Smartkarma Daily Briefs

• Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
• Highlights: Currently twelve pair trade opportunities across four markets and five sectors persist.
• Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.

• Profitable Arbitrage: Generates positive FCF by monetizing logistics spreads (Valmo) and ad-tech, effectively acting as a profitable toll booth for unorganized retail rather than a traditional commission-based marketplace.
• The Moat: Monopolizes “India 2” (<INR 300 AOV) via low-cost logistics infrastructure, creating a defensive barrier against Amazon and Flipkart’s higher-cost premium models.
• Downside Risk: Supply-side flywheel is fragile; high return rates driving seller churn could pose significant threats to long-term sustainability.

• TSMC: +27.1% Premium; Increased to More Historically Extreme Level; Deeper in Short Range
• UMC: +2.3% Premium; Good Level to Open a Short of The Spread
• ASE: +2.3% Premium; Wait Better Long Opportunity Near Parity or Below

• Multiple industry checks now indicate that Apple is preparing to source its entry-level M-series processors from Intel’s 18A node with EMIB-T packaging as early as 2027.
• The revenue impact will be modest, but the signalling value is enormous: Apple does not hand out advanced-node access unless the foundry roadmap is de-risked.
• This development aligns directly with the structural shifts we’ve been highlighting; Intel’s packaging-first wedge, foundry credibility, and TSMC’s overcapacity creating space for second-sourcing.

• Choice Hotels International’s recent earnings call provides an intricate overview of the company’s financial performance and strategic initiatives during the third quarter of 2025.
• The company reported a 7% increase in adjusted EBITDA, reaching $190 million, primarily driven by an enhanced brand mix and increased business from small and medium enterprises and group bookings.
• However, the positive financial performance was countered by a flat global RevPAR compared to the prior year, with a notable dip of 3.2% in the U.S. market owing to softer government and international inbound demand.

• Meituan (MT)’s revenue growth rate plummeted to 2% YoY in 3Q25.
• The discount campaign has not actually ended after the authorities warned twice.
• We expect that MT’s price has a downside of 30% in the next twelve months.

• Taste Gourmet (8371 HK) reported H1 FY26 results of Revenues/Pat 11.8% YoY/17.8%YoY. Profits were in line with our expectations as the company reined in costs and showed slight margin improvements. 
• Cash continues to pile on the balance sheet, with 242 mn HKD of net cash representing >30% of market capitalization. The company paid an 8-cent semi-annual dividend.
• The stock trades at a 6.8x PE for FY26e, has an 8.6% dividend yield, and plans to grow at a CAGR of at least 15%.

• Pure-Play, Low-Cost Producer with Ambitious Growth: Sigma Lithium is a new, low-cost producer of high-purity, environmentally friendly lithium concentrate from its single asset, the Grota do Cirilo project in Brazil. The company is aggressively expanding, with plans to more than triple production capacity by the end of 2026, positioning it as a significant player in the EV battery supply chain.
• Leveraged to a Volatile but Recovering Lithium Market: The company’s profitability is highly sensitive to lithium prices, which have been volatile after collapsing from 2022 highs. While the market has been oversupplied, projections suggest a tightening supply-demand balance from 2025 onwards, driven by robust EV and energy storage growth, which could provide significant tailwinds.
• High-Risk, High-Reward Equity Profile: As a single-asset company in an emerging market with a short operational history, Sigma carries significant execution and geopolitical risks. However, its industry-leading cost structure, strong ESG credentials, and aggressive, funded expansion plan offer substantial upside potential for investors with a high-risk tolerance.

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• Wrkr Ltd (ASX:WRK) offers compliance solutions for Australian superannuation contributions and payroll including member onboarding, super payments, messaging and employee validation.
• WRK has delivered a record cash receipts quarter ($4.0m), +74% on the previous corresponding period (pcp) and +30% on Q4 FY25, aided by milestone payments and some overdue receipts from Q4 FY25 ($0.4m).
• Total costs increased 24% on Q4 FY25 as WRK prepares for client onboarding and continues product development.

• Kyivstar Group (KYIV US) launched Starlink Direct to Cell on November 24, making Ukraine the first European country with commercial satellite connectivity to mobile phones.
• Satellite connectivity provides Kyivstar a differentiated capability that should be positive for customer churn management given the ‘insurance value’ of having satellite backup connectivity for Ukrainians.
• Kyivstar’s Starlink partnership is a net positive for the shares. We reiterate our Structural Long rating and US$19.8 target price. KYIV shares are trading at just 5.1x 2025E EV/EBITDA.