Smartkarma Daily Briefs

20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.

Before it’s here, it’s on Smartkarma

Apr 22

Equity Bottom-Up: Cafe De Coral Holdings, Softbank Group, Nidec Corp, Mediatek Inc, Tencent Music, Shiseido Company, Abbott Laboratories, Fosun Tourism and more

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

In today’s briefing:

Hong Kong F&B: Stock Screening As Social-Distancing Curbs Ease
Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too
Nidec – Small Precision Motors and Automotive Concerning
MediaTek (2454.TT): 1Q22 Results/ 2Q22 Outlook- 2Q22 Growth Outlook Could Be near Mid-Single Digits
TME – ByteDance’s Launch of Music Streaming App to Add Further Pressure on Earnings
Shiseido: Shanghai Lockdown Adds Pressure to Faltering Japanese Cosmetics
Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues
Nidec (6594 JP) | The Second Coming of Nagamori
Fosun Tourism (1992 HK): Well Geared Towards Global Travel Recovery

Hong Kong F&B: Stock Screening As Social-Distancing Curbs Ease

By David Blennerhassett

Hong Kong’s hospitality industry has endured three years of upheaval, first with the democracy protestors in 2019, which slowed inbound, followed by the onset of Covid in early 2020.
Beginning today, 21 April, the Government commenced the relaxation of most social distancing measures, to be eased over three phases.
This evolving dynamic is welcome, yet the progress and recovery for many operators may be gradual.

Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too

By Kirk Boodry

The strong dollar has boosted Softbank’s predominantly dollar-linked asset value by 9% in yen terms (although reported net debt will also increase)
Also relevant is a decrease in the dollar cost of its ¥1,000bn share repurchase which was $8.8bn when announced but costs less than $8bn at the current exchange rate.
This has kept the share price up YTD and QTD despite weakness in the investment portfolio but tech weakness probably has more legs than dollar appreciation

Nidec – Small Precision Motors and Automotive Concerning

By Shifara Samsudeen, ACMA, CGMA

Nidec earnings were worse than we feared as 4Q OP was just ¥36.9bn below even our ¥40bn estimate and far below consensus at ¥48.5bn.
This was despite a 4.9% top line beat and there were some signs of kitchen sinking in our view.
Nevertheless, guidance for ¥210bn in OP next year, while below consensus, still feels aggressive in our view.

MediaTek (2454.TT): 1Q22 Results/ 2Q22 Outlook- 2Q22 Growth Outlook Could Be near Mid-Single Digits

By Patrick Liao

Mediatek revenue was NTD$142.7bn in 1Q22, which was 32.1% YoY and 10.9% QoQ. It was higher than the prior high-end guidance of $NTD141.5bn.
The 2nd quarter outlook could be slight growth of NTD$148.9bn/49.1% GM, which could be not much growth expected.
The expectation of the 5G deployment could be a bit slower because of COVID-19 impact and slow down in China handset shipment.

TME – ByteDance’s Launch of Music Streaming App to Add Further Pressure on Earnings

Several news media outlets report that ByteDance has launched a new music streaming service in China called Qishui Yinyue.
Tencent Music (TME US) earnings have come under pressure with ending of exclusive music streaming licensing deals and increased regulatory pressure on its social entertainment biz.
We expect TME’s 1Q2022E earnings to decline further with increased competition and drop in social entertainment.

Shiseido: Shanghai Lockdown Adds Pressure to Faltering Japanese Cosmetics

By Oshadhi Kumarasiri

The market position of Japanese cosmetics in China is weakening with Japanese exports declining around 5.0% YoY in January and February 2022.
With Shanghai under a strict lockdown and the recovery of inbound demand taking more time than expected, it is possible that Shiseido Company (4911 JP) could downgrade its 2022 guidance.
These forces could take Shiseido’s valuation multiples to the pre-2013 level, resulting in a downside of close to 30%.

Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues

Abbott Laboratories (ABT US) reported better-than-expected Q1 revenue and earnings, due to higher diagnostic revenue led by strong COVID-19 testing revenue. 2022 adjusted EPS guidance remains unchanged.
In Q1, global COVID-19 testing-related sales reached to a record high of $3.3 billion, representing 28% of total revenue. COVID-19 testing revenue guidance was raised to $4.5 billion for 2022.
Medical devices business reported double-digit organic revenue growth in the U.S. as well as international market, showing continued recovery in the elective procedures.

Nidec (6594 JP) | The Second Coming of Nagamori

By Mark Chadwick

Nidec is the best stock in Japan to play the rising adoption of EVs
The company is already dominating the largest E-Axle market in the world and will benefit from growing economies of scale
We think the company can hit its mid-term targets and see over 30% upside for the stock

Fosun Tourism (1992 HK): Well Geared Towards Global Travel Recovery

By Osbert Tang, CFA

Fosun Tourism (1992 HK) (FTG) is not a China play and, instead, it has excellent exposure to the global travel industry recovery particularly through its ownership in Club Med.
1Q22 showcased a very solid 306.6% rebound in business volume of resorts and tourism destination operations and tourism and leisure services and solutions business, and the trend will continue.
We think Club Med’s exposure to overseas recovery, Atlantis Sanya’s ride on domestic demand and new resorts’ good position to capture China’s travel recovery are key drivers for FTG.

Before it’s here, it’s on Smartkarma

Apr 22

India: Campus Activewear Ltd, Larsen & Toubro Infotech, Gland Pharma Ltd, ICICI Securities Ltd, ACC Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Campus Activewear IPO – Peer Comparison-Competitive Market, Firm Has Been Resilient During Pandemic
Campus Activewear Pre-IPO – Synergistic Business Model, but in a Fragmented Industry
Larsen and Toubro Infotech: Strong FY23 Outlook, but Valuations Remain Rich
ACC Ltd: Higher Realization Drives Marginal EBITDA Beat
ACC Ltd: Reduction in Fuel Cost Remains Key Trigger
Gland Pharma: Well-Placed to Gain from the Drug Shortages in the US
ICICI Securities: Near Term Headwinds Exist; Long Term Story Remains Intact
ICICI Securities: Revenue from Broking Falls, Issuer Services Segment Witnesses Some Pressure
ACC Ltd: Results Largely in Line; Power & Fuel Costs Controlled

Campus Activewear IPO – Peer Comparison-Competitive Market, Firm Has Been Resilient During Pandemic

By Clarence Chu

Campus Activewear Ltd (1535013D IN) is looking to raise about US$184m in its India IPO, via a 100% secondary selldown.
While there are other domestically listed footwear makers, Campus’ competitors generally market a broader product offering, ranging from casual, formal or outdoor shoes etc..
Campus’ performance was amongst the most resilient during the pandemic, but its margins continues to trail peers.

Campus Activewear Pre-IPO – Synergistic Business Model, but in a Fragmented Industry

By Clarence Chu

Campus Activewear Ltd (1535013D IN) is looking to raise about US$200m in its India IPO, via a 100% secondary selldown.
Campus Activewear is a lifestyle-oriented sports and athleisure footwear firm based in India.
Operating under the “CAMPUS” brand, the firm offers a diverse portfolio of styles, color palettes, and price points.

Larsen and Toubro Infotech: Strong FY23 Outlook, but Valuations Remain Rich

LTI reported a growth of 3.6% QoQ CC on a high base, below our estimate of 4.2%.
Growth was broad-based across verticals and service lines.
EBIT margin moderated by 60bp QoQ to 17.3% in 4QFY22 (inline) due to lower working days and revenue mix

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ACC Ltd: Higher Realization Drives Marginal EBITDA Beat

By Emkay

Q1CY22 EBITDA declined 26% YoY/increased 14% QoQ to Rs6.3bn, marginally ahead of our estimates, led by better-than-expected realization.
Blended EBITDA/ton fell 25% YoY/rose 12% QoQ to Rs812 (Emkay est.: Rs780).
Ongoing expansion projects (2.7mt clinker and 3.2mt cement grinding) are delayed by a quarter.

ACC Ltd: Reduction in Fuel Cost Remains Key Trigger

By ICICI Securities Limited

ACC’s Q1CY22 EBITDA of Rs6.35bn (down 26% YoY) was broadly in-line with our / consensus estimates.
Total cost/te continued its upward trajectory as it rose 1.6% QoQ and 13% YoY primarily due to higher fuel prices, while blended realisations were up 2.7% QoQ and 5.0% YoY, resulting in blended EBITDA/te increasing 12% QoQ but declining 24% YoY to Rs812/te (I-Sec: Rs779/te).
Volumes including clinker sales were down 2% YoY and up 2% QoQ at 7.8mnte.

Gland Pharma: Well-Placed to Gain from the Drug Shortages in the US

GLAND has 11 injectable products in the USFDA shortage list, which have combined sales of ~USD400m over the past 12-months.
The overall number of drugs under shortage in the US has declined to a 15-year low at present.
However, the number of injectables facing a shortage is at its 20-year average, but is at a record high as a percentage of total drug shortages.

ICICI Securities: Near Term Headwinds Exist; Long Term Story Remains Intact

By Axis Direct

ICICI Securities Ltd. (ISEC) reported numbers stood below our and consensus estimates, mainly owing to lower brokerage income driven by weak market sentiments arising from the geopolitical tensions.
While the momentum on the client addition has been strong YoY, it has moderated on a sequential basis
We maintain our BUY recommendation on the stock with a revised target price of Rs 865/share (17x FY24E EPS), implying an upside of 38% from CMP.

ICICI Securities: Revenue from Broking Falls, Issuer Services Segment Witnesses Some Pressure

ISEC witnessed a 6% YoY and 7% QoQ decline in revenue from the Retail Broking segment.
We have lowered our FY23/FY24 EPS estimate by 10% each, to factor in weaker-than-expected traction in the Broking segment, a slowdown in the Issuer Services segment, the impact of a run-down in the ESOP funding book, and higher costs.
Revenue from Retail Broking declines; momentum in client addition slows down

ACC Ltd: Results Largely in Line; Power & Fuel Costs Controlled

By Nirmal Bang

Results largely in line; Power & Fuel costs controlled ACC reported numbers largely in-line with our estimates with reported EBITDA coming in at Rs6.34bn, only 1.8% below our estimate.
While volume and realisation were lower than our estimates, operating costs were also down, resulting in reduced impact on EBITDA.
In fact, we were surprised that ACC did not show a bump up in Power & Fuel costs, which were largely controlled…(continued).

Before it’s here, it’s on Smartkarma

Apr 22

Most Read: Toshiba Corp, LG Energy Solution, Keppel Corp, Zhihu Technology, Softbank Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toshiba – Some Thoughts on the Bain Article
LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
Zhihu HK Secondary Listing Trading – Delivered the Correction but Still Set for the Worst Debut Yet
Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too

Toshiba – Some Thoughts on the Bain Article

Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia.
Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba.
While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.

LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits

By Sumeet Singh

LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.
LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
In this note, we will talk about the lock-up dynamics and updates since our last note.

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities

20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.

Zhihu HK Secondary Listing Trading – Delivered the Correction but Still Set for the Worst Debut Yet

By Sumeet Singh

Zhihu Technology (ZH US) raised around US$106m via a dual primary listing in Hong Kong.
Unlike all the prior dual primary/secondary listings which have been done via offering either only primary or a mix of primary+secondary shares, Zhihu’s offering will consist of only secondary shares.
In this note, we’ll talk about the demand and trading dynamics.

Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too

By Kirk Boodry

The strong dollar has boosted Softbank’s predominantly dollar-linked asset value by 9% in yen terms (although reported net debt will also increase)
Also relevant is a decrease in the dollar cost of its ¥1,000bn share repurchase which was $8.8bn when announced but costs less than $8bn at the current exchange rate.
This has kept the share price up YTD and QTD despite weakness in the investment portfolio but tech weakness probably has more legs than dollar appreciation

Before it’s here, it’s on Smartkarma

Apr 22

Health Care: SK Bioscience, HilleVax, Abbott Laboratories and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

SK Chemical’s CEO Sells All His Shares of SK Bioscience
HilleVax Pre-IPO: Lead Candidate Has Potential to Become First Approved Vaccine for Norovirus
Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues

SK Chemical’s CEO Sells All His Shares of SK Bioscience

After the market close on 21 April, it was reported that SK Chemical’s CEO Jeon Kwang-Hyun sold all his shares (21,852 shares) of SK Bioscience from April 19th to 21st.
The fact that the CEO of SK Chemical, the controlling shareholder of SK Bioscience, sold all his stake in the latter company does not bode well for SK Bioscience.
The CEO of SK Chemical selling all his shares in SK Bioscience and increasing reluctance in getting more COVID booster shots suggest further downside risk for SK Bioscience.

HilleVax Pre-IPO: Lead Candidate Has Potential to Become First Approved Vaccine for Norovirus

HilleVax (HLVX US), a novel vaccine developer intends to raise $100 million through an IPO. Its lead program HIL-214, intended to prevent norovirus infection is in phase 2 clinical trial.
The number of shares to be offered and the price range are yet to be disclosed. Post listing, the company will trade under the ticker HLVX on the Nasdaq.
HIL-214’s large addressable market, with huge unmet need, HilleVax’s earlier fund-raising history, and Takeda’s backing are some of the positives of this new offering.

Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues

Abbott Laboratories (ABT US) reported better-than-expected Q1 revenue and earnings, due to higher diagnostic revenue led by strong COVID-19 testing revenue. 2022 adjusted EPS guidance remains unchanged.
In Q1, global COVID-19 testing-related sales reached to a record high of $3.3 billion, representing 28% of total revenue. COVID-19 testing revenue guidance was raised to $4.5 billion for 2022.
Medical devices business reported double-digit organic revenue growth in the U.S. as well as international market, showing continued recovery in the elective procedures.

Before it’s here, it’s on Smartkarma

Apr 22

Industrials: Keppel Corp, Nidec Corp, Hitachi Transport System, SK Shieldus, John Menzies PLC, Yinson Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities
Nidec – Small Precision Motors and Automotive Concerning
Hitachi Transport (9086) Takeover Deal Imminent
SK Shieldus IPO: Revises IPO Filing But Maintains Same Price Range
National Aviation Services/John Menzies: Agreed Final Offer
Nidec (6594 JP) | The Second Coming of Nagamori
Yinson Holdings (YINS.KL) – A Strong Bet Still

Keppel : Thinking About Keppel/SMM MergeCo and NEW KEPPEL Pro-Forma Opportunities

20 months ago, Temasek walked away from a deal to buy control of Keppel Corp (KEP SP) as the O&M business saw large writedowns and covid stoppage losses.
The story? A possible Keppel O&M and Sembcorp Marine (SMM SP) merger. SMM was recapped and spun out of Sembcorp Industries (SCI SP) then recapped again.
Now it’s crunch time. Keppel & SMM hope to update investors on a merger plan by end of April. This insight looks at what to look out for.

Nidec – Small Precision Motors and Automotive Concerning

Nidec earnings were worse than we feared as 4Q OP was just ¥36.9bn below even our ¥40bn estimate and far below consensus at ¥48.5bn.
This was despite a 4.9% top line beat and there were some signs of kitchen sinking in our view.
Nevertheless, guidance for ¥210bn in OP next year, while below consensus, still feels aggressive in our view.

Hitachi Transport (9086) Takeover Deal Imminent

The Nikkei Leak Article of the Hitachi Transport takeover price is out. That suggests board meetings and deal announcement are imminent
The price suggested in the article comes out to be just under ¥8,000.
Past deals between KKR and Hitachi for Hitachi subs (and the language of the article on deal structure) suggest the minority Tender Offer Price could be different.

SK Shieldus IPO: Revises IPO Filing But Maintains Same Price Range

After the market close today, SK Shieldus revised its IPO filing, especially for the valuation comps. However, it maintained the same IPO price range of 31,000 won to 38,800 won.
Bankers included two new comps (Taiwan Secom and Cyberone). Bankers excluded ADT Inc, Alarm.com, and Qualys as comps.
Our valuation of SK Shieldus suggests market cap of 4.1 trillion won or target price of 44,892 won (28.6% higher than the mid-point of the IPO price range).

National Aviation Services/John Menzies: Agreed Final Offer

By Jesus Rodriguez Aguilar

The contracts, presence in airports and relationships make John Menzies a difficult business to replicate. NAS has a direct stake of 19% and undertakings and letters of intent for 33.3%.
The 608p final offer represents a 107% premium to the 3-month VWAP and 6.1x EV/Fwd EBITDA, and is 10% above my fair-value estimate (551p/share, DCF based WACC 9.0%, 4.5x EBITDA exit multiple).
The offer is highly likely to close. Gross spread is 1.48% with an estimated annual return of 4.78% (assuming settlement by 15 August). Reiterate long MNZS LN.

Nidec (6594 JP) | The Second Coming of Nagamori

By Mark Chadwick

Nidec is the best stock in Japan to play the rising adoption of EVs
The company is already dominating the largest E-Axle market in the world and will benefit from growing economies of scale
We think the company can hit its mid-term targets and see over 30% upside for the stock

Yinson Holdings (YINS.KL) – A Strong Bet Still

By Maybank Research

Maintain BUY and MYR5.58 TP
FPSO Anna Nery project on track
3 strong bids, realistically targets 2
Rights issue and value-unlocking proposals

Its Anna Nery FPSO project in China is 90% completed; on track to meet its delivery deadline. Meanwhile, its PDB and Enauta projects are still at preliminary stages, thus not affected by the latest Covid-19 lockdown. Yinson remains well-entrenched to capitalise on this FPSO upcycle. With 6 prospects in the horizon, it targets 2 wins over the next 12 months. It is also exploring options to unlock FPSO assets by undertaking an IPO route, or bringing in a strategic investor. Our TP is SOP-based.

Before it’s here, it’s on Smartkarma

Apr 22

Japan: Softbank Group, Nidec Corp, Hitachi Transport System, HS Holdings, Shiseido Company, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too
Nidec – Small Precision Motors and Automotive Concerning
Hitachi Transport (9086) Takeover Deal Imminent
HS/Sawada: Khan Bank IPO Decided, and Earnings in A Week To Show Sharp Gain in BVPS/Liquidity
Shiseido: Shanghai Lockdown Adds Pressure to Faltering Japanese Cosmetics
Nidec (6594 JP) | The Second Coming of Nagamori
Japan’s Governance: About an Article on Prime Market Listed Companies

Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too

By Kirk Boodry

The strong dollar has boosted Softbank’s predominantly dollar-linked asset value by 9% in yen terms (although reported net debt will also increase)
Also relevant is a decrease in the dollar cost of its ¥1,000bn share repurchase which was $8.8bn when announced but costs less than $8bn at the current exchange rate.
This has kept the share price up YTD and QTD despite weakness in the investment portfolio but tech weakness probably has more legs than dollar appreciation

Nidec – Small Precision Motors and Automotive Concerning

Nidec earnings were worse than we feared as 4Q OP was just ¥36.9bn below even our ¥40bn estimate and far below consensus at ¥48.5bn.
This was despite a 4.9% top line beat and there were some signs of kitchen sinking in our view.
Nevertheless, guidance for ¥210bn in OP next year, while below consensus, still feels aggressive in our view.

Hitachi Transport (9086) Takeover Deal Imminent

The Nikkei Leak Article of the Hitachi Transport takeover price is out. That suggests board meetings and deal announcement are imminent
The price suggested in the article comes out to be just under ¥8,000.
Past deals between KKR and Hitachi for Hitachi subs (and the language of the article on deal structure) suggest the minority Tender Offer Price could be different.

HS/Sawada: Khan Bank IPO Decided, and Earnings in A Week To Show Sharp Gain in BVPS/Liquidity

It looks like the Khan Bank IPO in Mongolia is on.
HS Holdings (former Sawada) will own <50% shortly. That will trigger de-consolidation of Khan Bank in Q2.
That could be meaningful. Right now, the entire capital structure is in flux because of recently announced/booked/closed asset sales and now this. Earnings are out 28 April.

Shiseido: Shanghai Lockdown Adds Pressure to Faltering Japanese Cosmetics

By Oshadhi Kumarasiri

The market position of Japanese cosmetics in China is weakening with Japanese exports declining around 5.0% YoY in January and February 2022.
With Shanghai under a strict lockdown and the recovery of inbound demand taking more time than expected, it is possible that Shiseido Company (4911 JP) could downgrade its 2022 guidance.
These forces could take Shiseido’s valuation multiples to the pre-2013 level, resulting in a downside of close to 30%.

Nidec (6594 JP) | The Second Coming of Nagamori

By Mark Chadwick

Nidec is the best stock in Japan to play the rising adoption of EVs
The company is already dominating the largest E-Axle market in the world and will benefit from growing economies of scale
We think the company can hit its mid-term targets and see over 30% upside for the stock

Japan’s Governance: About an Article on Prime Market Listed Companies

By Aki Matsumoto

Nikkei article of March 18 titled “Prime Market Listed Companies Reel in ESG, Increase Value with ‘Non-Financial.'” I considered the issues in the article in reference to my previous article.
The prime market has limited investment targets because their market caps are mostly smaller for institutions, and their profitability needs further improvement, and valuations remain low in line with this.
It’s reasonable to consider the portion of market-cap exceeding net assets as “goodwill,” source of earning power and growth potential that has a more direct impact on future cash flows.

Before it’s here, it’s on Smartkarma

Apr 22

United States: Tesla Motors, HilleVax, Abbott Laboratories, Houghton Mifflin Harcourt Co and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Tesla Posted Strong Q1 Results (Thanks to China)/Elon Is Looking For Other People’s Money
HilleVax Pre-IPO: Lead Candidate Has Potential to Become First Approved Vaccine for Norovirus
Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues
Laughing Water Capital Q1 2022 Letter

Tesla Posted Strong Q1 Results (Thanks to China)/Elon Is Looking For Other People’s Money

By Vicki Bryan

Tesla should probably thank its China operations for another record quarter as strong pricing and lag in hits from cost inflation made profits soar.
Next quarter will be tougher as China’s business conditions rapidly deteriorate amid the worst Covid surge in two years.
Meanwhile, CEO Elon Musk is on the hunt for cash to buy Twitter.

HilleVax Pre-IPO: Lead Candidate Has Potential to Become First Approved Vaccine for Norovirus

HilleVax (HLVX US), a novel vaccine developer intends to raise $100 million through an IPO. Its lead program HIL-214, intended to prevent norovirus infection is in phase 2 clinical trial.
The number of shares to be offered and the price range are yet to be disclosed. Post listing, the company will trade under the ticker HLVX on the Nasdaq.
HIL-214’s large addressable market, with huge unmet need, HilleVax’s earlier fund-raising history, and Takeda’s backing are some of the positives of this new offering.

Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues

Abbott Laboratories (ABT US) reported better-than-expected Q1 revenue and earnings, due to higher diagnostic revenue led by strong COVID-19 testing revenue. 2022 adjusted EPS guidance remains unchanged.
In Q1, global COVID-19 testing-related sales reached to a record high of $3.3 billion, representing 28% of total revenue. COVID-19 testing revenue guidance was raised to $4.5 billion for 2022.
Medical devices business reported double-digit organic revenue growth in the U.S. as well as international market, showing continued recovery in the elective procedures.

Laughing Water Capital Q1 2022 Letter

By Fund Newsletters

Laughing Water Capital returned approximately -12.5% in the first quarter of 2022.
Most of the quarter our results tracked the indexes pretty closely, but as the indexes rallied into quarter end, our portfolio did not.

Before it’s here, it’s on Smartkarma

Apr 22

South Korea: SK Bioscience, SK Shieldus and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

SK Chemical’s CEO Sells All His Shares of SK Bioscience
SK Shieldus IPO: Revises IPO Filing But Maintains Same Price Range

SK Chemical’s CEO Sells All His Shares of SK Bioscience

After the market close on 21 April, it was reported that SK Chemical’s CEO Jeon Kwang-Hyun sold all his shares (21,852 shares) of SK Bioscience from April 19th to 21st.
The fact that the CEO of SK Chemical, the controlling shareholder of SK Bioscience, sold all his stake in the latter company does not bode well for SK Bioscience.
The CEO of SK Chemical selling all his shares in SK Bioscience and increasing reluctance in getting more COVID booster shots suggest further downside risk for SK Bioscience.

SK Shieldus IPO: Revises IPO Filing But Maintains Same Price Range

After the market close today, SK Shieldus revised its IPO filing, especially for the valuation comps. However, it maintained the same IPO price range of 31,000 won to 38,800 won.
Bankers included two new comps (Taiwan Secom and Cyberone). Bankers excluded ADT Inc, Alarm.com, and Qualys as comps.
Our valuation of SK Shieldus suggests market cap of 4.1 trillion won or target price of 44,892 won (28.6% higher than the mid-point of the IPO price range).

Before it’s here, it’s on Smartkarma

Apr 22

Financials: PICC Property & Casualty H, HS Holdings, Dongzheng Automotive Finance, MXN 10Y, Houghton Mifflin Harcourt Co, Tokyo Stock Exchange Tokyo Price Index Topix, ICICI Securities Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

FTSE China 50 Index Rebalance Preview: Two Changes Could Increase to Three
HS/Sawada: Khan Bank IPO Decided, and Earnings in A Week To Show Sharp Gain in BVPS/Liquidity
Auction of China ZhengTong’s Dongzheng Stake Set for 18 May; Potential MGO
Dongzheng (2718 HK): 18th May Liquidation Of ZhengTong’s Stake
Are Mexico’s Local Bonds Cheap?
Laughing Water Capital Q1 2022 Letter
Japan’s Governance: About an Article on Prime Market Listed Companies
ICICI Securities: Revenue from Broking Falls, Issuer Services Segment Witnesses Some Pressure
ICICI Securities: Near Term Headwinds Exist; Long Term Story Remains Intact

FTSE China 50 Index Rebalance Preview: Two Changes Could Increase to Three

By Brian Freitas

As of the last close, we expect Li Auto (2015 HK) and PICC Property & Casualty H (2328 HK) to replace Smoore International (6969 HK) and Sunny Optical (2382 HK).
There are some reasonably large capping changes that will result in one-way turnover estimated at 4.25% and will result in a one-way trade of HK$2,090m.
Short interest has spiked recently on Smoore International (6969 HK), while there has been short covering on the other potential inclusions and exclusion.

HS/Sawada: Khan Bank IPO Decided, and Earnings in A Week To Show Sharp Gain in BVPS/Liquidity

It looks like the Khan Bank IPO in Mongolia is on.
HS Holdings (former Sawada) will own <50% shortly. That will trigger de-consolidation of Khan Bank in Q2.
That could be meaningful. Right now, the entire capital structure is in flux because of recently announced/booked/closed asset sales and now this. Earnings are out 28 April.

Auction of China ZhengTong’s Dongzheng Stake Set for 18 May; Potential MGO

By Arun George

On 16 April, the Shanghai Financial Court published the details for the auction of China Zhengtong Auto Services Hldg (1728 HK)’s 71.04% stake in Dongzheng Automotive Finance (2718 HK).
If the auction is successful and results in any person and a group of persons acting in concert holding 30%+ of the voting rights, it will result in an MGO.
The base bid implies an MGO price of HK$1.294 per H Share, a 112.1% premium to the last close. The auction will be held from 18 May to 19 May.

Dongzheng (2718 HK): 18th May Liquidation Of ZhengTong’s Stake

By David Blennerhassett

After both stocks were suspended on the 19 April, the forced liquidation of China Zhengtong (1728 HK)‘s stake in Dongzheng (2718 HK) will occur, via auction, on the 18 May.
That minimum bid price is HK$1.294/share, or a 112% premium to last close.
ZhengTong’s stake is 71.04% of shares out. A mandatory general offer – conditional or unconditional – may materialise from the auction process.

Are Mexico’s Local Bonds Cheap?

By Gautam Jain, PhD, CFA

Rates in emerging countries are rising with the US, but they are outperforming. As an example, Mexico’s spread to the US remains high but is off the peak.
Inflationary pressures, including elevated inflation expectations and breakeven, argue for a high spread. On the other hand, aggressive rate hikes are priced and real rates are already high.
With inflation likely to peak soon, I find rates in Mexico high enough to receive and have a trade recommendation accordingly, even though there are arguments on both sides.

Laughing Water Capital Q1 2022 Letter

By Fund Newsletters

Laughing Water Capital returned approximately -12.5% in the first quarter of 2022.
Most of the quarter our results tracked the indexes pretty closely, but as the indexes rallied into quarter end, our portfolio did not.

Japan’s Governance: About an Article on Prime Market Listed Companies

By Aki Matsumoto

Nikkei article of March 18 titled “Prime Market Listed Companies Reel in ESG, Increase Value with ‘Non-Financial.'” I considered the issues in the article in reference to my previous article.
The prime market has limited investment targets because their market caps are mostly smaller for institutions, and their profitability needs further improvement, and valuations remain low in line with this.
It’s reasonable to consider the portion of market-cap exceeding net assets as “goodwill,” source of earning power and growth potential that has a more direct impact on future cash flows.

ICICI Securities: Revenue from Broking Falls, Issuer Services Segment Witnesses Some Pressure

ISEC witnessed a 6% YoY and 7% QoQ decline in revenue from the Retail Broking segment.
We have lowered our FY23/FY24 EPS estimate by 10% each, to factor in weaker-than-expected traction in the Broking segment, a slowdown in the Issuer Services segment, the impact of a run-down in the ESOP funding book, and higher costs.
Revenue from Retail Broking declines; momentum in client addition slows down

ICICI Securities: Near Term Headwinds Exist; Long Term Story Remains Intact

By Axis Direct

ICICI Securities Ltd. (ISEC) reported numbers stood below our and consensus estimates, mainly owing to lower brokerage income driven by weak market sentiments arising from the geopolitical tensions.
While the momentum on the client addition has been strong YoY, it has moderated on a sequential basis
We maintain our BUY recommendation on the stock with a revised target price of Rs 865/share (17x FY24E EPS), implying an upside of 38% from CMP.

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