Category

Daily Briefs

Apr 03
0

Daily Brief Event-Driven: JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality? and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?
  • JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder
  • TOPIX Inclusions: Who Is Ready (Apr 2024)
  • IntelliCentrics (6819 HK): 18th April “Scheme” Vote
  • What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
  • Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity
  • Hyundai Motor Group Becomes the Largest Shareholder of KT Corp
  • Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
  • Keysight/Spirent: Recommended Competing Offer

JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?

By Travis Lundy

JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder

By Arun George

  • Murakami’s City Index Eleventh entity reported a 5.11% position in JSR Corp (4185 JP). The share purchases started on 19 March, the day of the tender start.
  • Murakami’s average buy-in price of JPY4,346.22 per share is broadly in line with the JPY4,350 tender offer. 
  • Murakami’s disclosure suggests two possibilities: starting an activist campaign for a bump or pursuing the appraisal process to determine a fair value. We think the latter is likely. 

TOPIX Inclusions: Who Is Ready (Apr 2024)

By Janaghan Jeyakumar, CFA

  • Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
  • There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.
  • There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate CELSYS (3663 JP) is one of them.

IntelliCentrics (6819 HK): 18th April “Scheme” Vote

By David Blennerhassett

  • Soon-To-Be ex-healthcare technology platform play IntelliCentrics Global Holding (6819 HK) is a pseudo risk arb. 
  • IntelliCentrics is selling its key ops, declaring a special dividend from the sale proceeds, subsequently being wound up, then delisted. 
  • Shareholders have the option of voting on a raft of resolutions on the 18th April. Irrevocables total 72.1%. This is done. Just the final dividend amount needs to be confirmed.

What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene

By Sanghyun Park

  • Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
  • Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
  • The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.

Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity

By Xinyao (Criss) Wang

  • Zadaxin is the biggest performance driver of SciClone. However, due to the challenge of generic drugs/VBP, sales of Zadaxin wouldn’t maintain strong growth momentum.  SciClone’s revenue/profit would face a significant decline.
  • The capital participating the IPO had reduced their holdings or exit entirely. Considering the low valuation/poor liquidity in HKEX, we think this privatization provides investors with a great exit opportunity.
  • For arbitrage investors, the annualized return depends on the time it takes to complete the privatization (e.g. about 5%-10%). If the privatization fails, share price could fall back to HK$14.

Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

By Douglas Kim

  • Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%. 
  • Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT. 
  • Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.

Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter

By David Blennerhassett

  • Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
  • Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments. 
  • Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.

Keysight/Spirent: Recommended Competing Offer

By Jesus Rodriguez Aguilar

  • Keysight Technologies In (KEYS US) and Spirent Communications (SPT LN) have agreed a recommended 201.5p/share cash acquisition via Scheme of Arrangement, an increase of 26.5p (15.1%) relative to Viavi Solutions (VIAV US)‘s Offer.
  • Spirent, with some scarcity value, should be able to improve its cyclicality as part of Keysight. A counteroffer from Viavi looks unlikely unless Silver Lake significantly increases its stake.
  • Gross spread is 1.99%. Using Keysight’s forecast s about completion, at best, estimated annual return would be 3.51% while at worst, 1.88%. This suggests there may be better opportunities elsewhere.

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Apr 03
0

Daily Brief Thematic (Sector/Industry): Fabricated Knowledge Quarterly Review and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Fabricated Knowledge Quarterly Review
  • Ohayo Japan | US Stocks Tumble
  • Junior Copper Miners: An Update After 1Q24

Fabricated Knowledge Quarterly Review

By Douglas O’Laughlin

  • This is the first edition of a quarterly summary piece to highlight my ideas and best pieces quarterly.
  • This is one of the 16th-best quarters in SOXX since 2002. While it’s a pretty solid showing at a 17% quarterly return, this doesn’t compare to the incredible returns in 2020 and 2023.
  • Now, the misleading thing is that SMH, a broader ETF, is up 30%.

Ohayo Japan | US Stocks Tumble

By Mark Chadwick

  • Stocks closed lower for a second consecutive day as the Dow Jones Industrial Average fell 1% to settle at 39,170.24
  • Workers at Japanese small and midsize manufacturers secured record wage hikes averaging 4.12% this year, influenced by wage increases exceeding 5% at larger firms
  • Fast Retailing Co Ltd (9983) reports a 1.5% decline in UNIQLO same-store sales in Japan for March, attributed to cooler temperatures impacting spring clothing sales

Junior Copper Miners: An Update After 1Q24

By Nicolas Van Broekhoven

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Apr 03
0

Daily Brief ECM: HD Hyundai Marine Solutions IPO: Valuation Insights and more

By | Daily Briefs, ECM

In today’s briefing:

  • HD Hyundai Marine Solutions IPO: Valuation Insights
  • Horizon Robotics Pre-IPO Tearsheet

HD Hyundai Marine Solutions IPO: Valuation Insights

By Arun George

Horizon Robotics Pre-IPO Tearsheet

By Sumeet Singh

  • Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities International.
  • Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
  • HR was the first and the largest Chinese company providing integrated ADAS and AD solutions in terms of annual installation volume since 2021, according to CIC.

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Apr 03
0

Daily Brief Credit: Morning Views Asia: Kawasan Industri Jababeka and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Kawasan Industri Jababeka, Rakuten, Tata Motors ADR
  • China Vanke – Earnings Flash – FY 2023 Results – Lucror Analytics
  • Morning Views Asia: China Hongqiao, Nickel Industries

Morning Views Asia: Kawasan Industri Jababeka, Rakuten, Tata Motors ADR

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.

China Vanke – Earnings Flash – FY 2023 Results – Lucror Analytics

By Leonard Law, CFA

China Vanke’s FY 2023 numbers were somewhat soft in our view. While its top line and profitability declined in tandem with industry trends, the company’s property development gross margin remained robust (relative to peers) at c. 15%. Negatively, OCF (after interest and tax) was weak and net debt continued to rise. Leverage and coverage metrics deteriorated, but remained at reasonable levels (vs. peers).

Vanke’s liquidity at the holdco level is likely tight. In particular, the migration of bank borrowings to the project level has pressured the company’s holdco-level financing. The development may also indicate lenders’ reduced risk appetite towards Vanke. In addition, we view negatively that management did not disclose the amount of cash held under escrow restrictions. Moreover, it is unclear whether the Shenzhen government would provide extraordinary support (above and beyond market-oriented measures) to the company.

Morning Views Asia: China Hongqiao, Nickel Industries

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.

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Apr 03
0

Daily Brief Equity Bottom-Up: SK Square: Higher NAV Driven by Its Holding in SK Hynix and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • SK Square: Higher NAV Driven by Its Holding in SK Hynix
  • Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point
  • China Comm Const (1800 HK): A Nice Surprise
  • Midea Group (000333 CH):  Strong 4Q23 Result As Expected
  • [#20] Namaste India 🙏 | Bajaj Finance’s Catch Up
  • TSMC (2330.TT; TSM.US): 2Q24F Preview; TSMC Is Anticipated to Receive ~US$5Bn from the US Chip Act.
  • CBA – Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies
  • Legend Biotech Corp (LEGN.US) – FDA’s Upcoming Decision on Carvykti Will Change the Whole Landscape
  • As Predicted, TCL Electronics (1070.HK) Wows with 2023 Results
  • Dream International (1126 HK): Dream Valuation of 3.7x PE and 12% Div Yield, >40% of Mkt Cap In Cash

SK Square: Higher NAV Driven by Its Holding in SK Hynix

By Douglas Kim

  • SK Square owns a 20.07% stake in SK Hynix which is now worth 27.2 trillion won. SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix.
  • SK Square has benefited from increased capital allocation to low P/B stocks in Korea due to the Corporate Value Up program. SK Square is trading at P/B of 0.7x. 
  • Amid the tremendous demand for Nvidia’s AI related chips, this has also benefited several Korean companies including SK Hynix and SK Square. 

Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point

By Tina Banerjee

  • Aster DM Healthcare Ltd (ASTERDM IN) shares took a beating as Olympus Capital offloaded ~49M shares at a price range of INR405.00–406.72 (~7% discount to the last close price).
  • GCC business separation is expected to complete in Q4FY24. Aster DM plans to consider distributing 70–80% of the upfront consideration of $903M as dividend to its shareholders.
  • Stake sale by Olympus Capital is not a warning sign for the company. Despite CGHS rate overhang, we think recent pullback in Aster DM share provides an attractive entry point.

China Comm Const (1800 HK): A Nice Surprise

By Osbert Tang, CFA

  • China Communications Construction (1800 HK) believes its FY24 new contracts and revenue growth can be faster than FY23, particularly fuelled by strategic new industries and overseas. 
  • Its end-FY23 contract backlog of Rmb3.45trn (+1.8% YoY) translates into coverage of 4.1x of FY24F revenue, providing a secured stream of revenue over the next few years.
  • Its improving cash flow allows for a 1pp increase in the payout ratio. Efforts in realising underlying asset value should narrow its 82% discount to book value.

Midea Group (000333 CH):  Strong 4Q23 Result As Expected

By Steve Zhou, CFA

  • Midea Group Co Ltd A (000333 CH) posted strong 4Q23 results, with net profit up 18% yoy and sales up 10% yoy. 
  • In terms of 2024 outlook, management targets a 5-10% yoy growth in both the top and bottom line. 
  • The stock is has rerated up to 12x 2024E earnings, compared to an average of 13x over the last 10 years. 

[#20] Namaste India 🙏 | Bajaj Finance’s Catch Up

By Pranav Bhavsar

TSMC (2330.TT; TSM.US): 2Q24F Preview; TSMC Is Anticipated to Receive ~US$5Bn from the US Chip Act.

By Patrick Liao

  • TSMC Q2 2024 outlook is expected to increase by approximately 5% QoQ, with 2024 projected Capex to see a slight uptick. 
  • Intel is expected to adopt TSMC N3B technology in 2Q24F, while we anticipate that MediaTek will transition to N3E by the end of 3Q24F.  
  • Intel has received financial assistance of US$8 billion through the US Chips and Science Act, and TSMC is also projected to receive around US$5 billion.

CBA – Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

By Daniel Tabbush

  • It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
  • CBA’s past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
  • Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL

Legend Biotech Corp (LEGN.US) – FDA’s Upcoming Decision on Carvykti Will Change the Whole Landscape

By Xinyao (Criss) Wang

  • The sBLA of Carvykti is under review by FDA with a target PDUFA date of April 5. If approved for 2L therapy, Carvykti would become “a game changer” in MM treatment.
  • The peak sales of US$5 billion is becoming possible. From this perspective, as Carvykti advances towards earlier line treatment, the subsequent valuation leap of legend Bio is becoming more certain.
  • However, considering lower gross margin and Legend Bio/J&J’s 50/50 split ratio, Legend Bio’s market value performance could be inferior to BeiGene. Investors should also closely monitor the changes in macro.

As Predicted, TCL Electronics (1070.HK) Wows with 2023 Results

By Pyramids and Pagodas

  • Spirits were high as we attended the TCL Electronics (1070.HK ) (“TCL”) investor conference last Thursday (28 March) at the Shangri-La in Hong Kong, following its after-market earnings release.
  • The results topped our own expectations in some areas, which we outlined in our recent write-up on the Company .
  • We decided to summarize the results, as well as management insights shared at the conference for added context.

Dream International (1126 HK): Dream Valuation of 3.7x PE and 12% Div Yield, >40% of Mkt Cap In Cash

By Sameer Taneja

  • We like Dream International (1126 HK), the plush toy maker listed in HK for its long-term association with Disney and revenue growth profile (12% CAGR over 15 years).
  • The 15-year ROE has averaged 18%, and the company currently has 40% of the market capitalization (1.3 bn HKD) in net cash on the balance sheet. 
  • Trading at 3.7x FY23 PE, with a 12% dividend yield (and the company’s high likelihood of maintaining a payout ratio), this is an idea worth exploring.

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Apr 03
0

Daily Brief Macro: Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend and more

By | Daily Briefs, Macro

In today’s briefing:

  • Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend
  • China Economics: Don’t Celebrate the Good PMIs Just Yet
  • Great Game – Israel running out of friends, China growing friendships
  • Energy Cable #63: It is still all eyes on China
  • CX Daily: How a China-built railway is connecting Ethiopia to the world
  • Malaysia:  Socioreligious Controversies Expose Limits of Government
  • Positioning Watch – Steepener bets back on?

Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend

By David Mudd

  • With the BOJ’s struggle to support the yen gaining traction,  the NKY and TPX both hit major resistance
  • Hong Kong finally breaches resistance with a potential move to 20k in the near term
  • Diversification opportunities are abundant with potential negative correlation between China/HK markets and US

China Economics: Don’t Celebrate the Good PMIs Just Yet

By Manu Bhaskaran

  • The newest set of PMIs is a positive, but ultimately tentative, sign that the cyclical position of China’s economy is finally firming up after prolonged woes in the past year. 
  • But readers should not be carried away by one month of good data; bottom-up indicators in the consumer and business sectors have yet to show a convincing turnaround. 
  • Given the elevated uncertainties in domestic and global demand, we do not expect a linear, smooth-sailing recovery. Expect more than a few speed bumps along the way. 

Great Game – Israel running out of friends, China growing friendships

By Mikkel Rosenvold

  • Welcome to this week’s Great Game, where we cover current geopolitical events relevant to your portfolio!Israel-Hamas War takes toll on hospitalsSituation: Israeli troops have left the Shifa hospital in Gaza after reducing the site to rubbles.
  • Meanwhile, Israeli strikes have hit the Al-Aqsa hospital as well as a ‘World Food Kitchen’ convoy, killing seven NGO workers.
  • Finally, Israel bombed the Iranian embassy in Syria, killing a couple of high-ranking Iranian military commanders.

Energy Cable #63: It is still all eyes on China

By Ulrik Simmelholt

  • Solid PMI numbers out of China supporting the reflation story
  • Steel Production looks ok. There is still potential for the USD to throw a wrench in the works
  • This week we’ll pick up where we left off last week and continue to talk about China as we have had a surprise in PMI numbers.

CX Daily: How a China-built railway is connecting Ethiopia to the world

By Caixin Global

  • BRI / Cover Story: How a China-built railway is connecting Ethiopia to the world
  • FDI /Foreign direct investment into China plummets to 23-year low
  • Personnel /Provincial officials moved to key leadership jobs in Beijing

Malaysia:  Socioreligious Controversies Expose Limits of Government

By Manu Bhaskaran

  • Prime minister Anwar Ibrahim and his government are struggling to keep a lid on ongoing controversies surrounding religious tensions and citizenship reforms. 
  • At the core of its difficulties is continued insecurities over the relatively low level of support among Malay-majority voters. 
  • There are consequences for economic policy; measures that are seen as harming bumiputra interests will face difficulties in being carried out. 

Positioning Watch – Steepener bets back on?

By Andreas Steno

  • Hello everyone, and welcome back to our weekly positioning watch! Hope you all had a great time off during the Easter break.
  • The market narrative has remained more or less intact after the break, with equity sentiment still going strong until today despite a bit of a hiccup delivered from the Fed, with especially Waller but also to a certain extent Powell pushing back on the 3 rate cuts priced in just a couple of weeks ago.
  • The scenario with 0 Fed cuts in 2024 is looking to come into play, right as European central banks have likely received the final evidence for them to start cutting rates, with German CPI surprising on the dovish side, and UK Retail Prices collapsed, paving the way for both BoE and ECB to cut rates before the Fed, which admittedly has a more difficult time battling inflation.

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Apr 03
0

Daily Brief Crypto: Crypto Crisp: Where’s the Volatility? and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Crypto Crisp: Where’s the Volatility?

Crypto Crisp: Where’s the Volatility?

By Mads Eberhardt

  • As we predicted in the last few weeks’ Crypto Crisp, the crypto market has been relatively stable in recent weeks.
  • However, things are beginning to shift.
  • During a speech in San Francisco on Friday, Federal Reserve Chairman Jerome Powell mentioned that robust economic growth in the US allows Federal Reserve officials to take their time with interest rate cuts.

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Apr 02
0

Daily Brief Industrials: HDC Hyundai Development Co-Engineering & Construction, Shenzhen International, Lindbergh SpA, Dongfang Electric, GMS Inc, Griffon Corp, MillerKnoll and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2024
  • Shenzhen Intl (152 HK): A Decent Rebound
  • Portfolio Update: March 2024
  • Dongfang Electric (1072 HK): Good Profit, Record Orders
  • GMS Inc.: Initiation Of Coverage – A Story Of Improved Selling Prices and Anticipated Recovery in Single-Family Market! – Major Drivers
  • Griffon Corporation: 4 Major Catalysts For Its Growth In 2024 & Beyond! – Financial Forecasts
  • MillerKnoll, Inc – 3QFY24 EPS Beats; Revenue Misses

Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2024

By Douglas Kim

  • In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 2Q 2024.
  • Of the 38 pair trades, 26 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.  
  • These pairs could generate trading opportunities in terms of their pricing gaps closing reversal. [CJ Corp vs CJ Cheiljedang & Hanjin KAL Corp vs Korean Air Lines].

Shenzhen Intl (152 HK): A Decent Rebound

By Osbert Tang, CFA

  • Shenzhen International (152 HK) saw its FY23 earnings reaccelerated, supported by gains from the logistics park transformation business. Earnings even surged 169.1% YoY in 2H23. 
  • REIT issuance on two logistics assets, increase in areas of logistics projects, gains from South China Logistics Park transformation, and better Shenzhen Expressway (548 HK) will fuel FY24.
  • A better debt structure will save finance costs. Its 0.45x P/B, or 1.5SD below the 5-year average, is cheap given its proven ability to realise underlying asset value.

Portfolio Update: March 2024

By Contrarian Cashflows

  • I recently had a conversation with a close friend and fellow investor, during which he shared his current research interest in the dollar store concept.
  • He emphasized that this business model aligns with criteria conducive to long-term shareholder returns.
  • Given the scarce presence of dollar stores in Germany, primarily due to socioeconomic factors, I sought clarification on the underlying concept from him.

Dongfang Electric (1072 HK): Good Profit, Record Orders

By Osbert Tang, CFA

  • Dongfang Electric (1072 HK) reached another record year with net profit surging 24.2% in FY23. Favourable product mix has benefited gross margin which expanded 0.8pp YoY.
  • Record new orders of Rmb86.5bn (+31.9% YoY) have been signed and there is a recovery in momentum in 4Q23. Its end-FY23 backlog should be enough to cover 3.1x FY24F revenue.
  • DEC is well-positioned to capture the demand for hydrogen energy and power storage. With 19.3% 3-year earnings CAGR, its 5.1x PER and 8.2% dividend yield are attractive.

GMS Inc.: Initiation Of Coverage – A Story Of Improved Selling Prices and Anticipated Recovery in Single-Family Market! – Major Drivers

By Baptista Research

  • This is our first report on GMS Inc. Despite facing adverse weather conditions and steel price deflation, GMS reported a growth in net sales and lauded the volume growth across all its major product categories owing to its organic efforts and recent acquisitions.
  • Still, the company reported a net income of $51.9 million and adjusted EBITDA of $128 million, indicating robust financial performance.
  • 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.

Griffon Corporation: 4 Major Catalysts For Its Growth In 2024 & Beyond! – Financial Forecasts

By Baptista Research

  • This is our first report on Griffon Corporation.
  • The company’s latest earnings for fiscal 2024’s first quarter showcased a company navigating the complexities of market demands, supply chain logistics, and strategic growth initiatives.
  • The company reported a commendable start to the fiscal year, marked by a robust free cash flow of $133 million, underscoring its operational efficiency and financial prudence.

MillerKnoll, Inc – 3QFY24 EPS Beats; Revenue Misses

By Water Tower Research

  • As noted earlier, MillerKnoll’s 3QFY24 EPS beat expectations but revenue missed widely. 4QFY24 guidance was also below pre-report estimates.

  • With the misses, the stock gapped down by the mid-teens (~$5.00), closing at $24.76, thereby truncating and halting its recent rebound.

  • Y/Y revenue comparisons were negative in all three segments: Americas Contract (AC) at -9% to $441 million, International Contract & Specialty (IC&S) at -10.4% to $217 million, and Global Retail (GR) at -17% to $214 million. 

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Apr 02
0

Daily Brief Energy/Materials: JSR Corp, Copper, Waaree Energies Limited, Talos Energy Inc, Vitesse Energy and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • (Mostly) Asia M&A, Mar 2024: Chilled & Frozen, TDCX, MMA Offshore, JSR, Roland DG, SciClone
  • What the Baltimore Bride Collapse Means for Commodities
  • Waaree Energies Pre-IPO – Riding the Anti-China US Wave
  • Talos Energy Inc. – Targeting Free Cash Flow Waterfall in 2024
  • Vitesse Energy, Inc. – Compounding Capital to Support Dividend Strategy

(Mostly) Asia M&A, Mar 2024: Chilled & Frozen, TDCX, MMA Offshore, JSR, Roland DG, SciClone

By David Blennerhassett

  • For the month of March 2024, 8 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
  • The average premium for the new transactions announced (or first discussed) in March was ~55%. The average premium YTD is ~39%.
  • 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.

What the Baltimore Bride Collapse Means for Commodities

By The Commodity Report

  • Goldman also highlights that cyclical risks from the business cycle are fading.
  • An upswing in the global industrial cycle typically leads to broad metals upside over the next 12 months the investment bank added.
  • According to data from PIERS, a trade flow analytics tool within S&P Global, Baltimore port held just 4% share of the total trade volumes on the East Coast compared with other major regional ports like New York, with a nearly 38% share according to S&P Global.

Waaree Energies Pre-IPO – Riding the Anti-China US Wave

By Sumeet Singh

  • Waaree Energies  is looking to raise up to US$400m in its upcoming India IPO.
  • Waaree Energies is a solar PV module manufacturer in India with an aggregate installed capacity of 12 GW, as of Jun 2023. 
  • In this note, we talk about the company’s past performance.

Talos Energy Inc. – Targeting Free Cash Flow Waterfall in 2024

By Water Tower Research

  • Talos’s FY24 operating plan prioritizes free cash flow generation. The midpoint of FY24 production guidance is nearly 40% above FY23 production, while the midpoint of the FY24 upstream capex budget is 7% lower than FY23.

  • Our modeling suggests the combination could generate $479 million of free cash flow in FY24, compared with $3 million in FY23.

  • The anticipated free cash flow waterfall could allow Talos to repay nearly $400 million of borrowings under the existing RBL credit facility. 

Vitesse Energy, Inc. – Compounding Capital to Support Dividend Strategy

By Water Tower Research

  • Vitesse’s strategy is to compound cash flow derived from its diverse portfolio of oil-prone assets in the Bakken/Three Forks play to fund capital returns to shareholders and reinvest in the underlying asset base.
  • Management’s preferred method for returning cash is through a sustainable fixed dividend, currently $2.00/share annualized.
  • The dividend is sacrosanct and lies at the heart of management’s capital allocation model.

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Apr 02
0

Daily Brief TMT/Internet: HYBE , Tencent, Globalwafers, Ibotta , Vanguard Intl Semiconductor and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • KRX Imposes a 20% Cap on Weight Ceiling in Sector ETFs with Few Constituents
  • China Consumption Weekly (1 Apr 2024): Tencent, Alibaba, Xiaomi, Midea
  • ECM Weekly (1st Apr 2024) – Shinhan, GlobalWafers, Mankind, Hyundai Marine, Bharti Hexacom, ChaPanda
  • Ibotta IPO Valuation Analysis
  • Vanguard (5347.TT): A Consensus View to Build a New 12″ Fab in Singapore.

KRX Imposes a 20% Cap on Weight Ceiling in Sector ETFs with Few Constituents

By Sanghyun Park

  • KRX limits individual stock weight to 20% in ETFs with few constituents. KRX confirms working on it, with an official announcement expected soon.
  • Excludes index ETFs like KOSPI 200. KRX hasn’t finalized criteria for constituent number but expected to involve fewer than 30 stocks.
  • This could open new passive trading opportunities. Sector ETF cap at 30%, large AUM ones offer noteworthy trading potential.

China Consumption Weekly (1 Apr 2024): Tencent, Alibaba, Xiaomi, Midea

By Ming Lu

  • There is a rumor in social media that Tencent will dismiss 10% – 30% of its employees.
  • Alibaba withdrew the IPO application of its subsidiary Cainiao and all the other IPOs were halted as well.
  • Xiaomi began to sell its first vehicle model SU7, but it is too late for the company to enter the market.

ECM Weekly (1st Apr 2024) – Shinhan, GlobalWafers, Mankind, Hyundai Marine, Bharti Hexacom, ChaPanda

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, HD Hyundai Marine Solution (443060 KS) and Bharti Hexacom were in the market trying to raise over US$500m each.
  • Placements flow continued unabated this week as well, India, Taiwan and South Korea seeing large blocks.

Ibotta IPO Valuation Analysis

By Andrei Zakharov

  • In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenario under my base case.
  • Considering Ibotta achieved profitability in 2023 driven by strong growth in the segment of third-party publishers, I view EV/Revenue as the most appropriate methodology to value Ibotta.
  • I have a positive view of the upcoming Ibotta IPO. The company’s efficient B2B2C business model, success-based marketing approach and scale provide Ibotta with a long runway of growth.

Vanguard (5347.TT): A Consensus View to Build a New 12″ Fab in Singapore.

By Patrick Liao

  • The utilization rate for Vanguard in 1Q24F is at a recent low of 50-53%, indicating that the utilization rate is expected to increase from 2Q24 onwards.  
  • Vanguard should consider building a new 12″ Fab in Singapore, aligning with our potential acquisition of Taiwan Semiconductor (TSMC) – ADR (TSM US)’s 40nm and above business.
  • In conclusion, the future outlook appears promising for the coming 3~4 years.  

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