Category

Daily Briefs

Oct 26
0

Daily Brief Macro: China Stimulus Update – Centralization of Debt Still Means MORE Debt! and more

By | Daily Briefs, Macro

In today’s briefing:

  • China Stimulus Update – Centralization of Debt Still Means MORE Debt!
  • CX Daily: China Banks Jump on AI Bandwagon to Cut Costs

China Stimulus Update – Centralization of Debt Still Means MORE Debt!

By Jeroen Blokland

  • The latest wave of China stimulus not only confirms the dire financial state of local governments but also indicates that they have reached the limits of their borrowing capacity.
  • China President Xi’s visit to the PBoC raises the likelihood of new interest rate cuts and cuts in the Required Reserve Ratio for banks.
  • This puts the PBoC in a precarious state. No easing means the property recession continues, while the opposite means it must sell more US dollar assets to prevent yuan depreciation.

CX Daily: China Banks Jump on AI Bandwagon to Cut Costs

By Caixin Global

  • AI / In Depth: China banks jump on AI bandwagon to cut costs Banks in China are turning to artificial intelligence to save on labor costs and improve efficiency, but the transition faces both technical and regulatory hurdles, according to experts in the field.

  • Personnel /: China removes defense minister Li Shangfu, state broadcaster says

  • Diplomacy /: China’s top diplomat to visit Washington

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Oct 26
0

Most Read: Newcrest Mining, Gs Yuasa Corp, Cosmo Energy Holdings , Eoflow , Tuhu Car, LS Materials, Hollysys Automation Technologies, Medtronic Plc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Newcrest/Newmont Conclusion Nearing – Flowfront & Gold Price
  • Solactive Global Lithium Index Rebalance: 45% Turnover & US$980m Trade
  • Cosmo Energy (5021) – Headed to an EGM Showdown for the Poison Pill
  • EOFLOW/Medtronic Tender: Closing Date Extended to 3 January 2024
  • HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running
  • Medtronic’s M&A of Eoflow Timeline Postponed
  • EOFlow Situation: Latest Disclosure, Market Speculations, & Key Short-Term Focus
  • LS Materials IPO Preview
  • Hollysys (HOLI US): MBO Proposal and Updates
  • EOFlow/Medtronic: Signs of Life

Newcrest/Newmont Conclusion Nearing – Flowfront & Gold Price

By Travis Lundy

Solactive Global Lithium Index Rebalance: 45% Turnover & US$980m Trade

By Brian Freitas

  • Solactive has announced the constituent changes for the Global Lithium Index. There are 8 adds and 9 deletes with implementation at the close on 31 October.
  • Estimated one-way turnover is in excess of 22% and will result in a one-way trade of US$490m. There are 11 stocks with estimated passive flows greater than 1x ADV.
  • The index is not very widely tracked and there could be big moves in stocks today and over the next few days – especially where there is multiple days ADV.

Cosmo Energy (5021) – Headed to an EGM Showdown for the Poison Pill

By Travis Lundy

  • Japanese activist Murakami-san and Cosmo Energy Holdings (5021 JP) have been duking it out for 18 months. He now has 20%. Wants more. Management wants to exercise the poison pill. 
  • Cosmo’s efforts are not completely honest, but Murakami-san’s efforts are clearly designed to benefit Murakami-san over general shareholders, and Cosmo has finally explained the reasons publicly. Read the doc (Japanese).
  • At 1.0x book, lower refining margins vs earlier in the year, and difficulty for Murakami-san to force the issue, one must take more care here than one did 40% ago.

EOFLOW/Medtronic Tender: Closing Date Extended to 3 January 2024

By Arun George

  • The closing date of the Eoflow (294090 KS)/Medtronic Plc (MDT US) transaction has been extended from 25 October 2023 to 3 January 2024. All other terms are unchanged.
  • The bull view is that despite the preliminary injunction and share suspension, Medtronic’s move underscores its commitment to the transaction on current terms.
  • The bear view is that the extension was Medtronic’s best move as it retains option value should Insulet’s lawsuit start floundering in court and KRX reinstate trading in Eoflow shares. 

HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running

By Brian Freitas

  • There were only 14 new listing on the Main Board of the HKEX (388 HK) in the third quarter. Half of the listings were in the last week of September.
  • Of those stocks, only Tuhu Car (9690 HK) and Keep (3650 HK) have a chance of being added to the HSCI in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) could be added to Stock Connect in early December while Tuhu Car (9690 HK) will have to wait till April for inclusion to the link.

Medtronic’s M&A of Eoflow Timeline Postponed

By Douglas Kim

  • On 25 October, Eoflow announced that the M&A of Eoflow by Medtronic has been postponed. 
  • The closing date for Eoflow’s stock transfer agreement with Medtronic has now been changed to 3 January 2024. 
  • Although we believe Medtronic will continue to pursue Eoflow, the M&A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.

EOFlow Situation: Latest Disclosure, Market Speculations, & Key Short-Term Focus

By Sanghyun Park

  • We must acknowledge that the acquisition contract has not been withdrawn, signifying that we have averted the worst-case scenario.
  • During the shareholders’ meeting on November 15th, it is crucial for us to pay attention to whether personnel from Medtronic are included in the list of new board candidates.
  • If that’s the case, we can infer that Medtronic intends to go through with this deal, regardless of the litigation issues in the United States.

LS Materials IPO Preview

By Douglas Kim

  • LS Materials is getting ready to complete its IPO in Korea in late November. The IPO price range is from 4,400 won to 5,500 won per share. 
  • According to the bankers’ valuation, the expected market cap after the IPO is from 298 billion won to 372 billion won. 
  • LS Materials is one of the largest players globally in the large-size ultracapacitors, which stabilize power supply and are used to replace and supplement primary batteries and lithium-ion batteries.

Hollysys (HOLI US): MBO Proposal and Updates

By Arun George

  • Hollysys Automation Technologies (HOLI US) update notes a new MBO proposal at US$25 per share, a bidders shortlist in several weeks and an update on the special meeting. 
  • The update suggests several potential bidders and enough shareholders with the required record date to convene the special meeting to appoint independent directors. 
  • The MBO proposal, while potentially a delaying tactic, suggests that the Board are under pressure for a solution and is aiming for a friendly takeover. 

EOFlow/Medtronic: Signs of Life

By David Blennerhassett

  • When EOFlow (294090 KS) was suspended on the 11th October, and ceased global sales, either the Medtronic (MDT US) deal was (largely) toast; or it was a tactical move. 
  • I’m firmly in the latter camp. Insulet‘s lawsuit was expected. And completing the transaction enables the more financially and legally resource-rich MDT to become the party to the litigation.
  • The SPA between Jesse Kim and MDT was expected to complete on 25 October. That was not a hard date. It has now been pushed out to 3 January 2024. 

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Oct 26
0

Daily Brief Australia: Azure Minerals, Actinogen Medical, Paradigm Biopharmaceuticals and more

By | Australia, Daily Briefs

In today’s briefing:

  • Azure (AZS AU): SQM The Likely Suitor
  • Actinogen Medical – Taking steps to mitigate funding headwinds
  • Paradigm Biopharma – Disease modifying properties in iPPS Phase II

Azure (AZS AU): SQM The Likely Suitor

By David Blennerhassett

  • Lithium mining play Azure Minerals (AZS AU) went into a trading halt Monday (23 October) “regarding a potential change of control transaction“. That halt has been extended to Friday morning. 
  • The obvious suitor is Sociedad Quimica y Minera de C (SQM/B CI) with 19.9%, who approached Azure with a $2.31/share Offer in August but was rejected.
  • Mark Creasy, a major shareholder in Azure and also a direct stakeholder in Azure’s flagship mine, is the key. Should a firm Offer unfold, expect a chunky premium. 

Actinogen Medical – Taking steps to mitigate funding headwinds

By Edison Investment Research

Actinogen is refining the design of its XanaMIA Phase IIb study of lead candidate Xanamem in patients with cognitive impairment (CI) associated with mild-to-moderate Alzheimer’s disease (AD). The study will forego the 5mg dose group and will concentrate on the 10mg dose, which has already shown effectiveness in the subgroup analysis of XanADu as reported in Q422. The XanaMIA Phase IIb study will continue to assess c 110 AD patients in the 10mg dose cohort, as well as a placebo arm, and will concentrate on Australian test sites for the first 100 enrolled patients. These measures are expected to significantly reduce study costs, as Actinogen expects c A$30m in cost savings between now and June 2025 compared to its initial plan. Given that US sites may not begin recruitment for another c 12–18 months, we are pushing back our projection for study completion until CY26 (from H2 CY25 previously) and our timeline for potential Xanamem commercialisation in AD to CY29 (from CY28 previously). In September, Actinogen completed a A$10m rights offering and we now expect the company to be funded into Q424 (Q2 CY24). We determine a new risk-adjusted net present value (rNPV) of A$528m, versus A$645m previously.

Paradigm Biopharma – Disease modifying properties in iPPS Phase II

By Edison Investment Research

Paradigm reported favourable quantitative MRI data from the six-month analysis of the Phase II trial (PARA OA 008) evaluating a single six-week course of injectable pentosan polysulfate sodium (iPPS) treatment at 2mg/kg twice weekly in knee osteoarthritis (kOA) patients. This analysis provides more precise numerical measurements from the semi-quantitative analysis shared in April. In both studies treated patients exhibited increased cartilage thickness and volume in knee joints in patients, while the placebo group experienced reductions in both. The reversal of structural changes in the cartilage (structural changes in the knee joint are associated with the natural course of kOA) resulted in reduced bone marrow lesions and synovitis intensity as well as enhanced joint function. While the range of responses was not shared, and the number of treated patients is small (n=15), the recent data, coupled with the 12-month durable clinical responses disclosed last week, support iPPS as a potential disease-modifying treatment for kOA and address an unmet need. The company reiterated its plans to file a Provisional Approval application to the Australian regulatory authority and use the identified optimal dose of iPPS in the registration programmes.

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Oct 26
0

Daily Brief South Korea: Eoflow , LS Materials, Curexo Inc, SK Hynix and more

By | Daily Briefs, South Korea

In today’s briefing:

  • EOFLOW/Medtronic Tender: Closing Date Extended to 3 January 2024
  • Medtronic’s M&A of Eoflow Timeline Postponed
  • EOFlow Situation: Latest Disclosure, Market Speculations, & Key Short-Term Focus
  • LS Materials IPO Preview
  • Curexo Inc (060280 KS): Strong Growth in Medical Robot Prompts 2023 Guidance Raise
  • Morning Views Asia: Adani Green Energy, SK Hynix

EOFLOW/Medtronic Tender: Closing Date Extended to 3 January 2024

By Arun George

  • The closing date of the Eoflow (294090 KS)/Medtronic Plc (MDT US) transaction has been extended from 25 October 2023 to 3 January 2024. All other terms are unchanged.
  • The bull view is that despite the preliminary injunction and share suspension, Medtronic’s move underscores its commitment to the transaction on current terms.
  • The bear view is that the extension was Medtronic’s best move as it retains option value should Insulet’s lawsuit start floundering in court and KRX reinstate trading in Eoflow shares. 

Medtronic’s M&A of Eoflow Timeline Postponed

By Douglas Kim

  • On 25 October, Eoflow announced that the M&A of Eoflow by Medtronic has been postponed. 
  • The closing date for Eoflow’s stock transfer agreement with Medtronic has now been changed to 3 January 2024. 
  • Although we believe Medtronic will continue to pursue Eoflow, the M&A tender offer price could be lowered to about 26,000 won, which would be nearly 20% higher than current price.

EOFlow Situation: Latest Disclosure, Market Speculations, & Key Short-Term Focus

By Sanghyun Park

  • We must acknowledge that the acquisition contract has not been withdrawn, signifying that we have averted the worst-case scenario.
  • During the shareholders’ meeting on November 15th, it is crucial for us to pay attention to whether personnel from Medtronic are included in the list of new board candidates.
  • If that’s the case, we can infer that Medtronic intends to go through with this deal, regardless of the litigation issues in the United States.

LS Materials IPO Preview

By Douglas Kim

  • LS Materials is getting ready to complete its IPO in Korea in late November. The IPO price range is from 4,400 won to 5,500 won per share. 
  • According to the bankers’ valuation, the expected market cap after the IPO is from 298 billion won to 372 billion won. 
  • LS Materials is one of the largest players globally in the large-size ultracapacitors, which stabilize power supply and are used to replace and supplement primary batteries and lithium-ion batteries.

Curexo Inc (060280 KS): Strong Growth in Medical Robot Prompts 2023 Guidance Raise

By Tina Banerjee

  • Curexo Inc (060280 KS) has been showing sales growth for five consecutive quarters since Q1 2022, mainly driven by the medical robot business, which accounts for nearly 50% of sales.
  • In 2Q23, Curexo’s medical business sold 29 units and recorded highest quarterly sales of KRW9,744M (up 173% YoY and 15% QoQ), driven by strong demand in domestic and Indian market.
  • Curexo raised 2023 sales guidance to KRW74 billion from KRW70 billion. Medical business is expected to sell 100 units and register revenue of KRW35 billion in 2023.

Morning Views Asia: Adani Green Energy, SK Hynix

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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Oct 26
0

Daily Brief Indonesia: Japfa Comfeed Indonesia and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Japfa Comfeed – ESG Report – Lucror Analytics

Japfa Comfeed – 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 Japfa Comfeed’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.

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Oct 26
0

Daily Brief Singapore: Singapore Airlines, UOB and more

By | Daily Briefs, Singapore

In today’s briefing:

  • SIA Placement Lockup – Time for Another Trim of Its US$7bn Stake
  • UOB – Net Profit Down 1.5% YoY, Credit Costs +126% YoY, Citi Costs ~5% of Profit, Expect Worsening

SIA Placement Lockup – Time for Another Trim of Its US$7bn Stake

By Sumeet Singh

  • Temasek raised around US$300m via its secondary selldown in Singapore Airlines (SIA SP) in Jun 2023. The lockup from that placement will expire soon.
  • Temasek still owns over 50% of SIA and hence, any selldown might not come before SIA reports its 1H23/24 results in mid-Nov 2023.
  • In this note, we talk about the placement lockup dynamics.

UOB – Net Profit Down 1.5% YoY, Credit Costs +126% YoY, Citi Costs ~5% of Profit, Expect Worsening

By Daniel Tabbush

  • UOB (UOB SP) just released their 3Q23 results, with their IR documents attached below. Our interpretation of their numbers is less positive than their own presentation.
  • Credit growth is faltering, with worsening NIM in QoQ, and with what appears to be topping out net interest income. Citi integration costs remain an issue.
  • Underlying credit metrics with worse recoveries and worse new NPAs are not positive, nor is the 126% rise YoY in credit costs in 3Q23.  Will this improve in 4Q23?

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Oct 26
0

Daily Brief United States: Hollysys Automation Technologies, Medtronic Plc, Bitcoin Pro, SIGA Technologies and more

By | Daily Briefs, United States

In today’s briefing:

  • Hollysys (HOLI US): MBO Proposal and Updates
  • EOFlow/Medtronic: Signs of Life
  • Through the Fire – Will the Rubber Meet the Road?
  • SIGA Technologies – EU gateway to tap into new international orders

Hollysys (HOLI US): MBO Proposal and Updates

By Arun George

  • Hollysys Automation Technologies (HOLI US) update notes a new MBO proposal at US$25 per share, a bidders shortlist in several weeks and an update on the special meeting. 
  • The update suggests several potential bidders and enough shareholders with the required record date to convene the special meeting to appoint independent directors. 
  • The MBO proposal, while potentially a delaying tactic, suggests that the Board are under pressure for a solution and is aiming for a friendly takeover. 

EOFlow/Medtronic: Signs of Life

By David Blennerhassett

  • When EOFlow (294090 KS) was suspended on the 11th October, and ceased global sales, either the Medtronic (MDT US) deal was (largely) toast; or it was a tactical move. 
  • I’m firmly in the latter camp. Insulet‘s lawsuit was expected. And completing the transaction enables the more financially and legally resource-rich MDT to become the party to the litigation.
  • The SPA between Jesse Kim and MDT was expected to complete on 25 October. That was not a hard date. It has now been pushed out to 3 January 2024. 

Through the Fire – Will the Rubber Meet the Road?

By Delphi Digital

  • Crypto prices are still tracking our expected cycle trend, and the next big test is whether we see another period of consolidation — or if the breakout is finally near.
  • We outline a few notable risks in the near term that may stand in the way of the next crypto uptrend: stagnant liquidity, buyer exhaustion, further tightening in financial conditions
  • We don’t see these risks as long-term trends and view any downside volatility as an opportunity to increase exposure to the best assets at even better entry prices.

SIGA Technologies – EU gateway to tap into new international orders

By Edison Investment Research

SIGA Technologies has announced the formation by the European Commission of a joint procurement mechanism to source oral TPOXX initially involves 13 countries and is open to all countries in the EU and European Free Trade Association (EFTA). This is in anticipation of an initial $18m order of TPOXX in the next 60 days from EU/EFTA member countries; As such, management expects total (global) orders of $164m in FY23. This development allows participating EU/EFTA member countries to acquire courses of oral TPOXX in the near term and efficiently order additional quantities, provided the minimum quantity thresholds are met. While we expect the company’s near-term (H223 and FY24) revenues to be dominated by the replenishment of US government stockpiles, the announced European joint procurement mechanism establishes an important gateway to access an important market and creates longer-term upside revenue potential. Management maintains its FY23 pre-tax operating income guidance of $90–100m.

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Oct 26
0

Daily Brief India: Cello World Limited, SK Hynix and more

By | Daily Briefs, India

In today’s briefing:

  • Cello World IPO – Strong past Growth but Has a Number of Related Party Issues
  • Morning Views Asia: Adani Green Energy, SK Hynix

Cello World IPO – Strong past Growth but Has a Number of Related Party Issues

By Sumeet Singh

  • Cello World is looking to raise around US$240m in its upcoming India IPO.
  • Cello World (CW) is an Indian consumer products company. The firm is a leading company in the consumerware market in India.
  • In this note, we look at the company’s past performance.

Morning Views Asia: Adani Green Energy, SK Hynix

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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Oct 26
0

Daily Brief China: Tuhu Car, L’Occitane, J&T Global Express, WuXi XDC Cayman Inc, Hang Seng Index, Oriental Watch, Hansoh Pharmaceutical Group and more

By | China, Daily Briefs

In today’s briefing:

  • HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running
  • L’Occitane (973 HK):  Sol De Janeiro Growth Taking Off
  • J&T Global Express IPO Trading – Tepid Demand Despite the Team Effort
  • WuXi XDC Pre-IPO – Thoughts on Valuation – While TAM Is Uncertain, Sales and PAT Are Set to Double
  • EQD | Hang Seng Index WEEKLY Heavily Oversold: It Can Bounce in 2 Weeks
  • Oriental Watch: Gone Ex-Dividend, Higher Yield, But Sales Softening in The Short-Term
  • GSK Inks Eye-Popping $2B-Plus Pact for Hansoh’s ADC – Is The “New Story” About to Begin?

HSCI Index Rebalance Preview: Tuhu Car in the Driver’s Seat; Keep Inc in the Running

By Brian Freitas

  • There were only 14 new listing on the Main Board of the HKEX (388 HK) in the third quarter. Half of the listings were in the last week of September.
  • Of those stocks, only Tuhu Car (9690 HK) and Keep (3650 HK) have a chance of being added to the HSCI in December and then into Southbound Stock Connect.
  • Keep Inc (3650 HK) could be added to Stock Connect in early December while Tuhu Car (9690 HK) will have to wait till April for inclusion to the link.

L’Occitane (973 HK):  Sol De Janeiro Growth Taking Off

By Steve Zhou, CFA

  • L’Occitane (973 HK) reported 2QFY24 operational update last night.  Sales grew 17% yoy on reported currency, and up 25% yoy on constant currency. 
  • The bright spot of the release is the growth of Sol de Janeiro, the Brazilian-inspired premium body care brand, which grew 202% yoy in constant currency in the quarter.
  • Sol de Janeiro has the highest EBIT margin among the 3 major brands of the company, at 24.6% in FY23, suggesting highly profitable growth.

J&T Global Express IPO Trading – Tepid Demand Despite the Team Effort

By Sumeet Singh

  • J&T Global Express (1519 HK), a global logistics service provider, raised around US$500m in its Hong Kong IPO.
  • As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 22.5% market share as per 2022 parcel volume.
  • We have looked at the company’s past performance and valuations in our previous notes. In this note, we talk about the trading dynamics.

WuXi XDC Pre-IPO – Thoughts on Valuation – While TAM Is Uncertain, Sales and PAT Are Set to Double

By Clarence Chu

  • WuXi XDC Cayman Inc (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 our previous notes we looked at the company’s past performance and peer comparison. In this note, we discuss our thoughts on valuation.

EQD | Hang Seng Index WEEKLY Heavily Oversold: It Can Bounce in 2 Weeks

By Nico Rosti

  • The Hang Seng Index closed last week down at 17172.13 (CC=-1), on Wednesday was trading below the Q3 WEEKLY support, very OVERSOLD from a price perspective.
  • When this pattern is encountered, usually the index bounces no later than CC=-3, i.e. after this week or the week after the end of next week.
  • The next support area to go LONG is 16534 and the index got quite close to it intraday, at the start of this week: the low was 16879.

Oriental Watch: Gone Ex-Dividend, Higher Yield, But Sales Softening in The Short-Term

By Sameer Taneja

  • Oriental Watch (398 HK) went ex-dividend on the 4th of October. The stock gapped down more than what it paid out and now trades at 6x trailing PE.  
  • Cash at 1.1 bn HKD is greater than 50% of market capitalization, with a high trailing dividend yield of 16.2% and a rich history of paying chunky dividends. 
  • We monitor the sales environment for HK/China, which shows a reasonably good pick-up in HK but lackluster for China.

GSK Inks Eye-Popping $2B-Plus Pact for Hansoh’s ADC – Is The “New Story” About to Begin?

By Xinyao (Criss) Wang

  • The early-stage clinical data of Hansoh’s B7-H4 ADC showed good potential, thus attracting GSK’s attention. This would allow GSK to re-enhance the layout of ADC pipelines after its previous setbacks.
  • However, if future clinical data fail to meet expectation, GSK could return the product to Hansoh. After all, US$85 million upfront is more likely to test the waters for GSK.
  • Hansoh is already one step ahead of Hengrui in terms of internationalization. This short-term catalyst would no doubt help lift share prices, but the logic behind the rebound is shaky.

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Oct 26
0

Daily Brief Japan: Cosmo Energy Holdings , Japan Tobacco, Appier Group, TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, Japan

In today’s briefing:

  • Cosmo Energy (5021) – Headed to an EGM Showdown for the Poison Pill
  • Japan Tobacco High Conviction Call: Could Leave 2023 Guidance in the Dust
  • Appier (4180) | The Ups and Downs
  • % of Female Board Members Is a Measure of a Company’s Seriousness About Improving Its Practices

Cosmo Energy (5021) – Headed to an EGM Showdown for the Poison Pill

By Travis Lundy

  • Japanese activist Murakami-san and Cosmo Energy Holdings (5021 JP) have been duking it out for 18 months. He now has 20%. Wants more. Management wants to exercise the poison pill. 
  • Cosmo’s efforts are not completely honest, but Murakami-san’s efforts are clearly designed to benefit Murakami-san over general shareholders, and Cosmo has finally explained the reasons publicly. Read the doc (Japanese).
  • At 1.0x book, lower refining margins vs earlier in the year, and difficulty for Murakami-san to force the issue, one must take more care here than one did 40% ago.

Japan Tobacco High Conviction Call: Could Leave 2023 Guidance in the Dust

By Oshadhi Kumarasiri

  • Despite conservative 2023 guidance last quarter, Japan Tobacco (2914 JP) is primed to exceed expectations in the 3rd quarter of 2023.
  • Despite no new domestic price hikes, Japan Tobacco’s volume recovery post-hikes is expected to help sustain the revenue and profit growth momentum.
  • New price increases in the Philippines and the UK, coupled with last year’s hikes spillover, are expected to boost Japan Tobacco’s earnings; and the yen’s depreciation amplifies these gains.

Appier (4180) | The Ups and Downs

By Mark Chadwick

  • Appier’s stock initially surged 20% following strong Q2 results but later declined 25%, influenced by small-cap stock volatility, AI-induced valuations, and e-commerce sensitivity.
  • The AI company’s competitive position remains strong compared to Braze; the differing stock price performance and valuation suggests significant upside.
  • Appier’s thesis remains intact and we expect the company to benefit from key trends in consumer marketing, first-party data and AI solutions.

% of Female Board Members Is a Measure of a Company’s Seriousness About Improving Its Practices

By Aki Matsumoto

  • The groups with over 30% female board members and 25%-30% have higher percentage of foreign shareholders, suggesting that overseas investor engagement drives raising the ratio and that awareness is high.
  • Groups with 0% female board members include small companies and are distant from overseas investor engagement, but are unlikely to improve practices substantially, given that they have no female executives.
  • The group with over 30% female board members had noticeably higher ROE and Tobin’sQ than those with 25%-30%, which suggests that the high ROE was highly valued by overseas investors.

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