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Smartkarma Daily Briefs

Sep 11
0

Daily Brief India: National Infrastructure Trust, Krsnaa Diagnostics and more

By | Daily Briefs, India

In today’s briefing:

  • National Infrastructure Trust Pre-IPO Tearsheet
  • The Beat Ideas- Krsnaa Diagnostics: B2C & Asset Light Flavor

National Infrastructure Trust Pre-IPO Tearsheet

By Akshat Shah

  • National Infrastructure Trust (NIT IN) is looking to raise about US$190m in its upcoming India IPO. The deal will be run by SBI Caps and HDFC Bank.
  • National Infrastructure Trust is an infrastructure investment trust established to acquire, manage and invest in a portfolio of infrastructure assets in India.
  • Its initial asset portfolio will consist of nine road assets, in the states of Haryana, Rajasthan, Bihar, Uttarakhand, Himachal Pradesh, Madhya Pradesh and Karnataka with an aggregate length of ~683.875km.

The Beat Ideas- Krsnaa Diagnostics: B2C & Asset Light Flavor

By Sudarshan Bhandari

  • Krsnaa Diagnostics (KRSNAA IN) expands into B2C, adds new pathology labs, and secures major government contracts for further growth.
  • Growth in PPP and retail sectors, improved margins, and expanding service offerings solidify market leadership.
  • Krsnaa’s aggressive expansion strategy and diversification indicate strong long-term growth potential with new B2C trajectory and Asset Light Model Expansion.

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Sep 11
0

Daily Brief China: Midea Group Co Ltd A, PC Partner, Rubber, NIO , China Tourism Group Duty Free, Cosco Shipping Energy Transportation Co. Ltd. (H), Akeso Biopharma Inc, Shougang Fushan Resources and more

By | China, Daily Briefs

In today’s briefing:

  • Midea Group HK IPO Valuation Analysis
  • PC Partner (1263 HK): Goodbye Hong Kong; Hello Singapore
  • [Rubber, China, Futures] Typhoon Triggered Defaults Nudged Rubber Spot Prices and SHFE Futures Up
  • Midea HK Listing: Valuation Insights
  • [NIO Inc. (NIO US, SELL, TP US$1) Target Price Change]: Who Is Going to Give in a Slowing EV Market?
  • CTG Duty Free (1880 HK): Where Is the End of the Tunnel?
  • Cosco Shipping Energy Transportation – Capitulation in Oil and Related Equities Almost Complete?
  • Akeso Biopharma Inc (9926 HK) – Something Beautiful Is Happening
  • Shougang Fushan Resources (639 HK): Cash 83% of Market Cap, 11% Trailing Dividend Yield

Midea Group HK IPO Valuation Analysis

By Douglas Kim

  • We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares. 
  • We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.
  • Pricing of this offering is expected to be completed on 13 September and listing on 17 September. 

PC Partner (1263 HK): Goodbye Hong Kong; Hello Singapore

By David Blennerhassett

  • On the 18th June, personal computer parts and accessories play PC Partner (1263 HK) (PCP) announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
  • PCP’s 30th August announcement provided clarity on a step-by-step approach for the HKEx withdrawal. I recently held zooms with the SFC and SGX for added clarification.
  • PCP’s exchange relocation is predicated on PCP’s operational expansion into new markets, in particular, Southeast Asia. How and when the SGX becomes the preferred trading exchange  remains an unanswered question. 

[Rubber, China, Futures] Typhoon Triggered Defaults Nudged Rubber Spot Prices and SHFE Futures Up

By Farah Miller

  • Physical rubber prices gained strength during the Asian trade day as a typhoon in Vietnam disrupted the supply chain, limiting supply in the market. 
  • In addition, increased inquiries from the Chinese tire makers for the prompt cargoes resulted in further support for the prices. 
  • Chinese state buying up to 100kt of rubber, prices to be announced on 13 Sep 2024. This would provide some short term support on the SHFE 

Midea HK Listing: Valuation Insights

By Shifara Samsudeen, ACMA, CGMA

  • Chinese home appliance maker Midea has announced the terms for its IPO. The company plans to raise $3.46bn at an indicative price range of HK$52.0-54.8 per share.
  • The company has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and a growing robotics business.
  • As we expected, the HK offering is priced at around 25% discount to it’s A-shares and our analysis suggests that Midea’s HK offering is priced attractively. 

[NIO Inc. (NIO US, SELL, TP US$1) Target Price Change]: Who Is Going to Give in a Slowing EV Market?

By Eric Wen

  • NIO Motors (NIO) reported C2Q24 top line, non-GAAP operating loss and GAAP net loss in-line, narrower and narrower vs. our estimate, and in-line, narrower and in-line vs. consensus. 
  • The brightest spot of the result is gross margin due to both vehicle and service gross margin improvements. 
  • We keep rating at SELL and raise TP to US$1 to reflect better OPEX control.

CTG Duty Free (1880 HK): Where Is the End of the Tunnel?

By Osbert Tang, CFA

  • Market consensus is unrealistic as it expects China Tourism Group Duty Free (1880 HK) to record 32.1% YoY and 14.6% HoH earnings growth in 2H24. More downgrade risk ahead.
  • Average per-customer duty-free sales in Hainan dropped by 19.2% YoY in Jul, indicating the negative wealth effect and deteriorating middle-class spending appetite.
  • Overseas duty-free sales to Chinese residents surged by almost 50% YoY in Aug, implying a diversion effect which is also detrimental. 

Cosco Shipping Energy Transportation – Capitulation in Oil and Related Equities Almost Complete?

By Rikki Malik

  • Speculative liquidation of crude oil positions opens up an opportunity
  • A seasonally strong period for crude tanker rates coming up
  • Company option scheme for senior management approved. Strike above current price

Akeso Biopharma Inc (9926 HK) – Something Beautiful Is Happening

By Xinyao (Criss) Wang

  • AK112’s HARMONi-2 results were impressive, but there’s still critical data gap before obtaining approval from FDA. The main concern is whether good PFS can be translated into significant OS benefits.
  • Akeso will be eligible to receive low double-digit royalties on net sales from Summit. So, Summit is actually a better investment because it has complete global rights of AK112.
  • Investors are betting Summit to be acquired by MNCs at a high price.Due to anti-monopoly issue, the narrowing pool of potential buyers would increase the difficulty of Summit being acquired.

Shougang Fushan Resources (639 HK): Cash 83% of Market Cap, 11% Trailing Dividend Yield

By Sameer Taneja

  • Shougang Fushan Resources (639 HK) ended H1 FY24 with over 10.5 bn HKD of net cash and investments, compared to 12.7 bn HKD of market capitalization. 
  • At 1600 RMB/ton coking coal prices (current spot price), the business will be able to generate 1.1 bn HKD of profits, with an 80% payout implying a 7% dividend yield. 
  • The current spot prices are 16% below the average five-year price of 1900 RMB/ton ( yield 10%), and at these prices, the company still makes an EBITDA margin of 40-45%. 

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Sep 11
0

Daily Brief Japan: Seven & I Holdings, CELSYS, Joban Kosan, Descente Ltd, TSE Tokyo Price Index TOPIX, CYND, Yuke’s Co Ltd, Poletowin Pitcrew Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • Seven & I Holdings (3382 JP): State of Play
  • TOPIX Inclusions: Who Is Ready (September 2024)
  • Joban Kosan (9675) – Fortress Buys Out a Fukushima Tourism Asset
  • Itochu’s Big Plans for Descente – Shame Investors Won’t Get a Look In
  • Disclosure Is Important, but Walk the Talk Is More Important
  • Cynd (4256) – Tuesday, Jun 11, 2024
  • Yuke’s Co Ltd (4334 JP): 1H FY01/25 flash update
  • 3657 JP: 1H FY01/25 Flash Update, Revisions of Full-Year FY01/25 Earnings Forecast

Seven & I Holdings (3382 JP): State of Play

By Arun George

  • Despite Seven & I Holdings (3382 JP)‘s rejection, Alimentation Couche-Tard (ATD CN) remains prepared to enter collaborative and friendly discussions to focus on finding greater value for 7&i shareholders. 
  • Couche-Tard’s options are to return with a revised offer, go hostile or walk away. Couche-Tard will likely test the Board’s resolve by returning with a higher offer.
  • The Board’s options are to go through the motions (appointing IFAs), conduct a market check or launch a more aggressive action plan to placate restive shareholders. 

TOPIX Inclusions: Who Is Ready (September 2024)

By Janaghan Jeyakumar, CFA

Joban Kosan (9675) – Fortress Buys Out a Fukushima Tourism Asset

By Travis Lundy

  • In the annals of foreign buyers of Japanese tourism-related real estate assets, there have been a few good examples, and several disasters. Yesterday, we got a new suitor for assets. 
  • Fortress SPV Ontario GK will attempt to buy out Fukushima-based Joban Kosan (9675 JP) through a double Tender Offer. 
  • There is a history here of a bump on an MBO on an associated company. That may have caused it to trade at a premium on Day 1. It’s unrelated.

Itochu’s Big Plans for Descente – Shame Investors Won’t Get a Look In

By Michael Causton

  • Itochu’s Textile division continues to execute the directive from its CEO to expand reach and coverage in the fashion and lifestyle sectors, with sports one of the major target categories.
  • It will completely absorb Descente as part of this plan, meaning the brand is likely to become one of the largest in the portfolio.
  • The ongoing tender offer will likely succeed giving Itochu a bargain and investors no stake in the future.

Disclosure Is Important, but Walk the Talk Is More Important

By Aki Matsumoto

  • If a company seeks immediate effects to improve capital profitability, it’ll return cash to shareholders because it’ll be years before the company can recoup it by making more investments now.
  • Even companies that have increased valuations by raising their capital profitability can improve it by reducing their cash on hand and policy shareholdings, which are still too large.
  • Companies with low capital profitability and low valuations have to gain investor confidence through quarterly earnings disclosures by demonstrating that their disclosed goals are achievable.

Cynd (4256) – Tuesday, Jun 11, 2024

By Value Investors Club

  • CYND Co., Ltd. is a dominant player in the reservation management software for beauty salons in Japan, with 90% of its revenue coming from recurring contracts
  • The company has high barriers to scale and has acquired its second largest competitor, effectively eliminating competition
  • CYND has the potential to significantly increase its revenue over the next decade, led by its co-founders with strong insider ownership, and is currently valued at JPY 4.1bn with a projected net 10-year IRR of 24.1% for Sun Mountain.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Yuke’s Co Ltd (4334 JP): 1H FY01/25 flash update

By Shared Research

  • Revenue: JPY1.6bn (-20.2% YoY), Operating profit: JPY36mn (-78.3% YoY), Recurring profit: JPY56mn (-76.4% YoY), Net income: JPY21mn (-88.0% YoY).
  • 1H progress against revised full-year forecast: 47.8% for revenue, 32.5% for operating profit, 49.8% for recurring profit, 31.3% for net income.
  • Cost of revenue ratio rose by 10.1pp YoY to 75.0%, SG&A expense ratio decreased by 4.4pp YoY to 22.7%.

3657 JP: 1H FY01/25 Flash Update, Revisions of Full-Year FY01/25 Earnings Forecast

By Shared Research

  • Revenue grew 11.0% YoY to JPY24.3bn, supported by order growth in Overseas Solutions and yen depreciation.
  • Operating profit of JPY360mn (+36.2%) due to lower recruitment costs and deferred restructuring expenses.
  • Revised FY01/25 forecast: Revenue JPY51.0bn, Operating profit JPY1.8bn, Recurring profit JPY1.8bn, Net income JPY322mn.

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Sep 11
0

Most Read: Midea Group Co Ltd A, Seven & I Holdings, Trent Ltd, Midea Real Estate Holding , KT Corp, CELSYS, PC Partner, Nextdc Ltd and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Midea Group (300 HK): IPO Open Now; Upcoming Index Flows
  • Midea Group H Share Listing (300 HK): Valuation Insights
  • Seven & I Holdings (3382 JP): State of Play
  • SENSEX Index Rebalance Preview: Trent Could Replace Bajaj Finserv; BUT F&O Adds Could Change That
  • Midea Group HK IPO Valuation Analysis
  • Midea Real Estate (3990 HK): Now Trading Ex-In-Specie
  • Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall
  • TOPIX Inclusions: Who Is Ready (September 2024)
  • PC Partner (1263 HK): Goodbye Hong Kong; Hello Singapore
  • NEXTDC Placement – Good Track Record but Seems Opportunistic

Midea Group (300 HK): IPO Open Now; Upcoming Index Flows

By Brian Freitas

  • The Midea Group (300 HK) IPO is being offered at a price range of HK$52-54.8/share, a discount of 20.9%-25% to Midea Group. That will raise US$3.28bn-US$3.46bn for the company.
  • Midea Group (300 HK) will not get Fast Entry to the HSCI but will be added to Southbound Stock Connect on 14 October once the price stabilisation period has ended.
  • Midea Group (300 HK) should get Fast Entry to one global index and that could lead to inclusion in the iShares China Large-Cap (FXI) (FXI US) too.

Midea Group H Share Listing (300 HK): Valuation Insights

By Arun George

Seven & I Holdings (3382 JP): State of Play

By Arun George

  • Despite Seven & I Holdings (3382 JP)‘s rejection, Alimentation Couche-Tard (ATD CN) remains prepared to enter collaborative and friendly discussions to focus on finding greater value for 7&i shareholders. 
  • Couche-Tard’s options are to return with a revised offer, go hostile or walk away. Couche-Tard will likely test the Board’s resolve by returning with a higher offer.
  • The Board’s options are to go through the motions (appointing IFAs), conduct a market check or launch a more aggressive action plan to placate restive shareholders. 

SENSEX Index Rebalance Preview: Trent Could Replace Bajaj Finserv; BUT F&O Adds Could Change That

By Brian Freitas

Midea Group HK IPO Valuation Analysis

By Douglas Kim

  • We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares. 
  • We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.
  • Pricing of this offering is expected to be completed on 13 September and listing on 17 September. 

Midea Real Estate (3990 HK): Now Trading Ex-In-Specie

By David Blennerhassett

  • Back on the 23 June 2024, property developer Midea Real Estate Holding (3990 HK) announced the in-specie distribution of its core ops, either in unlisted scrip, or HK$5.90/share in cash.
  • The in-specie involved distributing 97.8% of Midea’s assets (involved in property development and sales); accounting for 95% of revenue and ~91% of profit. All figures as at FY23.
  • Midea went ex yesterday, closing down just HK$4.87/share. Midea, ex-in-specie, is currently trading at a trailing 0.6x P/B, and 2.3x PER. Pricing looks full.

Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall

By Sanghyun Park

  • KT’s foreign room is likely staying below 3.75% for November, setting up an ETF recall play. We’ve seen short-term buying pressure in similar past index reshuffles.
  • The ETF recall impact peaks right after the announcement. KT’s May downweight saw a 5% spike in two trading days post-announcement.
  • KT’s price moves more with downweights than SK Telecom’s because of higher overseas borrowing demand. This trend should hold, so setting up a position before the November announcement makes sense.

TOPIX Inclusions: Who Is Ready (September 2024)

By Janaghan Jeyakumar, CFA

PC Partner (1263 HK): Goodbye Hong Kong; Hello Singapore

By David Blennerhassett

  • On the 18th June, personal computer parts and accessories play PC Partner (1263 HK) (PCP) announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
  • PCP’s 30th August announcement provided clarity on a step-by-step approach for the HKEx withdrawal. I recently held zooms with the SFC and SGX for added clarification.
  • PCP’s exchange relocation is predicated on PCP’s operational expansion into new markets, in particular, Southeast Asia. How and when the SGX becomes the preferred trading exchange  remains an unanswered question. 

NEXTDC Placement – Good Track Record but Seems Opportunistic

By Sumeet Singh

  • Nextdc Ltd (NXT AU) aims to raise around US$366m via a fully underwritten institutional placement, along with another US$133m via a non-underwritten SPP.
  • The company has undertaken a number of deals in the past, most of which have done ok. Although this one appears to be a bit opportunistic.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

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Sep 11
0

Daily Brief Energy/Materials: Western Gold Resources, Iron Ore, Hellenic Petroleum Sa, Lake Victoria Gold , Serica Energy, Shougang Fushan Resources and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Are Index Inclusions an Alpha Opportunity?
  • [IO Technicals Weekly 2024/36] Iron Ore Futures Face Bearish Pressure but Encounters Support
  • HELLENiQ ENERGY – A good quarter, but softer margins expected in Q3
  • LVG: Exploration Update & Mining License Submission
  • Serica Energy Plc (AIM: SQZ): Cumulative Free Cash Flow
  • Shougang Fushan Resources (639 HK): Cash 83% of Market Cap, 11% Trailing Dividend Yield

Are Index Inclusions an Alpha Opportunity?

By Money of Mine

  • ASX 200 index rebalancing: West Gold and Yancoal added, Strike Energy removed
  • Impact on stock prices and trading dynamics around index inclusions and removals
  • Observations on companies prematurely entering the index and facing challenges after being removed

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

[IO Technicals Weekly 2024/36] Iron Ore Futures Face Bearish Pressure but Encounters Support

By Pranay Yadav

  • Iron ore prices declined 9.4% last week, closing below the monthly S1 pivot point, indicating resistance.
  • Despite a brief 0.75% rise on Friday, prices signaled a bearish crossover in the 9D and 21D SMAs, reinforcing negative sentiment.
  • The 91-price level remains strong support, with key resistance levels at 93.9, 95.7, and 98.9. A sharp reversal could push prices to 96.5 or higher.

HELLENiQ ENERGY – A good quarter, but softer margins expected in Q3

By Edison Investment Research

HELLENiQ ENERGY’s Q224 results showed a continuation of Q124 trends, with refining margins trending down but increased year-on-year oil prices and operational improvements driving sales and earnings growth. Q2 sales of €3,274m were up 9.9% y-o-y, adjusted EBITDA of €232m was up 42% y o y and adjusted net income of €73m was up 192% y-o-y. The Q224 HELLENiQ benchmark margin declined to $5.5/bbl, from $8.8/bbl in Q124, but was above the $4.4/bbl achieved in Q223. The company noted that the Q324 estimated refining margin has averaged $3.9/bbl, which is lower than Q224, and management expects a more normalised H224.

LVG: Exploration Update & Mining License Submission

By Atrium Research

  • LVG announced an update on Barrick Gold’s exploration activities on the claims surrounding the Tembo Project, which LVG carries interest in.
  • On September 4th, the Company announced submission of all documentation for the 10-year renewal and transfer of the Imwelo Mining License.
  • The acquisition should close by the end of September.

Serica Energy Plc (AIM: SQZ): Cumulative Free Cash Flow

By Auctus Advisors

  • 1H24 production was 43.7 mboe/d, which is in line with our expectations.
  • Net cash of ~US$143 mm at the end of June was also near our forecasts.
  • The FY24 production is expected to be towards the bottom end of the guidance of 41-46 mboe/d, mostly due to more downtime than expected at the Triton hub.

Shougang Fushan Resources (639 HK): Cash 83% of Market Cap, 11% Trailing Dividend Yield

By Sameer Taneja

  • Shougang Fushan Resources (639 HK) ended H1 FY24 with over 10.5 bn HKD of net cash and investments, compared to 12.7 bn HKD of market capitalization. 
  • At 1600 RMB/ton coking coal prices (current spot price), the business will be able to generate 1.1 bn HKD of profits, with an 80% payout implying a 7% dividend yield. 
  • The current spot prices are 16% below the average five-year price of 1900 RMB/ton ( yield 10%), and at these prices, the company still makes an EBITDA margin of 40-45%. 

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Sep 11
0

Daily Brief Industrials: Rubber, National Infrastructure Trust, Cosco Shipping Energy Transportation Co. Ltd. (H) and more

By | Daily Briefs, Industrials

In today’s briefing:

  • [Rubber, China, Futures] Typhoon Triggered Defaults Nudged Rubber Spot Prices and SHFE Futures Up
  • National Infrastructure Trust Pre-IPO Tearsheet
  • Cosco Shipping Energy Transportation – Capitulation in Oil and Related Equities Almost Complete?

[Rubber, China, Futures] Typhoon Triggered Defaults Nudged Rubber Spot Prices and SHFE Futures Up

By Farah Miller

  • Physical rubber prices gained strength during the Asian trade day as a typhoon in Vietnam disrupted the supply chain, limiting supply in the market. 
  • In addition, increased inquiries from the Chinese tire makers for the prompt cargoes resulted in further support for the prices. 
  • Chinese state buying up to 100kt of rubber, prices to be announced on 13 Sep 2024. This would provide some short term support on the SHFE 

National Infrastructure Trust Pre-IPO Tearsheet

By Akshat Shah

  • National Infrastructure Trust (NIT IN) is looking to raise about US$190m in its upcoming India IPO. The deal will be run by SBI Caps and HDFC Bank.
  • National Infrastructure Trust is an infrastructure investment trust established to acquire, manage and invest in a portfolio of infrastructure assets in India.
  • Its initial asset portfolio will consist of nine road assets, in the states of Haryana, Rajasthan, Bihar, Uttarakhand, Himachal Pradesh, Madhya Pradesh and Karnataka with an aggregate length of ~683.875km.

Cosco Shipping Energy Transportation – Capitulation in Oil and Related Equities Almost Complete?

By Rikki Malik

  • Speculative liquidation of crude oil positions opens up an opportunity
  • A seasonally strong period for crude tanker rates coming up
  • Company option scheme for senior management approved. Strike above current price

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Sep 11
0

Daily Brief Industrials: Rubber, National Infrastructure Trust, Cosco Shipping Energy Transportation Co. Ltd. (H) and more

By | Daily Briefs, Industrials

In today’s briefing:

  • [Rubber, China, Futures] Typhoon Triggered Defaults Nudged Rubber Spot Prices and SHFE Futures Up
  • National Infrastructure Trust Pre-IPO Tearsheet
  • Cosco Shipping Energy Transportation – Capitulation in Oil and Related Equities Almost Complete?

[Rubber, China, Futures] Typhoon Triggered Defaults Nudged Rubber Spot Prices and SHFE Futures Up

By Farah Miller

  • Physical rubber prices gained strength during the Asian trade day as a typhoon in Vietnam disrupted the supply chain, limiting supply in the market. 
  • In addition, increased inquiries from the Chinese tire makers for the prompt cargoes resulted in further support for the prices. 
  • Chinese state buying up to 100kt of rubber, prices to be announced on 13 Sep 2024. This would provide some short term support on the SHFE 

National Infrastructure Trust Pre-IPO Tearsheet

By Akshat Shah

  • National Infrastructure Trust (NIT IN) is looking to raise about US$190m in its upcoming India IPO. The deal will be run by SBI Caps and HDFC Bank.
  • National Infrastructure Trust is an infrastructure investment trust established to acquire, manage and invest in a portfolio of infrastructure assets in India.
  • Its initial asset portfolio will consist of nine road assets, in the states of Haryana, Rajasthan, Bihar, Uttarakhand, Himachal Pradesh, Madhya Pradesh and Karnataka with an aggregate length of ~683.875km.

Cosco Shipping Energy Transportation – Capitulation in Oil and Related Equities Almost Complete?

By Rikki Malik

  • Speculative liquidation of crude oil positions opens up an opportunity
  • A seasonally strong period for crude tanker rates coming up
  • Company option scheme for senior management approved. Strike above current price

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Sep 11
0

Daily Brief TMT/Internet: KT Corp, CELSYS, PC Partner, Nextdc Ltd, Taiwan Semiconductor (TSMC) – ADR, Palantir Technologies , NORBIT ASA, Kyndryl Holdings , CYND and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall
  • TOPIX Inclusions: Who Is Ready (September 2024)
  • PC Partner (1263 HK): Goodbye Hong Kong; Hello Singapore
  • NEXTDC Placement – Good Track Record but Seems Opportunistic
  • Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium
  • S&P 500/400/600 Changes – DELL, PLTR, and ERIE Added, AAL, ETSY, BIO Deleted
  • Portfolio Update: August 2024
  • Tech Supply Chain Tracker (11-Sep-2024): Global smartphones, 2Q ’24
  • Taiwan Tech Weekly: TSMC Becoming More Dominant; Apple’s AI Opportunity; Taiwan Market Hammered
  • Cynd (4256) – Tuesday, Jun 11, 2024

Timing a Trade to Capitalize on KT’s November Global Index Deletion and the ETF Recall

By Sanghyun Park

  • KT’s foreign room is likely staying below 3.75% for November, setting up an ETF recall play. We’ve seen short-term buying pressure in similar past index reshuffles.
  • The ETF recall impact peaks right after the announcement. KT’s May downweight saw a 5% spike in two trading days post-announcement.
  • KT’s price moves more with downweights than SK Telecom’s because of higher overseas borrowing demand. This trend should hold, so setting up a position before the November announcement makes sense.

TOPIX Inclusions: Who Is Ready (September 2024)

By Janaghan Jeyakumar, CFA

PC Partner (1263 HK): Goodbye Hong Kong; Hello Singapore

By David Blennerhassett

  • On the 18th June, personal computer parts and accessories play PC Partner (1263 HK) (PCP) announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
  • PCP’s 30th August announcement provided clarity on a step-by-step approach for the HKEx withdrawal. I recently held zooms with the SFC and SGX for added clarification.
  • PCP’s exchange relocation is predicated on PCP’s operational expansion into new markets, in particular, Southeast Asia. How and when the SGX becomes the preferred trading exchange  remains an unanswered question. 

NEXTDC Placement – Good Track Record but Seems Opportunistic

By Sumeet Singh

  • Nextdc Ltd (NXT AU) aims to raise around US$366m via a fully underwritten institutional placement, along with another US$133m via a non-underwritten SPP.
  • The company has undertaken a number of deals in the past, most of which have done ok. Although this one appears to be a bit opportunistic.
  • In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Taiwan Dual-Listings Monitor: TSMC 33% Growth, UMC Headroom Decrease, ASE Historically Low Premium

By Vincent Fernando, CFA

  • TSMC: +15.9% Premium; Sales Rose 33% YoY in August & Headroom Increased
  • UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May
  • ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium

S&P 500/400/600 Changes – DELL, PLTR, and ERIE Added, AAL, ETSY, BIO Deleted

By Travis Lundy

  • Last Friday, the S&P Index Committee announced the changes to the S&P500, S&P400, S&P600, and other indices, along with the result of a recent consultation on capping methodology.
  • The result is about US$23bn a side of flows for the major indices
  • In the S&P500, DELL, PLTR, and ERIE are ADDs. AAL, ETSY, and BIO are DELETEs. But as always, just knowing the names is deceptive. The history matters more.

Portfolio Update: August 2024

By Contrarian Cashflows

  • Welcome back to the portfolio updates series! This month, I enjoyed a long vacation with my family, spending three weeks traveling through Italy by car.
  • We began our journey from our home near Munich, which allowed us to traverse the entire country from north to south and back again.
  • We entered Italy through South Tyrol and drove down to Tuscany, where we spent a week. Afterward, we continued our journey all the way down to Puglia, where we stayed for ten days before making the return trip.

Tech Supply Chain Tracker (11-Sep-2024): Global smartphones, 2Q ’24

By Tech Supply Chain Tracker

  • Global smartphone sales are anticipated to rise in Q2 2024, presenting an opportunity for Taiwanese firms to act quickly.
  • IBM’s Kyndryl spinoff is focusing on addressing India’s cybersecurity talent shortage, signaling the need for immediate action.
  • Apple is prioritizing user privacy in its slow launch strategy, while Huawei revolutionizes mobile innovation with a triple-fold smartphone.

Taiwan Tech Weekly: TSMC Becoming More Dominant; Apple’s AI Opportunity; Taiwan Market Hammered

By Vincent Fernando, CFA

  • TSMC Extends Global Foundry Dominance Amid 33% Sales Surge – A Buy on Weakness Despite Market Concerns
  • Apple ‘Glowtime’ AI Announcements: Mixed Analyst and Media Reactions May Overlook Key Advantage — Apple Is Best Positioned to Seamlessly Integrate AI Into Your Smartphone Experience
  • Taiwan Market Gainers & Losers: Consumer Electronics & Memory Names Some of the Hardest Hit

Cynd (4256) – Tuesday, Jun 11, 2024

By Value Investors Club

  • CYND Co., Ltd. is a dominant player in the reservation management software for beauty salons in Japan, with 90% of its revenue coming from recurring contracts
  • The company has high barriers to scale and has acquired its second largest competitor, effectively eliminating competition
  • CYND has the potential to significantly increase its revenue over the next decade, led by its co-founders with strong insider ownership, and is currently valued at JPY 4.1bn with a projected net 10-year IRR of 24.1% for Sun Mountain.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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Sep 11
0

Daily Brief Consumer: Seven & I Holdings, Midea Group Co Ltd A, Joban Kosan, LG Electronics, Descente Ltd, NIO , TSE Tokyo Price Index TOPIX, China Tourism Group Duty Free and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Seven & I Holdings (3382 JP): State of Play
  • Midea Group HK IPO Valuation Analysis
  • Joban Kosan (9675) – Fortress Buys Out a Fukushima Tourism Asset
  • LG Electronics India IPO: Potential Big Gains. Booming Demand, Buoyant Valuations
  • Itochu’s Big Plans for Descente – Shame Investors Won’t Get a Look In
  • Midea HK Listing: Valuation Insights
  • [NIO Inc. (NIO US, SELL, TP US$1) Target Price Change]: Who Is Going to Give in a Slowing EV Market?
  • Disclosure Is Important, but Walk the Talk Is More Important
  • CTG Duty Free (1880 HK): Where Is the End of the Tunnel?

Seven & I Holdings (3382 JP): State of Play

By Arun George

  • Despite Seven & I Holdings (3382 JP)‘s rejection, Alimentation Couche-Tard (ATD CN) remains prepared to enter collaborative and friendly discussions to focus on finding greater value for 7&i shareholders. 
  • Couche-Tard’s options are to return with a revised offer, go hostile or walk away. Couche-Tard will likely test the Board’s resolve by returning with a higher offer.
  • The Board’s options are to go through the motions (appointing IFAs), conduct a market check or launch a more aggressive action plan to placate restive shareholders. 

Midea Group HK IPO Valuation Analysis

By Douglas Kim

  • We would subscribe to the HK offering of Midea Group due to its attractive valuations, strong fundamentals, and meaningful price discount relative to the A shares. 
  • We believe a premium valuation relative to the comps is appropriate for Midea Group due to its higher sales growth, EBIT margin, and ROE.
  • Pricing of this offering is expected to be completed on 13 September and listing on 17 September. 

Joban Kosan (9675) – Fortress Buys Out a Fukushima Tourism Asset

By Travis Lundy

  • In the annals of foreign buyers of Japanese tourism-related real estate assets, there have been a few good examples, and several disasters. Yesterday, we got a new suitor for assets. 
  • Fortress SPV Ontario GK will attempt to buy out Fukushima-based Joban Kosan (9675 JP) through a double Tender Offer. 
  • There is a history here of a bump on an MBO on an associated company. That may have caused it to trade at a premium on Day 1. It’s unrelated.

LG Electronics India IPO: Potential Big Gains. Booming Demand, Buoyant Valuations

By Devi Subhakesan

  • LG Electronics’s India business IPO could be valued above USD 7 billion, exceeding market expectations, driven by its dominant position in India’s growing home appliances market and strong sector valuations.
  • Favourable market conditions and robust sector growth make now an ideal time for LG Electronics (066570 KS) to launch its India IPO, securing high investor interest and compelling valuations.
  • In a recent interview, LG Electronics(066570 KS)  CEO William Cho mentioned that an Indian market debut is one of several options being considered to revitalise the company’s consumer electronics business.

Itochu’s Big Plans for Descente – Shame Investors Won’t Get a Look In

By Michael Causton

  • Itochu’s Textile division continues to execute the directive from its CEO to expand reach and coverage in the fashion and lifestyle sectors, with sports one of the major target categories.
  • It will completely absorb Descente as part of this plan, meaning the brand is likely to become one of the largest in the portfolio.
  • The ongoing tender offer will likely succeed giving Itochu a bargain and investors no stake in the future.

Midea HK Listing: Valuation Insights

By Shifara Samsudeen, ACMA, CGMA

  • Chinese home appliance maker Midea has announced the terms for its IPO. The company plans to raise $3.46bn at an indicative price range of HK$52.0-54.8 per share.
  • The company has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and a growing robotics business.
  • As we expected, the HK offering is priced at around 25% discount to it’s A-shares and our analysis suggests that Midea’s HK offering is priced attractively. 

[NIO Inc. (NIO US, SELL, TP US$1) Target Price Change]: Who Is Going to Give in a Slowing EV Market?

By Eric Wen

  • NIO Motors (NIO) reported C2Q24 top line, non-GAAP operating loss and GAAP net loss in-line, narrower and narrower vs. our estimate, and in-line, narrower and in-line vs. consensus. 
  • The brightest spot of the result is gross margin due to both vehicle and service gross margin improvements. 
  • We keep rating at SELL and raise TP to US$1 to reflect better OPEX control.

Disclosure Is Important, but Walk the Talk Is More Important

By Aki Matsumoto

  • If a company seeks immediate effects to improve capital profitability, it’ll return cash to shareholders because it’ll be years before the company can recoup it by making more investments now.
  • Even companies that have increased valuations by raising their capital profitability can improve it by reducing their cash on hand and policy shareholdings, which are still too large.
  • Companies with low capital profitability and low valuations have to gain investor confidence through quarterly earnings disclosures by demonstrating that their disclosed goals are achievable.

CTG Duty Free (1880 HK): Where Is the End of the Tunnel?

By Osbert Tang, CFA

  • Market consensus is unrealistic as it expects China Tourism Group Duty Free (1880 HK) to record 32.1% YoY and 14.6% HoH earnings growth in 2H24. More downgrade risk ahead.
  • Average per-customer duty-free sales in Hainan dropped by 19.2% YoY in Jul, indicating the negative wealth effect and deteriorating middle-class spending appetite.
  • Overseas duty-free sales to Chinese residents surged by almost 50% YoY in Aug, implying a diversion effect which is also detrimental. 

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Sep 11
0

Daily Brief Health Care: Krsnaa Diagnostics, Bicara Therapeutics, Akeso Biopharma Inc, Arrowhead Pharmaceuticals and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • The Beat Ideas- Krsnaa Diagnostics: B2C & Asset Light Flavor
  • Key Updates on Bicara Therapeutics IPO: ~$800M Valuation at the Midpoint and Strong Balance Sheet
  • Akeso Biopharma Inc (9926 HK) – Something Beautiful Is Happening
  • ARWR: PALISADE Phase 3 Results Published in NEJM

The Beat Ideas- Krsnaa Diagnostics: B2C & Asset Light Flavor

By Sudarshan Bhandari

  • Krsnaa Diagnostics (KRSNAA IN) expands into B2C, adds new pathology labs, and secures major government contracts for further growth.
  • Growth in PPP and retail sectors, improved margins, and expanding service offerings solidify market leadership.
  • Krsnaa’s aggressive expansion strategy and diversification indicate strong long-term growth potential with new B2C trajectory and Asset Light Model Expansion.

Key Updates on Bicara Therapeutics IPO: ~$800M Valuation at the Midpoint and Strong Balance Sheet

By Andrei Zakharov

  • Bicara Therapeutics unveiled the terms of its IPO: a clinical-stage biotech company offers ~11.8M shares at the price range of $16.00-$18.00, implying a market cap of ~$800M at the midpoint.
  • Existing shareholders do not intend to sell shares in this offering and Bicara Therapeutics shares will list on the Nasdaq under the ticker symbol “BCAX”.
  • The biotech company is focused on patients with HPV-negative head and neck cancer, and I view Bicara’s IPO valuation as attractive, with major catalysts coming up in 2025.

Akeso Biopharma Inc (9926 HK) – Something Beautiful Is Happening

By Xinyao (Criss) Wang

  • AK112’s HARMONi-2 results were impressive, but there’s still critical data gap before obtaining approval from FDA. The main concern is whether good PFS can be translated into significant OS benefits.
  • Akeso will be eligible to receive low double-digit royalties on net sales from Summit. So, Summit is actually a better investment because it has complete global rights of AK112.
  • Investors are betting Summit to be acquired by MNCs at a high price.Due to anti-monopoly issue, the narrowing pool of potential buyers would increase the difficulty of Summit being acquired.

ARWR: PALISADE Phase 3 Results Published in NEJM

By Zacks Small Cap Research

  • On September 2, 2024, Arrowhead Pharmaceuticals, Inc. (ARWR) announced results from the Phase 3 PALISADE study of plozasiran in patients with familial chylomicronemia syndrome (FCS).
  • The trial met its primary endpoint and all key secondary endpoints, including statistically significant reductions in triglycerides (TGs), apolipoprotein C-III (APOC3), and the incidence of acute pancreatitis.
  • The data were presented in a late-breaking oral presentation at the European Society of Cardiolog (ESG) Congress 2024 and simultaneously published in The New England Journal of Medicine.

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