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Smartkarma Daily Briefs

Jun 03
0

Daily Brief Event-Driven: SE600 Jun 23 Rebal: Past Trades Successful and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • SE600 Jun 23 Rebal: Past Trades Successful, DELs Could Underperform Index over the Next ~2 Weeks
  • Seven & I: ValueAct’s Proposals Unlikely to Be Considered, Investor Activism Effectively Over
  • FEMSA’s Exit from Heineken/Heineken Holding and Share Price Spread
  • EQT/​Dechra Pharmaceuticals: Recommended Offer

SE600 Jun 23 Rebal: Past Trades Successful, DELs Could Underperform Index over the Next ~2 Weeks

By Janaghan Jeyakumar, CFA

  • The June 2023 regular rebalance index changes for the SE600 index and the EURSTX index were announced after the close yesterday.
  • There are 8 ADDs/DELs for the SE600 index and 3 ADDs and 2 DELs for the EURSTX index.
  • In this insight, we take a closer look at our final index flow expectations for June 2023.

Seven & I: ValueAct’s Proposals Unlikely to Be Considered, Investor Activism Effectively Over

By Oshadhi Kumarasiri

  • Last week, shareholders of Seven & I Holdings (3382 JP) rejected all four of the board nominees proposed by ValueAct.
  • ValueAct, seeing their higher vote count as a modest success, sent a letter to Seven & I, requesting a resumption of discussions despite the failed attempt to remove senior leadership.
  • We think the company is unlikely to seriously consider Value Act’s proposals any longer, indicating the end of the investor activism campaign.

FEMSA’s Exit from Heineken/Heineken Holding and Share Price Spread

By Jesus Rodriguez Aguilar

  • FEMSA has placed c.€3.3 billion of Heineken NV (HEIA NA) and Heineken Holding NV (HEIO NA) shares and tap €250 million of existing 2026 Exchangeable bonds. The placement removes a major overhang.
  • The holding structure (equivalence 1 HEIO NA ~ 1 HEIA NO) allows the Heineken family to control the second largest brewer worldwide, with just a 27.3% economic interest (post-FEMSA’s placement).
  • The discount has tightened to 15.8%, still above the 10.4% average of the last ten years, and rather large considering such a simple structure.

EQT/​Dechra Pharmaceuticals: Recommended Offer

By Jesus Rodriguez Aguilar

  • At the end of PUSU deadline, EQT and Dechra have agreed a 3,875p/share offer (44% premium, 21.4x EV/Fwd EBITDA, 30.2x Fwd P/E, vs. market leader Zoetis at 20.5x and 28.9x respectively).
  • Other private equity companies may not be able to match the deal’s disintermediation benefits. Considering the short-term issues, I believe investors will accept the offer.
  • My base-case DCF fair-value estimate is 3,568p/share, 7.9% below the offer price. Therefore I set my TP at 3,875p. Spread is 5.8%/8.8% (gross/annualised), I feel the risk/reward is balanced. Long.

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Jun 03
0

Daily Brief Financials: Samhällsbyggnadsbolaget I Norden AB and more

By | Daily Briefs, Financials

In today’s briefing:

  • SE600 Jun 23 Rebal: Past Trades Successful, DELs Could Underperform Index over the Next ~2 Weeks

SE600 Jun 23 Rebal: Past Trades Successful, DELs Could Underperform Index over the Next ~2 Weeks

By Janaghan Jeyakumar, CFA

  • The June 2023 regular rebalance index changes for the SE600 index and the EURSTX index were announced after the close yesterday.
  • There are 8 ADDs/DELs for the SE600 index and 3 ADDs and 2 DELs for the EURSTX index.
  • In this insight, we take a closer look at our final index flow expectations for June 2023.

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Jun 03
0

Daily Brief Health Care: Amvis Holdings Inc, Dechra Pharmaceuticals and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Amvis Holdings Inc (7071 JP): Strong H1FY23 Result; FY23 Guidance Unchanged; Expansion Continues
  • EQT/​Dechra Pharmaceuticals: Recommended Offer

Amvis Holdings Inc (7071 JP): Strong H1FY23 Result; FY23 Guidance Unchanged; Expansion Continues

By Tina Banerjee

  • Amvis Holdings Inc (7071 JP) recorded 42% revenue growth to ¥14.7B in H1FY23, driven by 33% increase in bed capacity and stable utilization rate. Operating profit grew 37% to ¥3.9B.
  • The company has guided for FY23 revenue of ¥30.7B (+33% YoY), operating profit of ¥7.9B (+28% YoY), and net profit of ¥5.4B (+26% YoY).
  • Amvis announced plans to open 16 facilities, steadily progressing to achieve the target of opening 23 facilities in FY24. The company targets utilization rate of 82–85% for existing facilities.

EQT/​Dechra Pharmaceuticals: Recommended Offer

By Jesus Rodriguez Aguilar

  • At the end of PUSU deadline, EQT and Dechra have agreed a 3,875p/share offer (44% premium, 21.4x EV/Fwd EBITDA, 30.2x Fwd P/E, vs. market leader Zoetis at 20.5x and 28.9x respectively).
  • Other private equity companies may not be able to match the deal’s disintermediation benefits. Considering the short-term issues, I believe investors will accept the offer.
  • My base-case DCF fair-value estimate is 3,568p/share, 7.9% below the offer price. Therefore I set my TP at 3,875p. Spread is 5.8%/8.8% (gross/annualised), I feel the risk/reward is balanced. Long.

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Jun 03
0

Daily Brief Equity Bottom-Up: Amvis Holdings Inc (7071 JP): Strong H1FY23 Result; FY23 Guidance Unchanged; Expansion Continues and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Amvis Holdings Inc (7071 JP): Strong H1FY23 Result; FY23 Guidance Unchanged; Expansion Continues
  • BILI US, SELL, TP US$14.1, Target Price Change: Thriving Gaming Market Makes Limited Contribution
  • Intelligent Wave Inc. (4847 JP) – 3Q Follow-Up

Amvis Holdings Inc (7071 JP): Strong H1FY23 Result; FY23 Guidance Unchanged; Expansion Continues

By Tina Banerjee

  • Amvis Holdings Inc (7071 JP) recorded 42% revenue growth to ¥14.7B in H1FY23, driven by 33% increase in bed capacity and stable utilization rate. Operating profit grew 37% to ¥3.9B.
  • The company has guided for FY23 revenue of ¥30.7B (+33% YoY), operating profit of ¥7.9B (+28% YoY), and net profit of ¥5.4B (+26% YoY).
  • Amvis announced plans to open 16 facilities, steadily progressing to achieve the target of opening 23 facilities in FY24. The company targets utilization rate of 82–85% for existing facilities.

BILI US, SELL, TP US$14.1, Target Price Change: Thriving Gaming Market Makes Limited Contribution

By Shawn Yang

  • BILI reported 1Q23 revenue/non-GAAP net income (4.2%)/in-line vs. our estimate, but BILI’s suggested 2Q23 revenue and gross margin are (10%) and (3.5ppts) lower vs. our prior est.; 
  • Gaming will be BILI’s major swing factor.  Although BILI indicated that 2Q23 gaming revenue could decline 10% YoY, we expect that gaming revenue will still grow 6%~ YoY in 2023.; 
  • We maintain SELL rating and cut TP to US$ 14.1. 1Q23’s earning indicates that BILI’s cost saving measures have led to declining MAU.

Intelligent Wave Inc. (4847 JP) – 3Q Follow-Up

By Sessa Investment Research

  • IWI held an in-person briefing for 3Q FY23/6 results on Friday, May 12 at the Securities Analysts Association of Japan Kabutocho Heiwa Bldg. Annex 3F, which was also livestreamed via IR.
  • Stock Investment Information portal site Bridge Salon.
  • In SIR’s opinion, this 3Q results presentation hosted by IWI’s CEO and Representative Director Kunimitsu Sato was the most upbeat since he assumed office in Sep-2020. 

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Jun 03
0

Daily Brief Macro: Alpha Generation Through Share Buybacks in Korea: May 2023 and more

By | Daily Briefs, Macro

In today’s briefing:

  • Alpha Generation Through Share Buybacks in Korea: May 2023
  • India: Net Exports and Investment to Ensure 7%+ RGDP Growth as PSBR Moderates
  • US 10-Year | Jun 2, 2023
  • Bubble or Breadth: Evaluating the State of the Stock Market

Alpha Generation Through Share Buybacks in Korea: May 2023

By Douglas Kim

  • In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in May 2023.
  • We provide a list of 25 stocks in the Korean stock market that have announced share buyback programs in May 2023.
  • The top five market cap stocks that have announced share repurchases include Hyundai Elevator, DGB Financial, Com2Us, Miwon Commercial, and Jeisys Medical.

India: Net Exports and Investment to Ensure 7%+ RGDP Growth as PSBR Moderates

By Prasenjit K. Basu

  • RGDP grew 7.2% in FY2023 driven by 10.4% growth in GFCF and 7.5% growth in PCE. Improved terms of trade will boost net exports, ensuring 7.2% growth in FY2024 too.
  • Services (over half of GDP) have averaged 8% annual real growth for the past 25 years (8.7% excluding the covid year), underpinning growth. Manufacturing set to gain from relocating supply-chains.
  • With tax (personal, corporate and GST) revenues growing in double-digits YoY, the fiscal deficit (and PSBR) are undershooting official estimates, helping to crowd-in stronger investment spending. 

US 10-Year | Jun 2, 2023

By Untying The Gordian Knot

  • The five-year and ten-year yields have reached significant turning points, correcting their previous overbought positions.
  • This shift in sentiment has led to a bullish trend in bonds, which are now considered oversold.
  • The recent Chicago PMI inflation numbers have further contributed to this bond rally.

Bubble or Breadth: Evaluating the State of the Stock Market

By Jeroen Blokland

  • History shows that stock market bubbles – a 100% price boom within a year, followed by a 50%+ crash in the following year – are extremely rare.
  • We apply this metric to current market dynamics and conclude there are no booms around these days.
  • When expanding the definition of a bubble, two of them appear but only in a small subset of the total stock market: Non-profitable Tech stocks and NVIDIA.

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Jun 02
0

Daily Brief Credit: Morning Views Asia: Tata Motors ADR and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: Tata Motors ADR

Morning Views Asia: Tata Motors ADR

By Charles Macgregor

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.

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Jun 02
0

Daily Brief Australia: BrainChip Holdings, Empire Energy, Incannex Healthcare and more

By | Australia, Daily Briefs

In today’s briefing:

  • Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket
  • Empire Energy Group Ltd – Carpentaria – on the Road to First Gas
  • Incannex Healthcare – Spotlight on Incannex’s progress in psychedelics

Tax-Loss Selling in Australia – Brief Historical Analysis And A Trade Basket

By Travis Lundy

  • I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article last year shows.
  • The general gist of the idea is that retail investors in Australia will take gains on things which run up in price, or get taken over, then look for losses.
  • Below I present a study using data from 2012-2022 of how a basket portfolio trade might work.

Empire Energy Group Ltd – Carpentaria – on the Road to First Gas

By Research as a Service (RaaS)

  • Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
  • EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
  • The NT energy basins are fast developing as strategic high-calorific gas bolsters for east coast Australia’s future domestic requirements, growing Gladstone LNG ullage and potential supply for Darwin’s expanding LNG export terminals, amid funding support from Territory and Federal governments. 

Incannex Healthcare – Spotlight on Incannex’s progress in psychedelics

By Edison Investment Research

Incannex, an Australian-based biotech, has several active studies investigating cannabinoid combinations for a range of conditions, but is also focused on assessing psilocybin for the treatment of generalized anxiety disorder (GAD). In the psychedelics space, Incannex’s ongoing Phase II trial (Psi-GAD) received an encouraging interim review in March 2023, and we see the completion of the study in Q4 CY23 as a significant catalyst. Incannex has also recently announced developments in its psychedelic clinics business through its subsidiary Clarion Clinics Group. In this note, we provide an overview of psychedelics as therapeutics, the GAD market, and Incannex’s position in the emerging field of psychedelic-based therapies. Our valuation for Incannex stands at US$750.7m or US$11.83 per ADR (vs US$745.8m or US$11.75 per ADR previously).

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Jun 02
0

Daily Brief South Korea: Yg Entertainment, Eoflow and more

By | Daily Briefs, South Korea

In today’s briefing:

  • YG Entertainment: BabyMonster to Become the Next Black Pink?
  • Medtronic’s Delisting Offer For EOFlow

YG Entertainment: BabyMonster to Become the Next Black Pink?

By Douglas Kim

  • Despite the enormous demand for Black Pink concerts and the expected launch of the new girl-group band BabyMonster, we believe shares of Yg Entertainment (122870 KS) have overextended this year.
  • Black Pink remains a fan-favorite group and their contribution to sales and profits are likely to peak this year. Valuations for YG Entertainment is also unattractive.
  • Although BabyMonster is likely to become popular, the higher probability scenario is for them to fall below expectations. We do not believe BabyMonster could become the next Black Pink. 

Medtronic’s Delisting Offer For EOFlow

By David Blennerhassett

  • Back on the 25 May, healthcare company Medtronic Plc (MDT US) announced it had entered into a set of definitive agreements to acquire EOFlow (294090 KS).
  • Via a three-step process – SPAs, issuance of new shares, and a Tender Offer – Medtronic will seek majority control, together with a view to delisting EOFlow.
  • Completion is expected in 4Q23. Regulatory approvals –  domestic and foreign – form part of the conditions. Trading wide to terms. 

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Jun 02
0

Daily Brief Singapore: BHG Retail REIT, ZUZU Hospitality and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Smartkarma Corporate Webinar | BHG Retail REIT: Capitalising on China’s Recovery
  • ZUZU Hospitality Raises US$9M in a Series B Funding Round Led by SoftBank Ventures Asia

Smartkarma Corporate Webinar | BHG Retail REIT: Capitalising on China’s Recovery

By Smartkarma Research

For our next Corporate Webinar, we are glad to welcome BHG Retail’s CEO, Chan Iz-Lynn.

In the upcoming webinar, Iz-Lynn will share a short company presentation after which, she will engage in a fireside chat with Smartkarma Insight Provider, Osbert Tang, CFA. The Corporate Webinar will include a live Q&A session.

The webinar will be hosted on Tuesday, 06 June 2023, 17:00 SGT/HKT.

About BHG Retail REIT

Listed on Singapore Exchange Securities Trading Limited, BHG Retail REIT has a diversified portfolio of six retail properties strategically located in major cities in China, namely Beijing, Chengdu, Hefei, Xining and Dalian. BHG Retail REIT’s asset portfolio consists of community focused retail properties situated in high population density areas frequented by growing middle class professionals and families. Designed as lifestyle destinations, each multi-tenanted mall features a compelling mix of shopping, dining, education and entertainment establishments.

ZUZU Hospitality Raises US$9M in a Series B Funding Round Led by SoftBank Ventures Asia

By e27

  • ZUZU Hospitality, a revenue platform provider for independent hotels, today announced an oversubscribed US$9 million (SG$12 million) Series B funding round led by SoftBank Ventures Asia, with participation from Atinum Partners and existing investors Wooshin Venture Investment, Visor Ventures and JG Digital Equity Ventures.
  • The startup plans to double its hotel partner count across the region with a keen focus on India and reach an impressive milestone of 5,000 partners by the end of 2024.
  • Furthermore, it also plans to make strategic investments in AI tools to improve pricing, automate guest management, and improve partner experience.

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Jun 02
0

Daily Brief Indonesia: Amman Mineral Internasional, Evermos, Ringkas and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Amman Mineral Internasional IPO: The Investment Case
  • Evermos Raises US$39M to Fuel the Expansion of Its Connected Commerce Network
  • Ringkas Raises US$3.5M to Digitalise Mortgage Process in Indonesia

Amman Mineral Internasional IPO: The Investment Case

By Arun George

  • Amman Mineral Internasional (1416286D IJ), an Indonesian copper-gold producer, has launched an IDX IPO to raise US$860 million. Bookbuilding runs from 31 May to 16 June.
  • Amman’s Batu Hijau mine when combined with the Elang project has the fifth largest copper equivalent reserves in the world, according to Wood Mackenzie.
  • The key elements of the investment case rest on world-class reserves, credible development plans, solid top-line growth, high profitability, leading cost competitiveness and cash generation.

Evermos Raises US$39M to Fuel the Expansion of Its Connected Commerce Network

By e27

  • Indonesia-based social commerce platform Evermos today announced that it had raised US$39 million in its Series C funding round.
  • It was led by the International Finance Corporation (IFC) — a member of the World Bank group — and IFC Emerging Asia Fund, LP, managed by IFC Asset Management Company, with the participation of returning partners such as Jungle Ventures, Shunwei Capital, UOB Venture Management, and Telkomsel Mitra Inovasi.
  • This funding round also saw investment from new partners SWC Global, Endeavor Catalyst, and Uni-President Asset Holdings.

Ringkas Raises US$3.5M to Digitalise Mortgage Process in Indonesia

By e27

  • Indonesia-based digital mortgage startup Ringkas has secured US$3.5 million in a seed funding round led by East Ventures and Crestone Venture Capital.
  • 500 Global, Teja Ventures, Orvel Ventures, and Hustle Fund also participated.
  • Ringkas will use the fresh funds to advance and scale its platform across multiple cities in Indonesia and the secondary market.

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