Category

Daily Briefs

Jul 07
0

Daily Brief Thematic (Sector/Industry): Indonesia Consumer – Positive Impressions from the Jakarta Fair and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Indonesia Consumer – Positive Impressions from the Jakarta Fair
  • Ohayo Japan |Rates Rocket-Equities Take Heed; NUGGET: Profit Renaissance for Japan’s Defense Sector
  • China Property Developers In Distress – Weekly News & Announcements Tracker | 1-6 July 2023
  • Chinese VC Investor Launches AI Startup in ChatGPT Rush
  • Australia Banks – Construction Insolvencies +75%, A Look at NAB Risk Weights, PD
  • China TMT Update-XPEV/NIO/LI/TSLA/1211HK/ZLAB: 16 Automakers Pledge to Maintain Order;G6 Conversion

Indonesia Consumer – Positive Impressions from the Jakarta Fair

By Angus Mackintosh

Ohayo Japan |Rates Rocket-Equities Take Heed; NUGGET: Profit Renaissance for Japan’s Defense Sector

By Mark Chadwick

  • OVERSEAS. Strong ADP numbers drive bond and equity sell off; SPX -0.8% as all sectors in the red  as reality of further Fed hikes get real; EV Truce in China
  • JAPAN. NKY Futs -1.1% vs Cash; USDJPY 144.1; Expect further follow through of yesterday’s NKY sell off; Yen strength won’t help – as we head into weekend, correction finally here?
  • NUGGET. Profit Renaissance for Japan’s Defense Industry. From big (MHI, Melco, etc) to Small – expect numerous beneficiaries of the policy changes afoot.

China Property Developers In Distress – Weekly News & Announcements Tracker | 1-6 July 2023

By Robert Ciemniak

  • A weekly curated selection of Chinese news articles and company announcements focused on developers in distress
  • We look for their deals, updates, specific project progress news (‘local signals’), as well as relevant local research commentaries about the market
  • We do not verify the underlying data or provide any opinion, we only select and summarize the information; see direct links to sources

Chinese VC Investor Launches AI Startup in ChatGPT Rush

By Caixin Global

  • Computer-scientist-turned venture capitalist Kai-Fu Lee unveiled a new generative artificial intelligence (AI) company called 01.AI on Monday, the latest entrant in a race to develop large language models that can power products equivalent to OpenAI’s ChatGPT in China.
  • The new company was officially launched after three months of incubation by the AI pioneer’s Sinovation Ventures, according to a statement posted on the VC firm’s WeChat account Monday. The new website for the company has come online, according to the statement.
  • Beijing-based 01.AI aims to develop a platform and application ecosystem based on AI 2.0 era technologies, Lee said in the statement.

Australia Banks – Construction Insolvencies +75%, A Look at NAB Risk Weights, PD

By Daniel Tabbush

  • There is tremendous growth in Australian insolvencies, which is not simple a base effect
  • Construction insolvencies are up 75% YoY through mid June, the worst of any sector
  • NAB shows +17x exposures risk-weighted at 75%, PD +84% in qualifying revolving retail

China TMT Update-XPEV/NIO/LI/TSLA/1211HK/ZLAB: 16 Automakers Pledge to Maintain Order;G6 Conversion

By Shawn Yang

  • XPEV/NIO/LI/TSLA/1211HK: 16 major automakers pledge to jointly maintain order in China auto market (+/+/+/+/+)
  • XPEV: Xpeng G6’s conversion rate exceeds 50%, outperforming the industry (+)
  • ZLAB：ZLAB’s FcRn Efgartigimod received NMPA approval. We expect 2023 revenue US$10mn (-)

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Jul 07
0

Daily Brief Event-Driven: Delisting of 5 Korean Preferred Stocks on 17 July and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Delisting of 5 Korean Preferred Stocks on 17 July
  • Quiddity Leaderboard for Hang Seng Index Sep 23: Beigene Vs Peers An Interesting Trade
  • Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store
  • EQD | KOSPI 200 Index WEEKLY: Time to Go LONG?

Delisting of 5 Korean Preferred Stocks on 17 July

By Douglas Kim

  • The Korea Exchange officially announced today that the following five preferred stocks will be delisted on 17 July.
  • These five stocks including Samsung Heavy Industries Pref, SK Networks Pref,  DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B fell sharply today.   
  • Despite the warning by the Korea Exchange since end of May, it was not until today that these five stocks dropped sharply. On average, these five stocks fell 44% today. 

Quiddity Leaderboard for Hang Seng Index Sep 23: Beigene Vs Peers An Interesting Trade

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at some of the names with high likelihood of being involved in index changes for the Hang Seng Index in September 2023.
  • The index changes for the September 2023 rebalance could be announced in mid-August and implemented in early-September.
  • Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for September. 

Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store

By Sanghyun Park

  • Hyundai G.F. Holdings will conduct a tender offer to Hyundai Green Food and Hyundai Dept Store shareholders. The tendering period is August 11-September 1.
  • The target volume is 10,125,700 (Hyundai Green Food) and 4,669,556 (Hyundai Dept Store), corresponding to 29.89% and 19.95% of the outstanding shares, respectively.
  • We should approach this event trading with caution, taking into account the risk of an unhedged setup while monitoring the potential widening of the spread opening during the tendering period.

EQD | KOSPI 200 Index WEEKLY: Time to Go LONG?

By Nico Rosti

  • The Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY) has been (mildly) falling for 4 weeks, it may be now ready to resume its multi-month uptrend.
  • Friday July 7th would be a good time to enter this LONG trade at support prices between 337 and 333 (ideal range; it’s riskier below 333).
  • Hedge your bets in case the market keeps falling more next week and the following (it shouldn’t… but it can).

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Jul 07
0

Daily Brief Equity Bottom-Up: Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out
  • The Rise of the Fourth Telco in Korea – Breaking the Oligopoly
  • Genmab A/S (GMAB US): Darzalex Continued to Be the Cash Cow; Epkinly Approval Adds Another Catalyst
  • Bank of Baroda (BOB IN) – A Diamond in the Rough, on the Sidelines of the HDFC Bank-HDFC Merger
  • Anglo American: Noteworthy Developments
  • Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room
  • [NetEase(NTES US, BUY, TP US$102) TP Change]: Cut TP to $102 Due to More Near-Term Downside Risks
  • Aperam S.A. – Quick Note – July 3, 2023
  • TopBuild: Another Splendid GARP Opportunity
  • FLASH NOTE – West Fraser Timber Co. Ltd.

Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out

By Sameer Taneja

  • Multi Bintang Indonesia (MLBI IJ) is Indonesia’s leading beer company, with a marketshare of 50% by volume. The company is 89% owned by Heineken. 
  • The company has maintained an average 5 Yr/10 Yr ROCE of over 72%/82% and paid out 80-100% of its profits as dividends.  It is also net cash.
  • The stock boasts a 6.5%-7% dividend yield and trades at 14-15x PE if profits normalize due to increased tourism in Indonesia, where we believe most of the demand is. 

The Rise of the Fourth Telco in Korea – Breaking the Oligopoly

By Douglas Kim

  • The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.
  • This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.
  • On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus’ customers.

Genmab A/S (GMAB US): Darzalex Continued to Be the Cash Cow; Epkinly Approval Adds Another Catalyst

By Tina Banerjee

  • Genmab A/S (GMAB US) recorded 30% YoY growth in royalty revenue on net sales of Darzalex to DKK1,952 million, representing 68% of total revenue in 1Q23.
  • Genmab has guided for 2023 Darzalex royalty revenue of DKK10.4–11.1B, compared to royalty revenue of DKK10.1B in 2022, based on estimated Darzalex 2023 net sales of $9.4 – 10.0B.
  • In May 2023, Genmab received FDA approval for Epkinly as the first and only T-cell engaging bispecific antibody for the treatment of relapsed or refractory diffuse large B-cell lymphoma.

Bank of Baroda (BOB IN) – A Diamond in the Rough, on the Sidelines of the HDFC Bank-HDFC Merger

By Victor Galliano

  • The investor spotlight is on the HDFC Bank-HDFC merger, and we continue to favour HDFC Bank with its positive passive investor momentum, premium returns and merger synergy potential
  • Bank of Baroda, although not in the limelight like HDFC bank, is our value stand-out among the Indian bank peer group and it warrants increasing investor attention, in our view
  • Bank of Baroda is delivering on improving asset quality and returns; the shares have positive momentum, and we see great value on its 1x PBV ratio to ROE of 15%

Anglo American: Noteworthy Developments

By Pearl Gray Equity and Research

  • Recent events suggest change is en route at Anglo American plc.
  • A managerial shakeup is in full swing with “next generation” leadership emphasized.
  • Kio Kumba is pushing for a railway lease deal with the South African government.Investors must consider past and future impairment charges with caution.

Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room

By Kevin George

  • China accounts for over half of the automaker’s global sales.
  • There is also potential for Chinese brands to encroach on European markets.
  • Tesla’s valuation could be impacted by protectionism and nationalism, with questions over how China will tolerate overseas competitors in its electric vehicle market.

[NetEase(NTES US, BUY, TP US$102) TP Change]: Cut TP to $102 Due to More Near-Term Downside Risks

By Shawn Yang

  • Three risks in the short term: 1) Decreased gross billings from former legacies due to macro. 2) Lifecycle issues with new games. 3) Market over-optimism regarding new games and AI.
  • NetEase still has some positive catalysts in the long term, including: 1) New games and content expansions. 2) Overseas game publishing. 3) Continual improvement in margins.
  • We expect NetEase’s revenue in 2Q23 to be slightly lower than the consensus estimates of 2.5%, with a 13.3% beat in profits. Cut TP to $102, but maintain BUY rating.

Aperam S.A. – Quick Note – July 3, 2023

By VRS (Valuation & Research Specialists)

  • 1st Vertical | Recycling and Renewables: A very important vertical segment helping APERAM Group to attain a neutral CO2 emission footprint.
  • Innovative business based on new technology. Companies active within the segment are ELG (Recycling), BioEnergia (charcoal production from forests; plant in Brazil, CO2 neutral), Recyco (metal recycling from dust).
  • Represented 13% of consolidated EBITDA in FY 2022.

TopBuild: Another Splendid GARP Opportunity

By Pearl Gray Equity and Research

  • The stock has surged by more than 60% since the turn of the year.
  • The company’s acquisition strategy has resulted in significant market share and an ever-improving profit & loss statement.
  • The stock’s PEG ratio of 0.26 speaks volumes.

FLASH NOTE – West Fraser Timber Co. Ltd.

By VRS (Valuation & Research Specialists)

  • Our estimations for 2023 annual revenue range around $6,805 million and for 2024 around $7,354 million.
  • The company’s annual revenue reached $9,701 million in 2022, compared to $10,518 million in 2021, posting a de- crease of 7.77%.
  • West Fraser Timber Co. Ltd.’s gross profit for 2022 was $4,559 million, a decrease of 22% compared to $5,873 million for the corresponding period in 2021.

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Jul 07
0

Daily Brief Macro: Chinese LGFVs Contribute to Lower Growth and Disinflation and more

By | Daily Briefs, Macro

In today’s briefing:

  • Chinese LGFVs Contribute to Lower Growth and Disinflation
  • Bank Funding Watch: The lender of ‘favorite’ resort? – Watch Series
  • UK: Pricing Slowing into Summer-23
  • CX Daily: How China Is Sharpening Ethics Rules for Scientific Research
  • Eurozone Economy – Quarterly Macro Note – June 26, 2023
  • Greek Economy – Quarterly Macro Note – June 12, 2023

Chinese LGFVs Contribute to Lower Growth and Disinflation

By Jeroen Blokland

  • Chinese Local Government Financing Vehicles, representing roughly 50% of the total Chinese government debt, face a maturity wall of CNY 5.5 trillion this year.
  • We expect no official defaults, implying an ongoing accommodative stance of the PBoC, further diverging from monetary policy in the rest of the world.
  • A ‘kick the can down the road’ strategy, keeping insolvent LGFVs artificially alive results in misallocation of capital, lower GDP growth, lower inflation, and pressure on risk assets.

Bank Funding Watch: The lender of ‘favorite’ resort? – Watch Series

By Andreas Steno

  • Emergency lending facilities provided by the Federal Reserve, and the BTFP in particular, relieved banks in distress and helped them stay afloat, but are the same risks still lurking or has the need for funding eased?
  • Welcome to this edition of the ‘Watch Series’ where we’ll have a closer look at the use of currently operational funding, credit, liquidity and loan facilities provided by the Fed to try and deduce the state of and outlook for the economy and financial markets – banks in particular.
  • To ensure the functioning of the treasury and MBS markets in the immediate aftermath of patient zero, the Fed implemented lax monetary policy and resumed its QE.

UK: Pricing Slowing into Summer-23

By Phil Rush

  • Persistently excessive inflation has startled the BoE into extending its hiking cycle. Though the median is sticky, it may welcome signs of softening mean expectations.
  • Wage settlements have risen to especially problematic levels in the UK, creating widespread cost growth. Firms still plan to pass this on and restore margins.
  • The BoE must still break the second-round effects from resistance in real wages and margins. At least moderated pricing plans don’t appear as internationally unfavourable.

CX Daily: How China Is Sharpening Ethics Rules for Scientific Research

By Caixin Global

  • Ethics /In Depth: How China is sharpening ethics rules for scientific research
  • SCO /: Iran becomes full member of Shanghai Cooperation Organization
  • PMI /: China’s services sector recovery downshifts, Caixin PMI shows

Eurozone Economy – Quarterly Macro Note – June 26, 2023

By VRS (Valuation & Research Specialists)

  • The revised figures on the Euro area’s GDP growth rates reveal that the economy has entered a mild technical recession amid an increasingly challenging environment.
  • Stubbornly high inflation rates, a tightening monetary cycle, and heightened geopolitical tensions are taking a toll on households’ balance sheets and business activity.
  • Against this backdrop, we expect that Euro area will only recover moderately in the near term and grow by 0.16% (q-o-q) in the second quarter of the year followed by 0.19% in the third quarter.

Greek Economy – Quarterly Macro Note – June 12, 2023

By VRS (Valuation & Research Specialists)

  • In 2022, the Greek economy witnessed a substantial boost in GDP growth, as Real GDP (2015 Prices) reached €192.06 billion, reflecting a 6% increase compared to the previous year.
  • Moving forward, the OECD, IMF, and EU have forecasted average growth rates of 2.2% for 2023 and 1.67% for 2024.
  • Despite the steady increase in nominal values of Public Debt, as indicated by both ELSTAT data and IMF-EU Commission projections, there is a positive aspect in the declining Debt-to-GDP ratio based on projections.

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Jul 07
0

Daily Brief Energy/Materials: Anglo American PLC, APERAM SA, TMC the metals co, West Fraser Timber and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Anglo American: Noteworthy Developments
  • Aperam S.A. – Quick Note – July 3, 2023
  • TMC the Metals Company, Inc. – US Congress Weighs In on Deep-Sea Nodule Collection
  • FLASH NOTE – West Fraser Timber Co. Ltd.

Anglo American: Noteworthy Developments

By Pearl Gray Equity and Research

  • Recent events suggest change is en route at Anglo American plc.
  • A managerial shakeup is in full swing with “next generation” leadership emphasized.
  • Kio Kumba is pushing for a railway lease deal with the South African government.Investors must consider past and future impairment charges with caution.

Aperam S.A. – Quick Note – July 3, 2023

By VRS (Valuation & Research Specialists)

  • 1st Vertical | Recycling and Renewables: A very important vertical segment helping APERAM Group to attain a neutral CO2 emission footprint.
  • Innovative business based on new technology. Companies active within the segment are ELG (Recycling), BioEnergia (charcoal production from forests; plant in Brazil, CO2 neutral), Recyco (metal recycling from dust).
  • Represented 13% of consolidated EBITDA in FY 2022.

TMC the Metals Company, Inc. – US Congress Weighs In on Deep-Sea Nodule Collection

By Water Tower Research

  • Bringing the NDAA to bear. The US Congress, specifically the House of Representatives’ Armed Services Committee, directed the US Department of Defense to explore and assess the domestic ability to process undersea polymetallic nodules in the United States for the purpose of establishing a critical materials supply chain independent of China.

  • Auspicious timing. The timing of the request is notable, as it comes after several nations, including China, Norway, and Japan, began to move forward with deep-sea mineral extraction projects in their sovereign waters, now that the technology for collecting and transporting to the surface the polymetallic nodules found on the seabed is maturing and the July meeting of the ISA is about to get underway.

  • Not a member, but… While the US is not a signatory (member) of the ISA, it is an observer and, as such, has the ability to positively contribute to the conversation and weigh in on matters pertaining to the development and issuance of the final exploitation regulations for deep-sea mining in international waters. 

FLASH NOTE – West Fraser Timber Co. Ltd.

By VRS (Valuation & Research Specialists)

  • Our estimations for 2023 annual revenue range around $6,805 million and for 2024 around $7,354 million.
  • The company’s annual revenue reached $9,701 million in 2022, compared to $10,518 million in 2021, posting a de- crease of 7.77%.
  • West Fraser Timber Co. Ltd.’s gross profit for 2022 was $4,559 million, a decrease of 22% compared to $5,873 million for the corresponding period in 2021.

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Jul 07
0

Daily Brief TMT/Internet: LG Uplus Corp, Fadu , NetEase Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • The Rise of the Fourth Telco in Korea – Breaking the Oligopoly
  • Fadu Pre-IPO – Stupendous Revenue Growth but Heavily Reliant on Two Key Customers
  • [NetEase(NTES US, BUY, TP US$102) TP Change]: Cut TP to $102 Due to More Near-Term Downside Risks

The Rise of the Fourth Telco in Korea – Breaking the Oligopoly

By Douglas Kim

  • The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.
  • This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.
  • On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus’ customers.

Fadu Pre-IPO – Stupendous Revenue Growth but Heavily Reliant on Two Key Customers

By Ethan Aw

  • Fadu (440110 KS) is looking to raise up to US$147m in its Korean IPO.
  • Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs. 
  • Fadu’s revenue growth has been stupendous, to say the least. However, the firm’s revenues are derived mainly from two customers, which exposes it to a large degree of concentration risk.

[NetEase(NTES US, BUY, TP US$102) TP Change]: Cut TP to $102 Due to More Near-Term Downside Risks

By Shawn Yang

  • Three risks in the short term: 1) Decreased gross billings from former legacies due to macro. 2) Lifecycle issues with new games. 3) Market over-optimism regarding new games and AI.
  • NetEase still has some positive catalysts in the long term, including: 1) New games and content expansions. 2) Overseas game publishing. 3) Continual improvement in margins.
  • We expect NetEase’s revenue in 2Q23 to be slightly lower than the consensus estimates of 2.5%, with a 13.3% beat in profits. Cut TP to $102, but maintain BUY rating.

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Jul 07
0

Daily Brief Industrials: Samsung Heavy Industries Pref, Tryt Inc and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Delisting of 5 Korean Preferred Stocks on 17 July
  • TRYT IPO: Peer Comparison and Valuation

Delisting of 5 Korean Preferred Stocks on 17 July

By Douglas Kim

  • The Korea Exchange officially announced today that the following five preferred stocks will be delisted on 17 July.
  • These five stocks including Samsung Heavy Industries Pref, SK Networks Pref,  DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B fell sharply today.   
  • Despite the warning by the Korea Exchange since end of May, it was not until today that these five stocks dropped sharply. On average, these five stocks fell 44% today. 

TRYT IPO: Peer Comparison and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • TRYT Group is engaged in job placement and temporary staffing, specialising in the medical and welfare and construction fields. The company has set the pricing for its Tokyo IPO.
  • Existing shareholders of the company will offer 40m shares at an indicative price range of ¥1,100-1,300 per share, raising around US$305-360m from the IPO.
  • We think Tryt Inc (9164 JP) ’s IPO is overvalued at the above price range compared to Japanese recruitment peers and would recommend staying on the sidelines.

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Jul 07
0

Daily Brief Industrials: Samsung Heavy Industries Pref, Tryt Inc and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Delisting of 5 Korean Preferred Stocks on 17 July
  • TRYT IPO: Peer Comparison and Valuation

Delisting of 5 Korean Preferred Stocks on 17 July

By Douglas Kim

  • The Korea Exchange officially announced today that the following five preferred stocks will be delisted on 17 July.
  • These five stocks including Samsung Heavy Industries Pref, SK Networks Pref,  DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B fell sharply today.   
  • Despite the warning by the Korea Exchange since end of May, it was not until today that these five stocks dropped sharply. On average, these five stocks fell 44% today. 

TRYT IPO: Peer Comparison and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • TRYT Group is engaged in job placement and temporary staffing, specialising in the medical and welfare and construction fields. The company has set the pricing for its Tokyo IPO.
  • Existing shareholders of the company will offer 40m shares at an indicative price range of ¥1,100-1,300 per share, raising around US$305-360m from the IPO.
  • We think Tryt Inc (9164 JP) ’s IPO is overvalued at the above price range compared to Japanese recruitment peers and would recommend staying on the sidelines.

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Jul 07
0

Most Read: Socionext, Yachiyo Industry, Samsung Heavy Industries Pref, BeiGene Ltd, Rakuten Group , JSW Steel Ltd, Tryt Inc, Hyundai Green Food and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Socionext (6526 JP) – Pre-IPO Lockup Expiry Offering Will Double Real World Float
  • Socionext Placement – A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains
  • Socionext (6526 JP): US$1.9bn Secondary Placement
  • And Now For Something Truly Offensive – Honda Pays <0.5x Book for Yachiyo
  • Delisting of 5 Korean Preferred Stocks on 17 July
  • Quiddity Leaderboard for Hang Seng Index Sep 23: Beigene Vs Peers An Interesting Trade
  • Rakuten Securities IPO: Promising Business with Valuation Caveats
  • SENSEX Ad Hoc Rebalance: JSW Steel Replaces HDFC
  • TRYT IPO: Revised IPO Price Range Remains Unattractive
  • Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store

Socionext (6526 JP) – Pre-IPO Lockup Expiry Offering Will Double Real World Float

By Travis Lundy

  • Today after the close, SoC and market darling Socionext (6526 JP) announced that DBJ, Fujitsu, and Panasonic would offer the remaining shares they in a US$1.8bn secondary offering.
  • Pshaw…. that’s only 2.5 days of 20-day ADV… Not a lot. But in fact, that is a LOT of stock. 
  • I harp on understanding shareholder structure. I think it worthwhile. Here it matters too.

Socionext Placement – A US$1.8bn Cleanup, Will Have to Give up Some of Its 6x Listing Gains

By Sumeet Singh

  • Three shareholders of Socionext (6526 JP) aim to raise around US$1.8bn via selling all of their shares in Socionext.
  • Socionext was listed on 12th Oct 2022, when it raised US$457m in its upsized Japan IPO. Its six-month lockup expired in Apr 2023. Its shares are up 6x since listing.
  • In this note, we talk about the deal dynamics and run the deal through our ECM framework.

Socionext (6526 JP): US$1.9bn Secondary Placement

By Arun George

  • Socionext (6526 JP) announced a pure secondary offering of 12.6 million or 37.50% of outstanding shares. At the last close, the placement is worth JPY277 billion (US$1.9 billion)
  • The selling shareholders’ primary motivation for exiting their shareholding is to capitalise on the extraordinary share price. Socionext shares are up 6x from the IPO price of JPY3,650 per share.
  • We think looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 11 to 13 July (likely 11 July).

And Now For Something Truly Offensive – Honda Pays <0.5x Book for Yachiyo

By Travis Lundy

  • Every now and then, you get a tender offer proposal which is truly offensive. This is one. 
  • Yes, existing ICE-related autoparts makers are under the cosh as they face down obsolesence induced by competition from EVs. Fuel tank makers like Yachiyo are at risk. 
  • But this bid started at <0.3x book, and ended at <0.5x book, despite significant net financial assets and lots of unrecognised DTAs. 

Delisting of 5 Korean Preferred Stocks on 17 July

By Douglas Kim

  • The Korea Exchange officially announced today that the following five preferred stocks will be delisted on 17 July.
  • These five stocks including Samsung Heavy Industries Pref, SK Networks Pref,  DB Hitek Pref, Hyundai BNG Steel Pref, and Heungkuk Fire & Marine Insurance Pref 2B fell sharply today.   
  • Despite the warning by the Korea Exchange since end of May, it was not until today that these five stocks dropped sharply. On average, these five stocks fell 44% today. 

Quiddity Leaderboard for Hang Seng Index Sep 23: Beigene Vs Peers An Interesting Trade

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at some of the names with high likelihood of being involved in index changes for the Hang Seng Index in September 2023.
  • The index changes for the September 2023 rebalance could be announced in mid-August and implemented in early-September.
  • Although the index methodology is highly subjective and predicting index changes is extremely tricky, the HSI is an important index in the region and here are our thoughts for September. 

Rakuten Securities IPO: Promising Business with Valuation Caveats

By Oshadhi Kumarasiri

  • Yesterday, Rakuten Group (4755 JP) announced that its consolidated subsidiary, Rakuten Securities, has applied for a listing on the Tokyo Stock Exchange.
  • Rakuten Securities has long-term growth potential through leveraging Rakuten’s ecosystem for steady securities account growth and exploring cross-selling opportunities for related services.
  • While the business seems promising, there may be concerns regarding its valuation, given its previous high trailing PE of 43.0x.

SENSEX Ad Hoc Rebalance: JSW Steel Replaces HDFC

By Brian Freitas

TRYT IPO: Revised IPO Price Range Remains Unattractive

By Arun George

Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store

By Sanghyun Park

  • Hyundai G.F. Holdings will conduct a tender offer to Hyundai Green Food and Hyundai Dept Store shareholders. The tendering period is August 11-September 1.
  • The target volume is 10,125,700 (Hyundai Green Food) and 4,669,556 (Hyundai Dept Store), corresponding to 29.89% and 19.95% of the outstanding shares, respectively.
  • We should approach this event trading with caution, taking into account the risk of an unhedged setup while monitoring the potential widening of the spread opening during the tendering period.

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Jul 07
0

Daily Brief Consumer: Rakuten Group , Hyundai Green Food, Multi Bintang Indonesia, Tesla Motors, Topbuild Corp and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Rakuten Securities IPO: Promising Business with Valuation Caveats
  • Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store
  • Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out
  • Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room
  • TopBuild: Another Splendid GARP Opportunity

Rakuten Securities IPO: Promising Business with Valuation Caveats

By Oshadhi Kumarasiri

  • Yesterday, Rakuten Group (4755 JP) announced that its consolidated subsidiary, Rakuten Securities, has applied for a listing on the Tokyo Stock Exchange.
  • Rakuten Securities has long-term growth potential through leveraging Rakuten’s ecosystem for steady securities account growth and exploring cross-selling opportunities for related services.
  • While the business seems promising, there may be concerns regarding its valuation, given its previous high trailing PE of 43.0x.

Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store

By Sanghyun Park

  • Hyundai G.F. Holdings will conduct a tender offer to Hyundai Green Food and Hyundai Dept Store shareholders. The tendering period is August 11-September 1.
  • The target volume is 10,125,700 (Hyundai Green Food) and 4,669,556 (Hyundai Dept Store), corresponding to 29.89% and 19.95% of the outstanding shares, respectively.
  • We should approach this event trading with caution, taking into account the risk of an unhedged setup while monitoring the potential widening of the spread opening during the tendering period.

Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out

By Sameer Taneja

  • Multi Bintang Indonesia (MLBI IJ) is Indonesia’s leading beer company, with a marketshare of 50% by volume. The company is 89% owned by Heineken. 
  • The company has maintained an average 5 Yr/10 Yr ROCE of over 72%/82% and paid out 80-100% of its profits as dividends.  It is also net cash.
  • The stock boasts a 6.5%-7% dividend yield and trades at 14-15x PE if profits normalize due to increased tourism in Indonesia, where we believe most of the demand is. 

Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room

By Kevin George

  • China accounts for over half of the automaker’s global sales.
  • There is also potential for Chinese brands to encroach on European markets.
  • Tesla’s valuation could be impacted by protectionism and nationalism, with questions over how China will tolerate overseas competitors in its electric vehicle market.

TopBuild: Another Splendid GARP Opportunity

By Pearl Gray Equity and Research

  • The stock has surged by more than 60% since the turn of the year.
  • The company’s acquisition strategy has resulted in significant market share and an ever-improving profit & loss statement.
  • The stock’s PEG ratio of 0.26 speaks volumes.

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