidance but issued fourth quarter forecast showing further deterioration in the business
  • During the third quarter AXTI experienced a significant delay in orders from customers causing revenue to decline by approximately 11 percent sequentially
  • The spill over of weakness into the fourth quarter should not be a surprise given the pace of decline in revenue in the third quarter

Visa Inc: Collaboration With FTX & Other Drivers

By Baptista Research

  • Despite the uncertainty brought on by the pandemic, the timing of the cross-border travel rebound, inflation, the Ukraine crisis, and potential recession, Visa’s performance in 2022 has been quite solid.
  • The company delivered yet another all-around beat as it established over 400 business collaborations with fintechs worldwide this year, ranging from start-ups to established businesses.
  • Cross-border volumes in Q4 increased by 7 points from Q3 and were up 49% year over year and 130% compared to three years earlier, excluding intra-Europe.

3M Co: Acquisition of Treo Solutions & Other Drivers

By Baptista Research

  • 3M delivered a mixed set of results for the last quarter as it failed to meet revenue expectations of Wall Street but managed an earnings beat.
  • Every business segment produced margins higher than 21%, with noteworthy margin growth in the safety, industrial, transportation, and electronics sectors.
  • This is what helped them deliver an earnings beat.

Kraft Heinz Inc: New Plant-Based Offerings & Other Drivers

By Baptista Research

  • Kraft Heinz has had another strong quarter and the company delivered yet another all-around beat.
  • Despite the challenges of the supply chain, the company managed to have a strong customer demand that resulted in a greater-than-expected profitability and cash flow in this quarter.
  • Kraft Heinz has not only succeeded in meeting the market demand but also gained market share in many key categories during the third quarter.

ISSB Affirms Scope 3 Emissions Reporting Requirements and Investor-Centric Focus

By Kyle Rudden

  • The International Sustainability Standards Board (ISSB) recently confirmed important aspects of its proposed sustainability reporting standards. One step closer to a unified standard.
  • Particularly noteworthy is confirmation that disclosures of Scope 3 emissions will be required. Scope 3 emissions are largely unreported, but account for the majority of total emissions.
  • Scope 3 disclosure could have repercussions for ESG ratings, ESG indices based on ESG ratings, and potentially (though too soon to tell) reconstutions of exchange-traded funds.

Otis Worldwide Corp: New Contracts For Gen 2 & Other Drivers

By Baptista Research

  • Otis delivered a mixed set of results for the last quarter.
  • The company saw a good growth in organic sales but failed to meet the revenue expectations of Wall Street.
  • Its expansion in margins did result in the company delivering an earnings beat.

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Daily Brief China: China Vast Industrial Urban Development, Chiho Environmental Group Limited , Hubei Feilihua Quartz Glas-A, Vitasoy Intl Holdings, Ethereum, Ping An Healthcare and Technology Company Limited, Geek+, Hai Robotics, XPeng Robotics, Gaussian Robotics and more

By | China, Daily Briefs

In today’s briefing:

  • China VAST’s Vote on 23 November
  • Chiho (976 HK): Possible Restructuring May Trigger Offer
  • ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Stocks & Mean Reversion
  • Vitasoy (345): Time to Bounce
  • Quick Update on the New Hong Kong Crypto Policy Statement – A Revival of the Crypto Hub?
  • Ping An Healthcare and Technology (1833.HK) – The New Acquisition Is Hard to Turn Things Around
  • Geek+: Global Leader in Smart Logistics Robotic Technology
  • HAI Robotics: The Pioneer and Leader in ACR Robot Market
  • XPeng Robotics: Early-Stage VC Investment in Developer of Smart Robot Pony
  • Gaussian Robotics: Leading Provider of AI-Powered Cleaning Robots

China VAST’s Vote on 23 November

By Arun George

  • China Vast Industrial Urban Development (6166 HK)‘s scheme document is out with the court meeting scheduled for 23 November. The IFA considers the offer to be fair and reasonable. 
  • Key conditions include approval by at least 75% of independent shareholders (<10% rejection). Shareholders with blocking stakes either provided irrecovables or will likely support the offer.
  • The offer is not great but headcount test is not applicable. At last close and for the 14 December payment, the gross and annualised spread is 0.8% and 6.7%, respectively.

Chiho (976 HK): Possible Restructuring May Trigger Offer

By David Blennerhassett

  • Metal recycler Chiho Environmental Group Limited (976 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
  • For more than a year, the controlling shareholder group has been implementing a potential restructuring. The ultimate controlling shareholder is Tu Jianhua, an executive director of Chiho.
  • This long drawn-out reorganisation may finally result in an Offer for Chiho.

ChiNext/ChiNext50 Index Rebalance Preview: Overlapping Stocks & Mean Reversion

By Brian Freitas

  • At the end of the review period, we forecast 10 changes for the Chinext Price Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
  • Passive trackers will need to buy +/-0.5 days of ADV for most inclusions and exclusions from the indices. The impact on the potential deletions is higher on average.
  • The potential adds have outperformed the potential deletes over the last six months, though there has been a sharp narrowing of the gap over the last few weeks.

Vitasoy (345): Time to Bounce

By Henry Soediarko

  • Vitasoy Intl Holdings (345 HK) was shunned by investors last year as its products were taken off the shelves in China, causing its revenue from China to plummet. 
  • Recently announced a substantial increase in net profit vs last year.  
  • Despite the recent uptick, Vitasoy’s share price is still trading at 50% PBR vs 5 years ago. 

Quick Update on the New Hong Kong Crypto Policy Statement – A Revival of the Crypto Hub?

By Edward Wu

  • Hong Kong government published on Oct 31 a statement titled “Policy Statement on Development of Virtual Assets in Hong Kong” with a much friendlier stance on crypto industry
  • The policy statement mainly focuses on crypto asset ETF, NFT, tokenized assets, stablecoin, and e-HKD; while utility tokens are missing from it.
  • While this has been perceived positively by the industry, the biggest concern is still the regulatory uncertainty, especially considering mainland China’s outright ban on all crypto-related activity

Ping An Healthcare and Technology (1833.HK) – The New Acquisition Is Hard to Turn Things Around

By Xinyao (Criss) Wang

  • In 2022H1, Ping An Health’s losses narrowed and gross profit margin increased, with various financial indicators showing an improving trend. The Company also announced a new acquisition recently.
  • In the process of turning from 2C business to 2B business, Ping An Health hopes to expand B-end users who can contribute higher margin, but this transformation would encounter difficulties.
  • If the payment method in China is not changed (still dominated by national medical insurance payment, with small portion of commercial insurance), it’s difficult to improve the profitability qualitatively.

Geek+: Global Leader in Smart Logistics Robotic Technology

By Andrei Zakharov

  • Geek+ is the fastest-growing robotics startup and producer of warehouse robots powered by AI and deep learning algorithms. The company successfully integrates logistics with robots. 
  • Beijing-Based Geek+ has raised a total of ~$532M in funding over 7 rounds. The last round was a $100M Series E in August 2022 that was led by Intel Capital. 
  • Warehouse robots have a huge market potential driven by rising labor costs in China, lack of human labor in the warehouse segment, and huge fluctuations in production capacity. 

HAI Robotics: The Pioneer and Leader in ACR Robot Market

By Andrei Zakharov

  • Founded in 2016 by Richie Chen and Shengdong Xu, HAI Robotics is a pioneer in ACR systems and warehouse automation robotics unicorn.  
  • HAI Robotics offers flexible automation solutions to improve efficiency while reducing costs. The company’s vision is to utilize robotics to create and deliver value to each factory and warehouse. 
  • China is the hub for the production of AMRs and ACRs, easing the workforce shortage, improving operational efficiency, saving additional storage, and handling a wide range of SKUs. 

XPeng Robotics: Early-Stage VC Investment in Developer of Smart Robot Pony

By Andrei Zakharov

  • XPeng Robotics is a bionic smart robot maker backed by Chinese EV giant XPeng and high-profile investor IDG Capital. The company focuses on AI, robot autonomy, and interaction.
  • Founded in 2016 and headquartered in Shenzhen, XPeng Robotics is an affiliate of XPeng, with R&D centers in Beijing, Guangzhou, and Silicon Valley. 
  • Bloomberg reported that $100M+ Series A financing was the largest single-tranche fundraising for the bionic robot sector in China in the past two years. 

Gaussian Robotics: Leading Provider of AI-Powered Cleaning Robots

By Andrei Zakharov

  • Gaussian Robotics sells a new generation of autonomous cleaning robots that can be applied in office buildings, shopping malls, indoor galleries, hotels, schools, healthcare facilities, and warehouses.  
  • Shanghai-Based unicorn wants to disrupt the cleaning industry with automation, promoting the use of low-cost autonomous cleaning robots worldwide. 
  • The company owns the world’s most advanced commercial cleaning robot portfolio offering cost-effective smart robotic solutions to 2,000+ customers in 40+ countries across 6 regions.

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Daily Brief Japan: Toshiba Corp, Oriental Land, Mercari Inc, Takeda Pharmaceutical, Asahi Intecc, SoftBank Robotics and more

By | Daily Briefs, Japan

In today’s briefing:

  • Toshiba – How Much Risk Is There On A Deal Break?
  • Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
  • Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
  • Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals
  • Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23
  • SoftBank Robotics: Robotics Arm of Japanese Conglomerate SoftBank

Toshiba – How Much Risk Is There On A Deal Break?

By Mio Kato

  • With Toshiba giving up its deal premium on news that the JIP consortium was struggling to secure financing it is worth assessing how much downside risk there is. 
  • Prospects are deteriorating rapidly and we believe valuations for Kioxia and the HDD business are likely to lead the way down. 
  • We estimate that there is still a premium of about 20-25% being assessed for the possibility of a deal but that there is fundamental risk beyond this.

Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent

By Oshadhi Kumarasiri

  • Oriental Land (4661 JP) raised its FY23 revenue and OP guidance by 8.4% and 59.4% respectively last week sighting a recovery in demand for leisure during the second-half of the year.
  • The modest price reaction to upgraded guidance could be an indication that a breakdown is imminent.
  • Cost overruns of ¥70bn and a delay to the scheduled opening of Fantasy Springs from FY23 to FY24, could force investors to second guess consensus medium-term expectations.

Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise

By Kirk Boodry

  • Domestic results were better than we expected driving operating income to its highest level in six quarters.  Management will launch credit card services to boost fintech exposure
  • The US business remains a drag on results with platform sales down 5% YoY and expanding operating losses. A downgrade to expectations is likely in the quarters ahead
  • Q1 results were better than we expected but a weak US business and higher spending ahead may disappoint markets that bid shares 28% higher over the last month

Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals

By Shifara Samsudeen, ACMA, CGMA

  • Takeda Pharmaceutical (4502 JP) reported 2QFY03/2023 results last week. Reported revenue increased 18.6% YoY to JPY1.0trn (vs consensus JPY962bn) while OP increased 7.2% YoY to JPY104.4bn (vs consensus JPY119bn).
  • Growth in sales was driven by Takeda’s blockbuster drug Entyvio (+36.6% YoY), Takhzyro (+75.8%) and immunoglobulin products (HYQVIA in particular).
  • The company also has raised its peak sales estimate for Entyvio to US$7.5-9.0bn (from US$5.5-6.5bn) driven by further market growth and market share expansion.

Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23

By Tina Banerjee

  • Asahi Intecc (7747 JP) reported better-than-expected FY22 results, driven by overseas sales primarily in Europe and China mainly due to market recovery and a weaker yen versus other major currencies.
  • Asahi has raised FY23 revenue guidance to ¥89.3 billion (+15% y/y) from ¥83.5 billion earlier. However, with weakening yen, another beat is on card.
  • Although Asahi shares have strong upside potential, continued hospital staff shortages in the U.S. and COVID-related restrictions in China are the main downside risks.

SoftBank Robotics: Robotics Arm of Japanese Conglomerate SoftBank

By Andrei Zakharov

  • SoftBank Robotics is a pioneer in the industry of service robots and human-robot interactions. The company unveiled the world’s first social humanoid robot Pepper in 2014.
  • Alibaba Group and Foxconn Technology have invested $118M each in SoftBank Robotics: 5%+ investor shareholders include Alibaba (20%), Foxconn (20%), and SoftBank holds a 60% stake.  
  • The company is struggling to grow revenues, and the business is structurally unprofitable. However, SoftBank Robotics announced RI strategy with plans to introduce a new series of smart robots.  

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Daily Brief Utilities: PNM Resources, Crude Oil and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Iberdrola/PNM Resources: One to Watch
  • The Commodity Report #75

Iberdrola/PNM Resources: One to Watch

By Jesus Rodriguez Aguilar

  • Iberdrola SA has not abandoned its strategic plan in the United States, which includes the acquisition of PNM Resources through its American subsidiary Avangrid Inc.
  • Iberdrola is convinced that the transaction will be unblocked in the coming weeks, either because the appeal prospers or because of changes in the regulator.
  • I retain my TP of $50.3 cash takeout price (consideration offered by Avangrid/Iberdrola) vs. my $49.8/share median implied valuation. My TP represents 8.5% upside plus a 2.9% dividend yield.

The Commodity Report #75

By The Commodity Report

  • With the beginning of this week’s newsletter, I probably won’t make any new friends in my home country.
  • What makes me sad is that literally nobody is speaking about the untapped natural gas reserves we have underground in Germany that are indeed accessible.
  • A short calculation: In 2021 Russia delivered 55 billion cubic meters to Germany or 55% of the total German gas consumption.

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Daily Brief Energy/Materials: Chiho Environmental Group Limited , Los Andes Copper Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Chiho (976 HK): Possible Restructuring May Trigger Offer
  • Los Andes Copper: Insider Buying Continues and PFS in Next 60 Days

Chiho (976 HK): Possible Restructuring May Trigger Offer

By David Blennerhassett

  • Metal recycler Chiho Environmental Group Limited (976 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
  • For more than a year, the controlling shareholder group has been implementing a potential restructuring. The ultimate controlling shareholder is Tu Jianhua, an executive director of Chiho.
  • This long drawn-out reorganisation may finally result in an Offer for Chiho.

Los Andes Copper: Insider Buying Continues and PFS in Next 60 Days

By Nicolas Van Broekhoven

  • Los Andes Copper, our preferred copper junior exploration company, will have an updated PFS out in the coming 60 days.
  • Meanwhile, regular insider buying continues by Chief Executive Michael Jones.
  • Los Andes Copper remains key M&A target for larger diversified miners.

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Daily Brief Consumer: Oriental Land, Mercari Inc, Vitasoy Intl Holdings, Kino Indonesia, Monde Nissin Corp, Coca Cola Co, Gaussian Robotics, Trent Ltd, MSCI Egypt Index, Garrett Motion and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
  • Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
  • Vitasoy (345): Time to Bounce
  • Kino Indonesia (KINO IJ) – Staples with a Discretionary Edge
  • COP27: Agriculture and Food Stocks Likely to Be Most Affected by Conference Talks
  • The Coca-Cola Co: Major Drivers
  • Gaussian Robotics: Leading Provider of AI-Powered Cleaning Robots
  • Trent Ltd: Trending Multi-Brand, Multi-Format Retailer. Value Fashion to Home Grocery
  • COP27: Despite Limited Expectations There Are Several Potential Bright Spots
  • GTX: Free Cash Flow and Win Rate

Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent

By Oshadhi Kumarasiri

  • Oriental Land (4661 JP) raised its FY23 revenue and OP guidance by 8.4% and 59.4% respectively last week sighting a recovery in demand for leisure during the second-half of the year.
  • The modest price reaction to upgraded guidance could be an indication that a breakdown is imminent.
  • Cost overruns of ¥70bn and a delay to the scheduled opening of Fantasy Springs from FY23 to FY24, could force investors to second guess consensus medium-term expectations.

Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise

By Kirk Boodry

  • Domestic results were better than we expected driving operating income to its highest level in six quarters.  Management will launch credit card services to boost fintech exposure
  • The US business remains a drag on results with platform sales down 5% YoY and expanding operating losses. A downgrade to expectations is likely in the quarters ahead
  • Q1 results were better than we expected but a weak US business and higher spending ahead may disappoint markets that bid shares 28% higher over the last month

Vitasoy (345): Time to Bounce

By Henry Soediarko

  • Vitasoy Intl Holdings (345 HK) was shunned by investors last year as its products were taken off the shelves in China, causing its revenue from China to plummet. 
  • Recently announced a substantial increase in net profit vs last year.  
  • Despite the recent uptick, Vitasoy’s share price is still trading at 50% PBR vs 5 years ago. 

Kino Indonesia (KINO IJ) – Staples with a Discretionary Edge

By Angus Mackintosh

  • Kino Indonesia (KINO IJ) is one of Indonesia’s most interesting staples players with a strong share in a number of segments within beverages and personal care which dominate its sales.
  • The company has seen a decent rebound in its beverages business as mobility has improved but continues to face some headwinds from higher input costs and packaging for personal care. 
  • Kino Indonesia (KINO IJ) has been selectively increasing prices to offset higher costs and is seeing an improvement in sales of some of its more discretionary products. 

COP27: Agriculture and Food Stocks Likely to Be Most Affected by Conference Talks

By Kyle Rudden

  • COP27, the 27th annual United Nations international conference on climate change, starts on 6 November and runs through 18 November – in the Egyptian coastal city of Sharm el-Sheikh.
  • Whereas climate mitigation and clean energy were the main focus of prior conferences, climate adaptation and sustainable agriculture and food are top priorities for the COP26 Presidency.
  • Therefore, agriculture and food stocks are poised to be the most impacted on a relative basis by COP27 proceedings and outcomes. This Insight considers the potential “winners and losers.”

The Coca-Cola Co: Major Drivers

By Baptista Research

  • Despite a macroeconomic environment that remained difficult in the third quarter, Coca-Cola managed to deliver yet another all-around beat.
  • Utilizing their customer-centric marketing strategy, they are rapidly connecting consumption occasions with passion points through digital engagement.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Gaussian Robotics: Leading Provider of AI-Powered Cleaning Robots

By Andrei Zakharov

  • Gaussian Robotics sells a new generation of autonomous cleaning robots that can be applied in office buildings, shopping malls, indoor galleries, hotels, schools, healthcare facilities, and warehouses.  
  • Shanghai-Based unicorn wants to disrupt the cleaning industry with automation, promoting the use of low-cost autonomous cleaning robots worldwide. 
  • The company owns the world’s most advanced commercial cleaning robot portfolio offering cost-effective smart robotic solutions to 2,000+ customers in 40+ countries across 6 regions.

Trent Ltd: Trending Multi-Brand, Multi-Format Retailer. Value Fashion to Home Grocery

By Devi Subhakesan

  • Trent Ltd (TRENT IN), one of India’s leading apparel retailers led by the Tatas, is on an accelerated growth path helped by its recently expanded apparel retail chain, Zudio.
  • Zudio sells value fashion through its own stores targeted at India’s burgeoning youth that is high on aspiration while low on budget, a hitherto severely underserved category.
  • Star Bazaar, Trent’s grocery retail JV with Tesco PLC (TSCO LN), is also beginning to gain traction and has the potential to expand and grow its presence across the country.

COP27: Despite Limited Expectations There Are Several Potential Bright Spots

By Kyle Rudden

  • COP27, the 27th annual United Nations international conference on climate change, starts on 6 November and runs through 18 November – in the Egyptian coastal city of Sharm el-Sheikh.
  • World leaders and delegations from 196 nations and territories are expected to collaborate on a host of issues such as finance, decarbonisation, agriculture, water, energy, and biodiversity.
  • Overall expectations are being kept in check, but COP27 is likely to focus on climate adaptation and sectors like agriculture/food that heretofore have taken a back seat to clean energy.

GTX: Free Cash Flow and Win Rate

By Hamed Khorsand

  • GTX experienced a recovery in its order trends from all segments in the third quarter leading to the Company reporting sales exceeding our expectations
  • GTX reported third quarter sales of $945 million compared to our lowered forecast of $908 million
  • GTX’s foray into EVs should have a positive impact on GTX’s sales and stock valuation. Investors have not been valuing GTX on the basis for having exposure to EVs

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