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Smartkarma Daily Briefs

Oct 04
0

Daily Brief Thailand: Betagro Group and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Betagro IPO: The Bull Case

Betagro IPO: The Bull Case

By Arun George

  • Betagro Group (1737144D TB), Thailand’s leading integrated food company, is seeking to raise US$554 million through a SET IPO, according to press reports
  • Betagro plans to offer 500 million shares or 25% of the total issued shares after IPO. This will be Thailand’s second-largest listing this year after Thai Life Insurance (TLI TB). 
  • The key elements of the bull case rest on top quartile growth rates, a well-functioning core business, rising profitability, cash generation and declining leverage.

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Oct 04
0

Daily Brief India: Road King Infrastructure and more

By | Daily Briefs, India

In today’s briefing:

  • Morning Views Asia: Road King Infrastructure, Vedanta Resources

Morning Views Asia: Road King Infrastructure, 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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Oct 04
0

Daily Brief United States: O2Micro International, Ethereum, Tesla Motors, ACCO Brands, AXT Inc, CRB Commodity Index, Bitcoin, Peer Metaverse Coin and more

By | Daily Briefs, United States

In today’s briefing:

  • O2Micro’s “Reasonable” Homecoming Offer
  • The Future of Ethereum: A Deflationary ETH, Sharding, and the Roadmap
  • O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS
  • Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess
  • ACCO: Adjusting for Macroenvironment
  • AXTI: The Fruit of a Preview
  • #37 Exploring the new Cosmos
  • The Commodity Report #71
  • Bitcoin and Gold Correlation Hits Yearly High
  • Sporting Crypto – October 3rd 2022: What does the Metaverse mean for Sports?

O2Micro’s “Reasonable” Homecoming Offer

By David Blennerhassett

  • O2Micro International (OIIM US), an integrated circuits play, has announced a definitive privatisation transaction.
  • The acquirer, led by the CEO and CFO of O2Micro, are offering US$5.00/ADS, a 68.9% premium to the undisturbed price. 
  • The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. Roughly 30% of shares out appear to be supportive. This Offer is expected to close in the 1Q23.

The Future of Ethereum: A Deflationary ETH, Sharding, and the Roadmap

By Edward Wu

  • ETH is used for gas payment (transaction cost), part of gas payment is burned. When amount of ETH burned exceeds the amount of new issuance, ETH becomes a deflationary asset.
  • Sharding is the next big update for Ethereum. With sharding, network throughput will increase from current 15 transactions/second to potential 100,000 tps.
  • Long-Term roadmap of Ethereum: Merge (completed), Surge (sharding is expected on 2H 2023), Verge, Purge, and Splurge.

O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS

By Arun George

  • O2Micro International (OIIM US) entered into a definitive agreement for going private with FNOF Precious Honour Limited at US$5.00 per ADS, a 54.8% to the undisturbed price (17 March).
  • Shareholders representing two-thirds of shares present and voting need to approve the deal. The rollover shareholders represent 16.90% of voting rights.
  • The offer is attractive in the context of O2Micro’s weakening performance and grim market conditions. At the last close, the gross spread is 18.2%. Expect a 1Q23 deal close.

Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess

By Vicki Bryan

  • Q3 deliveries were an impressive 343,830, a bit better vs my cautious 331,104 est;
  • But results trailed plunging market projections & Tesla’s own guidance by 20,000-50,000; 
  • Even worse, the shortfall meant sales trailed production by record 22,100.

ACCO: Adjusting for Macroenvironment

By Hamed Khorsand

  • The business climate has not improved for Acco Brands (ACCO) in Europe since the Company reported second quarter results, and thus could result in lower than expected third quarter numbers
  • The macroenvironment has been volatile in a quarter dependent on back-to-school sales and more people working from their offices. 
  • We are updating our earnings model for the rest of the year. Our third quarter sales estimate is now $517.1 million

AXTI: The Fruit of a Preview

By Hamed Khorsand

  • Third quarter results could serve as an inflection point for AXT Inc. (AXTI) after the Company reported a rebound in gross margin in the second quarter
  • When AXTI reported second quarter results, management described a design win that would be part of a consumer electronic device with a feature in a higher end model
  • We believe the reference could have been to the iPhone 14 Pro and Pro Max having different a different display feature compared to the iPhone 14.

#37 Exploring the new Cosmos

By Carbono Insights

  • On a very fundamental level, blockchains are in the business of selling blockspace.
  • Blockspace can be used to store transaction information or to perform computation through smart contracts hosted on chain.
  • However, as more applications emerge and become more complex, blockspace becomes scarce and insufficient.

The Commodity Report #71

By The Commodity Report

  • We expect the oil crisis to worsen once economic activity resumes again. Till then some months will probably pass.
  • Nevertheless, the industry hasn’t increased production significantly enough, and the SPR release by the Biden administration veiled the actual grim picture in the oil market.
  • Those stories from Bloomberg show how relaxed the sentiment seems to be again. I have the feeling that this sentiment won’t age well at all.

Bitcoin and Gold Correlation Hits Yearly High

By Kaiko

  • Price Movements: Crypto markets performed better than traditional assets in Q3 despite a post-Merge September sell off. 
  • Market Liquidity: After Kucoin implemented a series of 5th anniversary contests, trade volume surged to all time highs. Exchanges are getting increasingly creative amid a widespread rout in trade volume. 
  • Derivatives: Luna Classic open interest tripled in September and funding rates turned deeply negative after Interpol issued a red notice for Do Kwon.

Sporting Crypto – October 3rd 2022: What does the Metaverse mean for Sports?

By Sporting Crypto

  • Anything that augments your physical life, to the digital, is in some way or form linked to what currently is, and what will become, ‘The Metaverse’.
  • So a Zoom call or a free world game — whilst they don’t wholly agree with the notion of interoperability or persistence —they still are in essence part of the Metaverse.
  • Now, to give further context, there is the idea of ‘Metaverses’ — aka, Decentraland, Sandbox or any company building their own virtual world.

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Oct 04
0

Daily Brief Japan: Toshiba Corp, Nexon, Lasertec Corp, ASICS Corp, Pola Orbis Holdings, NTT (Nippon Telegraph & Telephone), Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, Japan

In today’s briefing:

  • Two Bits of Non-Bullish Toshiba News
  • Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
  • Lasertec (6920 JP): Accumulate for the Long Term
  • Asics (7936) | Nike Air Pockets
  • Japanese Cosmetics: Trading Around Q3 Earnings
  • NTT (Buy) – Investor Day Highlights Global Data Center Business
  • Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional

Two Bits of Non-Bullish Toshiba News

By Travis Lundy

  • On Friday, Toshiba investors got two bits of news which have been taken as non-bullish.
  • Affiliate and former subsidiary Kioxia (6600 JP) announced it would cut wafer input volume by 30% starting in October, and Toshiba’s announcement on the Privatisation process status implied some delay.
  • Today the shares are getting hit vs Peers. It’s still a problem of lots of moving parts. 

Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry

By Douglas Kim

  • Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
  • There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
  • Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.

Lasertec (6920 JP): Accumulate for the Long Term

By Scott Foster

  • The shares are down 58% from their January high. Our 3-year forecast brings valuations down to levels not seen since FY Jun-18.
  • The great surge in orders is coming to an end, but EUV lithography and SiC power devices should keep demand for Lasertec’s mask inspection systems at high levels.
  • The severity of the emerging semiconductor down-cycle and global recession remain to be seen, but the company’s long-term potential warrants another look. 

Asics (7936) | Nike Air Pockets

By Mark Chadwick

  • NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).  
  • ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
  • ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now

Japanese Cosmetics: Trading Around Q3 Earnings

By Oshadhi Kumarasiri

  • The latest rally in Japanese cosmetics, driven by improving domestic market conditions has strangely avoided two of the big names in the market, Shiseido Company (4911 JP) & Pola Orbis.
  • Although both of these names seem to offer big upside potential, we think Pola Orbis Holdings (4927 JP) has a significantly better risk-reward profile in the short term.
  • We would also be inclined to hedge the market risk using Kose Corp (4922 JP) on the short side as the name has the biggest downside potential.

NTT (Buy) – Investor Day Highlights Global Data Center Business

By Kirk Boodry

  • NTT’s global data center business has 6% market share with annual revenue growth of 20% that is twice the industry average
  • We have updated our model and valuation summary to reflect the transfer of NTT Ltd, which operates the GDC business, into NTT Data
  • Our valuation remains unchanged although we have lowered our target price ¥4,500 to ¥4,450 for payment of the H1 dividend.  NTT remains a top pick in our coverage

Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional

By Aki Matsumoto

  • With the revision of Corporate Governance Code in 2021 and its listing criteria on prime market, the groundwork has been laid to some degree to facilitate functioning of compensation committee.
  • Meanwhile, there are not many companies with voluntary nominating and compensation committees that disclose the authority of their nominating and compensation committees in their annual securities reports.
  • Many companies, even large companies, do not even have a compensation policy in place, indicating that individual director compensation is a much lower priority to consider.

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Oct 04
0

Daily Brief China: Tianqi Lithium, Tencent, Shanghai United Imaging Healthcare, Road King Infrastructure, Cubic City Service Apartment Group and more

By | China, Daily Briefs

In today’s briefing:

  • FTSE All-World/​​​​All-Cap Index Rebalance Preview (Dec): Quieter Than Usual as IPOs Dry Up
  • China Internet Weekly (3Oct2022): Tencent, NetEase, Alibaba, Kuaishou, Uxin
  • EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
  • Shanghai United Imaging Healthcare (688271.CH) – Overvalued; Stock Price Will Return to Rationality
  • Morning Views Asia: Road King Infrastructure, Vedanta Resources
  • Cubic City Service Apartment Group Pre-IPO Tearsheet

FTSE All-World/​​​​All-Cap Index Rebalance Preview (Dec): Quieter Than Usual as IPOs Dry Up

By Brian Freitas

  • We see 4 potential inclusions to the FTSE All-World and All-Cap indices that will be implemented at the close of trading on 16 December.
  • There are a couple of other recent listings that are close to the investable market cap threshold and could be added to the All-Cap index.
  • Given the lack of IPO in the April to August period, the rebalance will be quieter than usual though lock-up expiries will keep things interesting.

China Internet Weekly (3Oct2022): Tencent, NetEase, Alibaba, Kuaishou, Uxin

By Ming Lu

  • The global game market can shrink in 2022, which will impact Chinese game companies’ global diversification.
  • NetEase formally launched its own social networking service to compete with Tencent.
  • Kuaishou announced that it would launch an e-commerce channel on its App’s homepage.

EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options

By Simon Harris

  • Stock has fallen 17% since Sep 15th, and implied vols have picked up
  • The fundamentals remain strong and tech momentum may be shifting
  • We suggest two directional trades using options to play earnings

Shanghai United Imaging Healthcare (688271.CH) – Overvalued; Stock Price Will Return to Rationality

By Xinyao (Criss) Wang

  • United Imaging’s high valuation is driven by pandemic/policy dividends. After the impact of COVID-19 fades,the market needs new stories to judge a sustainable business model with increasing investment value.
  • Although in the name of domestic substitution of high-end medical imaging equipment, most of sales still come from middle/low-end products. The real competitiveness in high-end market remains to be seen.
  • United Imaging’s fundamentals and prospects hardly justify a market value of more than RMB100 billion. It’s expected that the stock price will return to rationality in the future.

Morning Views Asia: Road King Infrastructure, 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.

Cubic City Service Apartment Group Pre-IPO Tearsheet

By Ethan Aw

  • Cubic City Service Apartment Group (CCSAG HK) is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Morgan Stanley and CCB International. 
  • Cubic City Service Apartment Group (CCSAG) is a rental apartment services platform, which pioneered the centralized rental apartment model in China, according to the company. 
  • It provides rental apartments in centrally managed buildings with modern facilities. As of 30 Jun 2022 (1Q23), the company operates 76,190 apartments nationwide across 394 locations in 26 cities. 

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Oct 03
0

Daily Brief Utilities: Genex Power Ltd, China Power International and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Merger Arb Mondays (03 Oct) – Genex, Pendal, Alliance Aviation, Fengxiang, Lifestyle Intl, VNET, 111
  • China Power International (2380 HK): We Think Good Opportunities Are Presented

Merger Arb Mondays (03 Oct) – Genex, Pendal, Alliance Aviation, Fengxiang, Lifestyle Intl, VNET, 111

By Arun George

China Power International (2380 HK): We Think Good Opportunities Are Presented

By Osbert Tang, CFA

  • China Power International (2380 HK) is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep – we think this is overdone. 
  • Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.
  • Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. 

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Oct 03
0

Daily Brief Industrials: SATS and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Weekly Deals Digest (02 Oct) – SATS, Jinke Smart, EVOC, Fengxiang, Tassal, MACA, Growatt, CALB

Weekly Deals Digest (02 Oct) – SATS, Jinke Smart, EVOC, Fengxiang, Tassal, MACA, Growatt, CALB

By Arun George

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Oct 03
0

Daily Brief Industrials: SATS and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Weekly Deals Digest (02 Oct) – SATS, Jinke Smart, EVOC, Fengxiang, Tassal, MACA, Growatt, CALB

Weekly Deals Digest (02 Oct) – SATS, Jinke Smart, EVOC, Fengxiang, Tassal, MACA, Growatt, CALB

By Arun George

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Oct 03
0

Daily Brief TMT/Internet: EVOC Intelligent Technology Company Limited H, Lionheart Studios, Vontier Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • EVOC (2308 HK): 19 October H-Class Meeting. IFA Says Fair & Reasonable
  • Lionheart Studio IPO Valuation Analysis
  • Some new stocks

EVOC (2308 HK): 19 October H-Class Meeting. IFA Says Fair & Reasonable

By David Blennerhassett

  • The Composite Document for electronics play and property developer EVOC Intelligent Technology Company  (2308 HK), has been dispatched.  The EM and H-Class meeting will be held on the 19 October. 
  • The Offer Price is HK$1.75/share. It will not be increased. No further dividends will be added. 
  • This is done. Trading at a gross/annualised spread of 2.9%/34%.

Lionheart Studio IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Lionheart Studio is a target price of 19,362 won per share, which is 46% lower than the low end of the IPO price range.
  • Our IPO valuation assumes a 7.2x EV/EBITDA (comps’ average) using 2023 estimated EBITDA of 145 billion won for the company.
  • All in all, we believe there is a strong probability of Lionheart Studio being forced to lower its IPO price range in order to attract more investors. 

Some new stocks

By Turtles all the way down

  • First one is Vontier, its main business is a duopoly in gas station equipment and software.
  • Repair tools for ICE vehicles. Software and hardware for car washes, and some smaller miscellaneous businesses.
  • Some of which they will divest for probably several $100 million in proceeds. And they have a piece in EV charging infrastructure as well. 

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Oct 03
0

Daily Brief Consumer: Leapmotor, Tassal and more

By | Consumer, Daily Briefs

In today’s briefing:

  • HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)
  • Tassal (TGR AU): 3rd November Shareholder Vote On Cooke Offer

HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)

By Brian Freitas

  • We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.
  • Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.
  • Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.

Tassal (TGR AU): 3rd November Shareholder Vote On Cooke Offer

By David Blennerhassett

  • Tassal (TGR AU) has convened a Scheme Meeting on the 3 November for shareholders to vote on the proposal from Cooke Inc at A$5.23/share.
  • The vote, for all intent and purposes, appears a formality. The Independent Expert considers the Offer to be fair and reasonable with a fair range of A$4.65-A$5.35/share. 
  • Trading at a gross/annualised spread of 1.2%/8.8%, assuming late-November completion. 

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