Daily Brief Equity Bottom-Up: NST’s $5B Deal: Most Expensive Undeveloped Gold Mine Ever and more

• De Grey acquiring Northern Star for $5 billion
• Northern Star issuing new shares to De Grey shareholders
• Transformational deal with potential for future spin-offs and M&A opportunities

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• Robosense Technology (2498 HK) has seen its sales of LiDAR solution systems grow substantially as it achieved the ability to mass produce for its customers.
• The company integrates proprietary hardware and software, creating a barrier to entry for most LiDAR competitors, who produce only the hardware system.
• Robosense announced a strong set of results for 3Q24 and expects to be profitable at some time in 2025.  The company has been actively buying back shares.
  

• Kioxia is planning to offer its IPO on 18 December 2024.  This Insight profiles Kioxia and its market.
• NAND flash, Kioxia’s product, is a commodity, and that results in dramatic price, revenue, and margin swings.
• Kioxia is in a joint venture that provides excellent scale economies which are offset by a supply agreement that amplifies troubles caused by oversupplies

• Artificial intelligence granted sovereign status, with autonomous decision-making capabilities, gaining power and authority.
• Fujifilm Taiwan expands by building a new plant in Hsinchu, while ASM grows in proximity to TSMC and suppliers in Taiwan.
• China issues a warning to Biden and Trump with an export ban on gallium and germanium, impacting US industries; Marvell sees strong 3Q24 results boosted by high demand for AI silicon.

• Rain Industries (RINDL IN) is the largest player of CTP and 2nd largest player of CPC in the world delivering loss due to downcycle in industry.
• CAQM enabled the import of GPC and CPC improved the pricing and demand further and also has created an opportunity for Rain Industries to ramp up its SEZ plant.
• Rain Industries is pivoting to future-ready sectors like EVs and batteries while addressing cyclical challenges. Focused debt reduction and strategic investments enhance its long-term growth potential despite near-term pressures.

• Gelsinger’s IDM 2.0 strategy will be up for debate by Intel’s BoD. Most likely it will be largely scaled back 
• The new CEO’s options will be limited by the legal agreements in place with Brookfield & Apollo, along with the restrictions imposed by the US DOC 
• Possible CEO candidates are the current Globalfoundries CEO, Tom Caulfield, former Intel board member Lip-Bu Tan and former Intel executive Stacy Smith, who recently joined Intel’s BoD

• GEM banks Bradesco, Hana and Bank of Baroda are buys due to deep value with positive returns catalysts; the sell on premium-valued Nubank is due to fundamental return headwinds emerging
• In the Japanese banks we identify Mizuho and Resona as key beneficiaries of higher benchmark rates going forward, alongside very attractive valuations and supported by strategic share portfolios
• CME Group is our 2025 pick in global exchanges, as a flow monster with a very strong competitive position; PagSeguro is the deep value, contrarian pick in payments

• Headline profit numbers for FY24 indicate a 38-40% decline from 110 mn HKD in FY23 to 65-69 mn HKD, including non-cash impairment/property revaluation losses amounting to 44.2 mn HKD. 
• The implication is that core profits would have been 109-113 mn HKD for FY24; a slight earnings growth at the upper end is admirable in a weak HK demand environment.
• Based on core earnings, the stock trades at 6x PE, >67% of the market capitalization in cash, and a 10% dividend yield. The company will release earnings on December 16th.

• Key regional partner for Veldona; a good start for Ainos’ out-licensing strategy.
• Ainos entered a strategic partnership with Taiwan Tanabe Seiyaku for Veldona in Sjogren’s syndrome.
• Under a memorandum of understanding (MOU), the collaboration aims to advance Veldona development by leveraging Taiwan Tanabe’s established expertise in drug manufacturing and Taiwan market promotion. 

• Aegis Logistics is India’s leading logistics player in Liquified Petroleum Gas (LPG/Propane) and Chemicals.
• It has demonstrated a stellar track record over past decade, delivering a 25% CAGR in EBITDA and Net profit, along with a 28% CAGR in dividend payouts.
• Given the strength of its partnership with Vopak and various capital expenditure lined up in medium term, it should continue to deliver robust operational and financial performance.