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Smartkarma Daily Briefs

Nov 15
0

Daily Brief Quantitative Analysis: ASX Short Interest Weekly (Nov 8th): National Australia Bank and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • ASX Short Interest Weekly (Nov 8th): National Australia Bank, Sigma Pharmaceuticals, Macquarie

ASX Short Interest Weekly (Nov 8th): National Australia Bank, Sigma Pharmaceuticals, Macquarie

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of ASX Stocks as of Nov 8th (reported today) which has an aggregated short interest worth USD25.2bn.
  • We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
  • We highlight short interest changes in National Australia Bank, Sigma Pharmaceuticals, Macquarie, Aristocrat Leisure, Evolution Mining.

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Nov 15
0

Daily Brief Equity Bottom-Up: Zomato Vs Swiggy: The Great Indian Delivery War and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Zomato Vs Swiggy: The Great Indian Delivery War
  • Grab Holdings (GRAB US) – High-Value Products Take the Helm
  • The Beat Ideas: Prakash Industries Limited, A Mining Catalyst
  • Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)
  • Appier (4180) | Record Quarter
  • Aem: Hoping for Better 2025
  • Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates
  • ASML Investor Day: Oops They Did It Again. Different Story, Same 2030 Targets.
  • Freee 1Q: Turns Profitable Sooner Than We Expected
  • Applied Materials: The Stock Is Reasonably Valued on Modest Expectations. More Attractive than ASML.

Zomato Vs Swiggy: The Great Indian Delivery War

By Sudarshan Bhandari

  • Swiggy (1255298D IN) debuts with an 8% premium, raising Rs. 11,328 crore in IPO for Dark store expansion, brand promotion, tech & inorganic growth.
  • Swiggy lags behind Zomato across metrics, while Zomato diversifies with high-growth ticketing and “Going Out” segments.
  • With both segments is on the edge of becoming Contribution and EBITDA positive, one need to look the results of upcoming quarters of swiggy carefully.

Grab Holdings (GRAB US) – High-Value Products Take the Helm

By Angus Mackintosh

  • Grab booked an impressive performance in 3Q2024, with strong evidence of its high-value products such as advance bookings gaining traction along with increasing monthly transacting users through its Saver offering. 
  • The company’s delivery business benefitted from strong performance from GrabMart and GrabFood. Its Grab Unlimited subscription hit record new highs, with users transacting four times as frequently as non-users.
  • Grab also saw a strong performance from GrabFin and its digital banks, which all started lending in November plus rapid deposit growth. Guidance increased reflecting a more positive outlook. 

The Beat Ideas: Prakash Industries Limited, A Mining Catalyst

By Sudarshan Bhandari

  • Prakash Industries (PKI IN) Bhaskarpara Coal Mine is now received all the government approvals ensuring stable, self-supplied coal for steel production as well as open market sale.
  • This development reduces raw material costs, boosts EBITDA potential, and strengthens PIL’s valuation amid past corporate governance concerns.
  • PIL has manageable debt and with rising EBITDA, the company is available at a very attractive valuation compared to its peers.

Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)

By Ming Lu

  • Geely’s revenue grew by 20% YoY and deliveries increased by 19% YoY in 3Q24.
  • The operating margin improved to 5.3% in 3Q24 versus 2.9% in 3Q23.
  • We conclude an upside of 58% and a price target of HK$22 for the end of 2025.

Appier (4180) | Record Quarter

By Mark Chadwick

  • In Q3 FY24, Appier achieved record-breaking revenue, reaching JPY 9.1 billion, marking a 28% year-over-year growth.
  • Operating income for Q3 surged by 2.5 times YoY to JPY 788 million, with the operating margin improving by 4.3 percentage points to 8.7%.
  • At less than 4x EV/Sales and 16x FY25 EBITDA the stock does not appear expensive.

Aem: Hoping for Better 2025

By Nicolas Van Broekhoven

  • AEM (AEM SP) released 3Q24 numbers and bumped its guidance higher as its key customer pulled forward some orders.
  • In 2025 it will be the first year where customers outside of Intel will make up the majority of AEM’s revenues. This is a big milestone for AEM.
  • Continued business from Intel and growth in new key accounts means we should expect FY25 revenue growth. Guidance for FY25 will come by February 2025. 

Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates

By Sameer Taneja

  • Plover Bay Technologies (1523 HK) issued a profit alert stating that the profit for the first 10 months of FY24 grew by>10% over the entire FY23 profit (28 mn USD). 
  • Nov/Dec tend to be decent business months for the company, so we expect the profit to be a little over 40 million USD for FY24, implying a 17-18x FY24 PE.  
  • The company has net cash of more than 50 mn USD and consistent ROEs of more than 35% (currently >65%), with excellent prospects for future growth.

ASML Investor Day: Oops They Did It Again. Different Story, Same 2030 Targets.

By Nicolas Baratte

  • ASML maintains its 2030 targets: revenue EUR44-60bn, Gross Margin 56-60%. But the narrative has changed, again. In 2022, it was Mature nodes (DUV) and EUV. In 2024, it’s AI. 
  • What’s changed? Lower growth in Smartphone, PC, Auto. AI bigger than expected. Server DRAM and HBM is the major positive change. NAND is revised down sharply. It’s actually believable. 
  • The guidance implies Operating Profits growing between 9.5-17.5% Cagr over 2024-2030. That’s pretty good but the stock is trading at 27x 2025 EPS, 22x 2026. No room for disappointment. 

Freee 1Q: Turns Profitable Sooner Than We Expected

By Shifara Samsudeen, ACMA, CGMA

  • Freee KK (4478 JP) reported 1QFY06/2025 results which saw the company generating its first-ever Adj. operating profit, earlier than we expected.
  • The company has begun capitalising its software assets (decline in R&D costs as % of revenue) and this coupled with fall in S&M costs have contributed to profits.
  • The corporate paying customers surpassed more than 200k for the first time and we expect freee’s earnings to continue to improve going forward.

Applied Materials: The Stock Is Reasonably Valued on Modest Expectations. More Attractive than ASML.

By Nicolas Baratte

  • Management reiterates 1) growth accelerating on Advanced Logic (Gate All Around, Back Side Power), Advanced Packaging incl HBM, DRAM capacity additions  2) improving margins  3) energy-efficient computing driving materials innovation.
  • The risk is Mature node Capex slowdown in China, which we think is underestimated for 2025. China revenue: AMAT 30%, ASML 47%.
  • AMAT is trading at reasonable multiples on modest Consensus expectations, upside possible as 2nm and HBM accelerate. ASML is trading on rich multiples, on rich expectations, less room for upside.

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Nov 15
0

Daily Brief Crypto: Crypto Moves #52 – Are You Ready for Altcoin Season? and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Crypto Moves #52 – Are You Ready for Altcoin Season?

Crypto Moves #52 – Are You Ready for Altcoin Season?

By Mads Eberhardt

  • In Crypto Moves #18 from early March this year, we referred to this crypto bull market as the least speculative in the history of the crypto market.
  • By Crypto Moves #35 in early July, we reaffirmed this view.
  • Meanwhile, during this period, Bitcoin had outpaced almost every other altcoin.

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Nov 15
0

Daily Brief ECM: SF Holding H Share Listing: Updates Point to Improving Fundamentals and more

By | Daily Briefs, ECM

In today’s briefing:

  • SF Holding H Share Listing: Updates Point to Improving Fundamentals
  • Zinka Logistics IPO – Has Grown Rapidly but Looks Expensive
  • CiDi Inc. Pre-IPO Tearsheet
  • MNC Solutions Pre-IPO – Momentum Has Been Very Strong, Although Some Corp Gov Issues to Watch For

SF Holding H Share Listing: Updates Point to Improving Fundamentals

By Arun George

  • S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
  • SF is the largest integrated logistics service player in China and Asia and the fourth largest player globally in terms of revenue in 2023, according to Frost & Sullivan.   
  • The PHIP update shows that the business is in good health, with a return to growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.

Zinka Logistics IPO – Has Grown Rapidly but Looks Expensive

By Akshat Shah

  • Blackbuck (1355652D IN) is looking to raise about US$130m in its India IPO.
  • Zinka Logistics (Blackbuck) is India’s largest digital platform for truck operators (in terms of number of users), with 963,345 truck operators transacting on its platform in FY24, as per Redseer.
  • Previously, we talked about the company’s historical performance. In this note, we share our quick thoughts on peer comparison and valuation.

CiDi Inc. Pre-IPO Tearsheet

By Nicholas Tan

  • CiDi Inc (CIDI HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC, China Securities and Ping An.
  • It is a leading provider of autonomous driving technology for commercial vehicles in China.
  • It focuses on research and development of autonomous mining and logistics trucks, V2X technologies and high-performance perception solutions.

MNC Solutions Pre-IPO – Momentum Has Been Very Strong, Although Some Corp Gov Issues to Watch For

By Clarence Chu

  • MNC Solution (MNC KS) MNC Solutions is looking to raise US$200m in its upcoming Korea IPO.
  • MNC Solutions (MNC) supplies high-precision control components for maritime and aviation weaponry, and travel devices for stabilization to the defense industry.
  • In this note, we look at the firm’s past performance.

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Nov 15
0

Daily Brief Event-Driven: NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
  • CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid
  • Boqi Env (2377 HK)’s Partial Offer
  • Macromill (3978 JP): CVC’s Light Tender Offer at JPY1,150 Begs for Activism
  • Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
  • Renewable Japan (9522 JP): Tokyu Fudosan (3289 JP)-Sponsored MBO Set at a 132% Takeover Premium
  • SBI Fintech Solutions: Tender Offer and Delisting
  • NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update
  • Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off
  • Monte Dei Paschi Poised for Strategic Merger Opportunity

NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed

By Travis Lundy

  • On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
  • On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
  • The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.

CVC Offers ¥1150 for Macromill (3978) – Wrong Price, Wrong Register – Expect Activism or An Overbid

By Travis Lundy

  • Today, CVC announced a deal to buy out Macromill, Inc (3978 JP). It is agreed and supported by management and the Board. 
  • The shareholder register on this stock is wide open. It is not burdened by crossholders. It IS burdened by 7 large active holders who have 55%. 
  • Those holders may complain about the process, the transparency, and the low price. This could be a target for an activist or a strategic overbidder.

Boqi Env (2377 HK)’s Partial Offer

By David Blennerhassett

  • Back on the 23rd October,  flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
  • The upshot of the buyback lifts the stake of co-founder Zeng Zhijun and concert parties  to 32.59% – up from 27.71% – before options. A whitewash waiver is required.
  • A expected, the Offer Doc has now been delayed. It is now expected to be dispatched on or before the 29th November. 

Macromill (3978 JP): CVC’s Light Tender Offer at JPY1,150 Begs for Activism

By Arun George

  • Macromill, Inc (3978 JP) has recommended CVC’s tender offer at JPY1,150, a 40.1% premium to the last close.
  • While the offer is attractive compared to historical trading ranges, it is 41% below the IPO price and 11% below the midpoint IFA DCF valuation range. 
  • The lack of an irrevocable, open shareholder register and large foreign institutions’ shareholding increases the odds of activism to force a bump.  

Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates

By Sanghyun Park

  • A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
  • FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
  • We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.

Renewable Japan (9522 JP): Tokyu Fudosan (3289 JP)-Sponsored MBO Set at a 132% Takeover Premium

By Arun George

  • Renewable Japan (9522 JP) has recommended a Tokyu Fudosan Holdings (3289 JP)-sponsored MBO at JPY1,250 per share, a 132.3% premium to the last close.
  • The high takeover premium reflects the 55% YTD decline in the share price. While the timing is opportunistic, the offer is attractive compared to peer multiples. 
  • The irrevocables and low required minority acceptance rate ensure that this is a done deal. The tender runs from 15 November to 8 January 2025 (34 business days).

SBI Fintech Solutions: Tender Offer and Delisting

By Douglas Kim

  • After the market close on 14 November, SBI Fintech Solutions announced that the Japanese financial group SBI is pushing for a tender offer and delisting of SBI Fintech Solutions.
  • The tender offer price is 5,000 won per share, which is 36% higher than the closing price on 14 November. The tender offer size amount is about 26 billion won.
  • Given the relatively solid upside, we believe SBI Holdings is likely to successfully complete this tender offer and take the company private. 

NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update

By Charlotte van Tiddens, CFA

  • It has been an eventful week for Naspers and Prosus – Tencent reported 3Q FY24 results yesterday after the HK close and Swiggy listed on the NSE and BSE.
  • Prosus sold shares in Swiggy worth $500m and retains an interest of 25% (fully diluted basis).
  • Since 2017, Naspers and Prosus invested $1.3bn to build a 31% stake. The group have created $2bn of value for shareholders following the listing.

Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off

By David Blennerhassett

  • On the 6th October, Sihuan Pharmaceutical Hldgs (460 HK) announced a HK$500mn, 12-month buyback programme. Shares jumped 31% on the news, but have since given all that gain back.
  • Sihuan Pharma has now announced an intention to spin-off non-wholly-owned subsidiary Xuanzhu Biopharm on the HKEx. 
  • Concurrent with the spin-off news. Sihuan Pharma acquired 6.9% in Xuanzhu Biopharm for RMB596mn, implying a full value of ~RMB8.5bn (~HK$9.2bn). This compares to Sihuan Pharma’s market cap of HK$6.6bn. 

Monte Dei Paschi Poised for Strategic Merger Opportunity

By Jesus Rodriguez Aguilar

  • The Italian government sold a 15% stake in Banca Monte dei Paschi di Sien (BMPS IM), reducing its holding to 11.7%, signaling potential acquisition interest.
  • Banco BPM SpA (BAMI IM) and Anima Holding (ANIM IM)’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.
  • BMPS’s improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.

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Nov 15
0

Daily Brief Macro: CX Daily: How Trump’s Return Might Be a Boon for TikTok and more

By | Daily Briefs, Macro

In today’s briefing:

  • CX Daily: How Trump’s Return Might Be a Boon for TikTok
  • Flash Macro Watch: The Fed has abandoned its 2% target
  • Actinver Research – Mexico Equity Research: Opportunities amid the noise
  • The X Factor
  • Tire Industry: Premium Brands Exit Small-Rim Market Amidst Rising Competition

CX Daily: How Trump’s Return Might Be a Boon for TikTok

By Caixin Global

  • Donald Trump’s victory in the presidential election could be a boon for TikTok, potentially offering the Chinese-owned short-video app a reprieve from the impending federal ban that would cost it one of its biggest markets.
  • President Joe Biden signed a bill into law this April that gave a choice to ByteDance Ltd., the Chinese parent company of TikTok — sell the app by January next year or face a ban from the country’s app stores.
  • The reason given for the bill was concern that Beijing could access U.S. users’ information and use TikTok to influence citizens — although TikTok denied both claims.

Flash Macro Watch: The Fed has abandoned its 2% target

By Andreas Steno

  • Following another reasonably hot U.S. CPI report yesterday, it’s time to dust off the old sell-side charlatan chart comparing today’s inflation to the 1970s.
  • Honestly, I find this comparison absurd in many ways, as the drivers of inflation are different now.
  • Still, there is an interesting resemblance, which got me thinking…Inflation in the U.S. is trending around 3-3.5%, and the Fed has made no progress over the past 3-4 months toward the 2% target.

Actinver Research – Mexico Equity Research: Opportunities amid the noise

By Actinver

  • We review our current coverage given recent headlines, including potential FX depreciation, trade moves and migration changes.
  • Within Consumer, we see most of our covered companies as solidly positioned, as most of these companies have at least a third of their revenues originated in the U.S., with mostly minimal export-import relationship.
  • In Cement, our covered companies are also well positioned, supported by their exposure to the U.S. market, with a significant portion of their EBITDA generated in this country.

The X Factor

By Mark Tinker

  • This was not about Left versus Right, it was about a generational shift, from the Boomers to Gen X.
  • This will then also move the children of the Boomers – the Millennials – down in favour of the next generation, the Zoomers of Gen Z.
  • The economy and the markets will now shift in line with their traits and behaviours.

Tire Industry: Premium Brands Exit Small-Rim Market Amidst Rising Competition

By Farah Miller

  • Premium brands focus on high-value large rims, leaving small-rim markets.
  • Factory closures signal overcapacity as brands exit small-rim tire production.
  • New players gain ground in small-rim segments in Europe and North America.

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Nov 15
0

Daily Brief Australia: Pointerra Ltd, Mineral Resources, Neuren Pharmaceuticals, Verbrec and more

By | Australia, Daily Briefs

In today’s briefing:

  • Pointerra Ltd – Q1 cash receipts up 50% on pcp
  • Another Lithium Mine Bites the Dust
  • Neuren Pharmaceuticals (NEU AU): Substantial Buyback Plan Announced; Daybue Sales Accelerate in US
  • Verbrec Limited – Building a Sustainable Model

Pointerra Ltd – Q1 cash receipts up 50% on pcp

By Research as a Service (RaaS)

  • RaaS has published an update report on 3D spatial data solutions group Pointerra (ASX:3DP) following its Q1 FY25 results in which it reported a 50.4% increase in cash receipts to $3.08m, the highest recorded since Q3 FY23.
  • Operating cash flow for the quarter was positive $0.31m, a $0.801m turnaround on the previous corresponding period (pcp) and $0.494m uplift on Q4 FY24.
  • Pointerra ended the quarter with $2.994m in cash.

Another Lithium Mine Bites the Dust

By Money of Mine

  • Minres board admitted to not disclosing related party transactions two years ago, a strike against the board
  • Bald Hill operations will go into care and maintenance, impacting 300 employees with some redeployment efforts
  • Decision to shut down due to cost-saving measures, with potential for quick restart if market conditions improve

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Neuren Pharmaceuticals (NEU AU): Substantial Buyback Plan Announced; Daybue Sales Accelerate in US

By Tina Banerjee

  • Neuren Pharmaceuticals (NEU AU) announced a share buy-back program worth up to A$50M (~3M shares, representing 2.4% of total shares on issue). The 12-month buyback will commence on December 2.
  • As of September 30, 2024, Neuren has a cash balance of A$210M and the company’s R&D expenses for 1H24 were A$18M. Interest income more than covers Neuren’s corporate expenses.
  • The buyback announcement follows Neuren’s recent entitlement of one-off income from the sale of partner’s Priority Review Voucher and Daybue’s record high sales in 3Q24.  

Verbrec Limited – Building a Sustainable Model

By Research as a Service (RaaS)

  • RaaS is initiating coverage of engineering, asset management, and infrastructure and training services group Verbrec (ASX:VBC) with a DCF-based valuation of $0.40/share, representing potential capital upside of 196% on the current share price.
  • FY24 was a turnaround year for Verbrec under new management with a clear strategy of carving out costs, improving operating and risk management disciplines, selling under-performing businesses and finalising legacy projects.
  • The business is now recapitalised, profitable, cash generative and, in our opinion, poised for further growth with a favourable macro environment in both VBC’s traditional engineering projects and particularly its areas of sustainable focus, led by the energy transition that is underway in Australia.

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Nov 15
0

Daily Brief Thailand: Valeura Energy Inc and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Valeura Energy (TSX: VLE): High Production in 4Q24. Launching a Share Buyback Programme

Valeura Energy (TSX: VLE): High Production in 4Q24. Launching a Share Buyback Programme

By Auctus Advisors

  • The 3Q24 production and cash position at the end of September had been reported previously.
  • Production in September and October stood at ~26.4 mbbl/d. This is very high.
  • The company expects production to be ~26 mbbl/d over 4Q24. We only assumed 24-25 mbbl/d. 

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Nov 15
0

Daily Brief South Korea: SK Inc, SBI FinTech Solutions, Dong Il Corp, MNC Solution and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
  • SBI Fintech Solutions: Tender Offer and Delisting
  • Di Dong Il Corp: Share Cancellation of 15% of Outstanding Shares
  • MNC Solutions Pre-IPO – Momentum Has Been Very Strong, Although Some Corp Gov Issues to Watch For

Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates

By Sanghyun Park

  • A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
  • FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
  • We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.

SBI Fintech Solutions: Tender Offer and Delisting

By Douglas Kim

  • After the market close on 14 November, SBI Fintech Solutions announced that the Japanese financial group SBI is pushing for a tender offer and delisting of SBI Fintech Solutions.
  • The tender offer price is 5,000 won per share, which is 36% higher than the closing price on 14 November. The tender offer size amount is about 26 billion won.
  • Given the relatively solid upside, we believe SBI Holdings is likely to successfully complete this tender offer and take the company private. 

Di Dong Il Corp: Share Cancellation of 15% of Outstanding Shares

By Douglas Kim

  • On 14 November, Di Dong Il Corp (001530 KS) announced that it plans to cancel 3.78 million treasury shares (representing 15% of outstanding shares) on 29 November.
  • The company currently has 5.84 million outstanding shares. Thus, the share cancellation of 3.78 million shares represent 65% of its treasury shares. 
  • The company is facing an investigation due to suspicions that it conducted a loan transaction with its largest shareholder, the Jung-Hun Foundation, without board approval.

MNC Solutions Pre-IPO – Momentum Has Been Very Strong, Although Some Corp Gov Issues to Watch For

By Clarence Chu

  • MNC Solution (MNC KS) MNC Solutions is looking to raise US$200m in its upcoming Korea IPO.
  • MNC Solutions (MNC) supplies high-precision control components for maritime and aviation weaponry, and travel devices for stabilization to the defense industry.
  • In this note, we look at the firm’s past performance.

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Nov 15
0

Daily Brief China: China Boqi Environmental Hol, S.F. Holding, Prosus NV, Sihuan Pharmaceutical Hldgs, Geely Auto, Plover Bay Technologies, China Gas Holdings, CiDi Inc, XPeng , Zhuzhou Tianqiao Crane Company and more

By | China, Daily Briefs

In today’s briefing:

  • Boqi Env (2377 HK)’s Partial Offer
  • SF Holding H Share Listing: Updates Point to Improving Fundamentals
  • NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update
  • Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off
  • Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)
  • Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates
  • China Gas Holdings (384 HK): Assessing the Spin-Off of Value-Added Business
  • CiDi Inc. Pre-IPO Tearsheet
  • [XPeng Inc. (XPEV US, SELL, TP US$5) Company Update]: Material and Component Pricing Drove Cost Down
  • How Crane’s Process Flow Technologies Are Quietly Powering Revenue Growth!

Boqi Env (2377 HK)’s Partial Offer

By David Blennerhassett

  • Back on the 23rd October,  flue gas treatment play China Boqi Environmental Hol (2377 HK) announced a buyback of 15% of shares out, at HK$1.20/share, a 16.5% premium to undisturbed.
  • The upshot of the buyback lifts the stake of co-founder Zeng Zhijun and concert parties  to 32.59% – up from 27.71% – before options. A whitewash waiver is required.
  • A expected, the Offer Doc has now been delayed. It is now expected to be dispatched on or before the 29th November. 

SF Holding H Share Listing: Updates Point to Improving Fundamentals

By Arun George

  • S.F. Holding (002352 CH), the largest Asian integrated logistics service provider, is premarketing an H Share listing to raise US$1.0-1.5 billion, according to press reports.
  • SF is the largest integrated logistics service player in China and Asia and the fourth largest player globally in terms of revenue in 2023, according to Frost & Sullivan.   
  • The PHIP update shows that the business is in good health, with a return to growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.

NPN X PRX: Swiggy Lists, Tencent 3Q FY24 Results, Market Awaits H1 FY25 Results and Strategy Update

By Charlotte van Tiddens, CFA

  • It has been an eventful week for Naspers and Prosus – Tencent reported 3Q FY24 results yesterday after the HK close and Swiggy listed on the NSE and BSE.
  • Prosus sold shares in Swiggy worth $500m and retains an interest of 25% (fully diluted basis).
  • Since 2017, Naspers and Prosus invested $1.3bn to build a 31% stake. The group have created $2bn of value for shareholders following the listing.

Sihuan Pharmaceutical (460 HK): Buybacks, Now A Spin-Off

By David Blennerhassett

  • On the 6th October, Sihuan Pharmaceutical Hldgs (460 HK) announced a HK$500mn, 12-month buyback programme. Shares jumped 31% on the news, but have since given all that gain back.
  • Sihuan Pharma has now announced an intention to spin-off non-wholly-owned subsidiary Xuanzhu Biopharm on the HKEx. 
  • Concurrent with the spin-off news. Sihuan Pharma acquired 6.9% in Xuanzhu Biopharm for RMB596mn, implying a full value of ~RMB8.5bn (~HK$9.2bn). This compares to Sihuan Pharma’s market cap of HK$6.6bn. 

Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)

By Ming Lu

  • Geely’s revenue grew by 20% YoY and deliveries increased by 19% YoY in 3Q24.
  • The operating margin improved to 5.3% in 3Q24 versus 2.9% in 3Q23.
  • We conclude an upside of 58% and a price target of HK$22 for the end of 2025.

Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates

By Sameer Taneja

  • Plover Bay Technologies (1523 HK) issued a profit alert stating that the profit for the first 10 months of FY24 grew by>10% over the entire FY23 profit (28 mn USD). 
  • Nov/Dec tend to be decent business months for the company, so we expect the profit to be a little over 40 million USD for FY24, implying a 17-18x FY24 PE.  
  • The company has net cash of more than 50 mn USD and consistent ROEs of more than 35% (currently >65%), with excellent prospects for future growth.

China Gas Holdings (384 HK): Assessing the Spin-Off of Value-Added Business

By Osbert Tang, CFA

  • The spin-off of the value-added business (VAS) of China Gas Holdings (384 HK) may add HK$0.22-0.83/share to the stock price, or 3.4-12.8%, based on our initial assessment.
  • VAS generated an operating profit of HK$1.58bn in FY24, up by 5.7% YoY. It is significant to China Gas as this accounted for 23.5% of its total segment profit.
  • The share price has not reacted much to the news because weak Chinese equity market and uncertainties on the upcoming 1H FY25 result. Once cleared, we see good upside.

CiDi Inc. Pre-IPO Tearsheet

By Nicholas Tan

  • CiDi Inc (CIDI HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by CICC, China Securities and Ping An.
  • It is a leading provider of autonomous driving technology for commercial vehicles in China.
  • It focuses on research and development of autonomous mining and logistics trucks, V2X technologies and high-performance perception solutions.

[XPeng Inc. (XPEV US, SELL, TP US$5) Company Update]: Material and Component Pricing Drove Cost Down

By Eric Wen

  • C3Q24 results from LEAP Motors seems to indicate the profit margins of low-priced EV can reach high single digits.
  • We thus revised up XPEV’s 2024-25 top line by 8% and 28% on successful launch of P7+, 2024-25 gross margins by 0.6ppt and 1.7ppt
  • Despite these improvements, we opt to maintain the rating of SELL and TP of US$5 unchanged as XPEV’s path to profitability is still unclear.

How Crane’s Process Flow Technologies Are Quietly Powering Revenue Growth!

By Baptista Research

  • Crane Company recently presented its third-quarter 2024 financial results, showcasing several key highlights and challenges.
  • The company’s performance this quarter was marked by a solid increase in both core sales and earnings per share, despite encountering multiple operational disruptions.
  • Firstly, Crane demonstrated robust financial performance by exceeding expectations, with adjusted earnings per share (EPS) rising to $1.38.

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