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Smartkarma Daily Briefs

Sep 24
0

Daily Brief Industrials: Tokyo Metro, S.F. Holding, Chart Industries, Casella Waste Systems Inc A, Federal Signal, Kirby Corp, Leonardo DRS , Valmont Industries, Allison Transmission Holdings, Wizz Air Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Tokyo Metro (9023 JP) IPO: The Bull Case
  • Monthly Chinese Express Tracker | Price Pressures Ease | X-Border Re-Accelerates | (September 2024)
  • Chart Industries Inc.: Initiation Of Coverage – A Solid Competitive Advantage Driving Our ‘Buy’ Rating! – Major Drivers
  • Casella Waste Systems: Initiation Of Coverage – Expansion of Service Offering and Market Penetration! – Major Drivers
  • Federal Signal Corporation: Initiation Of Coverage – Their Geographic Expansion Initiatives
  • Kirby Corporation: Initiation Of Coverage – How Are They Dealing With The Energy and Fuel Market Dynamics? – Major Drivers
  • Leonardo DRS Inc.: Initiation Of Coverage – Electric Power and Propulsion Systems Advancement Catalyzing Growth! – Major Drivers
  • Valmont Industries Inc.: Initiation Of Coverage – Infrastructure Expansion & Innovations In Solar & Telecom Makes Us Bullish! – Major Drivers
  • Allison Transmission Holdings: Initiation Of Coverage – A Robust Competitive Edge Through High Switching Costs! – Major Drivers
  • Wizz Air – Fitness for 500?

Tokyo Metro (9023 JP) IPO: The Bull Case

By Arun George

  • Tokyo Metro (TKYMETRO JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.   
  • Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government. 
  • The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout. 

Monthly Chinese Express Tracker | Price Pressures Ease | X-Border Re-Accelerates | (September 2024)

By Daniel Hellberg

  • August parcel volume growth moderated, but easing price pressure matters more
  • In July & August, Chinese X-border parcel volume growth re-accelerated
  • We believe easing price pressure should lead to express margin expansion

Chart Industries Inc.: Initiation Of Coverage – A Solid Competitive Advantage Driving Our ‘Buy’ Rating! – Major Drivers

By Baptista Research

  • Chart Industries, Inc. reported its 2024 second quarter results, showcasing robust financial performance, marked by several all-time highs across various metrics.
  • The company, renowned for its industrial and energy equipment, posted record earnings in sales, operating income, and EBITDA margins, among others, signifying superior operational execution and strategic growth initiatives.
  • 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.

Casella Waste Systems: Initiation Of Coverage – Expansion of Service Offering and Market Penetration! – Major Drivers

By Baptista Research

  • Casella Waste Systems has demonstrated a trajectory of strategic execution and growth, marked by recent acquisitions and operational optimizations, as evidenced in the second quarter 2024 earnings discussion.
  • The company has expanded its geographical footprint to 10 states, which underscores an aggressive growth strategy through acquisitions that align with Casella’s core operational focus.
  • During the quarter, Casella added to its portfolio with the acquisition of LMR Disposal and Whitetail Disposal, marking significant strides in extending service offerings in the Mid-Atlantic region.

Federal Signal Corporation: Initiation Of Coverage – Their Geographic Expansion Initiatives

By Baptista Research

  • Federal Signal Corporation has reported another strong quarter, solidifying its position with a series of financial records that underscore its robust operational and strategic execution.
  • The company achieved record consolidated net sales of $490 million for the second quarter, indicating an impressive 11% year-over-year increase.
  • This performance is highly commendable, particularly considering this growth was entirely organic, reflecting robust internal capabilities and market acceptance of Federal Signal’s offerings.

Kirby Corporation: Initiation Of Coverage – How Are They Dealing With The Energy and Fuel Market Dynamics? – Major Drivers

By Baptista Research

  • Kirby Corporation recently disclosed its financial results for the second quarter of 2024, revealing a notable increase in earnings per share to $1.43 compared to $0.95 for the same period in the previous year.
  • The company, managed by CEO David Grzebinski and a competent executive team, harbored a positive tone regarding the steady market fundamentals underpinning its Marine Transportation and Distribution and Services segments despite some navigational and supply challenges.
  • 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.

Leonardo DRS Inc.: Initiation Of Coverage – Electric Power and Propulsion Systems Advancement Catalyzing Growth! – Major Drivers

By Baptista Research

  • Leonardo DRS’s performance during the second quarter of 2024 demonstrates a robust trajectory, backed by growth across several segments and strategic advancements, despite facing some industry-wide challenges.
  • The company’s revenue growth of 20% year-over-year is entirely organic, driven primarily by demand in sectors related to advanced infrared sensing, electric power and propulsion, along with network computing and ground system integration.
  • Moreover, Leonardo DRS’s adjusted EBITDA increased by 32%, showing a meaningful margin expansion of 100 basis points over the previous year, alongside improvements in adjusted net earnings and adjusted diluted earnings per share, which rose by 21% and 20% respectively.

Valmont Industries Inc.: Initiation Of Coverage – Infrastructure Expansion & Innovations In Solar & Telecom Makes Us Bullish! – Major Drivers

By Baptista Research

  • Valmont Industries presented their second quarter 2024 earnings, reflecting both progress and challenges.
  • CEO Avner Applbaum emphasized robust operational improvements and strategic adjustments that have uplifted their profitability considerably during difficult market dynamics.
  • Notable was the increase in operating margins to 14.2%, marking a significant improvement.

Allison Transmission Holdings: Initiation Of Coverage – A Robust Competitive Edge Through High Switching Costs! – Major Drivers

By Baptista Research

  • Allison Transmission has recently communicated its second quarter 2024 results, underscoring some significant growth and robust performance, particularly in its North American On-Highway end market primarily driven by heightened demand for Class 8 vocational vehicles.
  • The company reported a record quarterly revenue of $816 million, a 4% increase over the same period last year.
  • This surge was also supported by notable growth in the defense sector and markets outside North America.

Wizz Air – Fitness for 500?

By Neil Glynn

  • Pre-Pandemic, Wizz Air traded on an equity value or market cap €43m-€44m per aircraft. However, it currently trades on only €9m per aircraft using its March 2025 fleet. 
  • ​Key issues need to addressed to convince on the “right” to more than double fleet to 500 aircraft.
  • ​We do not share equity issuance concerns – proper inspection illustrates leverage as a margin challenge not a balance sheet challenge.

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Sep 24
0

Daily Brief Industrials: Tokyo Metro, S.F. Holding, Chart Industries, Casella Waste Systems Inc A, Federal Signal, Kirby Corp, Leonardo DRS , Valmont Industries, Allison Transmission Holdings, Wizz Air Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Tokyo Metro (9023 JP) IPO: The Bull Case
  • Monthly Chinese Express Tracker | Price Pressures Ease | X-Border Re-Accelerates | (September 2024)
  • Chart Industries Inc.: Initiation Of Coverage – A Solid Competitive Advantage Driving Our ‘Buy’ Rating! – Major Drivers
  • Casella Waste Systems: Initiation Of Coverage – Expansion of Service Offering and Market Penetration! – Major Drivers
  • Federal Signal Corporation: Initiation Of Coverage – Their Geographic Expansion Initiatives
  • Kirby Corporation: Initiation Of Coverage – How Are They Dealing With The Energy and Fuel Market Dynamics? – Major Drivers
  • Leonardo DRS Inc.: Initiation Of Coverage – Electric Power and Propulsion Systems Advancement Catalyzing Growth! – Major Drivers
  • Valmont Industries Inc.: Initiation Of Coverage – Infrastructure Expansion & Innovations In Solar & Telecom Makes Us Bullish! – Major Drivers
  • Allison Transmission Holdings: Initiation Of Coverage – A Robust Competitive Edge Through High Switching Costs! – Major Drivers
  • Wizz Air – Fitness for 500?

Tokyo Metro (9023 JP) IPO: The Bull Case

By Arun George

  • Tokyo Metro (TKYMETRO JP), a mass transit operator, is seeking to raise up to US$2.3 billion. Pricing is on 15 October, and the listing is on 23 October.   
  • Tokyo Metro is held 53.42% by the Minister of Finance and 46.58% by the Tokyo Metropolitan Government. 
  • The bull case rests on a core high-quality asset, future growth drivers, top-quartile profitability, high FCF generation, and peer-leading dividend payout. 

Monthly Chinese Express Tracker | Price Pressures Ease | X-Border Re-Accelerates | (September 2024)

By Daniel Hellberg

  • August parcel volume growth moderated, but easing price pressure matters more
  • In July & August, Chinese X-border parcel volume growth re-accelerated
  • We believe easing price pressure should lead to express margin expansion

Chart Industries Inc.: Initiation Of Coverage – A Solid Competitive Advantage Driving Our ‘Buy’ Rating! – Major Drivers

By Baptista Research

  • Chart Industries, Inc. reported its 2024 second quarter results, showcasing robust financial performance, marked by several all-time highs across various metrics.
  • The company, renowned for its industrial and energy equipment, posted record earnings in sales, operating income, and EBITDA margins, among others, signifying superior operational execution and strategic growth initiatives.
  • 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.

Casella Waste Systems: Initiation Of Coverage – Expansion of Service Offering and Market Penetration! – Major Drivers

By Baptista Research

  • Casella Waste Systems has demonstrated a trajectory of strategic execution and growth, marked by recent acquisitions and operational optimizations, as evidenced in the second quarter 2024 earnings discussion.
  • The company has expanded its geographical footprint to 10 states, which underscores an aggressive growth strategy through acquisitions that align with Casella’s core operational focus.
  • During the quarter, Casella added to its portfolio with the acquisition of LMR Disposal and Whitetail Disposal, marking significant strides in extending service offerings in the Mid-Atlantic region.

Federal Signal Corporation: Initiation Of Coverage – Their Geographic Expansion Initiatives

By Baptista Research

  • Federal Signal Corporation has reported another strong quarter, solidifying its position with a series of financial records that underscore its robust operational and strategic execution.
  • The company achieved record consolidated net sales of $490 million for the second quarter, indicating an impressive 11% year-over-year increase.
  • This performance is highly commendable, particularly considering this growth was entirely organic, reflecting robust internal capabilities and market acceptance of Federal Signal’s offerings.

Kirby Corporation: Initiation Of Coverage – How Are They Dealing With The Energy and Fuel Market Dynamics? – Major Drivers

By Baptista Research

  • Kirby Corporation recently disclosed its financial results for the second quarter of 2024, revealing a notable increase in earnings per share to $1.43 compared to $0.95 for the same period in the previous year.
  • The company, managed by CEO David Grzebinski and a competent executive team, harbored a positive tone regarding the steady market fundamentals underpinning its Marine Transportation and Distribution and Services segments despite some navigational and supply challenges.
  • 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.

Leonardo DRS Inc.: Initiation Of Coverage – Electric Power and Propulsion Systems Advancement Catalyzing Growth! – Major Drivers

By Baptista Research

  • Leonardo DRS’s performance during the second quarter of 2024 demonstrates a robust trajectory, backed by growth across several segments and strategic advancements, despite facing some industry-wide challenges.
  • The company’s revenue growth of 20% year-over-year is entirely organic, driven primarily by demand in sectors related to advanced infrared sensing, electric power and propulsion, along with network computing and ground system integration.
  • Moreover, Leonardo DRS’s adjusted EBITDA increased by 32%, showing a meaningful margin expansion of 100 basis points over the previous year, alongside improvements in adjusted net earnings and adjusted diluted earnings per share, which rose by 21% and 20% respectively.

Valmont Industries Inc.: Initiation Of Coverage – Infrastructure Expansion & Innovations In Solar & Telecom Makes Us Bullish! – Major Drivers

By Baptista Research

  • Valmont Industries presented their second quarter 2024 earnings, reflecting both progress and challenges.
  • CEO Avner Applbaum emphasized robust operational improvements and strategic adjustments that have uplifted their profitability considerably during difficult market dynamics.
  • Notable was the increase in operating margins to 14.2%, marking a significant improvement.

Allison Transmission Holdings: Initiation Of Coverage – A Robust Competitive Edge Through High Switching Costs! – Major Drivers

By Baptista Research

  • Allison Transmission has recently communicated its second quarter 2024 results, underscoring some significant growth and robust performance, particularly in its North American On-Highway end market primarily driven by heightened demand for Class 8 vocational vehicles.
  • The company reported a record quarterly revenue of $816 million, a 4% increase over the same period last year.
  • This surge was also supported by notable growth in the defense sector and markets outside North America.

Wizz Air – Fitness for 500?

By Neil Glynn

  • Pre-Pandemic, Wizz Air traded on an equity value or market cap €43m-€44m per aircraft. However, it currently trades on only €9m per aircraft using its March 2025 fleet. 
  • ​Key issues need to addressed to convince on the “right” to more than double fleet to 500 aircraft.
  • ​We do not share equity issuance concerns – proper inspection illustrates leverage as a margin challenge not a balance sheet challenge.

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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
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Sep 24
0

Daily Brief Energy/Materials: Korea Zinc, NSL Ltd, Arras Minerals, SGX Rubber Future TSR20, Crude Oil, Iron Ore, Schlumberger Ltd, Allegiant Gold , Arrow Exploration and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?
  • NSL Ltd (NSL SP): YTL’s Unconditional Offer
  • Arras Minerals: Looking for Elephant Sized Gold/Copper Deposits in Kazakhstan
  • Helixtap China Report: Inclement Weather And Arbitrage Buying Spurs Chinese Prices
  • US Rig Count Resumes Decline After Last Week’s Strong Rebound
  • [IO Technicals Weekly 2024/​38] Iron Ore Falls Below Key Support Level Amid Weak Fundamentals
  • [Earnings Preview] Schlumberger Set for Q3 Growth on Global Demand and Seasonal Boost
  • AUAU: Provides Update on Eastside Project – MRE Q1/25
  • Arrow Exploration Corp. (AIM: AXL): Another horizontal well with high flow rate

What Are Locals Saying About Potential Allies to Choi Family in Fight for Korea Zinc?

By Douglas Kim

  • In this insight, we discuss three particular allies that could help the Choi family that have been highlighted by the local media including Hanwha, KIS, and Softbank.
  • The Hanwha Group is one of the largest shareholders of Korea Zinc. In addition, Hanwha Group Vice Chairman Kim Dong-Kwan has a close relationship with Korea Zinc Chairman Choi Yoon-Beom.
  • Korea Zinc is planning to hold an important press conference on the 24 September to reveal its position on the tender offer of Korea Zinc shares by MBK.

NSL Ltd (NSL SP): YTL’s Unconditional Offer

By David Blennerhassett

  • Back on the 23rd July, YTL Cement entered into a S&P agreement with 98 Holdings to acquire a 81.24% stake in building material manufacturing/supplier NSL Ltd (NSL SP) at S$0.75/share. 
  • Pre-Conditions are now satisfied, and YTL Cement has launched a mandatory unconditional cash Offer. The Offer price is also S$0.75/share. 
  • Super straightforward deal. And will trade tight to – or through terms. YTL’s intention is to maintain NSL’s listing. 

Arras Minerals: Looking for Elephant Sized Gold/Copper Deposits in Kazakhstan

By Nicolas Van Broekhoven

Helixtap China Report: Inclement Weather And Arbitrage Buying Spurs Chinese Prices

By Arusha Das

  • Adverse weather impacts Chinese prices   
  • Arbitrage buying spurs prices up  
  • TSR inventory drops in September 

US Rig Count Resumes Decline After Last Week’s Strong Rebound

By Suhas Reddy

  • US oil and gas rig count fell by two to 588 for the week ending 20/Sep, the fifth decline in six weeks, after rising by eight last week.
  • The US oil rig count stayed flat at 488 after rising by five last week. Gas rigs fell by one to 96, marking its fourth decrease in five weeks.
  • For the week ending 20/Sep, US energy producers added two rigs in Texas. Conversely, they cut one rig each in Colorado, Louisiana, New Mexico, and Utah.   

[IO Technicals Weekly 2024/​38] Iron Ore Falls Below Key Support Level Amid Weak Fundamentals

By Pranay Yadav

  • SGX Iron Ore futures closed the week $1.38 lower, with wide trading range of $5.85/ton in a week filled with economic releases including FOMC and PBoC rate decisions.
  • Momentum indicators are neutral; RSI at 37.70 signals potential upside, while the price remains below key moving averages, including the 9, 21, 50, 100, and 200-day SMAs.
  • Prices broke below key volume profile support at $91.27 and may see a short-term rebound to $90/ton due to limited trading volume below this level.

[Earnings Preview] Schlumberger Set for Q3 Growth on Global Demand and Seasonal Boost

By Suhas Reddy

  • Schlumberger’s Q3 2024 revenue is projected to increase by 12% YoY and EPS by 15.4%, driven by international growth, digital sales, and cost-efficiency programs.
  • Management expects 2024 EBITDA margin to reach or exceed 25%, driven by stronger H2 performance led by seasonally higher year-end digital and product sales.
  • Schlumberger announced a milestone in sustainable lithium production and secured significant contracts through its carbon capture and OneSubsea joint ventures.

AUAU: Provides Update on Eastside Project – MRE Q1/25

By Atrium Research

  • Allegiant provided an update on its ongoing 5,000m 2024 drill program at Eastside.
  • AUAU will look to update its mineral resource estimate at Eastside by Q1/25, noting that the most recent update was in July 2021, with much drilling being done since.
  • We recently initiated coverage on Allegiant, find the report here.

Arrow Exploration Corp. (AIM: AXL): Another horizontal well with high flow rate

By Auctus Advisors

  • The fourth horizontal well at Carrizales Notre (CNB HZ-5) has been put on production at a gross oil rate of 2.7 mbbl/d (1.35 mbbl/d net to Arrow) with a water cut of 11%.
  • This flow rate compares favourably with CNB HZ-4 that was put on production at a gross oil rate of >2.5 mbbl/d (8% water cut).
  • Overall gross oil production from the three other horizontal wells is ~5.62 mbbl/d (~2.8 mbbl/d net to Arrow) including 2.1 mbbl/d for CNB HZ-4, 1.9 mbbl/d for CNB HZ-3 and 1.6 mbbl/d for CNB HZ-1.

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  • ✓ Events & Webinars
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Sep 24
0

Daily Brief Consumer: Globus Spirits, Fast Retailing, Nike, Fu Shou Yuan, TSE Tokyo Price Index TOPIX, Cocoa Futures, Sands China, JAKKS Pacific and more

By | Consumer, Daily Briefs

In today’s briefing:

  • The Beat Ideas: Globus Spirits- Maize, Capex, B2C Play
  • Uniqlo’s European Romance
  • Nike CEO Shakeup: Challenges Ahead for Elliott Hill as He Takes the Helm of the Sneaker Giant!
  • Fu Shou Yuan (1448.HK) – The Business Model Has “Flaws”
  • How to Make a Non-Functioning Statutory Auditor Function
  • Fund Managers Hate Commodities // EU Deforestation Law Disaster
  • Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 23)
  • Duplicate of JAKK: Setting Sail for Sunnier Climes; Reiterate Buy, $24 Price Target

The Beat Ideas: Globus Spirits- Maize, Capex, B2C Play

By Sudarshan Bhandari

  • In Q4FY24, Globus Spirits (GBSL IN) changed its raw material from rice to maize to improve the margin and stability in margins.
  • Globus Spirits (GBSL IN) increased its capacity in Q4 recently 120KLPD, 60 each in Jharkhand and West Bengal.
  • Recently, the government also removed the ban on using FCI grain and sugarcane for Ethanol production.

Uniqlo’s European Romance

By Michael Causton

  • Uniqlo’s European arm is on a roll, with more stores, higher sales and a loyal fan base. 35% of customers were under 29 last year up from 16% in 2019.
  • Uniqlo is also doing better at home but it needs the boost from newer markets given concerns over growth in China.
  • And it is far too early to know whether GU’s formal launch in the US will pay off but so far so good.

Nike CEO Shakeup: Challenges Ahead for Elliott Hill as He Takes the Helm of the Sneaker Giant!

By Baptista Research

  • Nike recently announced a significant leadership change, with CEO John Donahoe stepping down and longtime company veteran Elliott Hill set to take over.
  • This transition comes amid a broader restructuring effort at Nike, aimed at addressing the company’s evolving business challenges.
  • Donahoe, who led the company through several years of strategic shifts, including the prioritization of direct-to-consumer sales, had faced increasing pressure due to flat revenue growth and lower-than-expected guidance for fiscal 2025.

Fu Shou Yuan (1448.HK) – The Business Model Has “Flaws”

By Xinyao (Criss) Wang

  • The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.
  • Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn’t require too much capital, which means the Company would have greater motivation to distribute dividends.
  • The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.

How to Make a Non-Functioning Statutory Auditor Function

By Aki Matsumoto

  • Information asymmetries between shareholders/investors and board directors, between inside and outside board directors, between inside and outside statutory auditors, and between insiders and the rest are constant challenges.
  • Statutory auditors cannot be dismissed and have significant powers, including the right to investigate, and since statutory auditors are board members, they can attend and speak at board meetings.
  • To make statutory auditors function, establish a process for nominating statutory auditors, raise the compensation of outside auditors, and run an open board meeting where board members’ comments are respected.

Fund Managers Hate Commodities // EU Deforestation Law Disaster

By The Commodity Report

  • According to the latest BofA fund manager survey, investors continue to sell commodities.
  • Allocation-wise we’re now back at levels we were at the beginning of the pandemic back in 2020.
  • Long commodities is now a contrarian trade again.

Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 23)

By David Mudd

  • Hong Kong tech sector leads the market higher with increased momentum and lower volatility.  Short selling has abated with unwind of HKD carry trade.
  • Sands China (1928 HK) had a breakout from a Falling Wedge pattern. The share price broke above its short-term averages with increasing momentum.
  • China Feihe (6186 HK) broke out from its downtrend with a Reversal from its U-Shaped Bottom.  Techtronic Industries (669 HK) broke out to a new YTD high.

Duplicate of JAKK: Setting Sail for Sunnier Climes; Reiterate Buy, $24 Price Target

By Small Cap Consumer Research

  • We are reiterating our Buy rating and $24 price target and raising our 2024 and 2025 projections for JAKKS Pacific after the company handily beat our 2Q24 projections, as gains in the core business offset expected material weakness in content-led (i.e. movie driven) offerings.
  • Further, with the recent launch of The Simpsons and Authentic Brands driven licensed offerings, the upcoming launch of key Holiday movie properties (Moana 2 and Sonic the Hedgehog 3), new owned properties and a continued focus on international expansion, we view our projections, even after our top and bottom line increases, as conservative.
  • Further, with JAKK continuing to trade at a material discount to their peers, we believe the risk/reward in the name remains impressive, and we reiterate our Buy rating and $24 price target.

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Sep 24
0

Daily Brief Health Care: Lexaria Bioscience , Newron Pharmaceuticals, Oryzon Genomics, Tissue Regenix Group and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • LEXX: Changing Gears: Christopher Takes Over as CEO
  • Newron Pharmaceuticals – Moving full steam towards pivotal studies
  • Oryzon Genomics – Final PORTICO data reaffirms potential in BPD
  • Tissue Regenix (TRX): Maiden pre-tax profit

LEXX: Changing Gears: Christopher Takes Over as CEO

By Zacks Small Cap Research

  • Zacks Small-Cap Research Note for Lexaria Bioscience Corp. (LEXX)

Newron Pharmaceuticals – Moving full steam towards pivotal studies

By Edison Investment Research

Newron Pharmaceuticals’ H124 results reflect a period of positive traction for lead clinical asset evenamide, with stellar clinical data as an add-on treatment in schizophrenia, building a strong foundation for the upcoming, potentially pivotal Phase III programme (study 017). While the Phase III trial will initially focus on treatment-resistant schizophrenia (TRS), we note the likelihood of the trial expanding to cover patients with poorly managed symptoms, as evaluated in the prior Phase II/III 008A study, which we have reflected in our estimates. With discussions focused on securing the most beneficial partnering option, management expects the trial to initiate in H125, with funding in place to achieve this milestone. Our valuation adjusts to CHF245.8m or CHF12.8/share (previously CHF219.1m or CHF12.3/share).

Oryzon Genomics – Final PORTICO data reaffirms potential in BPD

By Edison Investment Research

Oryzon has presented the results of the final analysis from the Phase IIb PORTICO trial, which evaluated the efficacy and safety of vafidemstat in borderline personality disorder (BPD). While top-line results were initially published in January, the final data (presented at the 37th ECNP 2024 congress) show notable improvements across key efficacy measures, reaffirming the potential of the candidate to deliver meaningful benefits to patients with BPD, a highly underserved condition with no approved drugs. Management also confirmed that the data, and a registrational Phase III programme, have been discussed with the FDA at an end-of-Phase II (EoP2) meeting. We view this update as highly encouraging for Oryzon and await the announcement of a formal outcome from the FDA on the proposed Phase III programme, which we anticipate in early-Q424.

Tissue Regenix (TRX): Maiden pre-tax profit

By Hardman & Co

  • TRX is focused on the development and commercialisation of two proprietary processing technologies for the repair of soft tissue (dCELL®) and bone (BioRinse®).
  • It has a broad portfolio of products used in biosurgery, orthopaedics and dental markets.
  • Investment in tissue processing, manufacturing capacity and strong commercial partners, together with its “4S” strategy, has generated seven consecutive reporting periods of strong growth, with TRX becoming profitable in 1H’24.

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Sep 24
0

Daily Brief Financials: KE Holdings , S&U PLC, K Bank, Nesco Ltd, DLocal, Molten Ventures and more

By | Daily Briefs, Financials

In today’s briefing:

  • KE (BEKE US): Why Earning Money in Weak Market
  • S&U – Timing is everything
  • K Bank IPO – Peer Comparison – Lags Its Main Peer on Most Fronts
  • Nesco: Mixed Q1FY25, However On Track for Robust Growth
  • DLocal Limited: Initiation Of Coverage – Continuous TPV Growth and Market Expansion As A Critical Growth Lever! – Major Drivers
  • Molten Ventures – Crystallising portfolio values

KE (BEKE US): Why Earning Money in Weak Market

By Ming Lu

  • In 2Q24, KE’s revenue grew by 20% YoY despite the weak property market.
  • We believe property developers and personal landlords need KE more than the prosperous time.
  • We believe the stock has an upside of 148% for the end of 2025. Buy.

S&U – Timing is everything

By Edison Investment Research

Interim results, for the six months to 31 July (H125), will be published on 8 October. Ahead of that, S&U has alerted the market that based on the H1 performance, full year PBT is unlikely to meet the previous market consensus expectations. We believe this to be primarily a timing issue, reflecting the continuing impact of the temporary FCA restrictions on collections activity in the motor finance business. Once regulatory clarity has been established, we expect a significant recovery. Meanwhile, as previously reported, the property lending division continues to perform strongly. We have reduced our FY25 PBT estimate by 7% to £27m and will review our FY26 forecasts with the interim results.

K Bank IPO – Peer Comparison – Lags Its Main Peer on Most Fronts

By Sumeet Singh

  • K Bank (279570 KS) plans to raise up to US$740m in its upcoming South Korean IPO.
  • K Bank is one of three Internet-only banks in Korea. It provides a full range of commercial banking products and services.
  • In our previous note, we have looked at the company’s past performance. In this note, we will undertake a peer comparison.

Nesco: Mixed Q1FY25, However On Track for Robust Growth

By Ankit Agrawal, CFA

  • Nesco reported a mixed Q1FY25. The IT Park business reported strong growth led by improved occupancy. IT Park revenue grew 20%+ YoY and 7.4% QoQ.
  • The BEC business saw decline in its revenue due to seasonality. Q1 tends to be the weakest quarter for BEC. This also impacted the Nesco Foods business to an extent.
  • BEC revenue declined -19% YoY. Nesco Foods revenue declined -14% YoY. Overall, Nesco’s PBT increased 7% YoY, however PAT declined -8% YoY due to deferred tax impact. 

DLocal Limited: Initiation Of Coverage – Continuous TPV Growth and Market Expansion As A Critical Growth Lever! – Major Drivers

By Baptista Research

  • DLocal’s Q2 2024 earnings report indicates a complex blend of growth, challenges, and strategic adaptation amid volatile market conditions.
  • The company reported a significant achievement with its Total Payment Volume (TPV) reaching $6 billion, depicting a strong year-on-year growth of 38% despite a high comparative in the previous year.
  • This growth attests to DLocal’s ongoing capability to deepen relationships with existing global merchants and to attract new ones, contributing positively toward its long-term expansion prospects.

Molten Ventures – Crystallising portfolio values

By Edison Investment Research

Molten Ventures has already surpassed its £100m realisation target for FY25 (ending March 2025) with exits from Perkbox, Endomag, Graphcore and M-Files, which in aggregate represent £124m in exit proceeds. Consequently, Molten launched a £10m buyback programme in July 2024. All these transactions were agreed at or slightly above the previous carrying values. Molten’s H125 results will likely benefit from Revolut’s recent secondary sale, which values the fintech at US$45bn compared with US$33bn during the previous funding round in July 2021. Finally, several of Molten’s core holdings raised capital this year, providing additional validation points for Molten’s H125 carrying values.

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Sep 23
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Daily Brief Quantitative Analysis: TWSE Foreign Holding Weekly (Sep 20th): TSMC and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • TWSE Foreign Holding Weekly (Sep 20th): TSMC, Shin Kong Financial, Evergreen Marine Corp Taiwan
  • KRX Foreign Holding Weekly (Sep 20th): Alteogen, Samsung Electronics, Sk Hynix
  • TWSE Short Interest Weekly (Sep 20th): Ase Industrial, Century Iron And Steel Industrial

TWSE Foreign Holding Weekly (Sep 20th): TSMC, Shin Kong Financial, Evergreen Marine Corp Taiwan

By Ke Yan, CFA, FRM

  • We analyzed the changes in foreign holdings of TWSE Stocks as of Sep 20th which has an aggregated holding worth USD971.7bn.
  • We estimate that foreign flows to be inflows of USD1,487mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
  • We highlight changes of foreign holdings in TSMC, Shin Kong Financial, Evergreen Marine Corp Taiwan, Mediatek, Hon Hai Precision Industry, Ase Industrial.

KRX Foreign Holding Weekly (Sep 20th): Alteogen, Samsung Electronics, Sk Hynix

By Ke Yan, CFA, FRM

  • We analyzed the changes in foreign holdings of KRX stocks as of Sep 20th which has an aggregated holding worth USD544.0bn.
  • We estimate that foreign flows to be outflows of USD1,602mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
  • We highlight changes of foreign holdings in Alteogen, Samsung Electronics, Sk Hynix.

TWSE Short Interest Weekly (Sep 20th): Ase Industrial, Century Iron And Steel Industrial

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Sep 20th which has an aggregated short interest worth USD20.8bn.
  • We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
  • We highlight short interest changes in Ase Industrial, Century Iron And Steel Industrial, Jentech Precision Industrial, Eva Airways, Shin Kong Financial, King Slide Works.

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Sep 23
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Daily Brief Thematic (Sector/Industry): HK Strategy: Rate Cut Beneficiaries – Fixed & Floating Rate Debt Analysis and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • HK Strategy: Rate Cut Beneficiaries – Fixed & Floating Rate Debt Analysis

HK Strategy: Rate Cut Beneficiaries – Fixed & Floating Rate Debt Analysis

By Osbert Tang, CFA

  • With the US interest rate heading lower, the HSI constituent companies with the highest gearing levels are the prime beneficiaries as their interest burden will lessen.
  • Sands China (1928 HK), while it has the highest leverage, is not a near-term gain. This is because its debt structure with 100% fixed rate borrowings. 
  • Based on the gearing level, floating rate proportion, and YTD performance, New World Development (17 HK) and Hang Lung Properties (101 HK) are the two potential best bets.

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Sep 23
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Daily Brief ECM: ECM Weekly (23rd Sep 2024) – Tokyo Metro and more

By | Daily Briefs, ECM

In today’s briefing:

  • ECM Weekly (23rd Sep 2024) – Tokyo Metro, Midea, Intermestic, Sagility, Belstar, Kuaishou, Bajaj HF
  • Pre-IPO Zhejiang Taimei Medical Technology (PHIP Updates) – Some Points Worth the Attention
  • IREDA QIP Early Look – Strong Momentum, Although Valuations Are Eye-Popping

ECM Weekly (23rd Sep 2024) – Tokyo Metro, Midea, Intermestic, Sagility, Belstar, Kuaishou, Bajaj HF

By Sumeet Singh

  • Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
  • On the IPO front, Midea Group Co Ltd A (000333 CH) and Bajaj Housing Finance (BHF IN) hogged much of the limelight this week as well.
  • On the placements front, there were a few large US$400m+ placements across the region this week.

Pre-IPO Zhejiang Taimei Medical Technology (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • Declining customer retention rate indicates that a slowdown in future revenue growth seems inevitable. If revenue growth stagnates, it means Taimei’s business model hasn’t been fully validated by the market.
  • Taimei’s IPO on SSE STAR Market was rejected. This means regulatory authorities don’t recognize Taimei’s core technology/performance prospects. Taimei has to take a step back and list on the HKEX.
  • Post-Investment valuation reached RMB8.1 billion after Series F financing. However, considering the continuous decline in valuation of its peers, we are concerned about Taimei’s future stock price performance after IPO.

IREDA QIP Early Look – Strong Momentum, Although Valuations Are Eye-Popping

By Clarence Chu

  • IREDA (1845911D IN) is looking to raise INR45bn (US$538m) via its qualified institutional placement (QIP).
  • Most recently on 19th Sept 2024, IREDA received the Department of Investment and Public Asset Management’s (DIPAM) approval for said QIP.
  • Overall, the deal wouldn’t be a large one for the stock to digest at just 4.7 days of three month ADV.

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Sep 23
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Daily Brief Event-Driven: Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price
  • KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical
  • Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum
  • STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?
  • PKSHA Tech (3993 JP) – TOPIX Inclusion in October 2024
  • Tech M&A: Qualcomm for Intel? No Chance. Here’s Why.
  • CELSYS (3663 JP) Finally Makes It to Prime Time (TOPIX Inclusion Next Month)
  • EQD / NSE Vol Update / IVs Ride the Fed Seesaw
  • Quiddity Leaderboard CSI Medical Dec 24: 5 Changes Possible; Exp ADDs yet to Outperform Exp DELs
  • Ain Shifts Focus with FrancFranc Acquisition

Korea Zinc’s Latest Shareholder Roll & MBK’s Triggers to Sweeten Tender Price

By Sanghyun Park

  • MBK is watching for a 1 million share trading volume, as that may prompt neutral institutional investors to sell rather than participate in the tender, triggering a price hike.
  • MBK may raise the tender price to ₩900,000, a 35% jump, with a local pension fund CIO suggesting it’s the sweet spot for participation.
  • MBK believes securing the minimum target would give them 44% voting rights, enough to push their proposals, indicating they’ll go all-in for that 7% stake in this first attempt.

KOSDAQ150 Index Adhoc Rebalance: HLB Therapeutics Replaces Jeisys Medical

By Brian Freitas

Merger Arb Mondays (23 Sep) – Henlius, GA Pack, China TCM, Canvest, Trancom, Fuji Soft, Platinum

By Arun George

STAR50/STAR100 Index Rebalance Preview: Massive Outperformance in Last Two Months; Time to Unwind?

By Brian Freitas

  • 90% of the way through the review period, there could be 1 change for the SSE STAR50 (STAR50 INDEX) and 5 changes for the STAR100 Index.
  • We estimate turnover of 1% for the STAR50 INDEX and 5.5% for the STAR100 Index. The net round-trip trade is CNY 3.2bn (US$453m).
  • The forecast add to the SSE STAR50 (STAR50 INDEX) has massively outperformed the forecast deletion from the index over the last two months.

PKSHA Tech (3993 JP) – TOPIX Inclusion in October 2024

By Travis Lundy

  • PKSHA is an AI company. It was before this year, and got a boost this past spring. The stock price rose 60% in two weeks in February and March 2024.
  • Then it fell more than 50%. Back to late 2023 levels. High growth, growing into its valuations. Now moving to TSE Prime this week, TOPIX next month. 
  • Impact in days of ADV is lower than impact in Real World Float metrics. There are lots of day-traders. This probably has legs.

Tech M&A: Qualcomm for Intel? No Chance. Here’s Why.

By Neil Campling

  • SAMR would draw out review process for too long for a deal to be approved
  • Intel faces an existential crisis and even the new Foundry division has issues
  • A theoretical deal would have little financial synergy and destroy Qualcomm’s gross margins

CELSYS (3663 JP) Finally Makes It to Prime Time (TOPIX Inclusion Next Month)

By Travis Lundy

  • 12 days ago, Janaghan Jeyakumar, CFA published his September version of TOPIX Inclusions: Who Is Ready (September 2024). His chosen name was CELSYS (3663 JP), a long-time TSE-Prime inclusion bet. 
  • This week on the 18th, they announced they were going to enter TSE Prime on 25 September. This was a somewhat well-known known. They were interested and had been. 
  • The stock popped 15% the next day. It’s a small cap, but there is a lot of float.

EQD / NSE Vol Update / IVs Ride the Fed Seesaw

By Sankalp Singh

  • IVs seesawed through the week on account of the Fed meeting. Trading up to 12.7% going into the meeting & selling-off to 11.4% thereafter.
  • Vol-Curve Term-structure in Contango post Fed meeting – Nifty50 vol curve sheds its inversion & BankNifty vol curve loses its kinked-shape
  • BankNifty Smile & Skew characteristics extend relative to previous weeks – despite falling IVs & strengthening index.

Quiddity Leaderboard CSI Medical Dec 24: 5 Changes Possible; Exp ADDs yet to Outperform Exp DELs

By Janaghan Jeyakumar, CFA

  • CSI Medical Service represents the top 50 largest and most-liquid stocks involved in medical devices, medical care, medical informatization, and other medical theme from the Shanghai, Shenzhen and Beijing Exchanges.
  • In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
  • We expect up to five ADDs and five DELs for the CSI Medical Service index during this index review event based on the latest available data.

Ain Shifts Focus with FrancFranc Acquisition

By Michael Causton

  • Ain is best known for running prescription pharmacies but also has a lifestyle-oriented cosmetics chain called Ainz & Tulpe.
  • Without this, the acquisition of FrancFranc would look odd, but the merger of the two will create genuine synergies and a lifestyle business targeting women in their 20s and 30s.
  • The move makes sense given the pressure on margins in drug dispensing, Ain’s main business.

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