Smartkarma Daily Briefs

Today, Itochu Corp (8001 JP) announced that it had received SAMR approval and would launch its Tender Offer to take private its affiliate, Descente Ltd (8114 JP).
As warned last year, Descente is cheap on a forward basis due to very strong growth and profitability of Descente China Holdings but Itochu can downplay that future.
And indeed, it appear they did, and unless someone takes them to task, this probably gets done. So far, nobody has.

T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder

Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.

T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder

By Arun George

T Gaia Corp (3738 JP) disclosed a Bain tender offer at JPY2,670, a 35.9% premium to the undisturbed price but a 27.2% discount to the last close.
Bain has set the minimum number of shares to be purchased at a 12.67% ownership ratio to appease the Board, which has a neutral recommendation.
Bain hopes the offer’s harsh reality check will burst the share price bubble, nudging minorities to accept. An auction process suggests that the chance of a competing offer is low.

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2025 based on trading data as of end-September 2024.

Softbank (9984 JP) – Despite the High NAV Discount, We See Greater Headwinds; Downgrading to Neutral

By Victor Galliano

The SoftBank NAV discount is historically high, which makes it appear optically attractive; despite this, we turn neutral on SoftBank group from our previous positive recommendation, due to its headwinds
JPY strength is a key challenge, especially since the new Japanese prime minister supports the BoJ normalising monetary policy; this means BoJ tightening whilst many other central banks are easing
Arm Holdings’ super premium valuation versus its peers is another potential headwind for SoftBank group shares and NAV, combined with the high correlation between Arm Holdings and SoftBank group shares

Descente (8114 JP): Itochu’s (8001 JP) Tender Offer Launches

By Arun George

Descente Ltd (8114 JP) has announced that Itochu Corp (8001 JP)’s tender offer precondition has been satisfied. The offer terms are unchanged at JPY4,350 per share.
The offer is arguably light due to the peer re-rating and historical trading ranges. It is also below the midpoint of the special committee’s IFA DCF valuation range.
Nevertheless, the offer will likely succeed. There is no vocal opposition, the volume traded through terms is low, and the offer implies a premium multiple compared to peers.

Tokyo Metro IPO – Thoughts on Valuation

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

Sanwa Holdings (5929) | Revolving Door of Activist Influence

By Mark Chadwick

ValueAct Capital took a significant 5.9% stake in Sanwa. Dalton Investments has also been a shareholder, but had most recently sold down to under 5% in June
Sanwa Holdings (5929 JP) presents an attractive investment opportunity rooted in its strong global market position, undervalued stock price, and growth potential
We see 30% upside, based off historical revenue growth, 11% EBIT margins, and an exit multiple of 12.5x (global peers).

Not Many Companies Have Implemented Full-Scale Improvements in Return on Capital

By Aki Matsumoto

Certainly, the “TSE’s request” has begun to change companies’ mindsets, but what we focus on now is whether they have put the plan into action and whether it’s producing results.
The importance of investor engagement is also indicated in the Japan Investor Relations Association’s survey summary. Companies that receive overseas investor engagement are furthering their efforts to improve profitability.
Even among companies with high IR awareness, few have taken serious steps to reform their business portfolios, as under 60% have begun to reform business portfolios.

Honda Motor Company: Will The Much Needed Strategic Shift Towards EVs Finally Pay Off? – Major Drivers

Honda Motor Co., Ltd. recently reported its financial results for the first quarter of fiscal year 2025, marking a period of significant transformation and adaptation in the face of ongoing global economic fluctuations, particularly in the key markets like the U.S., China, and new energy vehicle (NEV) sectors.
This summary provides a balanced view, underscoring both opportunities and challenges the company faces as it navigates complex market dynamics.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

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Oct 01

Daily Brief India: Swiggy, CE Info Systems (MapmyIndia), Biocon Ltd, Lippo Karawaci and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Swiggy Pre-IPO Tearsheet
C.E. Info Systems (Mapmyindia)- Forensic Analysis
Biocon Biologics – New Issue Assessment – Lucror Analytics
Morning Views Asia: Bharti Airtel, Lippo Karawaci, Softbank Group

Swiggy Pre-IPO Tearsheet

By Akshat Shah

Swiggy (1255298D IN) Swiggy is looking to raise about US$1.25bn in its upcoming India IPO. The deal will be run by Kotak, Citi, Jefferies, Avendus, JPM, BofA and ICICI.
Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
The platform can also be used to make restaurant reservations (Dineout), event bookings (SteppinOut), product pick-up/drop-off services (Genie) and other hyperlocal commerce activities (Swiggy Minis).

C.E. Info Systems (Mapmyindia)- Forensic Analysis

By Nitin Mangal

CE Info Systems (MapmyIndia) (1052633Z IN) is one of the leading Indian players engaged in advanced digital maps, geospatial software and location-based IoT technologies. It launched its IPO in 2021
Since its IPO, MAPPLS has embarked on a growth journey since then. It also boasts high margins & ROCE due to its asset light model.
While the balance sheet looks good, one might have to check on the speedy receivables and trend of commission expenses.

Biocon Biologics – New Issue Assessment – Lucror Analytics

By Trung Nguyen

Biocon Biologics launched a roadshow last week to market its USD 5NC2 144A/RegS notes offering. The expected issue rating is BB/BB by S&P/Fitch. The proceeds will be used to refinance an outstanding syndicated loan facility obtained for the acquisition of Viatris’ global biosimilars business for USD 3.335 bn in May 2022.

We see fair value for the proposed 5NC2 bonds at 7%.

Morning Views Asia: Bharti Airtel, Lippo Karawaci, Softbank Group

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Bharti Airtel
Lippo Karawaci
Softbank Group

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Oct 01

Daily Brief China: China Galaxy Securities (H), Crude Oil, Tencent, Midea Group Co Ltd A, ZTO Express Cayman , Hive Box Holdings and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus
Global FX and Commodities: Everything Everywhere All at once
Tencent/Netease: One Approval for Tencent in September
Midea HK Listing: Take Profit
Logistics Shift to Quality Amid Evolved Ecommerce Plans
Hive Box Holdings Pre-IPO, Part 3: Hive Box Vs InPost Group: Similarities & (BIG) Differences

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

By Shifara Samsudeen, ACMA, CGMA

Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse.
But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

Global FX and Commodities: Everything Everywhere All at once

By At Any Rate

Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Tencent/Netease: One Approval for Tencent in September

By Ke Yan, CFA, FRM

China announced game approval for the September batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening.
Of the companies that we are monitoring, Tencent and Kingsoft got one approval each.

Midea HK Listing: Take Profit

Midea debuted on HKEx on 17th September and shares last closed at HK$74.25 per share, up by about 35% compared to final HK offer price of HK$54.80 apiece.
We previously suggested that Midea’s HK offering was attractive as HK shares were priced at a 25% discount to its A-shares, and was at a discount to Haier Smart Homes.
The PBOC announced several measures to revive the housing market in the country which contributed to the recent rally in the China home appliance sector.

Logistics Shift to Quality Amid Evolved Ecommerce Plans

By Robert McKay

Amid fierce low-price competition in 1H24, low-end couriers benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

Hive Box Holdings Pre-IPO, Part 3: Hive Box Vs InPost Group: Similarities & (BIG) Differences

By Daniel Hellberg

In this insight we compare Hive Box to InPost, a smart locker specialist
The firms play in different geographies, making apples:apples comps tough
In the absence of better comps, comparing Hive Box to InPost still useful

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Oct 01

Most Read: Shin Kong Financial Holding, Korea Zinc, Descente Ltd, T Gaia Corp, Wonik Ips, Tokyo Metro, China Galaxy Securities (H), Ana Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts
Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb
Latest Forecast for Korea Zinc’s Tendering Rate
Itochu (8001 JP) Lowball TOB for Descente (8114) Is Here – Trades Tight But No Big Holder Appeared
T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder
T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder
FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC
Tokyo Metro IPO – Peer Comparison – Pre-COVID to 1Q25
A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus
Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

Shin Kong (2888 TT) Deal – Activism, Proxy Advice, Proxy Fight, Voting Risk, and Discounts

Taishin Financial Holding (2887 TT) has raised its bid for Shin Kong Financial Holding (2888 TT) and CTBC Financial Holding (2891 TT) has dropped its bid after FSC rejection.
Shin Kong’s Board approved the revised (25% higher) Taishin bid. Shares in Shin Kong fell sharply on the FSC rejection of the CTBC bid.
Taishin’s bid clearly has governance/related party issues and a significant portion of the “non-Taishin” reps on the Shin Kong Board had issues. October 9th passage is not a done deal.

Tokyo Metro (9023 JP) IPO: TPX Inclusion in November; Global Indices: One in October, One in Feb

By Brian Freitas

Tokyo Metro (9023 JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 23 October.
At the reported indicative IPO price of JPY 1100/share, Tokyo Metro (9023 JP) will be valued at JPY 639.1bn (US$4.49bn).
The stock should be added to one global index on 29 October, to the TOPIX INDEX on 28 November, while another global index inclusion will need to wait till February.

Latest Forecast for Korea Zinc’s Tendering Rate

By Sanghyun Park

Overseas institutions might tender around 4%, locals about 6%, giving a realistic max of 10%. MBK may struggle to even reach that minimum of 7%.
Mirae Asset and Samsung Life, holding the largest portion of the targetable stakes, hinted they’ll participate in the tender but won’t tender all their shares.
Allocation risk for the tender is minimal, but cancellation risk remains. MBK may barely exceed the 7% minimum, making predictions tough and reducing chances of a post-tender stock price drop.

Itochu (8001 JP) Lowball TOB for Descente (8114) Is Here – Trades Tight But No Big Holder Appeared

Today, Itochu Corp (8001 JP) announced that it had received SAMR approval and would launch its Tender Offer to take private its affiliate, Descente Ltd (8114 JP).
As warned last year, Descente is cheap on a forward basis due to very strong growth and profitability of Descente China Holdings but Itochu can downplay that future.
And indeed, it appear they did, and unless someone takes them to task, this probably gets done. So far, nobody has.

T-Gaia (3738 JP) – Potential Premium Takeout Story Turns To An Ugly Takeunder

Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.

T-Gaia (3738 JP): Reality Check as Bain Launches a Takeunder

By Arun George

T Gaia Corp (3738 JP) disclosed a Bain tender offer at JPY2,670, a 35.9% premium to the undisturbed price but a 27.2% discount to the last close.
Bain has set the minimum number of shares to be purchased at a 12.67% ownership ratio to appease the Board, which has a neutral recommendation.
Bain hopes the offer’s harsh reality check will burst the share price bubble, nudging minorities to accept. An auction process suggests that the chance of a competing offer is low.

FnGuide Semiconductor Top10 Index Rebalance Preview: Wonik IPS to Replace ISC

By Brian Freitas

Today is the last trading day in the review period for the October rebalance of the FnGuide Semiconductor Top10 Index.
Wonik Ips (240810 KS) is a high probability add and ISC Co Ltd (095340 KS) is a high probability delete. This will reverse the changes from the April rebalance.
Passive trackers will need to buy over 3.5x ADV in Wonik Ips (240810 KS) and sell nearly 2x ADV in ISC Co Ltd (095340 KS).

Tokyo Metro IPO – Peer Comparison – Pre-COVID to 1Q25

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous note. In this note, we will undertake a peer comparison.

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse.
But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2025 based on trading data as of end-September 2024.

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Oct 01

Daily Brief Industrials: Ana Holdings, Shinsegae Eng & Construction, Doosan Robotics , Tokyo Metro, Sanwa Holdings, Credit Bureau Asia, ZTO Express Cayman , Plug Power Inc, Roper Technologies, ITT and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks
Shinsegae E&C (034300 KS)’s Delisting Offer
End of Mandatory Lock-Up Periods for 39 Companies in Korea in October 2024
Tokyo Metro IPO – Thoughts on Valuation
Sanwa Holdings (5929) | Revolving Door of Activist Influence
Give Credit Where Credit Is Due
Logistics Shift to Quality Amid Evolved Ecommerce Plans
Plug Power Inc.: Expanded Production Capacity and Green Hydrogen Plant Projects Drive Our Optimism! – Major Drivers
Roper Technologies Inc.: Enhanced Product Integration and SaaS Solutions Catalyzing Growth! – Major Drivers
ITT Inc.: Will The Acquisition of kSARIA Be A Game Changer? – Major Drivers

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2025 based on trading data as of end-September 2024.

Shinsegae E&C (034300 KS)’s Delisting Offer

By David Blennerhassett

Construction services play Shinsegae E&C (034300 KS) has announced a Tender Offer from E Mart (139480 KS) for 27.33% of shares out, at ₩18,300/share, a 14% premium to undisturbed.
E Mart holds 70.46% – and the company holds 2.21% in treasuries – therefore, E Mart requires ~22% of the remaining ~27% held by minorities to tender and force delisting.
Super clean deal. E Mart will acquire all shares tendered. The Offer kicks off today, and closes on the 29th October. There is no minimum tendering % condition.

End of Mandatory Lock-Up Periods for 39 Companies in Korea in October 2024

By Douglas Kim

We discuss the end of the mandatory lock-up periods for 39 stocks in Korea in October 2024, among which four are in KOSPI and 35 are in KOSDAQ.
These 39 stocks on average could be subject to further selling pressures in October and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in October are Korea Zinc, Doosan Robotics, and Kolon TissueGene.

Tokyo Metro IPO – Thoughts on Valuation

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

Sanwa Holdings (5929) | Revolving Door of Activist Influence

By Mark Chadwick

ValueAct Capital took a significant 5.9% stake in Sanwa. Dalton Investments has also been a shareholder, but had most recently sold down to under 5% in June
Sanwa Holdings (5929 JP) presents an attractive investment opportunity rooted in its strong global market position, undervalued stock price, and growth potential
We see 30% upside, based off historical revenue growth, 11% EBIT margins, and an exit multiple of 12.5x (global peers).

Give Credit Where Credit Is Due

By The Mikro Kap

The company is headquartered in Singapore and listed under the ticker $TCU.SI
As the name implies, CBA is a credit bureau business that operates across Asia.
It currently has operations in Singapore, Malaysia, Cambodia, and Myanmar, with plans to expand in China and Vietnam shortly.

Logistics Shift to Quality Amid Evolved Ecommerce Plans

By Robert McKay

Amid fierce low-price competition in 1H24, low-end couriers benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

Plug Power Inc.: Expanded Production Capacity and Green Hydrogen Plant Projects Drive Our Optimism! – Major Drivers

Plug Power’s latest financial earnings for the second quarter of 2024 showcase a complex mix of achievements and ongoing challenges.
The company’s progress in the hydrogen economy reflects both substantial strategic advances and areas where market conditions have tempered growth expectations.
Positively, Plug Power has achieved significant milestones in scaling up its hydrogen production capabilities.

Roper Technologies Inc.: Enhanced Product Integration and SaaS Solutions Catalyzing Growth! – Major Drivers

Roper Technologies recently disclosed their financial performance for the second quarter of 2024, with the presentation focused on solid quarterly achievements and updating fiscal guidance.
The company, a diversified technology firm, visually demonstrated its continual growth and groundwork for future investments particularly simplifying operational processes and broadening its market presence through strategic acquisitions.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

ITT Inc.: Will The Acquisition of kSARIA Be A Game Changer? – Major Drivers

ITT’s 2024 second quarter earnings call reflected a robust period of growth and strategic positioning bolstered by significant commercial wins and streamlined operations.
The tone conveyed by CEO Luca Savi and CFO Emmanuel Caprais revealed a company making deliberate strides in expanding its market foothold, particularly within high-margin, high-growth sectors.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

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Oct 01

Daily Brief Energy/Materials: Crude Oil, Korea Zinc, Copper, Harbour Energy, Energy Absolute, Natural Gas, Petroleos Mexicanos, NOV , Iron Ore and more

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

In today’s briefing:

Global FX and Commodities: Everything Everywhere All at once
(Mostly) Asia M&A, Sep 2024: GTJA/Haitong Sec, Korea Zinc/YPP, Hotel Property, Virgin Money, Raysum
Did China Just Trigger Commodity Markets?
US Rig Count Drops for Second Straight Week as Oil Rigs Decline
Harbour Energy (HBR) – Sunday, Jun 30, 2024
Energy Absolute: Trying to Be a B+ Credit
[US Nat Gas Options Weekly 2024/39] Henry Hub Jumps on Shrinking Storage Surplus and Healthy Demand
Initiating Coverage on Pemex: Set to Outperform on Reclassification Potential
NOV Inc.: International & Offshore Markets Expansion & Expansion Into Renewables Catalyzing Growth!
[IO Technicals Weekly 2024/39] Iron Ore Surges on China Stimulus

Global FX and Commodities: Everything Everywhere All at once

By At Any Rate

Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

(Mostly) Asia M&A, Sep 2024: GTJA/Haitong Sec, Korea Zinc/YPP, Hotel Property, Virgin Money, Raysum

By David Blennerhassett

For the month of September 2024, 15 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$23bn.
The average premium for the new transactions announced (or first discussed) in September was ~43%. The average premium YTD is ~44%
This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

Did China Just Trigger Commodity Markets?

By The Commodity Report

Did China Just Trigger Commodity Markets?
China’s central bank last week announced a new stimulus package to the economy to curb the growth decline that is still going on.
Chinese stocks jumped and also “Chinese-linked commodity prices” like soy, copper and steel gained momentum as Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households’ mortgage repayment burden.

US Rig Count Drops for Second Straight Week as Oil Rigs Decline

By Suhas Reddy

US rig count declined by one to 587 for the week ending 27/Sep, marking the sixth drop in seven weeks. Despite this, the rig count increased by six in Q3.
The US oil rig count fell by four to 484 after staying flat last week. Gas rigs rose by three to 99, marking its second increase in six weeks.
For the week ending 27/Sep, US energy producers added one rig in Texas and cut two in New Mexico and one in Louisiana.

Harbour Energy (HBR) – Sunday, Jun 30, 2024

By Value Investors Club

Harbour Energy plans to acquire Wintershall Dea’s non-Russian upstream assets, which will triple its 2p resources, increase production, lower operating costs, and boost free cash flow
This move will reduce HBR’s reliance on the UK Continental Shelf and diversify its resource base
Despite concerns about the future of UK oil and gas producers, HBR’s stock presents a potential upside of over 100% within the next 12-18 months, making it an attractive investment opportunity.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Energy Absolute: Trying to Be a B+ Credit

By Warut Promboon

This flash note is an update for our readers on the indicative probability of default for Energy Absolute Public Company Limited (EA).
We plotted EA’s probability of default, using Criat’s iRAP Global Plus PD Toolkit (iRap), against its peers, and we believe the chart indicated a high probability of default still.
Given a lack of reliable bond quotes in the THB bond market, we continue to issue our report on EA without a recommendation.

[US Nat Gas Options Weekly 2024/39] Henry Hub Jumps on Shrinking Storage Surplus and Healthy Demand

By Suhas Reddy

US natural gas prices jumped 19.2% for the week ending 27/Sept, marking the largest weekly increase since November 2023, driven by strong demand and concerns over supply cuts.
Henry Hub Put/Call volume ratio fell to 1.03 (27/Sep) from 1.69 the previous week as put volumes fell by 45.5% WoW, while call volumes declined by 10.1%.
Put OI increased for contracts expiring in October and November, while call OI rose for expiries in December, January, February, and March.

Initiating Coverage on Pemex: Set to Outperform on Reclassification Potential

By Leandro Gubler

We are initiating coverage on PEMEX with an Outperform recommendation.
We think the potential reclassification to a public company will lead to an improved credit profile, resulting in spread compression due to the increased linkage with the sovereign.
We prefer the PEMEX (B3/BBB/B+) 5.950% 2031, PEMEX 6.625% 2038, and PEMEX 7.690% 2050 bonds, as they are trading wide to the overall PEMEX curve.

NOV Inc.: International & Offshore Markets Expansion & Expansion Into Renewables Catalyzing Growth!

NOV Inc. has reported a strong performance in the second quarter of 2024, with revenues reaching $2.22 billion, indicating a 6% increase compared to the same period in 2023.
Notably, international markets demonstrated double-digit growth, and the offshore sector grew by 6%, contrasting with a slight 1% decline in North American sales.
The company achieved a net income of $226 million or $0.57 per fully diluted share, an improvement from the previous year.

[IO Technicals Weekly 2024/39] Iron Ore Surges on China Stimulus

By Pranay Yadav

SGX Iron Ore futures surged by $10.24/ton to $102.09/ton last week, hitting the highest level since July, driven by China’s stimulus announcement.
A bullish technical signal emerged as the 9-day moving average crossed over the 21-day, yet RSI overbought levels (72.35) suggest a potential correction.
Trading volume spiked mid-week but thinned near $105/ton, indicating waning volume above $100/ton and setting up volatility for a short-term price drop.

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Oct 01

Daily Brief Financials: China Galaxy Securities (H), COG Financial Services, Intercontinental Exchange, Lippo Karawaci, The International Stock Exchange and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus
COG Financial Services (ASX:COG)
Intercontinental Exchange Inc. (ICE): Expansion into Digital Mortgage Infrastructure & Leveraging Fixed Income Growth! – Major Drivers
Morning Views Asia: Bharti Airtel, Lippo Karawaci, Softbank Group
The International Stock Exchange (TISE): Strong bounce back continues

A/H Premium Tracker (To 27 Sep 2024): Hs Outperforming Explosive Chinese Stimulus

Everything changed this past week. China has launched major public stimulus programs which seem open-ended. They are less about money and more about greasing the wheels of risk.
It still requires that OTHER PEOPLE take risk. Shorts covered. New speculative longs made. Better financing but still the same recourse.
But everything is going up. And believe it or not, Hs are outperforming As. Broker and Bank Hs seem like the right place to be.

COG Financial Services (ASX:COG)

By Hurdle Rate

Following on from my decision to pass on Euroz another company I looked further into was COG Financial Services.
Unitholders may be well familiar with this already as the second bidder for Diverger, and substantial shareholder of Centrepoint Alliance (Given I invested in both this says something about their capital allocation).
COG is another financial services business operating predominately in the space of asset finance brokering and lending.

Intercontinental Exchange Inc. (ICE): Expansion into Digital Mortgage Infrastructure & Leveraging Fixed Income Growth! – Major Drivers

Intercontinental Exchange’s second quarter 2024 financial results demonstrate a dynamic performance with several growth facets tempered by areas needing attention.
The company reported record net revenues totaling $2.3 billion, reflecting a 7% increase on a pro forma basis compared to the previous year.
This growth is supported by acquisition synergies, notably from the acquisition of Black Knight, which has been integrated within its operations to bolster revenue streams.Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Morning Views Asia: Bharti Airtel, Lippo Karawaci, Softbank Group

By Leonard Law, CFA

Bharti Airtel
Lippo Karawaci
Softbank Group

The International Stock Exchange (TISE): Strong bounce back continues

By Hardman & Co

The International Stock Exchange (TISE) had an excellent half year to June 2024: revenue was up 22% to £6.4m and fully diluted EPS +27% to 105p.
The second interim dividend was raised 67% to 75p, reflecting the new, higher payout, dividend policy.
The performance, once again, demonstrates the strength of the business, this time against a background of more active markets.

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Oct 01

Daily Brief TMT/Internet: Leeno Industrial, Softbank Group, Taiwan Semiconductor (TSMC) – ADR, Telecom Italia SpA/Milano, CE Info Systems (MapmyIndia), Tencent, Samsara, GLOBALFOUNDRIES , Premier Technology, Nano Dimension and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

NPS Cash Inflow Projections for KRX Value-Up Index & Surging Interest in KOSDAQ Stocks
Softbank (9984 JP) – Despite the High NAV Discount, We See Greater Headwinds; Downgrading to Neutral
Taiwan Dual-Listings Monitor: TSMC Premium Back Below 15%; ASE Short Interest Surging
Italian Savings Shares
C.E. Info Systems (Mapmyindia)- Forensic Analysis
Tencent/Netease: One Approval for Tencent in September
Samsara Inc (IOT) – Sunday, Jun 30, 2024
GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?
Tech Supply Chain Tracker (01-Oct-2024): Intel’s EUR10B plant stalls in Germany.
Nano Dimension – Scaling up

NPS Cash Inflow Projections for KRX Value-Up Index & Surging Interest in KOSDAQ Stocks

By Sanghyun Park

NPS will likely use the KRX Value-Up Index as its benchmark, with Long-Term Growth and Value categories likely to adopt it.
When NPS shifts to the Value-Up Index, KOSDAQ stocks will likely drive significant flow impacts due to their lower overlap.
These non-overlapping KOSDAQ stocks, attracting over 1 trillion won, could see significant price impacts as funds gradually flow in.

Softbank (9984 JP) – Despite the High NAV Discount, We See Greater Headwinds; Downgrading to Neutral

By Victor Galliano

The SoftBank NAV discount is historically high, which makes it appear optically attractive; despite this, we turn neutral on SoftBank group from our previous positive recommendation, due to its headwinds
JPY strength is a key challenge, especially since the new Japanese prime minister supports the BoJ normalising monetary policy; this means BoJ tightening whilst many other central banks are easing
Arm Holdings’ super premium valuation versus its peers is another potential headwind for SoftBank group shares and NAV, combined with the high correlation between Arm Holdings and SoftBank group shares

Taiwan Dual-Listings Monitor: TSMC Premium Back Below 15%; ASE Short Interest Surging

By Vincent Fernando, CFA

TSMC: +14.2% Premium; Can Consider Going Long at Current Level
UMC: +1.8% Premium; The ADR Headroom Has Decreased Yet Again
ASE: +5.4% Premium; Short Interest Surging for The Local Shares

Italian Savings Shares

By Jesus Rodriguez Aguilar

Italian savings shares (azioni di risparmio) are non-voting stocks offering higher dividend yields. They prioritize income over governance influence, appealing to investors who prefer steady returns over company decision-making power.
Ordinary shares command higher prices due to voting rights and control, while preference shares are valued lower. In Italy, control is highly valued, thus a significant premium for ordinary shares.
Following mandatory conversions, the two remaining tradable situations are Danieli (whose mandatory October 2020 conversion seems postponed) and Telecom Italia, trading at a premium awaiting dividends in arrears.

C.E. Info Systems (Mapmyindia)- Forensic Analysis

By Nitin Mangal

CE Info Systems (MapmyIndia) (1052633Z IN) is one of the leading Indian players engaged in advanced digital maps, geospatial software and location-based IoT technologies. It launched its IPO in 2021
Since its IPO, MAPPLS has embarked on a growth journey since then. It also boasts high margins & ROCE due to its asset light model.
While the balance sheet looks good, one might have to check on the speedy receivables and trend of commission expenses.

Tencent/Netease: One Approval for Tencent in September

By Ke Yan, CFA, FRM

China announced game approval for the September batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening.
Of the companies that we are monitoring, Tencent and Kingsoft got one approval each.

Samsara Inc (IOT) – Sunday, Jun 30, 2024

By Value Investors Club

Samsara is focused on monitoring and optimizing operations through its technology
Strong revenue growth and market potential attract investors
Becoming the “system of record” for operational intelligence could lead to increased customer retention and expansion opportunities

GlobalFoundries. Share Price Down 17% Below IPO Price & Down 30% Since July. But Why?

By William Keating

Tier 2 foundry revenue recovery is taking far longer than most expected.
Globalfoundries 2024 CapEx is less than one tenth of what SMIC is spending. Even Hua Hong is spending more. This makes investors nervous.
Globalfoundries CapEx strategy is a pragmatic one and will pay dividends in the years to come

Tech Supply Chain Tracker (01-Oct-2024): Intel’s EUR10B plant stalls in Germany.

By Tech Supply Chain Tracker

Intel’s EUR10 billion semiconductor plant in Germany faces delays due to budget battles over chips and batteries, impacting the nation’s technology sector and economic growth.
Taiwan’s luxury car market growth reflects its prosperous economy, while the country continues to prioritize a nuclear-free energy agenda despite increasing energy needs.
AI is revolutionizing nuclear energy production, enhancing efficiency and safety, leading to innovative developments in the industry and heightened global interest. StarLux Airlines is boosting Taiwan’s role as a transit hub in Asia amidst evolving global dynamics.

Nano Dimension – Scaling up

By Edison Investment Research

Nano Dimension has agreed to acquire Markforged, a specialist in additive manufacturing (AM) for metal and advanced composites, for cash of $115m. The deal requires regulatory and Markforged shareholder approval, which, if granted, should allow the deal to close by the end of Q125. The combination of Nano Dimension, Desktop Metal (acquisition process underway) and Markforged had pro forma revenue of $340m in FY23. This deal further broadens the product portfolio with the addition of a new printing technology, strengthens Nano Dimension’s position in metal AM and provides greater scale, which should support the path to profitability for the combined group.

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Oct 01

Daily Brief Industrials: Ana Holdings, Shinsegae Eng & Construction, Doosan Robotics , Tokyo Metro, Sanwa Holdings, Credit Bureau Asia, ZTO Express Cayman , Plug Power Inc, Roper Technologies, ITT and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks
Shinsegae E&C (034300 KS)’s Delisting Offer
End of Mandatory Lock-Up Periods for 39 Companies in Korea in October 2024
Tokyo Metro IPO – Thoughts on Valuation
Sanwa Holdings (5929) | Revolving Door of Activist Influence
Give Credit Where Credit Is Due
Logistics Shift to Quality Amid Evolved Ecommerce Plans
Plug Power Inc.: Expanded Production Capacity and Green Hydrogen Plant Projects Drive Our Optimism! – Major Drivers
Roper Technologies Inc.: Enhanced Product Integration and SaaS Solutions Catalyzing Growth! – Major Drivers
ITT Inc.: Will The Acquisition of kSARIA Be A Game Changer? – Major Drivers

Quiddity JPX-Nikkei 400 Rebal 2025: End-Sep 2024 Ranks

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2025 based on trading data as of end-September 2024.

Shinsegae E&C (034300 KS)’s Delisting Offer

By David Blennerhassett

Construction services play Shinsegae E&C (034300 KS) has announced a Tender Offer from E Mart (139480 KS) for 27.33% of shares out, at ₩18,300/share, a 14% premium to undisturbed.
E Mart holds 70.46% – and the company holds 2.21% in treasuries – therefore, E Mart requires ~22% of the remaining ~27% held by minorities to tender and force delisting.
Super clean deal. E Mart will acquire all shares tendered. The Offer kicks off today, and closes on the 29th October. There is no minimum tendering % condition.

End of Mandatory Lock-Up Periods for 39 Companies in Korea in October 2024

By Douglas Kim

We discuss the end of the mandatory lock-up periods for 39 stocks in Korea in October 2024, among which four are in KOSPI and 35 are in KOSDAQ.
These 39 stocks on average could be subject to further selling pressures in October and could underperform relative to the market.
The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in October are Korea Zinc, Doosan Robotics, and Kolon TissueGene.

Tokyo Metro IPO – Thoughts on Valuation

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

Sanwa Holdings (5929) | Revolving Door of Activist Influence

By Mark Chadwick

ValueAct Capital took a significant 5.9% stake in Sanwa. Dalton Investments has also been a shareholder, but had most recently sold down to under 5% in June
Sanwa Holdings (5929 JP) presents an attractive investment opportunity rooted in its strong global market position, undervalued stock price, and growth potential
We see 30% upside, based off historical revenue growth, 11% EBIT margins, and an exit multiple of 12.5x (global peers).

Give Credit Where Credit Is Due

By The Mikro Kap

The company is headquartered in Singapore and listed under the ticker $TCU.SI
As the name implies, CBA is a credit bureau business that operates across Asia.
It currently has operations in Singapore, Malaysia, Cambodia, and Myanmar, with plans to expand in China and Vietnam shortly.

Logistics Shift to Quality Amid Evolved Ecommerce Plans

By Robert McKay

Amid fierce low-price competition in 1H24, low-end couriers benefited from merchant demand for cheap logistics. However, new platform policies suggest greater emphasis on quality logistics and O2O in 2H24;
The shift towards higher-end logistics is manifesting through O2O. Spearheaded by Meituan, O2O is an experiment to copy Coupang’s business model in China. We believe there is a sizable market;
We see ZTO as best positioned amid the changing environment, JDL least impacted, with J&T and SFE in the least favorable positions.

Plug Power Inc.: Expanded Production Capacity and Green Hydrogen Plant Projects Drive Our Optimism! – Major Drivers

Plug Power’s latest financial earnings for the second quarter of 2024 showcase a complex mix of achievements and ongoing challenges.
The company’s progress in the hydrogen economy reflects both substantial strategic advances and areas where market conditions have tempered growth expectations.
Positively, Plug Power has achieved significant milestones in scaling up its hydrogen production capabilities.

Roper Technologies Inc.: Enhanced Product Integration and SaaS Solutions Catalyzing Growth! – Major Drivers

Roper Technologies recently disclosed their financial performance for the second quarter of 2024, with the presentation focused on solid quarterly achievements and updating fiscal guidance.
The company, a diversified technology firm, visually demonstrated its continual growth and groundwork for future investments particularly simplifying operational processes and broadening its market presence through strategic acquisitions.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

ITT Inc.: Will The Acquisition of kSARIA Be A Game Changer? – Major Drivers

ITT’s 2024 second quarter earnings call reflected a robust period of growth and strategic positioning bolstered by significant commercial wins and streamlined operations.
The tone conveyed by CEO Luca Savi and CFO Emmanuel Caprais revealed a company making deliberate strides in expanding its market foothold, particularly within high-margin, high-growth sectors.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

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Oct 01

Daily Brief Health Care: BrainStorm Cell Therapeutics I, Biocon Ltd, MediciNova , Mckesson Corp, GSK , Chemed Corp, Laboratory Corporation of America Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

BrainStorm Cell Therapeutics (BCLI) Flash Note 30092024
Biocon Biologics – New Issue Assessment – Lucror Analytics
MNOV: MN-166 to be Evaluated in NIH-Sponsored Expanded Access Trial in ALS
McKesson Corporation: Expanding Oncology & Specialty Pharmaceutical Services As Well As Distribution & Sourcing! – Major Drivers
GlaxoSmithKline plc: Will Its Enhanced Focus on Immunotherapy and Oncology Yield Dividends? – Major Drivers
Chemed Corporation: Integration of Covenant Health
Laboratory Corporation of America Holdings (LabCorp): Expansion into Hospital & Regional Laboratory Markets & Focus on High-Growth Specialty Testing Markets! – Major Drivers

BrainStorm Cell Therapeutics (BCLI) Flash Note 30092024

By ACF Equity Research

BrainStorm Cell Therapeutics Inc. (Nasdaq: BCLI) develops NurOwn® stem cell therapy for NDDs – BCLI’s first target is ALS (MND/Lou Gehrig’s).
BCLI on Friday confirmed its reverse stock split (R/S) to become effective today 30 Sept 2024 (to maintain Nasdaq listing).
Reverse stock splits are often (though not always) an effective mechanism and often lead to an upwards re-rating as psychological market factors come into play.

Biocon Biologics – New Issue Assessment – Lucror Analytics

By Trung Nguyen

We see fair value for the proposed 5NC2 bonds at 7%.

MNOV: MN-166 to be Evaluated in NIH-Sponsored Expanded Access Trial in ALS

By Zacks Small Cap Research

On September 30, 2024, MediciNova, Inc. (MNOV) announced that MN-166 (ibudilast) will be evaluated in a National Institutes of Health (NIH) – Neurological Disorders and Stroke (NINDS) sponsored Expanded Access Protocol (EAP) trial that will be supported by a $22 million grant to an academic group.
The EAP trial will enroll approximately 200 patients with amyotrophic lateral sclerosis (ALS) and will measure MN-166’s effect on neurofilament light, a biomarker for neuron damage.
MediciNova will provide investigational drug, regulatory support, and safety monitoring support.

McKesson Corporation: Expanding Oncology & Specialty Pharmaceutical Services As Well As Distribution & Sourcing! – Major Drivers

McKesson Corporation reported its earnings for the first quarter of fiscal 2025, showcasing continued growth and strategic progress across various aspects of its diversified healthcare services.
With a reported revenue of $79.3 billion, the company exhibited a 6% increase year-over-year, and an adjusted earnings per share increase of 8% to $7.88.
These figures surpassed initial expectations, prompting an upward revision of full-year adjusted earnings per share guidance from $31.25-$32.05 to $31.75-$32.55.

GlaxoSmithKline plc: Will Its Enhanced Focus on Immunotherapy and Oncology Yield Dividends? – Major Drivers

GSK has reported a strong performance for its second quarter of the year, with a 13% increase in sales to GBP 7.9 billion.
Highlighting the company’s effective operational execution and a diverse portfolio, GSK’s core operating profit improved by 21% to GBP 2.5 billion, and core earnings per share increased by 17% to 43.4p, all figures adjusted to exclude contributions from COVID solutions.
This demonstrates GSK’s ability to achieve profitable growth driven by both its longstanding and newly launched products.

Chemed Corporation: Integration of Covenant Health

Chemed Corporation, a diversified company primarily engaged through its subsidiaries, VITAS Healthcare Corporation and Roto-Rooter, recently provided updates in their Second Quarter 2024 Earnings Call.
The overview pulls into focus a mixed performance within its distinct operations.
Starting with VITAS Healthcare Corporation, there’s a pronounced positive trajectory witnessed in the segment, particularly off the back of the acquisition of Covenant Health.

Laboratory Corporation of America Holdings (LabCorp): Expansion into Hospital & Regional Laboratory Markets & Focus on High-Growth Specialty Testing Markets! – Major Drivers