Category

Daily Briefs

Dec 01
0

Daily Brief India: BYD, Rajshree Polypack, Powerlong Real Estate Holdings and more

By | Daily Briefs, India

In today’s briefing:

  • BYD (1211 HK) | Takeaways from India Showroom Visit | “Tata” Of China
  • RPPL: Climbing Up the Value Chain | All Set for a Strong FY25
  • Morning Views Asia: Azure Power Global Ltd, Powerlong Commercial Management Holdings

BYD (1211 HK) | Takeaways from India Showroom Visit | “Tata” Of China

By Pranav Bhavsar

  • We recently visited a BYD (1211 HK)  showroom in Ahmedabad, with the objective of understanding the preference for Electric Vehicles in India.
  • Pitched as the “Tata” of China, BYD offers 2 models ATTO 3 and e6 in India. 
  • Considering Tesla Motors (TSLA US) India interest, and Mahindra & Mahindra (MM IN) big bet on EV, BYD’s current operations in India seem to be minuscule and may find little success.

RPPL: Climbing Up the Value Chain | All Set for a Strong FY25

By Ankit Agrawal, CFA

  • RPPL reported decent Q2FY24 earnings, led by volume growth and margin expansion. Revenue growth was somewhat tepid due to decline in realization led by volatility in raw material prices.
  • RPPL is seeing good traction in exports with improving mix of value-added products and enhanced geographic reach. Revenue from exports is guided to triple to INR 30cr+.
  • RPPL has also entered into In-mold Labeling (IML) in rigid plastic injection molding products. This could be a game changer for RPPL in terms of growth and target market potential.

Morning Views Asia: Azure Power Global Ltd, Powerlong Commercial Management Holdings

By Charles Macgregor

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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Dec 01
0

Daily Brief Indonesia: Indofood CBP Sukses and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Indofood CBP Sukses (ICBP IJ) – FMCG On Track at Home and Abroad

Indofood CBP Sukses (ICBP IJ) – FMCG On Track at Home and Abroad

By Angus Mackintosh

  • Indofood CBP Sukses (ICBP IJ) has weathered the worst of higher raw material prices and is now seeing the benefits of lower input costs, benefiting margins.
  • The company is a core beneficiary of pre-election spending as its products are often given as gifts during campaigning. ICBP is also seeing strong performance in its export markets.
  • ICBP should increasingly be seen as an emerging market staples player, with globally recognised brands such as Indomie and Chitato. Valuations do not reflect this.

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Dec 01
0

Daily Brief United States: OpenAI, Micron Technology, NVIDIA Corp, Seadrill , Tjx Companies, Airbnb , Amgen Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • Altman Allure at OpenAI: Where the Hunter Gets Hunted
  • Memory Monitor: Micron Expects 2025E to Be Best-Ever for Memory; But Valuations Have Run Up a Lot
  • Micron. The Rally Is Premature
  • Nvidia’s China Problems, Applied Materials, and Microsoft’s Accelerators
  • SDRL: Course for Free Cash Flow
  • GES: 3Q Review: Guess Goes Conservative for 4Q; Reiterate Buy, $32.50 Pt
  • EXPR: 3Q Review; Cleaning Up the Mess; Reiterate Buy, Lowering PT to $20
  • EXPR: Snapping the Store: Remedying Issues of Xmas Past; Reiterate Buy, $40 PT
  • Airbnb Inc.: The GamePlanner.AI Acquisition & Investments In AI – Major Drivers
  • Amgen Inc.: Expansion Of Oncology Research & Other Major Drivers

Altman Allure at OpenAI: Where the Hunter Gets Hunted

By Pranay Yadav

  • Sam returned as the CEO of OpenAI days after his surprise removal. Its board was overhauled with new members – Larry Summers and Bret Taylor.
  • The surprise removal of Sam was driven by philosophical differences over AI safety. Fears of employee exodus to Microsoft is the primary driver of his return to OpenAI leadership.
  • Recent events have solidified Microsoft’s partnership with OpenAI and Sam. Outcome from fallout suggests Microsoft will have a larger role in shaping OpenAI’s future.

Memory Monitor: Micron Expects 2025E to Be Best-Ever for Memory; But Valuations Have Run Up a Lot

By Vincent Fernando, CFA

  • Memory names have rallied strongly, with Nanya Tech outperforming since the start of November.
  • DRAM bottomed and NAND flash prices have jumped. Micron says that 2025E could be a record year for the Memory industry.
  • High valuations make near-term upside for Memory names uncertain. For Long/Shorts one can consider Long Micron vs. Short SK Hynix or Long Micron vs. Short Nanya Tech.

Micron. The Rally Is Premature

By William Keating

  • Improving outlook with Q1F24 revenue forecast slightly above the high end of the guided range
  • 2024 is being positioned as a “recovery year”, helping reset investor expectations about the nature and speed of the recovery
  • Micron’s share price typically rallies strongest into record revenue years. 2024 will not be a record revenue year. As such, we think the present rally is premature. 

Nvidia’s China Problems, Applied Materials, and Microsoft’s Accelerators

By Douglas O’Laughlin

  • Nvidia’s quarter was surprising to me because it was boring. There were a few incremental pieces, but the big news was everything to do with China.
  • As you know, there was another round of export restrictions with a myopic focus on AI Accelerators.
  • This impacted results and the outlook.

SDRL: Course for Free Cash Flow

By Hamed Khorsand

  • SDRL reported third quarter results exceeding expectations and announcing slight extensions to when near-term contracts would expire.
  • There had been minimal news from SDRL to expect contract extensions. SDRL’s peers had been reporting a slowing in contract activity.
  • The free cash flow SDRL is generating is being used for stock buy backs with the authorization doubled to a total of $500 million.

GES: 3Q Review: Guess Goes Conservative for 4Q; Reiterate Buy, $32.50 Pt

By Small Cap Consumer Research

  • We are reiterating our Buy rating and $32.50 price target for Guess?, after the company reported mixed 3QFY24 (October) results, with EBITDA handily beating Street consensus, but EPS a miss, driven by a higher than expected tax rate and slightly weaker top line results, as Europe saw slowing traffic and the domestic stores remain negative.
  • Jeans), the recapture of the company’s license for domestic outerwear and a normalization of the expense base.
  • As such, we are reiterating our Buy rating and $32.50 price target on GES, which now translates to 6.5X our new FY25 EBITDA.

EXPR: 3Q Review; Cleaning Up the Mess; Reiterate Buy, Lowering PT to $20

By Small Cap Consumer Research

  • We are cutting our projections and price target for Express, but maintaining our Buy rating after the company missed 3Q projections and guided to a materially weaker than expected 4Q.
  • Further, with inventories heavier than expected ahead of the Holiday season (up 14% YoY, or flat if Bonobos is excluded) we expect the season to remain aggressively promotional and, in the near term, offset any gains from cost savings and other S,G&A reductions (and probably spill over into Q1FY24).
  • Our new price target of $20 (down from $40) translates to 8.2X our new, materially lowered FY24 EBITDA projection.

EXPR: Snapping the Store: Remedying Issues of Xmas Past; Reiterate Buy, $40 PT

By Small Cap Consumer Research

  • We are reiterating our Buy rating, projections and price target for Express after visiting stores in Long Island and Connecticut.
  • We believe, after a tough Xmas last year, Express offerings are materially more versatile, priced better and more inline with the split between fashion and basics to create multiple exciting looks and outfits.
  • As such, we reiterate our Buy rating and price target for EXPR.

Airbnb Inc.: The GamePlanner.AI Acquisition & Investments In AI – Major Drivers

By Baptista Research

  • Airbnb delivered an all-around beat in the previous quarter, reporting a net income of $4.4 billion, including a one-time income tax benefit of $2.8 billion from releasing a valuation allowance.
  • Excluding this benefit, adjusted net income reached a significant $1.6 billion, representing a historic adjusted net income margin of 47%.
  • The quarter’s free cash flow amounted to $1.3 billion, with a trailing 12-month free cash flow hitting an all-time high of $4.2 billion.

Amgen Inc.: Expansion Of Oncology Research & Other Major Drivers

By Baptista Research

  • Amgen delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
  • The company achieved significant quarterly sales for seven key brands and witnessed substantial volume growth across general medicine, inflammation, and hematology/oncology portfolios.
  • In bone health, Prolia reported a 14% year-over-year sales increase in the third quarter, buoyed by a 7% volume growth and higher net selling prices.

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Dec 01
0

Daily Brief China: Greatview Aseptic Packaging, Meituan, PDD Holdings , Futu Holdings Ltd, Sunho Biologics, Powerlong Real Estate Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • GAPack (468 HK): Unpacking XJF’s Move To Send The Board Packing
  • 2024 High Conviction: Meituan / MT (3690 HK) – Big Opportunity Emerging After Plunge
  • Pinduoduo (PDD US): TEMU at Center Stage
  • [Futu Holdings(FUTU US, SELL, TP US$46)Rating Change]: Run Out of Growth Momentum, Downgrade to SELL
  • Sunho Biologics (盛禾) Pre-IPO: Testing the Unproven Targets
  • Morning Views Asia: Azure Power Global Ltd, Powerlong Commercial Management Holdings

GAPack (468 HK): Unpacking XJF’s Move To Send The Board Packing

By David Blennerhassett

  • Back on the 27 January 2023, Jardine Matheson (JM SP) entered an agreement with Shandong Xinjufeng (301296 CH) (XJF) to sell its 28.22% stake in GAPack (468 HK). 
  • That sale completed in September.  Last week, XJF requisitioned an EGM to consider appointing five new (& friendly) directors, all-but taking control of the board. 
  • CEO and founder Jeff Bi holds 9.65%. The question is: what are his options?

2024 High Conviction: Meituan / MT (3690 HK) – Big Opportunity Emerging After Plunge

By Ming Lu

  • The stock has been declining for about three years and plummeted after the 3Q23 results.
  • However, we believe MT and its corporate clients have been recovering and MT’s profits will rise by 129% in 2024.
  • We set an upside of 132% and a price target of HK$209 for 2024. Buy.

Pinduoduo (PDD US): TEMU at Center Stage

By Eric Chen

  • Stock rally on strong revenue growth suggests TEMU will be at center stage of the investment thesis for PDD down the road. 
  • Besides soaring GMV, TEMU achieved blowout performance likely due to much higher-than-expected take-rate and disciplined marketing, resulting in narrower-than-expected losses.
  • We expect the company’s growth will even accelerate in 4Q23 and generate adjusted net profit of US$12 bn for FY24, with a target market cap of US$240 bn (20xPE).

[Futu Holdings(FUTU US, SELL, TP US$46)Rating Change]: Run Out of Growth Momentum, Downgrade to SELL

By Eric Wen

  • We think FUTU is stepping into a stagnant phase in 2024. Japan is not a game changer.
  • Client asset inflow from overseas is not meaningful, and growth from mainland is frozen by regulation.
  • We downgrade the stock into SELL rating and cut TP to US$46/ADS, mainly due to slow progress in overseas expansion and difficulty in monetization.

Sunho Biologics (盛禾) Pre-IPO: Testing the Unproven Targets

By Ke Yan, CFA, FRM

  • Sunho Biologics, a China-based clinical-stage biotechnology company, plans to raise up to US$100m via a Hong Kong listing.
  • In this note, we examine the company’s three core products, namely IAP0971, IAE0972, and IAH0968, which target malignancies.
  • A large part of the company’s pipeline is testing the unproven targets. We also think the management and pre-IPO investors are of mediocre quality.

Morning Views Asia: Azure Power Global Ltd, Powerlong Commercial Management Holdings

By Charles Macgregor

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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Dec 01
0

Daily Brief Japan: Denso Corp, Ito En Ltd Preferred Shares, Sapporo Holdings, CyberAgent Inc, Taisho Pharmaceutical Holdin, Kobayashi Pharmaceutical Co, Toyota Motor Corp Spon Adr and more

By | Daily Briefs, Japan

In today’s briefing:

  • Denso – Thoughts On The Cross-Holdings Sell-Down
  • Itoen Pref (25935 JP) – Big Discount, Big Buyback, No Big Governance Change
  • Sapporo Holdings: Activist Investor 3D Investment Partners Assumes Majority Ownership
  • 2024 High Conviction – CyberAgent: Worst Seems to Be Over
  • (Mostly) Asia M&A, Nov 2023: Taisho Pharma, CIMC Vehicle, CMIC, Japan Best Rescue, Shidax
  • Kobayashi Pharmaceutical Co (4967 JP): Q3 Shows Early Signs of Business Revival; Aims Big for US
  • Toyota Motor Corporation: Market Dynamics in China & the Impact on Toyota’s Electric Vehicle Strategy! – Major Drivers

Denso – Thoughts On The Cross-Holdings Sell-Down

By Mio Kato

  • The trend of governance reform in Japan continues with Toyota, Toyota Industries and Aisin selling shares of Denso. 
  • Denso is buffering some of the flow impact by repurchasing roughly half of the shares to be sold. 
  • While the size of these moves is relatively large we believe their impact could be disproportionately large for the market as a whole.

Itoen Pref (25935 JP) – Big Discount, Big Buyback, No Big Governance Change

By Travis Lundy

  • This is always a tough subject, but every now and then I throw myself on the mercy of the ho-humming crowd and write about the Ito En Prefs (25935 JP).
  • No strong catalyst. Limited capacity for strongly better governance. Even less apparent corporate interest in good governance. 
  • But we have a mini-catalyst, and it has been a while, and I think there IS a good way to think about this stock, so here’s another crack at it.

Sapporo Holdings: Activist Investor 3D Investment Partners Assumes Majority Ownership

By Oshadhi Kumarasiri

  • Last week, activist investor 3D Investment Partners raised its stake in Sapporo Holdings (2501 JP) by an additional 13%, cementing its position as the majority shareholder in the business.
  • This suggests the activist investor is optimistic about successfully advancing their proposals.
  • If investment properties are sold or spun off, and Alcoholic Beverages and Food & Soft Drinks undergo the suggested turnaround, we anticipate an additional 80-100% upside in the near term.

2024 High Conviction – CyberAgent: Worst Seems to Be Over

By Shifara Samsudeen, ACMA, CGMA

  • CyberAgent Inc (4751 JP) (CA) is a Japan-based media and entertainment company offering media, internet advertising, smart games and investment development businesses in Japan.
  • The gaming business of the company has collapsed with the slowdown of hit title UMA MUSUME while titles released after UMA MUSUME have failed to perform satisfactorily.
  • Profitability of Internet advertising and media are expected recover and seems that worst is over for the games business as several titles are slated for release in the near future.

(Mostly) Asia M&A, Nov 2023: Taisho Pharma, CIMC Vehicle, CMIC, Japan Best Rescue, Shidax

By David Blennerhassett

  • For the month of November 2023, 16 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$13bn.
  • The average premium for the new deals announced (or first discussed) in November was 41%. The average YTD is 38% (97 deals).
  • This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Kobayashi Pharmaceutical Co (4967 JP): Q3 Shows Early Signs of Business Revival; Aims Big for US

By Tina Banerjee

  • Kobayashi Pharmaceutical Co (4967 JP) witnessed business revival in Q3, especially in the domestic household and the U.S. business. In Q3, revenue increased 6% YoY and 13% QoQ to ¥45.4B.
  • Kobayashi has reiterated FY24 guidance. The company has guided for FY24 revenue of ¥172.0B (+4% YoY), operating income of ¥25.5B (-4% YoY), and net profit of ¥20.2B (-1% YoY).
  • By establishing the supplement business in North America and further expanding OTC medicines, the company aims to achieve sales of ¥34B in the U.S. in 2030, including ¥16B from healthcare.

Toyota Motor Corporation: Market Dynamics in China & the Impact on Toyota’s Electric Vehicle Strategy! – Major Drivers

By Baptista Research

  • Toyota Motor Corporation delivered a positive result and managed an all-around beat in the last quarter.
  • Consolidated vehicle sales reached 114.1% of the previous fiscal year, totaling 4,744,000 units.
  • Toyota and Lexus brand vehicle sales amounted to 5,172,000 units, representing 109.1% of the same period last fiscal year.

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Nov 30
0

Most Read: GMO Payment Gateway, Denso Corp, Toyota Motor, Celltrion Healthcare , SK Square , Kurita Water Industries and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Japan – Increase in Shorts on Some Interesting*** Stocks
  • Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying
  • Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!”
  • Denso Offering, Buyback, and New Cross-Holding Reduction Policy – It WAS a Trap
  • StubWorld: Toyota Group To Sell 10% of Denso; Adelson Selling LVS
  • Spread Trade Opportunities Arising from KQ150/KS200 Passive Flows in the Celltrion Merger
  • Denso (6902 JP): US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback
  • SK Square: Drag Along Rights To Be Exercised to Sell 11 Street + Merger of TVing and Wavve
  • Japan – A Last Look at Shorts on Some Interesting Stocks & Positioning
  • Denso Corp Placement – Toyota to Raise US$4.4bn, as Expected

Japan – Increase in Shorts on Some Interesting*** Stocks

By Brian Freitas

Denso Corp (6902 JP): Potential US$4.6bn Placement & Limited Passive Buying

By Brian Freitas

Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!”

By Travis Lundy

  • Yesterday, Reuters reported that multiple Toyota Group companies would sell ~10% of Denso Corp (6902 JP) worth ¥700bn in a secondary share sale by year-end.
  • The sellers would be Toyota, selling down to just over 20%, Toyota Industries (6201) (selling down a bit more than half, and Aisin Seiki (7259 JP) selling its 2% stake. 
  • Denso would buy back shares. This whole thing is both interesting and complicated so I discuss the interesting complications below. It looks bigger than it probably is.

Denso Offering, Buyback, and New Cross-Holding Reduction Policy – It WAS a Trap

By Travis Lundy

  • 15 minutes after I published what I thought was a considered analysis, Denso dumps the details. I thought it might be a trap. It looks like a trap.
  • A holistic view of the three different documents here suggests, indeed, “It was a trap”. 
  • This giant offering is not bearish overhang but likely tilts bullish with greenshoe support, a large buyback, a new cross-holding reduction policy, and the follow-on effects from that.

StubWorld: Toyota Group To Sell 10% of Denso; Adelson Selling LVS

By David Blennerhassett

Spread Trade Opportunities Arising from KQ150/KS200 Passive Flows in the Celltrion Merger

By Sanghyun Park

  • KOSDAQ 150’s passive outflow occurs on December 14th for Celltrion Healthcare, whereas it would be January 11th for Celltrion with KOSPI 200.
  • The estimated passive flow size (x ADTV) on their respective rebalancing trading days is anticipated to be approximately -2.79x (Celltrion Healthcare) and +1.76x (Celltrion).
  • We should monitor the potential expansion of the swap spread on December 14th. Additionally, contemplating an outright approach for Celltrion, akin to the Hanwha Ocean scenario, could be worth considering.

Denso (6902 JP): US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback

By Arun George

  • Denso Corp (6902 JP) announced a secondary offering of up to 294.8 billion shares (including overallotment) and a buyback (maximum shares of 125 million or maximum value of JPY200 billion).
  • Denso also announced a cross-holding reduction policy. In an unspecified timeframe, it will sell part of its holdings in Toyota Industries (6201 JP) and Aisin (7259 JP).
  • Looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 13 and 18 December (likely 13 December).

SK Square: Drag Along Rights To Be Exercised to Sell 11 Street + Merger of TVing and Wavve

By Douglas Kim

  • SK Square announced it will not exercise the call option to repurchase minority stake in 11 Street. This is likely to have a positive impact on the company. 
  • SK Square does not need to pay 500 billion won plus 3.5% annualized interest to the financial investors of 11 Street. This will also accelerate sale of 11 Street.
  • In addition, SK Square announced the merger of TVing and Wavve OTT services. 

Japan – A Last Look at Shorts on Some Interesting Stocks & Positioning

By Brian Freitas

Denso Corp Placement – Toyota to Raise US$4.4bn, as Expected

By Sumeet Singh

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Nov 30
0

Daily Brief ESG: Headline Is Eye Catching and more

By | Daily Briefs, ESG

In today’s briefing:

  • Headline Is Eye Catching, but the Revised Voting Criteria Do Not Affect Most Companies

Headline Is Eye Catching, but the Revised Voting Criteria Do Not Affect Most Companies

By Aki Matsumoto

  • The “minimum majority of outside directors” is an eye catcher, but it does’t affect most companies because the 1/3 outside director ratio applies if a nominating committee is in place.
  • Since companies with majority of independent directors are 12.1% in prime market, the objective becomes to achieve the minimum requirement (1/3 INEDs), and few companies engage in further improving practices.
  • Companies with over 50% independent director have extremely superior market values in capitalization, ROE, ROA, and Tobin’s Q. Therefore, the acceleration of increasing independent director ratios should be seriously implemented.

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Nov 30
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | GM Higher on $10bn Buyback; Honda Boosts Bet on Electric Bikes and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | GM Higher on $10bn Buyback; Honda Boosts Bet on Electric Bikes
  • [Blue Lotus Daily – TMT Update] PDD: PDD Begins Hiring Staff to Train LLM for Temu Customer Service
  • Japan’s Convenience Stores Still Growing, Still Innovating

Ohayo Japan | GM Higher on $10bn Buyback; Honda Boosts Bet on Electric Bikes

By Mark Chadwick

  • Overseas: SPX -0.1%, Nasdaq -0.1%; Mixed signals from the Fed; CrowdStrike +10%, GM +9%
  • Today: NKY Futs -0.1% v cash. JPY/$ 147.3; Toyota to sell shares in Denso; Japan announces extra budget to offset inflation
  • JapanX: Honda Charges Ahead with its investment in electric motorcycles

[Blue Lotus Daily – TMT Update] PDD: PDD Begins Hiring Staff to Train LLM for Temu Customer Service

By Ying Pan

  • On November 22nd, 2023 local Chinese media reported that Pinduoduo began hiring researchers/engineers for its large language model (LLM) on its recruitment website and other staffing channels.
  • According to reports, PDD is in the process of hiring researchers to build its new LLM tool to make AI functionality available for customer service on Temu.
  • Reminder that Temu is responsible for handling post sales services under a “fully managed” business model, which is currently out-sourced to a customer service center.

Japan’s Convenience Stores Still Growing, Still Innovating

By Michael Causton

  • Convenience stores remain Japan’s largest sector. 2020 was the first and, so far, only year in the format’s 50-year history when sales declined, but performance has since bounced back.
  • Still dominated by three of the largest retail chains in the country, it remains one of the most dynamic and forward thinking retailing and marketing sectors
  • The latest initiatives look set to deliver more growth in sales as well as potentially delivering a huge new revenue stream in the form of retail media.

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Nov 30
0

Daily Brief ECM: Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!” and more

By | Daily Briefs, ECM

In today’s briefing:

  • Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!”
  • Denso Offering, Buyback, and New Cross-Holding Reduction Policy – It WAS a Trap
  • Denso (6902 JP): US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback
  • Denso Corp Placement – Toyota to Raise US$4.4bn, as Expected
  • Dekon Food and Agriculture Group IPO – Ebbs and Flows of Cycle Have Hurt Profitability
  • Tata Technologies IPO: Trading Debut
  • Tata Technologies IPO Trading – Will Be a Good Listing Owing to over Enthusiasm
  • Fedbank Financial IPO Trading – Subscription Rates Hint at a Snoozy Debut
  • Leader Energy Holdings Pre-IPO – Still Too Early for an ESG Angle
  • Sino-Synergy Hydrogen IPO – High Potential but Comes with Ample Issues

Huge Denso (6902) Secondary Sale by Toyota Group – Admiral Ackbar Says “It’s A Trap!”

By Travis Lundy

  • Yesterday, Reuters reported that multiple Toyota Group companies would sell ~10% of Denso Corp (6902 JP) worth ¥700bn in a secondary share sale by year-end.
  • The sellers would be Toyota, selling down to just over 20%, Toyota Industries (6201) (selling down a bit more than half, and Aisin Seiki (7259 JP) selling its 2% stake. 
  • Denso would buy back shares. This whole thing is both interesting and complicated so I discuss the interesting complications below. It looks bigger than it probably is.

Denso Offering, Buyback, and New Cross-Holding Reduction Policy – It WAS a Trap

By Travis Lundy

  • 15 minutes after I published what I thought was a considered analysis, Denso dumps the details. I thought it might be a trap. It looks like a trap.
  • A holistic view of the three different documents here suggests, indeed, “It was a trap”. 
  • This giant offering is not bearish overhang but likely tilts bullish with greenshoe support, a large buyback, a new cross-holding reduction policy, and the follow-on effects from that.

Denso (6902 JP): US$4.0 Billion Secondary Offering and US$1.4 Billion Buyback

By Arun George

  • Denso Corp (6902 JP) announced a secondary offering of up to 294.8 billion shares (including overallotment) and a buyback (maximum shares of 125 million or maximum value of JPY200 billion).
  • Denso also announced a cross-holding reduction policy. In an unspecified timeframe, it will sell part of its holdings in Toyota Industries (6201 JP) and Aisin (7259 JP).
  • Looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 13 and 18 December (likely 13 December).

Denso Corp Placement – Toyota to Raise US$4.4bn, as Expected

By Sumeet Singh

Dekon Food and Agriculture Group IPO – Ebbs and Flows of Cycle Have Hurt Profitability

By Clarence Chu

  • Dekon Food and Agriculture Group (DFAG CH) is looking to raise up to US$128m in its Hong Kong IPO.
  • Dekon Food and Agriculture Group (DFAG) is a vertically integrated livestock farming enterprise in China.
  • In this note, we will look at past performance, and share our thoughts on valuation.

Tata Technologies IPO: Trading Debut

By Arun George

Tata Technologies IPO Trading – Will Be a Good Listing Owing to over Enthusiasm

By Sumeet Singh

  • Tata Technologies (TATATECH IN) (TT) raised around US$370m in its India IPO.
  • Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
  • In our previous note, we looked at the company’s past performance and valuation. In this note, we talk about the demand and trading dynamics.

Fedbank Financial IPO Trading – Subscription Rates Hint at a Snoozy Debut

By Clarence Chu

  • Fedbank Financial Services (0702066D IN) raised around US$130m in its India IPO.
  • Fedbank Financial Services (Fedbank) is a retail-focused non-banking finance company (NBFC) promoted by The Federal Bank Limited.
  • In our previous note, we looked at the company’s past performance and valuation. In this note, we talk about the demand and trading dynamics.

Leader Energy Holdings Pre-IPO – Still Too Early for an ESG Angle

By Ethan Aw

  • Leader Energy Holdings (1814173D MK) is looking to raise up to US$215m in its upcoming Malaysia IPO. 
  • Leader Energy Holdings (LE) is an independent power producer (IPP) primarily engaged in the development, ownership, O&M of power assets and projects.
  • LE’s revenue has grown on the back of higher power generation as well as coal price increases over the track record period, which drove profitability up. 

Sino-Synergy Hydrogen IPO – High Potential but Comes with Ample Issues

By Sumeet Singh

  • Sino-Synergy Hydrogen Energy Technology (9663 HK) (SHET) is looking to raise around US$200m in its Hong Kong IPO. 
  • SHET is a hydrogen fuel cell company in the PRC focusing on research, development, production and sales of hydrogen fuel cell stacks and hydrogen fuel cell systems.
  • In this note, we will look at the company’s background and talk about valuations.

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Nov 30
0

Daily Brief Equity Bottom-Up: L’Occitane (973 HK):  FY1H24 Earnings Hurt By Massive Increase In Marketing and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • L’Occitane (973 HK):  FY1H24 Earnings Hurt By Massive Increase In Marketing, As Expected
  • Perfect Medical H1 FY24: Rebound of Growth in H2 FY24, 9% Div Yield, New High ROIC Investment
  • YSB (9885.HK) – Being Included in ETF Offers a Great Escape Opportunity
  • ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024
  • Meituan: Earnings to Weaken Further
  • Korean Air (003490 KS): Cheap, but a Value Trap
  • [Miniso Group (MNSO US, BUY, TP US$31) Company Update]:Opportunity for a Reposition Has Come to Fore
  • India Industrials | Quarterly Update – ABB India, Siemens, Polycab and Havells
  • Taiwan Tech Post-Earnings Takeaways: Semis Margins Underestimated? Hardware 2024E Forecasts Ramped
  • UMC (2303.TT; UMC.US): There Is a Greater Chance for a Rebound in 2Q24F.

L’Occitane (973 HK):  FY1H24 Earnings Hurt By Massive Increase In Marketing, As Expected

By Steve Zhou, CFA

  • L’Occitane (973 HK) reported FY1H24 (fiscal year ending March 31) results yesterday after market, with net profit down 45% yoy. 
  • The sharp drop in earnings is mainly due to a 48% yoy increase in marketing costs, as well as increased finance costs.
  • The company maintained the FY24 outlook of 17% topline growth and an operating profit margin of 12% (FY1H24:  7.2%). 

Perfect Medical H1 FY24: Rebound of Growth in H2 FY24, 9% Div Yield, New High ROIC Investment

By Sameer Taneja

  • Perfect Medical Health (1830 HK) results showed 7% revenue growth and 10% YoY profit (27% YoY adjusted profit for subsidies) growth in H1 FY24.
  • The company declared a 14.2 cent/share interim dividend. H2 dividends usually are higher, so we expect a 32-35 cent dividend for FY24. 
  • This is another dividend-yielding gem, trading at 12.0x PE FY24e, a 9% dividend yield, and 15% of the market cap in cash and investments with a >50% ROE. 

YSB (9885.HK) – Being Included in ETF Offers a Great Escape Opportunity

By Xinyao (Criss) Wang

  • YSB would be added to KraneShares CSI China Internet ETF.Cornerstone investors could opt to cash out directly,taking advantage of improved liquidity, which means even they’re not optimistic about YSB’s prospects.
  • YSB’s profit margin is disappointing. It would be hard for YSB to deliver decent profits in the end. This business does not make money. YSB is also short of money.
  • Since going public, YSB’s share price has been on a rollercoaster, which has deviated from the fundamentals, but it should be pointed out eventually stock prices will return to fundamentals.

ELS Losses for HSCEI Index Could Result in Lowering Dividend Expectations for Korean Banks in 2024

By Douglas Kim

  • The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean banks in 2024. 
  • On average, if H-Index declines below 5,699, then the majority of the investors on these H-Index could start to incur major losses starting 1Q 2024. 
  • Amid challenges of lower interest rates expectations and higher losses from ELS products, major Korean banks could be more hesitant on share buybacks and increasing their dividends in 1H 2024.

Meituan: Earnings to Weaken Further

By Shifara Samsudeen, ACMA, CGMA

  • Meituan (3690 HK) ‘s 3Q2023 revenues beat estimates while OP for the quarter was well below consensus estimates.
  • There were clear signs of slowdown in earnings growth due to macroeconomic challenges and weaker demand. 4Q earnings are expected to decline further.
  • Meituan’s share price went down by about 11% following its earnings announcement as slowdown in core local commerce and weakening earnings have concerned investors.

Korean Air (003490 KS): Cheap, but a Value Trap

By Mohshin Aziz

  • Korean Air Lines (003490 KS) is cheap, against peers and its own history. The impending merger with Asiana Airline is a major overhang  
  • Business is good, with steady passenger loads and yields, and cargo showing decent signs of recovery. Lower fuel prices could surprise on the upside 
  • Target Price KRW23,868 based on FY24 P/BV of 0.81x (1SD below mean). Too little upside for the level of uncertainty. PASS   

[Miniso Group (MNSO US, BUY, TP US$31) Company Update]:Opportunity for a Reposition Has Come to Fore

By Eric Wen

  • MNSO reported C3Q23 revenue in line with our estimate/consensus, and non-GAAP operating income in line with our estimate.
  • However, stock fell 14% over two days, mainly on concern of slowdowns in overseas distributors;
  • Based on our channel checks, overseas distributor inventory has always been a problem, more so when heightened US interest rate pricking the consumption bubble in developing markets.

India Industrials | Quarterly Update – ABB India, Siemens, Polycab and Havells

By Pranav Bhavsar

Taiwan Tech Post-Earnings Takeaways: Semis Margins Underestimated? Hardware 2024E Forecasts Ramped

By Vincent Fernando, CFA

  • Taiwan Tech companies beat analyst expectations by a high rate in the latest quarter
  • Semiconductors: Consensus could be underestimating a margin rebound for 2024E
  • Hardware aggregate forecast earnings growth increased significantly for 2024E as compared to just three months ago

UMC (2303.TT; UMC.US): There Is a Greater Chance for a Rebound in 2Q24F.

By Patrick Liao

  • Although it is still early to determine the extent of the utilization rate that could be reached in UMC for 2Q24F, there is a greater chance for a rebound.
  • UMC’s high-end technology, specifically 28nm, has a utilization rate of over 80% in 4Q23F. 
  • MediaTek is UMC’s largest client, dominating in WiFi, TV SoC, Bluetooth, and other areas.

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