Daily Briefs

Dentsu experienced difficult trading conditions in its first half, with US client hesitancy, poor Chinese macro conditions and a one-off hit from a problematic project in the DACH region, compounded by demanding comparatives. These ease in H223, and trading should also benefit from one-off events like the Rugby World Cup, as well as the contribution from Tag, consolidated from 1 July. FY23 guidance is now for organic net revenue growth of 0% to -2% (was 1–2%) and a 17.0% operating margin (was 17.5%). With the inclusion of Tag, operational cost savings and lower interest following debt restructuring, guidance for EPS is unchanged. We have updated our forecasts to reflect this, with a knock-on into FY24. The valuation remains well below peers and long-term average metrics.

Limited Number of Business Types with Great Opportunities for Women Is at Heart of the Problem

By Aki Matsumoto

The relationship between % of female managers and P/B doesn’t appear to be as strong as the significant correlation found between % of female directors and the value creation indices
Currently, companies in business categories where women have greater opportunities to play active roles (new business models) are appointing female employees to management positions, and such companies have higher P/Bs.
Since the gender wage gap is attributed to % of female managers, unless a company has significant opportunities for women to play active roles, the gender wage gap is large.

1Q Follow-Up – Torex Semiconductor (6616 JP)

By Sessa Investment Research

TOREX Semiconductor announced 1Q FY24/3 consolidated financial results at 15:30 on 8/10.
Headline numbers were net sales -25.5% YoY, operating profit -87.2% YoY, and profit attributable to owners of parent -94.3% YoY.
Ordinary profit posted a slight loss due to recording a loss on foreign exchange.

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Aug 19

Daily Brief Industrials: SK Rent A Car and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Fully Disseting SK Rent A Car’s Hybrid Tender Offer Disclosure, Whose Cash Offer at a 5.7% Spread

Fully Disseting SK Rent A Car’s Hybrid Tender Offer Disclosure, Whose Cash Offer at a 5.7% Spread

By Sanghyun Park

With just the SK Networks stake, both of these conditions are already satisfied. So, the key point will be how quickly the spread of the cash offer narrows next Monday.
We need to watch whether the spread for the exchange offer opens. As SK Networks is a K200 constituent, it’s subject to short selling, making a Long Short play possible.
Worth noting, among the 24% minority shareholders, NPS and KIT hold a combined 15%, potentially leading to limited market circulation volume. This is something we should also be mindful of.

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Aug 19

Daily Brief Energy/Materials: Pan African Resources, Alkane Resources, iShares MSCI ACWI ETF, Canacol Energy and more

By Smartkarma Daily Briefs | Daily Briefs, Energy & Materials Sector

In today’s briefing:

Pan African Resources – Dividend yield trending higher than P/E ratio
Alkane Resources – Expanding its resources
10-Yr Treasury Yield and DXY at Key Inflection Points; $ACWI Testing $93; Energy/HC/Tech/CD Buys
Canacol Energy – 2022 ESG report highlights new goals

Pan African Resources – Dividend yield trending higher than P/E ratio

On 7 August, Pan African Resources (PAF) announced FY23 production of 175,209oz, which was within 0.1% of its guidance of 175,000oz on 26 May. It also indicated all-in sustaining costs (AISC) of US$1,325–1,350/oz (at ZAR17.77/US$), reiterated output guidance of 178–190koz for FY24 and reported net senior debt of US$18.9m as at end-June (cf US$49.9m as at end-H123). In response to the announcement, we have reduced our FY23 normalised HEPS forecast for PAF by 8.3%, from 3.82c/share to 3.50c/share to reflect dollar costs, which were stickier at higher levels than we had hoped. However, our forecast remains above the market consensus. Moreover, our life-of-mine valuation of the company remains almost completely unchanged at 34.24c/share (see Exhibit 7 for full explanation), notwithstanding recent rand strength.

Alkane Resources – Expanding its resources

Tomingley delivered Q423 gold production of 15,822oz, meeting its quarterly forecasts at an AISC of A$2,174/oz. These results concluded a strong year, with full year production of 70,253oz at an AISC of A$1,602/oz beating original FY23 guidance of 55,000–60,000oz production (at an AISC of A$1,650–1,900/oz), and meeting April 2023 production guidance of 65,000–73,000oz (at an AISC of A$1,550–1,750/oz). Full year gold sales totalled 70,498oz, generating revenue of A$190.5m at an average price of A$2,703/oz. FY24 guidance has been set for Tomingley at 60,000–65,000oz production at an AISC of A$1,750–2,100/oz as Alkane anticipates increased costs in wages, and electricity, fuel and reagent prices. Following Alkane’s updates since our last note in April, we have increased our FY23 EPS estimate by 26.8% to 7.38c (cf 5.82c previously).

10-Yr Treasury Yield and DXY at Key Inflection Points; $ACWI Testing $93; Energy/HC/Tech/CD Buys

By Joe Jasper

Global equities under pressure; we discussed in our August 3,2023 Int’l Compass how it could be the start of a ~15% pullback in $ACWI, which would put it at $84-$85.
We also discussed how it is possible that this is a normal 3%-6% pullback to the major $93 support level (which it tested today).
If the 10-year Treasury yield and DXY remain below their respective resistance levels, we remain buyers on this pullback to $93 on ACWI-US.

Canacol Energy – 2022 ESG report highlights new goals

Canacol Energy released its 2022 ESG Report on 9 August. It highlights the company’s desire for a 50% reduction in Scope 1 and 2 emissions by 2035, to achieve carbon neutrality by 2050 and to have no methane emissions by 2026. This reflects Canacol Energy’s position as a top decile upstream performer in the S&P Global Corporate Sustainability Assessment.

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Aug 19

Daily Brief TMT/Internet: Lenovo, Airalo, Indosat Tbk PT, Silicon Motion Technology, Automatic Data Processing, Torex Semiconductor and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Weekly Wrap – 18 Aug 2023
Etisalat’s VC Arm, Singtel Innov8 Join Airalo’s US$60M Series B Round
Indosat (ISAT IJ) – Sails Set on a More Profitable Course
What’s Next for SiMo?
ADP Inc: These Are The 3 Main Catalysts Responsible For Its Growth! – Financial Forecasts
1Q Follow-Up – Torex Semiconductor (6616 JP)

Weekly Wrap – 18 Aug 2023

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

and more…

Etisalat’s VC Arm, Singtel Innov8 Join Airalo’s US$60M Series B Round

By e27

Airalo, an e-SIM marketplace, has secured US$60 million in a Series B investment round from a clutch of investors, its Co-Founder Ahmet Bahadir Ozdemir said in a LinkedIn post.
The investors participating in the round are Etisalat’s e& capital, Liberty Global, Singtel Innov8, Orange Ventures, Deutsche Telekom’s T.Capital, KPN Ventures, and Telefonica.
Existing investors Antler, Rakuten Ventures, Peak XV Partners’s Surge, and I2BF Global Ventures also joined.

Indosat (ISAT IJ) – Sails Set on a More Profitable Course

By Angus Mackintosh

Indosat (ISAT IJ) 2Q2023 saw the benefit of surging seasonal demand driving data usage coupled with its stronger network post the 3 integration.
The company saw a further increase in subscribers in 2Q2023 to over 100m, along with higher ARPUs, which rose by +8.6% YoY in 2Q2023 helping to improve returns.
Indosat (ISAT IJ) continues to invest in maintaining the quality of its network as well as offering new value-added products to customers, boosting retention and profitability.

What’s Next for SiMo?

By Jim Handy

MaxLinear’s acquisition of Silicon Motion has been abandoned, with both sides threatening arbitration.
It is difficult to understand why the acquisition would have resulted in the synergies projected by management. The businesses are very different.
Assuming the companies go different ways, expect for SiMo to perform as it has in the past.

ADP Inc: These Are The 3 Main Catalysts Responsible For Its Growth! – Financial Forecasts

ADP delivered an all-around beat in the previous quarter.
The HCM demand environment remained healthy, and the company’s worldwide sales and marketing team delivered exceptional results, exceeding expectations with double-digit overall growth in Employer Services and new business Bookings.
With a focus on innovation, client service, and expanding its reach, ADP aims to capitalize on the growth opportunities in the HCM industry.

1Q Follow-Up – Torex Semiconductor (6616 JP)

By Sessa Investment Research

TOREX Semiconductor announced 1Q FY24/3 consolidated financial results at 15:30 on 8/10.
Headline numbers were net sales -25.5% YoY, operating profit -87.2% YoY, and profit attributable to owners of parent -94.3% YoY.
Ordinary profit posted a slight loss due to recording a loss on foreign exchange.

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Aug 19

Daily Brief Industrials: SK Rent A Car and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Fully Disseting SK Rent A Car’s Hybrid Tender Offer Disclosure, Whose Cash Offer at a 5.7% Spread

Fully Disseting SK Rent A Car’s Hybrid Tender Offer Disclosure, Whose Cash Offer at a 5.7% Spread

By Sanghyun Park

With just the SK Networks stake, both of these conditions are already satisfied. So, the key point will be how quickly the spread of the cash offer narrows next Monday.
We need to watch whether the spread for the exchange offer opens. As SK Networks is a K200 constituent, it’s subject to short selling, making a Long Short play possible.
Worth noting, among the 24% minority shareholders, NPS and KIT hold a combined 15%, potentially leading to limited market circulation volume. This is something we should also be mindful of.

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Aug 19

Daily Brief Health Care: Celltrion Healthcare , Global Health (Medanta), Immix Biopharma Inc, Abbvie Inc, Abbott Laboratories, Johnson & Johnson and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Celltrion Inc/Healthcare Merger. Pharm Is Next
Merger Between Celltrion Inc and Celltrion Healthcare (Phase I First)
Global Health (MEDANTA IN): Record High Quarterly Revenue in Q1; New Hospital Plan Announced
Immix Biopharma – Progressing as expected on all fronts
AbbVie Inc.: Interesting Advancements In Several Preclinical & Early-stage Clinical Assets – Key Drivers
Abbott Laboratories: Can The Acquisition Of Cardiovascular Systems Be A Game Changer? – Key Drivers
Johnson & Johnson: Unpacking Its Recent Performance Through 4 Key Drivers – Financial Forecasts

Celltrion Inc/Healthcare Merger. Pharm Is Next

By David Blennerhassett

It’s finally happening: biopharmaceuticals developer and producer Celltrion Inc (068270 KS) will acquire Celltrion Healthcare (091990 KS).
Inc will issue 0.4492620 new shares for each share in Healthcare. The swap prices of ₩148,853 for Inc and ₩66,874 for Healthcare are firm.
Celltrion Pharm (068760 KS) is excluded from the original three-way merger plan, but is expected to be merged with the enlarged Inc/Healthcare entity around July 2024.

Merger Between Celltrion Inc and Celltrion Healthcare (Phase I First)

By Douglas Kim

On 17 August, Celltrion Inc announced that it will merge with Celltrion Healthcare. The merger ratio is 0.449262 Celltrion Inc share for each share of Celltrion Healthcare.
There was a negative surprise which was that Celltrion Pharm will not be included as part of the three companies merger which has been promised in the past several years.
Overall, we believe that this merger will have a positive impact on Celltrion Inc and Celltrion Healthcare’s share prices.

Global Health (MEDANTA IN): Record High Quarterly Revenue in Q1; New Hospital Plan Announced

By Tina Banerjee

Global Health (Medanta) (MEDANTA IN) delivered robust revenue growth and profitability in Q1FY24. Revenue grew 27% YoY and 9% sequentially to INR7.9B. EBITDA margins expanded 250 bps YoY to 25.1%.
All the key operating metrics including inpatient and outpatient volume, ARPOB, and ALOS improved. However, occupancy declined to 58.1% in Q1FY24 from 60% in Q1FY23 on increased bed capacity.
Medanta and DLF will develop a 400 bed multi-specialty hospital in Delhi. Ongoing expansion projects are on track to increase the bed capacity to 3,500–4,000 in FY25 from 2,725.

Immix Biopharma – Progressing as expected on all fronts

Immix reported Q223 results, which were largely as expected. Operational highlights included rolling positive newsflow for CAR-T therapy NXC-201 and interim results for IMX-110 in colorectal cancer patients. With the ramp-up in clinical activity, mainly the NEXICART-1 trial, as well as the two ongoing Phase Ib/IIa trials for IMX-110, management reported R&D expenses of $2.2m, notably higher than $0.6m in the previous year. At end June 2023, cash was $12.7m, supported by a $5m (gross) at-the-market fund-raise in H123. Based on our estimated cash burn, we continue to forecast an operating cash runway into Q224, consistent with management guidance. As we update our FY23 and FY24 expense estimates based on the H123 run rate, roll forward our model and update the net cash figure, our valuation adjusts to $81.1m versus $83.3m previously.

AbbVie Inc.: Interesting Advancements In Several Preclinical & Early-stage Clinical Assets – Key Drivers

AbbVie managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
Skyrizi and Rinvoq are exhibiting exceptional growth in immunology, with sales for both treatments increasing over the previous year.
Skyrizi and Rinvoq are now approved across ten significant indications and are projecting combined revenue growth this year.

Abbott Laboratories: Can The Acquisition Of Cardiovascular Systems Be A Game Changer? – Key Drivers

Abbott Laboratories managed to exceed the revenue expectations as well as the earnings expectations of analysts.
Organic sales showed steady growth, led by solid performances in Medical Devices, Established Pharmaceuticals, and Nutrition.
Abbott’s various segments, such as Nutrition, Established Pharmaceuticals, Diagnostics, and Medical Devices, reported solid growth and significant achievements in product innovations.

Johnson & Johnson: Unpacking Its Recent Performance Through 4 Key Drivers – Financial Forecasts

Johnson & Johnson managed to exceed analyst expectations in terms of revenue as well as earnings.
It was a strong quarter for Johnson & Johnson, with market-leading performance and significant advances in their innovative Pharmaceutical and MedTech pipelines.
The company reported solid sales and earnings growth in the second quarter of 2023, raising expectations for the year.

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Aug 19

Daily Brief Consumer: Dentsu Inc, Mcdonald’s Corp, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Dentsu Group – Set for a stronger H223
McDonald’s Corporation: A Spicy Enough Investment Opportunity? – Key Drivers
Limited Number of Business Types with Great Opportunities for Women Is at Heart of the Problem

Dentsu Group – Set for a stronger H223

McDonald’s Corporation: A Spicy Enough Investment Opportunity? – Key Drivers

McDonald’s Corporation delivered an all-around beat in the previous quarter.
The second quarter was yet another example of their continually strong success, driven by their execution and guided by their Accelerating the Arches strategy.
McDonald’s continued its outstanding success in Q2 by reaching global comparable sales of 11.7% and double-digit comparable sales in each of its sectors.

Limited Number of Business Types with Great Opportunities for Women Is at Heart of the Problem

By Aki Matsumoto

The relationship between % of female managers and P/B doesn’t appear to be as strong as the significant correlation found between % of female directors and the value creation indices
Currently, companies in business categories where women have greater opportunities to play active roles (new business models) are appointing female employees to management positions, and such companies have higher P/Bs.
Since the gender wage gap is attributed to % of female managers, unless a company has significant opportunities for women to play active roles, the gender wage gap is large.

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Aug 19

Daily Brief Financials: AMP Ltd, Bitcoin Pro, Coinshares International and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

AMP – Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank
Where Has the Volatility Gone?
CoinShares International – Bibehålla AUM-ledarskap i Europa

AMP – Strong Numbers Released,, Returning Capital, Paying Down Debt, Deposit Funded, Mortgage Bank

By Daniel Tabbush

AMP released 1H23 numbers with 24-26% underlying NPAT growth in 2 key divisions
AUD610m of returned capital in past 12 months will see AUD140m added by October
AMP Bank is unlike peers, which is deposit-funded, small, focused on mortgages

Where Has the Volatility Gone?

By Kaiko

This week, news broke that the oldest crypto market maker, GSR, has been scaling back operations – particularly in the U.S. – while a number of top executives have left the company.
This is yet another hit to U.S. and global liquidity and volumes; in May, Jump Crypto and Jane Street revealed they were reducing crypto operations.
This week, we’ll take a look at the state of the crypto market, including volatility, liquidity, and volumes, and then examine some budding narratives and tokens.

CoinShares International – Bibehålla AUM-ledarskap i Europa

CoinShares International (CS) levererade ytterligare en solid uppsättning kvartalsresultat, med EBITDA på 12,8 miljoner GBP under andra kvartalet 2023 jämfört med 8,4 miljoner GBP under första kvartalet 2023. Kapitalförvaltningsverksamheten genererade avgiftsintäkter på 10,6 miljoner GBP (ned från 14,2 miljoner GBP under andra kvartalet 2022, men upp från 9,2 miljoner GBP under första kvartalet 2023) när det totala förvaltade kapitalet ökade till 2,14 miljarder GBP i slutet av juni 2023 från 1,44 miljarder GBP i slutet av 2022. Verksamheten inom kapitalmarknadsinfrastruktur (CSCM) redovisade en vinst på 10,0 miljoner GBP under andra kvartalet 2023, främst tack vare aktiviteter inom räntebärande tillgångar, staking och decentraliserad finansiering (DeFi). CS fortsätter att utveckla sin aktiva kapitalförvaltningsverksamhet och börjar med att köra sin första strategi för att generera ett track record före den formella lanseringen i slutet av 2023.

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Aug 19

Most Read: Li Auto , BeiGene , Renesas Electronics, Celltrion Inc, Trent Ltd, Celltrion Healthcare , Rakuten Securities and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hang Seng Index Rebalance Preview: 80 Member Target Achieved; What Next?
HSCEI Index Rebalance Preview: Deletions Fairly Certain; Uncertainty Among the Adds
Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough
Celltrion Merger: Index Implications
Celltrion Merger Swap: Conditions & Schedule
NIFTY NEXT50 Index Rebalance: Five Changes; Big Impact; Cross Index Flow
Celltrion (068270 KS) Merger with Celltrion Healthcare (091990 KS)
Celltrion Inc/Healthcare Merger. Pharm Is Next
Merger Between Celltrion Inc and Celltrion Healthcare (Phase I First)
Rakuten Securities IPO: Japan Optimism and Fractional Trading Boost Revenue Amid Stable Costs

Hang Seng Index Rebalance Preview: 80 Member Target Achieved; What Next?

We finally got to 80 Hang Seng Index constituents in June. Now comes the next step of moving up to 100 index constituents though there is no timeline for completion.
The conclusions of the market consultation on the inclusion of foreign stocks in the Hang Seng Index should be announced soon though implementation could start only in December.
We highlight 10 potential inclusions to the index with passive trading impact varying from 1.5-5.6 days of ADV. There are large shorts on some of the stocks.

HSCEI Index Rebalance Preview: Deletions Fairly Certain; Uncertainty Among the Adds

Country Garden Services Holdings (6098 HK) and Zhongsheng Group (881 HK) are high probability deletions in September, while Trip.com (9961 HK) is a high probability inclusion.
The second add could be BeiGene Ltd (6160 HK) if it passes the velocity test. If not, Chow Tai Fook Jewellery (1929 HK) will be added.
With the exception of Zhongsheng Group (881 HK), short interest has been rising on all the other stocks and could affect how the stocks trade close to implementation date.

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

By Travis Lundy

The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review – twice a year rather than once.
More interestingly, they also change the “High Liquidity” definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.

Celltrion Merger: Index Implications

Celltrion Inc (068270 KS) and Celltrion Healthcare (091990 KS) will merge later this year. Celltrion Pharm (068760 KS) has been left out for now; it could be merged next year.
For each share of Celltrion Healthcare (091990 KS) held, shareholders will receive 0.449262 shares of Celltrion Inc (068270 KS).
There will be implications for the Korea Stock Exchange Kospi Index (KOSPI INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) with funding flows and index replacements.

Celltrion Merger Swap: Conditions & Schedule

By Sanghyun Park

The swap prices, ₩148,853 for Celltrion Inc and ₩66,874 for Celltrion Healthcare, specified below are not tentative prices but confirmed prices. So, the merger ratio has been determined as 1:0.4492620.
The key focus now is the appraisal rights exercise. Both offer attractive spreads. Yet, the ₩1T combined ceiling might seem restricted considering potential dissenting Celltrion Inc shareholders exceeding expectations.
Nonetheless, considering the strong determination of the company towards this merger, we should consider a strategy of approaching this spread aggressively while keeping the cancellation risk in mind.

NIFTY NEXT50 Index Rebalance: Five Changes; Big Impact; Cross Index Flow