This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. Intel. Could Things Get Any Worse? You Bet. Here’s How.
- Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
- The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
- Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock
2. Intel Cancels 20A. Now Why Would They Go & Do That?
- Intel’s CFO says the company is going to “kind of skip over productizing 20A”
- This decision removes an important, looming milestone from Intel’s roadmap, i.e. the ramp of Arrow Lake later this year
- The decision to outsource all Arrow Lake tiles, apart from final packaging, strongly suggests that Intel 3 and Intel 18A are not capable of a cost-competitive volume ramp
3. TSMC (2330.TT; TSM.US): Benefiting from Intel (INTC.US) Skipping 20A Process.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) will benefit from Intel Corp (INTC US)‘s decision to use their 20A processor, named Arrow Lake.
- Intel plans to stick with the 18A process and has identified about 5 potential customers.
- As of now, TSMC remains the primary source for technology deliveries.
4. Taiwan Tech Weekly: Nvidia’s SG Revenue Red Flag; Rise of Custom Silicon; SEMICON Taiwan This Week
- Latest Industry Signals — Nvidia Crashed While Marvell Soared… Custom Silicon a Threat to Nvidia’s Monster Growth? Taiwan AI/Server Exposed Names Were a Mixed Bag of Performance
- Key Events to Watch — SEMICON Taiwan This Week, We Will Be Attending
- Perspective — NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
5. Hotchips Conference Sparknotes
- Hot Chips this year was primarily about AI chips (per the theme of every semiconductor conference as of late).
- The most impactful presentation by far was the Broadcom CPO presentation, SuperMicro water cooling, MTIA, and some honorable mentions to Enfabrica and Dojo/Mojo from Tesla.
- The biggest disappointment was AMD, which presented nothing incremental and, of course, the CPU announcements.
6. Vanguard (5347.TT): The Outlook of 4Q24 Seems a Bit Softer.
- The 4Q24 is slightly on the downside, and we are currently adopting a somewhat conservative approach.
- Visibility extends for no more than 3 months, and any increase in demand is primarily driven by urgent orders.
- As for the upcoming 12″ Fab, which is in collaboration with Nxp Semiconductors Nv (NXPI US), it has commenced local recruitment efforts in Singapore.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Midea Group H Share Listing: AH Discount Views
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
- In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.
2. Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- Midea is the world’s largest home appliance company in sales volume and revenue in 2023. Its subsidiary, KUKA Group, is one of the world’s “big four” industrial robotics companies.
- The PHIP update shows that the business is in good health, with accelerating growth, rising margins, and strong cash generation. Therefore, a premium multiple to peers is justified.
3. Midea: Thoughts on HK Listing and Valuation
- Chinese appliance maker Midea’s application to list its shares on the HKEx has been approved and the company plans to list up to 10% of its shares to raise $4bn.
- Midea Group Co Ltd A (000333 CH) has a diversified product portfolio, well-balanced exposure to domestic as well as overseas markets and M&A’s that have helped significantly grow its business.
- Our analysis on previous secondary listings of Chinese-listed companies on HKEx shows that the HK listings were priced at a significant discount to their A-Shares.
4. Key Things to Watch in Ecopro HN’s Big Rights Offering
- Ecopro HN announced a ₩200 billion rights issue, offering 5.67 million shares (a 40% capital increase) with a stockholder allocation rate of 0.3 per share.
- The extended timeline likely results from the issuer’s 20% discount push, with Daishin, an underdog banker, extending it to boost subscriptions despite risking price stability.
- The strategy is to time entry when the stock rights and subscription costs create a solid spread versus the spot price, despite increased volatility making price predictions harder.
5. Hamamatsu Photonics Placement – Peculiar Timing
- Toyota Motor (7203 JP) aims to raise around US$190m via selling over a 4% stake in Hamamatsu Photonics Kk (6965 JP).
- This is another cross-shareholding unwind and hence, won’t be a huge surprise. Although given the recent share price weakness, the timing appears peculiar.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
6. Bajaj Housing Finance IPO – Will Trade at a Premium
- Bajaj Housing Finance (BHF IN) is looking to raise around US$800m in its India IPO.
- BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
- In our previous notes, we looked at the company’s past performance. In this note, we will talk about valuations.
7. Premier Energies IPO Trading – Very Strong Insti Demand, Looks Ready to Pop
- Premier Energies Limited (0377949D IN) raised around US$337m after pricing the deal at the top end of the range at INR450 / share.
- It also executes engineering, procurement, and construction (EPC) projects and provides follow-up operation and maintenance (O&M) services.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.
8. CICT Placement – Accretive Acquisition, Should Be Favored by Existing Unitholders
- Capitaland Integrated Commercial Trust (CICT SP) is looking to raise around S$350m (US$267m) in its primary placement. Included in the issuance is a preferential offering to raise an additional S$757m.
- The proceeds will be geared towards acquiring a 50% interest in the ION Orchard mall from its Sponsor.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
9. Midea Group: Initial Thoughts on the Hong Kong IPO Listing
- Midea Group Co Ltd A (000333 CH) is getting ready for a Hong Kong IPO listing, trying to raise at least US$3 billion.
- Midea Group is trading a relatively attractive valuations. It is trading at P/E of 11.8x, EV/EBITDA of 8.1x, and P/B of 2.5x based on 2024 consensus earnings estimates.
- In the past five days, Midea’s price is down 2.3%. Some investors have been selling shares in Midea due to concerns about higher discount price offered at HK IPO listing.
10. The Born Korea IPO Preview
- The Born Korea is getting ready to complete its IPO in Korea in November. The total IPO offering is expected to range from 69 billion won to 84 billion won.
- Based on the bankers’ valuation, the expected market cap of the company ranges from 357 billion won to 419 billion won.
- The Born Korea was founded by Baek Jong-Won, the most famous celebrity chef in Korea.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.
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1. Artisan Partners Writes a Letter To the 7&I Board (3382) – Meh…
- On 30 August, 7&i shareholder Artisan Partners (holder since 2019, now at 1%) wrote an open letter to the Board of Directors of Seven & I Holdings (3382 JP)
- There are several comments in bold. “It is imperative that the board of directors negotiate with ACT immediately to achieve the best possible outcome for shareholders” is one.
- The letter is a bit preachy, a bit fluffy, and a bit misleading in parts. But it requests the Company brief shareholders on the negotiations by 19 September 2024.
2. Sep24 Nikkei 225 Rebal – Last Minute Thoughts and Change in Predictions
- The last two reviews have been announced on the second business day of the month of the review. The one before that on the third business day.
- The review could be announced today or tomorrow. Wednesday would seem to be “late.”
- There are still questions about implementation – thus “care” in previous insights. Here I explore the possibilities/probabilities/issues around the edges. And a Dark Horse which may be lighter than thought.
3. China ETF Inflows & Implications: YTD Inflows Near US$100bn
- Nearly US$100bn has flowed into mainland China listed ETFs year to date and could be driven by the National Team led by Central Huijin supporting the market.
- Nearly all the net inflows have been focused on the CSI 300, CSI 1000, CSI 500, SSE50, ChiNext and STAR50 indices. Flows to sector ETFs have been mixed.
- Over 70% of the net inflows have gone to the CSI 300 Index with another 18% going to the CSI 500 Index and CSI 1000 Index.
4. Select Sector Indices – Updated Flows as Round-Trip Trade Hits US$35bn
- The changes to the S&P 500 INDEX (SPX INDEX), S&P400 Index and S&P600 Index will be announced after market close on Friday.
- The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.
- Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the XLP and XLK.
5. Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT
- Today, the Nikkei Index Committee decided to delete Nippon Paper (3863) for low liquidity, and DIC (4631) for sector over-representation, and added Nomura Research Institute (4307) and Ryohin Keikaku (7453).
- The only auto-delete was Nippon Paper. The DIC delete was “discretionary.” But they could have done a third. Why did they not do a third change? I do not know.
- The whole shebang should be ¥350-375bn a side. At current price, Fast Retailing is set for another capping (selling) event in March 2025. And there is one shoo-in then too.
6. HSI, HSCEI, HSTECH, HSIII: Rebalance Flows Post Capping (Sep 2024)
- The September 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 will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$18.1bn (US$2.3bn).
- Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.
7. India: Index Implications of Additions to the F&O Segment
- Following SEBI’s review of eligibility criteria for entry/exit of stocks in the derivatives segment, there could be 18 deletions/79 inclusions in the F&O segment over the next 6 months.
- The introduction of some stocks in the F&O segment could lead to their inclusion in the NIFTY, SENSEX, Nifty Bank and CNXIT indices and weight changes in the Nifty Next50.
- The inclusion of stocks in indices with a fixed number of constituents will result in deletion of some stocks from these indices. There should be methodology changes too.
8. CPMC Holdings (906.HK) Privatization Update – ORG Is Pushing Baosteel to Raise Its Offer
- Huarui Offer has been approved by SAMR, which marks a solid step forward.Meanwhile, ORG’s management stated that the reduction of Huangshan Novel shares is to raise funds to acquire CPMC.
- While Baosteel may want to “test the waters”, the signals ORG is sending is it will make every effort to advance the acquisition of CPMC and is accelerating the process.
- The return on Huarui Offer isn’t attractive.We recommend waiting for Baosteel to raise its Offer, or simply choosing to add more positions in China TCM, whose privatization is more lucrative.
9. STAR50/STAR100 Index Rebalance: Adds Rally, Deletes Drop as Positioning Builds Up
- There are 2 constituent changes for the STAR50 INDEX and 6 changes for the STAR100 Index at the September rebalance that will be implemented at the close on 13 September.
- There are no surprises for the SSE STAR50 (STAR50 INDEX) while there are 3 surprise adds for the STAR100 Index with the profitability criterion being ignored.
- The adds to the SSE STAR50 (STAR50 INDEX) have outperformed the deletes over the last month and positioning is larger in some stocks compared to others.
10. Nikkei 225 Index Rebalance: NRI, Ryohin Keikaku IN; Nippon Paper, DIC OUT; Fast Retailing Capped
- Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX).
- Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!)
- Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Best Of: How Dubai is reshaping the global oil trade
- Correspondent Tom Wilson visited Fujairah, a booming port city in the UAE where oil trading has exploded in recent years
- Western sanctions on Russian oil exports have led to a redirection of global energy flows, with the UAE emerging as a major energy trading hub
- Switzerland has historically been a top location for commodity traders due to its banking secrecy and political neutrality, but the rise of UAE as an oil trading hub is shifting the balance of power in oil markets
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
2. Tactical Trading – Time to Sell Japan Again
- Act II of the drama begins and continues from where it left off in early August
- Sentiment has changed – bad news really is bad news
- With >100 basis points of cuts already priced in before year end…
3. Corporate Value Up in Korea – Focus On Reducing Outstanding Shares and Comparison to M7
- In this insight, we compare the outstanding shares changes in the Korean stock market (KOSPI and KOSDAQ) relative to M7 (Magnificent 7) companies.
- In Korea, there are more companies such as Samsung C&T, KB Financial, and KT&G that are actively reducing their outstanding shares and investors are rewarding them with higher share prices.
- Top 10 companies in KOSPI that reduced their outstanding shares (from end of 2019 to 5 Sept 24) experienced average share price increase of 116% on average in this period.
4. Steno Signals #115 – The head-fake business cycle strikes again
- Happy Sunday from Copenhagen.
- Almost exactly a year ago, we wrote about the “roadmap to a recession” and how the market wrongly anticipated a near-term recession going into 2025.
- We also labeled the increasing re-inflation and manufacturing momentum a head-fake during the spring as the credit growth never truly supported a comeback to the most cyclical parts of the economy.
5. August Themes and Thematic Portfolio Review
- A monthly review of how the markets and our themes are currently performing
- Analysing what went wrong and what went right in stocks and sectors
- Highlighting positions added or removed from the thematic investment portfolio
6. JAPAN: No Lifeguard on Duty, Swim at Your Own Risk
- BOJ sows confusion with hawkish and dovish statements regarding its tightening policy. On a USD-basis the Japan market failed again to break its long-term resistance indicating a “Dead Cat Bounce”.
- Auto and Semiconductor sectors pressured by US trade policies and Trading Companies are affected by JPY strength. US rejection of Nippon Steel Corporation (5401 JP)merger affects Japan steel sector.
- Higher domestic yields is a catalyst to reverse the large money flows from Japan during the Kuroda years.
7. China’s Volatile Consumption Sector
- China consumption patterns are divergent; slowing and becoming more volatile at a sub sector level.
- Less certainty over new employment and wage growth, plus wealth worries over housing are some of the causes.
- We forecast GDP to slow in H2 and be 4.0% in 2025.
8. China Hard Landing Scenario
- We see a 30% probability of a harder landing in China GDP growth in 2025, which we most likely be in the 3-4% region but could persist into 2026.
- A large than projected slowdown in consumption would be a key concern, alongside persistently moderate negative deductions from residential investment.
- Negative inflation would only worsen this situation, while China authorities appear reluctant to go beyond targeted extra policy support towards aggressive action.
9. India GDP Review: A Bearish Start to FY25
- India’s GDP growth slowed to 6.7% yr/yr in Q1 FY25, falling short of expectations, as reduced public spending during the election period weighed on economic activity.
- Strong private consumption and investment provided some support, but a decline in manufacturing growth and weak external trade dampened overall momentum.
- Looking ahead, easing inflation, improved farm output, and a rebound in government spending are expected to drive growth in the coming quarters.
10. The Week At A Glance: No one trusts the July job report, but should they?
- Happy Labor Day! In this article, we are going to look into a feisty week of economic releases from the US economy given the backdrop of our nowcasting slowing considerably into September again.
- Our congestion based data has remained at muted growth levels, while the taxation data is starting to re-weaken, which is interesting into an otherwise strong tax season in September.
- Chart of the week: The Macro Environment is weakening in the US. Looking at the week ahead, we are on growth, liquidity, and inflation watch, especially focusing on the US.
SINGAPORE, 3 September 2024: Smartkarma, a leading global investment intelligence platform, has announced the acquisition of Helixtap, a prominent global commodities alternative data and insights platform. This acquisition marks a significant milestone in Smartkarma’s strategy to broaden its market presence and enhance its proprietary data services across critical global commodity supply chains.
The acquisition underscores Smartkarma’s commitment to expanding its proprietary data capabilities and institutional coverage, particularly within the commodity and alternative data markets. By integrating Helixtap’s specialized insights and analytics, Smartkarma aims to deliver unparalleled value to its clients and stakeholders through enriched data offerings and enhanced market intelligence into commodities, as well as the related and fast-growing global electric vehicle market.
Raghav Kapoor, CEO of Smartkarma, expressed enthusiasm about the acquisition: “Helixtap brings its commodity DNA to Smartkarma, broadening our customer base, expanding our revenue opportunities, and underscoring our focus on proprietary data. With smart ideas and sound karma, we can cultivate a highly successful outcome.” Kapoor’s statement highlights the strategic alignment between the two companies, emphasizing the growth and innovation potential this acquisition represents.
Helixtap, headquartered in Singapore, is renowned for its expertise in the commodities sector, particularly in pricing complexities related to natural rubber, automotive, and EV industries. Farah Miller, CEO of Helixtap and now Head of Commodity Sales at Smartkarma, commented on the acquisition: “Being a part of Smartkarma marks a pivotal point in the Helixtap journey, empowering us in providing a wider range of innovative solutions to tackle the pricing complexities in the natural rubber industry, and greater automotive and EV sector. We look forward to leveraging synergies, unlocking new opportunities and driving even greater value for our clients and stakeholders together.”
The strategic goals behind this acquisition are multi-faceted. By combining Smartkarma’s extensive institutional coverage with Helixtap’s specialized commodity insights, the combined entity will enhance its ability to offer comprehensive data assessments and analytics. This strategic blend is particularly timely, given the rapidly shifting dynamics in the global commodities market.
The acquisition comes at a time when we are witnessing an inflection in the demand for rubber amidst higher volatility, La Nina impacts and other supply disruptions. Additionally, new EU deforestation regulations (EUDR) are impacting the supply chain, alongside a strategic focus by various countries on the electric vehicle market and more funds growing their commodities desks.
Smartkarma and Helixtap both share a strong commitment to leveraging technology to drive industry-leading insights and solutions. As one of Asia’s leading firms across important sectors of the economy, including equities and commodities markets, this acquisition positions the combined entity at the forefront of financial and market intelligence innovation.
Smartkarma’s acquisition of Helixtap represents a pivotal development in the investment and commodities intelligence landscape. As the financial and commodities markets continue to evolve, this strategic move positions Smartkarma as a leading provider of comprehensive, technology-driven data solutions, equipped to meet the growing demands of its diverse client base.
—–ENDS—–
Media Contact
Arham Jain
Email: [email protected]
About Smartkarma
Smartkarma is a global investment intelligence platform based in Singapore. It provides institutional investors with actionable insights, high-touch analyst access and specialist data subscriptions to make informed investment decisions. With a focus on innovation and technology, Smartkarma offers a wide range of data solutions and analytics across various sectors, including equities and commodities. Smartkarma Shareholders include the Singapore Exchange (SGX), Enterprise Singapore Seeds Capital, Peak XV (formerly Sequoia Capital), Wavemaker and Jungle Ventures. Learn more at smartkarma.com.
About Helixtap
Helixtap is a global commodities alternative data and insights platform headquartered in Singapore. Specializing in pricing complexities and market dynamics, Helixtap provides cutting-edge solutions and analytics for the natural rubber industry, automotive sector, and electric vehicle market. The company is known for its expertise in delivering accurate and actionable data to support decision-making across the commodities landscape. Helixtap’s clients include a mixture of clients in the physical and financial commodities markets globally comprising financial institutions, exchanges, commodities Trading desks and funds. Learn more at helixtap.com.
This press release is intended for informational purposes and provides an overview of the acquisition between Smartkarma and Helixtap. For more detailed information or to arrange interviews, please reach out to the contact listed above.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.
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1. NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
- NVIDIA delivered another blockbuster quarter with record revenues of $30 billion, blowing well past the guided $28 billion, up 15% QoQ and up 122% YoY.
- $5.6 billion in revenues were attributed to Singapore, making up more than 18% of overall revenues and up >5 times YoY
- What the heck is the city state doing with all of those GPUs?
2. TSMC (2330.TT; TSM.US): 2024 Top Clients
- TSMC’s top 5 clients for 2024 are Apple (AAPL US), Advanced Micro Devices (AMD US, Qualcomm Inc (QCOM US), Mediatek Inc (2454 TT) and NVIDIA Corp (NVDA US).
- Smartphone orders continue to dominate at TSMC, with QCOM and MediaTek being key clients.
- Looking ahead to 2025, Intel Corp (INTC US) is expected to rely more on TSMC, potentially leading to changes in TSMC’s client ranking.
3. Taiwan Dual-Listings Monitor: TSMC Maintaining Strong Premium; UMC Headroom Continues to Decrease
- TSMC: +15.4% Premium; Wait for Closer to 20% Before Opening Fresh Short
- UMC: +1.2% Premium; Can Consider Shorting at 1.5% or Higher; Headroom Continues to Decrease
- ASE: +5.2% Premium; Wait for More Extreme Levels Before New Trade
4. Taiwan Tech Weekly: Nvidia Results Imminent; Apple IPhone 16 Reveal Date; Micron’s Taiwan Expansion
- Nvidia, Dell, Marvell results coming out this week.. Apple iPhone 16 Reveal September 9th?
- Micron progressing on potential Taiwan capacity expansion due to strong HBM DRAM demand
- AMD acquires a key U.S. server systems integrator, expanding its enterprise server opportunity in a market including Taiwan’s server ODM players such as Hon Hai, Wiwynn, Inventec, Quanta, and Compal.
5. Intel Missed the Party, while AMD’s ZT Systems is the Bet to Stay in the Game
- First, let’s start with Intel. Intel had a pretty poor earnings result. There’s no two ways about it.
- Intel reports Q2 EPS $0.02 ex-items vs FactSet $0.10, announces $10B cost reduction plan; suspends dividend
- There was another layoff of around 15% of employees, a full dividend suspension (finally, guys), and a capex cut.
6. Earnings Preview (Nvidia and Marvell)
- It’s about to be primetime for the AI semiconductor trade, and for the first time in a long time (maybe ever), I wanted to write an earnings preview. It might be the first time (ever) and hopefully the last time.
- Two critical companies report this week. I’ll start with Marvell, the less important but the one I like, and then talk about some exciting dynamics at Nvidia that could lead to volatility and why it might not even matter.
- Marvell has always been a favorite of this newsletter. I won’t lie; I root for the hometown on this one. Inphi was my first paid post, and it worked out with a buyout by Marvell only two weeks later.
7. MHI (7011 JP): Election Unlikely to Affect Defense Budget
- The next leader of Japan’s ruling LDP, who will almost certainly become prime minister in October, will probably not make major changes to the nation’s defense policy.
- Guidance remains unchanged after 1Q results that suggest the possibility of a better than expected order flow but also a material negative impact from a stronger yen.
- MHI’s valuation is not yet in speculative territory, but neither is it compelling. If the yen remains stable, we expect the share price to test its recent highs.
8. Silergy (6415.TT): 2024 Can Be Operating Trough, and Revenue in 2025 Is Expected to Grow by 20-30%.
- Company’s 2Q24 overall performance exceeded expectations, and 3Q and 4Q are expected to be flat and to grow by 10-20% per quarter, respectively.
- With expectations of continued improvement in ASP and cost structure, overall gross profit margin is expected to continue to grow.
- Gen4 (12″) is mainly applied in EV, AI server, and new energy sectors, as these applications have higher specification requirements.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Terumo (4543 JP) Secondary Offering – Smaller Than It Looks
- On Thursday 29 August, Terumo Corp (4543 JP) announced a secondary offering where 7 major cross-holders would sell just under 5% of the shares outstanding to international investors.
- In recent quarters, Terumo has seen better consensus EPS growth than Peers in recent quarters, and Peers have underperformed. Right now, Terumo isn’t ‘cheap’ but consensus growth is strong.
- This back-end demand in this case has enough moving parts that it bears a closer look.
2. Terumo Placement – US$1.4bn Secondary Selldown, Buyback Should Aid Deal Dynamics
- A group of shareholders are looking to raise around US$1.36bn from selling ~5% stake in Terumo Corp (4543 JP).
- While the deal shouldn’t come as a surprise, given 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.
3. Initial Thoughts on the Kioxia IPO – Impact on SK Hynix and Samsung Electronics
- Kioxia is getting ready to complete its IPO in Japan as soon as in October. Kioxia’s valuation is expected to exceed JPY 1.5 trillion (about USD 10.3 billion).
- SK Hynix’s stake in Kioxia (through Bain led consortium) is 19%. SK Hynix’s stake in Kioxia would rise to 34% if the CBs are converted into equity.
- The IPO of Kioxia has mixed implications for SK Hynix which is a major shareholder. However, the IPO of Kioxia has a more direct negative impact on Samsung Electronics.
4. Kioxia IPO Early Re-Look – Better Placed This Time Around
- Kioxia Holdings (6600 JP) aims to list in Japan by Oct 2024 at a valuation of over US$10bn, as per media reports.
- Kioxia is a manufacturer and a global leader in flash memory and solid state drives for smartphones, PCs, enterprise servers and data centers
- In this note, we take an early look at the possible listing.
5. Terumo (4543 JP): A US$1.4 Billion Secondary Offering
- Terumo Corp (4543 JP) has announced a secondary offering of up to 73.2 million shares, worth JPY203 billion (US$1.4 billion) at the last close.
- The secondary offering facilitates the exit of large shareholders. Terumo also announced a buyback worth a maximum of JPY30 billion or 15 million shares.
- Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 10 and 12 September (likely 10 September).
6. Interglobe Aviation (Indigo) Placement – Another US$800m+ Deal, This Time by the Correct Co-Founder
- InterGlobe Aviation Ltd (INDIGO IN)’s co-founder, Rakesh Gangwal, aims to raise around US$850m via selling around 3.8% stake in Indigo.
- He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with his co-founder Rahul Bhatia. He has sold many times before.
- In this note, we will talk about the lockup dynamics and possible placement.
7. Keppel Infra Trust Placement – While the Raising Is Relatively Large, Its past Deals Have Done Well
- Keppel Infrastructure Trust (KIT SP) is looking to raise around S$206m (US$158m) in its primary placement.
- Proceeds will be used to pay down its bridge loan facility linked to its Ventura acquisition. KIT also appears to have secured its unitholders’ approval for the raising earlier.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
8. Hyundai Motor India IPO Valuation Analysis
- Our base case valuation of Hyundai Motor India is market cap of US$18.6 billion, based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25.
- There have been some increasing concerns about Hyundai Motor India paying out higher royalty to its parent Hyundai Motor and dividend to shareholders, which could lower profit.
- According to a recent article by livemint, the expected valuation of Hyundai Motor India has fallen to about USD16 billion to USD20 billion.
9. STCube: Rights Offering Capital Raise of 89 Billion Won
- STCube announced it plans to increase capital by 89 billion won (13 billion won through a third party rights offering and 75.7 billion won through shareholder preferred capital increase).
- We have a positive view of STCube’s capital raise and there could be some alpha generating returns in our view.
- The fact that the company’s share price surged nearly 5x from the last rights offering in May 2022 (to October 2022) is likely to positively impact capital raise this time.
10. Hamamatsu Photonics (6965) – Toyota Selling Yet Another Cross-Holding
- Today after the close we got news that after a year-plus of Hamamatsu Photonics Kk (6965 JP)‘s sliding stock price, Toyota Motor (7203 JP) is selling their 5+% stake.
- The offering is standard. Probably prices 9 Sep 2024. HP’s amended buyback program and probable index upweights offset most of the offering size over the next several months.
- So investors have to decide whether they want to catch the falling knife.
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1. Updates on The Couche-Tard Deal for 7&I (3382 JP)
- Today saw the publication of three different articles regarding the Alimentation Couche-Tard (ATD CN) approach and offer to purchase all the shares of Seven & I Holdings (3382 JP)
- The first in the Nikkei said ATD could push offer a high price, even up to ¥8 trillion. The second mentioned debt financing being feasible because of prodigious cash flow.
- The third in Bloomberg noted that 7&i had requested the government upgrade its FEFTA status to “core”, which would lead to a more burdensome/restrictive government approval process.
2. Toyota Partial Offer Results – What Next?
- Today after the close, Toyota Motor (7203 JP) reported the results of their ¥800bn Tender Offer Buyback, originally intended to repurchase 290.12mm shares from cross-holders.
- In the end, 343.83mm shares were tendered (53.71mm shares more than originally expected, worth about ¥150bn at Tender Price). That creates back-end “issues” which must be considered.
- The resulting supply/demand profile is mixed, but on balance, I expect sees positive demand into the H1 earnings announcement. Watch for another buyback possibly announced then.
3. Zomato: Index Inclusions & Passive Impact (Once Added to F&O)
- Zomato (ZOMATO IN) has a market cap of over US$27bn but is not a member of the NIFTY Index and S&P BSE SENSEX Index since it is not an F&O member.
- Once SEBI’s proposed and enhanced stock inclusion thresholds are implemented, Zomato (ZOMATO IN) should be added to the F&O segment of the market.
- Passive NIFTY Index and S&P BSE SENSEX Index will have to buy a lot of Zomato stock at subsequent rebalances. The impact will be higher given the lower real float.
4. Shin Kong (2888.TW) And Taishin (2887.TW) Agree to Merge, But It Isn’t Clean, And It’s A Bad Price
- After rumours were rekindled a week earlier, on 22 August 2024, Taishin Financial Holding (2887 TT) and Shin Kong Financial Holding (2888 TT) announced they would merge.
- The ratio is 0.6022 shares of Taishin for every share of Shin Kong putting NEWCO assets at about the level of Taiwan #3 CTBC Financial. That’s bad.
- There’s history here. LOTS of history. This would need approvals from the FSC and FTC, but CTBC is already a spoiner, and the SKFH Board Meeting was anything but clean.
5. Huafa Property (982 HK): Buy With Both Hands
- A state-owned Offeror pitching a lifetime high Offer Price – with a solid premium – for an illiquid company? Sounds like a slam dunk.
- Yet property manager Huafa Property Services Group (982 HK) has perennially traded wide to Huafa Industrial Co., Ltd. Zhuhai (600325 CH)‘s terms. This is not justified.
- The Scheme Meeting/SGM is tomorrow (28 August), with payment on (or before) the 30 September. Or a gross/annualised return of 4%/46%. Buy here. Then buy some more.
6. Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Could Drop Some More
- With the review period complete, Nuvoton Technology (4919 TT) is a near certain deletion from the Yuanta/P-Shares Taiwan Dividend Plus ETF in September.
- Passive trackers will need to sell 20m shares in Nuvoton Technology (4919 TT). That is over 10% of float and the stock could continue to remain under pressure.
- The potential deletion still appears to be under positioned. There could be renewed selling in the stock over the next few weeks.
7. Jardine Matheson (JM SP): Trading “Cheap”
- I see Jardine Matheson Holdings (JM SP)‘s discount to NAV and implied stub at 12-month lows.
- Recent interim results were okay. Stripping out DFI Retail Group Holdings (DFI SP)‘s outperformance, the remainder of the Jardine stable delivered weaker numbers.
- Further afield, the implied stub is marginally below the long-term average since the Jardine Strategic Holdings (JS SP) circularity was collapsed in April 2021.
8. NIFTY NEXT50 Index Rebalance: 7 Changes on Expected Lines
- There are 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that will be implemented at the close on 27 September. Changes are on expected lines.
- Estimated one-way turnover for the Nifty Next 50 Index (NIFTYJR INDEX) is 19.6% resulting in a one-way trade of INR 63.64bn (US$759m). Many stocks have over 1x ADV to trade.
- The adds have outperformed the deletes this year but there has been big underperformance over the last month as stocks expected to benefit from rural spending have rallied.
9. Shinko Electric (6967) Deal Approval Delayed; From Here, Big Gap-, Small Break-, Some Delay-Risk
- Today after the close, Shinko Electric Industries (6967 JP) offered a progress report on the approvals for the JIC Consortium Tender Offer originally “scheduled” to start in late August 2024.
- “Procedures and Steps Necessary under the competition laws of Vietnam and China have not been completed” so the Tender Offeror expects to commence the Tender Offer in/after late January 2025.
- The announcement appears to suggest no update is likely for another five months or until the Tender Offer starts. That will introduce questions of further delay.
10. Yamaha Motors (7272 JP) – Secondary Offering as Toyota Sells Down – Easy To Digest
- On Firday 23 August, Yamaha Motor (7272 JP) announced that three cross-holders would sell about 4.6% of the shares out in a secondary sale.
- MS&AD was expected. Toyota was probably expected. Yamaha Corp is a bit of a surprise. But it also frees up Yamaha Motor to sell down cross-holdings (top 2 are Toyota/Yamaha).
- Given the price/guidance/dividend yield and limited size, this should be quite easy to place.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Gold: Fakeout or Generational Buying Opportunity?
- Gold has reached another all-time high at 2500, will history repeat itself? Is this another generational buying opportunity or a bull trap fakeout?
- We conclude that the upside breakout in gold prices has more room to run, though the market is extended and could pull back at any time.
- A long-term point and figure analysis of monthly prices using a 5% box and 3-box reversal shows a measured objective of 4406.
2. India to Become Next China?
- India’s rapid economic growth, coupled with China’s recent economic challenges, has fueled discussions about whether India can become the next global economic power, as China has done for decades.
- China and India, Asia’s two largest economies, have taken different economic paths in recent years.
- Analysts at UBS Global Research pointed out: “China’s post-epidemic economic recovery is weak, while India’s performance is strong.”
3. Steno Signals #114 – A Powell Put is Ueda’s Catastrophe
- Happy Sunday from Denmark!I’ve had a few days to digest Powell’s speech from Friday, and my takeaway is unequivocally dovish.
- Powell and the committee have signaled that they will not tolerate further cooling of the U.S. labor market without responding.
- This marks a full-blown shift in priorities, with inflation numbers now taking a backseat to labor market data going forward.
4. China Unlikely to Escape Middle-Income Trap Without Social or Political Reform
- As economic growth of China move to sub-5% level (a figure which may have been manipulated upward), the living standard of its lower-middle and lower class are hopeless to improve.
- Standing at USD12970 in 2023, the capita real GDP grows much slower than previous decade.
- This is the middle income trap which is experienced by other middle-income Asian countries as well, like Philippines, Thailand, and Malaysia.
5. EM Watch: 5 Charts on the Nosediving Chinese Indicators!
- China’s exports fired on all cylinders during the spring, but we are now starting to see signs of fading inventories in the US (and to some extent, Europe) again.
- We believe the front-loading of imports, with rising freight rates being a symptom of this, propelled the Chinese economy ahead of the feared tariffs implemented by the Biden administration and potentially increased under a Trump presidency.
- We know that Chinese exporters have front-loaded exports of cars and other goods ahead of the tariff deadlines in both the US and Europe, and we are now seeing freight rates moderating alongside some concerning nowcasts out of China.
6. The Week At A Glance: The slippery slope of data revisions
- Happy Monday from Europe.
- Powell is cutting, Ueda is hiking and USDJPY is heading lower.
- It sounds like a tune we have heard before, and while we are NOT on imminent recession watch, we need to be aware of the potential slippery slope once the revised cat is let out of the bag.
7. China Consumption Disappoints
- China consumption patterns are slowing and becoming more volatile at a sub sector level. There is also less certainty over new employment and wage growth.
- China’s consumption is vital to growth when production is transitioning from old economy dependency on residential investment, steel, cement and other industries.
- We forecast GDP to slow in H2 and be 4.0% in 2025
8. Energy Cable: On the inventory build-up due to China-tariffs
- The Chinese rebound story is losing momentum fast, which has important implications for Western economies and assets, while the impact from freight rates on inflation might not be as large as previously feared.
- Take aways Beta from freight rates to goods inflation is lower than usual due to inventory building in the USChinese retail and IP down some 10% from the pre-pandemic trend China’s export of disinflation will force policy makers in the West to introduce tariffs and subsidies Greetings from a sunny Copenhagen.
- This week we’ll discuss freight rates and what inventory data tells us to expect going forward and then we’ll dive into some more data points on the weak Chinese economic outlook.
9. Real Estate: India/China Rotation Sparks Sector Growth
- Uptick in Real Estate positioning driven by a shift towards Indian Real Estate stocks, which has outweighed reductions in exposure to China & HK Real Estate
- Three names stand out: Phoenix Mills, Macrotech Developers, and DLF Limited, all of which have seen ownership rise to record levels.
- New positions in Indian Real Estate by Allianz and JKC have been offset by closures in Chinese Real Estate by LO Funds and SEB, among others.
10. How Different Is the Current Unemployment Behavior?
- A climb in the unemployment rate can be associated with recessions, especially when dominated by a negative change in employment
- But the recent rise in the unemployment rate through July does not seem to be consistent with the characteristics of prior recessions on balance
- Nevertheless, further increases in the unemployment rate need not be of the same breed
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