Category

Daily Briefs

Mar 29
0

Daily Brief Event-Driven: Koito Mfg (7276) – New Medium Term Plan and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned
  • CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid
  • SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80
  • Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco
  • Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

By Travis Lundy

  • Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
  • As Toyota Group’s leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block. 
  • Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.

CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid

By David Blennerhassett

  • On the 6th Dec 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China (NCSSF). 
  • A decent premium (32.1%), presumed rubber-stamped regulatory approvals, and a 50% acceptance condition with 29.7% in the bag – this Offer looked done. Then ORG announced a possible competing proposal.
  • Nearly four months have elapsed and details on ORG’s Offer remain unknown. SASAC/NCSSF chip away at reg approvals. Shares are down 2.6% from its recent peak. That makes sense.

SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80

By Arun George

  • Sciclone Pharmaceuticals (6600 HK) disclosed a scheme privatisation offer from GL Capital at HK$18.80 per share, a 33.9% premium to the undisturbed price (HK$14.04 on 15 March).
  • The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The Bank of China, which holds a blocking stake, should be supportive.
  • The offer price has been declared final. It is reasonable, aligning with the all-time high and the IPO price. This is a done deal.

Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco

By Janaghan Jeyakumar, CFA

  • 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, adjusted every year in August.
  • We look at the rankings of the potential ADDs/DELs every month for the next rebal, based on most recent trading data. 
  • Every month we provide trade suggestions. The last three months have seen market-neutral returns of +3.0%, +6.5%, +3.2% respectively for the one-month periods. A new trade is suggested below.

Kum Yang: Auditor Raises Flags on Viability as a Going Concern + Chairman Ryu Could Sell Shares

By Douglas Kim

  • On 28 March, the external auditor of Kum Yang (Samil PriceWaterhouseCoopers) raised warnings about the viability of Kum Yang as a going concern. 
  • The auditor also mentioned increasing probability of Chairman Ryu of Kum Yang potentially selling a portion of his shares to raise further capital.
  • It is RARE for an auditor to raise concerns about a company’s viability of the entity as a going concern. This is likely to negatively impact Kum Yang’s share price. 

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Mar 29
0

Daily Brief Macro: Reflation Watch: Has Japan turned a page and more

By | Daily Briefs, Macro

In today’s briefing:

  • Reflation Watch: Has Japan turned a page, and have markets gotten ahead of themselves?
  • CX Daliy: China IPO slowdown pits startups against investors
  • Shrinking Inventories Lends Support to Oil Prices in the Near-Term
  • UK Wage Wealth is an Inflationary Illusion

Reflation Watch: Has Japan turned a page, and have markets gotten ahead of themselves?

By Elias Lisberg Glistrup

  • Stagnant growth and price deflation have defined the term Japanization, and, due to rapidly rising debt levels in conjunction with aging populations, long been the striking worry for many economists.
  • Post-Covid inflation has shifted the narrative however, and fears of it becoming structural has taken over as the new doom-scenario globally.
  • For Japan though, inflation is not so much a fear as a hope, and we see signs that Japan is in fact achieving sustained inflation.

CX Daliy: China IPO slowdown pits startups against investors

By Caixin Global

  • IPOs / In Depth: China IPO slowdown pits startups against investors
  • Pakistan /: Beijing pushes Pakistan to hunt down ‘terrorists’ after bombing kills five Chinese
  • TikTok /: Rivals vie to fill market void as U.S. business ban looms over TikTok

Shrinking Inventories Lends Support to Oil Prices in the Near-Term

By Suhas Reddy

  • As of the week ending 15/March, crude inventories fell more than expected (2 million barrels vs 900k barrels expected) led by higher exports and refinery activity.
  • Refineries operations have picked up faster than anticipated, with the utilization rate jumping from 80% in early February to nearly 88% by 15/Mar.
  • OPEC members like Iraq, UAE, Gabon, and Kuwait, have exceeded their production quotas, raising concerns about adherence.

UK Wage Wealth is an Inflationary Illusion

By Phil Rush

  • Nominal disposable income continues to surge amid widespread enormous pay rises. Unmatched by productivity, the nominal boost is eroded by inflation to real stagnation.
  • The regime of high nominal increases nonetheless inflates away the debt stock, helping sustain affordability despite forceful interest rate increases.
  • An inflationary reduction in debt burdens is not real wealth. The UK’s net worth is crashing to record negatives as corporates and households suffer post-pandemic.

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Mar 29
0

Most Read: ZOZO Inc, Lawson Inc, Alteogen Inc, Koito Manufacturing, CPMC Holdings, HD Hyundai Marine Solution , Sciclone Pharmaceuticals, RENOVA Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out
  • KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
  • Alteogen: Block Deal Sale of About 3% of Shares
  • Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned
  • CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid
  • Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation
  • SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80
  • Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco
  • HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures
  • Ohayo Japan | S&P Hits Record: Japan Passes Budget

Nikkei 225 Index Rebalance: DISCO, Socionext, ZOZO In; PacMetals, Sumitomo Osaka, Takara Holding Out

By Brian Freitas

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

By Travis Lundy

  • KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP). 
  • It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines. 
  • There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up. 

Alteogen: Block Deal Sale of About 3% of Shares

By Douglas Kim

  • On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale. 
  • The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won. 
  • This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Koito Mfg (7276) – New Medium Term Plan, BIG Buyback, Even Bigger Shareholder Returns Planned

By Travis Lundy

  • Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
  • As Toyota Group’s leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block. 
  • Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.

CPMC (906 HK): Shares Retrace As Clock Ticks On ORG’s Bid

By David Blennerhassett

  • On the 6th Dec 2023, packaging play CPMC Holdings (906 HK) announced a pre-conditional Offer from SASAC and the National Council for Social Security Fund of China (NCSSF). 
  • A decent premium (32.1%), presumed rubber-stamped regulatory approvals, and a 50% acceptance condition with 29.7% in the bag – this Offer looked done. Then ORG announced a possible competing proposal.
  • Nearly four months have elapsed and details on ORG’s Offer remain unknown. SASAC/NCSSF chip away at reg approvals. Shares are down 2.6% from its recent peak. That makes sense.

Local Color on HD Hyundai Marine Solution’s Excessive IPO Valuation

By Sanghyun Park

  • Valuation controversy arises from comparing HD Hyundai Marine Solution, a ship AS specialist, with diverse global companies, leading to a target market cap of ₩5T.
  • HD KSOE’s inclusion worsens the valuation controversy. Applying HD KSOE’s last year PER without adjusting for a significant one-off profit seems to inflate HD Hyundai Marine Solution’s PER.
  • Currently, major local IPO funds see HD Hyundai Marine’s valuation nearing ₩4T as excessive, despite the industry’s revival and potential growth in eco-friendly ship conversions, impacting the upcoming bookbuilding process.

SciClone Pharma (6600 HK): GL Capital’s Scheme Offer at HK$18.80

By Arun George

  • Sciclone Pharmaceuticals (6600 HK) disclosed a scheme privatisation offer from GL Capital at HK$18.80 per share, a 33.9% premium to the undisturbed price (HK$14.04 on 15 March).
  • The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The Bank of China, which holds a blocking stake, should be supportive.
  • The offer price has been declared final. It is reasonable, aligning with the all-time high and the IPO price. This is a done deal.

Quiddity JPX-Nikkei 400 Rebal 2024: End-Mar 2024 Estimates and Another Trade Reco

By Janaghan Jeyakumar, CFA

  • 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, adjusted every year in August.
  • We look at the rankings of the potential ADDs/DELs every month for the next rebal, based on most recent trading data. 
  • Every month we provide trade suggestions. The last three months have seen market-neutral returns of +3.0%, +6.5%, +3.2% respectively for the one-month periods. A new trade is suggested below.

HD Hyundai Marine Solution IPO – Strong Profitability Growth but Lacking in Disclosures

By Ethan Aw

  • HD Hyundai Marine Solution (443060 KS) is looking to raise up to US$555m in its Korean IPO.
  • HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship. 
  • In this note, we talk about the company’s historical performance.

Ohayo Japan | S&P Hits Record: Japan Passes Budget

By Mark Chadwick

  • US Market Wrap: S&P 500 hits record, Dow inches higher; tech stocks lag.
  • Japan Budget: Parliament passes ¥112 trillion budget, emphasizing defense spending, inflation mitigation, and earthquake recovery.
  • Stocks Update: Mercari introduces Eco Mercari Delivery; Kubota’s construction equipment business grows; Mitsubishi Electric expands digital workforce.

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Mar 28
0

Daily Brief Industrials: Mitsubishi Heavy Industries, Shipping Corp of India Land And Assets, Symbotic, China Everbright Environment, SharkNinja , Steelcase Inc Cl A, Acuity Brands and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mitsubishi Heavy Industries (7011 JP): Take Profits and Wait for Reality to Catch Up
  • Shipping Corporation of India Land & Assets Ltd.: Demerger and a Value Bet
  • Symbotic Inc. (SYM): Fast Growing AI-Powered Warehouse Automation Supplier
  • China Everbright Environment (257 HK): Being Penalised Too Much
  • SharkNinja Inc.: Initiation of Coverage – A Story Of Expansion Into New Markets & Categories! – Major Drivers
  • Steelcase, Inc. – Tweaking FY25 Estimates; Encouraged by Orders and Cash Flow
  • Acuity Brands: Initiation of Coverage – 4 Critical Factors Responsible For Its Future Performance! – Financial Forecasts

Mitsubishi Heavy Industries (7011 JP): Take Profits and Wait for Reality to Catch Up

By Scott Foster

  • MHI’s share price has risen more than 60% year-to-date and nearly tripled over the past 12 months on the improving outlook for Japanese defense contractors.
  • A huge increase in new orders, prospects for a doubling of sales and a rapidly rising operating margin on Aircraft, Defense & Space have been factored into the price.
  • The shares do not look expensive compared with international comparables, but neither are they particularly cheap. Potential problems, from Japanese defense budget constraints to production glitches, have been ignored. 

Shipping Corporation of India Land & Assets Ltd.: Demerger and a Value Bet

By Sudarshan Bhandari

  • Discover SCILAL’s debut in the stock market after demerger form Shipping Corp Of India (SCI IN), its strategic disinvestment, and the hidden value within its diverse asset portfolio.
  • Real Estate Assets in company and future outlook by management of SCILAL over the years going forward.
  • The market value of assets is twice more than the book value. Value bet but can take longer time to monetize the same.

Symbotic Inc. (SYM): Fast Growing AI-Powered Warehouse Automation Supplier

By GSBR Research Pvt Ltd

  • Symbotic is a warehouse automation technology leader and offers end-to-end AI-powered robotic and software platform for supply chains.
  • SYM’s hi-tech platform forms its deep competitive moat underpinned by significant R&D spend of $800 million and 575 issued or pending patents.
  • Our positive outlook for SYM is underpinned by its hi-tech platform , a large TAM, robust order backlog ($23.2B) and its JV deal with Softbank that opens a large market.

China Everbright Environment (257 HK): Being Penalised Too Much

By Osbert Tang, CFA

  • Despite a 3.8% decline in FY23 net profit, China Everbright Environment (257 HK)‘s profitability has still outperformed its peers by significant magnitudes. 
  • Positive notes in the result are an increase in operation service revenue proportion, expansion in EBITDA margin, improvement in financial position, and addition of new projects.
  • It is easy for CEE to achieve the market expectation of a 9.8% growth in FY24. Yet, it just trade on 3.6x PER, 8.5% yield, and 0.34x P/B. 

SharkNinja Inc.: Initiation of Coverage – A Story Of Expansion Into New Markets & Categories! – Major Drivers

By Baptista Research

  • This is our our first report on household appliances distributor, SharkNinja.
  • The company’s Q4 2023 Earnings revealed that it had a robust fourth quarter, with nearly 20% growth in adjusted net sales and more than 70% growth in adjusted EBITDA. The CEO, Mark Barrocas, attributed this to the company’s growth strategy, innovation and the support from both consumers and retail partners.
  • The company’s full year sales grew by over 15% nearing to $4.2 billion and with an adjusted EBITDA increase by nearly 39% reaching $720 million.

Steelcase, Inc. – Tweaking FY25 Estimates; Encouraged by Orders and Cash Flow

By Water Tower Research

  • We are publishing new estimates for our Steelcase economic model after its solid 4QFY24 earnings.
  • Adjusted EPS of $0.23 beat our estimate as well as consensus. Revenue of $775.2 million modestly missed estimates.
  • 1QFY25: We tweaked our non-GAAP (adjusted) EPS estimate to $0.11 ($0.10 previously).

Acuity Brands: Initiation of Coverage – 4 Critical Factors Responsible For Its Future Performance! – Financial Forecasts

By Baptista Research

  • This is our first report on building management solutions provider, Acuity Brands.
  • The company reported fiscal first quarter earnings, indicating positive performance for the period.
  • The company demonstrated strong overall execution as it increased its adjusted operating profit, adjusted operating profit margin, and adjusted diluted earnings per share.

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Mar 28
0

Daily Brief Energy/Materials: Rajshree Polypack, Zephyr Energy, Pharos Energy and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • RPPL: On Track for a Strong FY25
  • Zephyr Energy Plc (AIM: ZPHR): Potential for helium well to be drilled mid 2024
  • Pharos Energy Plc (LSE: PHAR): Re-Iterating Guidance

RPPL: On Track for a Strong FY25

By Ankit Agrawal, CFA

  • Rajshree Polypack (“RPPL”) reported a robust Q3FY24 led by strong volume growth of 29%+ YoY. EBITDA margin also expanded leading to EBITDA growth of 35%+ YoY.
  • Export business continues to grow steadily with quarterly run-rate now at INR 10cr. This suggests that on an annualized basis, exports could be INR 40cr vs INR 30cr guided earlier.
  • Injection molding business is doing well and has reached optimum capacity utilization. RPPL is exploring to expand this capacity and is also expecting it to become profitable from next quarter.

Zephyr Energy Plc (AIM: ZPHR): Potential for helium well to be drilled mid 2024

By Auctus Advisors

  • In October 2023, Zephyr announced the acquisition of at least a 75% WI in the Salt Wash field, located ~3 miles to the south of the Paradox project.
  • Salt Wash has a 15 feet oil rim, above which is an inert gas cap (~500 feet of gas column) which consists of ~72% nitrogen, 22% hydrocarbon gases, and 1.4% to 1.7% helium content.
  • The field was abandoned in 2014 after having produced 1.65 mmbbl of oil and 11.7 bcf of natural gas.

Pharos Energy Plc (LSE: PHAR): Re-Iterating Guidance

By Auctus Advisors

  • FY23 production and YE23 net debt had already been reported.
  • Pharos has re-iterated its FY24 guidance of 5.2-6.5 mboe/d (3.9-5.0 mboe/d in Vietnam plus 1.3-1.5 mbbl/d in Egypt) with net capex of US$27.1 mm.
  • In 2H24, Pharos plans to commence a two well drilling programme at TGT (Vietnam) and to start the development of NBS SW (Egypt).

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Mar 28
0

Daily Brief TMT/Internet: ACI Worldwide, AudioEye , Datatec Limited, QYOU Media and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • ACI Worldwide: Initiation Of Coverage – Expansion of SaaS Businesses & Improved Productivity with Generative AI! – Major Drivers
  • AEye, Inc. – 4Q23 Cash Burn Lower, New Product Announced
  • Datatec – FY24 revenue growth of 5.8%
  • QYOU: Setting Up for a Record 2024

ACI Worldwide: Initiation Of Coverage – Expansion of SaaS Businesses & Improved Productivity with Generative AI! – Major Drivers

By Baptista Research

  • This is our first report on software player, ACI Worldwide Inc. The company delivered a solid earnings performance for the fourth quarter and full year ended 2023.
  • The company witnessed a strong acceleration in growth, with a revenue growth of 9% and an EBITDA growth of 32% in its Biller segment.
  • The company also demonstrated growth in its banking segment, with revenue growth of 35% and 24% in its anti-fraud and real-time payment solutions respectively.

AEye, Inc. – 4Q23 Cash Burn Lower, New Product Announced

By Water Tower Research

  • While AEye announced 4Q23 revenue of $0.1 million and reduced cash burn again, the real story was the signing of a letter-of-intent with a Tier 1 automotive ADAS sensor supplier.
  • CEO Matt Fisch said this, “marks the beginning of a new relationship as part of our capital- light, automotive-first strategy.”
  • AEye announced its first 4Sight Flex product, Apollo, which will target L2+, L3, and L4 applications in the automotive market. 

Datatec – FY24 revenue growth of 5.8%

By Edison Investment Research

Datatec expects to report revenue of $5.44bn for FY24, up 5.8% y-o-y, and noted that the quality of earnings improved in the year. During H224, Westcon International continued to deliver a strong financial performance. Logicalis International also had a strong half, although its reported revenue growth has been suppressed by a higher proportion of net revenue-reported software sales. Logicalis Latin America had a tougher H2 due to difficult market conditions in Argentina and Brazil. We maintain our forecasts pending FY24 results, which are expected to be on or around 27 May.

QYOU: Setting Up for a Record 2024

By Atrium Research

  • QYOU Media announced the launch of two new channels for its Connected TVs business as well as a distribution agreement for QPlay+.
  • On its March 7th townhall, QYOU USA highlighted that it is currently having its best quarter ever, bouncing back from the Hollywood strike.
  • This sets up QYOU for a record 2024, as seen in our model and Q1/24 preview section below.

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Mar 28
0

Daily Brief Health Care: Alteogen Inc, Eiken Chemical, Probiotec Ltd, Fortrea Holdings , HealthCare Global Enterprises, Beijing Wantai Biological Phar, Recce Ltd and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Alteogen: Block Deal Sale of About 3% of Shares
  • Consolidation in the Med-Tech Sector? Eiken and Hogy to Benefit
  • Probiotec (PBP AU): Trading Wide Ahead Of 29th May Shareholder Vote
  • Probiotec (PBP AU): Scheme Vote on 29 May as Doubts on Pyridam’s Funding Linger
  • Fortrea Holdings: Refocusing As A Pure-Play CRO But Will It Pay Off?
  • HCG: FY25 and FY26 Set To Be Defining Years
  • Beijing Wantai Biological (603392 CH): Struggling to Make a Mark in Murky China HPV Vaccine Market
  • Recce Pharmaceuticals – R&D advance (A$11.18m) extends runway

Alteogen: Block Deal Sale of About 3% of Shares

By Douglas Kim

  • On 27 March, Alteogen announced that Jeong Hye-shin, former Alteogen Chief Strategy Officer (CSO), sold 1.6 million shares of Alteogen stock in after-hours trading in block deal sale. 
  • The block deal sale price was 197,770 won. Alteogen’s share price declined by 10.9% today to 195,600 won. Block deal sale amount was about 316 billion won. 
  • This block deal sale combined with the sharp recent, share price increase are likely to result in a near-term consolidation of its share price in the next several months.

Consolidation in the Med-Tech Sector? Eiken and Hogy to Benefit

By Mark Chadwick

  • The med-tech sector is ripe for consolidation. Smaller players like Hogy Medical (3593 JP) , and Eiken Chemical (4549 JP)  exhibit sub-par growth and lagging valuations
  • Activist investors like ValueAct Capital, Dalton and Asset Value have recognized an opportunity for growth and potential M&A
  • Both Hogy and Eiken trades at a deep discount to larger domestic peers and stand to benefit the most from any consolidation

Probiotec (PBP AU): Trading Wide Ahead Of 29th May Shareholder Vote

By David Blennerhassett

  • On the 22 December 2023, drugs maker/packager group Probiotec Ltd (PBP AU) entered into a Scheme with Indonesia’s Pyridam Farma (PYFA IJ).
  • Pyridam is offering Probiotec shareholders A$3.00/share (in cash, or a 19% premium to the undisturbed price). An interim dividend of A$0.035/share was also added (now gone ex).
  • The Scheme Booklet is now out. The Scheme Meeting will be held on the 29th May. The IE says terms are fair. I agree. Trading wide. Gross spread is 4.9%.

Probiotec (PBP AU): Scheme Vote on 29 May as Doubts on Pyridam’s Funding Linger

By Arun George

  • The Probiotec Ltd (PBP AU) IE considers Pyridam Farma (PYFA IJ)’s A$3.00 offer fair and reasonable as it is within its A$2.79-A$3.28 per share valuation range.
  • The scheme remains conditional on shareholders’ (Probiotec and Pyridam), FIRB, and OJK approvals. Probiotec can also pay a permitted dividend of up to A$0.04 per share.
  • The gross spread of 4.9% (6.3% including dividends) reflects doubts about Pyridam’s funding credibility, as Pyridam’s market cap is 16% of Probiotec’s implied by the offer.

Fortrea Holdings: Refocusing As A Pure-Play CRO But Will It Pay Off?

By Baptista Research

  • This is our first report on Fortrea Corporation, a renowned contract research organization (CRO).
  • The company reported its fourth quarter 2023 earnings, recording revenue growth of 1.8% year-over-year to $775.4 million.
  • CEO Tom Pike praised the company’s transformation over 2023, managing to transition from a division within a larger parent company to a stand-alone entity.

HCG: FY25 and FY26 Set To Be Defining Years

By Ankit Agrawal, CFA

  • Despite Q3 being seasonally weak, HealthCare Global Enterprises (“HCG”) reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.
  • HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.
  • With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.

Beijing Wantai Biological (603392 CH): Struggling to Make a Mark in Murky China HPV Vaccine Market

By Tina Banerjee

  • Beijing Wantai Biological Phar (603392 CH) announced that its net profit for 2023 declined 71–75% YoY to RMB1.20–1.35B mainly due to the market competition.
  • China’s HPV vaccine market is highly competitive. Beijing Wantai has no presence in higher valent HPV vaccine segment, which dominates the domestic market.
  • Although the company will be one of the early movers in domestically developed nonavalent HPV vaccines, at least three more players will follow soon, thereby making the space more competitive.

Recce Pharmaceuticals – R&D advance (A$11.18m) extends runway

By Edison Investment Research

Recce Pharmaceuticals recently received A$11.18m as an R&D advance credit through an arrangement with Endpoints Capital for the R&D tax credit rebates that Recce expects to receive for FY23/FY24 and FY25. We believe this non-dilutive source of funding should extend Recce’s operating runway into FY25. Recce is also continuing to advance its intravenous (IV) R327 formulation in its ongoing Phase I/II study in healthy volunteers, having recently started the 20-minute (3,000mg) dosing cohort. We have made minor adjustments to our valuation and we now obtain a risk-adjusted net present value (rNPV) of A$644.4m (or A$3.16/share), versus A$652.6m previously.

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Mar 28
0

Daily Brief Industrials: Mitsubishi Heavy Industries, Shipping Corp of India Land And Assets, Symbotic, China Everbright Environment, SharkNinja , Steelcase Inc Cl A, Acuity Brands and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mitsubishi Heavy Industries (7011 JP): Take Profits and Wait for Reality to Catch Up
  • Shipping Corporation of India Land & Assets Ltd.: Demerger and a Value Bet
  • Symbotic Inc. (SYM): Fast Growing AI-Powered Warehouse Automation Supplier
  • China Everbright Environment (257 HK): Being Penalised Too Much
  • SharkNinja Inc.: Initiation of Coverage – A Story Of Expansion Into New Markets & Categories! – Major Drivers
  • Steelcase, Inc. – Tweaking FY25 Estimates; Encouraged by Orders and Cash Flow
  • Acuity Brands: Initiation of Coverage – 4 Critical Factors Responsible For Its Future Performance! – Financial Forecasts

Mitsubishi Heavy Industries (7011 JP): Take Profits and Wait for Reality to Catch Up

By Scott Foster

  • MHI’s share price has risen more than 60% year-to-date and nearly tripled over the past 12 months on the improving outlook for Japanese defense contractors.
  • A huge increase in new orders, prospects for a doubling of sales and a rapidly rising operating margin on Aircraft, Defense & Space have been factored into the price.
  • The shares do not look expensive compared with international comparables, but neither are they particularly cheap. Potential problems, from Japanese defense budget constraints to production glitches, have been ignored. 

Shipping Corporation of India Land & Assets Ltd.: Demerger and a Value Bet

By Sudarshan Bhandari

  • Discover SCILAL’s debut in the stock market after demerger form Shipping Corp Of India (SCI IN), its strategic disinvestment, and the hidden value within its diverse asset portfolio.
  • Real Estate Assets in company and future outlook by management of SCILAL over the years going forward.
  • The market value of assets is twice more than the book value. Value bet but can take longer time to monetize the same.

Symbotic Inc. (SYM): Fast Growing AI-Powered Warehouse Automation Supplier

By GSBR Research Pvt Ltd

  • Symbotic is a warehouse automation technology leader and offers end-to-end AI-powered robotic and software platform for supply chains.
  • SYM’s hi-tech platform forms its deep competitive moat underpinned by significant R&D spend of $800 million and 575 issued or pending patents.
  • Our positive outlook for SYM is underpinned by its hi-tech platform , a large TAM, robust order backlog ($23.2B) and its JV deal with Softbank that opens a large market.

China Everbright Environment (257 HK): Being Penalised Too Much

By Osbert Tang, CFA

  • Despite a 3.8% decline in FY23 net profit, China Everbright Environment (257 HK)‘s profitability has still outperformed its peers by significant magnitudes. 
  • Positive notes in the result are an increase in operation service revenue proportion, expansion in EBITDA margin, improvement in financial position, and addition of new projects.
  • It is easy for CEE to achieve the market expectation of a 9.8% growth in FY24. Yet, it just trade on 3.6x PER, 8.5% yield, and 0.34x P/B. 

SharkNinja Inc.: Initiation of Coverage – A Story Of Expansion Into New Markets & Categories! – Major Drivers

By Baptista Research

  • This is our our first report on household appliances distributor, SharkNinja.
  • The company’s Q4 2023 Earnings revealed that it had a robust fourth quarter, with nearly 20% growth in adjusted net sales and more than 70% growth in adjusted EBITDA. The CEO, Mark Barrocas, attributed this to the company’s growth strategy, innovation and the support from both consumers and retail partners.
  • The company’s full year sales grew by over 15% nearing to $4.2 billion and with an adjusted EBITDA increase by nearly 39% reaching $720 million.

Steelcase, Inc. – Tweaking FY25 Estimates; Encouraged by Orders and Cash Flow

By Water Tower Research

  • We are publishing new estimates for our Steelcase economic model after its solid 4QFY24 earnings.
  • Adjusted EPS of $0.23 beat our estimate as well as consensus. Revenue of $775.2 million modestly missed estimates.
  • 1QFY25: We tweaked our non-GAAP (adjusted) EPS estimate to $0.11 ($0.10 previously).

Acuity Brands: Initiation of Coverage – 4 Critical Factors Responsible For Its Future Performance! – Financial Forecasts

By Baptista Research

  • This is our first report on building management solutions provider, Acuity Brands.
  • The company reported fiscal first quarter earnings, indicating positive performance for the period.
  • The company demonstrated strong overall execution as it increased its adjusted operating profit, adjusted operating profit margin, and adjusted diluted earnings per share.

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Mar 28
0

Daily Brief Consumer: Lawson Inc, Fast Retailing, Shenzhou Intl Group Holdings, China Resources Beer Holdings, Lotte Tour Development Co, Ltd., RPSG Ventures Limited, Abercrombie & Fitch Co Cl A, Academy Sports & Outdoors , Nippon Television and more

By | Consumer, Daily Briefs

In today’s briefing:

  • KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
  • Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches
  • Fast Retailing: Earnings Preview
  • Shenzhou Intl (2313 HK):  Higher Visibility Into Restocking Cycle
  • China Resources Beer Holdings (291.HK) Starts 2024 with a Bang!
  • Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity
  • RPSG Ventures: FMCG Business Is Scaling Up Well | BPO Business Is Recovering
  • Abercrombie & Fitch Co: Initiation of Coverage – Its Enhanced Product Differentiation & Expansion Responsible For The Recent Growth? – Major Drivers
  • Academy Sports and Outdoors Inc.: Initiation of Coverage – Why Are We Bullish On This Sports Products Giant? – Major Drivers
  • NTV’s Change of Policy Is a Positive Effect Of TSE’s Request, But Its Seriousness Will Be Tested Now

KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap

By Travis Lundy

  • KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP). 
  • It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines. 
  • There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up. 

Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches

By Arun George

  • Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share. 
  • The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range. 
  • Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms. 

Fast Retailing: Earnings Preview

By Oshadhi Kumarasiri

  • While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
  • Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
  • Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.

Shenzhou Intl (2313 HK):  Higher Visibility Into Restocking Cycle

By Steve Zhou, CFA

  • Shenzhou Intl Group Holdings (2313 HK) reported 2023 results yesterday.  2H23 continued to be weak, with sales down 6% yoy.  Net profit grew 10% yoy in 2H23.
  • Most importantly, the company sounded quite bullish on 2024 during the results briefing, which greatly improves the visibility in the order recovery thesis of the company.
  • I continue to believe that Shenzhou is the best proxy for gaining exposure to the global sportswear sector, especially given the improved visibility now. 

China Resources Beer Holdings (291.HK) Starts 2024 with a Bang!

By Rikki Malik

  • Full -year 2023 results  and 2024 forecasts indicate business going to plan
  • The Baijiu division, key to a rerating, grew sales 50% y/y in the first two months of the year
  • The beer division continues to reap the benefits of its premiumisation strategy

Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity

By Douglas Kim

  • Lotte Tour Development announced that it will conduct a major asset revaluation which could positively impact its share price. 
  • The company’s assets will increase to 2.39 trillion won and equity will increase to 569.3 billion won (up more than 8x) at end of 1Q 2024 due to asset revaluation.
  • As a result of the asset revaluation, the company’s balance sheet will improve significantly and this likely result in many investors taking another look at the company for potential investments. 

RPSG Ventures: FMCG Business Is Scaling Up Well | BPO Business Is Recovering

By Ankit Agrawal, CFA

  • With around 3.4% QoQ CC revenue growth in Q3FY24, the BPO business, Firstsource Solutions (“Firstsource”), is recovering back to normal, after seeing cyclical dip over the past couple of years.
  • The FMCG business is scaling up well. Q3FY24 revenues came in at INR 135cr, a growth of around 12% QoQ, led by festive season demand. YoY growth was 17%+.
  • The Sports business reported muted revenues in Q3FY24 as currently the revenue stream is dominated by the IPL event which typically happens in the March to June period.

Abercrombie & Fitch Co: Initiation of Coverage – Its Enhanced Product Differentiation & Expansion Responsible For The Recent Growth? – Major Drivers

By Baptista Research

  • Abercrombie & Fitch Co.
  • emerged from 2023 with significant achievements, marking it as a defining year for the company.
  • The brand witnessed a 15.8% increase in sales, reaching $4.28 billion, which not only represents its second highest annual sales level in history but also a testament to its robust growth strategy.

Academy Sports and Outdoors Inc.: Initiation of Coverage – Why Are We Bullish On This Sports Products Giant? – Major Drivers

By Baptista Research

  • This is our first report on sports products major, Academy Sports and Outdoors.
  • In the Q4 and 2023 fiscal year call of Academy Sports and Outdoors, the management reported impressive sales improvement during the quarter and significant progress in their long-term strategic objectives.
  • Sales came in at $1.8 billion, which was a 2.8% increase in total and adjusted earnings per share increased by 8%.

NTV’s Change of Policy Is a Positive Effect Of TSE’s Request, But Its Seriousness Will Be Tested Now

By Aki Matsumoto

  • Although unavoidable under the provisions of Broadcasting Act, the fact that the right to receive dividends as interest-bearing securities was inhibited was problematic in terms of fairness with other shareholders.
  • NTV Holdings, which has ignored this issue, changes its policy, which is a positive impact of “TSE’s request,” but NTV’s seriousness can be measured by whether it raises its ROE.
  • If the intention is to leave cross-shareholdings intact and attract overseas investor purchases through some share repurchases, there would be little prospect of a serious increase in ROE.

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Mar 28
0

Daily Brief Financials: Noah Holdings, Nesco Ltd, USD, Yuexiu Property and more

By | Daily Briefs, Financials

In today’s briefing:

  • Update on active Ideas
  • Nesco: Stellar Q3FY24
  • Global FX: An Uncomfortable Setup for USD Bulls and Bears
  • Yuexiu Property – Earnings Flash – FY 2023 Results – Lucror Analytics

Update on active Ideas

By Turtles all the way down

  • I mentioned Noah holdings as a trade to buy before earnings since I anticipated an announcement of significant capital returns.
  • This has worked out well with over $2 in dividends announced. Half of that dividend will be recurring.
  • So I sold out all of my shares at just under $12. This was never a high conviction investment, but merely a trade. Marking it as a 18% return.

Nesco: Stellar Q3FY24

By Ankit Agrawal, CFA

  • Nesco reported a strong Q3FY24 led by significant growth in the exhibition business. It grew by 55%+ YoY and grew 3%+ QoQ despite Q2 being a seasonally strong quarter.
  • The IT business performed steady with revenues at around INR 80cr and EBIT at around 65cr. Revenue declined by -4% QoQ, led by slight decline in occupancy.
  • Nesco is now on track to beat our prior FY24 upgraded PAT estimate of INR 330cr+. It may now end FY24 with a PAT of INR 350cr+.

Global FX: An Uncomfortable Setup for USD Bulls and Bears

By At Any Rate

  • Powell’s dovish tone at the press conference led to initial market reaction, but subsequent dollar rally due to revised growth and inflation forecasts in the SCP release
  • Market leaning towards higher median dot in SCP, but overall outlook remains for shallower cutting cycle by Fed
  • Yen vulnerability due to negative real yields despite BOJ rate hikes, yen weakening may impact other Asian currencies and markets

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

Yuexiu Property – Earnings Flash – FY 2023 Results – Lucror Analytics

By Leonard Law, CFA

Yuexiu Property’s (YXP) FY 2023 results were largely stable and in line with our expectations. The company reported strong contracted sales and top-line growth, albeit the margins weakened in tandem with industry trends. Leverage was mixed, as net debt crept up slightly. Importantly, liquidity appears sound, supported by YXP’s healthy access to financing. The company remains active in land acquisitions and has a good quality land bank, with 95% of its projects in Tier 1 and 2 cities.

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