Smartkarma Daily Briefs

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025.

Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications

By Brian Freitas

Barito Renewables Energy (BREN IJ) listed on the IDX in October 2023 and inclusion in global indices was expected in June and August.
The IDX threw a spanner in the works by placing Barito Renewables Energy (BREN IJ) onto its Watchlist under criteria 10. That resulted in cancellation of index inclusion in June.
Barito Renewables Energy (BREN IJ) will come off the Watchlist today and that could see a renewed move higher in the stock over the next few weeks.

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern

I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: the Capitol Health (CAJ AU) / Integral Diagnostics (IDX AU) merger; and Infocom Corp (4348 JP)‘s Tender Offer.
Key updates took place on: MMA Offshore (MRM AU), L’Occitane (973 HK), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), and Great Eastern Holdings (GE SP).

EQD | The KOSPI 200 Is Ready to Pullback (Again)

By Nico Rosti

After 3 weeks up in a row the KOSPI 200 is ripe for a pullback.
The reversal is probably going to begin this coming week.
If the index goes higher, look at 391 resistance targets to initiate SHORT trades or to cover your LONGs.

Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.
Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.

Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage

Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
L’Occitane (973 HK) finally announces the share alternative. And Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

By Andrei Zakharov

Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
Event-Driven developments: L’Occitane (973 HK), Exedy Corp (7278 JP), Infocom Corp (4348 JP), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU).

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Jun 23

Daily Brief Quantitative Analysis: A/H Premium Tracker (To 21 Jun 2024): AH Premia Stabilising Lower and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

A/H Premium Tracker (To 21 Jun 2024): AH Premia Stabilising Lower, Can Move A Leg Lower Still
HK Connect SOUTHBOUND Flows (To 21 June 2024); Every Day A Net Buy; Banks, Energy, and Utes

A/H Premium Tracker (To 21 Jun 2024): AH Premia Stabilising Lower, Can Move A Leg Lower Still

The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
BIG Net SOUTHBOUND inflow continues. Notable in the past four weeks are US$1.9bn of net flow to Energy Hs and US$2.2bn to Banks in the H side of H/A Pairs.
AH Premia lowish in 52-week range, but still high for many pairs. I continue to expect further “convergence” among spreads, and the recent HA Premium bounce has lost momentum.

HK Connect SOUTHBOUND Flows (To 21 June 2024); Every Day A Net Buy; Banks, Energy, and Utes

SOUTHBOUND was again a net buyer, for HK$24.1bn this week, on smallish two-way volumes. Banks, Tech, Energy, and Materials all saw inflows.
It is not clear how much of this is H/A discounts, expected dividend tax removal, shareholder return KPIs for SOE CEOs, upcoming Third Plenum policy, or national team buying…
But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 23

Daily Brief Thematic (Sector/Industry): Japan Weekly | S&P 500 Continues Longest Stretch Without Significant Volatility Since GFC. and more

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

In today’s briefing:

Japan Weekly | S&P 500 Continues Longest Stretch Without Significant Volatility Since GFC.
EU’s Battery and Solar Investments, One Year After, Part II

Japan Weekly | S&P 500 Continues Longest Stretch Without Significant Volatility Since GFC.

By Mark Chadwick

Despite mixed economic signals, markets showed resilience. The S&P 500 gained 0.6%, the DJIA added 1.5%, and the Nasdaq remained flat.
The Japanese yen continued its decline against major currencies, falling below 159 per USD, nearing levels last seen in April before intervention by Japan’s Ministry of Finance
Fancl’s (4921) stock surged 19% to ¥2,720 following Kirin Holdings’ announcement to acquire it as a wholly owned subsidiary

EU’s Battery and Solar Investments, One Year After, Part II

By Eric Wen

Contrary to battery, Chinese renewable energy companies have largely been absent in EU’s solar capacity buildup.We believe the main reason is supply chain structure differences;
One year after we tallied the capacity in C2Q23,11% of the tallied capacity have been cancelled, but another 66% more have been added, among which, however,no ingot or polysilicon projects;
Wacker Chemie’s 39GW polysilicon project needs to supply ~10GW of ingot and wafer,~13GW of cell and ~52GW of module, comparing to EU’s 2023 installation of only 56GW, which is insufficient.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 23

Daily Brief ECM: Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

By Andrei Zakharov

Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 23

Daily Brief Event-Driven: (Mostly) Asia-Pac M&A: Infocom and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern
Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage
Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon
Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern

I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: the Capitol Health (CAJ AU) / Integral Diagnostics (IDX AU) merger; and Infocom Corp (4348 JP)‘s Tender Offer.
Key updates took place on: MMA Offshore (MRM AU), L’Occitane (973 HK), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), and Great Eastern Holdings (GE SP).

Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage

Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
L’Occitane (973 HK) finally announces the share alternative. And Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon

By Arun George

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
Event-Driven developments: L’Occitane (973 HK), Exedy Corp (7278 JP), Infocom Corp (4348 JP), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU).

Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 23

Daily Brief Equity Bottom-Up: Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap? and more

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

In today’s briefing:

Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap?
Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.
UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.
Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24
Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)
European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial
Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap?

By Uttkarsh Kohli

Never a pioneer, instead a perfectionist in delivering mind bending experience. That’s what Apple has stood for traditionally. Can it repeat the act in the Gen AI era?
Siri to have advanced language comprehension and Writing Tools to deliver useful features to drive convenience and productivity.
Private Cloud Compute ensures user data remains encrypted and secure. Reflects Apple’s commitment to privacy amidst growing concerns surrounding data misuse.

Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.
Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24