Smartkarma Daily Briefs

Insulet Corporation has demonstrated robust financial performance in the second quarter of 2024, aligning with the company’s primary goal of enhancing diabetes management through its Omnipod products.
Jim Hollingshead, the CEO, highlighted the significant demand for Omnipod 5, which has been central to the company’s growth both domestically and internationally.
The company’s innovation trajectory remains strong with numerous product launches, including the full market release of Omnipod 5 integrated with Dexcom’s G7.

Palo Alto Networks’ Bold Shift: Can AI-Driven Security Keep Up with Cyber Threats?

Palo Alto Networks’ fiscal fourth quarter 2024 earnings announcement underscores both strides and challenges in the cybersecurity landscape, reflecting a dynamic sector intensively engaged with technological advancements and emerging threats.
Chairman and CEO Nikesh Arora detailed the company’s response to significant cybersecurity threats, including ransomware and public data extortion, emphasizing a heightened focus on AI and platformization to simplify client security architectures.
Financially, Palo Alto Networks reported exceeding its quarterly revenue and EPS guidance.

OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports

By Suhas Reddy

OPEC cuts demand growth estimates for the second straight month, lowering its 2024 and 2025 forecasts by 3.8% and 2.2%, respectively, citing demand weakness in China.
Total production of OPEC members obliged to implement supply cuts averaged 21.48m bpd in August, exceeding the target by 1.6%.
EIA lowered its 2024 and 2025 oil price forecasts due to slower demand growth. However, it expects a quick recovery in prices driven by declining inventories.

GameStop’s Bumpy Road to Recovery: Is The Meme Stock Worth The Risk?

GameStop, a major player in the video game retail industry, revealed a complex scenario in its latest earnings presentation for the fourth quarter and full year 2022.
The company’s leadership highlighted substantial shifts in strategies aimed at improving profitability and creating sustainable long-term growth.
From a financial perspective, GameStop reported a net income of $48.2 million for the quarter, compared to a considerable net loss of $147.5 million in the same quarter of the previous year.

Toll Brothers: Expanding Geographic Footprint & Emphasis on Spec Homes Driving Growth! – Major Drivers

Toll Brothers, a prominent homebuilder, showcased an optimistic third quarter for the 2024 fiscal year, reflecting growth and stability despite varied market conditions.
In this quarter, the company reported record home sale revenues of $2.72 billion, demonstrating a strong performance with the delivery of 2,814 homes at an average price of $968,000.
The adjusted gross margin significantly outperformed projections, reaching 28.8%, aided by operational efficiencies and a favorable mix of home sales.

Enterprise Products Partners L.P.: Enhanced LPG Export Capacity & Major Drivers

Enterprise Products Partners L.P. reported robust results for the second quarter of 2024, with $1.4 billion in net income, marking a 12% increase over the same quarter the previous year.
This performance is grounded in the company’s extensive project initiatives and strategic operations in various segments, including natural gas and NGL pipelines and services.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Teradyne Inc.: Expansion into High-Payload Robotics and Channel Growth Is A Critical Growth Lever! – Major Drivers

Teradyne, a leading provider of automated test equipment, exhibited mixed financial results in the second quarter of 2024, grappling with various segment-specific dynamics and macroeconomic factors.
The company reported a robust performance in its System on Chip (SOC) and Memory segments, primarily boosted by elevated demand from cloud AI applications.
Additionally, Teradyne noted solid deliveries in the Compute sector, attributed to the dense network requirements of AI data centers.

Ambarella’s AI Surge: Can IoT and Automotive Growth Drive Future Success?

Ambarella’s Q2 Fiscal Year 2025 earnings revealed a mixed yet promising scenario as the company navigates through a challenging economic environment while seizing growing demands for AI-powered solutions.
Dr. Fermi Wang, President and CEO, alongside CFO John Young, presented a detailed account of the company’s performance and future outlook which provides a comprehensive understanding of its position and strategies moving forward.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

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Sep 15

Daily Brief China: SHEIN, Midea Group Co Ltd A, Alibaba Group Holding , China Construction Bank H, Tuhu Car , Agricultural Bank Of China, Beijing Tiantan Biological Products, Longfor Properties, Great Wall Motor and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War” Vs DTC Platforms
Weekly Deals Digest (15 Sep) – Midea, Seven & I, Raysum, Haitong/GJTA, Dyna-Mac
Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec
China Banks; Challenged on Credit Quality Trends, with Selective Opportunities to Be Found
Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market
HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!
China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass
Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way
A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance

SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War” Vs DTC Platforms

By Daniel Hellberg

Biden Administration rule would make “de minimis” items subject to tariffs
Besides adding to landed cost of those items, reporting requirements would rise
In addition, US/EU governments launch probes of SHEIN/Temu product safety

Weekly Deals Digest (15 Sep) – Midea, Seven & I, Raysum, Haitong/GJTA, Dyna-Mac

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Midea Group Co Ltd A (000333 CH) upsized H Share listing, Terumo Corp (4543 JP) placement.
Event-Driven developments: Haitong Securities Co Ltd (H) (6837 HK)/Guotai Junan Securities (2611 HK), Seven & I Holdings (3382 JP), Raysum Co Ltd (8890 JP), Dyna Mac Holdings (DMHL SP).

Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec

Alibaba Group Holding (9988 HK) was (finally) included in the Shanghai/Shenzhen-HK Connect programs; on the same day a Cayman court uplifted a BABA dissenter’s merger price by 659%.
MBK has teamed up with Young Poong (000670 KS) to secure control of Korea Zinc (010130 KS) via Partial Tender Offers for Korea Zinc and Young Poong Precision (036560 KS)
Like all long-dated arbs, Shinko Electric (6967 JP) is really about buying dips, then lightening up when it gets tighter, as long as the opinion about eventual result/path is unchanged.

China Banks; Challenged on Credit Quality Trends, with Selective Opportunities to Be Found

By Victor Galliano

In this China banks screen, we focus on the credit quality headwinds going forward and which are the better positioned banks to confront the challenge
China bank shares’ PBV ratios have eroded over time, due to low growth and credit quality concerns; yet through our analysis of these bank, we see selective contrarian positive opportunities
CCB is a core GEM bank buy for its deeply discounted valuations and strong balance sheet; Ping An Bank is the deep value contrarian pick; Minsheng is our fundamental sell

Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market

By Mohshin Aziz

Tuhu Car (9690 HK) is poised to capture the lion share of China’s automotive aftersales service industry that is forecasted to grow at 7.3% CAGR from 2023:30.
Tuhu is on an inflection of high earnings growth (+30% CAGR) as it has reached scalability, cost efficiency, and its younger shops are maturing profitably.
Our fair value of HKD24 implies 25x FY25 PE – average for US peers. A bargain with 3-year CAGR of 30%, net cash, and churns high free cash flow.

HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!

SOUTHBOUND was a net buyer this week. Over five days, it was +HK$12.5bn on high gross volume, but all of that net buying was on Alibaba Group Holding (9988 HK).
Alibaba Group Holding (9988 HK) became SOUTHBOUND-eligible on Tuesday, and mainland buyers bought US$2.1bn of BABA shares, more than total SOUTHBOUND net buys.
Gross volumes were highest in months. This was a big week. Even bigger than just BABA. After BABA the story was banks buying.

China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

By Xinyao (Criss) Wang

Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.
BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.
The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.

Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way

By Janaghan Jeyakumar, CFA

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in December 2024.
At present, we see two ADDs/DELs based on the latest available data but the rankings can change until 30th September 2024.

A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance

Repeat of last week: Miserable economic data continues. Trade geopol is mixed. Territorial geopol getting more serious. But SOUTHBOUND gross volumes way up.
AH Premia rose slightly as HK-listed shares outperformed mainland share indices. The HK/mainland spread is consistently better than H/A performance. It’s not clear why. This week no exception.
This week will see limited H/A action because of the long Mid-Autumn Festival. Hopes are high for non-durables purchases this month. Maybe even homes. But I am skeptical…

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Sep 15

Daily Brief Japan: Raysum Co Ltd, Seven & I Holdings, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente
Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal

Raysum Co Ltd (8890 JP) has recommended Hulic Co Ltd (3003 JP)’s tender offer at JPY5,913, a 94.2% premium to the last close price of JPY3,045.
The tender offer runs from 17 September to 30 October (30 business days), with payment commencing from 7 November. The offer represents an all-time high.
This is a done deal, as the irrevocable (Oasis) represents a 63.88% ownership ratio. With a knockout offer, the required 7.7% minority acceptance rate is easily achieved.

(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente

I tally 40 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Six new deals: Hotel Property (HPI AU), Guotai (1788 HK)/Haitong (6837 HK), Joban Kosan (9675 JP), Dyna Mac (DMHL SP), Korea Zinc (010130 KS)/Young Poong Precision (036560 KS), Hulic (3003 JP).
Key updates took place on Namoi Cotton Co Operative (NAM AU), Seven & I Holdings (3382 JP), Fuji Soft (9749 JP), Descente (8114 JP), & Silverlake Axis (SILV SP).

Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

By Aki Matsumoto

Rather than lowering the minimum investment amount, attention is focused on whether the essence of the issue is whether the long-standing unit share system can be abolished.
This system, which doesn’t grant voting rights to shareholders who don’t hold more than certain number shares, has led companies to turn inward-looking by making AGMs skeleton and accelerating cross-shareholdings.
With corporate racketeer, who triggered the introduction of this system, gone and the reduction of cross-shareholdings beginning, shareholder units that can exercise voting rights for open AGMs should be reexamined.

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Sep 15

Most Read: NVIDIA Corp, China Shipbuilding Industry Group Power, Midea Group Co Ltd A, Palantir Technologies , Evolution Mining, Taiwan Semiconductor (TSMC) – ADR, Raysum Co Ltd, K Bank, Seven & I Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying
CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar
Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry
S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight
Hulic (3003) Launches TOB to Take Out Raysum (8890) – HUGE Win for Good Governance And Activism
MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn
Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
K Bank IPO Preview
(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente

Select Sector Indices: Inflows to Apple, Palantir, Dell Will Add to SPX Buying

Constituent changes to the S&P 500 INDEX and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.
The largest one-way turnover is expected in the Consumer Staples Select Sector SPDR Fund, Technology Select Sector SPDR, Materials Select Sector SPDR and Communication Services Select Sector SPDR Fund.
The inflows to Apple (AAPL US), Palantir Technologies (PLTR US) and Dell Technologies (DELL US) will add to the buying from the S&P 500 INDEX (SPX INDEX) trackers.

CSI300 Index Rebalance Preview: Round-Trip Trade Tops US$6bn as ETF Creations Soar

There could be 17 changes at the December rebalance with the Industrials sector gaining 3 index spots and the Information Technology sector losing 3 spots.
We estimate one-way turnover of 2.9% at the rebalance leading to a one-way trade of CNY 21.96bn (US$3.1bn). There are 22 stocks with over 3x ADV to trade.
Impact on the stocks has increased as creations in ETFs linked to the CSI 300 Index continue. That flow will reverse from the deletions in the next few months.

Midea Group (300 HK): Priced at Top End; Offer Size Adj Option Exercise Would Ease Index Fast Entry

Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.

S&P500/400/600 Index Rebalance: Dell, Palantir Make It (Finally!); Apple Upweight

There are 3 changes for the S&P 500 INDEX, 8 changes for the S&P Midcap400 Index and 15 changes for the S&P SmallCap600 Index at the September rebalance.
Dell Technologies (DELL US) and Palantir Technologies (PLTR US) were finally added to the S&P 500 INDEX (SPX INDEX) and there is huge size to trade in the stocks.
There will also be big buying in Apple (AAPL US) following a float increase driven by Berkshire Hathaway Inc Cl A (BRK/A US) selling last quarter.

Hulic (3003) Launches TOB to Take Out Raysum (8890) – HUGE Win for Good Governance And Activism

The change in control of Raysum Co Ltd (8890 JP) has a complex backstory. But one week shy of two years ago, Oasis launched a buyout to own 65%.
The company had a strong MTMP. Oasis paid ¥1,700/share to own 65%. The MTMP came through, there was an offering, and it stayed near ¥3,000/share.
Now Hulic Co Ltd (3003 JP) has come out with a Tender Offer to buy the company for ¥5,913/share. That’s a 94% premium and 3.5x what Oasis paid 2yrs ago.

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn

There are 2 adds and 3 deletes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September. Plus there are capping and float changes.
Estimated one-way turnover is 11.4% resulting in a round-trip trade of US$1.14bn. There are 16 stocks with over 1x ADV to trade from passive trackers.
The largest inflows are expected in B2Gold Corp, Evolution Mining and Pan American Silver while the largest outflows are from Kinross Gold and Cia de Minas Buenaventura SAA.

MV US Listed Semiconductor 25 Index Rebalance: Round-Trip Trade Over US$2bn

There are no constituent changes for the VanEck Vectors Semiconductor (SMH US) ETF in September but there are a lot of float and capping changes.
TSMC – ADR and NVIDIA are the largest sells with buying spread across ASML Holding NV, Qualcomm Inc, Applied Materials and Micron Technology.
The selling in NVIDIA Corp (NVDA US) will add to the selling from the Technology Select Sector SPDR (XLK US) due to the market consultation.

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal

Raysum Co Ltd (8890 JP) has recommended Hulic Co Ltd (3003 JP)’s tender offer at JPY5,913, a 94.2% premium to the last close price of JPY3,045.
The tender offer runs from 17 September to 30 October (30 business days), with payment commencing from 7 November. The offer represents an all-time high.
This is a done deal, as the irrevocable (Oasis) represents a 63.88% ownership ratio. With a knockout offer, the required 7.7% minority acceptance rate is easily achieved.

K Bank IPO Preview

By Douglas Kim

K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago.
Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank.
Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.

(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente

I tally 40 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Six new deals: Hotel Property (HPI AU), Guotai (1788 HK)/Haitong (6837 HK), Joban Kosan (9675 JP), Dyna Mac (DMHL SP), Korea Zinc (010130 KS)/Young Poong Precision (036560 KS), Hulic (3003 JP).
Key updates took place on Namoi Cotton Co Operative (NAM AU), Seven & I Holdings (3382 JP), Fuji Soft (9749 JP), Descente (8114 JP), & Silverlake Axis (SILV SP).

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Sep 15

Daily Brief Industrials: Tuhu Car , easyJet PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market
European Airlines – Fare Data Suggests Risk to EasyJet/Wizz Peak Summer but Winter More Encouraging

Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market

By Mohshin Aziz

Tuhu Car (9690 HK) is poised to capture the lion share of China’s automotive aftersales service industry that is forecasted to grow at 7.3% CAGR from 2023:30.
Tuhu is on an inflection of high earnings growth (+30% CAGR) as it has reached scalability, cost efficiency, and its younger shops are maturing profitably.
Our fair value of HKD24 implies 25x FY25 PE – average for US peers. A bargain with 3-year CAGR of 30%, net cash, and churns high free cash flow.

European Airlines – Fare Data Suggests Risk to EasyJet/Wizz Peak Summer but Winter More Encouraging

By Neil Glynn

Latest RDC fare data deep dive suggests scope for negative surprises at easyJet and Wizz Air – we publish a detailed analysis across booking windows.
easyJet fare data suggest potential for late-market disappointment, albeit winter prospects more encouraging.
Wizz Air fare data cast doubt on hopes for fare growth.

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Sep 15

Daily Brief Energy/Materials: Evolution Mining, Crude Oil, Enterprise Products Partners, Transocean Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn
OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports
Enterprise Products Partners L.P.: Enhanced LPG Export Capacity & Major Drivers
Transocean Ltd.: Advanced Drilling Technology Adoption & Other Major Developments! – Financial Forecasts

MV Global Junior Gold Miners Index Rebalance: Round-Trip Trade of Over US$1bn

There are 2 adds and 3 deletes for the VanEck Vectors Junior Gold Miners ETF (GDXJ US) in September. Plus there are capping and float changes.
Estimated one-way turnover is 11.4% resulting in a round-trip trade of US$1.14bn. There are 16 stocks with over 1x ADV to trade from passive trackers.
The largest inflows are expected in B2Gold Corp, Evolution Mining and Pan American Silver while the largest outflows are from Kinross Gold and Cia de Minas Buenaventura SAA.

OPEC and EIA Cut Oil Demand Forecasts; EIA Projects Nat-Gas Rise in 2025 on Strong LNG Exports

By Suhas Reddy

OPEC cuts demand growth estimates for the second straight month, lowering its 2024 and 2025 forecasts by 3.8% and 2.2%, respectively, citing demand weakness in China.
Total production of OPEC members obliged to implement supply cuts averaged 21.48m bpd in August, exceeding the target by 1.6%.
EIA lowered its 2024 and 2025 oil price forecasts due to slower demand growth. However, it expects a quick recovery in prices driven by declining inventories.

Enterprise Products Partners L.P.: Enhanced LPG Export Capacity & Major Drivers

Enterprise Products Partners L.P. reported robust results for the second quarter of 2024, with $1.4 billion in net income, marking a 12% increase over the same quarter the previous year.
This performance is grounded in the company’s extensive project initiatives and strategic operations in various segments, including natural gas and NGL pipelines and services.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Transocean Ltd.: Advanced Drilling Technology Adoption & Other Major Developments! – Financial Forecasts

Transocean’s recent quarterly earnings results present a dual narrative with strong operational performance reflecting positively on the company’s strategic initiatives and market positioning, while also highlighting areas of concern that potential investors should consider.
In terms of positive developments, Transocean reported adjusted EBITDA of $284 million with contract drilling revenues of $861 million, translating to an impressive EBITDA margin of approximately 33%.
This strong performance is a testament to the company’s operational efficiency, marked by a revenue efficiency of approximately 97% in the quarter.

Before it’s here, it’s on Smartkarma

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Sep 15

Daily Brief Industrials: Tuhu Car , easyJet PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market
European Airlines – Fare Data Suggests Risk to EasyJet/Wizz Peak Summer but Winter More Encouraging

Tuhu Car (9690 HK | BUY | TP:HKD24): Poised to Capture China’s Auto Aftersales Service Market

By Mohshin Aziz

Tuhu Car (9690 HK) is poised to capture the lion share of China’s automotive aftersales service industry that is forecasted to grow at 7.3% CAGR from 2023:30.
Tuhu is on an inflection of high earnings growth (+30% CAGR) as it has reached scalability, cost efficiency, and its younger shops are maturing profitably.
Our fair value of HKD24 implies 25x FY25 PE – average for US peers. A bargain with 3-year CAGR of 30%, net cash, and churns high free cash flow.

European Airlines – Fare Data Suggests Risk to EasyJet/Wizz Peak Summer but Winter More Encouraging

By Neil Glynn

Latest RDC fare data deep dive suggests scope for negative surprises at easyJet and Wizz Air – we publish a detailed analysis across booking windows.
easyJet fare data suggest potential for late-market disappointment, albeit winter prospects more encouraging.
Wizz Air fare data cast doubt on hopes for fare growth.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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✓ Company Data and News
✓ Events & Webinars

Sep 15

Daily Brief Consumer: SHEIN, Seven & I Holdings, Alibaba Group Holding , Midea Group Co Ltd A, Great Wall Motor, TSE Tokyo Price Index TOPIX, GameStop, Toll Brothers and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War” Vs DTC Platforms
(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente
Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec
Weekly Deals Digest (15 Sep) – Midea, Seven & I, Raysum, Haitong/GJTA, Dyna-Mac
A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance
Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job
GameStop’s Bumpy Road to Recovery: Is The Meme Stock Worth The Risk?
Toll Brothers: Expanding Geographic Footprint & Emphasis on Spec Homes Driving Growth! – Major Drivers

SHEIN and Temu: New Rule Could Crush “De Minimis” Imports | New Front In “War” Vs DTC Platforms

By Daniel Hellberg

Biden Administration rule would make “de minimis” items subject to tariffs
Besides adding to landed cost of those items, reporting requirements would rise
In addition, US/EU governments launch probes of SHEIN/Temu product safety

(Mostly) Asia-Pac M&A: Seven & I, Hotel Property, Hulic, Joban Kosan, Dyna Mac, Fuji Soft, Descente

I tally 40 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Six new deals: Hotel Property (HPI AU), Guotai (1788 HK)/Haitong (6837 HK), Joban Kosan (9675 JP), Dyna Mac (DMHL SP), Korea Zinc (010130 KS)/Young Poong Precision (036560 KS), Hulic (3003 JP).
Key updates took place on Namoi Cotton Co Operative (NAM AU), Seven & I Holdings (3382 JP), Fuji Soft (9749 JP), Descente (8114 JP), & Silverlake Axis (SILV SP).

Last Week in Event SPACE: Alibaba, Young Poong/Korea Zinc, Shinko Electric, Guotai Junan/Haitong Sec

Alibaba Group Holding (9988 HK) was (finally) included in the Shanghai/Shenzhen-HK Connect programs; on the same day a Cayman court uplifted a BABA dissenter’s merger price by 659%.
MBK has teamed up with Young Poong (000670 KS) to secure control of Korea Zinc (010130 KS) via Partial Tender Offers for Korea Zinc and Young Poong Precision (036560 KS)
Like all long-dated arbs, Shinko Electric (6967 JP) is really about buying dips, then lightening up when it gets tighter, as long as the opinion about eventual result/path is unchanged.

Weekly Deals Digest (15 Sep) – Midea, Seven & I, Raysum, Haitong/GJTA, Dyna-Mac

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: Midea Group Co Ltd A (000333 CH) upsized H Share listing, Terumo Corp (4543 JP) placement.
Event-Driven developments: Haitong Securities Co Ltd (H) (6837 HK)/Guotai Junan Securities (2611 HK), Seven & I Holdings (3382 JP), Raysum Co Ltd (8890 JP), Dyna Mac Holdings (DMHL SP).

A/H Premium Tracker (To 13 Sep 2024): SB Buying of H Underperformance

Repeat of last week: Miserable economic data continues. Trade geopol is mixed. Territorial geopol getting more serious. But SOUTHBOUND gross volumes way up.
AH Premia rose slightly as HK-listed shares outperformed mainland share indices. The HK/mainland spread is consistently better than H/A performance. It’s not clear why. This week no exception.
This week will see limited H/A action because of the long Mid-Autumn Festival. Hopes are high for non-durables purchases this month. Maybe even homes. But I am skeptical…

Share Trading Unit System, Which Made AGM Skeleton and Spurred Cross-Shareholdings, Has Done Its Job

By Aki Matsumoto

Rather than lowering the minimum investment amount, attention is focused on whether the essence of the issue is whether the long-standing unit share system can be abolished.
This system, which doesn’t grant voting rights to shareholders who don’t hold more than certain number shares, has led companies to turn inward-looking by making AGMs skeleton and accelerating cross-shareholdings.
With corporate racketeer, who triggered the introduction of this system, gone and the reduction of cross-shareholdings beginning, shareholder units that can exercise voting rights for open AGMs should be reexamined.

GameStop’s Bumpy Road to Recovery: Is The Meme Stock Worth The Risk?

GameStop, a major player in the video game retail industry, revealed a complex scenario in its latest earnings presentation for the fourth quarter and full year 2022.
The company’s leadership highlighted substantial shifts in strategies aimed at improving profitability and creating sustainable long-term growth.
From a financial perspective, GameStop reported a net income of $48.2 million for the quarter, compared to a considerable net loss of $147.5 million in the same quarter of the previous year.

Toll Brothers: Expanding Geographic Footprint & Emphasis on Spec Homes Driving Growth! – Major Drivers

Toll Brothers, a prominent homebuilder, showcased an optimistic third quarter for the 2024 fiscal year, reflecting growth and stability despite varied market conditions.
In this quarter, the company reported record home sale revenues of $2.72 billion, demonstrating a strong performance with the delivery of 2,814 homes at an average price of $968,000.
The adjusted gross margin significantly outperformed projections, reaching 28.8%, aided by operational efficiencies and a favorable mix of home sales.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Sep 15

Daily Brief Health Care: Beijing Tiantan Biological Products, Insulet Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass
Insulet Corporation: Will The Enhanced Focus on MDI Market Segments Pay Off? – Major Drivers

China Healthcare Weekly (Sep15)- Tiantan’s New Deal, BeiGene-AbbVie Lawsuit, BIOSECURE Act Will Pass

By Xinyao (Criss) Wang

Tiantan plans to acquire 100% equity of Zhongyuan Ruide from CSL Behring ASIA PACIFIC LIMITED for US$185 million, so as to consolidate its leading position in blood products industry.
BeiGene is accused of trade secrets theft by AbbVie. Considering AbbVie is good at using legal means to profit for itself, this lawsuit may become full of uncertainty in US.
The House passed BIOSECURE Act to make drug companies stop doing business with Chinese CXO.The probability of this Bill passing is high. We recommend prepare for worst-case scenario in advance.

Insulet Corporation: Will The Enhanced Focus on MDI Market Segments Pay Off? – Major Drivers

Insulet Corporation has demonstrated robust financial performance in the second quarter of 2024, aligning with the company’s primary goal of enhancing diabetes management through its Omnipod products.
Jim Hollingshead, the CEO, highlighted the significant demand for Omnipod 5, which has been central to the company’s growth both domestically and internationally.
The company’s innovation trajectory remains strong with numerous product launches, including the full market release of Omnipod 5 integrated with Dexcom’s G7.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Sep 15

Daily Brief Financials: Raysum Co Ltd, K Bank, China Construction Bank H, Agricultural Bank Of China, Longfor Properties and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal
K Bank IPO Preview
China Banks; Challenged on Credit Quality Trends, with Selective Opportunities to Be Found
HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!
Quiddity Leaderboard HSCEI Dec 24: Two Changes Possible; US$265mn Capping Flows One-Way
K-Bank’s IPO Details Out: Aggressive Pricing, but as a Crypto Play, It Might Surprise

Raysum (8890 JP): Hulic (3033 JP)’s Tender Offer a Done Deal

Raysum Co Ltd (8890 JP) has recommended Hulic Co Ltd (3003 JP)’s tender offer at JPY5,913, a 94.2% premium to the last close price of JPY3,045.
The tender offer runs from 17 September to 30 October (30 business days), with payment commencing from 7 November. The offer represents an all-time high.
This is a done deal, as the irrevocable (Oasis) represents a 63.88% ownership ratio. With a knockout offer, the required 7.7% minority acceptance rate is easily achieved.

K Bank IPO Preview

By Douglas Kim

K Bank finally provided its IPO prospectus which includes more details of the IPO than what the company already announced about the IPO several days ago.
Bankers used KakaoBank, SBI Sumishin Net Bank, and Bancorp Inc as comps. Average PBR of 2.56x was used to value K Bank.
Some investors will question the inclusion of overseas comps including SBI Sumishin Net Bank and Bancorp in the valuation of K Bank.

China Banks; Challenged on Credit Quality Trends, with Selective Opportunities to Be Found

By Victor Galliano

In this China banks screen, we focus on the credit quality headwinds going forward and which are the better positioned banks to confront the challenge
China bank shares’ PBV ratios have eroded over time, due to low growth and credit quality concerns; yet through our analysis of these bank, we see selective contrarian positive opportunities
CCB is a core GEM bank buy for its deeply discounted valuations and strong balance sheet; Ping An Bank is the deep value contrarian pick; Minsheng is our fundamental sell

HK Connect SOUTHBOUND Flows (To 13 Sep 2024); Weak Data, Weak Markets, but BABA and Banks!