Smartkarma Daily Briefs

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

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

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

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 Shifara Samsudeen, ACMA, CGMA

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

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.

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Feb 23

Daily Brief Macro: China & HK Banks: Optimism Fading and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

China & HK Banks: Optimism Fading
5 Things We Watch: Higher For Longer, the Consumer, Core Prices, Energy Prices and Cyclicals
CX Daily: Malaysia’s New Trade Minister Explains Why China Matters to Southeast Asia

China & HK Banks: Optimism Fading

By Steven Holden

Allocations in China & HK Banks are at depressed levels. The percentage of funds with exposure has fallen from a high of 78% in 2011 to just 58.2% today.
More funds have exposure to Mexico, Brazil and Indonesian Banks. Versus benchmark, China Banks are the 2nd largest Bank country underweight.
For the major stocks in the sector, we see a picture of low positioning and declining sentiment.

5 Things We Watch: Higher For Longer, the Consumer, Core Prices, Energy Prices and Cyclicals

By Andreas Steno

The higher for longer narrative is tattooed all over the current market
But if the economy is actually rebounding it is not bad news for risk assets
Something has to give. Either rates and equities go up in tandem or else the current narrative is wrongfooted

CX Daily: Malaysia’s New Trade Minister Explains Why China Matters to Southeast Asia

By Caixin Global

China-Malaysia /: Q&A: Malaysia’s new trade minister explains why China matters to Southeast Asia
Security /: China spells out ‘Global Security Initiative’ for international conflict settlement
ChatGPT /: Chinese educators should embrace ChatGPT as part of reform, experts say

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Feb 22

Daily Brief India: TVS Supply Chain Solutions, Jubilant Foodworks and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

TVS Supply Chain Solutions Pre-IPO – Profitability Might Have Been COVID-Driven
Jubilant Foodworks Vs Devyani International | When the Going Gets Tough

TVS Supply Chain Solutions Pre-IPO – Profitability Might Have Been COVID-Driven

By Ethan Aw

TVS Supply Chain Solutions (1915741D IN) is looking to raise about US$500m in its upcoming India IPO.
TVS SCS is an Indian supply chain logistics solution provider which also has global capabilities and network across the value chain with cross deployment abilities, according to RedSeer.
TVS SCS has seen its revenue grow as both its operating segments registered decent growth during the track record period. However, its profitability might have been a result of COVID-19.

Jubilant Foodworks Vs Devyani International | When the Going Gets Tough

By Pranav Bhavsar

Devyani International (DEVYANI IN) has outperformed Jubilant in terms of growth, revenue, and EPS.
Devyani International (DEVYANI IN)’s focus on KFC and Costa Coffee benefits from the “Dine In” trend, while Jubilant faces increased competition.
DEVYANI’s plans to double store count and penetrate underrepresented categories justify its premium over Jubilant Foodworks (JUBI IN) .

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Feb 22

Daily Brief Singapore: Transcelestial Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Singapore

In today’s briefing:

Transcelestial Gets US$10M Funding Boost to Expand Its Lasercomms Tech into US, Ramp up in Asia

Transcelestial Gets US$10M Funding Boost to Expand Its Lasercomms Tech into US, Ramp up in Asia

By e27

Singapore-headquartered last-mile internet connectivity startup Transcelestial Technologies has received US$10 million in a Series A extension round.
Existing investor Airbus Ventures led the round, with participation from Kickstart Ventures, Genesis Alternative Ventures, Wavemaker, Cap Vista, and SEEDS Captial. In-Q-Tel had also joined in a previous undisclosed round.
The new round brings Transcelestial’s total investment raised to date to US$24 million.

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Feb 22

Daily Brief Japan: Amvis Holdings Inc, Torii Pharmaceutical, Japan Tobacco, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Amvis Holdings Placement – Has Done Exceptionally Well, Now It’s Prime Time
Torii Pharmaceutical (4551 JP): Board Opposes Shareholder Proposal for Appropriation of Surplus
Japan Tobacco (2914) | Time to Work the Balance Sheet
Dissolving the Parent-Subsidiary Listing Is a Powerful Way to Increase Valuations?

Amvis Holdings Placement – Has Done Exceptionally Well, Now It’s Prime Time

Amvis Holdings Inc (7071 JP) (AH)’s founder aims to raise around US$250m via a secondary follow-on offering.
The deal will increase the free-float of the stock and will lead to the stock being transferred to the Prime segment.
In this note, we will talk about the placement and run the deal through our ECM framework.

Torii Pharmaceutical (4551 JP): Board Opposes Shareholder Proposal for Appropriation of Surplus

By Tina Banerjee

LIM Japan Event Master Fund sent a document to Torii Pharmaceutical (4551 JP) requesting the company to distribute 100% of its surplus to shareholders and conduct a drastic share buyback.
LIM is of view that Torii has excess cash balances, which is more than the market cap of the company. Inefficient use of capital has led to low single-digit ROE.
Torii opposes the proposal, as the company thinks it needs adequate cash to pursue business development aka in-licensing of new drugs.

Japan Tobacco (2914) | Time to Work the Balance Sheet

By Mark Chadwick

The balance sheet is in great shape and could fund a much more aggressive growth strategy (or higher shareholder returns)
JT lags peers in the higher growth vape & oral markets. Ploom X needs investment to be a global hit. The balance sheet can easily fund both
Why bullish? The stock is trading cheap and offering a higher yield than its five-year average

Dissolving the Parent-Subsidiary Listing Is a Powerful Way to Increase Valuations?

By Aki Matsumoto

While this was a major step forward, it did not adequately explain how Fujitsu would invest the cash from the sale of these non-core businesses in its core businesses.
The investment strategy of buying listed subsidiaries with parent-subsidiary listings was shown to be reasonable. The exit risk may be lower when the parent makes the subsidiary a wholly-owned subsidiary.
If valuations are enhanced by expectations of increased corporate value through reviews of the parent’s business portfolio, the dissolution of the parent-subsidiary listing is a powerful way to enhance valuations.

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Feb 22

Daily Brief Australia: Origin Energy, New Century Resources, Respiri Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Origin Energy (ORG AU): Recut Deal Is a Win-Win
Sibanye-Stillwater Raids New Century Resources (NCZ AU)
Respiri – wheezo included in paediatric standard of care

Origin Energy (ORG AU): Recut Deal Is a Win-Win

By Arun George

Origin Energy (ORG AU) has disclosed a revised non-binding proposal from Brookfield/EIG. The headline price has been lowered by -1.1% from A$9.00 to A$8.90 per share.
Under the revised proposal, shareholders’ first 100,000 shares get A$8.90. Beyond that ownership, the offer is A$4.334 plus US$3.194 per share (currently worth A$8.99 per share).
While the recut introduces FX rate risk, the average implied value is A$9.01 since 10 November. Both the offeror and the Board seem keen to get a binding offer.

Sibanye-Stillwater Raids New Century Resources (NCZ AU)

Sibanye-Stillwater (SGL SJ), the holder of 19.9% of shares, has made an off-market takeover for Queensland zinc miner New Century Resources (NCZ AU) at $1.10/share, a 42.9% premium to last close.
Sibanye-Stillwater said it was concerned about the change in the strategic direction of NCZ under the current management.
Concurrently, Sibanye-Stillwater has made an on-market buy order for 10.92% (14.4mn shares) of shares out to take its stake to ~30%. Shares closed at $1.095. ~32mn shares changed hands.

Respiri – wheezo included in paediatric standard of care

By Edison Investment Research

Respiri has announced the successful completion of the Michigan Children’s Hospital’s pilot programme assessing the wheezo SAAS (Respiri and partner Access Telehealth) platform. The initial March 2022 agreement enabled pulmonologists to employ wheezo to increase the engagement of paediatric patients with asthma. The hospital will include the wheezo RPM programme in its current standard of care for eligible asthma patients. We expect the paediatric population to be one of the cohorts to find the most utility from the wheezo monitoring protocol (given this population is not always able to self-identify and flag symptoms) and usage feedback from these patients is anticipated to be crucial for Respiri. We also note the Michigan Children’s Hospital is a part of the of the NYSE-listed Tenet Healthcare Corporation (over 60 hospitals across the US) and uptake, if encouraging, can support a broader roll out.

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Feb 22

Daily Brief South Korea: SK Telecom, DGB Financial Group, Samyang Foods and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Foreign Room Race for MSCI Re-Inclusion: SK Telecom Is Unexpectedly Rising
KOSPI200 Index Rebalance Preview: Changes in April & June
Samyang Foods: KOSPI 200 Inclusion & Improving Fundamentals

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.

KOSPI200 Index Rebalance Preview: Changes in April & June