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Smartkarma Daily Briefs

Jan 25
0

Daily Brief ESG: The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX

The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX

By Aki Matsumoto

  • Since simply increasing shareholder returns won’t increase corporate value/market cap, it’s more natural to present shareholder return policy together with reasonable earnings target, even when such policy is put forth.
  • In fact, the companies exemplified in the Nikkei article saw share prices rise for companies with positive earnings outlooks and increased conviction that they will meet their medium-term earnings targets.
  • This is  a more serious and urgent issue for transitional companies, as companies with market cap of less than 10 billion yen in October 2023 will be excluded from TOPIX.

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Jan 25
0

Daily Brief Credit: Morning Views Asia: JSW Steel Ltd and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: JSW Steel Ltd, Reliance Industries

Morning Views Asia: JSW Steel Ltd, Reliance Industries

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.

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Jan 25
0

Daily Brief Thematic (Sector/Industry): Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power
  • Japan Fintech – Cashless Payments Competition Is Heating Up

Good Morning Japan |NYSE Glitches; Stocks Mixed; While JP Freezes the Public Warms to Nuclear Power

By Mark Chadwick

  • OVERSEAS.  Stocks Mixed as SPX -0.1% as NYSE Glitches on Open;  MSFT Beats  but Chip Giant Texas Instruments weak; DoJ calls for Google Ad Break up
  • JAPAN.  NKY Futs -0.4% vs Cash; USDJPY steady at 130.19; Japan Freezes – No Joke; Nikkei Survey shows public sentiment toward Nuclear Power improving; Nidec misses; Elliot tgts DNP
  • DAILY NUGGET. Is Japan Stuck ? This is the view of outgoing BBC reporter. We disagree – changes are happening.

Japan Fintech – Cashless Payments Competition Is Heating Up

By Kirk Boodry

  • Japan trails global peers in the proportion of payments that are cashless but it is starting to close the gap led by Internet and telecom companies
  • Rakuten is a fintech leader in Japan (15% of cashless payments) but PayPay is closing the gap as it ramps up cashless app users
  • We expect compound annual growth in the mid-teens but margin expansion will be limited by competitive intensity

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Jan 25
0

Daily Brief ECM: Mankind Pharma (6596876Z IN) Pre-IPO: Solid India-Centric Growth Story Fueled by Marquee Brands and more

By | Daily Briefs, ECM

In today’s briefing:

  • Mankind Pharma (6596876Z IN) Pre-IPO: Solid India-Centric Growth Story Fueled by Marquee Brands
  • Nextracker IPO Valuation Analysis
  • Sonos Inc: New Launches & Other Drivers
  • Sunrun Inc: Collaboration With The Enel Group & Other Drivers
  • Qualys Inc.: The Blue Hexagon Acquisition & Other Drivers
  • Marathon Oil: Acquisition Of Eagle Ford Assets Of Ensign Resources & Other Drivers
  • Enphase Energy Inc: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (01/23)
  • Lululemon Athletica: Major Drivers
  • Appian Corp: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

Mankind Pharma (6596876Z IN) Pre-IPO: Solid India-Centric Growth Story Fueled by Marquee Brands

By Tina Banerjee

  • Mankind Pharma (6596876Z IN), India’s fourth largest pharmaceutical company, has filed DRHP for INR55B IPO, which is comprised of an OFS of 40M shares by promoters and existing investors.  
  • Mankind has 36 pharma brands that have each achieved annual revenue of more than INR500M. 18 of its brands are among 300 top selling brands of the Indian pharma market.
  • During FY20–22, domestic sales of Mankind had a CAGR of ~16%, which is ~1.5 times that of the Indian pharma market, which grew at a CAGR of ~11%.

Nextracker IPO Valuation Analysis

By Andrei Zakharov

  • NEXTracker (NXT US) , a leading solar tracker and software solutions provider for utility-scale and distributed generation projects, filed for an IPO.
  • According to Crunchbase, NEXTracker (NXT US)  has raised ~$548M in funding over four rounds, and investors include Sigma Partners, DBL Partners, SJF Ventures, and American private equity firm TPG.
  • We have a favorable view of the upcoming Nextracker IPO and see upside potential to the last round valuation of ~$3B, when the company announced a strategic investment from TPG. 

Sonos Inc: New Launches & Other Drivers

By Baptista Research

  • Sonos delivered a decent performance in the last quarter with revenue growth beyond market expectations and narrower-than-expected losses despite the challenging macroeconomic backdrop.
  • In the last quarter, installer solutions revenue grew, driven by robust demand for the company’s Port and Amp products in spite of persistent supply challenges.
  • Sonos continues to see strong performance in its installer solutions channel in spite of slowing house activity in the United States.

Sunrun Inc: Collaboration With The Enel Group & Other Drivers

By Baptista Research

  • Sunrun delivered strong results in the last quarter as it continued expanding net subscriber value and delivering cost efficiency.
  • During the quarter, Lunar Energy unveiled the clean energy company where Sunrun invested for accelerating whole-home electrification.
  • Ford’s partnership with Sunrun continues to deliver strong results.

Qualys Inc.: The Blue Hexagon Acquisition & Other Drivers

By Baptista Research

  • Qualys delivered a strong set of results for the previous quarter, surpassing Wall Street expectations in terms of revenues as well as earnings.
  • It was another quarter of steady VMDR (Vulnerability, Management, Detection, Response) adoption that has developed 45% of the company’s customers worldwide.
  • VMDR applications of the company saw an increasing number of vendors and Qualys managed to build a high positioning in the recent market.

Marathon Oil: Acquisition Of Eagle Ford Assets Of Ensign Resources & Other Drivers

By Baptista Research

  • Marathon Oil delivered a mixed result for the quarter as it surpassed the revenue expectations of Wall Street.
  • It brought 13 wells to sales, among which 8 were 2-mile laterals and the productivity for these extended laterals is very strong.
  • We provide the stock of Marathon Oil Corporation with a ‘Hold’ rating with a revision in the target price.

Enphase Energy Inc: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (01/23)

By Baptista Research

  • Enphase delivered solid results for the past quarter driven largely by solid revenues through microinverters which helped them produce an all-around beat.
  • Enphase Energy has recently announced the launch of IQ8 Microinverters in the Netherlands and France, thereby making the foremost expansion into the international markets for this product.
  • In the U.S., the microinverter channel inventory has been very healthy, and its storage channel inventory was slightly elevated because of longer installation times.

Lululemon Athletica: Major Drivers

By Baptista Research

  • Lululemon’s results for the last quarter continued to be strong and the company produced an all-around beat despite the fact that the external environment remains challenging.
  • In terms of traffic driven and revenue, Black Friday was among the biggest days for the company.
  • The revenue growth of Lululemon remained balanced and strong across various drivers, and the company’s market share gains continued.

Appian Corp: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

By Baptista Research

  • Appian Corp delivered a mixed result in the last quarter with revenues exceeding Wall Street expectations largely driven by the growth in cloud subscription revenue.
  • In every category, the revenue growth is healthy and setting records in the quarter.
  • While a large part of the tech industry has been retrenching, Appian went ahead and hired 221 employees in the last quarter.

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Jan 25
0

Daily Brief Energy/Materials: Norwest Energy NL, China Internet Investment Finance Holdings, Asian Paints, NEXTracker, JSW Steel Ltd, Marathon Oil and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Norwest Energy (NWE AU): The Board Perplexing Succumbs to MinRes’ Revised Offer
  • China Internet Investment (810 HK): 98% Downside
  • Asian Paints (APNT IN) | Masking Growth Concerns
  • Nextracker IPO Valuation Analysis
  • Morning Views Asia: JSW Steel Ltd, Reliance Industries
  • Marathon Oil: Acquisition Of Eagle Ford Assets Of Ensign Resources & Other Drivers

Norwest Energy (NWE AU): The Board Perplexing Succumbs to MinRes’ Revised Offer

By Arun George

  • Mineral Resources (MIN AU) has revised its offer from 1 MinRes share for every 1,367 NWE shares to 1 MinRes share for every 1,300 NWE shares. The offer is unconditional. 
  • The Norwest Energy NL (NWE AU) Board now recommends the offer. Most of the value uplift is due to the 17.4% increase in MinRes’ share price since 15 December.
  • MinRes’ revised off-market takeover offer is fair in comparison to Warrego Energy (WGO AU)’s bids and historical ranges. However, this is predicated on the MinRes maintaining its share price run.

China Internet Investment (810 HK): 98% Downside

By David Blennerhassett

  • Bubble-Stock China Internet Investment Finance Holdings (810 HK) (CIIFH) was suspended on the 10 January pursuant to the Hong Kong Code on Takeovers and Mergers. 
  • It has now announced a possible voluntary conditional takeover. No price was mentioned and terms remain indeterminate.  
  • CIIFH, which invests primarily in listed Hong Kong securities, is trading at an eye-watering 59.5x NAV. 98% downside from here is conceivable. 

Asian Paints (APNT IN) | Masking Growth Concerns

By Pranav Bhavsar

  • Asian Paints (APNT IN) reported flat year-over-year volumes and flat sales in domestic decorative paints in 3Q FY23. The company’s gross margin recovery is aligned with easing raw material prices.  
  • The company attributed the rough quarter to a heavy base from last year’s price increases and a prolonged monsoon, which impacted October volumes.
  • We believe that the volumes are lower than what has been reported.  Increasing competition could challenge APNT’s premium valuation.

Nextracker IPO Valuation Analysis

By Andrei Zakharov

  • NEXTracker (NXT US) , a leading solar tracker and software solutions provider for utility-scale and distributed generation projects, filed for an IPO.
  • According to Crunchbase, NEXTracker (NXT US)  has raised ~$548M in funding over four rounds, and investors include Sigma Partners, DBL Partners, SJF Ventures, and American private equity firm TPG.
  • We have a favorable view of the upcoming Nextracker IPO and see upside potential to the last round valuation of ~$3B, when the company announced a strategic investment from TPG. 

Morning Views Asia: JSW Steel Ltd, Reliance Industries

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.

Marathon Oil: Acquisition Of Eagle Ford Assets Of Ensign Resources & Other Drivers

By Baptista Research

  • Marathon Oil delivered a mixed result for the quarter as it surpassed the revenue expectations of Wall Street.
  • It brought 13 wells to sales, among which 8 were 2-mile laterals and the productivity for these extended laterals is very strong.
  • We provide the stock of Marathon Oil Corporation with a ‘Hold’ rating with a revision in the target price.

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Jan 25
0

Daily Brief Event-Driven: KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings? and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?
  • YFO To Take the Fight To Toyo Construction’s Board
  • KRX New Deal Index Rebalance Preview: Some Big Impact Names
  • Norwest Energy (NWE AU): The Board Perplexing Succumbs to MinRes’ Revised Offer
  • China Internet Investment (810 HK): 98% Downside
  • Coway Is a Prime Candidate for Corporate Activism in Korea
  • Quiddity Leaderboard STOXX Europe Mar 23: 5 ADDs/DELs and Potential Downweights for EDF and VTWR
  • A Tender Offer of Osstem Implant by MBK & Unison Capital?
  • Detailing Maekyung Report on MBK’s Tender Offer to Osstem Implant Shareholders at a 20% Premium

KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?

By Travis Lundy

  • KLine is the cheapest of the three Japan majors in terms of forward consensus PER. And forward EPS ratios are improving as the company buys back shares. 
  • The CEO mentioned in December the possibility of additional shareholder return this fiscal year based on cashflow. 
  • In this insight, we look at what he knew then, and what he might know now, and the chances for an additional buyback (and how it might work).

YFO To Take the Fight To Toyo Construction’s Board

By Travis Lundy

  • YFO offered another Press Release yesterday. This one outlines what they see as Corporate Governance failures and offers a NEW POLICY.
  • The Corporate Governance failures are indeed, failures. Toyo’s Board has failed to be transparent with shareholders, and in not at least addressing the takeover proposal, has failed its duties.
  • NEW POLICY? Elect new independent directors “capable of improving the long-term corporate value and maximizing the interests of the general shareholders.”  Soft war starts now.

KRX New Deal Index Rebalance Preview: Some Big Impact Names

By Brian Freitas

  • The review period for the March rebalance ends on 31 January, the changes will be announced towards end February and implemented at the close of trading on 9 March.
  • We forecast one add/delete for the 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).

Norwest Energy (NWE AU): The Board Perplexing Succumbs to MinRes’ Revised Offer

By Arun George

  • Mineral Resources (MIN AU) has revised its offer from 1 MinRes share for every 1,367 NWE shares to 1 MinRes share for every 1,300 NWE shares. The offer is unconditional. 
  • The Norwest Energy NL (NWE AU) Board now recommends the offer. Most of the value uplift is due to the 17.4% increase in MinRes’ share price since 15 December.
  • MinRes’ revised off-market takeover offer is fair in comparison to Warrego Energy (WGO AU)’s bids and historical ranges. However, this is predicated on the MinRes maintaining its share price run.

China Internet Investment (810 HK): 98% Downside

By David Blennerhassett

  • Bubble-Stock China Internet Investment Finance Holdings (810 HK) (CIIFH) was suspended on the 10 January pursuant to the Hong Kong Code on Takeovers and Mergers. 
  • It has now announced a possible voluntary conditional takeover. No price was mentioned and terms remain indeterminate.  
  • CIIFH, which invests primarily in listed Hong Kong securities, is trading at an eye-watering 59.5x NAV. 98% downside from here is conceivable. 

Coway Is a Prime Candidate for Corporate Activism in Korea

By Douglas Kim

  • In this insight, we discuss the major reasons why Coway Co Ltd (021240 KS) is a prime candidate for corporate activism in Korea.
  • Netmarble has done a poor job with Coway post its acquisition in 2019.
  • An action plan for Coway is to return at least half of its net profit through dividends and share buybacks/cancellations.

Quiddity Leaderboard STOXX Europe Mar 23: 5 ADDs/DELs and Potential Downweights for EDF and VTWR

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the March 2023 Rebalance.
  • Based on the latest available data, I see five ADDs/DELs for the STOXX Europe 600 Index during the March 2023 review.
  • Separately, Electricite De France Sa (EDF FP) and Vantage Towers (VTWR GR) could have index outflows triggered by extraordinary float adjustments before or during the March 2023 review. 

A Tender Offer of Osstem Implant by MBK & Unison Capital?

By Douglas Kim

  • On 24 January, it was reported in Maeil Business Daily that MBK and Unison Capital are ready to take over the management rights of Osstem Implant through a tender offer.
  • For now, Osstem Implant, MBK Partners, and Unison Capital have not confirmed on the validity of this news.
  • We would attach a 70-90% probability that indeed MBK Partners and Unison Capital Korea are ready to launch a tender offer on Osstem Implant.

Detailing Maekyung Report on MBK’s Tender Offer to Osstem Implant Shareholders at a 20% Premium

By Sanghyun Park

  • Maekyung exclusively reports MBK will do a tender offer to Osstem Implant shareholders at a 20% premium to buy a 15% stake.
  • As Maekyung is a first-tier news outlet in Korea, we have to see enough credibility in this report. We should expect to see it in an official regulatory filing soon.
  • We should design a play that actively utilizes the tender offer event very elaborately. Here, we need to consider immediate offerings and potential delisting from a longer-term perspective.

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Jan 25
0

Daily Brief Macro: India’s Prospects: One (Huge) Positive and Three Risks and more

By | Daily Briefs, Macro

In today’s briefing:

  • India’s Prospects: One (Huge) Positive and Three Risks
  • Asset Allocation Watch – How to Position for USD Weakness?
  • Beijing Shows Signs of Shifting Towards Policy Pragmatism
  • Activity Resisting Recession Into 2023

India’s Prospects: One (Huge) Positive and Three Risks

By Manu Bhaskaran

Is India the next growth miracle? Market sentiment is increasingly optimistic that this will be so. In particular, the country’s remarkable progress in digitalizing the economy has created the conditions for a burst of entrepreneurial activity. However, some of its traditional weaknesses such as limited openness, macroeconomic mismanagement, and social cleavages need to be remedied to unlock India’s full economic potential. 

Asset Allocation Watch – How to Position for USD Weakness?

By Andreas Steno

  • Seek carry / exposure in Eastern Europe, if you think the USD will weaken further – it is your best BETA
  • Prefer metals to oil as the correlation between a weaker USD and higher commodity prices is stronger and more stable in precious -and industrial metals over time
  • Hold less (USD) cash than in 2022 as investors will seek for the USD cash exit door

Beijing Shows Signs of Shifting Towards Policy Pragmatism

By Manu Bhaskaran

After years of hardball on economic and foreign policy, policymakers in Beijing are embarking on major policy pivots that aim to resuscitate an ailing economy and re-engage with foreign governments on friendlier terms. The jury is still out on whether these are sufficient.

Activity Resisting Recession Into 2023

By Phil Rush

  • Flash PMIs broadly bounced back a little in Jan-23, as activity proved surprisingly resilient. Manufacturing’s trend decline broke, at least temporarily.
  • Most firms are still reporting activity declines, albeit fewer than before, aided by falling energy prices. Resilience remains too broad to break tight labour markets.
  • Central banks need cyclical pressures to fall back to target-consistent levels. Postponing that victory sustains the need for tight monetary policy.

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Jan 25
0

Daily Brief Industrials: Kawasaki Kisen Kaisha, Toyo Construction, Nidec Corp, Comfortdelgro Corp, Baycurrent Consulting, Sunrun Inc, Enphase Energy, United Airlines Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?
  • YFO To Take the Fight To Toyo Construction’s Board
  • Nidec (6594) | Down but Not Out
  • Comfortdelgro (CD): Now or Never
  • Baycurrent Consulting: High Value-Added Projects and New Consulting Areas Drive New Phase of Growth
  • Sunrun Inc: Collaboration With The Enel Group & Other Drivers
  • Enphase Energy Inc: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (01/23)
  • United Airlines: Major Drivers

KLINE (9107) – Chances for an Additional Buyback At Q3 Earnings?

By Travis Lundy

  • KLine is the cheapest of the three Japan majors in terms of forward consensus PER. And forward EPS ratios are improving as the company buys back shares. 
  • The CEO mentioned in December the possibility of additional shareholder return this fiscal year based on cashflow. 
  • In this insight, we look at what he knew then, and what he might know now, and the chances for an additional buyback (and how it might work).

YFO To Take the Fight To Toyo Construction’s Board

By Travis Lundy

  • YFO offered another Press Release yesterday. This one outlines what they see as Corporate Governance failures and offers a NEW POLICY.
  • The Corporate Governance failures are indeed, failures. Toyo’s Board has failed to be transparent with shareholders, and in not at least addressing the takeover proposal, has failed its duties.
  • NEW POLICY? Elect new independent directors “capable of improving the long-term corporate value and maximizing the interests of the general shareholders.”  Soft war starts now.

Nidec (6594) | Down but Not Out

By Mark Chadwick

  • Nidec slashed its full year operating profit guidance by 48% to 110 billion yen
  • For Q3, Nidec reported an operating profit of 28 billion yen (-37% YoY), significantly below street expectations (51 billion)
  • We remain bullish, expecting cost cutting efforts to ignite a profit recovery next year

Comfortdelgro (CD): Now or Never

By Henry Soediarko

  • New leadership with expertise in Australia could lead to value unlocking for Australian assets. 
  • Q3 22 ridership has gone up to 85% and 83% of pre-COVID level for NEL and DTL while in Q3 21 was only 49% for NEL and 43% for DTL.
  • The reopening has brought tourists back and increased ridership level while China’s reopening has just started and is not yet priced in. 

Baycurrent Consulting: High Value-Added Projects and New Consulting Areas Drive New Phase of Growth

By Shifara Samsudeen, ACMA, CGMA

  • Baycurrent’s share price has moved up 41.3% YTD with the company reporting strong earnings for 3QFY02/2023 which beat consensus estimates by a huge margin.
  • With pandemic conditions fading off, share price began to fall with top-line growth declining slightly. However, growth rates have bounced back, and margins have seen strong improvement reaching new highs.
  • Though share priced has rallied significantly over the last few months, we think there is further upside driven by value-added projects and expansion into new consulting areas.

Sunrun Inc: Collaboration With The Enel Group & Other Drivers

By Baptista Research

  • Sunrun delivered strong results in the last quarter as it continued expanding net subscriber value and delivering cost efficiency.
  • During the quarter, Lunar Energy unveiled the clean energy company where Sunrun invested for accelerating whole-home electrification.
  • Ford’s partnership with Sunrun continues to deliver strong results.

Enphase Energy Inc: Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (01/23)

By Baptista Research

  • Enphase delivered solid results for the past quarter driven largely by solid revenues through microinverters which helped them produce an all-around beat.
  • Enphase Energy has recently announced the launch of IQ8 Microinverters in the Netherlands and France, thereby making the foremost expansion into the international markets for this product.
  • In the U.S., the microinverter channel inventory has been very healthy, and its storage channel inventory was slightly elevated because of longer installation times.

United Airlines: Major Drivers

By Baptista Research

  • United Airlines faced a challenging operating environment during the last quarter but managed to deliver an all-around beat.
  • Although the company had high load factors, it quickly accommodated thousands more passengers when other airlines’ flights were cancelled.
  • Domestic capacity decreased by 8%, while international capacity decreased by 12%.

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Jan 25
0

Daily Brief TMT/Internet: Tencent, Douzone Bizon, Communication Services Select, Automatic Data Processing, On Semiconductor, WANdisco plc, Qualys Inc, Schrole Group Ltd, Twilio Inc, Appian Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Tencent (700.HK): Valuing Wechat Channels
  • KRX New Deal Index Rebalance Preview: Some Big Impact Names
  • Upgrading Communications, Downgrading Staples – Both to Market Weight; US Dollar Major Top
  • Automatic Data Processing Inc (ADP): Major Drivers
  • ON Semiconductor Corp: Major Drivers
  • WANdisco – New use case in manufacturing opening up?
  • Qualys Inc.: The Blue Hexagon Acquisition & Other Drivers
  • Schrole Group Ltd – Record Cash Receipts and Quarterly Operating Cashflow
  • Twilio Inc: Launch Of Healthcare & Life Science Platform & Other Drivers
  • Appian Corp: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

Tencent (700.HK): Valuing Wechat Channels

By Eric Chen

  • Recent developments highlighted the strategic significance of Wechat Channels (微信视频号) that Tencent’s management attached to the company’s future.
  • Counter-Intuitively, while backing of the social giant saves Wechat Channels’ efforts for traffic acquisition, it also limits the product’s potential to develop into a content ecosystem rivaling Douyin.
  • Our base case values the product at $29 billion, or 6% of Tencent’s market cap as of January 20th.

KRX New Deal Index Rebalance Preview: Some Big Impact Names

By Brian Freitas

  • The review period for the March rebalance ends on 31 January, the changes will be announced towards end February and implemented at the close of trading on 9 March.
  • We forecast one add/delete for the 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).

Upgrading Communications, Downgrading Staples – Both to Market Weight; US Dollar Major Top

By Joe Jasper

  • In our January 10th Compass, we discussed a break above 3910 on SPX would signal a tradable rally, with 4100-4165 our target, the top-end of our expected 2023 trading range.
  • We believe equities are still in the midst of a rally/short squeeze, but that the rally is likely to fizzle in the 4100-4165 area.
  • After being underweight Communications (XLC) since Nov 2021, sidestepping 20% underperformance vs. SPX, we now see signs of price and RS bottoms, and we are upgrading to market weight. Buy.

Automatic Data Processing Inc (ADP): Major Drivers

By Baptista Research

  • ADP had a great start to fiscal 2023 and delivered an all-around beat in its last result.
  • The company overcame elevated expense growth over the first quarter of last year and ongoing investments in the business by delivering 30 basis points of adjusted EBIT margin expansion.
  • In contrast, the start of bookings growth in the foreign business was slower than the management had anticipated.

ON Semiconductor Corp: Major Drivers

By Baptista Research

  • ON Semiconductor Corporation delivered another all-around beat in its last result.
  • The company is a well-known provider of intelligent sensing and power solutions and has established a good market position within its niche in the semiconductor market.
  • More and more companies are considering ON Semiconductors as their long-term strategic partners as the company walks according to an amazing foresight.

WANdisco – New use case in manufacturing opening up?

By Edison Investment Research

WANdisco’s deal flow momentum continues, with a $9m contract with a European consumer goods and manufacturing company. This win is notable in that it is the company’s first deployment for migrating a manufacturing company’s process data to the cloud. The manufacturing sector is increasingly producing large sets of data and has therefore been identified as a strategic target market for WANdisco. The deal provides early support to our recently upgraded 2023 estimates.

Qualys Inc.: The Blue Hexagon Acquisition & Other Drivers

By Baptista Research

  • Qualys delivered a strong set of results for the previous quarter, surpassing Wall Street expectations in terms of revenues as well as earnings.
  • It was another quarter of steady VMDR (Vulnerability, Management, Detection, Response) adoption that has developed 45% of the company’s customers worldwide.
  • VMDR applications of the company saw an increasing number of vendors and Qualys managed to build a high positioning in the recent market.

Schrole Group Ltd – Record Cash Receipts and Quarterly Operating Cashflow

By Research as a Service (RaaS)

  • Schrole Group Ltd (ASX:SCL) is an Australian software company focused on providing human resource technology solutions to the international education and training sector.
  • Schrole has developed a suite of five HR Software-as-a-Service (SaaS) offerings including the core product, Schrole Connect, a SaaS-based staff recruitment platform.
  • Schrole Group has reported its best- ever quarterly cash receipts and operating cashflow which respectively increased 38% and 138% over the same period in CY21.

Twilio Inc: Launch Of Healthcare & Life Science Platform & Other Drivers

By Baptista Research

  • Like most of its tech peers, Twilio has also taken a beating in the markets even though its last results were not too bad.
  • In fact, the company delivered an all-around beat in the previous quarter and has had some interesting developments.
  • Given the current macro-economic climate, we are neutral on Twilio and give it a ‘Hold’ rating with a revised target price.

Appian Corp: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

By Baptista Research

  • Appian Corp delivered a mixed result in the last quarter with revenues exceeding Wall Street expectations largely driven by the growth in cloud subscription revenue.
  • In every category, the revenue growth is healthy and setting records in the quarter.
  • While a large part of the tech industry has been retrenching, Appian went ahead and hired 221 employees in the last quarter.

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Jan 25
0

Daily Brief Health Care: Mankind Pharma, Osstem Implant, Hutchmed China Ltd, Bayer Ag Reg, PolyNovo Ltd, Teladoc Health, Inc. and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Mankind Pharma (6596876Z IN) Pre-IPO: Solid India-Centric Growth Story Fueled by Marquee Brands
  • A Tender Offer of Osstem Implant by MBK & Unison Capital?
  • Hutchmed China Ltd (13.HK/HCM.US) – The $1.13B Eye-Catching Deal with Takeda and the New Outlook
  • Detailing Maekyung Report on MBK’s Tender Offer to Osstem Implant Shareholders at a 20% Premium
  • Bayer: Focusing On Fundamentals – What The Market Isn’t Picking Up!
  • PolyNovo (PNV AU): 1H23 Result- Growth Trajectory Continues; Fund Raising Strengthens Balance Sheet
  • Teladoc Inc: New Integrated Healthcare Experience & Other Developments

Mankind Pharma (6596876Z IN) Pre-IPO: Solid India-Centric Growth Story Fueled by Marquee Brands

By Tina Banerjee

  • Mankind Pharma (6596876Z IN), India’s fourth largest pharmaceutical company, has filed DRHP for INR55B IPO, which is comprised of an OFS of 40M shares by promoters and existing investors.  
  • Mankind has 36 pharma brands that have each achieved annual revenue of more than INR500M. 18 of its brands are among 300 top selling brands of the Indian pharma market.
  • During FY20–22, domestic sales of Mankind had a CAGR of ~16%, which is ~1.5 times that of the Indian pharma market, which grew at a CAGR of ~11%.

A Tender Offer of Osstem Implant by MBK & Unison Capital?

By Douglas Kim

  • On 24 January, it was reported in Maeil Business Daily that MBK and Unison Capital are ready to take over the management rights of Osstem Implant through a tender offer.
  • For now, Osstem Implant, MBK Partners, and Unison Capital have not confirmed on the validity of this news.
  • We would attach a 70-90% probability that indeed MBK Partners and Unison Capital Korea are ready to launch a tender offer on Osstem Implant.

Hutchmed China Ltd (13.HK/HCM.US) – The $1.13B Eye-Catching Deal with Takeda and the New Outlook

By Xinyao (Criss) Wang

  • HUTCHMED entered into an exclusive license agreement with Takeda- HUTCHMED will receive up to US$1.13 billion including US$400 million upfront, the third highest upfront among China’s TOP 10 license-out deals.
  • Even if fruquintinib may probably not become a blockbuster product in the future, HUTCHMED still gets a decent upfront to relieve its cash flow pressure and an internationalization admission ticket.
  • Hutchmed China Ltd (13 HK) is undervalued based on our sales forecast. After savolitinib has been included in the updated NRDL, this year’s performance growth is worth looking forward to.

Detailing Maekyung Report on MBK’s Tender Offer to Osstem Implant Shareholders at a 20% Premium

By Sanghyun Park

  • Maekyung exclusively reports MBK will do a tender offer to Osstem Implant shareholders at a 20% premium to buy a 15% stake.
  • As Maekyung is a first-tier news outlet in Korea, we have to see enough credibility in this report. We should expect to see it in an official regulatory filing soon.
  • We should design a play that actively utilizes the tender offer event very elaborately. Here, we need to consider immediate offerings and potential delisting from a longer-term perspective.

Bayer: Focusing On Fundamentals – What The Market Isn’t Picking Up!

By Alexis Dwek

  • The equity story expands across all of Bayer’s three segments. Positive signs in Pharma, Crops Sciences, and Consumer Health are showing, which we believe are misunderstood by the investment community
  • Bayer has seen a material share price decline driven by litigation issues, while earnings showed solid progress.
  • Positive news from the Pharma pipeline and progress in the high value seed business as well as the litigation cases removed from the spotlight should help the stock rerate.

PolyNovo (PNV AU): 1H23 Result- Growth Trajectory Continues; Fund Raising Strengthens Balance Sheet

By Tina Banerjee

  • PolyNovo Ltd (PNV AU) reported record high sales of A$27.3 million, up 67.5% YoY during H1FY23, mainly driven by the strong momentum in the U.S.
  • The company has continued to increase the sales team, particularly in the U.S. which has driven sales growth and customer account acquisition, entailing long-term visibility.
  • Recently, PolyNovo has raised A$53 million to fund its global growth aspirations. The company is entering new markets, enhancing portfolio, and expanding manufacturing facility to support 5x sales.

Teladoc Inc: New Integrated Healthcare Experience & Other Developments

By Baptista Research

  • Teladoc Health delivered a decent result for the last quarter and managed to exceed the revenue expectations as well as the earnings expectations of Wall Street.
  • Teladoc concluded the quarter with a total US paid membership of 57.8 million members, an increase of 1.2 million members over the second quarter, driven by a combination of new virtual care client onboardings and population expansions within current clients.
  • The management conducted their client advisory panel with representatives from 30 health plans, sizable employers, and health systems in attendance.

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