Category

Daily Briefs

Nov 02
0

Daily Brief Energy/Materials: Indika Energy, Calima Energy , Guala Closures S.p.A., Arrow Exploration Corp, Pulsar Helium, Sherwin Williams Co, Southern Copper and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Indika Energy – ESG Report – Lucror Analytics
  • Calima Energy Ltd (ASX: CE1): High production in 4Q23 and 1Q24
  • Guala Closures – ESG Report – Lucror Analytics
  • Arrow Exploration Corp. (AIM: AXL): Large Shareholders Increase Stake in Arrow
  • Pulsar Helium Inc. (TSX-V: PLSR): Additional Acreage Could Increase the Size of the Prize
  • The Sherwin-Williams Company: Acquisition Game-Changer! How Oskar Nolte & Klumpp Coatings Set the Stage for Future Wins! – Major Drivers
  • Southern Copper Corporation: Can It Defy The Odds? – Major Drivers

Indika Energy – ESG Report – Lucror Analytics

By Trung Nguyen

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Indika Energy’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

Calima Energy Ltd (ASX: CE1): High production in 4Q23 and 1Q24

By Auctus Advisors

  • • 3Q23 production was 3,683 boe/d, slightly below the company’s guidance due to maintenance, turn-around operations at two of the production facilities and unscheduled downhole maintenance on pumping equipment on a few of the more productive wells. 
  • This is more than offset by the high current production of ~4,100 boe/d following Pisces 10 and 11 being brought into production.
  • Calima forecasts 4Q23 production of 4,028 boe/d and we have increased our 4Q23 production forecast of 3,740 boe/d to 4,030 boe/d to be in line with Calima’s guidance.

Guala Closures – ESG Report – Lucror Analytics

By Charles Macgregor

  • Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
  • We assess Guala Closures’ ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.
  • Guala Closures is a leading producer of closures for spirits, with a strong presence in emerging markets. Its main product lines are Safety Closures, Wine Closures and Standard Closures. 

Arrow Exploration Corp. (AIM: AXL): Large Shareholders Increase Stake in Arrow

By Auctus Advisors

  • Canacol Energy has exercised 18.4 mm warrants. The company will now hold 60.1 mm shares in Arrow representing 21.2% of the issued share capital.
  • Tim Leslie has exercised 10.2 mm warrants, which more than doubles his interest from 7.6 mm shares to 17.8 mm shares.
  • This represents 6.3% of the issued share capital.

Pulsar Helium Inc. (TSX-V: PLSR): Additional Acreage Could Increase the Size of the Prize

By Auctus Advisors

  • Pulsar has signed a lease with a private mineral rights holder to expand the area surrounding the company’s Topaz helium project.
  • The additional mineral rights are within a 6.2 mile radius of the Topaz discovery and cover a total of 2,840 gross acres (1,049 net acres).
  • This more than doubles net acres under lease (existing net area of 1,040 net).

The Sherwin-Williams Company: Acquisition Game-Changer! How Oskar Nolte & Klumpp Coatings Set the Stage for Future Wins! – Major Drivers

By Baptista Research

  • The Sherwin-Williams Company delivered a solid result and managed an all-around beat in the last quarter.
  • In the third quarter, Sherwin-Williams’ Paint Stores Group exhibited commendable resilience, with a 3.6% increase in sales, despite a demanding 21.5% comparison.
  • Within the Paint Stores Group, the Protective & Marine sector emerged as the fastest-growing, achieving double-digit percentage sales growth against a mid-teens comparison.

Southern Copper Corporation: Can It Defy The Odds? – Major Drivers

By Baptista Research

  • Southern Copper Corporation delivered a strong result and managed an all-around beat in the last quarter, demonstrating resilience and adaptability.
  • Copper, constituting a significant 75% of their sales, faced a marginal 9% decline in production, primarily due to diminished ore grades in the Cuajone mine.
  • Amidst these challenges, Southern Copper remained proactive, predicting a 6% increase in copper production for the year 2023, aiming for 917,000 tons.

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Nov 02
0

Daily Brief Utilities: Adani Green Energy and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Adani Green Energy – Earnings Flash – H1 FY 2023-24 Results – Lucror Analytics

Adani Green Energy – Earnings Flash – H1 FY 2023-24 Results – Lucror Analytics

By Leonard Law, CFA

Adani Green Energy Limited (AGEL) has released acceptable H1/23-24 results, with the company reporting strong earnings growth and robust margins. Leverage improved on the back of the higher earnings, even though net debt increased slightly. That said, we anticipate that the negative FCF will deepen in H2 and FY 2024-25, as AGEL has guided for significant capex in order to expand capacity.

Positively, management has affirmed its plans to repay the USD 750 mn ADANIG 4.375 24 using funds already set aside at the promoter level. It also plans to refinance the USD 500 mn ADGREG 6.25 24 through a new bond issuance. The company is likely to formally announce its refinancing plans by December 2023 (as required under the bond indentures).

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Nov 02
0

Daily Brief TMT/Internet: AEM, Symbio Holdings, Advanced Micro Devices, Fiserv Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Preview AEM Holdings: Loss-Making Quarter Ahead For First Time in 10 Years
  • Symbio Backs ABB’s Reduced Terms
  • AMD Q323. MI300 >$2 Billion in 2024
  • Symbio (SYM AU): Aussie Broadband’s Lower Binding Proposal
  • Fiserv Inc.: Collaborating with Skytef & Other Major Developments

Preview AEM Holdings: Loss-Making Quarter Ahead For First Time in 10 Years

By Nicolas Van Broekhoven

  • AEM (AEM SP) will report 3Q23 results on 10/11/23. This will be the first loss-making quarter since 4Q14.
  • We expect a loss as AEM will have to recognize the 26.7M SGD arbitration expense to settle with Advantest Corp (6857 JP). 
  • Investors will be looking for an early read on the FY24 outlook to determine if AEM’s stock has bottomed.

Symbio Backs ABB’s Reduced Terms

By David Blennerhassett

  • Back on the 22 September, Superloop Ltd (SLC AU) lobbed a best and final cash/scrip NBIO for Symbio Holdings (SYM AU) with an implied price of A$2.85/share.
  • Aussie Broadband Pty Ltd (ABB AU) then tabled a cash/scrip Offer, with an implied price of  A$3.151/share. Symbio was supportive, if terms were firmed. Superloop’s Offer subsequently lapsed.
  • ABB returned with a reduced cash/scrip Offer of A$2.99-$3.04/share. Symbio has unanimously recommended the Offer (at A$3.011/share) and they entered into a Scheme agreement. A partially/fully franked dividend is permitted.

AMD Q323. MI300 >$2 Billion in 2024

By William Keating

  • Q323 revenues of $5.8 billion, $100 million above midpoint, up 7.5% QoQ and up 4% YoY. Net income of $299 million, significantly up from $27 million in the second quarter.
  • Forecasted Q423 revenues of $6.1 billion at the midpoint, up ~5% QoQ
  • MI300 forecasted to hit > $2 billion in 2024 making it the fastest product ramp to $1 billion in the company’s history

Symbio (SYM AU): Aussie Broadband’s Lower Binding Proposal

By Arun George

  • Symbio Holdings (SYM AU)‘s binding proposal with Aussie Broadband Pty Ltd (ABB AU) is at A$2.26 cash and 0.192 ABB shares per SYM share, 3.2% lower than its earlier proposal.
  • The key condition is shareholder approval. The scheme booklet will be despatched on 22 December, with a scheme meeting in early February 2024.
  • While the offer is light compared to long-term historical prices and multiples, there seem to be no signs of dissent from institutional or retail investors. 

Fiserv Inc.: Collaborating with Skytef & Other Major Developments

By Baptista Research

  • Fiserv, Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
  • These impressive results were fueled by the acceleration of organic revenue growth in both the Merchant Acceptance and Fintech segments, reaching 20% and 6%, respectively.
  • In the third quarter, Fiserv continued its impressive streak of double-digit organic revenue growth, focusing on five powerful opportunities to sustain this momentum.

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Nov 02
0

Daily Brief Industrials: Polycab India , Hanwha Corporation, Shenzhen International, ZTO Express Cayman , Paccar Inc, Waste Management, General Electric , Ask Automotive, Illinois Tool Works, 3M Co and more

By | Daily Briefs, Industrials

In today’s briefing:

  • AMFI Stock Reclassification Preview (Dec 2023): HUGE Outperformance as Active and Passive Meet
  • Hanwha Corp: Updated NAV Analysis – Defense Assets Undervalued
  • Shenzhen Intl (152 HK): A Big Step Forward
  • The Four Listed Chinese Express Companies Suffered Significant Margin Erosion in Q323
  • PACCAR Inc: Does The Battery Revolution Imply A Possible Investment Opportunity? – Major Drivers
  • Waste Management: Recycling Tech Transforms Business! Inside their Next-Gen Sustainability Approach! – Major Drivers
  • General Electric Company: A Lucrative Strategy Of Future-Proof Investments Revealed! – Major Drivers
  • ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated
  • Illinois Tool Works Inc.: Surge in China’s Automotive Segment – Unveiling Recent Big Winners! – Major Drivers
  • 3M Company: How They’re Dominating the Market! – Major Drivers

AMFI Stock Reclassification Preview (Dec 2023): HUGE Outperformance as Active and Passive Meet

By Brian Freitas

  • We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 14 stocks from MidCap to SmallCap.
  • Some stocks are expected to be inclusions to global indices later this month while others are potential NIFTY Index and/or Nifty Next 50 Index changes in March.
  • On average, the upward migrating stocks have outperformed the downward migrating stocks by close to 100% over the last 8 months. The passive flow can be used as an exit.

Hanwha Corp: Updated NAV Analysis – Defense Assets Undervalued

By Douglas Kim

  • We provide an updated NAV analysis of Hanwha Corporation which is a holding company of the Hanwha Group. We argue that Hanwha Corp’s shares are trading excessively below its NAV. 
  • Hanwha Corp is down 10.5% YTD, underperforming Hanwha Aerospace (up 54.2% YTD). Hanwha Corp’s stake in Hanwha Aerospace is worth 1.9 trillion won (14% higher than Hanwha Corp’s market cap). 
  • Our NAV analysis of Hanwha Corporation (000880 KS) suggests NAV of 2.3 trillion won or NAV per share of 30,203 won which is 33% higher than current price.

Shenzhen Intl (152 HK): A Big Step Forward

By Osbert Tang, CFA

  • Shenzhen International (152 HK) has reached agreement with the government on the South China Logistics Park Phase I transformation and it will receive Rmb1.058bn compensation.
  • The sum equals a significant 9% of SZI’s market capitalisation. The agreement also kick-started the project’s long-term contribution, which may provide an income stream lasting 3-5 years.
  • The deal showcased SZI’s ability to realise the underlying value of its assets. The stock should not be valued on its earnings, and its 0.3x P/B is deeply undervalued.

The Four Listed Chinese Express Companies Suffered Significant Margin Erosion in Q323

By Daniel Hellberg

  • Given declining prices and slowing volume growth, we anticipated lower Q3 express margins
  • The four China-listed express firms saw Op Inc margin fall from 5.3% in Q2 to 3.9% in Q3
  • SF fared better than ‘sort & transport’ names, but its freight forwarding segment still a drag

PACCAR Inc: Does The Battery Revolution Imply A Possible Investment Opportunity? – Major Drivers

By Baptista Research

  • PACCAR managed to surpass the revenue and earnings expectations of Wall Street, with net income surging by 60% year-over-year to a historic $1.23 billion, accompanied by a 23% increase in revenues.
  • PACCAR Parts also played a pivotal role in the company’s success, with third-quarter revenues reaching $1.58 billion and Parts pretax profits increasing by 10% to $412 million.
  • PACCAR Financial achieved an impressive pretax income of $134 million in the financial sector in the third quarter.

Waste Management: Recycling Tech Transforms Business! Inside their Next-Gen Sustainability Approach! – Major Drivers

By Baptista Research

  • Waste Management delivered a mixed result in the recent quarter, with revenues below market expectations but surpassed the analyst consensus regarding earnings.
  • The solid waste business was the driving force behind this achievement, with organic revenue growth in collection and disposal aligning well with expectations.
  • The resilience of solid waste volumes, with positive trends in commercial volumes and special waste growth, stood out.

General Electric Company: A Lucrative Strategy Of Future-Proof Investments Revealed! – Major Drivers

By Baptista Research

  • General Electric Company delivered an all-around beat in the previous quarter.
  • Orders increased by double digits, with services up by 15% and equipment up by 22%, driven primarily by the commercial aerospace sector.
  • The aerospace segment, in particular, experienced substantial growth, with commercial engines and services leading the way.

ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated

By Clarence Chu

  • Ask Automotive (7175293Z IN) is looking to raise around US$145m in its upcoming India IPO. 
  • ASK Automotive (ASKA) is the largest manufacturer of brake-shoe and advanced braking (AB) systems for 2Ws in India, in terms of FY23 production volume for OEMs and the branded IAM.
  • As per CRISIL, it had an approximate 50% market share in said market. The IPO is expected to consist of 100% secondary shares, with promoters trimming their stakes.

Illinois Tool Works Inc.: Surge in China’s Automotive Segment – Unveiling Recent Big Winners! – Major Drivers

By Baptista Research

  • Illinois Tool Works delivered a mixed set of results in its most recent results, with revenues falling short of Wall Street expectations but above-par earnings.
  • The company had relatively stable organic growth in the quarter, with a 2% increase on an equal-day basis.
  • Operating margin for the third quarter reached 26.5%, marking a 200-basis point increase compared to the previous year.

3M Company: How They’re Dominating the Market! – Major Drivers

By Baptista Research

  • 3M Company delivered an all-around beat in the most recent quarterly result.
  • This success has positioned the company for a promising conclusion to the year 2023.
  • The company also addresses potential risk and uncertainty by resolving significant litigation matters, such as Combat Arms and PFAS litigation.

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Nov 02
0

Daily Brief Health Care: Celltrion Inc, WuXi XDC Cayman Inc, Daiichi Sankyo, WuXi AppTec, Basilea Pharmaceutica Ag and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Celltrion Merger: Appraisal Rights & Passive Flows
  • WuXi XDC IPO: The Bear Case
  • Daiichi Sankyo (4568 JP): Landmark ADC Deal Pushes FY24 Revenue Guidance Higher
  • WuXi AppTec (2359.HK/603259.CH) 23Q3 – Will the TIDES Business Turn the Tide?
  • Basilea Pharmaceutica – Growth pivot with potential antibacterial addition

Celltrion Merger: Appraisal Rights & Passive Flows

By Brian Freitas

  • The Appraisal rights exercise period ends on 13 November. If the NPS and other large shareholders exercise their rights in Celltrion Inc (068270 KS), the merger could be in trouble.
  • Both stocks are trading close to their exercise price and could be supported due to the companies buying back their shares.
  • There will be passive flows from local and global trackers and there does not appear to be pre-positioning. That is likely due to the risk of potential merger cancellation.

WuXi XDC IPO: The Bear Case

By Arun George

  • WuXi XDC Cayman Inc (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
  • In WuXi XDC IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
  • The bear case rests on margins on a downward trend, large customer concentration, high related party transactions and volatile FCF generation.

Daiichi Sankyo (4568 JP): Landmark ADC Deal Pushes FY24 Revenue Guidance Higher

By Tina Banerjee

  • Daiichi Sankyo (4568 JP) reported strong H1FY24 results, with double-digit growth in revenue, core operating profit, and net profit, mainly driven by its global mainstay product Enhertu.
  • Daiichi Sankyo and Merck entered into a global development and commercialization agreement for three of Daiichi Sankyo’s drug candidates, for a total potential consideration of up to $22 billion.
  • Daiichi Sankyo has raised FY24 revenue, core operating profit, and net profit forecast by 7%, 11%, and 17%, respectively. FY24 revenue is expected to grow 21% YoY to ¥1,550 billion.

WuXi AppTec (2359.HK/603259.CH) 23Q3 – Will the TIDES Business Turn the Tide?

By Xinyao (Criss) Wang

  • 23Q3 results has sounded an alarm for investors. Obviously, the deterioration of financing situations both domestically and internationally has forced WuXi AppTec to readjust projected revenue growth.
  • Almost all of the important logic at the moment is negative for CXOs.Revenue growth in TIDES business alone is hard to offset the decline in WuXi AppTec’s other businesses/industry trend.
  • After a pullback, investors can bet on the next rebound, but we still recommend taking profits in time, because without persuasive fundamentals, rebound driven by sentiment is difficult to sustain.

Basilea Pharmaceutica – Growth pivot with potential antibacterial addition

By Edison Investment Research

Basilea has announced an exclusive evaluation licence and option agreement with South Korea-based iNtRON Biotechnology (KOSDAQ: 048530) for tonabacase, a potential first-class antibacterial of endolysin class. The product candidate could potentially fit well into Basilea’s portfolio of anti-fungal and anti-bacterial products, Cresemba and Zevtera. This announcement follows the recent in-licensing of GR-2397 (an antifungal compound, renamed BAL2062) and aligns with management’s strategic focus to seek anti-fungal and anti-infective synergistic additions to its portfolio. As part of the agreement, Basilea will evaluate tonabacase in a range of preclinical studies which, if favourable, could lead to a licensing agreement for further clinical development, at Basilea’s exclusive discretion and at pre-agreed financial terms. Basilea is making an undisclosed upfront payment to iNtRON and will make an additional payment if it decides to exercise its exclusive option to execute the licence agreement. While the terms of the deal are undisclosed, management maintains that the transaction has no impact on its FY23 financial guidance.

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Nov 02
0

Daily Brief Consumer: ZJLD Group , Honasa Consumer, GoTo Gojek Tokopedia Tbk PT, Coupang , Health And Happiness (H&H), Kimberly Clark, Midea Group Co Ltd A and more

By | Consumer, Daily Briefs

In today’s briefing:

  • ZJLD Group (6979 HK):  Direct Beneficiary Of Moutai Raising Ex-Factory Price
  • Honasa Consumer Ltd IPO- Forensic Analysis
  • GoTo Gojek Tokopedia (GOTO IJ) – New Initiatives Gaining Traction and Increasing Productivity
  • Coupang Inc.: Initiation of Coverage – Business Strategy
  • Morning Views Asia:
  • Kimberly-Clark Corporation: Is It The Market’s Hidden Gem? – Major Drivers
  • Past A/H Listings Performance – Have Been a Mixed Bag

ZJLD Group (6979 HK):  Direct Beneficiary Of Moutai Raising Ex-Factory Price

By Steve Zhou, CFA

  • Late last night (near mid-night), Kweichow Moutai (600519 CH) shocked the market by announcing a direct price hike on its main Feitian 53 degree product by an average of 20%. 
  • The market had no expectation of such price hike as it was widely perceived that Moutai could not directly increase the ex-factory price due to regulatory pressures. 
  • Moutai’s Feitian ex-factory price is the key price leader for pretty much all other major Baijiu brand, directly benefiting ZJLD Group (6979 HK).

Honasa Consumer Ltd IPO- Forensic Analysis

By Nitin Mangal

  • Honasa Consumer (1652951D IN) IPO is a book built issue worth INR 17 bn, comprising INR 3.65 bn worth fresh issue and INR 13.4 bn of OFS (41.2 mn shares). 
  • The company is renowned for its flagship brand, Mama Earth while it has acquired other brands recently such as B-Blunt, Dr. Sheth and has also ventured in the salon business. 
  • Our concerns remain on the A&P spends and related growth output, acquisition value and employee churning.

GoTo Gojek Tokopedia (GOTO IJ) – New Initiatives Gaining Traction and Increasing Productivity

By Angus Mackintosh

  • GoTo Gojek Tokopedia’s 3Q2023 results were far more illuminating and encouraging than the last 2Qs, with more progress towards adjusted EBITDA breakeven, with much more colour on its new initiatives.
  • The company’s focus on budget consumers and more affordable product offerings are already expanding its TAM and improving product density and productivity, speeding progress towards productivity. 
  • GoTo will continue to invest in growth, which may mean it misses its 4Q adjusted EBITDA breakeven target but it has reduced cash burn significantly giving it more breathing space.

Coupang Inc.: Initiation of Coverage – Business Strategy

By Baptista Research

  • This is our first report on South Korean e-commerce giant, Coupang Inc.
  • The company delivered an all-around beat in the most recent quarterly result.
  • The company observed an acceleration in revenue and active customer growth, particularly noteworthy for the rapid acceleration in active customer numbers.

Morning Views Asia:

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.

    Kimberly-Clark Corporation: Is It The Market’s Hidden Gem? – Major Drivers

    By Baptista Research

    • Kimberly-Clark Corporation delivered mixed results for the previous quarter, with revenues below the analyst consensus.
    • The strategic exit from the Brazil tissue business had an additional effect, reducing net sales by 100 basis points, primarily affecting Consumer Tissue and the Professional business.
    • Consumer Tissue reported 2% organic growth, with North America delivering a strong 4% organic growth, driven by robust demand for dry baths and towels.

    Past A/H Listings Performance – Have Been a Mixed Bag

    By Sumeet Singh

    • Two of the biggest deals in the Hong Kong pipeline are A/H listings for S.F. Holding (002352 CH) and Midea Group (000333 CH), both looking to raise around US$3bn.
    • Prior to the deals going live, we had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
    • Overall, most of the recent A/H listings haven’t done much in the near term.

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    Nov 02
    0

    Most Read: Socionext, Kakao Corp, TOPIX-Banks Index, Polycab India , Celltrion Inc, Hokuhoku Financial Group, WuXi XDC Cayman Inc, Symbio Holdings and more

    By | Daily Briefs, Most Read

    In today’s briefing:

    • March 2024 Nikkei 225 Rebal – Socionext, Disco and a Consumer Goods Stock (Ryohin Keikaku?) To ADD
    • Concerns About A Major Accounting Fraud at Kakao Mobility
    • Ueda’s BOJ Looking Like Ueda’s Pre-BOJ Opinions, but Normalisation Is “A Work in Progress.”
    • NIFTY NEXT50 Index Rebalance Preview: 6 Changes & Big Turnover
    • Celltrion Merger: Appraisal Rights & Passive Flows
    • Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down – Opportunity Abounds, Still
    • Pre-IPO WuXi XDC (PHIP Updates) – Some Points Worth the Attention
    • Symbio Backs ABB’s Reduced Terms
    • AMFI Stock Reclassification Preview (Dec 2023): HUGE Outperformance as Active and Passive Meet
    • WuXi XDC IPO: The Bear Case

    March 2024 Nikkei 225 Rebal – Socionext, Disco and a Consumer Goods Stock (Ryohin Keikaku?) To ADD

    By Travis Lundy

    Concerns About A Major Accounting Fraud at Kakao Mobility

    By Douglas Kim

    • It was reported in numerous local media in Korea that FSS is investigating Kakao Mobility for a potential accounting fraud. 
    • There are suspicions that Kakao Mobility may have artificially inflated its sales from 2020 to 2023 to enhance the value of the company prior to its IPO listing. 
    • Given that the regulators are unlikely to make a final decision on this matter until next year, this is likely to be negative on both Kakao Mobility and Kakao Corp. 

    Ueda’s BOJ Looking Like Ueda’s Pre-BOJ Opinions, but Normalisation Is “A Work in Progress.”

    By Travis Lundy

    • In July the BOJ lifted the YCC range to allow flexibility at 0.5% and a red line at 1.0%. Today it moved the “reference” to 1.0% with no red line.
    • This allows 10yr yields to move higher, but the Board’s insistence on negative rates and YCC staying in place tells you steeper for longer makes shorting long JGBs tough.
    • The move today helps encourage the market mechanism to take control of dampening volatility, the same way it did when the BOJ stepped away from ETF buying in 2021.

    NIFTY NEXT50 Index Rebalance Preview: 6 Changes & Big Turnover

    By Brian Freitas

    • Halfway through the review period, we see 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
    • Estimated one-way turnover is 15.26% and that will result in a one-way trade of INR 24bn. There will be more than 2x ADV to sell on nearly all deletes.
    • There is a possibility of an index methodology change, but no news for the last 4 months could indicate pushback from users or more stocks added to the F&O market.

    Celltrion Merger: Appraisal Rights & Passive Flows

    By Brian Freitas

    • The Appraisal rights exercise period ends on 13 November. If the NPS and other large shareholders exercise their rights in Celltrion Inc (068270 KS), the merger could be in trouble.
    • Both stocks are trading close to their exercise price and could be supported due to the companies buying back their shares.
    • There will be passive flows from local and global trackers and there does not appear to be pre-positioning. That is likely due to the risk of potential merger cancellation.

    Japan H1 Bank Earnings: Interest/Fees Up, Expenses/Credit Costs Down – Opportunity Abounds, Still

    By Travis Lundy

    • 40% of Banks outside the Top 7 (none of which offered H1 guidance) in the TOPIX Banks Index have now changed H1 guidance or reported H1. 2 reported both up.
    • 92% of the others have revised up H1 net income guidance a weighted average of 47%. Net Interest Income, Corporate fees/comms are up, expenses and credit costs are down.
    • Big tables with data, reasons for guidance changes, and buyback history of each presented below.

    Pre-IPO WuXi XDC (PHIP Updates) – Some Points Worth the Attention

    By Xinyao (Criss) Wang

    • We’ve seen increasing global cooperation for ADC pipelines. However, licensing deals alone cannot be used as the only basis for judgment. We still need to wait for solid clinical evidence.
    • ADCs are far less “general and popularized” than PD-1. If compare ADC with GLP-1s, the difference is more obvious.How big the real market is for ADC is a question mark.
    • WuXi XDC’s share price could perform well after IPO due to positive sentiments towards ADC, but whether its long-term valuation would be higher than peers remains to be seen.  

    Symbio Backs ABB’s Reduced Terms

    By David Blennerhassett

    • Back on the 22 September, Superloop Ltd (SLC AU) lobbed a best and final cash/scrip NBIO for Symbio Holdings (SYM AU) with an implied price of A$2.85/share.
    • Aussie Broadband Pty Ltd (ABB AU) then tabled a cash/scrip Offer, with an implied price of  A$3.151/share. Symbio was supportive, if terms were firmed. Superloop’s Offer subsequently lapsed.
    • ABB returned with a reduced cash/scrip Offer of A$2.99-$3.04/share. Symbio has unanimously recommended the Offer (at A$3.011/share) and they entered into a Scheme agreement. A partially/fully franked dividend is permitted.

    AMFI Stock Reclassification Preview (Dec 2023): HUGE Outperformance as Active and Passive Meet

    By Brian Freitas

    • We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 14 stocks from MidCap to SmallCap.
    • Some stocks are expected to be inclusions to global indices later this month while others are potential NIFTY Index and/or Nifty Next 50 Index changes in March.
    • On average, the upward migrating stocks have outperformed the downward migrating stocks by close to 100% over the last 8 months. The passive flow can be used as an exit.

    WuXi XDC IPO: The Bear Case

    By Arun George

    • WuXi XDC Cayman Inc (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
    • In WuXi XDC IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
    • The bear case rests on margins on a downward trend, large customer concentration, high related party transactions and volatile FCF generation.

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    Nov 02
    0

    Daily Brief Quantitative Analysis: Hong Kong Connect Flows (October): Four Months of Inflows and more

    By | Daily Briefs, Quantitative Analysis

    In today’s briefing:

    • Hong Kong Connect Flows (October): Four Months of Inflows
    • Northbound Flows Monthly (October): Three Months of Outflows

    Hong Kong Connect Flows (October): Four Months of Inflows

    By Ke Yan, CFA, FRM

    • We analyze the monthly Hong Kong Connect flows with our data engine.
    • We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
    • We highlight inflows into Meituan, Wuxi Biologics, SMIC, GWM, HKEX.

    Northbound Flows Monthly (October): Three Months of Outflows

    By Ke Yan, CFA, FRM

    • We analyze the monthly Shanghai/Shenzhen northbound Connect flows with our data engine.
    • Industrials ($2,588 million worth of outflows), Financials ($1,109 million worth of outflows) led the outflows. 
    • We highlight outflows from Moutai, CATL, Longi, Focus Media, Ping An Insurance.

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    Nov 02
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    Daily Brief ESG: Indika Energy – ESG Report – Lucror Analytics and more

    By | Daily Briefs, ESG

    In today’s briefing:

    • Indika Energy – ESG Report – Lucror Analytics
    • Guala Closures – ESG Report – Lucror Analytics

    Indika Energy – ESG Report – Lucror Analytics

    By Trung Nguyen

    Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
    We view Indika Energy’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

    Guala Closures – ESG Report – Lucror Analytics

    By Charles Macgregor

    • Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
    • We assess Guala Closures’ ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.
    • Guala Closures is a leading producer of closures for spirits, with a strong presence in emerging markets. Its main product lines are Safety Closures, Wine Closures and Standard Closures. 

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    Nov 02
    0

    Daily Brief ECM: WuXi XDC IPO: The Bear Case and more

    By | Daily Briefs, ECM

    In today’s briefing:

    • WuXi XDC IPO: The Bear Case
    • Honasa Consumer Ltd IPO- Forensic Analysis
    • ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated
    • Past A/H Listings Performance – Have Been a Mixed Bag

    WuXi XDC IPO: The Bear Case

    By Arun George

    • WuXi XDC Cayman Inc (1877628D HK), a leading contract research, development and manufacturing organization (CRDMO), is pre-marketing an HKEx IPO to raise US$500 million, according to press reports.
    • In WuXi XDC IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
    • The bear case rests on margins on a downward trend, large customer concentration, high related party transactions and volatile FCF generation.

    Honasa Consumer Ltd IPO- Forensic Analysis

    By Nitin Mangal

    • Honasa Consumer (1652951D IN) IPO is a book built issue worth INR 17 bn, comprising INR 3.65 bn worth fresh issue and INR 13.4 bn of OFS (41.2 mn shares). 
    • The company is renowned for its flagship brand, Mama Earth while it has acquired other brands recently such as B-Blunt, Dr. Sheth and has also ventured in the salon business. 
    • Our concerns remain on the A&P spends and related growth output, acquisition value and employee churning.

    ASK Automotive Pre-IPO – Business Has Been Resilient, Although Concentration Risk Remains Elevated

    By Clarence Chu

    • Ask Automotive (7175293Z IN) is looking to raise around US$145m in its upcoming India IPO. 
    • ASK Automotive (ASKA) is the largest manufacturer of brake-shoe and advanced braking (AB) systems for 2Ws in India, in terms of FY23 production volume for OEMs and the branded IAM.
    • As per CRISIL, it had an approximate 50% market share in said market. The IPO is expected to consist of 100% secondary shares, with promoters trimming their stakes.

    Past A/H Listings Performance – Have Been a Mixed Bag

    By Sumeet Singh

    • Two of the biggest deals in the Hong Kong pipeline are A/H listings for S.F. Holding (002352 CH) and Midea Group (000333 CH), both looking to raise around US$3bn.
    • Prior to the deals going live, we had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
    • Overall, most of the recent A/H listings haven’t done much in the near term.

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