Smartkarma Daily Briefs

• Discussion on recent acquisitions and earnings highlights in the resource sector
• Focus on BHP’s South Australian copper business and potential growth opportunities
• Analysis of return on capital employed for different assets within BHP’s portfolio

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• Carving out IFS & taking it private is the most likely outcome for Intel. However, it’s complicated by the SCIP deals and restrictions attached to the CHIPS money.  
• Intel Products Group most likely stays with Intel, maintaining the iconic brand and doubling down on efficiency and innovation. I don’t think it gets sold. 
• TSMC is unlikely to have any technical role in a spun out Intel Foundry due to a myriad of reasons including monopoly, conflict of interest, insufficient bandwidth etc.

• Tam Jai’s performance in recent years has been consistently below expectations. Its fundamentals have undergone negative changes after IPO. Consumers’ preference change may disrupt Tam Jai’s business model.
• Based on our forecast and the Cancellation Price of HK$1.58/share, P/E will be higher than the industry average. Considering the low trading liquidity and concerns on outlook, HK$1.58/share is acceptable.
• The fundamentals/prospects of Tam Jai are different from the situation of Henlius’ privatization.We recommend investors not reject the privatization easily because internationalization won’t bring significant positive changes in short term.

• On 19 February, it was reported that Rainbow Robotics’ VP Kim In-Hyeok sold 30,000 of his 55,000 shares (0.28% stake) on the 14th. Disposal price was 413,796 won per share.
• At end of 2024, Samsung Electronics announced that it will become the largest shareholder of Rainbow Robotics which has been the key reason why Rainbow Robotics’ share price has surged.
• Despite Samsung Electronics becoming the largest shareholder of Rainbow Robotics, the overly stretched valuations could result in higher downside risk ahead. It is trading at P/S of 106x in 2026.

• China Education Group (839 HK)‘s plunge in share price is due to management’s guidance for a 10-15% drop in adjusted net profit, significantly lower than the current consensus.
• Its decision to pause dividends for the foreseeable future on debt repayment burden and tight offshore refinancing environment for the sector has further disappointed the market.
• Based on guidance, its PER of 3.7x and nil dividend yield for FY25 make it unattractive relative to peers (1.7-2.9x PER). We shy away until things improve.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We provide updates on Taste Gourmet (8371 HK) / Perfect Medical Health (1830 HK) ,the Philippine Stock Exchange (PSE PM), and Sai Gon Cargo Service (SCS VN) .

• Deep Industries (DEEPI IN) Q3 & 9M FY25 revenue surged 47% and EBITDA grew 53%, driven by robust order book (Rs. 2,701 crore) and major contracts like the ONGC PEC order.
• Robust growth underscores Deep Industries strategic positioning in the energy sector, with record profitability and order book expansion paving the way for long-term value creation amid favorable government initiatives.
• Company is anticipating a growth of more than 30% year-on-year for the next 3 years with target revenue of 800Cr in FY26 and margin of 45-47%.

• Incyte Corporation’s recent financial and corporate update for the fourth quarter and full year 2024 showcases a year of significant growth and strategic progress.
• The company achieved a 15% increase in total revenues, reaching $4.2 billion for the year, driven by a robust 8% growth in Jakafi sales and a 50% surge in Opzelura revenues.
• The financial health of Incyte remains strong, with $2.2 billion in cash reserves and no debt, allowing the company to complete a $2 billion share repurchase program.

• Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term
• We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains
• Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling

• Kauntam Papers (KAUN IN)‘s Q3 & 9M FY25 results show revenue and EBITDA declines, yet steady sales volumes, cost optimization initiatives, and ongoing mill expansion efforts.
• Strategic cost management and mill expansion position the company to mitigate revenue challenges, ensuring long-term competitiveness in a dynamic paper industry.
• Industry is also asking for anti-dumping duty on some set of paper, especially copier, to make a level playing field with imported products.