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Smartkarma Daily Briefs

Jul 21
0

Daily Brief Energy/Materials: Adnoc Gas , Tokai Carbon, Resonac Holdings , JSW Steel Ltd, Provaris Energy , Copper, Regis Resources and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • ADNOC Gas (ADNOCGAS UH): Global Index Inclusion Following $2.8B Offering
  • Tokai Carbon (5301.T) – Portfolio Shift Underway; Margin Recovery Key to Re-Rating
  • Resonac Holdings (TSE: 4004) – Strategic Pivot Toward Semiconductor Materials
  • JSW Steel (NSE: JSWSTEEL) – Strong Q1 Beat, Confident FY26 Guidance, Premium Valuation
  • Provaris Energy (ASX:PV1) RaaS Interview Transcript 21 July 2025
  • Bullish Copper: Comex-LME Spreads Off The Charts + Positive China TSF Data
  • Regis Resources Ltd – The Monday Report – 21 July 2025

ADNOC Gas (ADNOCGAS UH): Global Index Inclusion Following $2.8B Offering

By Dimitris Ioannidis

  • Adnoc Gas (ADNOCGAS UH) had been omitted from both global indices due to insufficient float cap despite a market cap of over $60bn.
  • On 21 February 2025, the company completed a Secondary Offering of $2.8bn, resulting in a free float increase from 5% to 9%.
  • Adnoc Gas (ADNOCGAS UH) is expected to be added to Global All-World at the September 2025 review due to an increased float cap.

Tokai Carbon (5301.T) – Portfolio Shift Underway; Margin Recovery Key to Re-Rating

By Rahul Jain

  • Revenue peaked in FY23 but margins have declined due to cost pressures and impairments.
  • The company is exiting underperforming assets and expanding in fine carbon, furnaces, and carbon black.
  • At ¥1,010, it trades at ~19.6x FY25e P/E, in line with peers but below book at 0.8x P/B.

Resonac Holdings (TSE: 4004) – Strategic Pivot Toward Semiconductor Materials

By Rahul Jain

  • Past Performance: Revenues stable; margins improved due to semiconductor growth, despite weak performance in legacy chemicals and graphite electrodes.
  • Strategy & Shutdown: Shutting 30% electrode capacity; refocusing on high-margin semiconductor, SiC, and packaging materials with ¥330 bn capex planned by FY25.
  • Valuation: Trades at 8x EV/EBITDA and 14x P/E FY25E; re-rating possible with higher margins and semiconductor mix.

JSW Steel (NSE: JSWSTEEL) – Strong Q1 Beat, Confident FY26 Guidance, Premium Valuation

By Rahul Jain

  • Recent Results: Q1 EBITDA surged 38% YoY to ₹7,576 Cr, driven by volume ramp-up, improved product mix, and lower coking coal costs.
  • FY26 Guidance: Company maintains production at 30.5 mt and sales at 29.2 mt, reflecting confidence in its ramp-up and downstream expansion roadmap.
  • Valuation & Growth: Trading at ~18× FY27E P/E and ~7× EV/EBITDA—above global peers—justified by projected 20% EBITDA and 23% EPS growth into FY27.

Provaris Energy (ASX:PV1) RaaS Interview Transcript 21 July 2025

By Research as a Service (RaaS)

  • RaaS Research’s Finola Burke and Andrew Williams interview Provaris Energy Managing Director/CEO Martin Carolan on the company’s strategy, its partnerships with Yinson and K Line and path to a FID.

Bullish Copper: Comex-LME Spreads Off The Charts + Positive China TSF Data

By Sameer Taneja

  • In our previous insight, Trump 50% Import Tariff Could Send Copper Into Stratosphere Short-Term: LME Can Breach 11k USD/Ton, we highlighted upside risk to the LME price.
  • Comex-LME spreads remain elevated at $ 2,500/ton levels, reflecting the impact of tariffs that haven’t yet been imposed, amid ongoing supply disruptions. Inventories, though, have stopped depleting on the LME. 
  • We remain bullish on copper in the countdown to August 1st, where it is likely that tariffs of 50% are imposed on copper. 

Regis Resources Ltd – The Monday Report – 21 July 2025

By FNArena

  • Wrap of events affecting the market on Friday night and the weekend and a preview of the week ahead

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Jul 21
0

Daily Brief TMT/Internet: SK Hynix, Tencent and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • SK Hynix Single-Stock ETF Scheduled for 3Q: Watch for a Repeat of the Samsung ETF Playbook
  • ECM Weekly (21 July 2025) – Muyuan, Unisplendour, NTT, Kasumigaseki, Anthem, Leads, SBI, Ascentage

SK Hynix Single-Stock ETF Scheduled for 3Q: Watch for a Repeat of the Samsung ETF Playbook

By Sanghyun Park

  • When the SK Hynix ETF drops, expect meaningful physical buying shaking up supply-demand. Arb desks and alpha shops could pile in early, pushing the stock higher on flow.
  • Going long Hynix near listing could pay off if demand mirrors Samsung’s—ETF flows, NAV arb, and delta hedging drove a 4% jump with a noticeable increase in program buying.
  • Get in around the listing, watch flows, and take profits quickly. This is a short 2–3 day tactical play, with sharper front-running expected based on the Samsung ETF template.

ECM Weekly (21 July 2025) – Muyuan, Unisplendour, NTT, Kasumigaseki, Anthem, Leads, SBI, Ascentage

By Sumeet Singh

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the IPO front, filings and listings have cooled off going into the general summer lull.
  • On the placements front, State Bank Of India (SBIN IN) pulled the trigger on its long touted QIP.

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Jul 21
0

Daily Brief Utilities: ENN Energy and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Merger Arb Mondays (21 Jul) – ENN Energy, HEC Pharma, Shibaura, Abacus Storage, Insignia, Zeekr

Merger Arb Mondays (21 Jul) – ENN Energy, HEC Pharma, Shibaura, Abacus Storage, Insignia, Zeekr

By Arun George

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Jul 21
0

Daily Brief Health Care: Sichuan Kelun-Biotech Biopharm, Max Healthcare Institute, Anthem Biosciences, Next Science Ltd, Shoulder Innovations, Ono Pharmaceutical and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Sichuan Kelun Biotech (6990 HK): Price Surge & Global Index Inclusion
  • NIFTY50 Index Rebalance Preview: Forecast Changes, Impact, Positioning
  • Anthem Biosciences IPO: Lists Today; Index Inclusion Timing
  • Asset Sales, Mergers, and Regulatory Developments: Key Updates from SSI Weekly Newsletter
  • Shoulder Innovations IPO Preview: Seeing Value In InSet Glenoid Technology and Disruptive Ecosystem
  • Ono Pharmaceutical (4528 JP): Label Expansion Helps, But Long-Term Growth Momentum Calls for More

Sichuan Kelun Biotech (6990 HK): Price Surge & Global Index Inclusion

By Brian Freitas

  • The recent placement and price surge in Sichuan Kelun-Biotech Biopharm (6990 HK) could result in the stock being added to a global index in August.
  • Sichuan Kelun-Biotech Biopharm has outperformed its peers as the entire industry has been trading well. There is a small increase in short interest in the stock.
  • Positioning has increased steadily over the last month. Momentum in the stock and its peers could lead to further upside before profit taking kicks in.

NIFTY50 Index Rebalance Preview: Forecast Changes, Impact, Positioning

By Brian Freitas

Anthem Biosciences IPO: Lists Today; Index Inclusion Timing

By Brian Freitas

  • Anthem Biosciences raised INR 34bn (US$394m) in its IPO valuing the company at INR 320bn (US$3.7bn). The stock lists today.
  • The grey market premium is INR 132/share, so the stock could list 23.2% higher than the IPO price. That will help in getting larger index flows.
  • Anthem Biosciences could be added to one global index in November while the stock price gain will determine whether the stock is added to the other global index in December.

Asset Sales, Mergers, and Regulatory Developments: Key Updates from SSI Weekly Newsletter

By Special Situation Investments

  • Next Science (NXS:AX) plans a large capital return after selling assets to Demetra Holdings, with a 13% spread to expected distribution.
  • Cantor Equity Partners I (CEPO) merges with BSTR, becoming a major Bitcoin treasury, exiting with a 17% gain.
  • Banxa’s (BNXA:V) spread widens to 30% amid shareholder sales and pending acquisition by OSL Group, with Genius Act tailwinds.

Shoulder Innovations IPO Preview: Seeing Value In InSet Glenoid Technology and Disruptive Ecosystem

By Andrei Zakharov

  • Shoulder Innovations Inc., high-growth and pure-play shoulder arthroplasty device company, filed for an IPO in the United States.
  • Their flagship product, InSet Glenoid, is the first and only FDA cleared device that solves glenoid loosening. The company has raised ~$115M in equity according to the S-1.
  • I believe there is good near-term visibility for growth as Shoulder Innovations drives commercial expansion and achieves greater domestic reach.

Ono Pharmaceutical (4528 JP): Label Expansion Helps, But Long-Term Growth Momentum Calls for More

By Tina Banerjee

  • Ono Pharmaceutical (4528 JP) guided Opdivo revenue in FY26 to be ¥138.5B (Japan: ¥125B, up 4% and Overseas: ¥13.5B, up 3%), up 4% YoY.
  • Opdivo in combination with Yervoy (from Bristol Myers Squibb) was approved in Europe, US, South Korea, and Japan for the first-line treatment of patients with unresectable or metastatic hepatocellular carcinoma.
  • In FY26, Opdivo’s revenue growth will come from indication expansion but smaller addressable patient population remains a concern for long term.

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Jul 21
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Japan Ruling Coalition Loses Majority and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Japan Ruling Coalition Loses Majority
  • Bank Margins Under Pressure: Navigating the Rate Cut Ripple

Ohayo Japan | Japan Ruling Coalition Loses Majority

By Mark Chadwick

  • U.S. stocks ended mixed Friday as tariff tensions weighed on the Dow, earnings remained strong overall, and consumer sentiment improved with easing inflation fears.
  • The Magnificent Seven megacap technology companies are set to begin reporting earnings this week, starting with Alphabet and Tesla,
  • Japan’s ruling coalition lost its re-election majority in the Upper House, with PM Ishiba vowing to continue talks amid pressure from ongoing U.S. tariff negotiations.

Bank Margins Under Pressure: Navigating the Rate Cut Ripple

By Nimish Maheshwari

  • The 100bp rate cut cycle is transmitting unevenly, with Private Banks raising loan spreads to 415bp while PSBs cut more sharply, compressing margins. 
  • This divergence is reshaping profitability, with NIMs under pressure through Q2–Q3 FY26 and relief delayed by slow deposit rate repricing.
  • Margin recovery now hinges on H2FY26 onwards, aided by CRR liquidity, easing funding costs, and credit cost normalization.

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Jul 21
0

Daily Brief Industrials: Reece Ltd, Asian Terminals, MMC Port Holdings Berhad and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Reece (REH AU): Positioning Increases as Global Index Deletion Nears
  • Asian Terminals (ATI PM)
  • MMC Ports Pre-IPO – The Positives – Port Tariff Hike Beneficiary

Reece (REH AU): Positioning Increases as Global Index Deletion Nears

By Brian Freitas

  • Reece Ltd (REH AU)‘s stock price has dropped a lot over the last year, and the significantly lower market cap could result in global index deletion in August. 
  • Short interest started to pick up early this year and has accelerated over the last couple of months. There are indications of positioning in the stock.
  • Reece Ltd (REH AU) has underperformed its peers but still trades at a higher EV/EBITDA and forward PE compared to most of its peer group.

Asian Terminals (ATI PM)

By Michael Fritzell

  • Asian Terminals (ATI PM — US$941 million) is a Philippines-based port operator.
  • It’s owned by Eusebio (“Yosi”) Tanco, recently famous for having hit a jackpot with online bingo operator DigiPlus and school operator STI Education.
  • Asian Terminals has also done exceptionally well. It was set up in the 1980s and managed to acquire the Manila South Harbor port in the early 1990s.

MMC Ports Pre-IPO – The Positives – Port Tariff Hike Beneficiary

By Nicholas Tan

  • MMC Port Holdings Berhad (2436494D MK) is looking to raise up to US$2bn in its upcoming Malaysian IPO.
  • It is principally involved in port operations in Malaysia. The firm operates five sea ports and a solid product jetty terminal, and conducts ship-to-ship (STS) services at an offshore port.
  • In this note, we talk about the positive aspects of the deal. 

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Jul 21
0

Daily Brief ECM: Pre-IPO 52TOYS Development – The Business Model and the Concerns Behind and more

By | Daily Briefs, ECM

In today’s briefing:

  • Pre-IPO 52TOYS Development – The Business Model and the Concerns Behind
  • MMC Ports Pre-IPO – The Positives – Port Tariff Hike Beneficiary
  • ECM Weekly (21 July 2025) – Muyuan, Unisplendour, NTT, Kasumigaseki, Anthem, Leads, SBI, Ascentage
  • Shoulder Innovations IPO Preview: Seeing Value In InSet Glenoid Technology and Disruptive Ecosystem

Pre-IPO 52TOYS Development – The Business Model and the Concerns Behind

By Xinyao (Criss) Wang

  • For IP toy, the ability to provide a variety of categories is valuable,which means brands have access to diverse/creative designs/production based on IP characteristics, highlighting/interpreting the core of each IP.
  • Driven by top-tier licensed IPs, 52TOYS achieved solid growth, but its revenue scale/profit margin are inferior to peers. Due to intense competition, 52TOYS’s market share may be further squeezed.
  • The post-money valuation after Series C+ Financing is RMB4.27 billion. Based on the analysis, we think valuation of 52TOYS should be lower than Pop Mart (9992 HK), Bloks (325 HK).

MMC Ports Pre-IPO – The Positives – Port Tariff Hike Beneficiary

By Nicholas Tan

  • MMC Port Holdings Berhad (2436494D MK) is looking to raise up to US$2bn in its upcoming Malaysian IPO.
  • It is principally involved in port operations in Malaysia. The firm operates five sea ports and a solid product jetty terminal, and conducts ship-to-ship (STS) services at an offshore port.
  • In this note, we talk about the positive aspects of the deal. 

ECM Weekly (21 July 2025) – Muyuan, Unisplendour, NTT, Kasumigaseki, Anthem, Leads, SBI, Ascentage

By Sumeet Singh

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the IPO front, filings and listings have cooled off going into the general summer lull.
  • On the placements front, State Bank Of India (SBIN IN) pulled the trigger on its long touted QIP.

Shoulder Innovations IPO Preview: Seeing Value In InSet Glenoid Technology and Disruptive Ecosystem

By Andrei Zakharov

  • Shoulder Innovations Inc., high-growth and pure-play shoulder arthroplasty device company, filed for an IPO in the United States.
  • Their flagship product, InSet Glenoid, is the first and only FDA cleared device that solves glenoid loosening. The company has raised ~$115M in equity according to the S-1.
  • I believe there is good near-term visibility for growth as Shoulder Innovations drives commercial expansion and achieves greater domestic reach.

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Jul 21
0

Daily Brief Event-Driven: SK Hynix Single-Stock ETF Scheduled for 3Q: Watch for a Repeat of the Samsung ETF Playbook and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • SK Hynix Single-Stock ETF Scheduled for 3Q: Watch for a Repeat of the Samsung ETF Playbook
  • Anthem Biosciences IPO: Lists Today; Index Inclusion Timing
  • Kakao Pay’s Unique Quick-Flip EB: Watch Hedges & Rolls for Trading Angle
  • Dickson Concept (113 HK): More Minority Teeth Bared As Another Scheme Fails
  • Merger Arb Mondays (21 Jul) – ENN Energy, HEC Pharma, Shibaura, Abacus Storage, Insignia, Zeekr
  • Asset Sales, Mergers, and Regulatory Developments: Key Updates from SSI Weekly Newsletter

SK Hynix Single-Stock ETF Scheduled for 3Q: Watch for a Repeat of the Samsung ETF Playbook

By Sanghyun Park

  • When the SK Hynix ETF drops, expect meaningful physical buying shaking up supply-demand. Arb desks and alpha shops could pile in early, pushing the stock higher on flow.
  • Going long Hynix near listing could pay off if demand mirrors Samsung’s—ETF flows, NAV arb, and delta hedging drove a 4% jump with a noticeable increase in program buying.
  • Get in around the listing, watch flows, and take profits quickly. This is a short 2–3 day tactical play, with sharper front-running expected based on the Samsung ETF template.

Anthem Biosciences IPO: Lists Today; Index Inclusion Timing

By Brian Freitas

  • Anthem Biosciences raised INR 34bn (US$394m) in its IPO valuing the company at INR 320bn (US$3.7bn). The stock lists today.
  • The grey market premium is INR 132/share, so the stock could list 23.2% higher than the IPO price. That will help in getting larger index flows.
  • Anthem Biosciences could be added to one global index in November while the stock price gain will determine whether the stock is added to the other global index in December.

Kakao Pay’s Unique Quick-Flip EB: Watch Hedges & Rolls for Trading Angle

By Sanghyun Park

  • This Kakao Pay EB deal is basically a quick block trade with immediate share exchange and a 90–102% strike price, letting them sell shares quietly with a built-in discount.
  • Korea’s seen many EBs, but Kakao Pay’s quick-flip, discount deal is really unique. Watch hedging and roll activity—timing these can capture the sell-off and unwind bounce.
  • Goldman’s sell-down triggers initial short covering and price bumps; new buyers then short, causing a second wave. Near exchange, more covering leads to choppy, drawn-out price swings.

Dickson Concept (113 HK): More Minority Teeth Bared As Another Scheme Fails

By David Blennerhassett

Merger Arb Mondays (21 Jul) – ENN Energy, HEC Pharma, Shibaura, Abacus Storage, Insignia, Zeekr

By Arun George

Asset Sales, Mergers, and Regulatory Developments: Key Updates from SSI Weekly Newsletter

By Special Situation Investments

  • Next Science (NXS:AX) plans a large capital return after selling assets to Demetra Holdings, with a 13% spread to expected distribution.
  • Cantor Equity Partners I (CEPO) merges with BSTR, becoming a major Bitcoin treasury, exiting with a 17% gain.
  • Banxa’s (BNXA:V) spread widens to 30% amid shareholder sales and pending acquisition by OSL Group, with Genius Act tailwinds.

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Jul 21
0

Daily Brief Equity Bottom-Up: Curator’s Cut: Japan Insurers Vs Banks and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Curator’s Cut: Japan Insurers Vs Banks, the State of the Chinese EV Sector and Asian Ports in Focus
  • Formosa Prosonic: (FOR MK) : Margin of Safety Is Very High – Trades Below Cash
  • Asian Terminals (ATI PM)
  • Relative Value Opportunities in Asia-Pac, Pair Trade Roundup.
  • Bright Smart (1428 HK): Valuation Update
  • Tokai Carbon (5301.T) – Portfolio Shift Underway; Margin Recovery Key to Re-Rating
  • Waypoint REIT (WPR AU) Vs. Region Group (RGN AU): Aussie REIT Spread Trade Looks Ripe
  • Resonac Holdings (TSE: 4004) – Strategic Pivot Toward Semiconductor Materials
  • JSW Steel (NSE: JSWSTEEL) – Strong Q1 Beat, Confident FY26 Guidance, Premium Valuation
  • Regis Resources Ltd – The Monday Report – 21 July 2025

Curator’s Cut: Japan Insurers Vs Banks, the State of the Chinese EV Sector and Asian Ports in Focus

By Pranav Rao

  • Welcome to Curator’s Cut, a fortnightly roundup of standout themes from the 1,000+ insights published in the past two weeks on Smartkarma
  • In this cut, we compare Japanese insurers versus banks, look at the Chinese EV sector and explore how tariff hikes benefit Asian port operators
  • Want to dig deeper? Comment or message with the themes you’d like to see highlighted next

Formosa Prosonic: (FOR MK) : Margin of Safety Is Very High – Trades Below Cash

By Punit Khanna

  • Formosa Prosonic is a very cheap stock. Cash on its Balance Sheet is MYR 1.65 which is way higher than stock price.
  • Operating business has been consistently profitable & generated very good ROE & is available for free. 
  • Stock has been falling as Wistron the largest shareholder has decided to exit its holding as part of strategic overview which we think is a Buying opportunity

Asian Terminals (ATI PM)

By Michael Fritzell

  • Asian Terminals (ATI PM — US$941 million) is a Philippines-based port operator.
  • It’s owned by Eusebio (“Yosi”) Tanco, recently famous for having hit a jackpot with online bingo operator DigiPlus and school operator STI Education.
  • Asian Terminals has also done exceptionally well. It was set up in the 1980s and managed to acquire the Manila South Harbor port in the early 1990s.

Relative Value Opportunities in Asia-Pac, Pair Trade Roundup.

By Gaudenz Schneider

  • Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
  • Highlight: Three Aussie pair trade opportunities across three sectors persist.
  • Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.

Bright Smart (1428 HK): Valuation Update

By Osbert Tang, CFA

  • Bright Smart Securities (1428 HK) rallied by 132% since our last Insight, fueled by the euphoria in the brokerage and securities sector on the HK government’s stablecoin initiative.
  • At HK$16.44, it is at 100% PER premium to the sector average, ex-Guotai Junan International (1788 HK). The risk-reward payoff now looks less attractive.
  • It also implies net profit to grow by 150% by FY31F and priced at 18x PER. This appears stretched in the near term, though long-term prospects stay decent. 

Tokai Carbon (5301.T) – Portfolio Shift Underway; Margin Recovery Key to Re-Rating

By Rahul Jain

  • Revenue peaked in FY23 but margins have declined due to cost pressures and impairments.
  • The company is exiting underperforming assets and expanding in fine carbon, furnaces, and carbon black.
  • At ¥1,010, it trades at ~19.6x FY25e P/E, in line with peers but below book at 0.8x P/B.

Waypoint REIT (WPR AU) Vs. Region Group (RGN AU): Aussie REIT Spread Trade Looks Ripe

By Gaudenz Schneider

  • Context: The Region (RGN AU) vs. Waypoint REIT (WPR AU) Price-Ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
  • Highlights: The pair shows strong alignment in both statistical terms and fundamental metrics and factors.
  • Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

Resonac Holdings (TSE: 4004) – Strategic Pivot Toward Semiconductor Materials

By Rahul Jain

  • Past Performance: Revenues stable; margins improved due to semiconductor growth, despite weak performance in legacy chemicals and graphite electrodes.
  • Strategy & Shutdown: Shutting 30% electrode capacity; refocusing on high-margin semiconductor, SiC, and packaging materials with ¥330 bn capex planned by FY25.
  • Valuation: Trades at 8x EV/EBITDA and 14x P/E FY25E; re-rating possible with higher margins and semiconductor mix.

JSW Steel (NSE: JSWSTEEL) – Strong Q1 Beat, Confident FY26 Guidance, Premium Valuation

By Rahul Jain

  • Recent Results: Q1 EBITDA surged 38% YoY to ₹7,576 Cr, driven by volume ramp-up, improved product mix, and lower coking coal costs.
  • FY26 Guidance: Company maintains production at 30.5 mt and sales at 29.2 mt, reflecting confidence in its ramp-up and downstream expansion roadmap.
  • Valuation & Growth: Trading at ~18× FY27E P/E and ~7× EV/EBITDA—above global peers—justified by projected 20% EBITDA and 23% EPS growth into FY27.

Regis Resources Ltd – The Monday Report – 21 July 2025

By FNArena

  • Wrap of events affecting the market on Friday night and the weekend and a preview of the week ahead

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Jul 21
0

Daily Brief Macro: Political Pressure Steadily Mounting on the Fed as New Game of Chicken Emerges and more

By | Daily Briefs, Macro

In today’s briefing:

  • Political Pressure Steadily Mounting on the Fed as New Game of Chicken Emerges
  • The Dog That Didn’t Bark
  • The Trade War Is Dead! Long Live the Trade War!
  • Bullish Copper: Comex-LME Spreads Off The Charts + Positive China TSF Data

Political Pressure Steadily Mounting on the Fed as New Game of Chicken Emerges

By Said Desaque

  • The search for candidates to replace Chairman Powell is rumoured to be underway, while political attacks have become broader, including large financial losses being incurred by the Fed.
  • US equities are playing a game of chicken with President Trump, believing that threatened tariff increases will not be implemented. Total consumer spending impacted by higher tariffs is relatively small.
  • Hitherto, in contrast to predictions, there is scant evidence of tariffs significantly impacting import prices or consumer prices to the potential detriment of Chairman Powell’s credibility.

The Dog That Didn’t Bark

By Cam Hui

  • We call the stock market recovery off the April panic bottom as a “the dog that didn’t bark” market as there are few signs of speculative excess.
  • Technical indicators are also supportive of higher prices in the short run
  • The main risk to the bull is an unwelcome rise in inflation expectations, which could rattle the bond market as well as stock prices.

The Trade War Is Dead! Long Live the Trade War!

By Cam Hui

  • Despite all of the dire headlines about tariffs on Canada, Mexico and the European Union, the only trade war that matters is effectively over. China has won.
  • In the short run, economic policy uncertainty is receding but it’s not fully normalized. It’s time to adopt a risk-on posture.
  • In the long run, equity investors should not expect the S&P 500, which trades at forward P/E of 22, to continue to outperform global stocks in the next expansion cycle.

Bullish Copper: Comex-LME Spreads Off The Charts + Positive China TSF Data

By Sameer Taneja

  • In our previous insight, Trump 50% Import Tariff Could Send Copper Into Stratosphere Short-Term: LME Can Breach 11k USD/Ton, we highlighted upside risk to the LME price.
  • Comex-LME spreads remain elevated at $ 2,500/ton levels, reflecting the impact of tariffs that haven’t yet been imposed, amid ongoing supply disruptions. Inventories, though, have stopped depleting on the LME. 
  • We remain bullish on copper in the countdown to August 1st, where it is likely that tariffs of 50% are imposed on copper. 

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