Daily Briefs

Jardine Matheson (JM SP)‘s 77.8%-held DFI Retail Group (DFI SP) has sold its entire 22.2% stake in Robinsons Retail Holdings (RRHI PM) for ~US$283mn to “support its capital allocation strategy“.
Preceding my comments on Matheson are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

IFBH Ltd Pre- IPO – Growth Driven by Coconut Water Products Amid High Concentration Risks

By Akshat Shah

IFBH (IFBH HK) is looking to raise at least US$100m in its upcoming HK IPO.
IFBH specializes in ready-to-consume beverages and food, with a focus on coconut water and plant-based products.
In this note, we talk about the company’s historical performance.

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Jun 04

Daily Brief TMT/Internet: Nexchip Semiconductor , Mediatek Inc, Xiaomi Corp, Taiwan Semiconductor (TSMC), Circle Internet Group, Lens Technology , Plover Bay Technologies, VEON and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
TIP Customized Taiwan Select High Dividend Index Rebalance: 22 Changes as Expected
Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction
TSMC Wafer Price Increase ~30-40% at Each Node (N2-A16-A14), that Will Eventually Limit Demand
Circle IPO Analysis (Second Largest Issuer of Stablecoins Globally)
Smartphone 2025 Shipments Revised Down, PC Revised Up (IDC). Mediatek a Tad Expensive, TSMC Cheaper.
[Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver
Lens Technology H-Share Listing: First Look
Plover Bay (1523 HK): Preview On Earnings For H1 2025
VEON US: Pakistan Towers Sale Frees Capital for Digital Growth in Core Market Ahead of Ukraine IPO

CNI Semiconductor Chips Index Rebalance: One Change with Big Impact

There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 June.
Passive trackers are estimated to buy 2.7x ADV in Nexchip Semiconductor (688249 CH) and sell 1.5x ADV in Amlogic Shanghai (688099 CH).
The delete has outperformed the inclusion this year. With 8 days left to implementation of the changes and decent impact, there could be a short-term reversal.

TIP Customized Taiwan Select High Dividend Index Rebalance: 22 Changes as Expected

By Shifara Samsudeen, FCMA, CGMA

There are 16 adds and 6 deletes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF has an AUM of US$12.4bn.
The ETF has started trading the stocks and are expected to continue trading for the next 7 trading days. In reality, the process could drag on for some stocks.
The index committee appears to have a little discretion in choosing the inclusions with one expected add not being added and one lower ranked stock being added to the index.

Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction

By Ming Lu

In 1Q25, total revenue grew by 47% YoY with home appliance up by 59% YoY.
Both home appliance and electric vehicle will expand their capacities.
The stock has an upside of 29% and a price target of HK$66 for the next twelve months.

TSMC Wafer Price Increase ~30-40% at Each Node (N2-A16-A14), that Will Eventually Limit Demand

By Nicolas Baratte

A N3 wafer costs US$20k. Taiwan news mention N2 price at $30k, 16A at $45k. That’s a bit inflated but price increase at each node will be a hefty ~30-40%.
It will become difficult for PC, Smartphone to absorb a US$40k wafer cpst, or to use the chip’s performance in these devices. The addressable market will shrink: AI, Networking, Server.
TSMC’s growth will come more from wafer price increase than from volume growth. It’s already the case! Could be a problem for Semi Production Equipment vendors: scale will be smaller.

Circle IPO Analysis (Second Largest Issuer of Stablecoins Globally)

By Douglas Kim

Circle raised both the IPO shares to be issued and IPO price range. New IPO price range is $27 to $28 per share (from $24 to $26 per share previously).
We have a Positive View of the Circle due to its status as the second largest issuer of stablecoins globally, rapidly increasing user base and sales, and improving profit margins.
Major risk factors of this IPO include CBDCs, centralization, cyberattacks, and potential government crackdown.

Smartphone 2025 Shipments Revised Down, PC Revised Up (IDC). Mediatek a Tad Expensive, TSMC Cheaper.

By Nicolas Baratte

IDC has revised down 2025 Smartphone unit growth from 2.3% to 0.6%; increased PC from 3.7% to 4.5% but expects a decline in 2026.
The positive for Mediatek is AI in Mobile chips, but it’s a secondary driver compared to AI ASIC design. Mediatek stock is more expensive than TSMC despite lower visibility.
I don’t see any stock for which PC is a positive. The risk remain over-estimating replacement demand ahead of Windows 10 end-of-support in Oct-25.

[Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver

By Eric Wen

Xiaomi reported C1Q25 top line, non-IFRS operating income and IFRS net profit 2.0%, 41% and 57% vs. our estimate.
While there are a few product positives supporting outperformance, the main driver is still trade-in subsidy (TIS), which will start to end in C3Q25;
We continue to view Xiaomi as having an enviable market position as a “Huawei without the sanctions”, its valuation has also become very rich.

Lens Technology H-Share Listing: First Look

Shenzhen-Listed iPhone glass supplier Lens Technology (300433 CH) has filed for a listing on HKEx and plans to raise proceeds of around US$1-1.5bn.
The company is heavily reliant on smartphones (mainly iPhones) however has diversified into other verticals. While this has helped grow revenues, margins have continued to decline.
Though some exemptions have been given, the potential for further US reciprocal tariffs could increase costs and disrupt supply chains impacting Lens.

Plover Bay (1523 HK): Preview On Earnings For H1 2025

By Sameer Taneja

We expect the Trump tariffs announced on Taiwan (base for suppliers/production of Plover Bay) to slightly affect growth rates for H1 FY25 and estimate a 15%/13% YoY revenue/profit growth number.
A 32% tariff was imposed on Taiwan suppliers; however, electronic items, including routers, were subsequently excluded. Nonetheless, overall business sentiment had already been negatively impacted before these adjustments.
Trading at 19.4x FY25e earnings (assuming a reversion to 15% growth), the stock is somewhat fairly valued, although we love this name’s execution and long-term track record.

VEON US: Pakistan Towers Sale Frees Capital for Digital Growth in Core Market Ahead of Ukraine IPO

By Vincent Fernando, CFA

VEON last week announced it has secured regulatory approvals for its tower asset partnership with Engro Corp in Pakistan, unlocking US$563 million in value.
Cash portion of funds will be paid in tranches and received in Pakistan, with flexibility to upstream capital or reinvest locally.
Transaction supports VEON’s ongoing transformation at the Group level and digital growth strategy in Pakistan while offering a roadmap for similar value creation in Ukraine.

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Jun 04

Daily Brief Industrials: Bluefocus Communication Group Co, Ltd., Makino Milling Machine Co, Jardine Matheson Holdings, Wuxi Lead Intelligent Equipmen, Action Construction Equipment and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade
Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame
StubWorld: DFI Exits Robinson Retail
Wuxi Lead Intelligent Equipment A/H Listing – Market Leader but Has Been Facing Industry Headwinds
Action Construction Equipment: Record Performance, Defence Opportunity, Agri Turnaround

ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).

Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame

Makino Milling Machine Co (6135 JP) announced a preconditional tender offer from MBK Partners at JPY11,751, a 4.8% premium to last close and a 6.8% premium to Nidec’s withdrawn JPY11,000 offer.
The offer is broadly in line with the midpoint of the IFA DCF valuation range. The tender offer is expected to commence in early December.
Despite the offer resulting from an auction, there remains a medium probability that Nidec Corp (6594 JP) or a spurned white knight bidder (Candidate A) emerges with a higher offer.

StubWorld: DFI Exits Robinson Retail

Jardine Matheson (JM SP)‘s 77.8%-held DFI Retail Group (DFI SP) has sold its entire 22.2% stake in Robinsons Retail Holdings (RRHI PM) for ~US$283mn to “support its capital allocation strategy“.
Preceding my comments on Matheson are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Wuxi Lead Intelligent Equipment A/H Listing – Market Leader but Has Been Facing Industry Headwinds

By Sumeet Singh

Wuxi Lead Intelligent Equipmen (300450 CH) aims to raise around US$400m in its H-share listing.
WLIE is a global platform-based intelligent equipment enterprise, offering intelligent equipment and solutions to a wide range of emerging and high-end manufacturing industries.
In this note, we look at its past performance and other deal dynamics that might impact the listing.

Action Construction Equipment: Record Performance, Defence Opportunity, Agri Turnaround

Action Construction Equipment (ACCE IN) achieved record revenue and profits in FY25 and Q4, demonstrating strong execution and margin expansion.
Secured single largest order from Ministry of Defence, boosting future defense contribution and supporting Make in India.
Management is cautiously optimistic for FY26 due to temporary factors like BS5 price impact, but confident in medium to long-term growth prospects.

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Jun 04

Daily Brief India: Solar Industries India, NSE Nifty Bank Index, State Bank Of India, Nmdc Ltd, Action Construction Equipment, Dollar Industries and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

NIFTY200 Momentum30 Index Rebalance Preview: 69% One-Way Turnover & US$1.9bn Trade
This Friday’s RBI Decision: Nifty Bank Slips Either Way, History Suggests
State Bank of India (SBIN IN): Reserve Bank of India Day Patterns Offer a Tactical Trade Setup
NMDC Ltd (NSE: NMDC) – Volume-Led Growth Story with Re-Rating Potential
Action Construction Equipment: Record Performance, Defence Opportunity, Agri Turnaround
Dollar Industries: Navigating Market Headwinds with Strategic Investments and Focus

NIFTY200 Momentum30 Index Rebalance Preview: 69% One-Way Turnover & US$1.9bn Trade

There could be 20 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
If all changes are on expected lines, one-way turnover is estimated at 68.7% and that will result in a round-trip trade of INR 159bn (US$1.87bn).
Financials are expected to gain 9 index spots and Materials are expected to gain 3 spots. Consumer Discretionary could lose 5 spots and Information Technology could lose 4 spots.

This Friday’s RBI Decision: Nifty Bank Slips Either Way, History Suggests

By Gaudenz Schneider

The Reserve Bank of India (RBI) will announce its monetary policy decision on Friday, June 6, 2025. Market consensus expects a rate cut to 5.75%.
Analysis of the NSE Nifty Bank Index over the past decade shows consistent negative returns on rate decision days when a cut is expected—regardless of whether the cut is delivered.
This Insight highlights actionable insights for traders by revealing historical patterns in the Nifty Bank Index’s behavior on RBI rate decision days and breaking down market reactions by scenario.

State Bank of India (SBIN IN): Reserve Bank of India Day Patterns Offer a Tactical Trade Setup

By Gaudenz Schneider

The Reserve Bank of India (RBI) will announce its monetary policy decision on Friday, June 6, 2025. Market consensus expects a rate cut to 5.75%.
Analysis of the State Bank Of India (SBIN IN) over the past decade shows mostly negative returns on rate decision days when a cut is expected.
This Insight highlights actionable insights for traders by revealing historical patterns in the State Bank Of India’s behavior on RBI rate decision days and breaking down price dynamics by scenario.

NMDC Ltd (NSE: NMDC) – Volume-Led Growth Story with Re-Rating Potential

By Rahul Jain

Last 3 Years: NMDC’s PAT grew steadily from Rs3,774 Cr in FY23 to Rs6,693 Cr in FY25 (CAGR ~33%), driven by volume growth and margin expansion.
Guidance & Plans: Targets 55.4 MT (24% growth) in FY26 and 100 MT by 2030, backed by infra, EC capacity, and pellet expansion.
Re-Rating Potential: Meeting volume, margin, and execution targets could trigger valuation re-rating from current below-peer multiples.

Action Construction Equipment: Record Performance, Defence Opportunity, Agri Turnaround

Action Construction Equipment (ACCE IN) achieved record revenue and profits in FY25 and Q4, demonstrating strong execution and margin expansion.
Secured single largest order from Ministry of Defence, boosting future defense contribution and supporting Make in India.
Management is cautiously optimistic for FY26 due to temporary factors like BS5 price impact, but confident in medium to long-term growth prospects.

Dollar Industries: Navigating Market Headwinds with Strategic Investments and Focus

Dollar Industries (DOLLAR IN) reported modest revenue growth in FY25 amidst a challenging market, with strong emphasis on retail expansion and brand-building initiatives.
Despite a de-growth in sales volume, strategic investments in exclusive brand outlets (EBOs) and a renewed focus on premiumization are crucial for long-term growth.
The company’s resilience in maintaining margins despite volume pressures, coupled with its aggressive retail strategy, signals a potential turnaround as market conditions improve.

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Jun 04

Daily Brief Consumer: Toyota Industries, BYD, PointsBet Holdings , Korea Stock Exchange KOSPI 200, IFBH, Primo Global, Li Auto , Dollar Industries and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder
[Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
PointsBet (PBH AU): Mixi Returns with a Revised Offer and a Potential Takeover Offer
PointsBet (PBH AU): MIXI Bumps To A$1.20. Betr’s DD Continues
KOSPI 200 Update: Market Moves After Lee Jae-Myung’s Victory
IFBH Ltd Pre- IPO – Growth Driven by Coconut Water Products Amid High Concentration Risks
Primo Global Holdings: A Bridal Business with Long Presence, Short on Performance
[Li Auto Inc. (LI US, SELL, TP US$20) Earnings Review]: Key Question Is Still the New Model Launches
Dollar Industries: Navigating Market Headwinds with Strategic Investments and Focus

Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder

Toyota Industries (6201 JP) disclosed a preconditional tender offer from Toyota Fudosan at JPY16,300, a 23.3% premium to the undisturbed price but a 11.4% discount to last close.
While representing a pre-rumour all-time high, the offer is below the midpoint of the special committee IFA DCF valuation range. The Board has a neutral recommendation.
The offer undermines minorities as it lacks split pricing for the Toyota Motor (7203 JP) and its affiliates’ shareholding and likely undervalues the significant real estate holdings.

[Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks

2wks ago I said “a deal could be announced near-term.” 2wks later we have a deal. But it is a bad deal for TICO minorities. Low price. Minimal transparency. Awful.
But if you dig through deal structure and economics, it is worse than it looks. It takes digging to understand how bad, and they could tell you, but they won’t.
The deal will take time. Things will be in limbo til then. And Toyota Group governance and capital allocation is conditional on this deal getting done, which is also bad.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)

The June rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The net round-trip trade across all stocks across the four indices is estimated at HK$63.55bn (US$8.1bn). There are 12 stocks with over 2x ADV to trade from passive trackers.
The trade size is much bigger than usual due to the inclusion of BYD in the HSTECH Index and due to a change in the FAF methodology for Secondary Listings.

PointsBet (PBH AU): Mixi Returns with a Revised Offer and a Potential Takeover Offer

PointsBet Holdings (PBH AU) has disclosed a revised Mixi Inc (2121 JP) offer at A$1.20, a 13.2% premium to the previous A$1.06 offer and a 10.6% premium to last close.
Due to Betr’s 19.9% stake, which can effectively block Mixi’s scheme, Mixi will consider an off-market takeover offer of A$1.20 with a 50.1% minimum acceptance condition.
Mixi’s revised offer is superior to Betr’s if synergies are not factored in. While the Betr’s all-cash offer is equivalent to Mixi’s, it is subject to scale-back.

PointsBet (PBH AU): MIXI Bumps To A$1.20. Betr’s DD Continues

Back on the 26th Feb, PointsBet (PBH AU), an Australian/Canadian online wagering platform, entered into a Scheme Implementation Deed with MIXI (2121 JP), at $1.06/share, a 27.7% premium to undisturbed.
An approach from BETR Entertainment (BBT AU), PointsBet’s key rival, was initially rebuffed. On the 12th May, both parties subsequently entered into mutual due diligence after Betr finagled terms.
MIXI has now bumped terms to A$1.20/share. The Scheme Meeting has been delayed to the 25th June. DD continues to be carried out by PointsBet and Betr.

KOSPI 200 Update: Market Moves After Lee Jae-Myung’s Victory

By Nico Rosti

Lee Jae-myung’s is projected to win the Presidential Elections in South Korea. The Democratic Party of Korea candidate said he wants to revive the economy and stabilize the stock market.
At the moment of writing (around midnight Singapore time) the KOSPI 200 INDEX‘s reaction is positive, the futures are rising towards the most recent, last week highs (363).
This is a quick review of our most recent KOSPI 200’s tactical setups, in light of the political news coming out of the polls.

IFBH Ltd Pre- IPO – Growth Driven by Coconut Water Products Amid High Concentration Risks

By Akshat Shah

IFBH (IFBH HK) is looking to raise at least US$100m in its upcoming HK IPO.
IFBH specializes in ready-to-consume beverages and food, with a focus on coconut water and plant-based products.
In this note, we talk about the company’s historical performance.

Primo Global Holdings: A Bridal Business with Long Presence, Short on Performance

By Oshadhi Kumarasiri

Primo Global (367A JP) will debut on the Tokyo Stock Exchange’s Standard Market on June 24, offering 6.5m shares, with pricing set after the June 9–13 book-building period.
Despite decades in operation, Primo has shown slow domestic growth and limited international traction, raising doubts about its ability to scale meaningfully in the bridal jewelry market.
With net debt at 50% of assets and over half its balance sheet in goodwill and intangibles, Primo faces material financial risk, especially in a rising interest rate environment.

[Li Auto Inc. (LI US, SELL, TP US$20) Earnings Review]: Key Question Is Still the New Model Launches

By Eric Wen

Li Auto (LI) reported mixed results with C1Q25 revenue (2.9%)/2.5% vs. our est./cons., and non-GAAP net income (11%)/(3.7%) vs. our est./cons..
We see two negatives going forward: (1) renewed price promotion started in March, (2) cautious remarks regarding prospects of BEV SUV launch in July.
We maintain SELL on LI and TP of US$20 on cautious outlook.

Dollar Industries: Navigating Market Headwinds with Strategic Investments and Focus

Dollar Industries (DOLLAR IN) reported modest revenue growth in FY25 amidst a challenging market, with strong emphasis on retail expansion and brand-building initiatives.
Despite a de-growth in sales volume, strategic investments in exclusive brand outlets (EBOs) and a renewed focus on premiumization are crucial for long-term growth.
The company’s resilience in maintaining margins despite volume pressures, coupled with its aggressive retail strategy, signals a potential turnaround as market conditions improve.

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Jun 04

Daily Brief China: BYD, Nexchip Semiconductor , New World Development, Bluefocus Communication Group Co, Ltd., Xiaomi Corp, Lepu Medical Technology A, Lens Technology , Plover Bay Technologies, Wuxi Lead Intelligent Equipmen and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
NWD (17 HK): Markets Pricing In A Bust
ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade
Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction
Quiddity ChiNext/ChiNext 50 Jun25 Results: 23/26 Changes Correct Despite Methodology Change
[Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver
Lens Technology H-Share Listing: First Look
Plover Bay (1523 HK): Preview On Earnings For H1 2025
Wuxi Lead Intelligent Equipment A/H Listing – Market Leader but Has Been Facing Industry Headwinds

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)

The June rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The net round-trip trade across all stocks across the four indices is estimated at HK$63.55bn (US$8.1bn). There are 12 stocks with over 2x ADV to trade from passive trackers.
The trade size is much bigger than usual due to the inclusion of BYD in the HSTECH Index and due to a change in the FAF methodology for Secondary Listings.

CNI Semiconductor Chips Index Rebalance: One Change with Big Impact

There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 June.
Passive trackers are estimated to buy 2.7x ADV in Nexchip Semiconductor (688249 CH) and sell 1.5x ADV in Amlogic Shanghai (688099 CH).
The delete has outperformed the inclusion this year. With 8 days left to implementation of the changes and decent impact, there could be a short-term reversal.

NWD (17 HK): Markets Pricing In A Bust

0.052x P/B! That’s New World Development (17 HK)‘s current trailing P/B ratio; roughly a quarter of the next comparable real estate peer.
What’s new? The latest decline followed an announcement on the 30th May that it would defer payments on its perpetual bonds.
NWD’s 6.15% and 4.8% perpetuals fell to 23 cents and 15.5 cents on the dollar on 2nd June, suggesting the market is pricing in the possibility of a bust.

ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

By Shifara Samsudeen, FCMA, CGMA

There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).

Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction

By Ming Lu

In 1Q25, total revenue grew by 47% YoY with home appliance up by 59% YoY.
Both home appliance and electric vehicle will expand their capacities.
The stock has an upside of 29% and a price target of HK$66 for the next twelve months.

Quiddity ChiNext/ChiNext 50 Jun25 Results: 23/26 Changes Correct Despite Methodology Change

By Janaghan Jeyakumar, CFA

The June 2025 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
There will be eight changes for the ChiNext index and five changes for the ChiNext 50 index.
In this insight, we take a look at our final flow expectations for the the ChiNext and ChiNext 50 index rebal events.

[Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver

By Eric Wen

Xiaomi reported C1Q25 top line, non-IFRS operating income and IFRS net profit 2.0%, 41% and 57% vs. our estimate.
While there are a few product positives supporting outperformance, the main driver is still trade-in subsidy (TIS), which will start to end in C3Q25;
We continue to view Xiaomi as having an enviable market position as a “Huawei without the sanctions”, its valuation has also become very rich.

Lens Technology H-Share Listing: First Look

Shenzhen-Listed iPhone glass supplier Lens Technology (300433 CH) has filed for a listing on HKEx and plans to raise proceeds of around US$1-1.5bn.
The company is heavily reliant on smartphones (mainly iPhones) however has diversified into other verticals. While this has helped grow revenues, margins have continued to decline.
Though some exemptions have been given, the potential for further US reciprocal tariffs could increase costs and disrupt supply chains impacting Lens.

Plover Bay (1523 HK): Preview On Earnings For H1 2025

By Sameer Taneja

We expect the Trump tariffs announced on Taiwan (base for suppliers/production of Plover Bay) to slightly affect growth rates for H1 FY25 and estimate a 15%/13% YoY revenue/profit growth number.
A 32% tariff was imposed on Taiwan suppliers; however, electronic items, including routers, were subsequently excluded. Nonetheless, overall business sentiment had already been negatively impacted before these adjustments.
Trading at 19.4x FY25e earnings (assuming a reversion to 15% growth), the stock is somewhat fairly valued, although we love this name’s execution and long-term track record.

Wuxi Lead Intelligent Equipment A/H Listing – Market Leader but Has Been Facing Industry Headwinds

By Sumeet Singh

Wuxi Lead Intelligent Equipmen (300450 CH) aims to raise around US$400m in its H-share listing.
WLIE is a global platform-based intelligent equipment enterprise, offering intelligent equipment and solutions to a wide range of emerging and high-end manufacturing industries.
In this note, we look at its past performance and other deal dynamics that might impact the listing.

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Jun 04

Daily Brief Japan: Toyota Industries, Makino Milling Machine Co, Primo Global, Hearts United Group, D.Western Therapeutics Institute Inc., Wacom Co Ltd, Geo Holdings, Koukandekirukun Inc, LaKeel and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder
[Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks
Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame
Primo Global Holdings: A Bridal Business with Long Presence, Short on Performance
Digital Hearts Holdings (3676 JP) – Poised to Enjoy Higher Profitability
D. Western Therapeutics Institute (DWTI) (4576 JP) – Q1 Follow-Up – June 3, 2025
Wacom (6727 JP) – New Foundations Laid for Growth, Now for Execution
GEO HOLDINGS (2681 JP) – FY3/25 Earnings Miss Forecasts
Koukandekirukun (7695 JP) – Operating Profit Falls on Higher Costs
LaKeel (4074 JP) – At a Positive Inflection Point

Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder

Toyota Industries (6201 JP) disclosed a preconditional tender offer from Toyota Fudosan at JPY16,300, a 23.3% premium to the undisturbed price but a 11.4% discount to last close.
While representing a pre-rumour all-time high, the offer is below the midpoint of the special committee IFA DCF valuation range. The Board has a neutral recommendation.
The offer undermines minorities as it lacks split pricing for the Toyota Motor (7203 JP) and its affiliates’ shareholding and likely undervalues the significant real estate holdings.

[Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks

2wks ago I said “a deal could be announced near-term.” 2wks later we have a deal. But it is a bad deal for TICO minorities. Low price. Minimal transparency. Awful.
But if you dig through deal structure and economics, it is worse than it looks. It takes digging to understand how bad, and they could tell you, but they won’t.
The deal will take time. Things will be in limbo til then. And Toyota Group governance and capital allocation is conditional on this deal getting done, which is also bad.

Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame

Makino Milling Machine Co (6135 JP) announced a preconditional tender offer from MBK Partners at JPY11,751, a 4.8% premium to last close and a 6.8% premium to Nidec’s withdrawn JPY11,000 offer.
The offer is broadly in line with the midpoint of the IFA DCF valuation range. The tender offer is expected to commence in early December.
Despite the offer resulting from an auction, there remains a medium probability that Nidec Corp (6594 JP) or a spurned white knight bidder (Candidate A) emerges with a higher offer.

Primo Global Holdings: A Bridal Business with Long Presence, Short on Performance

By Oshadhi Kumarasiri

Primo Global (367A JP) will debut on the Tokyo Stock Exchange’s Standard Market on June 24, offering 6.5m shares, with pricing set after the June 9–13 book-building period.
Despite decades in operation, Primo has shown slow domestic growth and limited international traction, raising doubts about its ability to scale meaningfully in the bridal jewelry market.
With net debt at 50% of assets and over half its balance sheet in goodwill and intangibles, Primo faces material financial risk, especially in a rising interest rate environment.

Digital Hearts Holdings (3676 JP) – Poised to Enjoy Higher Profitability

Q4 FY3/25 results showed OP margin improvement YoY (Q4 FY3/24 6.1%, Q4 FY3/25 6.3%) as both DH Group (formerly Entertainment) and AGEST Group (formerly Enterprise) improved margins, although consolidated OP saw a small decline (-4.1% YoY).
DH Group’s segment OP declined (-9.9% YoY), but the segment OP margin improved (Q4 FY3/24 7.1%, Q4 FY3/25 7.3%), reflecting the sale of a low-margin subsidiary.
AGEST Group’s segment OP increased (+8.4% YoY) with the improved segment OP margin (Q4 FY3/24 4.5%, Q4 FY3/25 5.1%) on the back of better profitability in overseas QA Solutions than Q4 FY3/24.

D. Western Therapeutics Institute (DWTI) (4576 JP) – Q1 Follow-Up – June 3, 2025

By Sessa Investment Research

SIR believes DWTI has entered an exciting new phase given significant advances in pipeline development achieved over the last year.
Key advances included: 1) publishing favorable topline results of in-house H-1337 PIIb US trials (strong prospects as “first choice as a second-line Glaucoma drug”)
2) commenced jointly developed Japan PII clinical trials of regenerative medicine cell therapy DWR-2206 with ActualEyes, and successfully completing all transplants

Wacom (6727 JP) – New Foundations Laid for Growth, Now for Execution

FY3/25 results were in line with revised guidance (issued April 23, 2025), with stable performance in the Technology Solutions Business, and narrowing losses YoY at the Branded Business.
After completing business transformation efforts, the newly unveiled ‘Wacom Chapter 4’ medium-term plan covering FY3/26 to FY3/29 presents positive developments with a more defined roadmap of future earnings drivers, and outlines a gradual growth trajectory as the business diversifies into new market domains and use-cases.
For capital allocation, planned investments in new business initiatives suggest that Wacom is considering the balance between shareholder returns and sustainable, long-term growth.

GEO HOLDINGS (2681 JP) – FY3/25 Earnings Miss Forecasts

Q1-4 FY3/25 sales and operating profit missed forecasts, as new store openings fell behind schedule, while personnel costs and merchant fees for cashless payments rose more than expected.
Sales fell -1.4% YoY while OP dropped -33.1% YoY. On the plus side, sales of used Smartphones & Tablets accelerated sharply, while annual gross profit and GPM improved.
Costs are expected to weigh on earnings again in FY3/26, as the company continues to execute its global expansion strategy.

Koukandekirukun (7695 JP) – Operating Profit Falls on Higher Costs

Q1-4 FY3/25 +36.1% YoY sales outperformed. However, although operating profit beat revised guidance, it fell 50.3% YoY, a stark contrast to the company’s initial forecast for an increase of +0.6% YoY.
This was due to higher-than- expected costs related to M&A, internal transactions with a new subsidiary and investments to reaccelerate order growth.
The company is forecasting FY3/26 sales growth to slow to +18.5% YoY, as it faces difficult comps from the previous year’s acquisition boost.

LaKeel (4074 JP) – At a Positive Inflection Point

Q1 FY12/25 results were a positive surprise with OP growth of 45.5% YoY, primarily driven by LaKeel HR license sales, a stark contrast to FY12/24 results, which saw the company experience margin decline YoY and limited earnings visibility.
With evidence indicating that the company’s technology is gaining market penetration, we believe the company is embarking on a growth trajectory.
Despite the strong start and high run-rate, FY12/25 guidance has been left unchanged.

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Jun 04

Most Read: Yang Ming Marine Transport, Pasona Group, Toyota Industries, BYD, Nexchip Semiconductor , Bluefocus Communication Group Co, Ltd., New World Development, Makino Milling Machine Co and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)
TIP Customized Taiwan Select High Div Index Rebal Preview: Methodology Change Leads to US$9bn Trade
[Japan Activism] Pasona Group (2168 JP) – Three New Things Of Mixed Importance
Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder
[Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)
CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade
NWD (17 HK): Markets Pricing In A Bust
Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame

Toyota Industries (6201) – SURPRISE! It’s a TOYODA Takeover Proposal (Good Governance May Not Win)

On Friday after the close, media reports surfaced that Toyota Motor (7203 JP) Group chairman and founding family member had put forth a take-private proposal to Toyota Industries (6201 JP).
The number quoted was ¥6trln market cap (most) or EV (FT), financed by personal funds, 3 megabanks, and reportedly some group companies.
¥6trln market cap would be +50%. ¥6trln EV +16%. Simultaneously shocking but somehow not surprising. Opportunistic, and surprisingly elegant as a family/group/cultural solution. More below.

TIP Customized Taiwan Select High Div Index Rebal Preview: Methodology Change Leads to US$9bn Trade

The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 363bn (US$12.1bn).
Following a change in methodology, there could be 16 adds and 6 deletes in June with an estimated one-way turnover of 39% and a round-trip trade of US$9bn.
We expect the adds to outperform the deletes over the next few days, following which reversion could set in.

[Japan Activism] Pasona Group (2168 JP) – Three New Things Of Mixed Importance

Pasona Group (2168 JP) is a “value stock.” It has loads of cash (but less than you think) and significant ongoing governance issues, but they are doing a TINY buyback.
Several weeks ago we got an announcement which was odd. Not completely odd, just odd. Now in the past week we have market activity/announcements which make one wonder.
This piece attempts to interpret some of the recent data/info points. One is odd. Another is odd but meaningful (but different than people think). A third is just technical.

Toyota Industries (6201 JP): After a High, Comes the Low of a Takeunder

Toyota Industries (6201 JP) disclosed a preconditional tender offer from Toyota Fudosan at JPY16,300, a 23.3% premium to the undisturbed price but a 11.4% discount to last close.
While representing a pre-rumour all-time high, the offer is below the midpoint of the special committee IFA DCF valuation range. The Board has a neutral recommendation.
The offer undermines minorities as it lacks split pricing for the Toyota Motor (7203 JP) and its affiliates’ shareholding and likely undervalues the significant real estate holdings.

[Japan M&A] Toyota Inds (6201) Proposed Takeover – It Looks Bad, and It’s Worse Than It Looks

2wks ago I said “a deal could be announced near-term.” 2wks later we have a deal. But it is a bad deal for TICO minorities. Low price. Minimal transparency. Awful.
But if you dig through deal structure and economics, it is worse than it looks. It takes digging to understand how bad, and they could tell you, but they won’t.
The deal will take time. Things will be in limbo til then. And Toyota Group governance and capital allocation is conditional on this deal getting done, which is also bad.

HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$8.1bn of Flows Post Capping (June 2025)

The June rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This leads to large flows.
The net round-trip trade across all stocks across the four indices is estimated at HK$63.55bn (US$8.1bn). There are 12 stocks with over 2x ADV to trade from passive trackers.
The trade size is much bigger than usual due to the inclusion of BYD in the HSTECH Index and due to a change in the FAF methodology for Secondary Listings.

CNI Semiconductor Chips Index Rebalance: One Change with Big Impact

There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 June.
Passive trackers are estimated to buy 2.7x ADV in Nexchip Semiconductor (688249 CH) and sell 1.5x ADV in Amlogic Shanghai (688099 CH).
The delete has outperformed the inclusion this year. With 8 days left to implementation of the changes and decent impact, there could be a short-term reversal.

ChiNext/ChiNext 50 Index Rebalance: US$1.3bn Round-Trip Trade

There are 8 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index at the June rebalance.
We correctly forecast 7/8 and 8/8 for the Chinext Index adds/deletes and were 4/5 and 5/5 for the Chinext50 Index adds/deletes.
Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 9.55bn (US$1.33bn).

NWD (17 HK): Markets Pricing In A Bust

0.052x P/B! That’s New World Development (17 HK)‘s current trailing P/B ratio; roughly a quarter of the next comparable real estate peer.
What’s new? The latest decline followed an announcement on the 30th May that it would defer payments on its perpetual bonds.
NWD’s 6.15% and 4.8% perpetuals fell to 23 cents and 15.5 cents on the dollar on 2nd June, suggesting the market is pricing in the possibility of a bust.

Makino Milling Machine (6135 JP): MBK’s Preconditional Offer Is Not the Likely Endgame