Category

Daily Briefs

Nov 07
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Stocks, Yields, Oil Higher; SiC Chip Technology for Automotive Evolution
  • Furniture/Furnishings Weekly – Office Furniture Back in Focus After Strong HNI Quarter

Ohayo Japan | Stocks, Yields, Oil Higher; SiC Chip Technology for Automotive Evolution

By Mark Chadwick

  • Overseas: SPX +0.2% , Nasdaq +0.3%; Subdued start to the week after recent gains; Yields higher with 10Y at 4.65%
  • Today: NKY Futs -0.3% v cash. JPY 150/$; Ueda sees increasing chance of hitting 2% inflation goal
  • JapanX: Denso & Mitsubishi Elec Investing in SiC Chip Technology for Automotive Evolution

Furniture/Furnishings Weekly – Office Furniture Back in Focus After Strong HNI Quarter

By Water Tower Research

  • The commercial/contract (office) furniture stocks rallied last week following HNI’s strong 3Q23 earnings report.
  • The commercial/contract furniture issues rose more than 12.7%, outperforming the broad indexes, with HNI leading the group.
  • HNI’s 3Q report reinforced the sector story. Sales remain challenging. Improved pricing, a focus on costs, and eliminating unprofitable distractions restored margins.

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Nov 07
0

Daily Brief ECM: WuXi XDC IPO: Valuation First-Look and more

By | Daily Briefs, ECM

In today’s briefing:

  • WuXi XDC IPO: Valuation First-Look
  • Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
  • Hybe Placement- Another Block Incoming
  • Cello World IPO Trading – Very Strong Institutional Subscription
  • WuXi XDC Cayman Pre-IPO – BULL/BEAR Scenario Considerations for Valuations
  • WuXi XDC IPO Preview: The Rapid Rise of The Business In The Global ADC and Bioconjugate Market
  • CaiNiao Smart Logistics Pre-IPO Part 4 | Acquiring BABA’s Express Stakes Could Soak Up IPO Proceeds
  • Honasa Consumer IPO Trading – Great Anchor Book, Not so Great Overall Demand. Loved by FIIs
  • HighTide Therapeutics (君圣泰医药) Pre-IPO: Unconvincing Bet on NASH

WuXi XDC IPO: Valuation First-Look

By Arun George

Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise

By Clarence Chu

  • Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan. 
  • In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg. 
  • The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.

Hybe Placement- Another Block Incoming

By Ethan Aw

  • HYBE (352820 KS)‘s second-largest shareholder, Netmarble, seeks to raise approximately US$408m through a secondary block deal, selling approximately 2.5m shares (6% of TSO). 
  • The deal is a slightly large one to digest at 10.9 days of three month ADV and 5.5% of current mcap.
  • In this note, we will talk about the placement and run the deal through our ECM framework.

Cello World IPO Trading – Very Strong Institutional Subscription

By Sumeet Singh

  • Cello World raised around US$230m in its India IPO and will begin trading soon.
  • Cello World (CW) is an Indian consumer products company. The firm is a leading company in the consumerware market in India.
  • In our previous notes, we looked at the company’s past performance and valuations. In this note, we will talk about the demand and trading dynamics

WuXi XDC Cayman Pre-IPO – BULL/BEAR Scenario Considerations for Valuations

By Clarence Chu

  • WuXi XDC Cayman (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
  • WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
  • In this note, we share our updated thoughts on valuation and look at bull/bear scenarios for WXDC’s earnings.

WuXi XDC IPO Preview: The Rapid Rise of The Business In The Global ADC and Bioconjugate Market

By Andrei Zakharov

  • WuXi XDC, a leading CRDMO focused on the global ADC and bioconjugate market, filed to go public in Hong Kong and plans to raise up to $500M.
  • The company is expected to IPO in November or December at the latest. Morgan Stanley, Goldman Sachs, and J.P. Morgan are the lead underwriters. The offering may attract investor interest.
  • WuXi Biologics will spin off its ADC business, and WuXi XDC will raise capital through IPO to finance the construction of new facilities in Singapore and expand capacity in China.

CaiNiao Smart Logistics Pre-IPO Part 4 | Acquiring BABA’s Express Stakes Could Soak Up IPO Proceeds

By Daniel Hellberg

  • Acquiring parent Alibaba’s express investments could soak up much of CaiNiao’s IPO proceeds
  • Such transfers would help Alibaba, but the potential benefit to CaiNiao is less clear
  • The transfers of these stakes could become an important aspect of CaiNiao’s IPO process

Honasa Consumer IPO Trading – Great Anchor Book, Not so Great Overall Demand. Loved by FIIs

By Sumeet Singh

  • Honasa Consumer (Honasa IN) raised about US$200m in its India IPO.
  • HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
  • In our previous note, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

HighTide Therapeutics (君圣泰医药) Pre-IPO: Unconvincing Bet on NASH

By Ke Yan, CFA, FRM

  • HighTide Therapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$200m via a Hong Kong listing.
  • In this note, we examine the company’s core products, namely HTD1801, for the indication of NASH and T2DM.
  • We are not yet convinced of the product’s prospects. We also think the management and pre-IPO investors are of mediocre quality.

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Nov 07
0

Daily Brief Credit: Tata Motors – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics and more

By | Credit, Daily Briefs

In today’s briefing:

  • Tata Motors – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics
  • Vedanta Resources – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics
  • Morning Views Asia: Alam Sutera Realty, China Vanke , Vedanta Resources

Tata Motors – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics

By Trung Nguyen

Tata Motors has released Q2/23-24 results that significantly outperformed expectations. Revenue grew 32% y-o-y to INR 105 k cr. Reported EBITDA surged 86% to INR 14.4 k cr, with the margin expanding 430 bps to 14.9%. Automotive FCF was INR 3.9 k cr, up INR 2.9 k cr. Jaguar Land Rover and the Commercial Vehicle segment in India recorded robust growth and profits, while Q2 was a transition quarter for the Passenger Vehicle segment.

Vedanta Resources – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics

By Trung Nguyen

Vedanta Ltd (VEDL) has released puzzling Q2/23-24 results. The oil & gas segment recorded a huge y-o-y jump in earnings during the quarter, for no apparent reason. In our view, the lack of explanation and attribution for the unexpectedly large earnings jump is very strange, compounded by the timing of the call (on a weekend, when fewer analysts would have attended). It is unclear if VEDL has made an accounting error, or if this was an attempt to put itself in a more positive light to gain better access to capital. This is a crucial period for the group, with parent Vedanta Resources (VRL) facing significant debt maturities in the next two years (USD 3 bn, with the nearest being the USD 1 bn maturing in January 2024). The results have increased our scepticism of the group’s financial reporting.

We move our recommendation on the VEDLN notes to “Not Recommended” from “Hold”.

Morning Views Asia: Alam Sutera Realty, China Vanke , Vedanta Resources

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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Nov 07
0

Daily Brief Industrials: Mitsubishi Heavy Industries, Cainiao Smart Logistics Network, AP Moeller – Maersk A/S, Greatech Technology, ACCO Brands, HNI Corp and more

By | Daily Briefs, Industrials

In today’s briefing:

  • MHI (7011) | Rockets and Renewables
  • CaiNiao Smart Logistics Pre-IPO Part 4 | Acquiring BABA’s Express Stakes Could Soak Up IPO Proceeds
  • Maersk Q3: Estimates Met, Guidance Kept | But Downbeat Assessment of Market Sends Shares Down -17%
  • ASEAN EV Ecosystem Update: Progressing Towards a Robust EV Ecosystem
  • ACCO: Sales Retraction Creates Headwinds
  • HNI Corporation – Raising Estimates Following Strong 3Q Earnings Report – Correction

MHI (7011) | Rockets and Renewables

By Mark Chadwick

  • MHI reports impressive YoY growth in order intake, revenues, and profits across Energy Systems and Defense Equipment segments in Q2 2023.
  • Despite a 62% YTD stock price increase, strong order backlog and underlying drivers suggest resilience in a challenging economic climate.
  • The company benefits from global trends in decarbonization and increased national security spending, positioning itself as a leader in gas turbines and defense technology.

CaiNiao Smart Logistics Pre-IPO Part 4 | Acquiring BABA’s Express Stakes Could Soak Up IPO Proceeds

By Daniel Hellberg

  • Acquiring parent Alibaba’s express investments could soak up much of CaiNiao’s IPO proceeds
  • Such transfers would help Alibaba, but the potential benefit to CaiNiao is less clear
  • The transfers of these stakes could become an important aspect of CaiNiao’s IPO process

Maersk Q3: Estimates Met, Guidance Kept | But Downbeat Assessment of Market Sends Shares Down -17%

By Daniel Hellberg

  • Container shipping giant Maersk met Q3 expectations and maintained earlier FY23 guidance
  • However, downbeat commentary combined with capex and job cuts sent shares -17% lower
  • Maersk does not expect any recovery in ’24, but we believe this pessimism already in prices

ASEAN EV Ecosystem Update: Progressing Towards a Robust EV Ecosystem

By Shifara Samsudeen, ACMA, CGMA

  • EV Adoption in ASEAN is low compared to developed markets, however, development of a robust EV ecosystem remains a primary goal for the respective nations.
  • Governments in the region continues to introduce new policy measures and offer incentives to promote the sector, while companies continue to attract large investment to develop the EV market.
  • The four companies we looked at have reported earnings and we have discussed their latest results and our investment thesis.

ACCO: Sales Retraction Creates Headwinds

By Hamed Khorsand

  • ACCO reported third quarter results without the expected back to school benefit. Instead, ACCO focused on profitable sales helping to lift gross margin and report higher earnings results
  • Retailers continue to tightly manage their inventory levels and the trend is expected to remain in the fourth quarter. 
  • ACCO remains a free cash flow investment story. We are not expecting growth in 2024 putting greater pressure on how much free cash flow ACCO can generate 

HNI Corporation – Raising Estimates Following Strong 3Q Earnings Report – Correction

By Water Tower Research

  • This note corrects the version that was published on November 2. Due to errors in our model, the full-year estimate for 2024 was not calculated properly.
  • The correct full-year 2024 EPS estimate is $2.65.
  • We are raising our non-GAAP (adjusted) EPS estimates for 4Q23 and 2024 following HNI’s strong 3Q23 earnings report on Tuesday, October 31, 2023.

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Nov 07
0

Daily Brief Event-Driven: Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
  • Block Deal Sale of HYBE by Netmarble
  • Bajaj Finance QIP – Very Well Flagged US$1bn Raising, past Deals Have Done Well
  • OreCorp/Silvercorp: 8th December Shareholder Vote
  • OreCorp (ORR AU): A Wide Spread Heading into the 8 December Vote

Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

By Brian Freitas

  • Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
  • With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
  • Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.

Block Deal Sale of HYBE by Netmarble

By Douglas Kim

  • After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price. 
  • The actual block deal amount is likely to be less than 569 billion won as there will likely be a  block deal discount rate. 
  • We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers. 

Bajaj Finance QIP – Very Well Flagged US$1bn Raising, past Deals Have Done Well

By Sumeet Singh

  • Bajaj Finance Ltd (BAF IN) , one of India’s largest NBFCs, aims to raise around US$1bn via a QIP.
  • Bajaj Finance is an NBFC offering auto, consumer and home loans, along with other products as well.
  • In this note, we run the deal through our ECM framework and talk about the deal dynamics.

OreCorp/Silvercorp: 8th December Shareholder Vote

By David Blennerhassett

  • Back on the 6 August, Western Australian-based miner OreCorp Ltd (ORR AU) signed a Scheme Implementation Deed with Canada’s Silvercorp Metals (SVM CN).
  • OreCorp shareholders are offered A$0.15 in cash and 0.0967 new Silvercorp shares – or an implied value of A$0.60 – for each OreCorp share held.
  • The Scheme Booklet is out with a shareholder vote on the 8 December. Implementation is the 22 December.

OreCorp (ORR AU): A Wide Spread Heading into the 8 December Vote

By Arun George

  • The Orecorp Ltd (ORR AU) IE considers Silvercorp Metals (SVM US)’s A$0.15 cash per share and 0.0967 SVM shares per ORR share offer fair and reasonable. 
  • The offer is subject to the Tanzanian Fair Competition Commission and shareholder approval. The offer is attractive compared to the adjusted exchange ratios and historical prices.
  • While the offer has suffered from the steep SVM share price decline, there has been no visible dissent from major shareholders. At the last close, the gross spread was 12.1%. 

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Nov 07
0

Daily Brief Macro: Regional Economics: A Turning Point in Asian Trade Paves Way for 2024 Recovery and more

By | Daily Briefs, Macro

In today’s briefing:

  • Regional Economics: A Turning Point in Asian Trade Paves Way for 2024 Recovery
  • Energy Cable #45 – The World Needs a Riyadh Accord
  • Credit Watch: The Worst Is Behind Us in the SLOOS, But…
  • Positioning Watch: Prepared for a Short Squeeze?
  • The Week That Was in ASEAN@Smartkarma – GoTo’s Pivot, Astra’s Sustainability Push, and Mayora Indah

Regional Economics: A Turning Point in Asian Trade Paves Way for 2024 Recovery

By Manu Bhaskaran

  • Merchandise trade in Asian markets has been battered by headwinds from tight monetary conditions and growth slowdowns in major economies. This may draw to a close soon. 
  • Leading indicators such as air and sea cargo are turning a corner, while a robust automobile sector provides a foundation for a broader-based export recovery. 
  • While our optimism is moderated by contractionary manufacturing conditions, including new export orders, Asian exporters can nonetheless expect a better 2024.

Energy Cable #45 – The World Needs a Riyadh Accord

By Ulrik Simmelholt

  • Last week we got news that MBS is still keen on pursuing a mega deal with the US that would normalize relations with Israel.
  • We envisage a scenario in which Biden for instance gets MBS to open the crude oil taps and in return lets the Saudis get their hands on American military hardware and perhaps more importantly helps push global disinflation and a weaker USD.
  • We note that the House has passed substantial sanctions on Iranian Oil just about when traders are going short.

Credit Watch: The Worst Is Behind Us in the SLOOS, But…

By Andreas Steno

  • The quarterly SLOOS survey from the Fed was released a bit more than an hour ago and the results resemble the quarterly credit surveys from Japan and Europe released ahead of the US ditto.
  • There is a sequential improvement in demand, while fewer banks tighten standards compared to Q3.
  • So, is it good news or did the survey rather confirm the credit contraction?

Positioning Watch: Prepared for a Short Squeeze?

By Emil Moller

  • Hello everybody and welcome back to our Monday Positioning Watch! We’re here again on this fine Monday, ready to delve into our take on the market’s current temperature based on the latest Positioning and CFTC data.
  • Last week, we left off with the possibility of an impending bear market rally.
  • If that indeed plays out, it’s the positions with the heaviest shorts that are most at risk and we expect the bleeding is not done.

The Week That Was in ASEAN@Smartkarma – GoTo’s Pivot, Astra’s Sustainability Push, and Mayora Indah

By Angus Mackintosh

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Nov 07
0

Daily Brief Equity Bottom-Up: Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside
  • DBS – 0% Growth Guidance for FY24 | Quarterly Credit Costs Surging | As Good as It Gets
  • China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China
  • MHI (7011) | Rockets and Renewables
  • Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside
  • Asian Dividend Gems: Yue Yuen Industrial
  • UMC. Automotive Weakness Prolongs Downturn
  • Taiwan Tech Weekly: Positive Signs for Memory, PC, Smartphones; Key Autos & Display Color This Week
  • China Vanke (2202 HK):  Short Term Trading Opportunity Post Conference Call
  • Ferrari (RACE US) The Classic Fisher Stock Q3 2023: Stellar, No Slowdown Here

Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside

By Ming Lu

  • We believe advertising revenue will grow rapidly and game revenue will accelerate.
  • We also believe EPS will decrease YoY due to high “other gains” in 3Q22.
  • We expect the stock price will have an upside of 58% for year end 2024.

DBS – 0% Growth Guidance for FY24 | Quarterly Credit Costs Surging | As Good as It Gets

By Daniel Tabbush

  • DBS is now guiding for no profit growth during FY24. This may end up missing with negative growth more statistically likely, in a worsening world.
  • Credit metrics are not particularly positive in today’s release with SGD215m of credit costs compared with SGD72m in the preceding quarter.
  • If rate rises are done or nearly done, than the main positive delta of DBS earnings are also done or nearly done. Management guidance suggests as much too.

China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China

By Ming Lu

  • All major Chinese e-commerce companies set up live broadcasting channels on Bilibili at the beginning of Singles’ Day sales.
  • Kuaishou chairman’s resignation will not change the business strategy, as he stepped down from CEO two years ago.
  • Baidu begins to sell ChatGPT-like service for CNY49.90 per month.

MHI (7011) | Rockets and Renewables

By Mark Chadwick

  • MHI reports impressive YoY growth in order intake, revenues, and profits across Energy Systems and Defense Equipment segments in Q2 2023.
  • Despite a 62% YTD stock price increase, strong order backlog and underlying drivers suggest resilience in a challenging economic climate.
  • The company benefits from global trends in decarbonization and increased national security spending, positioning itself as a leader in gas turbines and defense technology.

Alibaba (9988 HK) 3Q24 Earnings Preview: Recovery to Continue, 67% Upside

By Ming Lu

  • We believe the financial recovery from 1Q24 will continue in 2Q24.
  • We expect the operating margin will improve to 15% in 2Q24 versus 12% in 2Q23.
  • Alibaba has an upside of 69% and the target will be HK$143 for the year end 2024. Buy.

Asian Dividend Gems: Yue Yuen Industrial

By Douglas Kim

  • Yue Yuen has a scalable business model with high dividend yield (6.4%). Its sales and net profit are expected to increase by 9.3% YoY and 55% YoY, respectively in 2024.
  • The company is likely to enjoy higher sales and profits in 2024 due to improved footwear inventory destocking cycle, higher sales and profits at its subsidiary Pou Sheng.
  • Yue Yuen Industrial is one of the largest footwear and athletic shoe manufacturers in the world. Its major customers include Nike, Adidas, Puma, and Reebok.

UMC. Automotive Weakness Prolongs Downturn

By William Keating

  • Q323 revenues of NT$57 billion, up 1.4% QoQ but down 24.3% YoY. For 2023 YTD, revenues have amounted to NT$167,575 billion, down 20.5% YoY.
  • Net income was NT$15.97, essentially flat QoQ. Gross margin came in at 35.9%, also flat QoQ. Utilisation for the quarter was 67%, down from 71% in the prior quarter.
  • Utilization set to further decline to low 60% levels in Q423, the lowest since the downturn began.

Taiwan Tech Weekly: Positive Signs for Memory, PC, Smartphones; Key Autos & Display Color This Week

By Vincent Fernando, CFA

  • Last week global heavyweights AMD, Samsung, and Qualcomm delivered good news, including for the Memory, PC, and Smartphone industries. Taiwan company results supported their views as well.
  • Looking ahead, Novatek, Asustek, and Himax are set to release in Taiwan. Combined with NXP abroad, this will provide color on display demand, automotive, and servers/PCs.
  • A new Chinese memory chip maker just received major government investment, with an IPO of its related company planned.

China Vanke (2202 HK):  Short Term Trading Opportunity Post Conference Call

By Steve Zhou, CFA

  • China Vanke (H) (2202 HK) saw a major drop in bond and stock prices recently, due to fear of default. 
  • Yesterday, the company held a conference call, with representatives from Shenzhen SASAC and Shenzhen Metro (major shareholder of Vanke and owned by Shenzhen SASAC) participating in the call.
  • The strong support shown by Shenzhen SASAC/Shenzhen Metro represents a good short-term buying opportunity, for both Vanke stock and bonds. 

Ferrari (RACE US) The Classic Fisher Stock Q3 2023: Stellar, No Slowdown Here

By Sameer Taneja

  • Ferrari N.V. (RACE US) had a stellar Q3 2023 with 23.5%/45% YoY overall revenue and profit growth, beating analyst estimates and conservatively upping guidance by 2-3%. 
  • Despite volumes growing only 8.5% YoY, car revenues grew 26% YoY, highlighting strong trends in personalization (at 19%) and pricing, with the current order book full.
  • Valuations are rich at 45x/39x FY23e/24e PE, but there seems to be a clear path to 20% YoY growth at over 25% ROCEs. 

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Nov 07
0

Daily Brief Energy/Materials: Orecorp Ltd, Ecovyst, Vedanta Resources, Rayonier Advanced Materials and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • OreCorp/Silvercorp: 8th December Shareholder Vote
  • OreCorp (ORR AU): A Wide Spread Heading into the 8 December Vote
  • ECVT: Investing for 2024
  • Vedanta Resources – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics
  • Rayonier Advanced Materials, Inc. – Investor Day Highlights “Specialty” In Specialty Cellulose

OreCorp/Silvercorp: 8th December Shareholder Vote

By David Blennerhassett

  • Back on the 6 August, Western Australian-based miner OreCorp Ltd (ORR AU) signed a Scheme Implementation Deed with Canada’s Silvercorp Metals (SVM CN).
  • OreCorp shareholders are offered A$0.15 in cash and 0.0967 new Silvercorp shares – or an implied value of A$0.60 – for each OreCorp share held.
  • The Scheme Booklet is out with a shareholder vote on the 8 December. Implementation is the 22 December.

OreCorp (ORR AU): A Wide Spread Heading into the 8 December Vote

By Arun George

  • The Orecorp Ltd (ORR AU) IE considers Silvercorp Metals (SVM US)’s A$0.15 cash per share and 0.0967 SVM shares per ORR share offer fair and reasonable. 
  • The offer is subject to the Tanzanian Fair Competition Commission and shareholder approval. The offer is attractive compared to the adjusted exchange ratios and historical prices.
  • While the offer has suffered from the steep SVM share price decline, there has been no visible dissent from major shareholders. At the last close, the gross spread was 12.1%. 

ECVT: Investing for 2024

By Hamed Khorsand

  • ECVT has navigated a challenging 2023, marked by unforeseen external factors that have made accurate quarterly forecasting a formidable task
  • As the year comes to a close, ECVT is seizing an opportunity during the seasonal refinery downtime to expedite its capital expenditure plans from 2024.
  • ECVT reported third quarter sales of $173.3 million compared to our estimate of $171.3 million. The miss was the result of greater than expected slowdown in ecoservices segment

Vedanta Resources – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics

By Trung Nguyen

Vedanta Ltd (VEDL) has released puzzling Q2/23-24 results. The oil & gas segment recorded a huge y-o-y jump in earnings during the quarter, for no apparent reason. In our view, the lack of explanation and attribution for the unexpectedly large earnings jump is very strange, compounded by the timing of the call (on a weekend, when fewer analysts would have attended). It is unclear if VEDL has made an accounting error, or if this was an attempt to put itself in a more positive light to gain better access to capital. This is a crucial period for the group, with parent Vedanta Resources (VRL) facing significant debt maturities in the next two years (USD 3 bn, with the nearest being the USD 1 bn maturing in January 2024). The results have increased our scepticism of the group’s financial reporting.

We move our recommendation on the VEDLN notes to “Not Recommended” from “Hold”.

Rayonier Advanced Materials, Inc. – Investor Day Highlights “Specialty” In Specialty Cellulose

By Water Tower Research

  • Portfolio strength and market weakness. At a recently held Investor Day, RYAM management highlighted its cellulose product portfolio, the company’s biomaterials initiative, and the current state of the industry in the wake of the G-P closure announcement.
  • RYAM also provided an update on 2023 guidance and a look at 2024 and 2027 EBITDA bridges.
  • Asset evaluation proceeding to the next round. Following the Investor Day, RYAM announced that it engaged Houlihan Lokey as its financial advisor to explore the potential sale of its paperboard and high-yield pulp (HYP) assets located at its Temiscaming site, as it advances its initiative to expand into higher-growth, higher-margin specialty businesses and reduce its exposure to commodity cellulose markets.

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Nov 07
0

Daily Brief TMT/Internet: Tencent, HYBE , Will Semiconductor Shan, Kuaishou Technology, United Microelectronics Corp, Taiwan Semiconductor (TSMC), Procurri Corporation, Ubiquiti Inc. and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
  • Block Deal Sale of HYBE by Netmarble
  • Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
  • Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside
  • China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China
  • UMC. Automotive Weakness Prolongs Downturn
  • Taiwan Tech Weekly: Positive Signs for Memory, PC, Smartphones; Key Autos & Display Color This Week
  • 5 in 5 with Procurri – Advancing Sustainability in IT
  • UI: Surprise Revenue Miss, PT to $160

Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates

By Brian Freitas

  • Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
  • With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
  • Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.

Block Deal Sale of HYBE by Netmarble

By Douglas Kim

  • After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price. 
  • The actual block deal amount is likely to be less than 569 billion won as there will likely be a  block deal discount rate. 
  • We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers. 

Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise

By Clarence Chu

  • Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan. 
  • In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg. 
  • The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.

Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside

By Ming Lu

  • We believe advertising revenue will grow rapidly and game revenue will accelerate.
  • We also believe EPS will decrease YoY due to high “other gains” in 3Q22.
  • We expect the stock price will have an upside of 58% for year end 2024.

China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China

By Ming Lu

  • All major Chinese e-commerce companies set up live broadcasting channels on Bilibili at the beginning of Singles’ Day sales.
  • Kuaishou chairman’s resignation will not change the business strategy, as he stepped down from CEO two years ago.
  • Baidu begins to sell ChatGPT-like service for CNY49.90 per month.

UMC. Automotive Weakness Prolongs Downturn

By William Keating

  • Q323 revenues of NT$57 billion, up 1.4% QoQ but down 24.3% YoY. For 2023 YTD, revenues have amounted to NT$167,575 billion, down 20.5% YoY.
  • Net income was NT$15.97, essentially flat QoQ. Gross margin came in at 35.9%, also flat QoQ. Utilisation for the quarter was 67%, down from 71% in the prior quarter.
  • Utilization set to further decline to low 60% levels in Q423, the lowest since the downturn began.

Taiwan Tech Weekly: Positive Signs for Memory, PC, Smartphones; Key Autos & Display Color This Week

By Vincent Fernando, CFA

  • Last week global heavyweights AMD, Samsung, and Qualcomm delivered good news, including for the Memory, PC, and Smartphone industries. Taiwan company results supported their views as well.
  • Looking ahead, Novatek, Asustek, and Himax are set to release in Taiwan. Combined with NXP abroad, this will provide color on display demand, automotive, and servers/PCs.
  • A new Chinese memory chip maker just received major government investment, with an IPO of its related company planned.

5 in 5 with Procurri – Advancing Sustainability in IT

By Geoff Howie

5 in 5 with Procurri – Advancing Sustainability in IT

UI: Surprise Revenue Miss, PT to $160

By Hamed Khorsand

  • UI fiscal first-quarter results (September) fell short of consensus estimates, primarily due to underperforming sales in the enterprise segment.
  • Our initial expectations included the anticipation of soft demand for Ubiquiti, which was compounded by our belief in the enterprise spending momentum continuing
  • Ubiquiti’s fiscal first-quarter revenue came in at $463.1 million, falling short of our estimate of $547.9 million. Historically, the quarter has been a strong period, making this deviation particularly noteworthy

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Nov 07
0

Daily Brief Health Care: WuXi XDC Cayman , TSE Tokyo Price Index TOPIX, HighTide Therapeutics, CanSino Biologics , Oryzon Genomics, Fresenius Medical Care & and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • WuXi XDC IPO: Valuation First-Look
  • WuXi XDC Cayman Pre-IPO – BULL/BEAR Scenario Considerations for Valuations
  • ROE Isn’t Rising Because Managers Don’t Think of the Value of the Company and Meaning of the Listing
  • WuXi XDC IPO Preview: The Rapid Rise of The Business In The Global ADC and Bioconjugate Market
  • HighTide Therapeutics (君圣泰医药) Pre-IPO: Unconvincing Bet on NASH
  • CanSino Biologics (6185.HK/688185.CH) 23Q3 – Some Positive Business Progress Worth the Attention
  • Oryzon Genomics – Q323 recap ahead of key clinical stages
  • Fresenius Medical Care: Feedback From Call With IR

WuXi XDC IPO: Valuation First-Look

By Arun George

WuXi XDC Cayman Pre-IPO – BULL/BEAR Scenario Considerations for Valuations

By Clarence Chu

  • WuXi XDC Cayman (1877628D HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
  • WuXi XDC Cayman (WXDC) is a CRDMO focused on the global antibody drug conjugates (ADC) and broader bioconjugate market providing integrated and end-to-end services.
  • In this note, we share our updated thoughts on valuation and look at bull/bear scenarios for WXDC’s earnings.

ROE Isn’t Rising Because Managers Don’t Think of the Value of the Company and Meaning of the Listing

By Aki Matsumoto

  • Even after the “TSE’s request,” the average P/B of listed companies has not increased. In addition, ROE, which can be considered a driver for corporate value expansion, has remained flat.
  • Japanese managers tend to be caught up in formalistic thinking about whether or not a company is listed, and whether or not it’s listed on the highest market or not.
  • Instead of being caught up in formalistic thinking, I would like managers to seriously rethink the value of the company and what it means to be listed.

WuXi XDC IPO Preview: The Rapid Rise of The Business In The Global ADC and Bioconjugate Market

By Andrei Zakharov

  • WuXi XDC, a leading CRDMO focused on the global ADC and bioconjugate market, filed to go public in Hong Kong and plans to raise up to $500M.
  • The company is expected to IPO in November or December at the latest. Morgan Stanley, Goldman Sachs, and J.P. Morgan are the lead underwriters. The offering may attract investor interest.
  • WuXi Biologics will spin off its ADC business, and WuXi XDC will raise capital through IPO to finance the construction of new facilities in Singapore and expand capacity in China.

HighTide Therapeutics (君圣泰医药) Pre-IPO: Unconvincing Bet on NASH

By Ke Yan, CFA, FRM

  • HighTide Therapeutics, a China-based clinical-stage biotechnology company, plans to raise up to US$200m via a Hong Kong listing.
  • In this note, we examine the company’s core products, namely HTD1801, for the indication of NASH and T2DM.
  • We are not yet convinced of the product’s prospects. We also think the management and pre-IPO investors are of mediocre quality.

CanSino Biologics (6185.HK/688185.CH) 23Q3 – Some Positive Business Progress Worth the Attention

By Xinyao (Criss) Wang

  • In 23Q3, CanSino’s revenue returned to positive growth and net loss narrowed as MCV4 sales exceeded expectations. Such strong growth momentum is expected to continue in 2024.
  • As negative impact of COVID-19 assets impairment on revenue/asset sides would basically come to an end this year,2024 performance would reflect growth on the basis of this year’s low base.
  • The potential resurgence of pandemic/influenza virus and PCV13i NDA submission could be catalysts. Performance turning point could appear in 2025.The cooperation with Gates Foundation would open up the internationalization prospect.

Oryzon Genomics – Q323 recap ahead of key clinical stages

By Edison Investment Research

Oryzon’s Q323 results recapped the clinical progression across its drug development pipeline. The company continues to develop therapies that address unmet needs related to the central nervous system (CNS) and oncology. As noted previously, an important development was the positive safety data for the PORTICO trial, assessing vafidemstat in patients with borderline personality disorder (BPD). Oryzon continues to enrol patients for its lead oncology trial (FRIDA), investigating iadademstat as a potential treatment for acute myeloid leukaemia (AML) and an update is expected in Q224. Based on current visibility, we have adjusted our FY23 operating loss estimates to €5.4m (vs €3.8m previously). Top-line data from PORTICO and FRIDA are expected to be the next key catalysts. Gross cash at the end of Q323 stood at US$8.8m (€8.4m), down from US$14.6m in H123, which we anticipate should fund the company’s operations into Q124. We value Oryzon at €900.3m or €15.4/share (up from €874.1m or €15.6/share).

Fresenius Medical Care: Feedback From Call With IR

By Alexis Dwek

  • Underlying market is set to double – 7m people on maintenance dialysis by 2035, implying a CAGR of 6%
  • Stock price decline is “irrational”. There will be no impact for 10-15 years!
  • Lots of investor interest, with many IR roadshows in the coming weeks. IR believes the share price overhang will remain for longer.

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