Smartkarma Daily Briefs

Today after the close, one of the very large brokers in Japan (N_m_r_) has a block for sale of Otsuka Holdings (4578 JP).
It is only 2.4% of total shares out, and as such, it looks small. But it isn’t that small. The shareholder structure is crowded with non-Real World Float holders.
The discount offered is large compared to absolute and sector-relative volatility.

Otsuka Holdings Placement – While Enticing Discount, Management Selling Will Raise Eyebrows

By Clarence Chu

Otsuka Estate is looking to raise US$389m via trimming its stake in Otsuka Holdings (4578 JP).
The deal is a relatively large one on an ADV basis, at 14.6 days of three month ADV.
In this note, we will talk about the firm’s track record and run the deal through our ECM framework.

JF Wealth Holdings IPO – Can Get Similar Exposure at Cheaper Valuations

By Clarence Chu

JF Wealth Holdings (9636 HK) is looking to raise US$143m in its Hong Kong IPO.
JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.
In this note, we discuss our earnings estimates, and thoughts on valuation.

SBI Sumishin Net Bank IPO: The Investment Case

By Arun George

SBI Sumishin Net Bank (7163 JP), an online bank in Japan, has revived its listing plans to raise up to US$440 million (vs the 2022 target of US$1 billion).
Founded in 2007, SBI Sumishin Net Bank is owned 50% by SBI Holdings (8473 JP) and 50% by Sumitomo Mitsui Trust Holdings (8309 JP).
The investment case rests on market share gains, the rude health of the digital bank segment, the nascent BaaS segment turning profitable and ambitious medium-term goals.

Deere & Company: New Dealer Business System & Other Drivers

Deere managed to deliver an all-around beat in the first quarter of the new fiscal year.
The equipment operations had a 20% margin in the financial results for the quarter.
The management expects demand to exceed the industry’s ability to deliver for another year.

Unity Software Inc.: Extended Partnership With Google & Other Drivers

Unity Software delivered an all-around beat in the last quarter and saw strong user growth and DAUs in its network.
It was a one-off profitable quarter for the company with improving market share across platforms.
We give Unity Software a ‘Hold’ rating with a revised target price.

eBay Inc.: Major Drivers

eBay delivered a solid set of results in the last quarter despite ongoing macro uncertainty and managed an all-around beat.
In the previous quarter, eBay acquired myFitment and in this quarter, it started making the technology of myFitment accessible to all buyers beginning with the pilot group of P&A sellers.
During the quarter, eBay scaled up several live events with select sellers.

Intuit Inc.: Major Drivers

Intuit had another strong quarter managed to deliver an all-around beat with revenues, operating income, and earnings per share rising.
In the Self-Employed Group and the Small Business, revenue grew during the quarter.
This quarter, Intuit launched a QuickBooks business network for millions of QuickBooks customers for further digitizing B2B payments in the U.S.

Reliance Steel & Aluminum Co.: Major Drivers

Reliance Steel & Aluminum had a mixed financial performance in the last quarter of 2022 and missed out on meeting the revenue expectations of Wall Street given the ongoing volatility in metal prices and general economic uncertainty.
Throughout the fourth quarter, prices fell for the majority of carbon steel, stainless steel, and aluminum products sold.
We give Reliance Steel & Aluminum Co a ‘Hold’ rating with a revised target price.

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Mar 03

Daily Brief Event-Driven: Adani Group: GQG Bets Big; MSCI Index Impacts and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Adani Group: GQG Bets Big; MSCI Index Impacts
MBK & Unison Capital Trying to Take Osstem Implant Private: “Two Yards to Endzone”
SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal
SIAS Agrees The Widjaja Family’s Offer For Golden Energy Is Low-Balled
IMM PE Lanches A Tender Offer on Hanssem
Nitro Software Backs Potentia’s Offer
SE600 Mar 23 Rebal: Final Changes and Historical Performance Analysis

Adani Group: GQG Bets Big; MSCI Index Impacts

Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

MBK & Unison Capital Trying to Take Osstem Implant Private: “Two Yards to Endzone”

MBK Partners and Unison Capital are trying to take Osstem Implant (048260 KS) private. Currently, it is estimated that the MBK/Unison consortium has secured 88.7% stake in Osstem Implant.
In the case of companies listed in KOSDAQ, if you have a stake of 90% or more, the company can generally proceed with discussions on delisting with the exchange.
There is a high probability of delisting sometime in March/April under two different scenarios. The second scenario offers the remaining minority shareholders and arb traders potential for further alpha creation.

SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal

The parent company of SHL Japan Ltd (4327 JP)‘s largest shareholder is buying out its main customer in Japan.
This is an LBO/MBO situation, and friends and family get it to 63% or so. A tiny sliver from others gets it over the hump.
Should get done easily, but the corporate governance here is not encouraging. Yes, a premium, but no explanation, and it’s a bit low.

SIAS Agrees The Widjaja Family’s Offer For Golden Energy Is Low-Balled

The Widjaja family’s Offer for Golden Energy (GER SP) back in November has been derided in the press, one outspoken minority shareholder, and (a loosely veiled statement) by Singapore RegCo.
Now the Securities Investors Association (Singapore) (SIAS) has thrown its hat into the ring and has called on GEAR to improve the Offer for shareholders.
The long stop date was surprisingly pushed back five months to satisfy the Exit offer conditions. This delay should avail the family of ample time to bump terms.

IMM PE Lanches A Tender Offer on Hanssem

IMM private equity fund launched a tender offer on Hanssem Co Ltd (009240 KS) and its share price surged by 19.7% to reach 53,700 won today.
IMM is currently the largest shareholder in Hanssem with a 27.7% stake in the company. IMM’s stake in Hanssem will rise to about 36% if this tender offer is successful.
Hanssem’s share price still 2.4% below the tender offer price of 55,000 won. In the coming days, we believe the share price will reach closer to the tender offer price.

Nitro Software Backs Potentia’s Offer

As expected, Nitro Software Ltd (NTO AU)‘s board has unanimously backed Potentia’s three-tiered revised Offer.
On the 23rd of February, Potentia bumped with a $2.17/share unconditional Offer, increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
Where does this leave Alludo? Nitro reckons Alludo can’t raise their offer because of ASIC’s Truth In Takeovers policy. But Alludo do pocket the A$5mn break fee for their troubles.

SE600 Mar 23 Rebal: Final Changes and Historical Performance Analysis

By Janaghan Jeyakumar, CFA

The March 2023 regular rebalance index changes for the SE600 index and the EUROSTX index were announced yesterday.
There are 8 ADDs/DELs for the SE600 index and 5 ADDs and 2 DELs for the EUROSTX index.
In this insight, we take a closer look at the index flow expectations and the historical performance of SE600 and EUROSTX Rebalance events.

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Mar 03

Daily Brief Equity Bottom-Up: JD.com (9618 HK) Earnings Preview: Weak Q4 and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

JD.com (9618 HK) Earnings Preview: Weak Q4, But Strong 2023
Appier (4180) | It’s Doubled, so What’s Next
Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power
Baidu Inc.: Ernie Bot As An Aftermath Of The ChatGPT Effect? Check Out The Key Drivers
Aurobindo Pharma (ARBP IN): Q3 Net Profit Dropped; R&D Cost To Remain Elevated in Near-Term
AFT Pharmaceuticals – Big win with Maxigesic Rapid’s FDA nod
Alibaba Group Holding Limited: Major Drivers
Booking Holdings Inc.: Major Drivers
Bilibili (Bili Us): Further Downside Risks Ahead
Adobe Systems: Surprisingly Resilient

JD.com (9618 HK) Earnings Preview: Weak Q4, But Strong 2023

By Ming Lu

We believe the revenue growth rate would still be low at 8.5% YoY in 4Q22, even lower than 11.4% YoY in 3Q22.
However, we believe the growth rate of total revenue will be 10% in 2022, 15% in 2023, and 18% in 2024.
We believe the stock has an upside of 47% for year end 2023.

Appier (4180) | It’s Doubled, so What’s Next

By Mark Chadwick

ChatGPT has focused the investment community on the potential of AI to drive business performance and investment returns.
Forbes picked Adobe as its top AI pick in 2023. We pick Appier, which is a faster-growing alternative in the digital marketing space.
Appier’s revenue grew by over 50% last year and unlike many SaaS companies, it is profitable.

Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power

By Oshadhi Kumarasiri

Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.
This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.
With a lasting pricing-power and a relatively inelastic demand than competitors, we think Yakult Honsha (2267 JP) and Nissin Foods Holdings (2897 JP) are in a great position to outperform competition.

Baidu Inc.: Ernie Bot As An Aftermath Of The ChatGPT Effect? Check Out The Key Drivers

Baidu managed to deliver an all-around in the last quarter beat despite the fact that its financial performance was impacted by a challenging environment because of a rapid rise in COVID-19 cases as well as its impact on the broader economy.
Both feeds distributed through the Baidu app and mobile search queries continued experiencing double-digit growth in the quarter.
Baidu is expected to launch Ernie Bot, its new conversational AI bot, powered by its latest in-house large language models, to counter ChatGPT.

Aurobindo Pharma (ARBP IN): Q3 Net Profit Dropped; R&D Cost To Remain Elevated in Near-Term

By Tina Banerjee

In Q3 FY23, Aurobindo Pharma (ARBP IN) recorded net profit of INR4.9B (~$60 million), down 19% YoY. Consensus expected the company to report net profit of INR5.2B during the quarter.
Net profit was negatively impacted by 51% YoY increase in R&D expenditure due to biosimilar pipeline progress. R&D expenses are expected to remain high over the next 6–7 quarters.
The company had negative free cash flow of $82M. With lack of any immediate catalyst or shareholders’ reward, we don’t expect multiple expansion for Aurobindo Pharma at least in near-term.

AFT Pharmaceuticals – Big win with Maxigesic Rapid’s FDA nod

By Edison Investment Research

AFT Pharmaceuticals (AFT) has announced it has received FDA approval for Maxigesic Rapid tablets, a quick-release version of its flagship Maxigesic product line. Notably, this marks the first regulatory win for AFT in the US (the world’s largest analgesic market), valued at c US$7bn. While AFT awaits Maxigesic IV’s clearance in the US, we expect this approval to help it build initial commercial traction in this high-margin market. The Rapid tablets, a patented combination of paracetamol (325mg) and ibuprofen (97.5mg), has been authorised for the treatment of mild-to-moderate acute pain. Negotiations with potential distribution partners are ongoing, with plans to release other dose versions in the future. The market has reacted positively to the news, with shares trading up by 10% at close of business.

Alibaba Group Holding Limited: Major Drivers

Alibaba managed to deliver an all-around beat despite experiencing significant challenges because of the rapid change in the Covid situation.
The company delivered double-digit growth in its free cash flow and adjusted EBITA through operating efficiency and cost optimization.
The strong net cash position of Alibaba is supported by its healthy cash flow generation.

Booking Holdings Inc.: Major Drivers

Booking reported a strong finish to 2022 as it delivered revenue and adjusted EBITDA above Wall Street expectations.
Gross Booking increased as compared to the pre-pandemic time.
Room night growth trends have strengthened in the quarter, with the improvements driven by the U.S. and Asia.

Bilibili (Bili Us): Further Downside Risks Ahead

By Eric Chen

BILI’s 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023
The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.
Reiterate our bearish view on the stock and see further downside risks ahead.

Adobe Systems: Surprisingly Resilient

4QFY22 results in-line with guidance and expectations; guidance for FY23 lower
Growth outlook while weakening, is surprisingly stronger-than-expected
Share price unlikely to move up materially due to overhang from Figma acquisition; but valuations seem fair given growth is holding up; fair value (FV) rises to USD365

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Mar 03

Daily Brief Macro: Europe Wants to Get Paid – 5 Feuds to Look Out For and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Europe Wants to Get Paid – 5 Feuds to Look Out For
From Lockdown to Liftoff? China’s Reopening and the Outlook for Emerging Equities (EEM)
CX Daily: Why China’s Lithium Firms Have Their Sights Set on Bolivia
EA: HICP Scarcely Slows Pace in Feb-23

Europe Wants to Get Paid – 5 Feuds to Look Out For

By Mikkel Rosenvold

A disappointing wage agreement for German metal workers in November was an early indicator that trade unions will be a poor match against employers in upcoming wage negotiations.
The 5 most important wage battlegrounds to watch in Europe in Q2-Q3 will be Germany, UK, France, Italy and the Netherlands – read full case studies below.
Despite weak unions, current broad-based wage pressures of 4-5% is enough to keep core inflation TOO elevated in the Euro zone. The ECB has more work to do on tightening.

From Lockdown to Liftoff? China’s Reopening and the Outlook for Emerging Equities (EEM)

By Jeroen Blokland

China’s reopening is finally showing up in the Macro numbers. But there is still an awful lot of catching up to do.
We look at if the China reopening provides a buying opportunity for Chinese (iShares MSCI China ETF (MCHI US)) and Emerging Market (iShares MSCI Emerging Markets (EEM US)) Equities.
Going through the three pillars of our investment framework, Macro, Sentiment, and Valuation, we conclude that the outlook for EM Equities is slightly more attractive than for DM Equities.

CX Daily: Why China’s Lithium Firms Have Their Sights Set on Bolivia

By Caixin Global

Lithium /: In Depth: Why China’s lithium firms have their sights set on Bolivia
Covid-19 /: China eases requirement of negative preflight Covid tests for some countries
PMI /: China’s factory activity gets back to growth, Caixin PMI shows

EA: HICP Scarcely Slows Pace in Feb-23

By Phil Rush

Flash EA inflation only slowed by 15bp to 8.49% in Feb-23. That was 18bp above our forecast but 0.3pp above the consensus, breaking the downward surprise trend.
Germany contributed the most upside to our view, but there was a broad skew higher in food prices, core goods, and headline rates outside the big-4 countries.
Powerful base effects should still trigger a steep drop in March, but resilience in core and food price inflation reinforces our hawkish view of a stronger underlying trend.

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Mar 03

Daily Brief Energy/Materials: ABM Investama, Texas Pacific Land Trust, Ecovyst, Fosun International, Reliance Steel & Aluminum and more

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

In today’s briefing:

Asia HY Monthly – February 2023 – Lucror Analytics
TPL: Cash Cushion
ECVT: Free Cash Flow Storm
Fosun International: New Onshore Credit Line a Positive but More Offshore Asset Disposals Needed
Reliance Steel & Aluminum Co.: Major Drivers

Asia HY Monthly – February 2023 – Lucror Analytics

By Charles Macgregor

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

TPL: Cash Cushion

By Hamed Khorsand

TPL reported fourth quarter revenue impacted by a trifecta of events. The decline in energy prices led to reduced production levels causing water sales to also decline in a period
TPL had been seeing production rebound in the summer of 2022. The volatility in energy prices in the Permian Basin pushed some producers to slow down their well development plans
The lower production was the biggest culprit to the decline in revenue as producers were not incentivized to produce oil and natural gas.

ECVT: Free Cash Flow Storm

By Hamed Khorsand

ECVT suffered damage from winter storm Elliot towards the end of the fourth quarter, but that was not enough to prevent it from issuing upside adjusted EBITDA guidance
ECVT has experienced continued demand for its ecoservices and catalyst technologies
The pass-through costs of sulfuric acid makes sales figures look volatile, but adjusted EBITDA is the true measure, which continues to trend higher

Fosun International: New Onshore Credit Line a Positive but More Offshore Asset Disposals Needed

We revise our recommendations for FOSUNI 6.75% Jul 2023, FOSUNI 5.5% Aug 2023, FOSUNI 6.85% Jul 2024 to Hold from Sell. FOSUNI 5.95% Oct 2025 and FOSUNI 5.05% Jan 2027 remain on Hold recommendations and Credit Direction remains Negative.
The new RMB12b credit line provides some liquidity relief and improves the likelihood of Fosun’s ability to meet its debt obligations in 2023.
However, more offshore asset disposals or pledges for loans need to be done to cover the remaining offshore bond maturities during the year.

Reliance Steel & Aluminum Co.: Major Drivers

Reliance Steel & Aluminum had a mixed financial performance in the last quarter of 2022 and missed out on meeting the revenue expectations of Wall Street given the ongoing volatility in metal prices and general economic uncertainty.
Throughout the fourth quarter, prices fell for the majority of carbon steel, stainless steel, and aluminum products sold.
We give Reliance Steel & Aluminum Co a ‘Hold’ rating with a revised target price.

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Mar 03

Daily Brief Utilities: Adani Total Gas, Greenko Energy Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

Adani Group: GQG Bets Big; MSCI Index Impacts
Greenko Energy Holdings: Stable Operating Performance; High but Manageable Leverage

Adani Group: GQG Bets Big; MSCI Index Impacts

Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

Greenko Energy Holdings: Stable Operating Performance; High but Manageable Leverage

Greenko Energy Holdings (“Greenko”; “the company”) is one of the leading independent clean energy companies in India.
As of September 2022, the company had total operational capacity of about 5.3 gigawatts (GW) – excluding a stake in hydropower operator Teesta Urja Limited – across a diversified portfolio of renewable energy assets.
Wind energy contributes about 3.2GW of operational capacity, hydro contributes about 0.6GW and solar contributes about 1.5GW.

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Mar 03

Daily Brief Industrials: SHL Japan Ltd, Golden Energy & Resources, Alfen, Carr’s Group PLC, Deere & Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal
SIAS Agrees The Widjaja Family’s Offer For Golden Energy Is Low-Balled
SE600 Mar 23 Rebal: Final Changes and Historical Performance Analysis
Carr’s Group – Initial look at FY22 performance
Deere & Company: New Dealer Business System & Other Drivers

SHL Japan (4327 JP) Takeover – Illiquid, Easy, Non-Transparent, but a Done Deal

The parent company of SHL Japan Ltd (4327 JP)‘s largest shareholder is buying out its main customer in Japan.
This is an LBO/MBO situation, and friends and family get it to 63% or so. A tiny sliver from others gets it over the hump.
Should get done easily, but the corporate governance here is not encouraging. Yes, a premium, but no explanation, and it’s a bit low.

SIAS Agrees The Widjaja Family’s Offer For Golden Energy Is Low-Balled

The Widjaja family’s Offer for Golden Energy (GER SP) back in November has been derided in the press, one outspoken minority shareholder, and (a loosely veiled statement) by Singapore RegCo.
Now the Securities Investors Association (Singapore) (SIAS) has thrown its hat into the ring and has called on GEAR to improve the Offer for shareholders.
The long stop date was surprisingly pushed back five months to satisfy the Exit offer conditions. This delay should avail the family of ample time to bump terms.

SE600 Mar 23 Rebal: Final Changes and Historical Performance Analysis

By Janaghan Jeyakumar, CFA

The March 2023 regular rebalance index changes for the SE600 index and the EUROSTX index were announced yesterday.
There are 8 ADDs/DELs for the SE600 index and 5 ADDs and 2 DELs for the EUROSTX index.
In this insight, we take a closer look at the index flow expectations and the historical performance of SE600 and EUROSTX Rebalance events.

Carr’s Group – Initial look at FY22 performance

By Edison Investment Research

Carr’s Group has issued a detailed trading update giving some preliminary financial metrics on FY22 performance. These show both continuing divisions (Speciality Agriculture and Engineering) beating our EBIT estimates, following a strong finish to the year. The shares remain suspended until management finishes the final stages of the audit process, which it believes are ‘essentially complete’. Our note is based on the initial information in the trading update. We will publish a follow-on update once the full results are announced.

Deere & Company: New Dealer Business System & Other Drivers

Deere managed to deliver an all-around beat in the first quarter of the new fiscal year.
The equipment operations had a 20% margin in the financial results for the quarter.
The management expects demand to exceed the industry’s ability to deliver for another year.

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Mar 03

Most Read: Mineral Resources, Posco Chemical Co Ltd, China Vanke (H), Srisawad Power 1979, HKBN Ltd, SBI Sumishin Net Bank, Otsuka Holdings, Adani Total Gas, Osstem Implant and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible
KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms
China Vanke (2202 HK): Placement & Index Flows
SET50 Index Rebalance: SAWAD Added; Buying at the Close Today
SBI Sumishin NetBank (7163 JP) Re-IPO Details, Fundamentals Tearsheet, Likely Index Treatment
HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer
SBI Sumishin Net Bank Pre-IPO – Refiling Updates – Growth Picks Up
Otsuka Holdings – Family Co Selldown for ¥56bn – Take It Vs Peers
Adani Group: GQG Bets Big; MSCI Index Impacts
MBK & Unison Capital Trying to Take Osstem Implant Private: “Two Yards to Endzone”

MVIS Global Rare Earth/Strategic Metals Index Rebalance Preview: One Add, One Delete Possible

The review period for the March rebalance ended yesterday. Announcement of the changes will be made on 10 March and will be implemented at the close on 17 March.
Mineral Resources (MIN AU) is a potential index inclusion if it is added to the index universe with lithium revenues nearing the 50% threshold.
ioneer Ltd (INR AU) is very close to the 98% deletion threshold and could be removed from the index at the March rebalance.

KRX New Deal Index Rebalance Preview: Potential Flows as Announcement Looms

The review period for the March rebalance ended on 31 January, changes will be announced in the next few days and implemented at the close of trading on 9 March.
We forecast one add/delete for the Secondary Battery Index and Game Index, and a couple of adds/deletes for the BBIG Index. There will be a lot of capping changes.
The largest inflows are expected on Posco Chemical (003670 KS) and Douzone Bizon (012510 KS); the largest outflows are expected on SK Innovation (096770 KS) and KMW (032500 KS).

China Vanke (2202 HK): Placement & Index Flows

News reports indicate that China Vanke (H) (2202 HK) is looking to place 300m shares at a price range of HK$12.93-13.20/share to raise around US$500m.
The 300m shares is nearly 33 days of ADV, but around 11-12% of the new shares will be bought by passive trackers early next week and provide near-term support.
China Vanke (H) (2202 HK) trades cheaper than its peers on EV/Sales, EV/EBITDA and forward PE. Shorts have ticked higher in the last couple of weeks.

SET50 Index Rebalance: SAWAD Added; Buying at the Close Today

Srisawad Power 1979 (SAWAD TB) has been added to the SET50 INDEX following the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger.
Passive SET50 INDEX trackers will need to buy 9.7m shares (THB 534m; 1x ADV) of Srisawad Power 1979 (SAWAD TB) at the close of trading today.
There could be two more changes in June with relatively new listings, Thai Life Insurance (TLI TB) and Betagro (BTG TB), being added to the SET50 INDEX.

SBI Sumishin NetBank (7163 JP) Re-IPO Details, Fundamentals Tearsheet, Likely Index Treatment

In February 2022, SBI Holdings (8473 JP) and Sumitomo Mitsui Trust Holdings (8309 JP) announced they would IPO SBI Sumishin Net Bank (7163 JP) but that got cancelled by Ukraine.
Yesterday, they announced they were going to try again. This time, with a reduced price and reduced aspirations. Given the way banks have performed in the last year… 👀
That changes – completely – the picture of index demand. But it also changes the fundamental picture.

HKBN Ltd (1310 HK) Mulls I Square’s HGC Offer

Reportedly (Bloomberg) Hong Kong broadband play HKBN Ltd (1310 HK) has received a takeover offer from I Square’s HGC Global Communications.
HKBN’s shares were halted in the late afternoon trading session yesterday after gaining 11.6%. The reason stated for the suspension was “possible inside information“, not pursuant to the Takeovers Code.
Last May, Bloomberg reported that KKR, PAG, and Stonepeak – amongst others – were considering bids for HKBN. The market cap at the time was US$1.6bn versus US$934mn now.

SBI Sumishin Net Bank Pre-IPO – Refiling Updates – Growth Picks Up

By Sumeet Singh

SBI Sumishin Net Bank (SSNB) is now looking to raise around US$380m in its second listing attempt.
SBI Sumishin Net Bank is a Japanese digital bank set up as a 50-50 joint venture between Sumitomo Mitsui Trust Bank, Japan’s largest trust bank, and SBI Group.
In this note, we talk about the updates from the latest filings.

Otsuka Holdings – Family Co Selldown for ¥56bn – Take It Vs Peers

Today after the close, one of the very large brokers in Japan (N_m_r_) has a block for sale of Otsuka Holdings (4578 JP).
It is only 2.4% of total shares out, and as such, it looks small. But it isn’t that small. The shareholder structure is crowded with non-Real World Float holders.
The discount offered is large compared to absolute and sector-relative volatility.

Adani Group: GQG Bets Big; MSCI Index Impacts

Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN).
There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

MBK & Unison Capital Trying to Take Osstem Implant Private: “Two Yards to Endzone”

MBK Partners and Unison Capital are trying to take Osstem Implant (048260 KS) private. Currently, it is estimated that the MBK/Unison consortium has secured 88.7% stake in Osstem Implant.
In the case of companies listed in KOSDAQ, if you have a stake of 90% or more, the company can generally proceed with discussions on delisting with the exchange.
There is a high probability of delisting sometime in March/April under two different scenarios. The second scenario offers the remaining minority shareholders and arb traders potential for further alpha creation.

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Mar 03

Daily Brief TMT/Internet: Appier Group, JF Wealth Holdings, Mathpresso, Nitro Software Ltd, Baidu, Alibaba (ADR), Bilibili Inc, Adobe Systems, Bilibili, Weibo Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Appier (4180) | It’s Doubled, so What’s Next
JF Wealth Holdings IPO – Can Get Similar Exposure at Cheaper Valuations
Mathpresso: Google Backed AI-Based Math Problem Solver
Nitro Software Backs Potentia’s Offer
Baidu Inc.: Ernie Bot As An Aftermath Of The ChatGPT Effect? Check Out The Key Drivers
Alibaba Group Holding Limited: Major Drivers
Bilibili (Bili Us): Further Downside Risks Ahead
Adobe Systems: Surprisingly Resilient
Bilibili (9626 HK): 4Q22, Not Really Weak Quarter, But Transition for Dropping Games
[Weibo (WB US) Earnings Review]: Maintain BUY for Ads Recovery in Coming Quarters

Appier (4180) | It’s Doubled, so What’s Next

By Mark Chadwick

ChatGPT has focused the investment community on the potential of AI to drive business performance and investment returns.
Forbes picked Adobe as its top AI pick in 2023. We pick Appier, which is a faster-growing alternative in the digital marketing space.
Appier’s revenue grew by over 50% last year and unlike many SaaS companies, it is profitable.

JF Wealth Holdings IPO – Can Get Similar Exposure at Cheaper Valuations

By Clarence Chu

JF Wealth Holdings (9636 HK) is looking to raise US$143m in its Hong Kong IPO.
JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.
In this note, we discuss our earnings estimates, and thoughts on valuation.

Mathpresso: Google Backed AI-Based Math Problem Solver

Mathpresso (Qanda app) uses AI technology to provide homework assistance for math problems.
As of February 2023, the Qanda app solved 4.7 billion math problems. The Qanda app is available in numerous languages including Korean, English, Spanish, Japanese, Vietnamese, Indonesian and Thai.
The company has received $122 million in funding since the inception of the company. Major investors in Mathpresso include Google, Softbank, Smilegate Investment, Legend Holdings, and GGV Capital.

Nitro Software Backs Potentia’s Offer

As expected, Nitro Software Ltd (NTO AU)‘s board has unanimously backed Potentia’s three-tiered revised Offer.
On the 23rd of February, Potentia bumped with a $2.17/share unconditional Offer, increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
Where does this leave Alludo? Nitro reckons Alludo can’t raise their offer because of ASIC’s Truth In Takeovers policy. But Alludo do pocket the A$5mn break fee for their troubles.

Baidu Inc.: Ernie Bot As An Aftermath Of The ChatGPT Effect? Check Out The Key Drivers

Baidu managed to deliver an all-around in the last quarter beat despite the fact that its financial performance was impacted by a challenging environment because of a rapid rise in COVID-19 cases as well as its impact on the broader economy.
Both feeds distributed through the Baidu app and mobile search queries continued experiencing double-digit growth in the quarter.
Baidu is expected to launch Ernie Bot, its new conversational AI bot, powered by its latest in-house large language models, to counter ChatGPT.

Alibaba Group Holding Limited: Major Drivers

Alibaba managed to deliver an all-around beat despite experiencing significant challenges because of the rapid change in the Covid situation.
The company delivered double-digit growth in its free cash flow and adjusted EBITA through operating efficiency and cost optimization.
The strong net cash position of Alibaba is supported by its healthy cash flow generation.

Bilibili (Bili Us): Further Downside Risks Ahead

By Eric Chen

BILI’s 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023
The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.
Reiterate our bearish view on the stock and see further downside risks ahead.

Adobe Systems: Surprisingly Resilient