Smartkarma Daily Briefs

Hexaware Technologies (HEXW IN), an Indian mid-sized global IT services company, aims to raise up to US$1.0 billion.
In Hexaware Technologies IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on mid-tier revenue growth, bottom-tier margins, low offshore mix, rising unbilled receivables/contract assets and a large post-IPO share overhang.

EQD | Nifty Index Options Weekly (January 20 – 24): Implied Vol Normalizes

Implied vols adjusted downward by 3 points and now at 33rd percentile over the past year as Nifty ekes out a 40 bp gain.
Seasonal trends not favorable for Nifty in the 2nd half of the month.
Expect that vol down / spot up will re-assert itself with implied vols having normalized.

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Feb 10

Daily Brief Japan: Seven & I Holdings, Brother Industries, SBI Sumishin Net Bank , Toyota Motor, Shibaura Electronics, Appier Group, Nikkei 225, Kyodo Printing, Axell Corp, Forum Engineering Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

7&I (3382) – In Limbo, Dipping, But Stories Coming Together
Japan: Last Look at Potential Passive Selling in February
SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer
EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension
Merger Arb Mondays (10 Feb) – Shibaura, Makino, Fuji Soft, Tecnos, Tohto Suisan, Proto, Pentamaster
Appier (4180) | Q4 Preview; Valuation Re-Rating Likely
EQD | Nikkei Index Options Weekly (January 27 – 31): Implied Vol Very Reactive to Spot
Kyodo Printing (7914 JP): Q3 FY03/25 flash update
Axell Corp (6730 JP): Q3 FY03/25 flash update
Forum Engineering Inc (7088 JP): Q3 FY03/25 flash update

7&I (3382) – In Limbo, Dipping, But Stories Coming Together

In the past month we have seen Seven & I Holdings (3382 JP) earnings, confirmation of the York Holdings timeline, stories about Apollo, KKR, and CP Group providing MBO financing.
We’ve also seen Itochu confirm the financing request from the Ito family, and two American banks tapped to provide LBO financing.
York Holdings itself gets created this month, and a buyer decided “in spring” with a Group Buyer/Outcome possibly decided by the May AGM. Looks skewed to me.

Japan: Last Look at Potential Passive Selling in February

There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.

SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer

On Friday, SBI Sumishin Net Bank (7163 JP) fell 12.5% in the last 90 minutes of trading. This was not due to their Q3 earnings release (out 30 January).
It seemed due to investor disappointment in the content of the NTT earnings call. As discussed in the forked insight, there had been speculation NTT would buy SBI Sumishin.
Investors had thought NTT would pay more than 28x earnings and a ¥600bn premium to book to buy the business. At 23.7x Mar25e EPS and 4.1x book, it’s still expensive.

EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension

Japanese Prime Minister Shigeru Ishiba’s meeting with US President Trump shines the spotlight on potential US tariffs on Japanese cars. Toyota Motor’s (7203 JP) high implied volatility expresses elevated risk.
Risk analysis suggests a range of option strategies. Implementation is challenging due to low liquidity in the Japanese market.
Option liquidity is higher in the US traded Toyota Motor Corp Spon ADR (TM US) which is the preferred route of implementation.

Merger Arb Mondays (10 Feb) – Shibaura, Makino, Fuji Soft, Tecnos, Tohto Suisan, Proto, Pentamaster

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Lifestyle China (2136 HK), Seven & I Holdings (3382 JP), Dada Nexus (DADA US), Smart Share Global (EM US), ESR Group (1821 HK), Get Nice Financial.
Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Avjennings Ltd (AVJ AU), Fuji Soft Inc (9749 JP), Macromill, Inc (3978 JP), Proto Corp (4298 JP).

Appier (4180) | Q4 Preview; Valuation Re-Rating Likely

By Mark Chadwick

We forecast Q4 consolidated revenue of ¥9.7bn (+27% YoY); Operating profit (OP) is expected to grow +129% YoY to ¥1.0bn in Q4
For FY25, we expect the company to guide for +25% revenue growth and OP +160% to ¥5.7bn, significantly ahead of the street estimate of ¥4.8bn.
Appier’s AI-powered solutions operate on top of generative AI models, utilizing proprietary data and analytics to enhance corporate online advertising efficiency.

EQD | Nikkei Index Options Weekly (January 27 – 31): Implied Vol Very Reactive to Spot

Nikkei down 2.66% on Monday with Implied vol very reactive to the move jumping almost 3 points.
USD/JPY dropped 2.35% for the week, Nikkei fared better only losing 1.96%.
Open interest in the Nikkei dominated by Puts with 2 outstanding for every 1 Call.

Kyodo Printing (7914 JP): Q3 FY03/25 flash update

Revenue increased by 4.4% YoY to JPY75.1bn; net income rose 86.3% YoY due to investment gains.
Publishing printing revenue declined YoY; operating loss narrowed by JPY138mn YoY, but price pass-through was slower than expected.
Revenue from business forms rose 8.8% YoY; operating profit exceeded expectations due to cost reductions despite weak BPO performance.

Axell Corp (6730 JP): Q3 FY03/25 flash update

Sales decreased by 13.6% YoY to JPY11.9bn, with operating profit and recurring profit declining by 38.7% and 37.5% respectively.
Pachinko and pachislot machine market showed deceleration; company focused on AI business expansion and graphics LSI sales.
New Businesses segment reported an operating loss of JPY377mn, with sales declining by 8.1% YoY to JPY340mn.

Forum Engineering Inc (7088 JP): Q3 FY03/25 flash update

Revenue increased by 10.9% YoY to JPY26.1bn, driven by higher demand for temporary engineers and staffing rates.
Cumulative Q3 pre-tax profit rose 43.3% YoY to JPY3.5bn, with significant contributions from Cognavi Staffing and staffing rate increases.
Cognavi India recorded JPY15mn revenue and JPY279mn operating loss in cumulative Q3 FY03/25 due to upfront investments.

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Feb 10

Daily Brief Industrials: Harmonic Drive Systems, Honeywell International, Kyodo Printing and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Harmonic Drive Systems (6324 JP): Q3 FY03/25 flash update
Live Call Starts Now + Weekly Update (MRP, WDC, HON, LGFA)
Kyodo Printing (7914 JP): Q3 FY03/25 flash update

Harmonic Drive Systems (6324 JP): Q3 FY03/25 flash update

Cumulative Q3 sales declined 3.7% YoY to JPY40.4bn, with operating loss of JPY337mn and net loss of JPY354mn.
Q3 parent orders increased 40.1% YoY to JPY8.3bn, marking the fifth consecutive quarterly YoY increase.
Orders for industrial robots recovered to 74.1% YoY, reaching JPY3.5bn in Q3, showing improvement from previous quarters.

Live Call Starts Now + Weekly Update (MRP, WDC, HON, LGFA)

By Richard Howe

Honeywell International (HON) announced its plan to spin off its Advanced Materials business on October 8, 2024.
Subsequently, on February 6, 2025, the company revealed its intention to separate into three independent entities by also spinning off its Aerospace and Automation divisions.
Automation (49% of revenue): This segment will concentrate on developing advanced automation technologies.

Kyodo Printing (7914 JP): Q3 FY03/25 flash update

Revenue increased by 4.4% YoY to JPY75.1bn; net income rose 86.3% YoY due to investment gains.
Publishing printing revenue declined YoY; operating loss narrowed by JPY138mn YoY, but price pass-through was slower than expected.
Revenue from business forms rose 8.8% YoY; operating profit exceeded expectations due to cost reductions despite weak BPO performance.

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Feb 10

Daily Brief Industrials: Harmonic Drive Systems, Honeywell International, Kyodo Printing and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Harmonic Drive Systems (6324 JP): Q3 FY03/25 flash update
Live Call Starts Now + Weekly Update (MRP, WDC, HON, LGFA)
Kyodo Printing (7914 JP): Q3 FY03/25 flash update

Harmonic Drive Systems (6324 JP): Q3 FY03/25 flash update

Cumulative Q3 sales declined 3.7% YoY to JPY40.4bn, with operating loss of JPY337mn and net loss of JPY354mn.
Q3 parent orders increased 40.1% YoY to JPY8.3bn, marking the fifth consecutive quarterly YoY increase.
Orders for industrial robots recovered to 74.1% YoY, reaching JPY3.5bn in Q3, showing improvement from previous quarters.

Live Call Starts Now + Weekly Update (MRP, WDC, HON, LGFA)

By Richard Howe

Honeywell International (HON) announced its plan to spin off its Advanced Materials business on October 8, 2024.
Subsequently, on February 6, 2025, the company revealed its intention to separate into three independent entities by also spinning off its Aerospace and Automation divisions.
Automation (49% of revenue): This segment will concentrate on developing advanced automation technologies.

Kyodo Printing (7914 JP): Q3 FY03/25 flash update

Revenue increased by 4.4% YoY to JPY75.1bn; net income rose 86.3% YoY due to investment gains.
Publishing printing revenue declined YoY; operating loss narrowed by JPY138mn YoY, but price pass-through was slower than expected.
Revenue from business forms rose 8.8% YoY; operating profit exceeded expectations due to cost reductions despite weak BPO performance.

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Feb 10

Daily Brief Energy/Materials: Orica Ltd, Copper, Iron Ore and more

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

In today’s briefing:

Australia: Last Look at Potential Passive Selling in February
Copper Tracker 10th Feb 2025: Comex Spreads Bullish, Commentary on China Improving
Iron Ore Tracker (10-Feb-2025): Rangebound / Pounding the Table On Fenix Resources (FEX AU)

Australia: Last Look at Potential Passive Selling in February

There are 6 stocks in Australia that could be deleted from global passive portfolios later this month, though the probability of deletion varies across the stocks.
If deleted, passive trackers will need to sell between US$234m-330m in the stocks. Impact is high at between 7-23 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over nearly every time period from 1 week to 3 months. Shorts have increased on all stocks recently.

Copper Tracker 10th Feb 2025: Comex Spreads Bullish, Commentary on China Improving

By Sameer Taneja

Copper prices closed above $9,000 per ton once more and are poised for short-term gains as the outlook on China’s economic recovery becomes more favorable.
The COMEX spread has hit a 12-week high, nearly reaching $1,000 per ton, as traders expressed concerns about copper potentially being included in the Trump administration’s blanket levies.
We favor Southern Copper (SCCO US) and Antofagasta PLC (ANTO LN) due to their greater copper exposure, higher ROCEs, and robust long-term expansion strategies.

Iron Ore Tracker (10-Feb-2025): Rangebound / Pounding the Table On Fenix Resources (FEX AU)

By Sameer Taneja

Goldman Sachs has upgraded its iron ore price forecast, highlighting rising near-term demand from China’s steel sector during the spring construction season and weather-related disruptions at Australian ports.
However, Goldman is bearish on iron ore for the second half (a consensus view), predicting a decline in China’s steel demand and the emergence of lower-cost supply.
We continue to pound the table on Fenix Resources (FEX AU). Read “Fenix Resources (FEX AU) Q2 FY25 Update: Close to Tripling Production.

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Feb 10

Daily Brief TMT/Internet: Brother Industries, Bestechnic Shanghai , Hexaware Technologies, Shibaura Electronics, Appier Group, Dell Technologies , Mediatek Inc, Qualcomm Inc, Tencent, Hang Seng Index and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Japan: Last Look at Potential Passive Selling in February
China/HK: Passive Activity Expected Later This Month
Hexaware Technologies IPO: The Bear Case
Merger Arb Mondays (10 Feb) – Shibaura, Makino, Fuji Soft, Tecnos, Tohto Suisan, Proto, Pentamaster
Appier (4180) | Q4 Preview; Valuation Re-Rating Likely
PC Monitor: Latest Qualcomm & Mediatek Results Show ARM-Based Chips Disrupting the PC Market
Mediatek: A Lot of Good Things Ahead but the Stock Is a Bit Expensive
Qualcomm Q125. Firing On All Cylinders & An Ace Up Their Sleeve…
HK Connect SOUTHBOUND Flows (To 7 Feb 2025); Busy Start Post CNY But Clear Selling of High Div SOEs
EQD | HSI Index Options Weekly (Feb 02-07): 94th Percentile 1-Week Move

Japan: Last Look at Potential Passive Selling in February

There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.

China/HK: Passive Activity Expected Later This Month

There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.

Hexaware Technologies IPO: The Bear Case

Hexaware Technologies (HEXW IN), an Indian mid-sized global IT services company, aims to raise up to US$1.0 billion.
In Hexaware Technologies IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on mid-tier revenue growth, bottom-tier margins, low offshore mix, rising unbilled receivables/contract assets and a large post-IPO share overhang.

Merger Arb Mondays (10 Feb) – Shibaura, Makino, Fuji Soft, Tecnos, Tohto Suisan, Proto, Pentamaster

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads: Lifestyle China (2136 HK), Seven & I Holdings (3382 JP), Dada Nexus (DADA US), Smart Share Global (EM US), ESR Group (1821 HK), Get Nice Financial.
Lowest spreads: Makino Milling Machine Co (6135 JP), Shibaura Electronics (6957 JP), Avjennings Ltd (AVJ AU), Fuji Soft Inc (9749 JP), Macromill, Inc (3978 JP), Proto Corp (4298 JP).

Appier (4180) | Q4 Preview; Valuation Re-Rating Likely

By Mark Chadwick

We forecast Q4 consolidated revenue of ¥9.7bn (+27% YoY); Operating profit (OP) is expected to grow +129% YoY to ¥1.0bn in Q4
For FY25, we expect the company to guide for +25% revenue growth and OP +160% to ¥5.7bn, significantly ahead of the street estimate of ¥4.8bn.
Appier’s AI-powered solutions operate on top of generative AI models, utilizing proprietary data and analytics to enhance corporate online advertising efficiency.

PC Monitor: Latest Qualcomm & Mediatek Results Show ARM-Based Chips Disrupting the PC Market

By Vincent Fernando, CFA

Growing Signs That ARM-Based Chips Are Set to Disrupt the PC Market
Qualcomm’s Earnings Call Insights — Snapdragon’s ARM-Based Push into PCs Successfully Taking Significant Market Share
Mediatek Earnings Call Highlights — Reiterates ARM-Based Entry into PC Market with AI Supercomputer CPU in Collaboration with NVIDIA

Mediatek: A Lot of Good Things Ahead but the Stock Is a Bit Expensive

By Nicolas Baratte

Smartphone revenues increased by 31% in 2024 and will increase by 15-20% in 2025 in my view: small volume growth (5%), ASP increase (AI in chips), share gains in premium.
MTK multiple bets in Automotive, AI, ARM CPU are starting to pay off. Nvidia GB100 revenues mid-25, AI Accelerator revenue start mid-26, Nvidia Auto revenue in 2H26 – my estimates.
Consensus forecasts revenues increasing +35% from 2024 to 2026, Net Income +30%. That should be the low-end of the range. The stock is trading at 21.1x 2025 EPS, 17.6x 2026.

Qualcomm Q125. Firing On All Cylinders & An Ace Up Their Sleeve…

By William Keating

Q125 revenues of $11.7 billion, up 18% YoY, up 15% QoQ and marginally above the high end of the guided range. This represented the company’s highest ever quarterly revenue
In December, Snapdragon X Series had more than 10% share of the greater than $800 Windows laptops in U.S. retail.
A recent hire suggests Qualcomm has an ace up their sleeve and that they are poised to launch yet another diversification gambit

HK Connect SOUTHBOUND Flows (To 7 Feb 2025); Busy Start Post CNY But Clear Selling of High Div SOEs

In the post-CNY return, SOUTHBOUND gross trading activity was stronger per day than the previous several weeks, but SB Net Buying was not.
Tech ended up being a big net buy, but Tencent (700 HK) a big net sell.
Lower-Than-Expected tariff rates against China meant foreigners are back to buying Chinese stocks for the time being which may lower SB net buys near-term.

EQD | HSI Index Options Weekly (Feb 02-07): 94th Percentile 1-Week Move

Powerful rally for HSI lands its 1-week price change in the 94th percentile of all weekly moves since 2000.
Implied vols raising a caution flag, trading at the 78th percentile over the past year and 68th percentile since the start of 2001.
Call volumes as a percentage of total option volumes has been dropping over the past three weeks.

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Feb 10

Daily Brief Health Care: Otsuka Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Otsuka Holdings (4578 JP): Guidance Revised Upward for 2024, Core 2 Products Show Strength

Otsuka Holdings (4578 JP): Guidance Revised Upward for 2024, Core 2 Products Show Strength

By Tina Banerjee

Otsuka Holdings (4578 JP) has revised revenue guidance for 2024 to ¥2,320B from previous ¥2,310B. Pharmaceutical business and nutraceutical business performed strongly.
2024 operating profit guidance have been revised slightly upwards to ¥323B. Due to the impact of temporary tax adjustment in U.S., net profit guidance raised by 43% to ¥343B.
Otsuka shares have rallied 40% in the last one year. With multiple growth drivers at play Otsuka is poised for accelerated growth.

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Feb 10

Daily Brief Financials: SBI Sumishin Net Bank , Nikkei 225, Anicom Holdings, NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer
EQD | Nikkei Index Options Weekly (January 27 – 31): Implied Vol Very Reactive to Spot
Anicom Holdings (8715 JP): Q3 FY03/25 flash update
EQD | Nifty Index Options Weekly (January 20 – 24): Implied Vol Normalizes

SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer

On Friday, SBI Sumishin Net Bank (7163 JP) fell 12.5% in the last 90 minutes of trading. This was not due to their Q3 earnings release (out 30 January).
It seemed due to investor disappointment in the content of the NTT earnings call. As discussed in the forked insight, there had been speculation NTT would buy SBI Sumishin.
Investors had thought NTT would pay more than 28x earnings and a ¥600bn premium to book to buy the business. At 23.7x Mar25e EPS and 4.1x book, it’s still expensive.

EQD | Nikkei Index Options Weekly (January 27 – 31): Implied Vol Very Reactive to Spot

Nikkei down 2.66% on Monday with Implied vol very reactive to the move jumping almost 3 points.
USD/JPY dropped 2.35% for the week, Nikkei fared better only losing 1.96%.
Open interest in the Nikkei dominated by Puts with 2 outstanding for every 1 Call.

Anicom Holdings (8715 JP): Q3 FY03/25 flash update

Recurring revenue increased by JPY4.8bn YoY to JPY49.7bn, driven by underwriting, investment, and other revenue growth.
Recurring profit rose JPY517mn YoY to JPY3.8bn, aided by decreased claims, agency fees, and SG&A expenses.
Combined ratio improved by 0.6pp YoY to 93.5% due to better operating expense and E/I loss ratios.

EQD | Nifty Index Options Weekly (January 20 – 24): Implied Vol Normalizes

Implied vols adjusted downward by 3 points and now at 33rd percentile over the past year as Nifty ekes out a 40 bp gain.
Seasonal trends not favorable for Nifty in the 2nd half of the month.
Expect that vol down / spot up will re-assert itself with implied vols having normalized.

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Feb 10

Daily Brief Consumer: Seven & I Holdings, Toyota Motor, Fosun Tourism, Guming Holdings, Tam Jai International, Yum China Holdings , JB Hi-Fi Ltd, Softcare, Geo Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

7&I (3382) – In Limbo, Dipping, But Stories Coming Together
EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension
Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March
Pre-IPO Guming Holdings – Thoughts on Valuation
ECM Weekly (10th Feb 2025) – Haitian, Guming, LG CNS, Dr Agarwal, Ola, Brainbees, Kaynes, Whirlpool
Tam Jai Intl (2217 HK): Is It Privatisation or Takeover?
Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds
EQD | JB Hi-Fi (JBH AU) Faces Volatile Trading After Earnings Announcement
Softcare Pre-IPO Tearsheet
Geo Holdings (2681 JP): Q3 FY03/25 flash update

7&I (3382) – In Limbo, Dipping, But Stories Coming Together

In the past month we have seen Seven & I Holdings (3382 JP) earnings, confirmation of the York Holdings timeline, stories about Apollo, KKR, and CP Group providing MBO financing.
We’ve also seen Itochu confirm the financing request from the Ito family, and two American banks tapped to provide LBO financing.
York Holdings itself gets created this month, and a buyer decided “in spring” with a Group Buyer/Outcome possibly decided by the May AGM. Looks skewed to me.

EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension

Japanese Prime Minister Shigeru Ishiba’s meeting with US President Trump shines the spotlight on potential US tariffs on Japanese cars. Toyota Motor’s (7203 JP) high implied volatility expresses elevated risk.
Risk analysis suggests a range of option strategies. Implementation is challenging due to low liquidity in the Japanese market.
Option liquidity is higher in the US traded Toyota Motor Corp Spon ADR (TM US) which is the preferred route of implementation.

Fosun Tourism (1992 HK)’s Scheme Buyback Vote On The 4th March

By David Blennerhassett

On the 10th December 2024, Fosun Tourism (1992 HK) announced a Scheme buyback, with a Cancellation Price of $7.80/share (not declared final), a chunky 95% premium to undisturbed.
Assuming the Scheme gets up, Fosun International (656 HK) and concert parties would hold 100% in Fosun Tourism.
The Scheme Doc is now out, with a Court Meeting on the 4th March, and expected settlement on the 26th March. The IFA (Altus Capital) says “fair and reasonable”.

Pre-IPO Guming Holdings – Thoughts on Valuation

By Xinyao (Criss) Wang

If based on the market value of HK$20.246 billion to HK$23.185 billion in this IPO, a single store market value is about HK$2-2.4 million, higher than that of Baicha Baidao.
Our forecast of 2024 net profit is RMB1.4 billion. Based on IPO price range of HK$8.68-9.94 per share, P/E is about 13.5-15.5x. There is still some upside room for valuation.
Investors may need more “safety margins” on valuation due to the pressure of performance growth after IPO.The higher the IPO price, the greater the risk of future valuation downward revisions.

ECM Weekly (10th Feb 2025) – Haitian, Guming, LG CNS, Dr Agarwal, Ola, Brainbees, Kaynes, Whirlpool

By Sumeet Singh

Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
On the IPO front, neither of the two listings performed last week, while more are lining up to list across the region.
On the placements front, given the ongoing earnings season there weren’t any deals. We did look at lockups and other possible upcoming deals.

Tam Jai Intl (2217 HK): Is It Privatisation or Takeover?

By Osbert Tang, CFA

Tam Jai Intl (2217 HK)‘s suspension has led to speculation about a privatisation or takeover. Its huge net cash, equal to 115% of market capitalisation, makes it appealing.
Its controlling shareholder Toridoll Holding Limited owns a 74.61% stake and there is no shareholder with more than a 5% interest. This makes a deal seemingly simple.
Assuming priced at the average P/B of 1.63x, this means HK$1.90, or 110% premium to the latest close, which is costly to the major shareholder.

Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds

By Devi Subhakesan

Yum China Holdings (9987 HK) posted robust year-over-year operating profit growth in 4Q2024 on the back of low single digit sales increase and operating efficiencies.
Despite significant sector headwinds, Yum China has managed to outperform peers and grow ahead of sector in 2024 by swiftly adapting to shifting consumer preferences.
Yum China’s value-for-money QSR model with mid-tier pricing amidst tough sector outlook implies limited margin upside, a likely single-digit sales growth outlook, and a modest dividend yield for 2025.

EQD | JB Hi-Fi (JBH AU) Faces Volatile Trading After Earnings Announcement

JB Hi-Fi Ltd (JBH AU) announced HY 2025 results this morning. Price increases 5.5% in early trading but gains were lost by noon.
Sales Up 9.8% to A$ 5.67m; EPS up 8.0% to A$ 2.611; interim dividend up A$ 0.12 to A$ 1.70. Results are in-line/slight beat.
Volatile trading can make for opportunities. Investors can speculate on a positive Post Announcement Earnings Drift (PEAD) or consider option strategies, as implied volatility remains elevated.

Softcare Pre-IPO Tearsheet

By Nicholas Tan

Softcare (SOFT HK) is looking to raise at least US$300m in its upcoming Hong Kong IPO. The deal will be run by CICC, CITIC and GF Securities.
SC is principally engaged in the development, manufacturing and sales of baby and feminine hygiene products, focusing on the fast-growing emerging markets, including Africa, Latin America and Central Asia.
As of September 30, 2024, SC had 18 sales branches in 12 countries, and an extensive sales network across over 2,500 wholesalers, distributors, supermarkets, and other retailers in total.

Geo Holdings (2681 JP): Q3 FY03/25 flash update

Revenue decreased by 3.4% YoY to JPY316.2bn, with a decline in new game console demand impacting sales.
Gross profit increased by 7.0% YoY to JPY127.3bn, while operating profit margin fell to 3.1% due to higher SG&A expenses.
Sales of secondhand goods rose 12.5% YoY to JPY140.4bn, driven by increased secondhand market demand and store expansions.

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Feb 10

Most Read: Seven & I Holdings, Shin Kong Financial Holding, Britannia Industries, Brother Industries, Englewood Lab, SBI Sumishin Net Bank , Orica Ltd, Bestechnic Shanghai , Hexaware Technologies, Toyota Motor and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

7&I (3382) – In Limbo, Dipping, But Stories Coming Together
Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC
NIFTY50 Index Rebalance Preview: Adds Secure; Tight Among the Deletes
Japan: Last Look at Potential Passive Selling in February
A Partial Tender Offer of Englewood Lab by Cosmecca Korea
SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer
Australia: Last Look at Potential Passive Selling in February
China/HK: Passive Activity Expected Later This Month
Hexaware Technologies IPO: The Bear Case
EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension

7&I (3382) – In Limbo, Dipping, But Stories Coming Together

In the past month we have seen Seven & I Holdings (3382 JP) earnings, confirmation of the York Holdings timeline, stories about Apollo, KKR, and CP Group providing MBO financing.
We’ve also seen Itochu confirm the financing request from the Ito family, and two American banks tapped to provide LBO financing.
York Holdings itself gets created this month, and a buyer decided “in spring” with a Group Buyer/Outcome possibly decided by the May AGM. Looks skewed to me.

Shin Kong (2888 TT) / Taishin (2887 TT) – Waiting on the FSC

The TFTC approved in early January, The TFTC said market power would be limited and competition unrestricted. Another CNA article suggested the two FHCs were completing employee placement plans.
Apparently, as of a month ago, only the Shin Kong Bank employee settlement plan had not been completed but the FSC has rules about that. Consideration likely proceeds.
There are specific rules about how these things are dealt with. In the meantime, the spread – still wide – is narrowing.

NIFTY50 Index Rebalance Preview: Adds Secure; Tight Among the Deletes

Following their inclusion in the F&O segment in November, Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) appear to be sure-shot inclusions to the NIFTY Index in March.
Bharat Petroleum Corp (BPCL IN) is a certain deletion from the index. Britannia Industries‘ average free-float market cap is less than 0.004% below Hero Motocorp‘s. It’s very close.
Passive trackers need to trade between 3.7-11.8 days of ADV on the stocks. The impact increases significantly to between 8.4-21.8 days of delivery volume to trade on the stocks.

Japan: Last Look at Potential Passive Selling in February

There are 14 Japanese stocks at risk of being deleted from global passive portfolios in February. The number will be smaller depending on the day of the review period chosen.
Selling from passive trackers will range from US$176m-354m and the impact ranges from 3.1-18.4 days of ADV. Short interest has increased in nearly all stocks over the last 4 weeks.
The forecast deletes have underperformed the TSE Tokyo Price Index TOPIX on average over the last 1-3 months, while there has been marginal outperformance over the last week or two.

A Partial Tender Offer of Englewood Lab by Cosmecca Korea

By Douglas Kim

On 6 February, Cosmecca Korea (241710 KS) launched a partial tender offer on Englewood Lab (950140 KS).
Cosmecca Korea announced that it plans to purchase 11% (2.185 million) of Englewood Lab’s outstanding shares at the tender offer price of 10,000 won.
It appears that this partial tender offer is an attempt by Cosmecca Korea to increase its stake in Englewood Lab even further, capitalizing on the lower share price.

SBI Sumishin NetBank (7163) – Oops! NTT Docomo May Not Be There As a Buyer

On Friday, SBI Sumishin Net Bank (7163 JP) fell 12.5% in the last 90 minutes of trading. This was not due to their Q3 earnings release (out 30 January).
It seemed due to investor disappointment in the content of the NTT earnings call. As discussed in the forked insight, there had been speculation NTT would buy SBI Sumishin.
Investors had thought NTT would pay more than 28x earnings and a ¥600bn premium to book to buy the business. At 23.7x Mar25e EPS and 4.1x book, it’s still expensive.

Australia: Last Look at Potential Passive Selling in February

There are 6 stocks in Australia that could be deleted from global passive portfolios later this month, though the probability of deletion varies across the stocks.
If deleted, passive trackers will need to sell between US$234m-330m in the stocks. Impact is high at between 7-23 days of ADV.
The potential deletions have underperformed the S&P/ASX 200 (AS51 INDEX) over nearly every time period from 1 week to 3 months. Shorts have increased on all stocks recently.

China/HK: Passive Activity Expected Later This Month

There could be up to 10 adds/ 29 deletes for the China global index in February. The actual number of changes will be smaller depending on the review date chosen.
The flow on the forecast adds varies from US$17.5m-US$175m (0.05x-15x ADV) while the flow on the forecast deletes varies from US$14.4m-US$100.4m (0.25x-22.75x ADV).
Bestechnic Shanghai (688608 CH) is a potential inclusion to multiple indices in June and there will be much larger passive flows to the stock then.

Hexaware Technologies IPO: The Bear Case

Hexaware Technologies (HEXW IN), an Indian mid-sized global IT services company, aims to raise up to US$1.0 billion.
In Hexaware Technologies IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on mid-tier revenue growth, bottom-tier margins, low offshore mix, rising unbilled receivables/contract assets and a large post-IPO share overhang.

EQD | Toyota (7203 JP // TM US) – Option Opportunities Amid Tariff Tension