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Smartkarma Daily Briefs

Nov 23
0

Daily Brief Energy/Materials: Indo Tambangraya Megah and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • ITMG Q3 2022: 25% FY22 Dividend Yield 40% of Mkt Cap in Cash, Coal Stronger For Longer

ITMG Q3 2022: 25% FY22 Dividend Yield 40% of Mkt Cap in Cash, Coal Stronger For Longer

By Sameer Taneja

  • Coal stronger for longer is making Indo Tambangraya Megah (ITMG IJ) a significant value investment with 40% of the market cap in cash and 2.5x PE FY22 after going ex-dividend. 
  • The company continues to churn out 6-7% of the market cap in cash every month, with coal prices at Newcastle over 300$/ton (current spot at 350$/ton).
  • Paying out >70% of its profits, the company trades at a 25% dividend yield at the very least, with a normalized yield of 10% at a 130-150$/ton coal price. 

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Nov 23
0

Daily Brief Health Care: Organicell Regenerative Medicine, Sharps Technology and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Organicell Regenerative Medicine Inc. – Investment Thesis
  • Sharps Technology – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 11/22

Organicell Regenerative Medicine Inc. – Investment Thesis

By Baptista Research

  • This is our first report on Organicell and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
  • Organicell’s drug candidates’ utilization of extracellular vesicles and perinatal-derived nanoparticles, represent the technological revolution of regenerative biologic drug treatments.
  • Overall, we believe that Organicell has phenomenal growth prospects and is an excellent investment prospect.

Sharps Technology – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 11/22

By Baptista Research

  • This is our first report on Sharps Technology and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
  • As the company starts reporting revenues in 2023, Sharps is expected to see its stock fly.
  • With the Nephron transaction and income generation from the Hungarian facility, this is anticipated to start reporting a positive top-line starting in Q1 2023.

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Nov 23
0

Daily Brief TMT/Internet: Link Administration, Delta Electronics Thai, Total Access Communication, Chindata Group, GoTo, Kuaishou Technology, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale
  • SET50 Index Rebalance Preview: Four Potential Changes in December
  • DTAC/True Merger to Proceed but Without the VTOs
  • 2023 High Conviction: Chindata’s Track Record & Rating Makes It a Takeover Target
  • GoTo: Long-Term Profitability Is Worrying
  • Kuaishou (1024 HK): 3Q22, Promising Live Streaming, Better Margin, 39% Upside
  • GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO
  • Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress?

Link Admin Is Cheap Amid PEXA In-Specie And Possible BCM/CM Sale

By David Blennerhassett

  • Link Administration (LNK AU) has released the explanatory memorandum regarding the PEXA Group (PXA AU) in-specie distribution. 
  • Link shareholders will receive one PEXA share for every 7.52 Link shares. Shareholders will vote on the distribution on the 23 December. The IE, rightfully, deemed the process fair.
  • If D&D buys Link’s BCM/CM ops for A$1.27bn, Link would be net cash of ~A$1.40/share versus an ex-entitlement price of ~A$1.58/share. And Link would still hold the lucrative RSS ops. 

SET50 Index Rebalance Preview: Four Potential Changes in December

By Brian Freitas

  • The market cap review period for the December rebalance of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) ends in 6 trading days.
  • Following the market consultation and reduction in the turnover ratio, there could be four changes to the index. The DTAC/TRUE merger could result in another inclusion in Q1 2023.
  • Estimated one-way turnover at the December rebalance is 8.1% and will result in a one-way trade of THB 7.4bn. More than 1x ADV to trade on most stocks.

DTAC/True Merger to Proceed but Without the VTOs

By Arun George

  • Telenor and CP Group will proceed with the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger but without the VTO due to missing the VTO conditions precedent deadline.
  • The likely real reason for the VTO cancellation was the realisation that the VTO prices were too generous, particularly in the context of the NBTC’s harsh conditions.
  • Completion is targeted for 1Q23. The current share price ratio of 8.750x vs the exchange ratio of 10.221x is attractive. Timing and potential tweaks to the exchange ratio are risks. 

2023 High Conviction: Chindata’s Track Record & Rating Makes It a Takeover Target

By Arun George

  • Chindata Group (CD US)’s 3Q22 results beat both revenue and adjusted EBITDA consensus estimates. Chindata raised its full-year guidance for the second time this year.
  • Chindata continues to attract rumours of takeover interest, most recently from China Merchants. Its track record of beating guidance, modest leverage and beaten-down rating make it a target. 
  • A forward EV/EBITDA multiple of 10.8x, in line with 21Vianet Group (VNET US)’s multiple implied by its founder’s offer (at US$8.20), would imply Chindata’s price of US$8 per ADS.  

GoTo: Long-Term Profitability Is Worrying

By Shifara Samsudeen, ACMA, CGMA

  • GoTo (GOTO IJ) reported 3Q2022 results on Monday. Gross revenue increased 30.4% YoY to IDR5.9trn while adjusted EBITDA (losses) dropped to 81.3% of net revenues vs 289% in 3Q2021.
  • There has been notable improvement in the company’s earnings (decline in losses in particular) driven by huge cost cuts on promotions which helped reduce losses.
  • However, cutting down promotions/marketing costs could lead to drop in top line growth and market share.

Kuaishou (1024 HK): 3Q22, Promising Live Streaming, Better Margin, 39% Upside

By Ming Lu

  • There are three positive signs in online marketing despite the business slowed down.
  • For living streaming, both active user base and time spent grew rapidly.
  • The operating margin improved significantly to -13% in 3Q22 from -37% in 3Q21.

GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO

By Sumeet Singh

  • In Mar 2022, GoTo raised around US$1bn from what was essentially a domestic Indonesian IPO. Its pre-IPO shareholders will be released from their lockup soon.
  • GoTo was formed in May 2021 as a result of a merger between two of Indonesia’s largest unicorns Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
  • In this note, we will talk about the upcoming lockup expiry.

Should the 2022 Annual Meeting of Shareholders Be Regarded as Constant Progress?

By Aki Matsumoto

  • Early disclosure of convocation notices and the use of electronic voting platforms, as specified in Corporate Governance Code, and electronic voting, which reduces the companies’ administrative burden, have also progressed.
  • Although the provision of English-language convocation notices was included in the Corporate Governance Code, only a few companies still send all documents in English translation.
  • More than 10 years after the regulatory-changes, few companies still file their annual securities reports prior to AGMs. Few companies take such a proactive approach by changing their company workflow.

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Nov 23
0

Daily Brief Consumer: DPC Dash, Fu Shou Yuan International, The Keepers Holdings, Inc., Save Foods Inc and more

By | Consumer, Daily Briefs

In today’s briefing:

  • DPC Dash Pre-IPO – The Positives – On a Rapid Expansion Spree
  • China Funeral Industry – Investment Opportunity with Both Alpha and Beta Superposition
  • Keepers Holdings: Highlights From The Q3 2022 Call / A Multibagger In The Making
  • Save Foods Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 11/22

DPC Dash Pre-IPO – The Positives – On a Rapid Expansion Spree

By Sumeet Singh

  • DPC Dash aims to raise around US$100m in its Hong Kong IPO. 
  • The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 562 stores across 13 cities, as of Nov 2022.
  • In this note, we will talk about the positive aspects of the deal.

China Funeral Industry – Investment Opportunity with Both Alpha and Beta Superposition

By Xinyao (Criss) Wang

  • China funeral industry has large growth potential.The total market scale would be about RMB400 billion if based on annual death toll of 10 million and per capita expenditure of RMB40,000.
  • Information asymmetry weakens the bargaining power of buyers. Administrative barriers raise the threshold of market access and weaken competition. So, related companies usually have high profitability and return on capital.
  • Changes in population structure would have a negative impact on most consumer goods, but demand of funeral industry would continue to rise. Investors would have both alpha and beta superposition.

Keepers Holdings: Highlights From The Q3 2022 Call / A Multibagger In The Making

By Sameer Taneja

  • The Keepers Holdings, Inc. (KEEPR PM) trades at 7.1x/5.6x FY22e/FY23e on revised numbers (including earnings from the W&H acquisition) and has 10% of its market cap in net cash. 
  • The outlook from the conference call was bullish, and the Q4 2022 revenue growth trend is expected to be similar to the 9M2022 (34% YoY) and future structural teens growth.
  • At a 300 mn USD market cap, you get a virtual monopoly (>70% marketshare by volume) of the imported spirits business with sole distributorship of the most recognizable brands. 

Save Foods Inc. – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 11/22

By Baptista Research

  • This is our first report on Save Foods and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
  • Despite catering to a sizable addressable market, Save Foods is currently trading at valuation ratios far lower than its competitors.
  • Baptista Research looks to evaluate the different factors that could influence Save Foods’ price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology to determine a suitable price for the company’s stock.

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Nov 23
0

Daily Brief Financials: China Huarong Asset Management, Jb Financial Group, Pendal Group, Euro Stoxx Banks Index, Seazen (Formerly Future Land) and more

By | Daily Briefs, Financials

In today’s briefing:

  • China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion
  • KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates
  • Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December
  • EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index
  • Morning Views Asia: Vedanta Resources

China Huarong (2799 HK): Full Circulation & MSCI/FTSE Index Inclusion

By Brian Freitas

  • China Huarong Asset Management (2799 HK) has announced the full conversion of 8.358bn Domestic Shares to H-shares. The increased float could help the stock get added to the MSCI/FTSE indices.
  • Depending on when the conversion is completed, the stock could be added to the MSCI China Index at the February QCIR though inclusion in May is more likely.
  • There is a high probability of inclusion in the FTSE indices at the March SAIR – though it remains to be seen if that’s to the All-World or All-Cap Index.

KOSPI 200 Rebalance in 1H 2023 – Five Potential Additions Post Deletions of Meritz Affiliates

By Douglas Kim

  • Meritz Financial Group’s decision to delist Meritz Fire & Marine Insurance and Meritz Securities in 1H 2023 will result in at least two new additions to KOSPI 200.
  • We highlight five companies which could be potential additions to KOSPI 200 in 1H 2023.
  • Five potential additions to KOSPI 200 in 1H 2023 include Jb Financial Group, Hyundai Construction Equipment, Dentium, Samyang Foods, and Lotte Rental. 

Pendal (PDL AU)/Perpetual (PPT AU) Scheme Meeting on 23 December

By Arun George

  • The IE considers Perpetual Ltd (PPT AU)‘s cash and scrip offer for Pendal Group (PDL AU) to be fair and reasonable as it is within its valuation range of A$4.87-5.71. 
  • Perpetual shareholders are getting the short end of the stick. While possible, Regal Partners (RPL AU)/BPEA EQT riding to the rescue of Perpetual shareholders is low. 
  • Pendal shareholders, who are the net beneficiaries, will be supportive of the offer. At the last close prices, the gross spread to the offer is 11.3%.

EQD | SX7E (SX7E Index): Relative Value Vol Trade Vs SX5E Index

By Simon Harris

  • SX7E spot has rallied and vols have sold off significantly
  • The spread between the sector and SX5E Index has converged and there are still many reasons to expect volatility in banking stocks into next year
  • Trade a 6M relative value vol spread to take advantage of the recent vol compression

Morning Views Asia: Vedanta Resources

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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Nov 22
0

Daily Brief Australia: Woodside Energy Group Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Woodside Energy ADR: Initiation of Coverage – Business Strategy & Key Drivers

Woodside Energy ADR: Initiation of Coverage – Business Strategy & Key Drivers

By Baptista Research

  • This is our first report on Australian Energy major, Woodside Energy.
  • Increased production volumes and increased pricing resulted in an increase in sales volume.
  • Woodland Energy to collaborate to secure a steady energy supply for Japan.

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Nov 22
0

Daily Brief Indonesia: Alam Sutera Realty and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Alam Sutera – Tear Sheet – Lucror Analytics

Alam Sutera – Tear Sheet – Lucror Analytics

By Trung Nguyen

We view Alam Sutera (ASRI) as “High Risk” on the LARA scale, given the company’s refinancing risk amid the challenging financing environment. ASRI’s pre-sales have been soft, which is a concern for rating agencies. We also note the group’s asset concentration and cash-flow volatility. The company was highly reliant on land sales to key partner CFLD until 2021, when CFLD defaulted on debt. Execution risks are increasing due to ASRI’s shift away from developing townships to high-rise buildings.

The company has very low recurring income compared to peers. That said, it has a large and low-cost land bank that is bigger than most peers’. The land bank has high potential value, and could be a source of liquidity, supporting high margins for the business. Positively, ASRI’s successful cash tender offer in October 2022 has alleviated refinancing risk. It now has no significant maturities until 2025.

We maintain our “Stable” Credit Bias, as we expect the company’s operations to remain satisfactory, with some positive FCF, and no significant maturities until 2025.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”.

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Nov 22
0

Daily Brief South Korea: Meritz Financial Group and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Meritz Merger Event: Swap Conditions, Spread Arb Trade, & K200 Flow Implementation
  • Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

Meritz Merger Event: Swap Conditions, Spread Arb Trade, & K200 Flow Implementation

By Sanghyun Park

  • The last trading day to secure appraisal rights is today (the 22nd). You must buy stocks by today to make arb trade possible using appraisal rights.
  • We should consider LONG FINANCIAL SHORT FIRE/SECURITIES. KSD allows us to maintain borrowed stocks of the target company without redemption procedures if new stocks are listed after the merger.
  • K200 trackers will have to buy in for FIRE at the close on January 27, whereas SECURITIES will be on March 31. We should design a setup targeting this preemptively.

Meritz Financial Group: Comprehensive Stock Swap + Delisting of Meritz Sec. And Meritz F&M Insurance

By Douglas Kim

  • After the market close today, Meritz Financial Group (MFG) made one of the biggest announcements in the history of the group.
  • It announced that Meritz Fire & Marine Insurance and Meritz Securities will become fully owned subsidiaries of Meritz Financial Group. Meritz F&M Insurance and Meritz Securities will also be delisted.
  • MFG is making a real positive change through the share swaps among the three companies. This will likely have the biggest positive impact will be on MFG. 

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Nov 22
0

Daily Brief India: JSW Steel Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Morning Views Asia: JSW Steel Ltd

Morning Views Asia: JSW Steel Ltd

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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Nov 22
0

Daily Brief United States: Uniswap, The Walt Disney Co, Copper, Nike, True Velocity Ammunition, DeXe and more

By | Daily Briefs, United States

In today’s briefing:

  • Implication for Decentralized Exchange Amid the FTX Collapse – A Case of Uniswap
  • Disney: Could Iger Sell to Apple?
  • Disney Replaces Bob Chapek with Bob Iger – Will The Magic Return at Disney?
  • The Commodity Report #78
  • Sporting Crypto – Nov 21st: Nike Launch Web3 Platform Dot Swoosh
  • Ready, Aim, Fire
  • Markets Dip Lower as FTX Contagion Spreads

Implication for Decentralized Exchange Amid the FTX Collapse – A Case of Uniswap

By Edward Wu

  • Despite Centralized exchanges (CEX) being unregulated and opaque in operation, over 90% of crypto transactions happened on CEXs.
  • DeFi exchanges are transparent and impossible for appropriation, but gain market share very slowly due technically difficult of building on blockchain.
  • Uniswap is the largest spot decentralized exchange that stands to benefit from capital relocation from CEX to DEX, Uniswap token is a pure governance token without value capture.

Disney: Could Iger Sell to Apple?

By Aaron Gabin

  • The suprise return of Bob Iger as Disney CEO can fix certain Bob Chapek specific issues: relationships with investors, politicians, and creative types.
  • But Iger faces similar intractable issues: accelerating cord cutting, a transition to a less profitable form of media distribution, and a potential recession.
  • We think Iger will refocus investors on revenues/profits at Disney+ rather than subscribers, will more efficiently spend on content through decentralizing decision making… and potentially sell Disney to Apple.

Disney Replaces Bob Chapek with Bob Iger – Will The Magic Return at Disney?

By Douglas Kim

  • On 21 November, The Walt Disney Co announced that it has replaced the incumbent CEO Bob Chapek with Bob Iger who has successfully headed Disney previously for nearly 15 years.
  • We believe this is a wonderful change and will have a huge impact in turning around Disney’s share price which is down nearly 50% from its peak in March 2021.
  • The previous CEO Bob Chapek did not focus enough on delivery great contents. Rather, the company got involved too much in politics turning off millions of customers. 

The Commodity Report #78

By The Commodity Report

  • The Rabobank issued a research note last week where they forecasted that prices for agricultural commodities like coffee, feed grains and oilseeds could dip next year as many major economies enter recession, but also stated that they will remain high in historical terms.
  • We think the general call is correct, but the timing isn’t. We already see this dip move playing out at the moment.
  • Just take a look at coffee, cotton, oil, or copper. We believe this dip in the long-term cyclical bull market will end towards Q2 of 2022 before the rally in many commodity markets resumes again as demand strikes back.

Sporting Crypto – Nov 21st: Nike Launch Web3 Platform Dot Swoosh

By Sporting Crypto

  • The most successful mainstream brand in Web3 is without a doubt, Nike.
  • That’s mostly thanks to their acquisition of NFT studio RTFKTin late 2021 for an undisclosed fee.
  • Since then, Nike have generated almost $200m in revenue from digital products in primary and secondary sales.

Ready, Aim, Fire

By subSPAC

  • Since the boom in 2020, SPACs have been instrumental in taking high-risk, technologically disruptive companies public.
  • This includes space startups building rockets focused on carrying payloads to space, Quantum Computing firms creating solutions for challenging tasks, and a host of Electric Vehicle Makers looking to challenge Tesla’s crown in building environmentally sound vehicles.
  • Texas-based True Velocity Ammo, which develops and markets composite-case ammunition, aims to disrupt the highly mature ammunition industry on the same scale as these other emerging firms, delivering lighter and more efficient solutions to the public and military.

Markets Dip Lower as FTX Contagion Spreads

By Kaiko

  • Price Movements: DEX tokens have been least impacted by the market collapse while L1 tokens have been the worst performers, led by SOL.
  • Market Liquidity: Uniswap v3 recorded one of its highest volume days ever, although both CEX and DEX volumes have since tumbled.
  • Derivatives: Binance and Bybit captured FTX’s market share of perpetual futures since the exchange collapsed.

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