Daily Briefs

Hyundai Motor (005385 KS) is looking to raise around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
In our previous notes, we have looked at the company’s past performance and provided our thoughts on valuations. In this note, we talk about index inclusion.

Prices Dip Fast In India; Tire Makers Suffer In First Half Of FY 2024 25

By Vinod Nedumudy

NR prices surge over 33% YoY during April-August 2024
In FY 2024-25 Q1, operating margin of top five tire firms falls ~200 basis points to 14%
NR prices in downward trend in Oct amid a surge in supply

Morning Views Asia: Adani Green Energy, Medco Energi, Tata Motors ADR

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Adani Green Energy
Medco Energi
Tata Motors ADR

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief Japan: USS Co Ltd, Tokyo Metro, Rigaku Holdings, CELSYS, Nikon Corp, Nikkei 225, Medley and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%
Tokyo Metro IPO Valuation Analysis
Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap
Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
TOPIX Inclusions: Who Is Ready (Oct 2024)
Nikon (7731) | Eyeing the Future? Nikon and Essilor’s Partnership in AR
Rigaku Holdings (268A JP) IPO: Valuation Insights
EQD | The Nikkei Is At The Top But Could Rally A Bit More…
EQD | Nikkei 225 – Persistent Volatility Amid Election Uncertainty: Tactical Opportunities Explored
Medley (4480 JP): Strong Base Business; No Fear from Fx; Digital Healthcare Push to Benefit

USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%

Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering.
Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.

Tokyo Metro IPO Valuation Analysis

Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO.

Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.4bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025

Rigaku Holdings (268A JP) listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
At the reported indicative IPO price of JPY 1230/share, Rigaku Holdings (268A JP) will be valued at JPY 277.1bn (US$1.87bn).
The stock should be added to the TOPIX INDEX on 28 November while inclusion in global indices will take place in February and June next year.

TOPIX Inclusions: Who Is Ready (Oct 2024)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.

Nikon (7731) | Eyeing the Future? Nikon and Essilor’s Partnership in AR

By Mark Chadwick

Essilor’s investment underscores Nikon’s undervalued potential, spotlighting its advanced optical technologies as strategic growth drivers in emerging high-tech sectors like AR.
Nikon’s established expertise in precision optics is highly adaptable for AR applications, positioning the company to capitalize on rising demand for wearable and immersive technology.
Increased collaboration with EssilorLuxottica may enhance Nikon’s R&D capabilities, promising new innovations and potential revenue streams, which could strengthen Nikon’s profitability and share value long-term.

Rigaku Holdings (268A JP) IPO: Valuation Insights

Rigaku Holdings (268A JP) is Japan’s leading manufacturer of X-ray analysis, measurement, and testing instruments. It is seeking to raise up to US$737 million.
We previously discussed the IPO in Rigaku Holdings (268A JP) IPO: The Bull Case and Rigaku Holdings (268A JP) IPO: The Bear Case.
In this note, we discuss valuation. Our analysis suggests that Rigaku is attractively valued at the IPO price compared to peer multiples.

EQD | The Nikkei Is At The Top But Could Rally A Bit More…

By Nico Rosti

In our last Nikkei 225 insight we predicted that the Nikkei 225 INDEX was overbought and about to pullback and that is exactly what happened the following week.
We also reiterated our view about the index’s overall trend, not looking good, and the fact that our seasonal quantitative model point to a coin flip scenario (up/down) for October.
This week the index gapped up and the current SHORT pattern model is showing a good chance to rally from here. Let’s check how high it can go.

EQD | Nikkei 225 – Persistent Volatility Amid Election Uncertainty: Tactical Opportunities Explored

By Gaudenz Schneider

Nikkei 225 (NKY INDEX) volatility is trading at historically high levels, and the skew is steep.
National, regional and global catalysts provide the potential for further near-term market turbulence. Downside risk persists.
The current vol environment lends itself to tactical option trades, such as put spreads or risk reversals.

Medley (4480 JP): Strong Base Business; No Fear from Fx; Digital Healthcare Push to Benefit

By Tina Banerjee

Medley (4480 JP) is a safe bet for hiding from the negative impact of strengthening yen. The company should benefit from digital healthcare push from the newly elected Prime Minister.
Although Medley has reported mixed 2Q24 result, with robust topline and declining profitability, the long-term growth potential remains intact. The company guided for 43% YoY revenue growth in 2024.
Continued shortage of human resource, including doctors and nurses at medical care facilities in Japan and underpenetrated market remain the main growth engines of the company.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Most Read: Tokyo Metro, CPMC Holdings, Hyundai Motor, Tianjin Port, Korea Zinc, Arcadium Lithium , USS Co Ltd, Zhejiang Expressway Co H, KB Financial and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Tokyo Metro IPO – Thoughts on Valuation
CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?
WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade
7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value
Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps
Rio Tinto Taps Arcadium As Lithium Prices Sag
USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%
Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities
Tokyo Metro IPO Valuation Analysis
Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained

Tokyo Metro IPO – Thoughts on Valuation

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.3bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about valuations.

CPMC Holdings (906.HK) Privatization Update – Will ORG Withdraw Midway?

By Xinyao (Criss) Wang

Acquiring CPMC at low price is in line with Baosteel’s strategic goals and the new assessment indicators of Baowu Group. This explains why Baosteel didn’t choose to raise its Offer
ORG intends to acquire 100% equity of CPMC. This means state-owned capital needs to withdraw completely from CPMC. So, would China Foods/COFCO (both SOEs) agree to be acquired by ORG?
If ORG is “forced to” acquire CPMC due to Baosteel’s low Offer Price, will ORG change mind and choose to withdraw midway?Such “potential unwillingness” from ORG makes the deal “tricky”.

WisdomTree Emerging Markets High Dividend Index Rebalance: US$2.5bn Round-Trip Trade

The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.

7&I (3382) – Asset Sale News Designed to Get Shareholder Attention to Future Value

Seven & I Holdings (3382 JP) is currently “in limbo” as the initial Alimentation Couche-Tard (ATD CN) (“ACT”) has been rejected, some news is out, and we await earnings/presentations.
The news last week was that 7&i might sell down a stake in Seven Bank Ltd (8410 JP) and could sell its retail/superstore business to PE rather than an IPO.
Both selldowns mean the focus on CVS everyone seems to want. That’s good news. And the shares are trading at/below ACT terms which “grossly undervalued” the company. Bullish.

Korea Zinc: Breaking Down the Cancel Risk with Specific Legal Provisions for Both Camps

By Sanghyun Park

MBK is unlikely to lower the tender price or cancel the offer due to legal constraints and potential regulatory hurdles, along with compensating investors.
Just keep in mind that if you want to participate in MBK’s Korea Zinc offer, you’ll need to submit your bid to secure that compensation safety net.
We can’t rule out the second injunction request being accepted on the 21st, leaving Choi’s camp in a tough position with tender offer cancellation risks compared to MBK.

Rio Tinto Taps Arcadium As Lithium Prices Sag

Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition.
No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable.

USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%

Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering.
Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.

Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities

Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%.
The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month.
Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH). The question: how much more in the tank?

Tokyo Metro IPO Valuation Analysis

Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO.

Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained

By Sanghyun Park

This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Oct 08

Daily Brief Industrials: Zhejiang Expressway Co H, Tokyo Metro, China Boqi Environmental Hol, Orient Overseas International, Fluence Corp, Intloop and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities
Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap
Tokyo Metro IPO Valuation Analysis
Boqi Environmental (2377 HK): Privatisation by Management?
Charts & Context | From Here, What Can Get Better for Container Carriers? | Reduce Sector Exposure
Fluence Corp Ltd – The pipeline is being converted
Intloop (9556 Jp) – Turning a Corner with Improving Earnings Visibility
Fluence Corp Ltd – Timing delays mask growth progress

Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities

Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%.
The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month.
Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH). The question: how much more in the tank?

Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.4bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

Tokyo Metro IPO Valuation Analysis

Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO.

Boqi Environmental (2377 HK): Privatisation by Management?

China Boqi Environmental Hol (2377 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. The shares have been up 39% since 30 September.
It is likely that management, representing 59.59% of outstanding shares, is seeking to privatise Boqi through a Cayman scheme.
Sinopec, a pre-IPO investor potentially holding a blocking stake, is likely seeking to exit. At the last close, Boqi trades in line with the median peers’ P/B multiple.

Charts & Context | From Here, What Can Get Better for Container Carriers? | Reduce Sector Exposure

By Daniel Hellberg

We believe price momentum for global container carriers is unlikely to improve from here
As price momentum falters, carriers’ shares could continue to give back big gains
We would look for near-term opportunities to reduce or eliminate exposure to sector

Fluence Corp Ltd – The pipeline is being converted

RaaS Research Group has published a flash comment on environmental services company Fluence Corporation (ASX:FLC) following its announcement yesterday that it had secured a US$7.1m contract to provide a Sea Water Reverse Osmosis project for Stereau on Mayotte, a French archipelago in the Indian Ocean.
This material project for the Municipal division (MWW) is complemented by a US$1.5m contract win in the Industrial Wastewater & Biogas division (IWB) for a food processor in the US.
When combined with other recent successful tenders the new orders secured in the first 6 weeks of the current quarter total ~US$12m.

Intloop (9556 Jp) – Turning a Corner with Improving Earnings Visibility

By Astris Advisory Japan

Strong finish to FY7/24 and positioned to grow – Q1-4FY7/24results were ahead of revised company guidance, demonstrating a positive combination of acquisitive growth, price hikes for new consultancy work, and improving utilization rates.
The company has unveiled its ‘VISION 2030’ medium and long-term plan, focusing on margin expansion to accelerate earnings growth through sustained price increases and leveraging investments into technology, whilst maintaining expectations of stable double-digit growth in the mainstay consulting business.
Overall, we believe INTLOOP’s earnings trajectory is set to improve, with management showing a strategic focus to raise profitability.

Fluence Corp Ltd – Timing delays mask growth progress

RaaS Research Group has published an update report on water and wastewater treatment and solutions company Fluence Corporation (ASX:FLC) following its Q2 FY24 result and progress for H1 FY24 in which it reduced full year guidance for revenue of US$70-75m (previously US$90-100m) and EBITDA at breakeven (previously US$3.5-4.0m).The conversion of the pipeline remains key and management communicated its confidence on new contract wins, suggesting H2 FY24 and FY25 will be a “real proving ground” for the business.
Likewise, after a weak cashflow performance in Q2 FY24, with an operating cash outflow of $6.3m, the company has guided to a positive performance in H2 FY24.
We believe the balance sheet remains in a solid position to execute growth initiatives without the material debt burdens of the past.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief TMT/Internet: Intel Corp, Taiwan Semiconductor (TSMC) – ADR, CELSYS, WRKR, Carta Holdings, Inc., DataTec Ltd, Gorilla Technology Group , Kinatico , POET Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Lots More on the Ongoing Mess That Is Intel
All Is Not Well in Tech Sector, AI Growth Slows, TSMC Expensive. Samsung, SK Hynix More Attractive.
TOPIX Inclusions: Who Is Ready (Oct 2024)
Wrkr (ASX:WRK) Webinar Transcript 2 August 2024
Carta Holdings (3688 Jp) – 2Q FOLLOW-UP
Datatec – Encouraging H1 across all divisions
Gorilla Technology Group, Inc. – Thailand Projects Highlight Progress and Growth Potential
Carly Holdings – Fleet size up, sales up, costs up less
Kinatico (KYP) Webinar Transcript 2 August 2024
POET Technologies Inc – With Cash at 40 Million

Lots More on the Ongoing Mess That Is Intel

By Odd Lots

Intel is struggling, with a dismal stock performance and job cuts
The company’s risky and capital-intensive strategy may not be sustainable
The core business is no longer sufficient to support their strategic goals, leading to financial challenges and market share loss.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

All Is Not Well in Tech Sector, AI Growth Slows, TSMC Expensive. Samsung, SK Hynix More Attractive.

By Nicolas Baratte

The rally of the Asia Tech sector (+24% YTD) is highly concentrated in a handful of stocks. TSMC is up 64% but Samsung is down -22% YTD.
With the exception of AI, end-demand isn’t great. Smartphone up 8% but below 2019-21 level. PC flattish. x86 Server flattish. Telecom capex declining. Automotive electronics declining.
AI is the most disruptive trend since Cloud in 2010. Years of increasing Capex are in front of us. But short-term, stocks are properly valued to rich, growth is slowing.

TOPIX Inclusions: Who Is Ready (Oct 2024)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.

Wrkr (ASX:WRK) Webinar Transcript 2 August 2024

Wrkr presented at a RaaS-focused Coffee Microcaps Webinar on 2 August 2024

Carta Holdings (3688 Jp) – 2Q FOLLOW-UP

By Sessa Investment Research

Following the upward profit forecast revision announced alongside 2Q FY2024/12 earnings, the CARTA HD’s forward P/E ratio has settled at just over 20x, in line with peer average.
Over the past one to two fiscal periods, the Company’s share price was underpinned by its proactive shareholder return policy targeting a DOE of 5% while profits were weak, leading to an abnormal P/E ratio.
However, Sessa Partners believes the Company is entering a phase where further earnings improvement will likely drive a rerate in valuation, as profits have recovered to a reasonable level when assessed on a going concern basis.

Datatec – Encouraging H1 across all divisions

By Edison Investment Research

Datatec’s trading statement flags a robust performance at group level in H1. Westcon continues to deliver profit growth, Logicalis International delivered a strong increase in profitability while financial performance at Logicalis Latin America has also improved. As a result, management expects H1 underling EPS to be 11–12c, up over 50% year-on-year on a like-for-like basis. Our FY25 estimates are unchanged and look well supported.

Gorilla Technology Group, Inc. – Thailand Projects Highlight Progress and Growth Potential

By Water Tower Research

Successes in Thailand give management confidence in significant growth for Gorilla’s revenue and profitability.
Gorilla has partnered with CS Energy to form an AI-powered strategic alliance aimed at accelerating the development of smart and green cities across Thailand and the broader Southeast Asian region.
Additionally, Lanner Electronics and Gorilla have announced a joint venture to manufacture next-generation security convergence appliances in Thailand.

Carly Holdings – Fleet size up, sales up, costs up less

RaaS has published an update on vehicle subscription business Carly Holdings (ASX:CL8) following the release of its FY24 results which saw a 71% year-on-year increase in revenue to $3.6m, a 40% increase in gross profit to $1.15m and 22% increase in EBITDA loss to $3.57m.
Carly’s FY24 accounts underline the company’s success in growing fleet and subscriptions but highlights the drag which deploying vehicles as they are acquired necessarily has on the cost base.
Revenue was again up strongly but so were fleet-related costs, albeit at only slightly over half as much.

Kinatico (KYP) Webinar Transcript 2 August 2024

Kinatico presented at a RaaS-focused Coffee Microcaps webinar on 2 August 2024.

POET Technologies Inc – With Cash at 40 Million

By Zacks Small Cap Research

POET Technologies is a startup disrupting the photonics industry with a new technology that eliminates parts of an optical transceiver and replaces them with a single integrated device which is smaller, cheaper, faster, more scalable and with much lower power consumption than the current solutions.
It has a $50M joint venture with Sanan IC to make and sell optical engines to data centers and telecom.
Its solution can be produced at wafer scale, eliminating costly manual steps, and allowing it to be easily produced in large quantities and at low cost.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief Energy/Materials: Arcadium Lithium , Gold, Greatview Aseptic Packaging, Crude Oil, Godawari Power and Ispat, SGX Rubber Future TSR20, Alkane Resources, Iron Ore and more

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

In today’s briefing:

Rio Tinto Taps Arcadium As Lithium Prices Sag
Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light
MacroVoices #448 Luke Gromen: Why the Gold Recycling Trade is Accelerating
Greatview Aseptic Packaging (468.HK) Update – Some New Information Worth the Attention
Global Commodities: This time, it feels different
The Beat Ideas: GPIL- Low Cost Mining with Upcoming Steel Plant
Option Prices are Singing
Prices Dip Fast In India; Tire Makers Suffer In First Half Of FY 2024 25
ALK AU – Australian Gold Conference 2024 – Who and What did we find interesting at the event?
[IO Technicals Weekly 2024/40] Expanded China Stimulus Supports Bullish Iron Ore

Rio Tinto Taps Arcadium As Lithium Prices Sag

Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition.
No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week’s 11% bounce, has been rumoured. That implies a price of ~$6/share.
Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable.

Arcadium Lithium (ALTM US/LTM AU): Rio Tinto’s Rumoured Bid Is Light

In response to media reports, Arcadium Lithium (LTM AU) confirmed receiving a non-binding proposal from Rio Tinto Ltd (RIO AU). No terms were disclosed.
According to press reports, Rio aims to acquire Arcadium at a valuation range of US$4-6 billion (A$5.9-8.8 billion). Blackwattle thinks a fair price is closer to US$8 billion.
The rumoured valuation range is unattractive and arguably a bear case valuation assuming no significant recovery in lithium prices.

MacroVoices #448 Luke Gromen: Why the Gold Recycling Trade is Accelerating

By Macro Voices

S&P 500 futures down 33 basis points, showing signs of exhaustion
US dollar index up 67 basis points, driven by euro reversal
China’s unexpected outperformance in equities may be linked to US stimulus actions and coordination

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Greatview Aseptic Packaging (468.HK) Update – Some New Information Worth the Attention

By Xinyao (Criss) Wang

The loss of control over Greatview’s international business will lead to significant loss of Newjf’s interests,which is the most direct trigger of Newjf’s decision to initiate an acquisition of Greatview.
Newjf is actively fulfilling the Pre-Conditions and is now progressing smoothly. Newjf’s acquisition of Greatview is complied with the Anti-monopoly Law. Newjf will make every effort to complete the acquisition.
Greatview urges shareholders to reject Newjf’s Offer is not for the benefit of the entire company. The “true motives” behind are questionable. We advise investors to take Newjf’s Offer seriously.

Global Commodities: This time, it feels different

By At Any Rate

Brent oil futures trading in line with fair value, with bullish bias in options, as volume of bullish calls hit record high
Ongoing conflict between Israel and Iran raising concerns about further escalation, with recent attacks and strikes indicating potential for heightened tensions
Global oil inventories are significantly lower than in previous years, potentially impacting market dynamics and prices as demand and inventory levels play a key role

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

The Beat Ideas: GPIL- Low Cost Mining with Upcoming Steel Plant

By Sudarshan Bhandari

Godawari Power and Ispat (GODPI IN) is fully integrated steel manufacturer with a diverse portfolio encompassing iron ore mining, pellet production, sponge iron, steel billets, ferroalloys, and power generation.
Net Cash Balance Sheet, Mining Expansion, and upcoming Integrated Steel Plant provide huge potential for the captive consumption.
Execution of the capex plan within the stipulated timeframe is the key risk.

Option Prices are Singing

By Alpha Exchange

Option prices are a valuable tool for studying market trends and risk premium
Gold’s unique properties make it a valuable asset for portfolio diversification and defense against government chaos
The oil VIX index, OVX, provides insights into market risk and volatility in the oil market, with potential implications for broader market trends

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Prices Dip Fast In India; Tire Makers Suffer In First Half Of FY 2024 25

By Vinod Nedumudy

NR prices surge over 33% YoY during April-August 2024
In FY 2024-25 Q1, operating margin of top five tire firms falls ~200 basis points to 14%
NR prices in downward trend in Oct amid a surge in supply

ALK AU – Australian Gold Conference 2024 – Who and What did we find interesting at the event?

From time to time, RaaS Research produces non-commissioned research reports on industries and companies which we believe deserve attention.
Josh Baker attended the Australian Gold Conference last week and found eight stocks he believes have clear catalysts for a re-rate.None of these companies are currently covered by RaaS.

[IO Technicals Weekly 2024/40] Expanded China Stimulus Supports Bullish Iron Ore

By Pranay Yadav

SGX Iron Ore futures surged by $5.64/ton last week, with prices peaking at $113.55/ton on 30 Sept amid China’s expanded stimulus measures.
Short-Term moving averages signal a bullish trend, with the 9-day MA crossing the 100-day MA on 4 Oct, indicating further upward momentum.
Overbought conditions, with RSI nearing 70, suggest caution, and a tight stop loss remains advisable as support at $105/ton remains weak.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief Industrials: Zhejiang Expressway Co H, Tokyo Metro, China Boqi Environmental Hol, Orient Overseas International, Fluence Corp, Intloop and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities
Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap
Tokyo Metro IPO Valuation Analysis
Boqi Environmental (2377 HK): Privatisation by Management?
Charts & Context | From Here, What Can Get Better for Container Carriers? | Reduce Sector Exposure
Fluence Corp Ltd – The pipeline is being converted
Intloop (9556 Jp) – Turning a Corner with Improving Earnings Visibility
Fluence Corp Ltd – Timing delays mask growth progress

Zhejiang Expressway (576 HK): “Cheap” Access To Zheshang Securities

Since Guotai Junan Securities (2611 HK) and Haitong Securities Co Ltd (H) (6837 HK) were suspended around a month ago, pending a merger, a basket of peers are up 37%.
The Shanghai Composite is up 21%. Volumes are up, commissions are up. Citic Securities (600030 CH), the largest broker by market cap, is up 42% in the past month.
Zhejiang Expressway (576 HK) is also up ~45% in recent weeks due to its 40.3% look-through stake in Zheshang Securities (601878 CH). The question: how much more in the tank?

Tokyo Metro IPO – Will Price at the Top, but Isn’t Particularly Cheap

Tokyo Metro (9023 JP)‘s shareholders aim to raise up to US$2.4bn in its Japan IPO.
Tokyo Metro (TKM) is one of the two metro network operators in the Tokyo region. It operates nine subway lines with a total of 180 stations.
We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

Tokyo Metro IPO Valuation Analysis

Tokyo Metro set the IPO price range at 1,100 to 1,200 Yen per share. At the top end of the range, Tokyo Metro would raise 349 billion yen ($2.35 billion).
Our base case valuation of Tokyo Metro is implied target price of 1,178 yen per share. This is within the top end of the IPO price range (1,200 yen).
Given the lack of upside relative to the IPO price range, we have a Negative view of this IPO.

Boqi Environmental (2377 HK): Privatisation by Management?

China Boqi Environmental Hol (2377 HK) entered a trading halt based on the Hong Kong Code on Takeovers and Mergers. The shares have been up 39% since 30 September.
It is likely that management, representing 59.59% of outstanding shares, is seeking to privatise Boqi through a Cayman scheme.
Sinopec, a pre-IPO investor potentially holding a blocking stake, is likely seeking to exit. At the last close, Boqi trades in line with the median peers’ P/B multiple.

Charts & Context | From Here, What Can Get Better for Container Carriers? | Reduce Sector Exposure

By Daniel Hellberg

We believe price momentum for global container carriers is unlikely to improve from here
As price momentum falters, carriers’ shares could continue to give back big gains
We would look for near-term opportunities to reduce or eliminate exposure to sector

Fluence Corp Ltd – The pipeline is being converted

RaaS Research Group has published a flash comment on environmental services company Fluence Corporation (ASX:FLC) following its announcement yesterday that it had secured a US$7.1m contract to provide a Sea Water Reverse Osmosis project for Stereau on Mayotte, a French archipelago in the Indian Ocean.
This material project for the Municipal division (MWW) is complemented by a US$1.5m contract win in the Industrial Wastewater & Biogas division (IWB) for a food processor in the US.
When combined with other recent successful tenders the new orders secured in the first 6 weeks of the current quarter total ~US$12m.

Intloop (9556 Jp) – Turning a Corner with Improving Earnings Visibility

By Astris Advisory Japan

Strong finish to FY7/24 and positioned to grow – Q1-4FY7/24results were ahead of revised company guidance, demonstrating a positive combination of acquisitive growth, price hikes for new consultancy work, and improving utilization rates.
The company has unveiled its ‘VISION 2030’ medium and long-term plan, focusing on margin expansion to accelerate earnings growth through sustained price increases and leveraging investments into technology, whilst maintaining expectations of stable double-digit growth in the mainstay consulting business.
Overall, we believe INTLOOP’s earnings trajectory is set to improve, with management showing a strategic focus to raise profitability.

Fluence Corp Ltd – Timing delays mask growth progress

RaaS Research Group has published an update report on water and wastewater treatment and solutions company Fluence Corporation (ASX:FLC) following its Q2 FY24 result and progress for H1 FY24 in which it reduced full year guidance for revenue of US$70-75m (previously US$90-100m) and EBITDA at breakeven (previously US$3.5-4.0m).The conversion of the pipeline remains key and management communicated its confidence on new contract wins, suggesting H2 FY24 and FY25 will be a “real proving ground” for the business.
Likewise, after a weak cashflow performance in Q2 FY24, with an operating cash outflow of $6.3m, the company has guided to a positive performance in H2 FY24.
We believe the balance sheet remains in a solid position to execute growth initiatives without the material debt burdens of the past.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief Consumer: USS Co Ltd, MDL Wholesale, Nikon Corp, Pacific Textiles, Ppb Group, Cash Converters Intl, Nvr Inc, Ola Electric, Hyundai Motor India and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%
MDL Wholesale Pre-IPO – IPO Redux
Nikon (7731) | Eyeing the Future? Nikon and Essilor’s Partnership in AR
HK-Listed Apparel & Footwear Screener: Attractive Yield & Rapid Expansion Outside China – Oct 2024
WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: US$300m Round-Trip Trade
Cash Converters International – Growth and value
Portfolio Update: September 2024
Ola Electric: Price-Cut Gamble, Social Media Blunders, Slipping Sales – Is the Spark Fading?
Hyundai Motor India Pre-IPO – Index Inclusion Won’t Have Near-Term Impact
USS Placement – Buyback and Decent Momentum Will Aid Dynamics

USS (4732 JP) – Small Offering on ‘Growth Darling’ – Buyback Offsets 50%

Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering.
Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.

MDL Wholesale Pre-IPO – IPO Redux

By Nicholas Tan

MDL Wholesale Limited is looking to raise about US$100m in its upcoming Hong Kong IPO.
MDL is a leading food and FMCG distribution solution provider in China.
In this note, we look at the firm’s past performance.

Nikon (7731) | Eyeing the Future? Nikon and Essilor’s Partnership in AR

By Mark Chadwick

Essilor’s investment underscores Nikon’s undervalued potential, spotlighting its advanced optical technologies as strategic growth drivers in emerging high-tech sectors like AR.
Nikon’s established expertise in precision optics is highly adaptable for AR applications, positioning the company to capitalize on rising demand for wearable and immersive technology.
Increased collaboration with EssilorLuxottica may enhance Nikon’s R&D capabilities, promising new innovations and potential revenue streams, which could strengthen Nikon’s profitability and share value long-term.

HK-Listed Apparel & Footwear Screener: Attractive Yield & Rapid Expansion Outside China – Oct 2024

By Sameer Taneja

The HK market is moving, and the share prices of high-yield companies are increasing. Despite the average YTD returns of 36%, stocks are trading at 5-18% dividend yields.
We await the November results of Pacific Textiles (1382 HK), which we will soon initiate coverage on.
We note that Yue Yuen Industrial Holdings (551 HK) continues with its buybacks, having repurchased 3.2 million shares (0.2% of outstanding shares) since August 28th, 2024.

WisdomTree Emerging Markets Ex-State-Owned Enterprises Index Rebalance: US$300m Round-Trip Trade

The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
There are 154 adds and 80 deletes for the index with an estimated round-trip trade of US$300m.

Cash Converters International – Growth and value

RaaS has published an update report on consumer finance group Cash Converters International (ASX:CCV) following the release of its FY24 results which saw 26% growth in revenue on the pcp and EBITDA growth of 21% in line with our forecasts.
The gross loan book grew 6% to $288m, which we find impressive as the business transitions away from SACC products due to regulatory change.
This was more than offset by growth in other products, domestically and internationally.

Portfolio Update: September 2024

By Contrarian Cashflows

This month, I had the privilege of attending an investment conference, where I engaged with many successful value investors and independent thinkers.
During one conversation, an investor jokingly remarked that everyone seems to have shifted toward “quality growth investing,” while he and Mr. Robotti appear to be among the few who still favor cyclical stocks, such as Tidewater Inc.
Although I don’t generally shy away from cyclical stocks, I recognize the immense challenge of navigating the capital cycle by investing in companies that seem on the brink of failure.

Ola Electric: Price-Cut Gamble, Social Media Blunders, Slipping Sales – Is the Spark Fading?

By Devi Subhakesan

Ola Electric (OLAELEC IN)‘s aggressive price cuts on its S1 scooter aim to fend off competition and boost sales but risk alienating existing customers and damaging brand perception.
Ola Electric’s mishandling of online criticism—capped by its CEO’s heated spat with a well-known comedian—has tarnished the brand’s image.
With market share and stock prices dropping, concerns loom over how the company will fare after lock-up expiry in November/February and whether it will qualify for global index inclusion.

Hyundai Motor India Pre-IPO – Index Inclusion Won’t Have Near-Term Impact

Hyundai Motor (005385 KS) is looking to raise around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
In our previous notes, we have looked at the company’s past performance and provided our thoughts on valuations. In this note, we talk about index inclusion.

USS Placement – Buyback and Decent Momentum Will Aid Dynamics

By Clarence Chu

Nomura Trust (the retirement benefit trust account for MUFG) is looking to raise US$132m via selling some shares in USS Co Ltd (4732 JP).
While the deal appears somewhat well flagged, given that its part of the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
In this note, we will talk about the placement and run the deal through our ECM framework.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief Financials: KB Financial, Bright Smart Securities And, Nikkei 225, CAD, Pioneer Credit, USD and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained
Bright Smart Securities (1428.HK) – Monday, Jul 8, 2024
EQD | The Nikkei Is At The Top But Could Rally A Bit More…
EQD | Nikkei 225 – Persistent Volatility Amid Election Uncertainty: Tactical Opportunities Explored
Global FX: It was hard enough in the first place
Pioneer Credit Ltd – Refinancing completed
US Rates: The Fall Classic

Korea Value-Up Index: Detailed Methodology, Weights, Float Rates, & Passive Impacts Obtained

By Sanghyun Park

This post dives into the official details of the Korea Value-Up Index methodology that I obtained from KRX. Plus, it has the official weights and free-float rates for each constituent.
The 3rd and 4th Phases led to surprising stocks entering the index, causing drops for KB and Hana, while SK Hynix benefited from the Exception Application rule.
The index’s straightforward methodology suggests low rebalancing uncertainty, but flexible Special Entry rules and upcoming December changes may add unpredictability, targeting bank stocks like KB, Hana, and JB.

Bright Smart Securities (1428.HK) – Monday, Jul 8, 2024

By Value Investors Club

Bright Smart Securities is a successful brokerage firm in Hong Kong founded by Mow Lum Yip in 1995 and publicly listed in 2010
The company has shown steady growth since its IPO, with impressive increases in revenue and net income
Despite a challenging market environment in Hong Kong, Bright Smart has maintained stable results, grown its client base and assets under management, and pays out all earnings in dividends, with dividends exceeding net earnings over the last 5 years.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

EQD | The Nikkei Is At The Top But Could Rally A Bit More…

By Nico Rosti

In our last Nikkei 225 insight we predicted that the Nikkei 225 INDEX was overbought and about to pullback and that is exactly what happened the following week.
We also reiterated our view about the index’s overall trend, not looking good, and the fact that our seasonal quantitative model point to a coin flip scenario (up/down) for October.
This week the index gapped up and the current SHORT pattern model is showing a good chance to rally from here. Let’s check how high it can go.

EQD | Nikkei 225 – Persistent Volatility Amid Election Uncertainty: Tactical Opportunities Explored

By Gaudenz Schneider

Nikkei 225 (NKY INDEX) volatility is trading at historically high levels, and the skew is steep.
National, regional and global catalysts provide the potential for further near-term market turbulence. Downside risk persists.
The current vol environment lends itself to tactical option trades, such as put spreads or risk reversals.

Global FX: It was hard enough in the first place

By At Any Rate

US economic growth has shown exceptional resilience, with a strong payrolls report and other positive macroeconomic factors
Higher US yields may put pressure on dollar shorts and lead to a potential capitulation in those positions
Canadian dollar baskets may outperform in this environment, with higher US yields benefiting the CAD

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Pioneer Credit Ltd – Refinancing completed

RaaS Research Group has published an update on ethically-motivated, diversified financials group Pioneer Credit (ASX:PNC) following the company’s announced new $272.5m four-year syndicated senior finance facility.
Our base case valuation has increased to $250m (previously $217m) or $1.94/share due to lower finance costs in FY26 (down $8m to c.
$20m) and ongoing.

US Rates: The Fall Classic

By At Any Rate

Labor market data challenges notion of slowing labor demand and jolts
Fed policy expectations shift to 25 basis point cut in November
Uncertainty in policy outcomes causing high policy uncertainty and potential for large market moves

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Oct 08

Daily Brief Health Care: Rigaku Holdings, Medley, Recordati SpA, Actinogen Medical and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025
Rigaku Holdings (268A JP) IPO: Valuation Insights
Medley (4480 JP): Strong Base Business; No Fear from Fx; Digital Healthcare Push to Benefit
Recordati – ESG Report – Lucror Analytics
Actinogen Medical – Funding in place to complete XanaMIA Phase IIb

Rigaku Holdings (268A JP) IPO: TOPIX Inclusion in November; Global Indices in 2025

Rigaku Holdings (268A JP) listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 25 October.
At the reported indicative IPO price of JPY 1230/share, Rigaku Holdings (268A JP) will be valued at JPY 277.1bn (US$1.87bn).
The stock should be added to the TOPIX INDEX on 28 November while inclusion in global indices will take place in February and June next year.

Rigaku Holdings (268A JP) IPO: Valuation Insights