Category

Daily Briefs

Nov 03
0

Daily Brief South Korea: Celltrion Healthcare , Lf Corp and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Celltrion Merger Update: Limits Lifted
  • Korea Small Cap Gem #26: LF Corp – A Deep Value Play and the Lee Hyori Effect

Celltrion Merger Update: Limits Lifted

By David Blennerhassett

  • Back on the 17 August, biopharmaceuticals developer and producer Celltrion Inc (068270 KS) announced a merger with Celltrion Healthcare (091990 KS).
  • On October 23rd, shareholders approved the merger. The appraisal rights exercise period commenced on the 23 October and ends on November 13. 28th December is the merger’s effective date.
  • Initially, the stock purchase rights limit was set at 1₩tn; however Celltrion Group’s founder/Chairman Seo Jung-jin has removed this limit. That takes care of NPS, which opposes the merger.

Korea Small Cap Gem #26: LF Corp – A Deep Value Play and the Lee Hyori Effect

By Douglas Kim

  • Lf Corp (093050 KS) is the 26th company in our Korea Small Cap Gems series. 
  • LF Corp is one of the leading apparel companies in Korea which has a market cap of 411 billion won. LF Corp is trading at 0.3x P/B and 4x P/E.
  • A key near-term catalyst is better than expected sales of the Reebok branded apparel that are promoted by the pop icon Lee Hyori. 

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Nov 03
0

Daily Brief Credit: Indika Energy – Earnings Flash – 9M FY 2023 Results – Lucror Analytics and more

By | Credit, Daily Briefs

In today’s briefing:

  • Indika Energy – Earnings Flash – 9M FY 2023 Results – Lucror Analytics
  • Bharti Airtel – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics
  • Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

Indika Energy – Earnings Flash – 9M FY 2023 Results – Lucror Analytics

By Trung Nguyen

In our view, Indika Energy’s 9M/23 results were weaker than expected due to a sharp decline in Kideco’s production and sales volume in Q3, lower-than-expected profitability at Kideco (which accounts for 90% of Indika’s EBITDA) and negative OCF, which came as a surprise. The balance sheet turned to a net debt position, after a few quarters of net cash. Liquidity remains sound, with a large (albeit fast shrinking) cash position.

OCF and FCF were negative, which was surprising as Indika has previously managed to generate positive FCF even when coal prices were lower than current levels. The last time the company generated negative FCF was in 2015, during a major coal downturn. We believe that the negative OCF may be due to the new businesses, which are ramping up. Indika’s key business strategy in the medium term is to diversify away from and reduce its reliance on coal-related activities, with the company aiming to derive 50% of its revenue from non-coal sources by 2025. The new businesses include a gold mine, renewable energy solutions (mainly solar power), electric scooters and several digital technology businesses.

Bharti Airtel – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics

By Trung Nguyen

Bharti Airtel’s Q2/23-24 results were robust in our view, with solid revenue and earnings growth across the Indian and African businesses. Operational stats were healthy, with strong increases in user bases and ARPU (particularly the 5G customer base). The financial risk profile remains stable. Liquidity is adequate.

Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

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 03
0

Daily Brief India: LT Foods Ltd, HDFC Bank, Bharti Airtel, Azure Power Global Ltd, Cipla Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Global Rice Market Disrupted: India’s Export Ban Sparks Chaos and Worries
  • HDFC Bank: Steady ROA Despite NIM Compression Post Merger
  • Bharti Airtel – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics
  • Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi
  • 2023 High Conviction Update: Cipla (CIPLA IN)- Q2 Result Beats Estimates; Margin Guidance Raised

Global Rice Market Disrupted: India’s Export Ban Sparks Chaos and Worries

By Nimish Maheshwari

  • India’s rice export ban triggers global market chaos, leading to panic buying and uncertainty in rice supply, affecting both India and Thailand.
  • El Niño’s drought threatens Thailand’s rice production, adding to the crisis. Other Asian nations impose export bans, raising inflation concerns.
  • Global rice prices rise, impacting vulnerable nations and sparking fears of a repeat of the 2008 rice crisis due to protectionist policies.

HDFC Bank: Steady ROA Despite NIM Compression Post Merger

By Ankit Agrawal, CFA

  • As highlighted in our prior notes, HDFC Bank (HDFCB IN) has been able to maintain its ROA and ROE despite NIM compression post merger.
  • As the excess liquidity (related to the merger) recedes over the next 3-4 quarters, ROA and ROE should further normalize.
  • HDFCB has been able to clock 5%ish QoQ growth across deposits and loans, allaying growth concerns on a larger base post merger.

Bharti Airtel – Earnings Flash – Q2 FY 2023-24 Results – Lucror Analytics

By Trung Nguyen

Bharti Airtel’s Q2/23-24 results were robust in our view, with solid revenue and earnings growth across the Indian and African businesses. Operational stats were healthy, with strong increases in user bases and ARPU (particularly the 5G customer base). The financial risk profile remains stable. Liquidity is adequate.

Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

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.

2023 High Conviction Update: Cipla (CIPLA IN)- Q2 Result Beats Estimates; Margin Guidance Raised

By Tina Banerjee

  • In Q2FY24, Cipla Ltd (CIPLA IN) clocked record-high quarterly revenue at INR66.8B (+15% YoY), and EBITDA margin of 26%, driven by double-digit growth across India, North America, and South Africa.
  • U.S. business reported highest ever revenue of $229M. India revenue is up 10% YoY, driven by continued market beating performance in branded prescription and trade generics businesses.
  • Cipla raised FY24 EBITDA margin guidance from 23% to 23% to 24% with bias towards the higher end. The company started FY24 with an EBITDA margin guidance of 21–22%.

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Nov 03
0

Daily Brief Japan: Kyocera Corp, Keisei Electric Railway Co, CyberAgent Inc, TSE Tokyo Price Index TOPIX, Japan Hotel Reit Investment and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kyocera (6971) And Their $10bn KDDI Stake – Did They Get CorpGov Religion?
  • Keisei Electric: Results Unimpressive, Yet Investor Activism Appeal Remains
  • CyberAgent: Gaming Shows Some Recovery but New Releases Yet to Shift Momentum for Games
  • What Is the Path for Resolving the Challenges of Life Insurance Companies’ Policy Shareholdings?
  • Japan REITs: Long Japan Hotel REIT and Short Nippon Building Fund on Industry Fundamentals

Kyocera (6971) And Their $10bn KDDI Stake – Did They Get CorpGov Religion?

By Travis Lundy

  • Yesterday, Kyocera Corp (6971 JP) announced Q2 results and lowered its full-year forecast. Then the CEO said it was “reconsidering” what to do with KDDI shares (after an AGM disaster).
  • The company had already planned to borrow ¥500bn against the KDDI stake to return capital to shareholders. That was in the price 5+ months ago. 
  • The new hope is that Kyocera just got Corporate Governance Religion. I have my doubts, and even if it did, you have to look carefully at their ambitious plans.

Keisei Electric: Results Unimpressive, Yet Investor Activism Appeal Remains

By Oshadhi Kumarasiri

  • Keisei Electric Railway Co (9009 JP)‘s FQ2 earnings, released on October-31st, surpassed revenue and OP expectations, yet the company revised down its revenue and OP guidance by ¥8.8bn and ¥200m.
  • Despite this, the share price has surged over 10% in recent days, likely influenced by activist investor Palliser Capital’s interest and a significant 30% increase in annual dividend guidance.
  • However, during earnings, the company remained silent about the activist investor’s proposal to reduce its Oriental Land (4661 JP) ownership below 15%.

CyberAgent: Gaming Shows Some Recovery but New Releases Yet to Shift Momentum for Games

By Shifara Samsudeen, ACMA, CGMA

  • CA reported 4Q and full-year FY09/2023 results today. 4Q revenue increased 5% YoY while OP dropped more than 50% during the quarter. Revenues beat consensus while OP fell behind.
  • Games revenues further decreased YoY during the quarter (improved QoQ) while it managed to report an OP which was possible due to UMA MUSUME’s game anniversary.
  • Though CA released a new game in September and few lined-up for release, until the company releases a hit title like UMA MUSUME, we expect the recovery to be slow.

What Is the Path for Resolving the Challenges of Life Insurance Companies’ Policy Shareholdings?

By Aki Matsumoto

  • It should be noted that some companies that state that they do not possess takeover defenses also indicate that they will take “appropriate measures.”
  • Addition of ROE and % of independent directors to the approval/disapproval of takeover defense agenda is likely an afterthought to add these conditions to favor the introduction of takeover defense.
  • It’ll take several years before life insurance companies show signs of change in voting. It’ll be interesting to see how they come to terms with their corporate clients and stewardship.

Japan REITs: Long Japan Hotel REIT and Short Nippon Building Fund on Industry Fundamentals

By Jacob Cheng

  • In this insight, among the J-REIT universe, we explore the pair trade idea of LONG Japan Hotel REIT and SHORT Nippon Building Fund
  • Among the real estate subsectors, we expect hotels continue to see superior performance on the back of tourism recovery, while office market will continue to be weak
  • Both JHR and NBF are large caps with good trading liquidity.  In terms of valuation, we see more upside in JHR (20%) than NBF (0%)

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Nov 03
0

Daily Brief Event-Driven: Origin: Brookfield Bumps. AustralianSuper Say Meh. and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Origin: Brookfield Bumps. AustralianSuper Say Meh.
  • Celltrion Merger Update: Limits Lifted
  • Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer
  • Kyocera (6971) And Their $10bn KDDI Stake – Did They Get CorpGov Religion?
  • Quiddity HSTECH Dec 23 Flow Expectations: US$512mn One-Way Flows if the Expected Change Takes Place
  • Quiddity HSCEI Dec 23 Rebalance: Zhongsheng Vs China Grand Pair Interesting if Deletion Is Confirmed

Origin: Brookfield Bumps. AustralianSuper Say Meh.

By David Blennerhassett

  • On the 31st October, AustralianSuper (with 13.67% of shares out and Origin Energy (ORG AU)‘s largest shareholder) argued the Brookfield/EIG-backed Consortium Offer remained substantially below its estimate of fair value.
  • Brookfield/EIG have now increased their Offer by 8% to $9.53/share from $8.81/share, which now comprises cash components of A$6.59/share and US$1.86/share. A consideration-reducing fully-franked dividend of A$0.39/share is expected.
  • The Offer is declared “best and final.” It is above the top-end of the IE’s valuation range. AustralianSuper should accept the revised terms. But they say no.

Celltrion Merger Update: Limits Lifted

By David Blennerhassett

  • Back on the 17 August, biopharmaceuticals developer and producer Celltrion Inc (068270 KS) announced a merger with Celltrion Healthcare (091990 KS).
  • On October 23rd, shareholders approved the merger. The appraisal rights exercise period commenced on the 23 October and ends on November 13. 28th December is the merger’s effective date.
  • Initially, the stock purchase rights limit was set at 1₩tn; however Celltrion Group’s founder/Chairman Seo Jung-jin has removed this limit. That takes care of NPS, which opposes the merger.

Origin Energy (ORG AU): AusSuper Wreaks Havoc on Brookfield/EIG’s Final Offer

By Arun George

  • Origin Energy (ORG AU)  has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.
  • AusSuper will vote against the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.
  • The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues. 

Kyocera (6971) And Their $10bn KDDI Stake – Did They Get CorpGov Religion?

By Travis Lundy

  • Yesterday, Kyocera Corp (6971 JP) announced Q2 results and lowered its full-year forecast. Then the CEO said it was “reconsidering” what to do with KDDI shares (after an AGM disaster).
  • The company had already planned to borrow ¥500bn against the KDDI stake to return capital to shareholders. That was in the price 5+ months ago. 
  • The new hope is that Kyocera just got Corporate Governance Religion. I have my doubts, and even if it did, you have to look carefully at their ambitious plans.

Quiddity HSTECH Dec 23 Flow Expectations: US$512mn One-Way Flows if the Expected Change Takes Place

By Janaghan Jeyakumar, CFA

  • The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
  • The index changes and the indicative component weights for the December 2023 index review will be published in a couple of weeks.
  • In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.

Quiddity HSCEI Dec 23 Rebalance: Zhongsheng Vs China Grand Pair Interesting if Deletion Is Confirmed

By Janaghan Jeyakumar, CFA

  • The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” Securities listed in Hong Kong.
  • In a couple of weeks, the official index changes and the indicative weights for the final index members for the December 2023 rebalance will be announced.
  • In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in December 2023.

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Nov 03
0

Daily Brief Equity Bottom-Up: Keisei Electric: Results Unimpressive and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Keisei Electric: Results Unimpressive, Yet Investor Activism Appeal Remains
  • Global Rice Market Disrupted: India’s Export Ban Sparks Chaos and Worries
  • HDFC Bank: Steady ROA Despite NIM Compression Post Merger
  • Tesla (TSLA) No Longer Prevails, a Dilemma and Touch Challenges Ahead
  • Mayora Indah (MYOR IJ) – Classy Biscuits and Beverages
  • CyberAgent: Gaming Shows Some Recovery but New Releases Yet to Shift Momentum for Games
  • Korea Small Cap Gem #26: LF Corp – A Deep Value Play and the Lee Hyori Effect
  • Silergy (6415.TT): The Revenue Could Be Upside Around 17% in 4Q23F.
  • Duolingo Valuation Update: Year-End Profit Taking Is Likely As ARR Growth Is Slowing Down
  • SiC as a Dog (Part 2)

Keisei Electric: Results Unimpressive, Yet Investor Activism Appeal Remains

By Oshadhi Kumarasiri

  • Keisei Electric Railway Co (9009 JP)‘s FQ2 earnings, released on October-31st, surpassed revenue and OP expectations, yet the company revised down its revenue and OP guidance by ¥8.8bn and ¥200m.
  • Despite this, the share price has surged over 10% in recent days, likely influenced by activist investor Palliser Capital’s interest and a significant 30% increase in annual dividend guidance.
  • However, during earnings, the company remained silent about the activist investor’s proposal to reduce its Oriental Land (4661 JP) ownership below 15%.

Global Rice Market Disrupted: India’s Export Ban Sparks Chaos and Worries

By Nimish Maheshwari

  • India’s rice export ban triggers global market chaos, leading to panic buying and uncertainty in rice supply, affecting both India and Thailand.
  • El Niño’s drought threatens Thailand’s rice production, adding to the crisis. Other Asian nations impose export bans, raising inflation concerns.
  • Global rice prices rise, impacting vulnerable nations and sparking fears of a repeat of the 2008 rice crisis due to protectionist policies.

HDFC Bank: Steady ROA Despite NIM Compression Post Merger

By Ankit Agrawal, CFA

  • As highlighted in our prior notes, HDFC Bank (HDFCB IN) has been able to maintain its ROA and ROE despite NIM compression post merger.
  • As the excess liquidity (related to the merger) recedes over the next 3-4 quarters, ROA and ROE should further normalize.
  • HDFCB has been able to clock 5%ish QoQ growth across deposits and loans, allaying growth concerns on a larger base post merger.

Tesla (TSLA) No Longer Prevails, a Dilemma and Touch Challenges Ahead

By Andrew Lu

  • Tesla is facing a dilemma whether to aggressively cut price to boost shipment but lose margins or to keep price stable with a more moderated shipment growth like 10-20% y/y.
  • Three challenges ahead: 1. Collapsing margin vs. rising margin for key competitors? 2. Cybertruck is selling at a loss, more margin downside? 3. Valuation reset for lower sales CAGR?
  • Cautious on Tesla as its sales/earnings CAGR is falling below 20% with a rich valuation until we see cost cut on Cybertruck, FSD AI breakthrough, and low price model introduction.

Mayora Indah (MYOR IJ) – Classy Biscuits and Beverages

By Angus Mackintosh

  • Mayora Indah (MYOR IJ) saw a significant positive surge in profitability from lower raw material prices and lower operating costs in 3Q2023, which suggests it will beat its FY2023 guidance.
  • The company continues to launch new variants in both biscuits and beverages with a slant towards premiumisation and is also more aggressively attacking export markets, where its brands are strong.
  • Mayora Indah (MYOR IJ) is expanding factory capacity to fuel growth in 2024 but should also benefit from pre-election spending from 4Q2023. Valuations look attractive versus historical comparisons.

CyberAgent: Gaming Shows Some Recovery but New Releases Yet to Shift Momentum for Games

By Shifara Samsudeen, ACMA, CGMA

  • CA reported 4Q and full-year FY09/2023 results today. 4Q revenue increased 5% YoY while OP dropped more than 50% during the quarter. Revenues beat consensus while OP fell behind.
  • Games revenues further decreased YoY during the quarter (improved QoQ) while it managed to report an OP which was possible due to UMA MUSUME’s game anniversary.
  • Though CA released a new game in September and few lined-up for release, until the company releases a hit title like UMA MUSUME, we expect the recovery to be slow.

Korea Small Cap Gem #26: LF Corp – A Deep Value Play and the Lee Hyori Effect

By Douglas Kim

  • Lf Corp (093050 KS) is the 26th company in our Korea Small Cap Gems series. 
  • LF Corp is one of the leading apparel companies in Korea which has a market cap of 411 billion won. LF Corp is trading at 0.3x P/B and 4x P/E.
  • A key near-term catalyst is better than expected sales of the Reebok branded apparel that are promoted by the pop icon Lee Hyori. 

Silergy (6415.TT): The Revenue Could Be Upside Around 17% in 4Q23F.

By Patrick Liao

  • Revenue was up 14.5% QoQ and down 31% YoY in 3Q23, but it could see an increase of about 17% QoQ and 3% YoY in 4Q23F. 
  • Silergy Corp (6415 TT) needs to increase another place to its Foundry source out of China and Taiwan.
  • The Automotive segment is expected to show significant growth and is likely to reach double digits by the end of 2024F.

Duolingo Valuation Update: Year-End Profit Taking Is Likely As ARR Growth Is Slowing Down

By Andrei Zakharov

  • Duolingo shares have outperformed in 2023, with shares up ~115% over the year versus ~26% gain on the Nasdaq. The company priced its IPO at $102 a share in 2021.
  • EdTech unicorn achieved the highest-ever MAUs and DAUs in 2QFY23, while paid subscribers reached 5.2M, ~7% of MAUs. Management raised top-line and profitability guidance for FY23. 
  • With a market cap of ~$7.4B on a fully diluted basis, Duolingo shares trade at ~13x and ~10x EV/Rev on my FY23/FY24 estimates, a significant premium to comparable companies.

SiC as a Dog (Part 2)

By Douglas O’Laughlin

  • The sickness in Silicon Carbide started at On semi.
  • Let’s look through the results and see the drivers, the big deal, and what we should do about it.
  • The market freaked out about Silicon Carbide, specifically On semiconductor, saying that automotive demand for the year will be weaker.

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Nov 03
0

Daily Brief Indonesia: Mayora Indah, Indika Energy, Azure Power Global Ltd and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Mayora Indah (MYOR IJ) – Classy Biscuits and Beverages
  • Indika Energy – Earnings Flash – 9M FY 2023 Results – Lucror Analytics
  • Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

Mayora Indah (MYOR IJ) – Classy Biscuits and Beverages

By Angus Mackintosh

  • Mayora Indah (MYOR IJ) saw a significant positive surge in profitability from lower raw material prices and lower operating costs in 3Q2023, which suggests it will beat its FY2023 guidance.
  • The company continues to launch new variants in both biscuits and beverages with a slant towards premiumisation and is also more aggressively attacking export markets, where its brands are strong.
  • Mayora Indah (MYOR IJ) is expanding factory capacity to fuel growth in 2024 but should also benefit from pre-election spending from 4Q2023. Valuations look attractive versus historical comparisons.

Indika Energy – Earnings Flash – 9M FY 2023 Results – Lucror Analytics

By Trung Nguyen

In our view, Indika Energy’s 9M/23 results were weaker than expected due to a sharp decline in Kideco’s production and sales volume in Q3, lower-than-expected profitability at Kideco (which accounts for 90% of Indika’s EBITDA) and negative OCF, which came as a surprise. The balance sheet turned to a net debt position, after a few quarters of net cash. Liquidity remains sound, with a large (albeit fast shrinking) cash position.

OCF and FCF were negative, which was surprising as Indika has previously managed to generate positive FCF even when coal prices were lower than current levels. The last time the company generated negative FCF was in 2015, during a major coal downturn. We believe that the negative OCF may be due to the new businesses, which are ramping up. Indika’s key business strategy in the medium term is to diversify away from and reduce its reliance on coal-related activities, with the company aiming to derive 50% of its revenue from non-coal sources by 2025. The new businesses include a gold mine, renewable energy solutions (mainly solar power), electric scooters and several digital technology businesses.

Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

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 03
0

Daily Brief United States: Tesla Motors, Aehr Test Systems, Duolingo, HNI Corp, Odyssey Marine Exploration and more

By | Daily Briefs, United States

In today’s briefing:

  • Tesla (TSLA) No Longer Prevails, a Dilemma and Touch Challenges Ahead
  • SiC as a Dog (Part 2)
  • Duolingo Valuation Update: Year-End Profit Taking Is Likely As ARR Growth Is Slowing Down
  • HNI Corporation – Raising Estimates Following Strong 3Q Earnings Report
  • Odyssey Marine Exploration, Inc. – Exploring and Developing Seabed Resources Responsibly

Tesla (TSLA) No Longer Prevails, a Dilemma and Touch Challenges Ahead

By Andrew Lu

  • Tesla is facing a dilemma whether to aggressively cut price to boost shipment but lose margins or to keep price stable with a more moderated shipment growth like 10-20% y/y.
  • Three challenges ahead: 1. Collapsing margin vs. rising margin for key competitors? 2. Cybertruck is selling at a loss, more margin downside? 3. Valuation reset for lower sales CAGR?
  • Cautious on Tesla as its sales/earnings CAGR is falling below 20% with a rich valuation until we see cost cut on Cybertruck, FSD AI breakthrough, and low price model introduction.

SiC as a Dog (Part 2)

By Douglas O’Laughlin

  • The sickness in Silicon Carbide started at On semi.
  • Let’s look through the results and see the drivers, the big deal, and what we should do about it.
  • The market freaked out about Silicon Carbide, specifically On semiconductor, saying that automotive demand for the year will be weaker.

Duolingo Valuation Update: Year-End Profit Taking Is Likely As ARR Growth Is Slowing Down

By Andrei Zakharov

  • Duolingo shares have outperformed in 2023, with shares up ~115% over the year versus ~26% gain on the Nasdaq. The company priced its IPO at $102 a share in 2021.
  • EdTech unicorn achieved the highest-ever MAUs and DAUs in 2QFY23, while paid subscribers reached 5.2M, ~7% of MAUs. Management raised top-line and profitability guidance for FY23. 
  • With a market cap of ~$7.4B on a fully diluted basis, Duolingo shares trade at ~13x and ~10x EV/Rev on my FY23/FY24 estimates, a significant premium to comparable companies.

HNI Corporation – Raising Estimates Following Strong 3Q Earnings Report

By Water Tower Research

  • 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.
  • Our sales estimates have moderated. Following the 3Q23 report, margins should be sustainably stronger.
  • HNI reported 3Q23 adjusted EPS of $0.93, $0.30 better than consensus. Sales were roughly in line. 

Odyssey Marine Exploration, Inc. – Exploring and Developing Seabed Resources Responsibly

By Water Tower Research

  • We hosted a fireside chat with Chief Executive Officer and Chairman of the Board of Directors Mark D. Gordon.
  • This report contains a transcript of the fireside chat from October 12, 2023, which can be accessed on demand.
  • Deep roots and unique capabilities. Odyssey Marine Exploration, Inc. is a company with nearly 30 years of experience exploring and recovering deep-sea sites, amassing more than 24,000 hours of deep-sea experience, and exploring more than 74,000 square kilometers of the seafloor in the process.

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Nov 03
0

Daily Brief China: Tongcheng Travel Holdings , Midea Group Co Ltd A, Zhongsheng Group, Cloudchain, Azure Power Global Ltd and more

By | China, Daily Briefs

In today’s briefing:

  • Quiddity HSTECH Dec 23 Flow Expectations: US$512mn One-Way Flows if the Expected Change Takes Place
  • Midea Group H Share Listing: The Investment Case
  • Quiddity HSCEI Dec 23 Rebalance: Zhongsheng Vs China Grand Pair Interesting if Deletion Is Confirmed
  • Cloudchain Pre-IPO Tearsheet
  • Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

Quiddity HSTECH Dec 23 Flow Expectations: US$512mn One-Way Flows if the Expected Change Takes Place

By Janaghan Jeyakumar, CFA

  • The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
  • The index changes and the indicative component weights for the December 2023 index review will be published in a couple of weeks.
  • In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.

Midea Group H Share Listing: The Investment Case

By Arun George

  • Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, has filed for a H Share listing to raise US$1 billion, according to press reports.   
  • Midea is the world’s largest home appliance company in sales volume and revenue in 2022. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
  • The investment case rests on return to growth, margin on an upward trajectory, cash generation, strong balance sheet and undemanding valuation. 

Quiddity HSCEI Dec 23 Rebalance: Zhongsheng Vs China Grand Pair Interesting if Deletion Is Confirmed

By Janaghan Jeyakumar, CFA

  • The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” Securities listed in Hong Kong.
  • In a couple of weeks, the official index changes and the indicative weights for the final index members for the December 2023 rebalance will be announced.
  • In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI in December 2023.

Cloudchain Pre-IPO Tearsheet

By Ethan Aw

  • Cloudchain (CC CH) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by China Securities International, ABC International, ICBC and Maxa Capital.
  • Cloudchain is an independent industry digital finance platform in China, serving anchor enterprises, chain-related enterprises, and financial institutions. 
  • According to F&S, it is the largest independent digitalized corporate credit confirming platform in China. Its user base had grown at a CAGR of 75.1% from 2020 to 2022. 

Morning Views Asia: Azure Power Global Ltd, Evergrande, Japfa Comfeed Indonesia, Medco Energi

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 03
0

Daily Brief Macro: Sentiment Nugget: What are Central Banks Actually Telling Us? and more

By | Daily Briefs, Macro

In today’s briefing:

  • Sentiment Nugget: What are Central Banks Actually Telling Us?
  • CX Daily: China Concludes Sixth Top Financial Meeting to Tackle New Challenges
  • EIA Watch: Oil demand up, Fuel demand down..
  • EM by EM #28 The Truth Hidden in Plain Sight
  • Powell Beats UGLY ISM in Two Sentences – Stocks Fly
  • BoE: Roasting in Persistent Inflation

Sentiment Nugget: What are Central Banks Actually Telling Us?

By Andreas Steno

  • At this point in the policy path, our Central Bank Sentiment trackers are showing some meaningful signs of life – not of all it totally anticipated.
  • Here we highlight some key observations made over the last month around what Central Bank language is actually telling us from a quantitative point of view.
  • We regularly track and update our measure of positivity/negativity of Bank language contained in statements, outlooks and speeches on a scale of -1 to +1.

CX Daily: China Concludes Sixth Top Financial Meeting to Tackle New Challenges

By Caixin Global

  • Financial meeting / Caixin Explains: China concludes sixth top financial meeting to tackle new challenges

  • Personnel /: China’s wave of ministry-level leadership shakeups rolls on in October

  • PE /: Communist Party cadres told to steer clear of private equity

EIA Watch: Oil demand up, Fuel demand down..

By Andreas Steno

  • Welcome to our weekly EIA Watch where we use our sophisticated models to filter noise from actual trends in the EIA demand data for Energy products.
  • Since a week ago, Oil has rebounded in the non-adjusted implied demand while transportation fuel demand weakness is seen across Gasoline and especially Diesel.
  • We continue to find the Gasoline demand out of whack with reality, while the Oil demand looks to be closer to the actual demand.

EM by EM #28 The Truth Hidden in Plain Sight

By Emil Moller

  • Key Points: The recent UST rally may offer relief to risk assets, and the market appears well-positioned for a bear market rally.
  • Our perspective remains unchanged: we believe the underlying economy is weaker than what current market sentiment reflects.
  • Persistent concerns surround China’s economic challenges, casting doubt on the sufficiency of the stimulus package, and financial fragility remains unresolved.

Powell Beats UGLY ISM in Two Sentences – Stocks Fly

By Jeroen Blokland

  • Adding the word FINANCIAL to the FOMC statement confirms that Powell & Co. are putting more emphasis on the recent rise in (long-term) interest rates in the Fed’s decision-making.
  • Powell overshadowed incoming macro data, revealing that the ISM Manufacturing Index fell sharply to 46.7 in October, ending its already tepid recovery.
  • Based on the historical relationship between the ISM Manufacturing Index and year-over-year returns on the S&P 500 Index, the S&P 500 Index should decline 17% to around 3,500!

BoE: Roasting in Persistent Inflation

By Phil Rush

  • The BoE held its policy rate at 5.25%, in line with the consensus, with most members still sounding hawkish and warning of a possible rise yet not changing their votes.
  • Inflation persistence was deemed not to have changed despite the minutes noting an assumption that explicitly raised it and a substantial rise in the inflation forecast.
  • A failure to hike encourages excessive wage settlements, which are rebounding. Second-round effects may not push policy up but should keep it there even longer.

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