Smartkarma Daily Briefs

Contemporary Amperex Technology (CATL) (300750 CH) has announced plans for an H-share listing with media reports indicating a raise of at least US$5bn. Shareholders have approved the issuance.
CATL (300750 CH) was designated as a Chinese Military Company earlier this year by the U.S. Department of Defense but is still not on the NS-CMIC list.
The CATL (300750 CH) H-shares should get Fast Entry to the global indices and iShares China Large-Cap (FXI US) ETF. Inclusion in the HSCEI and HSI will take longer.

Fast Retailing (9983 JP): Double Capping & The Reverse Funding Trade

With 3 days left in the review period, Fast Retailing (9983 JP) has a 11.29% weight in the Nikkei 225 (NKY INDEX). That means double capping in March.
If Fast Retailing (9983 JP) underperforms the other index stocks by 1.8% from now to the close on 31 January, there will only be a single level of capping.
Double capping will result in big selling on Fast Retailing (9983 JP) and big inflows into the other index constituents. Smaller impact for single level capping.

Guotai Junan/Haitong Sec Merger: The Many Index Flows Around the Corner

Haitong Securities (H) (6837 HK) and Haitong Securities (A) (600837 CH) shares will stop trading after 5 February following the merger with Guotai Junan Securities (2611 HK).
There will be small buying in Guotai Junan Securities (2611 HK) at the close on 5 February and there should be more buying in the A-shares and H-shares in March.
There will also be a stock added to the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) to bring the number of index constituents back to 300.

IDX30/LQ45/IDX80 Index Rebalance: Big Impact in Some Stocks with 4 Days to Implementation

There are 2 constituent changes for the IDX30 Index, and 3 changes each for the LQ45 Index and IDX80 Index to be implemented at the close on 31 January.
The largest passive flows are expected in Bank Central Asia, Indosat, Japfa Comfeed Indonesia, Indocement Tunggal Prakarsa, Dayamitra Telekomunikasi, MAP Aktif Adiperkasa, Bank Mandiri Persero, Ciputra Development and XL Axiata.
With only 4 days to implementation, there could be relatively big moves on stocks that have large flow/impact from passive fund trading.

Sigma Healthcare (SIG AU): Shareholders Approve Merger; Passives Could Start Buying in Two Weeks

Sigma Healthcare (SIG AU) and Chemist Warehouse (CWG) shareholders have approved the merger with 99.86% and 100% of the votes cast in favour.
The Second Court Hearing is on 3 February and the merger will be implemented on 12 February, which is when the passive buying could commence.
Sigma Healthcare has continued to trade higher on a record margin and sales expansion for CWG and expected passive buying that could top A$3bn over the next few months.

Indian Renewable Energy (IREDA IN) QIP: Index Implications

IREDA has announced a Qualified Institutional Placement (QIP) of a maximum of INR 50bn as long as the Government of India’s holding does not drop by more than 7%.
There will be passive buying at the time of settlement of the QIP shares while the increase in float will bring the stock closer to inclusion in another global index.
With the stock close to index inclusion level and down 37% from its peak, there could be positioning in the stock for passive inflows.

PCOMP Index Rebalance: AREIT, CBC to Replace NIKL, WLCON

As forecast, Areit (AyalaLand REIT) (AREIT PM) and China Banking (CBC PM) will replace Nickel Asia (NIKL PM) and Wilcon Depot (WLCON PM) in the Philippines Stock Exchange PSEi Index.
Passive trackers will need to buy between 14-44 days of ADV in the adds while selling between 17-54 days of ADV in the deletes.
The stocks have already moved a lot over the last few months and positioning has built up over that period. There could still be outperformance ahead of the passives trading.

Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book

6-7 years ago Sanyo Special Steel (5481 JP) bought out a large foreign specialty steel company, and funded it by getting Nippon Steel to inject capital at below book.
Now Nippon Steel is buying the rest of Sanyo Special Steel in a Tender Offer at 0.66x book, where most of book is Net Receivables, Inventory, WIP, and Materials.
This is the second time in a decade where the Board has decided to sell control of itself at far below book value. They should be ashamed of themselves.

Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover

Today, Nikkon Holdings (9072 JP) announced it would take over Chuoh Pack Industry (3952 JP) for ¥5,034/share. It closed today at ¥1,349. This is a HUGE win for governance.
The 273% premium is not the big win here. For holders it is, of course, but for Japan Inc shareholders everywhere, the win was the auction process.
This could have come out at 100% premium and that might have been OK. As it is, cross-holders and one big holder together get this deal done. Congrats!

Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block

Today, Freebit Co Ltd (3843 JP) announced it would launch a Tender Offer next Monday to buy out minorities in 60.9%-owned Giga Prize (3830 JP).
The multiple is not terribly impressive. It could be better. But they only need 5.8% of the 39.1% they do not own to get this over the hump.
Synergies are clear. They are expected. They are not priced in the valuation. This is disappointing. Again.

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Feb 02

Daily Brief Consumer: Fast Retailing, Tesla and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Last Week in Event SPACE: Fast Retailing, Sigma, Takeda Pharmaceutical, WH Group
Tesla’s Growth Story Facing Challenges Amidst Optimism for AI and Autonomy?

Last Week in Event SPACE: Fast Retailing, Sigma, Takeda Pharmaceutical, WH Group

By David Blennerhassett

It was confirmed on Friday afternoon Fast Retailing (9983 JP) was a single cap move, NOT a double-capping in a single Review. That limits the sell down.
Chemist Warehouse’s reverse buyout of pharmacy wholesaler Sigma Healthcare (SIG AU) is now all-but complete.
Takeda Pharmaceutical (4502 JP) announced decent results, decently upgraded guidance in both IFRS/GAAP terms and in Core/Adjusted terms (less impressive uplift in Adjusted/Analysed terms). They also announced a ¥100bn buyback.

Tesla’s Growth Story Facing Challenges Amidst Optimism for AI and Autonomy?

Tesla’s fourth-quarter earnings highlighted a company at the crossroads of transformation and challenge.
Despite achieving a record market valuation of $1.5 trillion in December, the company’s core automotive business struggled, with an 8% year-over-year revenue decline.
Demand softened, particularly for the Cybertruck, forcing Tesla to rely on aggressive promotional strategies to sustain sales.

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Feb 01

Daily Brief Thematic (Sector/Industry): Japan Strategy Weekly | A Buying Opportunity in the AI Rubble? and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Japan Strategy Weekly | A Buying Opportunity in the AI Rubble?
AUCTUS ON FRIDAY – 31/01/2025

Japan Strategy Weekly | A Buying Opportunity in the AI Rubble?

By Mark Chadwick

The recent market tremors sparked by DeepSeek, a Chinese AI firm, have rattled investors, prompting a wave of selling in AI stocks
The long-term AI narrative remains compelling and the current dip could offer compelling opportunities – we highlight the sell-off in Japanese names
The Bank of Japan’s long-standing commitment to ultra-loose monetary policy is looking increasingly untenable

AUCTUS ON FRIDAY – 31/01/2025

By Auctus Advisors

AUCTUS PUBLICATIONS ________________________________________ Corcel (CRCL LN)C; Target price of 1.00p per share: Restarting intervention activities at Tobias field -Intervention activities will soon restart at the Tobias-13 and Tobias-14 wells on Block KON-11, aiming to re-establish production at the Tobias field.
Discovered in 1961, the Tobias field initially had an estimated 94 mmbbl of oil in place.
Twelve wells were drilled, with eight producers reaching peak production of 17.5 mbbl/d.

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Feb 01

Daily Brief ECM: Metsera Inc (MTSR): GLP-1 Boom Comes to the IPO Market with Explosive Debut and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Metsera Inc (MTSR): GLP-1 Boom Comes to the IPO Market with Explosive Debut
Titan America (TTAM): Cement Producer IPO Spin-Off Poised for Growth Amid Favorable Industry Trends
Infinity Natural Resources (INR): Buyers Step In Marking Second Winning Energy IPO
Maze Therapeutics (MAZE): Upsized IPO Slumps in the Aftermarket

Metsera Inc (MTSR): GLP-1 Boom Comes to the IPO Market with Explosive Debut

Metsera (MTSR US), a biotech using peptides to treat obesity, overweight and related conditions opened 41.7% above the issue price.
The company was seeking a specific cash-raise of $275 million and was not looking to allow further dilution.
IPOs in the biotech sector are a “sell-the-news” event until we see on the tape otherwise.

Titan America (TTAM): Cement Producer IPO Spin-Off Poised for Growth Amid Favorable Industry Trends

Spinoff of European Parent Titan Cement is seeking a potential $3b valuation.
The financial metrics of this company have been steadily improving which could lend a strong opportunity if priced attractively.
We will be taking a wait-and-see approach for our short-term time frame forecast regarding this deal versus the issue price.

Infinity Natural Resources (INR): Buyers Step In Marking Second Winning Energy IPO

Throughout the week, Infinity Natural Resources had to manage the Venture Global (VG) headwind — a previously broken IPO from the energy sector.
While there was pushback on valuation with some buyside investors, Infinity Natural Resources was able to successfully convey their story.
There has now been three energy IPOs in 2025 with two winners.

Maze Therapeutics (MAZE): Upsized IPO Slumps in the Aftermarket

Maze Therapeutics (MAZE US) upsized its transaction but saw its IPO price dip below issue on day one.
A critical piece of information, price guidance, was missing from the final channel check sending a warning message to the market.
With the lack of enthusiasm for this IPO during its first session, we would encourage investors to exercise caution on this IPO in the aftermarket.

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Feb 01

Daily Brief Credit: Pemex: Lack of Concrete Action Weights on the Outperform Thesis and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Pemex: Lack of Concrete Action Weights on the Outperform Thesis
EM Spreads – Weekly News & Views

Pemex: Lack of Concrete Action Weights on the Outperform Thesis

By Leandro Gubler

We need to see concrete action from the Mexican government to maintain an Outperform recommendation.
Pemex’s deteriorating operational metrics will likely increase its need for government assistance.
Within Pemex’s capital structure, we continue to prefer the PEMEX (B3/BBB/B+) 5.950% 2031, the PEMEX 6.625% 2035, the PEMEX 6.625% 2038, and the PEMEX 7.690% 2050.

EM Spreads – Weekly News & Views

By Leandro Gubler

The LatAm Corporate Index tightened by 12 basis points (bps) to 306 bps in the week ending on Friday, January 31, 2025.
U.S. Treasuries saw decreases, with the 10-year yield down 11 bps to 4.51% and the 5-year yield also down 11 bps to 4.31%.
We initiated coverage on Suzano with a Market Perform outlook, Sheinbaum unveiled an energy reform, YPF completed its $327 million acquisition of Mobil, and Cemex finalized its $950 million divestment.

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Feb 01

Daily Brief Event-Driven: Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book
Daito Trust Buys Out Listed Private Co Ascot (3264 JP) – Small Done Deal at ¥260
Ascot Corp (3264 JP): Daito Trust Construction (1878 JP)’s Tender Offer a Done Deal
Sabadell’s Dividend Strategy and the BBVA Takeover Bid
EQD | NSE Nifty Bank Index – Implied Volatility Not (Yet) Rich Enough.
Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover
EQD | S&P/ASX 200 Option Strategy – Today’s All-Time-High Calls for Proactive Hedging
EQD | Global Option Implied Volatility – Option Opportunities Across the Regions
Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block

Nippon Steal! Again. Parent Takes Out Sanyo Special Steel (5481) At Well Below Book

6-7 years ago Sanyo Special Steel (5481 JP) bought out a large foreign specialty steel company, and funded it by getting Nippon Steel to inject capital at below book.
Now Nippon Steel is buying the rest of Sanyo Special Steel in a Tender Offer at 0.66x book, where most of book is Net Receivables, Inventory, WIP, and Materials.
This is the second time in a decade where the Board has decided to sell control of itself at far below book value. They should be ashamed of themselves.

Daito Trust Buys Out Listed Private Co Ascot (3264 JP) – Small Done Deal at ¥260

Ping An Insurance bought into a small Tokyo-based condo developer in 2017 at ¥255/share. In 2020, it reinvested on the dip with SBI at ¥155/share.
Ping An and SBI started with zero shares. By 2020 they had 80+% of shares. Now they are selling out to Daito Trust Construct (1878 JP).
This is a done deal at a slight premium to book value. Daito Trust buys Real Estate Available for Sale and assumes debt. That’s it. Easy peasy done deal.

Ascot Corp (3264 JP): Daito Trust Construction (1878 JP)’s Tender Offer a Done Deal

By Arun George

Ascot Corp (3264 JP) announced a tender offer from Daito Trust Construct (1878 JP) at JPY260 per share, a 20.4% premium to the last close.
Ascot currently does not meet the 25% tradeable share ratio criterion. The offer is attractive compared to historical trading ranges but below the mid-point of the IFA DCF valuation range.
This is a done deal, as irrevocables represent an 82.78% ownership ratio, well above the minimum acceptance condition (67.86% ownership ratio).

Sabadell’s Dividend Strategy and the BBVA Takeover Bid

By Jesus Rodriguez Aguilar

Sabadell plans a €500 million share buyback to maintain stock value, reducing the attractiveness of BBVA’s exchange offer and increasing shareholder resistance to the takeover.
Regulatory scrutiny intensifies as BBVA-Sabadell would control 39.63% of Catalonian banking credit, raising competition concerns, particularly in SME lending and payment services.
The market expects BBVA to raise its offer by 10-20%, but BBVA’s CEO insists there is “no room” for improvement, making shareholder approval uncertain.

EQD | NSE Nifty Bank Index – Implied Volatility Not (Yet) Rich Enough.

By Gaudenz Schneider

NSE Nifty Bank Index implied volatility could be seen as rich when compared to its own history and in comparison to realized volatility.
Putting implied volatility into context with the NSE Nifty Bank Index 200 day moving average will lead to a different conclusion. Selling volatility might not be the opportunity it seems.
This Insight provides a quantitative indication at which level implied volatility can be assessed as rich.

Nikkon Pays 273% Premium for Chuoh Pack (3952 JP) In Takeover

Today, Nikkon Holdings (9072 JP) announced it would take over Chuoh Pack Industry (3952 JP) for ¥5,034/share. It closed today at ¥1,349. This is a HUGE win for governance.
The 273% premium is not the big win here. For holders it is, of course, but for Japan Inc shareholders everywhere, the win was the auction process.
This could have come out at 100% premium and that might have been OK. As it is, cross-holders and one big holder together get this deal done. Congrats!

EQD | S&P/ASX 200 Option Strategy – Today’s All-Time-High Calls for Proactive Hedging

By Gaudenz Schneider

Today, the S&P/ASX 200 (AS51 INDEX) reached a new all-time high while implied volatility is near record low levels. The combination makes for a good opportunity to hedge.
Volatility assessment trough conventional volatility metrics and one new chart not seen anywhere else.
An actionable example of a put option hedge is presented, striking a balance between protection and cost.

EQD | Global Option Implied Volatility – Option Opportunities Across the Regions

By Gaudenz Schneider

Global option markets present a diverse picture, offering a broad opportunity set.
Several markets make for good hedging-candidates after a strong January and amid cheap options.
Although several Indian indices show high implied volatility, contextual analysis indicates volatility may be fairly priced relative to their bear trends.

Freebit (3843) Buys Out Minorities in Giga Prize (3830) – Light, But Tough to Block

Today, Freebit Co Ltd (3843 JP) announced it would launch a Tender Offer next Monday to buy out minorities in 60.9%-owned Giga Prize (3830 JP).
The multiple is not terribly impressive. It could be better. But they only need 5.8% of the 39.1% they do not own to get this over the hump.
Synergies are clear. They are expected. They are not priced in the valuation. This is disappointing. Again.

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Feb 01

Daily Brief Equity Bottom-Up: The Beat Ideas: Blue Jet Healthcare- Rising CDMO Player and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

The Beat Ideas: Blue Jet Healthcare- Rising CDMO Player
Intel: A Refreshing Direct Tone from New Management that Doesn’t Deny Issues
Top 10 Korean Stock Picks Bi-Weekly (3 February 2025)
Lam Research Corporation: Can Its Advanced Packaging & High Bandwidth Memory Expansion Reinforce Footprint In The Semiconductor Landscape?- Major Drivers
Boeing’s High-Stakes Production Ramp-Up: Can It Deliver Or Will Chaos Ensue? – Major Drivers
Apple Supply Chain Monitor: Latest AAPL Results — Taiwan Suppliers Well Placed for Monday Re-Open
KPIT Tech: Strong Q3Y25 Despite Challenging Environment
RTX Corporation: Will Its Next-Generation Engine Programs Affirm Leadership Position In The Defense & Aerospace Industry? – Major Drivers
The Beat Ideas: Sigachi Industries- High Growth, Revenue Diversification, New Category Launch
Avant Corp (3836 JP): 1H FY06/25 flash update

The Beat Ideas: Blue Jet Healthcare- Rising CDMO Player

By Sudarshan Bhandari

Blue Jet Healthcare Ltd (BJHC IN) is a science-led pharmaceutical company that has evolved into a strategic partner for the CDMO of advanced Pharmaceutical Intermediates and APIs.
Company gave a record breaking Q3FY25 primarily driven by capacity expansion in Contrast media and PI Segment. Strong demand for the cardiovascular product was also witnessed.
Company commissioned an additional manufacturing block during Q3 FY25 at Ambernath for manufacturing Advance Contrast Media with investment around Rs. 100Mn.

Intel: A Refreshing Direct Tone from New Management that Doesn’t Deny Issues

By Nicolas Baratte

Market looks happy about Intel 4Q result / 1Q guidance. There’s actually a fait bit of poor news for 2025. But the tone / narrative is a lot better.
2025: Product margins under pressure, Foundry margins better if 18A EUV delivers. Server share loss to be fixed. No GPU. Capex reduced to US$20bn.
How much do you pay for “we began the process of resizing our expense structure to support more modest long-term growth”. The stock trades at 13x 2025, 11x 2026 EPS.

Top 10 Korean Stock Picks Bi-Weekly (3 February 2025)

By Douglas Kim

In this insight, we provide the top 10 stocks picks in the Korean stock market for the two weeks starting 3 February.
The top 10 stock picks include Orion Holdings, OCI Holdings, Hana Tour Service, Hyundai Motor, KT Corp, Samsung F&M Insurance, Korean Air, Hankook T&T, Young Poong, and NICE Info Service.
Our top 10 Korean stock picks from 17 to 31 January are up on average 2.6%, outperforming KOSPI which is down 0.1% in the same period.

Lam Research Corporation: Can Its Advanced Packaging & High Bandwidth Memory Expansion Reinforce Footprint In The Semiconductor Landscape?- Major Drivers

Lam Research Corporation reported its earnings for the December 2024 quarter with results largely exceeding guidance midpoints, showcasing strong operational execution and strategic positioning.
The company reported a revenue of $4.38 billion, an increase of 5% from the previous quarter.
This growth was driven by a balance of increased spending in the DRAM and NAND segments, despite muted NAND spending levels earlier in the year.

Boeing’s High-Stakes Production Ramp-Up: Can It Deliver Or Will Chaos Ensue? – Major Drivers

The Boeing Company’s recent quarterly earnings call revealed a mixed performance, capturing both progress and ongoing challenges.
Key areas of focus included stabilizing production, managing fixed-price development programs, and cultural transformation, against the backdrop of an industry still in recovery.
On the commercial aerospace side, Boeing’s production strategy post-IAM strike was highlighted.

Apple Supply Chain Monitor: Latest AAPL Results — Taiwan Suppliers Well Placed for Monday Re-Open

By Vincent Fernando, CFA

Apple 1Q25 Results — Overall Price-Supportive for Taiwan Supplier Share Prices When the Taiwan Market Re-Opens Monday
Why Zhen Ding Technology Holding (4958 TT) and Kinsus Interconnect Tech (3189 TT) Could Be in a Favorable Position Relative to Apple’s AI Trajectory
Increasingly sophisticated Apple products require significantly more complex PCBs & interconnect solutions, especially as advanced packaging has become a key enabler of high-performance computing.

KPIT Tech: Strong Q3Y25 Despite Challenging Environment

By Ankit Agrawal, CFA

KPIT Technologies (“KPIT”) reported decent growth despite challenging macroeconomic environment in the automotive OEM segment. Q3FY25 revenue grew 17.4% YoY and 2.0% QoQ in constant currency (CC) terms.
Led by improved efficiency and revenue mix, EBITDA margin came in stronger than expected at 21.1%. This led KPIT to raise its FY25 EBITDA guidance to 21%+ from 20.5%+.
Deal engagement has been strong. TCV came in at $236mm vs typical run-rate of $150mm+. Deal pipeline is also healthy and the management is expecting substantial closures by H1FY26.

RTX Corporation: Will Its Next-Generation Engine Programs Affirm Leadership Position In The Defense & Aerospace Industry? – Major Drivers