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Smartkarma Daily Briefs

Jun 03
0

Daily Brief United States: Deckers Outdoor, Vf Corp, Snowflake , elf Beauty Inc, Intuit Inc, Medtronic Plc, Ralph Lauren, Ross Stores Inc, Synopsys Inc, Target Corp and more

By | Daily Briefs, United States

In today’s briefing:

  • Deckers Outdoor Corporation: These Are The 5 Fundamental Factors Driving Its Performance! – Financial Forecasts
  • V.F. Corporation: Expansion of Direct-to-Consumer (DTC) Channel & Other Major Drivers
  • Snowflake Inc.: Broadened Scope and Usability of Products & Other Major Drivers
  • e.l.f. Beauty Inc.: Will The Strong Growth in Sales and Market Share Last? – Major Drivers
  • Intuit Inc.: Will Its Investment in Core Money Movement and Risk Management Capabilities Bear Fruit? – Major Drivers
  • Medtronic plc: Expansion Of Global Operations & Supply Chain Transformation! – Major Drivers
  • Ralph Lauren Corporation: Will Its Focus on Direct-to-Consumer (DTC) Channel Growth Especially In Asia Pay Off? – Major Drivers
  • Ross Stores Inc.: A Robust Value Offering Serving a Broader Customer Base! – Major Drivers
  • Synopsys Inc.: Continued Momentum in Core Business & AI Investments Paying Off? – Major Drivers
  • Target Corporation: How Is The Continuing Growth In Private Labels Expected To Impact The Top-Line? – Major Drivers

Deckers Outdoor Corporation: These Are The 5 Fundamental Factors Driving Its Performance! – Financial Forecasts

By Baptista Research

  • In the fourth quarter fiscal of 2024, Deckers Brands achieved record revenue growth of 18% compared to the previous year, almost reaching $4.3 billion of annual revenue.
  • Gross margin increased by a considerable 530 basis points from last year to 55.6%, and earnings per share rose by 51% to $29.16.
  • These results reflect Deckers’ successful long-term strategies and the hard work of its employees.

V.F. Corporation: Expansion of Direct-to-Consumer (DTC) Channel & Other Major Drivers

By Baptista Research

  • From the Q4 2024 Earnings of VF Corporation, it can be inferred that the company is working on a transformation strategy named Reinvent to return to long-term growth.
  • The company seems to be undergoing significant changes both structurally and operationally.
  • Reinvent’s primary focus is on restructuring the U.S. business, cost base adjustment, and balance sheet enhancement.

Snowflake Inc.: Broadened Scope and Usability of Products & Other Major Drivers

By Baptista Research

  • Snowflake Inc. reported a strong Q1 for its fiscal year 2025, with the CEO, Sridhar Ramaswamy, outlining the key priorities of learning from customers, driving execution within go-to-market teams, and fueling innovation and product delivery.
  • The results presented prove that Snowflake’s core business remains robust.
  • It delivered a remarkable Q1 with product revenue for the quarter rising to $790 million, a 34% increase YoY.

e.l.f. Beauty Inc.: Will The Strong Growth in Sales and Market Share Last? – Major Drivers

By Baptista Research

  • e.l.f. Beauty reported a solid 2024 fiscal fourth quarter, hitting a significant milestone of over $1 billion in net sales.
  • The company grew net sales by 77%, exceeding expectations.
  • Q4 marked the 21st consecutive quarter of both net sales growth and market share gains.

Intuit Inc.: Will Its Investment in Core Money Movement and Risk Management Capabilities Bear Fruit? – Major Drivers

By Baptista Research

  • Intuit reported strong performance in its Q3 FY 2024 results as it continued executing its strategy of becoming a global AI-powered platform for consumers and small businesses.
  • The company achieved a 12% growth in revenue with the Small Businesses and Self-Employed Group portion growing 18% despite a volatile environment, indicating the strategic value of their services.
  • On the other hand, Consumer Group and Credit Karma exhibited growth rates of 9% and 8%, respectively, driven by product innovation and platform integration benefits.

Medtronic plc: Expansion Of Global Operations & Supply Chain Transformation! – Major Drivers

By Baptista Research

  • In its fiscal year 2024 Q4 earnings, Medtronic reported significant revenue growth and strong earnings, demonstrating the effectiveness of its strategies to drive growth and profitability.
  • The company’s four segments delivered mid-single-digit or higher revenue growth, with total revenue growth exceeding 5% for the full fiscal year.
  • This record growth was largely driven by new product innovations across Medtronic’s cardiovascular, robotics, diabetes care, and other therapeutic segments.

Ralph Lauren Corporation: Will Its Focus on Direct-to-Consumer (DTC) Channel Growth Especially In Asia Pay Off? – Major Drivers

By Baptista Research

  • Based on the recent earnings, Ralph Lauren Corporation demonstrated credible fiscal performance despite the ongoing uncertainties of the global business climate.
  • The company remained resilient with the successful execution of its Next Great Chapter Accelerate plan.
  • On a positive note, President and CEO, Patrice Louvet, highlighted the progress made on several fronts.

Ross Stores Inc.: A Robust Value Offering Serving a Broader Customer Base! – Major Drivers

By Baptista Research

  • Ross Stores Inc.’s first quarter report for 2024 showed a mixed picture.
  • On the positive side, the company managed to meet its Q1 sales guidance and outperform its earnings expectations.
  • Its total sales grew by 8% to $4.9 billion in Q1 2024 from $4.5 billion during the same period in the previous year.

Synopsys Inc.: Continued Momentum in Core Business & AI Investments Paying Off? – Major Drivers

By Baptista Research

  • In Q2 2024, Synopsys’s revenue increased by 15% year over year, aligning it with the high-end expectations of its guided range.
  • The non-GAAP operating margin also rose by roughly three points to 37.3%, with non-GAAP EPS increasing by 26% year over year.
  • These exceeding outcomes have prompted Synopsys to raise its full-year revenue and non-GAAP EPS guidance.

Target Corporation: How Is The Continuing Growth In Private Labels Expected To Impact The Top-Line? – Major Drivers

By Baptista Research

  • Target Corporation reported its Q1 2024 financial results that were largely in line with its own expectations, while outlining various strategies and initiatives aimed at bolstering growth and profitability.
  • Despite the challenging economic environment and volatility in consumer spending patterns, Target remains resilient, with its profitability continuing to benefit from prudent cost management and ongoing investments in strategic growth initiatives.
  • However, softer trends in discretionary categories, particularly Home and Hardlines, may continue to pressure sales in the near term.

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Jun 03
0

Daily Brief Equity Bottom-Up: SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules
  • [Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business
  • China Healthcare Weekly (Jun.2) – Innovent’s Trouble, Hengrui’s “smart Deal”, Zai Lab’s Pain Point
  • Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth
  • Deckers Outdoor Corporation: These Are The 5 Fundamental Factors Driving Its Performance! – Financial Forecasts
  • COSCO Shipping Energy (1138 HK): Don’t Get Carried Away
  • [Akeso (9926 HK, BUY, TP HK$58) Company Update]: AK112’s Win Unleashes Change in PD-1/L1 Landscape
  • The Battle of CMCDI: What Is the Endgame?
  • NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers
  • [Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?

SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules

By Daniel Hellberg

  • Several US customs brokers have been suspended under new, tighter rules
  • The new rules could make ‘de minimis’ imports slightly more difficult
  • Whether it lists in London or NYC, additional rule changes could threaten SHEIN

[Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business

By Eric Wen

  • Xiaomi reported CY1Q24 revenue, non-IFRS operating income and non-IFRS net income 2.7%, in-line, and 21.7% vs. consensus;
  • SU7 interest drove more and higher quality traffic to Xiaomi channels, driving higher revenue and margin for IoT and handset sales, in our view. 
  • We expect this augmentation to sustain higher non-EV margin and growth in the long-run, and for ADAS and battery upgrades to drive demand for its next EVs. 

China Healthcare Weekly (Jun.2) – Innovent’s Trouble, Hengrui’s “smart Deal”, Zai Lab’s Pain Point

By Xinyao (Criss) Wang

  • Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.
  • The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.
  • There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.

Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth

By Tina Banerjee

  • Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
  • Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
  • In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.

Deckers Outdoor Corporation: These Are The 5 Fundamental Factors Driving Its Performance! – Financial Forecasts

By Baptista Research

  • In the fourth quarter fiscal of 2024, Deckers Brands achieved record revenue growth of 18% compared to the previous year, almost reaching $4.3 billion of annual revenue.
  • Gross margin increased by a considerable 530 basis points from last year to 55.6%, and earnings per share rose by 51% to $29.16.
  • These results reflect Deckers’ successful long-term strategies and the hard work of its employees.

COSCO Shipping Energy (1138 HK): Don’t Get Carried Away

By Osbert Tang, CFA

  • Cosco Shipping Energy Transp. Co. Ltd. (H) (1138 HK)‘s 1.25x 12-month forward P/B is more than 2SD above historical average. Though earnings have improved, this still appears rich.
  • The market expects this upcycle will sustain for at least 5 years, but as a cyclical stock, CSET has never had such a long cycle in the last 10 years. 
  • While VLCC rate has gained 36% YTD, the average for FY24 is just in line with 2H22 and 1H23. However, earnings projections are 57% higher than that time.

[Akeso (9926 HK, BUY, TP HK$58) Company Update]: AK112’s Win Unleashes Change in PD-1/L1 Landscape

By Eric Wen

  • Ivonescimab’s (AK112) head-to-head clinical win against Keytruda (Pembrolizumab) reaffirmed Akeso’s standing as the flag-bearer of Chinese innovative drugs. It also affirmed its business model of specialized R&D+flexible distribution. 
  • This success might be followed by a similar win globally in 2025-27,as well as AK112 and 104’s head-to-head win against Tislelizumab.
  • We reiterate our BUY rating on Akeso and adjust TP to HK$58 to reflect revenue share from AK112 to come in from 2025 but in bulk after 2027

The Battle of CMCDI: What Is the Endgame?

By Alec Tseung

  • ASM is a hedge fund with a strong track record of investor activism in taking over distressed assets and closed-end funds. 
  • Lazard, the second largest CMCDI shareholder, bought shares last week at a multi-year high sending a strong message to the market.
  • CMCDI can also explore announcing a discount management program besides agreeing to ASM’s claim to sell assets to pay dividends and offer a share buyback to reduce the NAV discount.

NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers

By Baptista Research

  • NetEase’s first quarter earnings highlighted the company’s ongoing growth, driven in large part by its game portfolio.
  • Net revenue for Q1 rose to RMB 26.9 billion, marking an accelerated YoY increase led by the company’s diversified game offerings.
  • There was significant growth from established game franchises which have managed to maintain high popularity among their user bases, showcasing the sustainability of the company’s games.

[Atour Lifestyle (ATAT US, BUY, TP US$39) TP Change]: Should Retail Profit Be Accorded a Multiple?

By Eric Wen

  • Atour reported C1Q23 revenue 4.6%/6.8% higher than our est./cons., and non-GAAP NI 6.9%/8.8% higher than our est./ cons, driven by hotel expansion and new retail products.
  • The company raised total revenue guidance from 30% to 40% YoY for 2024 due to a strong retail sales trend. 
  • We believe retail sales is a form of increase in Atour’s same store sales. We thus raise TP to US$39 to reflect this retail-driven increase of same store sales.

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Jun 03
0

Daily Brief India: NIFTY Index, Divi’s Laboratories, Adani Ports & Special Economic Zone and more

By | Daily Briefs, India

In today’s briefing:

  • EQD / Weekly Vol Update / IVs Spike with Election Results Round the Corner
  • Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth
  • Morning Views Asia: Adani Ports & Special Economic Zone

EQD / Weekly Vol Update / IVs Spike with Election Results Round the Corner

By Sankalp Singh

  • IVs Spike with Election Results release on 04-June-2024. Post event there’s a risk of large IV-crush regardless of the result.
  • Current Vol-state is “High & Up”. Wait for the switch to “High & Down” before initiating new risk-premia harvesting strategies
  • Weekly IVs have received large markups due to elections. Entire Vol Curve is now in Backwardation –  curve inversion at extreme levels

Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth

By Tina Banerjee

  • Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
  • Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
  • In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.

Morning Views Asia: Adani Ports & Special Economic Zone

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.

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Jun 03
0

Daily Brief China: Beijing Strong Biotechnolo-A, United Nova Technology , Bank of Communications , Shenzhen New Industries Biomedical Engineering-A, China Traditional Chinese Medicine, Biwin Storage Technology Lt, Yunnan Aluminium Co Ltd A, SHEIN, Shanghai Fosun Pharmaceutical (Group), Guosen Securities and more

By | China, Daily Briefs

In today’s briefing:

  • CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
  • STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
  • SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
  • Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
  • Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern
  • CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
  • CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade
  • SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules
  • Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) – Things Are Not as Good as Expected
  • CSI All Share IB & Brokerage Index Rebalance: Couple of Large Flow & Impact Names

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

By Brian Freitas

  • CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
  • There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
  • With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

By Brian Freitas

SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance

By Brian Freitas

  • There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
  • The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
  • The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

By Janaghan Jeyakumar, CFA

  • The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
  • There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
  • Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%. 

Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern

By Arun George

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

By Brian Freitas

  • There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
  • Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
  • The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.

CSI300/CSI500 Index Rebalance: Big Flows and US$5bn Round-Trip Trade

By Brian Freitas

  • There are 12 changes for the CSI 300 Index (SHSZ300 INDEX) and 50 changes for the CSI Smallcap 500 Index (SH000905 INDEX) in June. Most changes were expected.
  • There are a lot of stocks with over 1 day of ADV to trade. The round-trip trade in June is estimated to be US$5bn.
  • The adds have outperformed the deletes for both indices but the return profile of a long adds/ short deletes trade for the CSI500 Index is a lot smoother.

SHEIN: Several US Customs Broker Suspensions Tied to Tighter ‘de Minimis’ Rules

By Daniel Hellberg

  • Several US customs brokers have been suspended under new, tighter rules
  • The new rules could make ‘de minimis’ imports slightly more difficult
  • Whether it lists in London or NYC, additional rule changes could threaten SHEIN

Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) – Things Are Not as Good as Expected

By Xinyao (Criss) Wang

  • It is said that Fosun Pharma plans to privatize Henlius. There’re doubts about how to solve the debt problem/cash flow pressure of Fosun Pharma. A third party could be involved.
  • Shareholders may not be willing to accept an Offer Price that is significantly below IPO price. It’s also possible that shareholders vote against the privatization. So, there are many uncertainties.
  • Deal talks are still ongoing. It’s difficult to see clearly what’s happening under the table. Valuation logic of Fosun Pharma should be more like PE/VC firms not traditional pharmaceutical company.

CSI All Share IB & Brokerage Index Rebalance: Couple of Large Flow & Impact Names

By Brian Freitas

  • The changes to the CSI All Share Investment Banking & Brokerage Index were announced after market close on 31 May and will be implemented at the close on 14 June.
  • Guosen Securities (002736 CH) will be added to the index while Northeast Securities (000686 CH) will be deleted from the index.
  • There is a lot of flow and impact for both stocks and the stocks could outperform/underperform their peers over the next couple of weeks.

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Jun 03
0

Daily Brief Japan: Teijin Ltd, TSE Tokyo Price Index TOPIX, Aisin , Sompo Holdings and more

By | Daily Briefs, Japan

In today’s briefing:

  • Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
  • Engagement Keeps Widening the Profitability Gap Between the Top and Bottom Companies in Market Cap
  • Aisin – 141% Profit Growth, With Future to Have More Sales for Electric and Hybrid Vehicles
  • ECM Weekly (3rd June 2024) – Shift Up, QuantumPharm, Telix, Sompo, ASMedia, Exedy, Barito, Zomato

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender

By Arun George

  • Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion. 
  • If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
  • However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.

Engagement Keeps Widening the Profitability Gap Between the Top and Bottom Companies in Market Cap

By Aki Matsumoto

  • Companies with larger market capitalizations tend to have higher profitability and valuations, and those companies have higher foreign ownership.
  • Given that board practices improved and that valuations, highly correlated with foreign ownership, are higher for companies with larger market capitalizations, this can be due to engagement of overseas investors.
  • If this hypothesis is correct, the gap between the top and bottom market capitalization companies will widen further as it takes a certain time for engagement to pay off.

Aisin – 141% Profit Growth, With Future to Have More Sales for Electric and Hybrid Vehicles

By Daniel Tabbush

  • Aisin is already achieving strong growth, across many markets, and this should continue with more sales into EV and HEV markets
  • Financial strength is improving, with gearing moving lower, and debt/ebitda moving lower
  • Balance sheet clean up can lead to some volatility, but overall a general positive, as is the focus on capital management

ECM Weekly (3rd June 2024) – Shift Up, QuantumPharm, Telix, Sompo, ASMedia, Exedy, Barito, Zomato

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, we undertook a peer comparison and looked at valuations for Shift Up (462870 KS). 
  • On the placement front, it was another busy week with a number of blocks in India along with Asmedia Technology (5269 TT)‘s GDR offering and Exedy Corp (7278 JP). 

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Jun 03
0

Daily Brief Macro: Goodbye to Ultra-Low US Short-Term Interest Rates? Financial Markets Well Ahead of the Fed and more

By | Daily Briefs, Macro

In today’s briefing:

  • Goodbye to Ultra-Low US Short-Term Interest Rates? Financial Markets Well Ahead of the Fed
  • Transitory Disinflation in 2025?
  • May Themes and Thematic Portfolio Review
  • The Market’s Dance of Thrusts and Dips
  • Central Banks Globally: Cut, Hike or Pause?
  • Steno Signals #102 – Bad inflation news everywhere

Goodbye to Ultra-Low US Short-Term Interest Rates? Financial Markets Well Ahead of the Fed

By Said Desaque

  • Markets are reviewing their outlook about a return to a lower Fed policy rate in a more hawkish manner. Their long-standing secular stagnation thesis could be jettisoned. 
  • The Fed’s low estimate for the neutral policy rate (r*) is based on perceived degradation of US economic growth after the bursting of the internet bubble and global financial crisis.
  • Higher US short-term interest rates may have been stimulative due to high levels of interest-earning financial assets held by corporations and households, while large budget deficits also support economic activity.

Transitory Disinflation in 2025?

By Cam Hui

  • We peered into 2025 to see how U.S. inflation may evolve, focusing on changes in immigration policy , the evolution in productivity and the effects of the election on inflation.
  • Upward pressures on inflation will come from changes in immigration policy and a Trump win. Productivity gains are uncertain and AI-driven gains will take a long time to be realized.
  • Such an environment is typical of a mid- or late-cycle expansion. It is bond price unfriendly, and neutral or positive for stock prices, depending how the nominal growth outlook evolves.

May Themes and Thematic Portfolio Review

By Rikki Malik

  • 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

The Market’s Dance of Thrusts and Dips

By Cam Hui

  • We believe the bullish implication of Triple 70 Breadth Thrust triggered on May 6 is still alive.
  • The U.S. equity market has just hit a temporary air pocket and should experience a shallow pullback.
  • The key risk is how the bond market reacts to a continuing flood of issuance in June, which could put upward pressure on yields and downward pressure on risk appetite.

Central Banks Globally: Cut, Hike or Pause?

By Thomas Lam

  • While most central banks worldwide are on-hold currently, on average, rate cuts are preferred over rate hikes 
  • The easing proportion of EM central banks is greater than that of DM central banks at this time
  • The majority of central banks globally are typically inclined toward the policy rate preferences of the Fed and BoE on balance 

Steno Signals #102 – Bad inflation news everywhere

By Andreas Steno

  • Happy Sunday and welcome to our weekly flagship editorial.
  • The inflation progress has stalled, and it is not just a US phenomenon.
  • It is spread to Europe and with freight rates rapidly on the rise, we are likely no longer getting any help from goods inflation in coming quarters.

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Jun 03
0

Most Read: Helios Techno Holding, Teijin Ltd, Beijing Strong Biotechnolo-A, ZX, Vanguard Intl Semiconductor, United Nova Technology , Bank of Communications , Shenzhen New Industries Biomedical Engineering-A, Biwin Storage Technology Lt, Hanwha Ocean and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap
  • Teijin (3401 JP): Alternative Play on the Potential Infocom Tender
  • CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
  • KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out
  • TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
  • STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
  • SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance
  • Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
  • CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
  • Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

Helios Techno Holding (6927) – Small TOB, Fat Premium (74%), Still Too Cheap

By Travis Lundy

  • On Friday, acquisitive wafer technology firm Rs Technologies (3445 JP) announced it would buy lamp and printing equipment maker Helios Techno Holding (6927 JP) at a 74% premium.  
  • The premium is big, but Helios is a steal at the price. Granted, it is a small potatoes steal. 
  • The register is not controlled by any one party or group of investors other than retail. That makes this interesting.

Teijin (3401 JP): Alternative Play on the Potential Infocom Tender

By Arun George

  • Blackstone (BX US) is widely reported to have agreed to acquire Teijin Ltd (3401 JP)’s 55% stake in Infocom Corp (4348 JP) at a valuation of JPY260 billion. 
  • If the valuation refers to market cap and Teijin shares its tax benefits, Teijin’s sale proceeds are around JPY128 billion, which is 42% of its market cap.
  • However, since 9 May, Teijin shares have been flat vs. Infocom shares are up 63%. Teijin’s medium-term plan suggests that the Infocom proceeds could result in substantial share buybacks.

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

By Brian Freitas

  • CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
  • There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
  • With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

KWEB Index Rebalance: ZX (9890 HK) In; Fenbi (2469 HK) Out

By Brian Freitas

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

By Brian Freitas

  • There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
  • One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
  • The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

By Brian Freitas

SSE50/SSE180 Index Rebalance: Heavy Focus on Sector Balance

By Brian Freitas

  • There are 5 changes for the SSE50 Index (SSE50 INDEX) that will be implemented at the close on 14 June. There is over 1x ADV to trade on most stocks.
  • The index committee has focused on sector balance with higher ranked stocks from the Financials sector ignored and lower ranked stocks from other sectors included.
  • The adds have outperformed the deletes over the last 6 months and positioning (especially on the surprises) could lead to further upside for a long/short trade.

Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

By Janaghan Jeyakumar, CFA

  • The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
  • There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
  • Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%. 

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

By Brian Freitas

  • There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
  • Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
  • The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.

Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

By Sanghyun Park

  • The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
  • Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
  • The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

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Jun 03
0

Daily Brief Industrials: Hanwha Ocean , APM Human Services, Cosco Shipping Energy Transportation Co. Ltd. (H), Adani Ports & Special Economic Zone, Array Technologies and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention
  • Madison Dearborn Takes APM Back Into The Fold
  • COSCO Shipping Energy (1138 HK): Don’t Get Carried Away
  • Morning Views Asia: Adani Ports & Special Economic Zone
  • Array Technologies Inc (ARRY) – Sunday, Mar 3, 2024

Hanwha Ocean’s June 22 Release of a 1.68% Stake Grabs Local Market Attention

By Sanghyun Park

  • The June 22 lock-up release, involving a 1.68% stake by Eximbank, is drawing attention, with concerns these shares might hit the market immediately, impacting prices significantly.
  • Eximbank is likely to sell its shares quickly post-lock-up, fueling speculation and potential market reactions, as their focus is on financial stability, not long-term holdings.
  • The 1.68% block deal could significantly impact Hanwha Ocean’s price, similar to last year’s 6.4% drop after a smaller block deal announcement by the Korean Financial Services Commission.

Madison Dearborn Takes APM Back Into The Fold

By David Blennerhassett

  • APM Human Services (APM AU) and US PE-outfit Madison Dearborn Partners, holding ~30%, have entered a Scheme at A$1.45/share, in cash.
  • That’s a 74.7% premium to undisturbed; and a $0.05/share increase over Madison Dearborn’s April 8th A$1.40/share NBIO, a price the Independent Board Committee (IBC) previously considered disappointing.
  • A scrip option is afforded, and Executive Chair, Megan Wynne and CEO, Michael Anghie will take up that option if the Scheme is implemented. The IBC is supportive. 

COSCO Shipping Energy (1138 HK): Don’t Get Carried Away

By Osbert Tang, CFA

  • Cosco Shipping Energy Transp. Co. Ltd. (H) (1138 HK)‘s 1.25x 12-month forward P/B is more than 2SD above historical average. Though earnings have improved, this still appears rich.
  • The market expects this upcycle will sustain for at least 5 years, but as a cyclical stock, CSET has never had such a long cycle in the last 10 years. 
  • While VLCC rate has gained 36% YTD, the average for FY24 is just in line with 2H22 and 1H23. However, earnings projections are 57% higher than that time.

Morning Views Asia: Adani Ports & Special Economic Zone

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.

Array Technologies Inc (ARRY) – Sunday, Mar 3, 2024

By Value Investors Club

  • Array Technologies stock fell from $45 to below $13 based on Mason’s recommendation in December 2020
  • Mason advised exiting the position at $17 in August 2021 after improvements seen
  • Stock currently trading at $14 a share with potential for 50-60% upside to fair value as second largest global solar tracking company

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.

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Jun 03
0

Daily Brief TMT/Internet: Vanguard Intl Semiconductor, United Nova Technology , Biwin Storage Technology Lt, Xiaomi Corp, NetEase , Snowflake , Synopsys Inc, Analog Devices, Workday Inc Class A and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
  • STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
  • CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
  • [Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business
  • NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers
  • Snowflake Inc.: Broadened Scope and Usability of Products & Other Major Drivers
  • CSI All Share Semiconductor Index Rebalance: Lots of Changes in June
  • Synopsys Inc.: Continued Momentum in Core Business & AI Investments Paying Off? – Major Drivers
  • Analog Devices Inc.: Expansion in Automotive Market & AI Investments Reaping Solid Profits? – Major Drivers
  • Workday Inc.: Will The Growth in the Medium Enterprise Market Benefit Their Top-Line In The Coming 3 Years? – Major Drivers

TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade

By Brian Freitas

  • There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
  • One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
  • The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.

STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability

By Brian Freitas

CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks

By Brian Freitas

  • There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
  • Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
  • The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.

[Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business

By Eric Wen

  • Xiaomi reported CY1Q24 revenue, non-IFRS operating income and non-IFRS net income 2.7%, in-line, and 21.7% vs. consensus;
  • SU7 interest drove more and higher quality traffic to Xiaomi channels, driving higher revenue and margin for IoT and handset sales, in our view. 
  • We expect this augmentation to sustain higher non-EV margin and growth in the long-run, and for ADAS and battery upgrades to drive demand for its next EVs. 

NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers

By Baptista Research

  • NetEase’s first quarter earnings highlighted the company’s ongoing growth, driven in large part by its game portfolio.
  • Net revenue for Q1 rose to RMB 26.9 billion, marking an accelerated YoY increase led by the company’s diversified game offerings.
  • There was significant growth from established game franchises which have managed to maintain high popularity among their user bases, showcasing the sustainability of the company’s games.

Snowflake Inc.: Broadened Scope and Usability of Products & Other Major Drivers

By Baptista Research

  • Snowflake Inc. reported a strong Q1 for its fiscal year 2025, with the CEO, Sridhar Ramaswamy, outlining the key priorities of learning from customers, driving execution within go-to-market teams, and fueling innovation and product delivery.
  • The results presented prove that Snowflake’s core business remains robust.
  • It delivered a remarkable Q1 with product revenue for the quarter rising to $790 million, a 34% increase YoY.

CSI All Share Semiconductor Index Rebalance: Lots of Changes in June

By Brian Freitas

  • The changes to the CSI All Share Semiconductors & Semiconductor Equipment Index were announced after market close on 31 May and will be implemented at the close on 14 June.
  • There are 17 adds and 5 deletes for the index.
  • The adds and deletes have underperformed the index over the last 6 months but the adds have outperformed the deletes over the last 3 months.

Synopsys Inc.: Continued Momentum in Core Business & AI Investments Paying Off? – Major Drivers

By Baptista Research

  • In Q2 2024, Synopsys’s revenue increased by 15% year over year, aligning it with the high-end expectations of its guided range.
  • The non-GAAP operating margin also rose by roughly three points to 37.3%, with non-GAAP EPS increasing by 26% year over year.
  • These exceeding outcomes have prompted Synopsys to raise its full-year revenue and non-GAAP EPS guidance.

Analog Devices Inc.: Expansion in Automotive Market & AI Investments Reaping Solid Profits? – Major Drivers

By Baptista Research

  • During the Analog Devices’ second quarter fiscal year 2024 earnings, the company reported revenue of $2.16 billion, with profitability and earnings per share exceeding expectations.
  • The management believes that the business is past the low point of this cycle, with positive signs of improvement particularly in the industrial sector.
  • However, there is still economic and geopolitical uncertainty that can potentially impact short-term performance, as such, careful cost and inventory management will be key.

Workday Inc.: Will The Growth in the Medium Enterprise Market Benefit Their Top-Line In The Coming 3 Years? – Major Drivers

By Baptista Research

  • Workday has reported solid financial performance for its first quarter fiscal 2025, noting a 19% subscription revenue growth and 18% 12-month backlog growth.
  • Non-GAAP operating margin is at 26%.
  • Despite some challenging dynamics in the quarter, such as increased deal scrutiny and slower customer headcount growth, Workday is encouraged by new go-to-market initiatives that are increasing total addressable market.

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Jun 03
0

Daily Brief Health Care: Beijing Strong Biotechnolo-A, Shenzhen New Industries Biomedical Engineering-A, China Traditional Chinese Medicine, Shanghai Fosun Pharmaceutical (Group), Zai Lab , Divi’s Laboratories, Akeso Biopharma Inc, Medtronic Plc and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week
  • Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows
  • Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern
  • Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) – Things Are Not as Good as Expected
  • China Healthcare Weekly (Jun.2) – Innovent’s Trouble, Hengrui’s “smart Deal”, Zai Lab’s Pain Point
  • Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth
  • [Akeso (9926 HK, BUY, TP HK$58) Company Update]: AK112’s Win Unleashes Change in PD-1/L1 Landscape
  • Medtronic plc: Expansion Of Global Operations & Supply Chain Transformation! – Major Drivers

CSI Medical Service Index Rebalance: Adds Could Outperform Deletes in the Coming Week

By Brian Freitas

  • CSI announced the changes for the June rebalance after market close on 31 May and the changes will be effective after the close of trading on 14 June.
  • There are 5 adds/deletes – we correctly forecasted 3 adds and all 5 deletes. Passives need to trade 0.5-3x ADV on the adds and 0.5-2.1x ADV on the deletes.
  • With the index not very widely forecasted, the adds could outperform the deletes over the next week in a repeat of the performance at the December rebalance.

Quiddity CSI 300/​​500 Jun 24 Rebalance: 92% Hit Rate; US$3.7 One-Way Flows

By Janaghan Jeyakumar, CFA

  • The June 2024 index review results for China’s CSI 300 and CSI 500 indices were announced after market close on Friday 31st May 2024.
  • There will be 12 changes in CSI 300 and 50 changes in CSI 500 which could collectively cause one-way index flows of ~US$3.7bn during the June 2024 index rebal event.
  • Compared to Quiddity’s final expectations, 114 out of the 124 index changes (both ways) were correct translating to a hit rate of 92%. 

Merger Arb Mondays (03 Jun) – China TCM, Huafa, GA Pack, SciClone, CF Logistics, Great Eastern

By Arun George

Fosun Pharma (2196 HK/600196.CH) To Privatize Henlius (2696.HK) – Things Are Not as Good as Expected

By Xinyao (Criss) Wang

  • It is said that Fosun Pharma plans to privatize Henlius. There’re doubts about how to solve the debt problem/cash flow pressure of Fosun Pharma. A third party could be involved.
  • Shareholders may not be willing to accept an Offer Price that is significantly below IPO price. It’s also possible that shareholders vote against the privatization. So, there are many uncertainties.
  • Deal talks are still ongoing. It’s difficult to see clearly what’s happening under the table. Valuation logic of Fosun Pharma should be more like PE/VC firms not traditional pharmaceutical company.

China Healthcare Weekly (Jun.2) – Innovent’s Trouble, Hengrui’s “smart Deal”, Zai Lab’s Pain Point

By Xinyao (Criss) Wang

  • Innovent’s 24Q1 product sales was up just 6% QoQ. The overall data shows that PD-1 growth has entered a bottleneck. This makes 24H2 YoY growth rate uncertain.
  • The deal between Hengrui and Hercules is different from traditional license-out cooperation, but belong to asset spin-off in essence, which is a “smart deal” and also a meaningful attempt.
  • There’re some positive signals in Zai Lab’s 24Q1 performance, but the pain points of business model severely limit its profitability/revenue scale. Zai Lab still has a long way to go.

Divi’s Laboratories (DIVI IN): Custom Synthesis Business to Drive Future Growth

By Tina Banerjee

  • Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
  • Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
  • In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.

[Akeso (9926 HK, BUY, TP HK$58) Company Update]: AK112’s Win Unleashes Change in PD-1/L1 Landscape

By Eric Wen

  • Ivonescimab’s (AK112) head-to-head clinical win against Keytruda (Pembrolizumab) reaffirmed Akeso’s standing as the flag-bearer of Chinese innovative drugs. It also affirmed its business model of specialized R&D+flexible distribution. 
  • This success might be followed by a similar win globally in 2025-27,as well as AK112 and 104’s head-to-head win against Tislelizumab.
  • We reiterate our BUY rating on Akeso and adjust TP to HK$58 to reflect revenue share from AK112 to come in from 2025 but in bulk after 2027

Medtronic plc: Expansion Of Global Operations & Supply Chain Transformation! – Major Drivers

By Baptista Research

  • In its fiscal year 2024 Q4 earnings, Medtronic reported significant revenue growth and strong earnings, demonstrating the effectiveness of its strategies to drive growth and profitability.
  • The company’s four segments delivered mid-single-digit or higher revenue growth, with total revenue growth exceeding 5% for the full fiscal year.
  • This record growth was largely driven by new product innovations across Medtronic’s cardiovascular, robotics, diabetes care, and other therapeutic segments.

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