Smartkarma Daily Briefs

Asia Vital Components (3017 TT) could replace Chang Hwa Commercial Bank (2801 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the June rebalance.
This ETF inclusion for Asia Vital Components (3017 TT) could come back-to-back with another index inclusion scheduled for the end of May.
Shorts in Asia Vital Components (3017 TT) have been increasing recently while shorts in Chang Hwa Commercial Bank (2801 TT) are near their lows.

Yuanta Taiwan Div+ ETF Rebalance Preview: 5 Changes as Names Move Around; US$2.35bn Round-Trip Trade

With the review period now complete, there could be 5 changes to the Yuanta/P-Shares Taiwan Dividend Plus ETF in June.
Price changes and changes to dividend estimates have led to names dropping off the list of potential adds and deletes over the last week.
Constituent changes, capping and funding flows will lead to a one-way turnover of 12.7% and a one-way trade of US$1.17bn. There are 12 stocks with over 4x ADV to trade.

ASMedia GDR Early Look – Momentum Has Been Strong, and Raising Would Grow Its Cash Base Almost 6x

By Clarence Chu

Asmedia Technology (5269 TT) is looking to raise up to US$333m in its upcoming global depository receipts (GDRs) offering.
ASMedia recently announced its board’s resolution to offer between 4.3-5.3m shares in the form of GDRs, with the proceeds geared towards purchasing raw materials and machinery, R&D and working capital.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Huafa Property Services (982 HK)’s Knockout Offer

By David Blennerhassett

After entering a trading halt on the 16th May pursuant to the Takeover’s Code, property manager Huafa Property Services (982 HK) has now announced a privatisation by way of a Scheme.
The cancellation price of A$0.29/share is a 30.63% to last close, a 70.59% premium over the 30-day average close, and a life-time high price. The price is final.
The Offeror, Zhuhai Huafa, a state-owned enterprise wholly-owned by Zhuhai SASAC, plus concert parties hold 42.63% of shares out. Clean deal.

S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June

With the review period complete, we take a look at the potential index changes at the June rebalance as well as potential index inclusions due to M&A.
Timing is key for the ad hoc inclusions to the S&P/ASX 200 (AS51 INDEX) with an ad hoc inclusion being announced prior to the regular announcement.
Passive trackers will need to buy 1.3-27x ADV on the expected adds and have 0.8-4.7x ADV to sell on the expected deletes. Shorts have built up on the potential deletes.

Barito Renewables Lockup Expiry – US$8bn Lockup Expiry for Largest Indonesian Market Cap Stock

By Ethan Aw

Barito Renewables Energy (BREN IJ) raised around US$200m in its Indonesian IPO, after pricing at the top end at IDR780/share. Its eight-month lockup will expire on 29th May 2024.
Barito Renewables (BR) is Indonesia’s largest geothermal power producer, and the third-largest globally by installed capacity, as per the firm.
In this note, we will talk about the lock-up dynamics and updates since our last note.

FnGuide Top 5 Plus Index Rebalance Preview: Celltrion Could Replace KT&G

The Samsung KODEX Top5Plus Total Return ETF (315930 KS) tracks the FnGuide Top 5 Plus Index and has an AUM of KRW 1,357bn (~US$1bn).
We currently see a high probability of Celltrion Inc (068270 KS) replacing KT&G Corporation (033780 KS) in the index at the June rebalance.
There is between 1-2 days of ADV to trade on the potential add and delete and smaller flows on the other index members due to capping and funding changes.

ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering

By Clarence Chu

Asmedia Technology (5269 TT) is looking to raise up to US$335m in its global depository receipts (GDRs) offering.
Overall, the deal would be a relatively small one for the stock to digest at just 5.6 days of its three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

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May 29

Daily Brief Industrials: DS Dansuk, Enav SpA, Norcros PLC, NOW Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

DS Dansuk: Block Deal Sale by Stonebridge Capital
Enav Spa (ENAV IM) – Tuesday, Feb 27, 2024
Norcros – Vast opportunity and new targets revealed
DNOW, Inc. – FY24 Free Cash Flow Outlook Lifted

DS Dansuk: Block Deal Sale by Stonebridge Capital

By Douglas Kim

After the market close on 28 May, it was announced that Stonebridge Capital plans to conduct a block deal sale of a portion of its stake in DS Dansuk.
This deal involves 210,000 to 290,000 shares of DS Dansuk. The block deal price range is from 99,800 won to 101,400 won, which represents 7.06% to 8.52% discount.
After this second block deal, there will be further overhang concerns about additional sales of DS Dansuk by Stonebridge Capital in the coming months.

Enav Spa (ENAV IM) – Tuesday, Feb 27, 2024

ENAV’s stock trades at a lower multiple compared to peers in the European airport concession industry
Shareholder activism could potentially influence board decisions despite majority ownership by the Italian government
ENAV’s cash flow is expected to improve, offering a potential 15% free cash flow yield by 2025 and presents minimal downside risk with significant upside potential if it trades closer to historical valuation multiples

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.

Norcros – Vast opportunity and new targets revealed

Norcros is the UK’s leading design-led sustainable kitchen and bathroom products group. Its compelling investment case was highlighted at its May 2024 capital markets day (CMD), where its unique, asset-light, design-led model was clearly illustrated. The CMD also indicated the enormous scale of the opportunity that is available in terms of entering adjacent unaddressed markets in the UK and South Africa, as well as the potential presented by other attractive geographies. Furthermore, revised medium-term targets were introduced that should further excite investors. Our profit forecasts are unchanged, but we have raised our valuation from 246p to 251p as we have rolled forward our P/E valuation and increased our FY25 dividend estimate.

DNOW, Inc. – FY24 Free Cash Flow Outlook Lifted

By Water Tower Research

The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets.
Management now expects FY24 revenue to increase in the mid- to high single digits range from FY23 and for adjusted EBITDA margin to be in line with FY23.
Management lifted its FY24 free cash flow outlook to ~$200 million from ~$150 million.

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May 29

Daily Brief Industrials: DS Dansuk, Enav SpA, Norcros PLC, NOW Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

DS Dansuk: Block Deal Sale by Stonebridge Capital
Enav Spa (ENAV IM) – Tuesday, Feb 27, 2024
Norcros – Vast opportunity and new targets revealed
DNOW, Inc. – FY24 Free Cash Flow Outlook Lifted

DS Dansuk: Block Deal Sale by Stonebridge Capital

By Douglas Kim

After the market close on 28 May, it was announced that Stonebridge Capital plans to conduct a block deal sale of a portion of its stake in DS Dansuk.
This deal involves 210,000 to 290,000 shares of DS Dansuk. The block deal price range is from 99,800 won to 101,400 won, which represents 7.06% to 8.52% discount.
After this second block deal, there will be further overhang concerns about additional sales of DS Dansuk by Stonebridge Capital in the coming months.

Enav Spa (ENAV IM) – Tuesday, Feb 27, 2024

ENAV’s stock trades at a lower multiple compared to peers in the European airport concession industry
Shareholder activism could potentially influence board decisions despite majority ownership by the Italian government
ENAV’s cash flow is expected to improve, offering a potential 15% free cash flow yield by 2025 and presents minimal downside risk with significant upside potential if it trades closer to historical valuation multiples

Norcros – Vast opportunity and new targets revealed

DNOW, Inc. – FY24 Free Cash Flow Outlook Lifted

By Water Tower Research

The 1Q24 Whitco Supply acquisition diversified DNOW’s customer base and added new revenue opportunities in the midstream markets.
Management now expects FY24 revenue to increase in the mid- to high single digits range from FY23 and for adjusted EBITDA margin to be in line with FY23.
Management lifted its FY24 free cash flow outlook to ~$200 million from ~$150 million.

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May 29

Daily Brief Energy/Materials: Deep Yellow Ltd, Indian Energy Exchange Ltd, Chariot Limited, ADF Group , Valeura Energy Inc and more

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

In today’s briefing:

S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June
Indian Energy Exchange: Do You Want to Earn a Royalty on India’s Economic Growth?
Chariot Limited (AIM: CHAR): Drilling success onshore Morocco
DRX: Here We Go Again; Increasing TP on Contract Announcement
Valeura Energy (TSX: VLE): Drilling success likely to add further resources

S&P/ASX Index Rebalance Preview: Regular & Ad Hoc Changes in June

With the review period complete, we take a look at the potential index changes at the June rebalance as well as potential index inclusions due to M&A.
Timing is key for the ad hoc inclusions to the S&P/ASX 200 (AS51 INDEX) with an ad hoc inclusion being announced prior to the regular announcement.
Passive trackers will need to buy 1.3-27x ADV on the expected adds and have 0.8-4.7x ADV to sell on the expected deletes. Shorts have built up on the potential deletes.

Indian Energy Exchange: Do You Want to Earn a Royalty on India’s Economic Growth?

By Contrarian Cashflows

As one of the fastest-growing economies globally, India is projected to become the third-largest economy, trailing only China and the US, by 2027.
Amid macroeconomic challenges worldwide, investors are eager to tap into India’s robust economic growth.
However, economic growth does not always correlate with equity market growth, as seen in Spain and Italy during the 1980s and 1990s, and more recently in China.

Chariot Limited (AIM: CHAR): Drilling success onshore Morocco

By Auctus Advisors

The OBA-1 well onshore Morocco has encountered an approximate 70 m gross interval containing elevated resistivities coincident with elevated mud gas readings, indicating potential gas pays, with no water-bearing reservoirs identified.
While the approximate 200 m gross thickness for the reservoirs is in line with pre-drill expectations, the absence of water in the 70 m gross interval is particularly encouraging and could suggest larger than expected resources (12 bcf pre drill).
The well is now expected to be tested in 3Q24.

DRX: Here We Go Again; Increasing TP on Contract Announcement

By Atrium Research

ADF announced a series of new contracts totalling $90M spanning the pharmaceutical, industrial, and public infrastructure sectors.
This includes additional work awarded for the pharmaceutical project in the Midwest U.S. which ADF was recently awarded phase 2 for.
ADF will be reporting Q1/25 on June 11th, we are expecting $90.1M revenue (12% YoY), 23.5% gross margin, and $17.2M EBITDA (19% margin).

Valeura Energy (TSX: VLE): Drilling success likely to add further resources

By Auctus Advisors

Two wells recently drilled at Nong Yao are likely to add some reserves.
The 37H development well has been put on production from the primary reservoir at an initial flow rate of ~500 bbl/d net to Valeura’s WI.
The well has also encountered 68 feet of net oil pay across eight separate appraisal target intervals.

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May 29

Daily Brief TMT/Internet: NVIDIA Corp, Asmedia Technology, Akatsuki Inc, Shift Up, Samsung Electronics, Darktrace, LY , United Microelectronics Corp, Datatec Limited and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Nvidia Earnings Overview: Networking in Focus
ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering
Akatsuki Inc (TYO 3932): A $188M Net Net Japanese Game Developer
Shift Up IPO: The Investment Case
Tech Supply Chain Tracker (29-May-2024): Samsung targets 1,000-layer 3D NAND by 2030.
Quiddity Leaderboard SE600 Jun 24: Potential ADDs Could Continue to Outperform Potential DELs
Yahoo Still Falling Further Behind Amazon and Rakuten
UMC (2303.TT; UMC.US): The Outlook for 2024 Could Show Flat to Low Single-Digit Growth.
Shift Up IPO – Thoughts on Valuations – Bear/Base/Bull
Datatec – Underlying earnings more than tripled in FY24

Nvidia Earnings Overview: Networking in Focus

By Douglas O’Laughlin

Nvidia reported earnings, and as expected, they beat earnings. Did you think that Jensen would fail us now?
On a more serious note, the guide was a bit light regarding buy-side bogeys, but there is almost nothing to complain about this result.
Below is the StreetAccount summary, and you can see it’s a clean beat by every metric.

ASMedia GDR Offering – Well Flagged, and Momentum Has Been Strong Leading into the Offering

By Clarence Chu

Asmedia Technology (5269 TT) is looking to raise up to US$335m in its global depository receipts (GDRs) offering.
Overall, the deal would be a relatively small one for the stock to digest at just 5.6 days of its three month ADV.
In this note, we run the deal through our ECM framework and comment on deal dynamics.

Akatsuki Inc (TYO 3932): A $188M Net Net Japanese Game Developer

By Altay Capital

Akatsuki Inc (TYO 3932) is a net-net Japanese video game developer with 10 years of profitability.
They’re undergoing a big transformation in an effort to better compete globally by investing enormous amounts into their core development capabilities and increasing their average budget per game 3-6x.
They recently formed a capital alliance with Sony (6758) and Koei Tecmo (TYO 3635) with each taking a 10% and 8% stake respectively.

Shift Up IPO: The Investment Case

By Arun George

Shift Up (462870 KS) is Korea’s leading game development studio. It is seeking to raise up to US$320 million.
Shift Up now focuses only on game development and has a policy of publishing games in cooperation with global partners such as Tencent (700 HK) and Sony Corp (6758 JP).
The investment case rests on a stellar game development track record, several growth drivers, high profitability and cash generation.

Tech Supply Chain Tracker (29-May-2024): Samsung targets 1,000-layer 3D NAND by 2030.

By Tech Supply Chain Tracker

Samsung aims to revolutionize memory technology by launching 1,000-layer 3D NAND by 2030, utilizing innovative materials for enhanced performance.
Lenovo expands its market reach with AI PCs targeting a global audience, but faces stiff competition amidst concerns over Indian restrictions on imported PCs and notebooks.
TSMC’s collaboration in Taiwan on 7nm tech brings together academia and industry, while China, Japan, and South Korea look to strengthen supply chains at a summit for mutual benefit. Samsung aims to increase its presence in China through collaboration.

Quiddity Leaderboard SE600 Jun 24: Potential ADDs Could Continue to Outperform Potential DELs

By Janaghan Jeyakumar, CFA

The SE600 index is one of the most widely followed benchmark indices in Europe. This index is rebalanced on a quarterly basis.
The base date for rankings for the June 2024 index rebal event is 31st May 2024. In this insight, we take a look at the latest list of potential ADDs/DELs.
Currently, I see 7 ADDs and 7 DELs for the SE600 index. There are more names just outside the border requiring small price changes to get involved in index changes.

Yahoo Still Falling Further Behind Amazon and Rakuten

By Michael Causton

LY (4689 JP)‘s Yahoo Shopping looks to be in trouble after five straight quarters of negative growth while Amazon and Rakuten move ahead.
Despite a revenue increase in 4Q2023, Yahoo Shopping continues to struggle with merchant fraud and a lack of a clear USP.
If effective integration between the many parts of LY is not forthcoming soon, the company may eventually attract demands for better synergies, as well as a stick-wielding Softbank.

UMC (2303.TT; UMC.US): The Outlook for 2024 Could Show Flat to Low Single-Digit Growth.

By Patrick Liao

UMC is currently forecasting a flat to low single digit growth QoQ for 3Q24, which is slight lower than consensus.
UMC has received orders from domestic and international clients. However, we believe it couldn’t be able to compensate for the loss of Samsung’s 28nm orders so far this year.
With accelerated construction in Singapore in 2024, the full-year capital expenditure has slightly risen to $3.3 billion.

Shift Up IPO – Thoughts on Valuations – Bear/Base/Bull

By Sumeet Singh

Shift Up (462870 KS) plans to raise up to US$320m in its South Korean IPO.
Shift Up is a South Korean games developer, which as released three games so far for the global markets.
We have looked at the company’s performance in our past notes. In this note, we talk about valuations.

Datatec – Underlying earnings more than tripled in FY24

Datatec reported FY24 revenue growth of 6%, with a strong performance from Westcon, a good performance in Logicalis International masked by a higher level of net revenue software sales and a mixed performance in Logicalis Latin America. Group gross profit grew 16% y-o-y and adjusted EBITDA grew 7%, resulting in a flat adjusted EBITDA margin of 3.5%. Underlying EPS of 20.2c more than tripled versus the prior year and good control of working capital resulted in year-end net debt of $123m. The company announced a dividend of ZAR1.3/US$0.07. Despite the difficult political and economic environment, management expects to see improved performances in each business in FY25 and continues to focus on unlocking shareholder value as part of its ongoing strategic review.

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May 29

Daily Brief Health Care: Akeso Biopharma Inc, JTEC Corp/Osaka, Sichuan Kelun-Biotech Biopharm, Jiangxi Rimag Group, Abeona Therapeutics , Edesa Biotech , NeuroBo Pharmaceuticals , Essa Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Is Akeso’s Sell-Off a Long Waited Opportunity or a Long Overdue Correction?
JTEC Corp (3446) – Facing Some Challenges over Lead Times
Sichuan Kelun-Biotech Biopharm (6990.HK) – Current High Valuation Is Not Secure
Pre-IPO Jiangxi Rimag Group (PHIP Updates) – Some Points Worth the Attention
ABEO: BLA Resubmission in 2H24
EDSA: Preparing IND for Phase 2 Trial of EB06 in Vitiligo
NRBO: Preclinical Data on DA-1241 with Semaglutide to be Presented at EASL Congress 2024
EPIX: Updated Data from Phase 1 Trial of Masofaniten and Enzalutamide Expected in 2H24

Is Akeso’s Sell-Off a Long Waited Opportunity or a Long Overdue Correction?

By Eric Wen

Disputable Phase III result of Akeso’s (9926 HK) flagship pipeline Ivonescimab (AK112) caused Akeso’s share price to drop 28% in three days, reaching the bottom of a year-long trading range;
The fundamental difference of opinions is around Ivonescimab’s global prospects against (1) Merck’s Keytruda, (2) J&J’s Rybrevant, (3) Kelun’s SKB264 and domestic prospect against (4) Innovent’s IBI305;
Some answers are clear while others are now. What can provide answers are (1) SKB264‘s Phase III data, and to a lesser degree (2) AK112’s head-to-head trial against Keytruda.

JTEC Corp (3446) – Facing Some Challenges over Lead Times

By Astris Advisory Japan

Lengthening order lead times impacting revenue recognition – Q1-3 FY6/24 results were behind expectations in our view, with sales declining 27.6% YoY.
Whilst a negative optic, the reason stems from lengthening lead times for shipment, given customer demands for more high-end and exacting technical requirements for custom-made products requiring more time for delivery.
We believe this highlights the value-added technical expertise of the company and delays in revenue recognition.

Sichuan Kelun-Biotech Biopharm (6990.HK) – Current High Valuation Is Not Secure

By Xinyao (Criss) Wang

The imagination space and good stories for Sichuan Kelun-Biotech Biopharm (6990 HK) at this stage mainly come from SKB264. The market has higher expectations for SKB264’s clinical data on NSCLC/TNBC.
The better the clinical results of SKB264 +PD1/L1, the greater the negative impact on AK112’s future expectations/market space in NSCLC. ADC +PD-1 seems more “convincing” than the logic of BsAb.
This July, restricted shares of major shareholders will be lifted, which may lead to big share price fluctuation if they reduce their shareholdings. Investors need not rush to be long.

Pre-IPO Jiangxi Rimag Group (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

Considering the dominant position of medical imaging centers in public hospitals and challenges from other players, future development space of Rimag would be squeezed,and even will soon encounter growth bottlenecks.
Although Rimag turned losses into profits, we still have doubts about its future profitability due to increasing costs and potential price decline.This business may fail to bring investors decent profits.
Rimag’s post-investment valuation after last round financing isn’t cheap.Given the uncertainty of future revenue growth prospects and the real market space, P/S of below 3 is a more comfortable range.

ABEO: BLA Resubmission in 2H24

On May 15, 2024, Abeona Therapeutics, Inc. (ABEO) announced financial results for the first quarter of 2024 and provided a business update.
The company is planning to resubmit the Biologics License Application (BLA) for pz-cel for the treatment of patients with recessive dystrophic epidermolysis bullosa (RDEB) in the second half of 2024 following the receipt of a Complete Response Letter (CRL) in April 2024.
The CRL did not identify any deficiencies related to the clinical efficacy or clinical safety data but did request additional CMC information.

EDSA: Preparing IND for Phase 2 Trial of EB06 in Vitiligo

On May 10, 2024, Edesa Biotech, Inc. (EDSA) announced financial results for the second quarter of fiscal year 2024 that ended March 31, 2024 and provided a business update.
Edesa is planning to seek regulatory approval for a Phase 2 trial of its anti-CXCL10 mAb in patients with moderate-to-severe nonsegmental vitiligo.
For EB05, the company has expanded site selection activities for the Phase 3 study in acute respiratory distress syndrome (ARDS) caused by COVID-19 and has begun transitioning the day-to-day management of the trial to a new clinical research organization (CRO).

NRBO: Preclinical Data on DA-1241 with Semaglutide to be Presented at EASL Congress 2024

On May 22, 2024, NeuroBo Pharmaceuticals, Inc. (NRBO) announced that preclinical data of DA-1241 in combination with semaglutide in mouse models of metabolic dysfunction-associated steatohepatitis (MASH) will be presented at the EASL Congress 2024 on Thursday, June 6, 2024.
Two abstracts will be presented: one using the GAN diet-induced obese and biopsy-confirmed mouse model of MASH and one using the CCl4 induced liver fibrosis model.
The company shared some of the results that showed an additive effect on different parameters of liver health in both models, with the posters being available following the presentations.

EPIX: Updated Data from Phase 1 Trial of Masofaniten and Enzalutamide Expected in 2H24

On May 14, 2024, ESSA Pharma Inc. (EPIX) announced financial results for the second quarter of fiscal year 2024 that ended March 31, 2024 and provided a business update.
ESSA is currently studying its lead compound, masofaniten (EPI-7386), in two clinical trials: EPI-7386-CS-001 and EPI-7386-CS-010.
The -001 trial consists of Part A monotherapy treatment and Part B combination therapy of masofaniten plus abiraterone acetate/prednisone (Cohort 1 mHSPC or mCRPC) or with apalutamide following 12 weeks of monotherapy therapy (Cohort 2 nmCRPC).

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May 29

Daily Brief Financials: PNB Housing Finance Ltd, QV Equities Ltd, Banco De Sabadell SA, China Vanke , Deutsche Beteiligungs AG and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

PNB Housing: Block Deal Trade Special Situations and Tactical Trade Strategy
QV Equities (QVE AU): 28th June Shareholder Vote
BBVA Files Hostile Offer: Conditions, Defences and Probabilities
Morning Views Asia: China Vanke
Deutsche Beteiligungs – Successful exits assist H124 performance

PNB Housing: Block Deal Trade Special Situations and Tactical Trade Strategy

By Nimish Maheshwari

Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
These block deals generally include selling promoters and big funds at a price discount to its current market price.
Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

QV Equities (QVE AU): 28th June Shareholder Vote

By David Blennerhassett

On the 12th March, Aussie-based investment plays QV Equities Ltd (QVE AU) and WAM Leaders Ltd (WLE AU) entered into a Scheme.
The current scrip terms are 0.739 new WAM shares per QVE share; OR A$0.989/share cash. Terms will be adjusted for updated pre-tax NTA/shares of both companies after the Scheme Meeting.
The Scheme Booklet is now out, with a Scheme Meeting to be held on the 28th June. Expected implementation on the 15 July. The IE says fair & reasonable.

BBVA Files Hostile Offer: Conditions, Defences and Probabilities

By Jesus Rodriguez Aguilar

On 24 May, Banco Bilbao Vizcaya Argentari (BBVA SM) submitted the authorisation request for its all-stock offer for Banco De Sabadell SA (SAB SM). Closing expected to take 6-8 months.
Gross spread (CSP 27 May) is 7.6%, which This translates in a 52% implied probability of deal success. The fixed income market appears to share this view.
Nevertheless, from a long-only perspective, the risk/reward of Sabadell is interesting. The deal values Sabadell’s shares at €2.07 each, an implied equity value of €11,187 million, for a 0.92 P/TBV.

Morning Views Asia: China Vanke

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.

China Vanke

Deutsche Beteiligungs – Successful exits assist H124 performance

Deutsche Beteiligungs (DBAG) reported an NAV total return of 3% in H124 (to March 2024) following the first-time recognition of 2024 portfolio company budgets and 2024 consensus forecasts for peers in Q124. Its H124 return includes a net €19m negative effect from the incorporation of additional portfolio valuation factors. DBAG’s H124 performance was supported by the successful sale of in-tech at a healthy 3.2x multiple on invested capital (MOIC). DBAG also closed the initial investment in a 51% stake in ELF Capital. Its shares now trade at a c 22% discount to NAV.

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May 29

Daily Brief Consumer: TSE Tokyo Price Index TOPIX, Rize , Virtuoso Optoelectronics, Watches of Switzerland, Deliveroo, Guess? Inc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Increasing Profitability to Gain Support from Overseas Investors Is a Condition for Higher Valuation
Temasek co-leads $14m round of SG agritech firm Rize
Virtuoso Optoelectronics Ltd- Forensic Analysis
Watches Of Switzerland (WOSG LN) – Tuesday, Feb 27, 2024
Deliveroo (ROO) – Tuesday, Feb 27, 2024
GES: 1Q Preview: Building for the Future: Reiterate Buy, $37 PT

Increasing Profitability to Gain Support from Overseas Investors Is a Condition for Higher Valuation

By Aki Matsumoto

Even after the TSE’s request for a P/B increase, it is not possible to raise valuations simply on the expectation of a P/B increase without improving profitability.
Most companies have cash allocation challenges. Companies with higher profitability will accumulate even more cash on hand, so higher level of shareholder return will further positively impact ROE and ROA.
Some of the companies that have reduced valuations include those with relatively high ROE and ROA, so there are small-cap stocks with reduced valuations and increased investment opportunities.

Temasek co-leads $14m round of SG agritech firm Rize

By Tech in Asia

Rize, a Singapore-based agritech startup, has secured US$14 million in a series A funding round co-led by Breakthrough Energy Ventures, GenZero, Temasek, and Wavemaker Impact.
The company plans to use the funds to boost its presence in other markets like Indonesia and Vietnam.
It also aims to increase its team of agronomy experts to over 100. Rize’s platform gathers key agricultural information needed for sustainable farming.

Virtuoso Optoelectronics Ltd- Forensic Analysis

By Nitin Mangal

Virtuoso Optoelectronics (VOEPL IN) is a contract manufacturer company engaged into production of ACs, Lightings and other equipments. The company is renowned for supplying ACs to Voltas.
The company has grown sharply over the last five years and has been engaging in constant capex. However, it does struggle in converting its earnings to cash.
Among the forensic checks, it nets off receivables and payables/advances, the exact nature of these line items cannot be commented upon. VOEPL also faces high cost of borrowings

Watches Of Switzerland (WOSG LN) – Tuesday, Feb 27, 2024

WOS is a luxury watch and fine jewelry retailer, with a focus on selling Rolex and other luxury brands
Despite strong financial performance and earnings growth, the company’s stock price has dropped significantly
Market misunderstanding of the impact of Rolex’s acquisition of Bucherer has led to WOS being undervalued, presenting a buying opportunity for investors.

Deliveroo (ROO) – Tuesday, Feb 27, 2024