Smartkarma Daily Briefs

SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer

Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

Boustead Projects (BOCJ SP): Boustead Singapore’s Final S$0.95 Offer to Call Minorities’ Bluff

By Arun George

Boustead Projects (BOCJ SP)/BPL has disclosed an improved final unconditional offer from Boustead Singapore Limited (BOCS SP) at $0.95 per share, a 5.6% premium to the previous S$0.90 offer.
In response to SIAS’ call to table a fairer offer closer to 1x P/NAV, Boustead Singapore has marginally increased its offer from 0.71x to 0.75x P/NAV.
Boustead Singapore’s approach is to call minorities bluff by tabling a “take it or leave it” proposal instead of a fair offer. The shares are currently trading 4.2% above terms.

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Feb 23

Daily Brief Quantitative Analysis: What Is the Historical HSI Moves in Next Two Months and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

What Is the Historical HSI Moves in Next Two Months, and Will It Follow This Year?

What Is the Historical HSI Moves in Next Two Months, and Will It Follow This Year?

By Osbert Tang, CFA

Our Insight Is There a January Effect in Hang Seng Index? correctly pointed to a strong Jan 2023. Based on historical pattern, Mar will be weak while Apr is positive.
Macro factors including Russia-Ukraine war, Sino-US tension, disappointing US CPI and potentially weak 4Q22 corporate earnings are negative to HSI performance in Mar.
In Apr, focus may shift to positive factors which include improved clarity on US rate after FOMC meeting, better guidances for 1Q23 result and favourable policies after NPC/CPPCC.

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Feb 23

Daily Brief Consumer: Zeekr, S.M.Entertainment Co, Honasa Consumer, S&P 500, Accor SA, Stellantis NV, The Walt Disney Co, Yum! Brands Inc, Tata Motors Ltd, Tyson Foods Inc Cl A and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Zeekr IPO Early Look – Possibly US$0 to US$7bn Revenue in Under Three Years
SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao
Honasa Consumer Pre-IPO – The Negatives – Ad Spending Keeping Profits Low
Pullback Begins; How Low Can Indexes Go?; High Yield Spreads & DXY Following Treasury Yields Higher
European High Yield Investment Outlook 2023 – Lucror Analytics
Stellantis: +15% Since Our Initial Note. Strong FY 2022 Finish Above Expectations
The Walt Disney Company: First Ever Subscriber Decline Story For Disney+ & Other Drivers
Yum! Brands Inc.: Major Drivers
Morning Views Asia: Adani Transmission, Tata Motors ADR
Tyson Foods Inc.: Major Drivers

Zeekr IPO Early Look – Possibly US$0 to US$7bn Revenue in Under Three Years

Zeekr, a premium EV brand by Geely, aims to raise around US$1bn (estimated) in its US listing in 1H2023. GS, BofA and MS are said to be running the deal.
Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
In this note, we take an early look at the IPO based on publicly avaiable information.

SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao

By Douglas Kim

Today (22 February), S.M.Entertainment Co (041510 KS) provided a detailed analysis of the strategic partnership with Kakao from shareholders and fans perspectives.
The timing of this detailed strategic partnership announcement is a bit unusual since it comes BEFORE the actual tender offer announcement and potential capital injection into SM Entertainment by Kakao.
Our call on this M&A remains consistent. In the last week of February/early March, Kakao could make a tender offer at prices of at least 140,000/150,000 won, in our view.

Honasa Consumer Pre-IPO – The Negatives – Ad Spending Keeping Profits Low

Honasa Consumer (HC) is looking to raise about US$350m in its upcoming India IPO.
HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
In this note, we will talk about the not-so-positive aspects of the deal.

Pullback Begins; How Low Can Indexes Go?; High Yield Spreads & DXY Following Treasury Yields Higher

By Joe Jasper

Since January, our expectation for 2023 has been for 4165 (and 4165-4200) to cap upside on the S&P 500.
We’ve been preaching caution with the indexes testing resistance, and we are now getting confirmation that suggests a pullback has officially begun
SPX, QQQ, and IWM all demonstrating false breakouts, alongside bullish inflections in Treasury yields, high yield spreads, and the U.S. dollar. Defensives also display bullish RS reversals

European High Yield Investment Outlook 2023 – Lucror Analytics

By Charles Macgregor

In our European High Yield Investment Outlook, we first discuss our high-conviction trade recommendations. We then examine major geopolitical and macroeconomic drivers for the year, as well as commodity price trends. We also assess the interest rate exposure of companies in our coverage universe and elaborate on developments for European HY markets, including new issuances and defaults. Lastly, we cover sectoral developments and the key drivers for companies under our coverage.

Overall, we are cautiously optimistic for 2023, and believe selected names still offer interesting opportunities, albeit spreads have recovered strongly this year.

Stellantis: +15% Since Our Initial Note. Strong FY 2022 Finish Above Expectations

By Alexis Dwek

FY 2022 earnings were above expectations, execution remains strong. Upgrades coming
FY 2023 outlook: double-digit margins, positive FCF; announcement of a share buyback program of €1.5bn + €4.2 ordinary dividend
We remain bullish on Stellantis, our top OEM pick for 2023. Valuation very supportive.

The Walt Disney Company: First Ever Subscriber Decline Story For Disney+ & Other Drivers

Despite a challenging quarter, Walt Disney managed to deliver an all-around beat and expanded internationally.
The sequential improvement was driven by lower SG&A costs and higher revenue at DTC.
At Domestic Parks and Experiences, significant operating income and revenue growth in the quarter was achieved.

Yum! Brands Inc.: Major Drivers

Yum Brands delivered a decent growth in 2022 despite labor shortages and commodity inflation.
It ended the year with an all-around beat in the last quarter and more than 55,000 restaurants operating globally.
We give Yum Brands a ‘Hold’ rating with a revised target price.

Morning Views Asia: Adani Transmission, Tata Motors ADR

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Adani Transmission
Tata Motors ADR

Tyson Foods Inc.: Major Drivers

Tyson Foods delivered a highly disappointing set of results for the last quarter.
The drop in earnings was a result of weaker results in beef, pork, and chicken.
Prepared foods revenues increased for the quarter, driven by pricing actions and volume growth.

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Feb 23

Daily Brief Financials: Japan Post Bank, HSBC Holdings, US 10Y and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
HSBC – Dangling The Dividend
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
US 10yr Yield (USGG10YR): We Have to Focus on the Big Picture (Multi-Year Uptrend)

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

HSBC – Dangling The Dividend

By Daniel Tabbush

Operating costs moved to USD8.9bn in 4Q22 from USD8.0bn in 3Q22
Continued high growth in QoQ credit costs up 33% QoQ in 4Q22
Net fee income seems to be shrinking about USD100m quarterly

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

US 10yr Yield (USGG10YR): We Have to Focus on the Big Picture (Multi-Year Uptrend)

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.
USGG10YR traded in a perfectly structured downtrend from 1981 to 2020. This downtrend was clearly broken in Q2 2022, confirming a dominant multi-year uptrend.
A mere 38.2% retracement of the 1981/2020 downtrend targets 6.24 in the coming 1-2 years. This is our big picture outlook. February may confirm the next leg in this uptrend.

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Feb 23

Daily Brief ECM: Zeekr IPO Early Look – Possibly US$0 to US$7bn Revenue in Under Three Years and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Zeekr IPO Early Look – Possibly US$0 to US$7bn Revenue in Under Three Years
Honasa Consumer Pre-IPO – The Negatives – Ad Spending Keeping Profits Low
Fangzhou Pre-IPO – The Positives – Regulatory Changes and COVID Spurred Growth
Fiserv Inc.: Major Drivers
Amkor Technology Inc.: Expansion of European Supply Chain & Other Drivers
CVS Health Corporation: Acquisitions Of Oak Street Health & Signify Health
ZoomInfo Technologies Inc.: Major Drivers

Zeekr IPO Early Look – Possibly US$0 to US$7bn Revenue in Under Three Years

Zeekr, a premium EV brand by Geely, aims to raise around US$1bn (estimated) in its US listing in 1H2023. GS, BofA and MS are said to be running the deal.
Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
In this note, we take an early look at the IPO based on publicly avaiable information.

Honasa Consumer Pre-IPO – The Negatives – Ad Spending Keeping Profits Low

Honasa Consumer (HC) is looking to raise about US$350m in its upcoming India IPO.
HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
In this note, we will talk about the not-so-positive aspects of the deal.

Fangzhou Pre-IPO – The Positives – Regulatory Changes and COVID Spurred Growth

By Clarence Chu

Fangzhou Group (FANGZHOU HK) is looking to raise about US$300m in its upcoming Hong Kong IPO.
Fangzhou (FZ) is an online chronic disease management (CDM) service provider in China.
In this note, we will talk about the positive aspects of the deal.

Fiserv Inc.: Major Drivers

Fiserv had a decent 2022 and managed to surpass the revenue expectations of Wall Street in its last result.
The company’s better-than-expected growth against the challenging backdrop was a result of growth in organic revenue, improvement in operating margin, and adjusted earnings per share.
Fiserv also advanced its core banking cloud roadmap for its new and existing clients with the acquisition and integration of Finxact.

Amkor Technology Inc.: Expansion of European Supply Chain & Other Drivers

Amkor produced a mixed set of results for the fourth-quarter with revenues of $1.9 billion that were above analyst expectations.
Demand for premium-tier smartphones was stronger than anticipated, while the automotive and industrial markets outperformed other markets where demand was weaker.
The demand for innovative packaging and infotainment systems helped the company was strong in the automotive and industrial sectors.

CVS Health Corporation: Acquisitions Of Oak Street Health & Signify Health

CVS Health has been on an acquisition spree lately and has been in the news for the acquisitions of Oak Street Health and Signify Health.
The company delivered strong financial results that exceeded the revenue expectations as well as earnings expectations of Wall Street with high single-digit top-line growth.
CVS recently announced that it has entered into one definitive agreement to acquire the outstanding shares of Oak Street Health.

ZoomInfo Technologies Inc.: Major Drivers

Even in the face of a challenging economic environment, Zoominfo Technologies delivered an all-around beat with strong revenue growth in the last quarter.
Structurally, Zoominfo is a profitable company committed to driving top-line growth while efficiently growing free cash flow and expanding profitability.
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.

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Feb 23

Most Read: Sembcorp Marine, SATS, Japan Post Bank, DGB Financial Group, SK Telecom, Chicony Electronics, Origin Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge
Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!
SATS SP: S$800m Rights Issue to Fund WFS Acquisition
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
KOSPI200 Index Rebalance Preview: Changes in April & June
Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms

Sembcorp Marine (SMM SP): MSCI Inclusion Confirmed as Shorts Surge

Keppel Corp (KEP SP) shares will trade ex-distribution on 23 February and the settlement of the new Sembcorp Marine (SMM SP) shares is expected to take place on 1 March.
MSCI has announced the inclusion of Sembcorp Marine (SMM SP) in the MSCI Singapore Free Index (SIMSCI INDEX) at the close on 1 March.
There are a lot of recent shorts on Sembcorp Marine (SMM SP) and there could be buying on the stock following the announcement of the MSCI inclusion.

Sembcorp Marine (SMM SP) – MSCI Pulls a Surprise Late Inclusion – All Engines Reverse Full!

Last night, MSCI announced Sembcorp Marine (SMM SP) will be added to MSCI Standard effective 2 March as the KOM Consideration Shares become tradable. This is something of a surprise.
That other index family announced a temp line would be added to the index on receipt by Keppel shareholders. This dramatically changes the Day1 overhang arithmetic.
It erases most but not all of the Day 1 passive overhang, and means adding shares for the existing SMM portion. Medium-long-term active overhang is unchanged.

SATS SP: S$800m Rights Issue to Fund WFS Acquisition

SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

KOSPI200 Index Rebalance Preview: Changes in April & June

Samyang Foods (003230 KS) will replace Hyundai Greenfood (005440 KS) in the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) at the close on 12 April.
We expect DGB Financial Group (139130 KS) will replace Meritz Securities (008560 KS) in early April.
Then we expect another 3 changes at the regular rebalance in June. The potential adds have moved sharply higher recently and there are flows from other index trackers too.

Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising

By Sanghyun Park

Looking at the recent pattern, SKT’s fast-rising is quite noticeable. Its foreign room rose to 12.08%. On the other hand, KT’s foreign room growth seems to be slowing somewhat.
SKT’s pace is fast. If the current pace continues, there will be even the possibility of inclusion with a full adjustment factor of 1.0, exceeding 25%, by the August review.
We should design a momentum trading setup targeting the point when SKT’s foreign room decline trend will be reflected into an MSCI re-inclusion momentum.

SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer

Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations

By Janaghan Jeyakumar, CFA

The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review.
Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday’s close (they weren’t going to change as of Friday).
In this insight, we take a look at Quiddity’s expectations for index flows resulting from these events.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms

By David Blennerhassett

The Brookfield/EIG consortium has reduced its Offer for Origin (ORG AU) to ~A$8.90/share, down from A$9.00/share, after conducting due diligence in the wake of the Aussie government’s gas price intervention.
Oddly, this revised proposal remains non-binding, suggesting a number of political kinks still need to be ironed out.
For its part, Origin’s board reckons the revised proposal has the potential to deliver significant value to shareholders, all but guaranteeing board support, assuming a firm Offer unfolds.

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Feb 23

Daily Brief Event-Driven: SATS SP: S$800m Rights Issue to Fund WFS Acquisition and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SATS SP: S$800m Rights Issue to Fund WFS Acquisition
Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)
SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer
Boustead Projects (BOCJ SP): Boustead Singapore’s Final S$0.95 Offer to Call Minorities’ Bluff
Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang
Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms
EQD | Alibaba (BABA US): Playing the Earnings Via Derivatives
SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao
Nitro Software: Potentia’s Tiered-Bump. Expect Alludo To Cash In

SATS SP: S$800m Rights Issue to Fund WFS Acquisition

SATS (SATS SP) has announced a 323:1000 underwritten rights issue at S$2.2/share that will raise S$798.8m to fund the WFS acquisition.
The rights issue price is a 20% discount to the last close and a 15.9% discount to the Theoretical Ex-Rights Price (TERP).
There has been a lot of short selling on the stock since the start of the year, peaking last week where 43% of total volume traded was from short selling.

Japan Post Holdings To Effectively “Re-IPO” Japan Post Bank (7182 JP)

Overnight a Reuters article suggested Japan Post Holdings (6178 JP) had started talks to sell a near 30%) stake in Japan Post Bank (7182 JP), the first sale since IPO.
A sale is designed with two aims: 1) the TSE requires a 35% tradable share ratio, and 2) JPH is supposed to lower holdings in JPB to <50% by 2025.
This event may include a buyback, and has moving parts, and flows on the back end, but fundamentally a sale would effectively constitute a “re-IPO” of the shares.

SATS – The Future Is Cargo so Shareholders Pay the Freight – S$800mm Rights Offer

Last September, rumours then an announcement SATS (SATS SP) – a leading inflight catering and gateway service provider – would buy WFS – the world’s largest cargo handler hit shares.
They expected to pay €1.187bn or S$1.639bn (9.7x EV/EBITDA), primarily through S$1.7bn of new equity, to close in March 2023. In January, it was S$800mm of rights and a loan.
Shareholder approval came 18 January. Regulatory approvals were received Monday. Closing comes no later than 3 April. Today the company announced a large rights offering.

Boustead Projects (BOCJ SP): Boustead Singapore’s Final S$0.95 Offer to Call Minorities’ Bluff

By Arun George

Boustead Projects (BOCJ SP)/BPL has disclosed an improved final unconditional offer from Boustead Singapore Limited (BOCS SP) at $0.95 per share, a 5.6% premium to the previous S$0.90 offer.
In response to SIAS’ call to table a fairer offer closer to 1x P/NAV, Boustead Singapore has marginally increased its offer from 0.71x to 0.75x P/NAV.
Boustead Singapore’s approach is to call minorities bluff by tabling a “take it or leave it” proposal instead of a fair offer. The shares are currently trading 4.2% above terms.

Japan Post Bank Possible Placement – Here We Go Again with the US$9bn Overhang

By Shifara Samsudeen, ACMA, CGMA

Japan Post Holdings (6178 JP) is looking to trim its stake in Japan Post Bank (7182 JP) by a third, as per Reuters.
The deal would be worth around US$9bn and could come as soon as next month.
In this note, we talk about the news and take an early look at the possible selldown.

Origin Energy (All But) Supports Brookfield/EIG’s Revised Terms

By David Blennerhassett

The Brookfield/EIG consortium has reduced its Offer for Origin (ORG AU) to ~A$8.90/share, down from A$9.00/share, after conducting due diligence in the wake of the Aussie government’s gas price intervention.
Oddly, this revised proposal remains non-binding, suggesting a number of political kinks still need to be ironed out.
For its part, Origin’s board reckons the revised proposal has the potential to deliver significant value to shareholders, all but guaranteeing board support, assuming a firm Offer unfolds.

EQD | Alibaba (BABA US): Playing the Earnings Via Derivatives

By Simon Harris

Alibaba (BABA US) is set to report earnings tomorrow on the 23rd
Stock has pulled back from the highs but earnings could be the next catalyst to determine direction
We use the derivatives market to extract market expectations and suggest some suitable trades

SM Entertainment: Provides a Detailed Analysis of a Strategic Partnership with Kakao

By Douglas Kim

Today (22 February), S.M.Entertainment Co (041510 KS) provided a detailed analysis of the strategic partnership with Kakao from shareholders and fans perspectives.
The timing of this detailed strategic partnership announcement is a bit unusual since it comes BEFORE the actual tender offer announcement and potential capital injection into SM Entertainment by Kakao.
Our call on this M&A remains consistent. In the last week of February/early March, Kakao could make a tender offer at prices of at least 140,000/150,000 won, in our view.

Nitro Software: Potentia’s Tiered-Bump. Expect Alludo To Cash In

By David Blennerhassett

After Alludo stated its $2.15/share Offer price was ‘best and final’, even if a superior proposal emerges, the ball was in Potentia’s court to just sneak in above those terms.
And so they have, with a $2.17/share unconditional Offer for Nitro (NTO AU), increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
Expect Nitro’s board to announce its unanimous support for Potentia’s revised Offer. Expect Alludo to cash in as tendering nears 75%.

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Feb 23

Daily Brief Equity Bottom-Up: HSBC – Dangling The Dividend and more

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

In today’s briefing:

HSBC – Dangling The Dividend
Sea Ltd: With Sell-Side Optimistic Once Again, Sea Looks Ripe For a Short
Smartkarma Corporate Webinar | Audience Analytics: Enabling Businesses in Asia
IQIYI (IQ US): From Turnaround to High-Quality Growth
GoTo Accelerates Profitability Timeline but We Are Not Yet Convinced
Palo Alto Networks: Even Better Than Crowdstrike?
Delta Taiwan Vs. Thailand Monitor: Results Released, 2023E Could See Delta Taiwan Grow Faster
EuBiologics (206650 KS): Accelerated Double-Digit Sales Growth In 2022; Strong Demand to Continue
Stellantis: +15% Since Our Initial Note. Strong FY 2022 Finish Above Expectations
The Walt Disney Company: First Ever Subscriber Decline Story For Disney+ & Other Drivers

HSBC – Dangling The Dividend

By Daniel Tabbush

Operating costs moved to USD8.9bn in 4Q22 from USD8.0bn in 3Q22
Continued high growth in QoQ credit costs up 33% QoQ in 4Q22
Net fee income seems to be shrinking about USD100m quarterly

Sea Ltd: With Sell-Side Optimistic Once Again, Sea Looks Ripe For a Short

By Oshadhi Kumarasiri

Although the sell-side has lowered their immediate and medium-term targets, our analysis points to another surprise to the downside for Sea Ltd (SE US) in 4Q22.
Having exhausted pretty much all the cost-cutting in the past few quarters, we don’t see much room for Sea Ltd to further reduce its losses in the e-commerce business.
With the sell-side optimistic once again expecting a narrower loss, a big miss in the fourth quarter could send Sea Ltd shares back towards their Nov 2022 lows.

Smartkarma Corporate Webinar | Audience Analytics: Enabling Businesses in Asia

By Smartkarma Research

In the upcoming webinar, Datuk William will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 7 March 2023, 17:00 SGT.

Register for the Webinar here

About Audience Analytics

Audience Analytics is a well-established business enabler with a presence in Singapore,
Cambodia, China, Hong Kong, India, Indonesia, Macau, Malaysia, the Philippines, South Korea,
Sri Lanka, Taiwan, Thailand, United Arab Emirates and Vietnam. With products ranging from
printed publications and online portals to exhibitions and business award programs, Audience
Analytics partners with business owners to grow their businesses. The Group’s portfolio
includes SME Magazine, HR Asia, Capital Asia, Mega Career Fair, SME Solutions Expo,
Malaysia Career & Training Fair, Post Graduate Education Fair, ITX Asia, SME 100 Award,
Golden Bull Award, HR Asia Best Companies to Work for in Asia Award and CXP Best
Customer Experience Award.

IQIYI (IQ US): From Turnaround to High-Quality Growth

By Eric Chen

IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.
Years of investments in original content production capabilities paid off and solidified IQ’s leadership in China’s long form video industry.
Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.

GoTo Accelerates Profitability Timeline but We Are Not Yet Convinced

GoTo (GOTO IJ) announced last week that it is accelerating its profit targets and aims to achieve positive adjusted EBITDA by 4QFY2023, advanced by five quarters.
The company also expects Group’s contribution margin to become positive within the first quarter of 2023 accelerated by four quarters compared to the company’s previous guidance.
Having analyzed the company’s revenue and cost base, we think this is too much to ask for as aggressive cost cutting would lead to giving up future growth opportunities.

Palo Alto Networks: Even Better Than Crowdstrike?

By Aaron Gabin

Huge operating margin and FCF beat as PANW is maintaining efficiency with slower headcount growth and supply chain issues abating supporting gross margins.
Deal sizes continue to grow dramatically: $1M deals grew 20% YoY, and transactions size grew nearly 60%. $5M+ deals grew 84% YoY and $10M+ deals grew 140%.
Prisma’ Access’ SASE product continues to be the catalyst driving 2.5x revenue lift vs. legacy firewalls.

Delta Taiwan Vs. Thailand Monitor: Results Released, 2023E Could See Delta Taiwan Grow Faster

By Vincent Fernando, CFA

Results have come out for both companies. Delta Thailand has delivered massive growth in 2022 however in 2023 consensus expects Delta Taiwan to grow faster.
One way to outperform the Thailand SET Index in 2023E could be to simply hold the index stocks but exclude Delta Thailand.
By essentially any fundamental metric, Delta Thailand is over-priced relative to Delta Taiwan and it’s hard to see what the next outperformance driver could be in 2023E.

EuBiologics (206650 KS): Accelerated Double-Digit Sales Growth In 2022; Strong Demand to Continue

By Tina Banerjee

In 2022, Eubiologics (206650 KS) reported revenue growth of 41% YoY to KRW55.47B, driven by increased supply of cholera vaccine to UNICEF following the outbreak of cholera worldwide.
In 2022, more than 29 countries reported cholera cases or outbreaks, up from 20 countries five year ago. Globally cholera vaccine is in short supply.
Eubiologic’s vaccine manufacturing capacity is expected to go up to 90 million doses after completion of the expansion project this year, which will drive sustainable sales growth.

Stellantis: +15% Since Our Initial Note. Strong FY 2022 Finish Above Expectations

By Alexis Dwek

FY 2022 earnings were above expectations, execution remains strong. Upgrades coming
FY 2023 outlook: double-digit margins, positive FCF; announcement of a share buyback program of €1.5bn + €4.2 ordinary dividend
We remain bullish on Stellantis, our top OEM pick for 2023. Valuation very supportive.

The Walt Disney Company: First Ever Subscriber Decline Story For Disney+ & Other Drivers