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Smartkarma Daily Briefs

May 25
0

Daily Brief Singapore: UOB and more

By | Daily Briefs, Singapore

In today’s briefing:

  • STI Banks Book S$500M YTD Net Institutional Inflows

STI Banks Book S$500M YTD Net Institutional Inflows

By Geoff Howie

  • DBS, OCBC and UOB have booked S$500 million in combined net institutional inflow for the 2024 year through to 23 May.
  • Combined net interest income (NII) for the trio was S$8.3 billion in 1QFY24, the sixth consecutive quarter combined NII surpassed S$8.0 billion, and up 46% from the combined S$5.7 billion in 4QFY19.
  • This compares to the trio averaging 5.8% total returns for the full 2023 year, with S$2.5 billion of combined net institutional outflow.

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May 25
0

Daily Brief United States: Uber Technologies , Exact Sciences, Insulet Corp, Warner Music Group , ROBLOX , Fox , Duolingo, Hyatt Hotels Corp Cl A, New York Times Co A, Chesapeake Financial Shares In and more

By | Daily Briefs, United States

In today’s briefing:

  • Uber Technologies: Partnership Strategy and Advancements in Autonomous Vehicles! – Major Drivers
  • Exact Sciences Corporation: Leveraging Health Systems and Electronic Ordering Channels To Catalyze Growth! – Major Drivers
  • Insulet Corporation: Will Its Innovative Edge In The Insulin Pump Market Last? – Major Drivers
  • Warner Music Group: A Tale Of Increasing Presence in Dynamic Music Markets! – Major Drivers
  • Roblox Corporation: Will Enabling In-World Advertising Catalyze Revenue Growth? – Major Drivers
  • Fox Corporation: A Robust Network Portfolio and Targeted Content Strategy! – Major Drivers
  • Duolingo Inc.: Investment in English Learning Content and Use of Generative AI! – Major Drivers
  • Hyatt Hotels Corporation: Favorable China Dynamics
  • The New York Times: A Story Of Increased Subscriber Engagement and Monetization Opportunities! – Major Drivers
  • CPKF: Initiating our 2025 Estimates

Uber Technologies: Partnership Strategy and Advancements in Autonomous Vehicles! – Major Drivers

By Baptista Research

  • Uber has kicked off 2024 with positive growth, reporting a 21% year-on-year increase in rides, which equates to its gross bookings growth rate. Their user base expanded by 15%, underpinned by 7.1 million drivers and couriers operating on the platform. The firm’s record adjusted EBITDA of $1.4 billion and the generation of $4.2 billion in free cash flow over the last year reflect a significant financial upswing. However, the world of automobiles is shifting towards autonomous vehicles (AVs), posing both challenges and opportunities for Uber. The firm needs to strategize to withstand expected competition from entities like Tesla. CEO Dara Khosrowshahi maintains that breakthroughs in AV technology will eventually prove profitable for Uber, as they promise safer rides and broader accessibility. However, the transition period from human-driven to autonomous vehicles will demand a balanced approach, exploiting both to keep the business steady. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Exact Sciences Corporation: Leveraging Health Systems and Electronic Ordering Channels To Catalyze Growth! – Major Drivers

By Baptista Research

  • Exact Sciences Corporation’s first quarter 2024 earnings. The quarter demonstrated robust performance with first quarter revenue growing by 6% to $638 million. Particularly noteworthy was the 7% increase in screening revenue to $475 million, which is attributed to the company’s successful optimization of billing and patient compliance systems. However, Exact Sciences faces a tough comparison base, as its growth in the previous year was buoyed by enhancements to billing and patient compliance systems and a weak flu season. The expansion of Precision Oncology revenue by 5% to $163 million also contributed to the company’s growth. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Insulet Corporation: Will Its Innovative Edge In The Insulin Pump Market Last? – Major Drivers

By Baptista Research

  • Insulet Corporation reported an excellent first quarter of 2024 that has exceeded expectations. The demand for Omnipod 5 continues to rise, the leading insulin delivery system, fueling a robust revenue growth. Performance-wise, the company achieved an overall Omnipod revenue growth of 21%, including a US growth of 23% and an international growth of 15%.
  • The Omnipod 5 has brought significant success to Insulet in both the US and international markets, thanks to its simplicity and affordability. This offering has assisted in driving market growth, as demonstrated by the fact that during the quarter, approximately 85% of new starts came from people previously utilizing multiple daily injections. This pattern of new starts is encouraging because these new starters originated from Insulet’s target market. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Warner Music Group: A Tale Of Increasing Presence in Dynamic Music Markets! – Major Drivers

By Baptista Research

  • Warner Music Group (WMG) demonstrates its influence in the music industry with a global team that continuously delivers for its artists and drives the business forward. In the second quarter earnings call transcript, Warner Music Group specified that the total revenue increased by 7% with Recorded Music and Music Publishing increasing by 4% and 19% respectively. This growth reflects the company’s efficacy in creating and promoting music in various genres and throughout all stages of artists’ development. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Roblox Corporation: Will Enabling In-World Advertising Catalyze Revenue Growth? – Major Drivers

By Baptista Research

  • Roblox Corporation reported its results of their first quarter 2024 earnings and reported that daily active users (DAUs) hit over 77 million, marking a 17% increase from the same period the year before. Year-on-year growth for users above the age of 13 was particularly impressive, at 22%.
  • Japan, a significant gaming market, reported a growth surge of 50%, while India saw similar success, boasting a growth rate of 58%.
  • There was also positive news relating to revenue, which hit $801 million, marking a 22% year-on-year rise and exceeding the company’s own projected range of $755 million to $780 million. Bookings were $923.8 million, landing firmly within the predicted guidance range of $910 million to $940 million. However, Baszucki highlighted expectations were for a higher figure, sparking some concern. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Fox Corporation: A Robust Network Portfolio and Targeted Content Strategy! – Major Drivers

By Baptista Research

  • Fox Corporation reported strong Q3 fiscal year 2024 results, demonstrating its ability to distinguish itself from its peers with a 7% EBITDA growth and the steady performance of its brands. However, these results were compared against last year’s Q3 which benefited significantly from the windfall of Super Bowl LVII.
  • Fox’s total affiliate revenue fees showed promising growth, with a 4% increase driven by the benefits of recent renewals. This was evident in both the Television and Cable segments. However, advertising revenues were down due to the absence of the Super Bowl and fewer NFL broadcasts compared to the previous year. If the shortfall from NFL games were disregarded, overall advertising revenues would have increased slightly. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Duolingo Inc.: Investment in English Learning Content and Use of Generative AI! – Major Drivers

By Baptista Research

  • Duolingo Inc. recently released its Q1 2024 shareholder letter, announcing positive financial results while outlining future initiatives. The company achieved revenue and bookings growth of 45% and 41% respectively and saw active daily users grow by 54% YoY, signaling the effectiveness of their product-driven flywheel. The strategy of offering efficient language tutoring, driving user growth, and converting users to subscribers has proven to be beneficial for the platform. Duolingo also announced record profitability for the quarter. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Hyatt Hotels Corporation: Favorable China Dynamics

By Baptista Research

  • Hyatt revealed in its Q1 Earnings that the year has started vigourously for them, displaying growth in multiple dimensions and expanding fees. The occupancy and RevPAR trends they have been observing are strong, driven by noteworthy demands across all customer segments. An increase of 5.5% in system-wide RevPAR was seen in Q1 on the back of robust leisure travel trends. While there is expectation of a subdued year-over-year growth rate, the rates are noticeably above pre pandemic levels. They also observed healthy business transient revenue indicating resumption in business travel. Furthermore, Hyatt’s loyalty program saw a growth of 22% over the past year, reaching a total of approximately 46 million members. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

The New York Times: A Story Of Increased Subscriber Engagement and Monetization Opportunities! – Major Drivers

By Baptista Research

  • The New York Times Company (NYT) reported a strong beginning to the year in its Q1 2024 earnings. The company’s strategy – aiming to become the essential subscription for people seeking to understand and engage with the world – is performing well, contributing to its sustained growth in a dynamic media environment. Among key drivers of this growth are the company’s diverse products serving various consumer needs and its deeply engaged subscriber base. Additionally, the high level of subscriber engagement observed reinforces NYT’s belief in its ability to grow the digital-only Average Revenue Per User (ARPU), anticipated to rise on a yearly basis, given multiple pricing and monetization levers. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

CPKF: Initiating our 2025 Estimates

By Zacks Small Cap Research

  • We are slightly decreasing our diluted EPS estimate for 2024 by a penny, from $2.20 to $2.19, a 2% gain from 2023’s actual diluted EPS of $2.15.
  • Our initial estimate for 2025 is $2.35 per diluted share, representing a 7% gain over our 2024 estimate.
  • We expect moderate gains in net interest income in 2024 and 2025 as solid loan growth, estimated at 8% in 2024 and 8% in 2025, will be partly offset by a lower net interest margin.

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May 25
0

Daily Brief Japan: Sumitomo Mitsui Financial Group and more

By | Daily Briefs, Japan

In today’s briefing:

  • Japanese Bigger-Cap Banks – Rates Story Continues, with the Prospect of Equity Holdings Disposals

Japanese Bigger-Cap Banks – Rates Story Continues, with the Prospect of Equity Holdings Disposals

By Victor Galliano

  • The continued “higher for longer” interest rates in the US, along with widening JGB yields adds weight to the Bank of Japan potentially raising benchmark rates further
  • In this report, we expand our coverage of the bigger cap banks’ metrics to include the equity holdings of the top six market caps and the banks’ BoJ deposits
  • We see further upside for Japanese bank shares, especially those geared into higher domestic rates and with the potential for equity holdings disposals; we like Resona, Mizuho, SMFG and Concordia

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May 25
0

Daily Brief China: Sciclone Pharmaceuticals, Hang Seng Index, PDD Holdings, Kuaishou Technology and more

By | China, Daily Briefs

In today’s briefing:

  • SciClone Pharma (6600 HK): Scheme Vote on 19 June
  • EQD | Hang Seng Down: How Low Can the Pullback Go?
  • [PDD Holdings (PDD US,BUY,TP US$172) TP Change]:Squeezing Supplier Base for Its Own Benefit,Globally
  • [Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI

SciClone Pharma (6600 HK): Scheme Vote on 19 June

By Arun George

  • Sciclone Pharmaceuticals (6600 HK)‘s scheme document is out, and the court meeting is scheduled for 19 June. The IFA considers the HK$18.80 per share offer fair and reasonable. 
  • The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
  • This is a done deal. At the last close and for the 12 July payment, the gross and annualised spread is 2.2% and 17.3%, respectively.

EQD | Hang Seng Down: How Low Can the Pullback Go?

By Nico Rosti

  • The Hang Seng Index has been rallying for 3 weeks but then last week the rise was halted and the index gave up a good chunk of the gains.
  • It seems the index has become quite volatile but this week it could go up again, or otherwise next week, the reversal is imminent given its oversold condition.
  • It’s hard to predict if the rally can continue after the bounce, the index seems a bit long-term overbought, albeit short-term oversold. A contradiction, but that is the situation now.

[PDD Holdings (PDD US,BUY,TP US$172) TP Change]:Squeezing Supplier Base for Its Own Benefit,Globally

By Ying Pan

  • PDD reported C1Q24 top-line, non-GAAP EBIT, and non-GAAP net income 1.3%, 67.0%, and 80.0% vs. our estimate, and 13.9%, 82.0%, and 94.7% vs. consensus, respectively;
  • Temu unit economics improvement drove the 1Q beat. Per order outlay on marketing and fulfilment declined 20-25% qoq, we estimate;
  • PDD continues to effectively squeeze merchants for its benefit,while also benefiting from weak consumer sentiment in China and overseas. We maintain BUY,and raise TP to US$172, implying 12.3x CY24 PE.

[Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI

By Ying Pan

  • Kuaishou reported C1Q24 revenue, IFRS OP, and IFRS Net income inline, 58%, and 78% vs. our estimates; and inline, 67% and 86% vs. consensus
  • Company suggested contribution of Generative AI (GAI) to the growth of the advertising business to be substantial;
  • We reiterate our BUY rating and raised target price to HK$83, implying 17x PE in 2025.

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May 25
0

Most Read: Chilled & Frozen Logistics Holdings, Korea Stock Exchange KOSPI 200, Akeso Biopharma Inc, Shanghai Henlius Biotech , Shift Up, Sciclone Pharmaceuticals, Hanmi Semiconductor, DB Hitek Co., Ltd. and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives
  • FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling
  • Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
  • Henlius Biotech (2696 HK): Fosun Offer?
  • Henlius (2696 HK): Privatisation by Fosun Pharma?
  • Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues
  • SciClone Pharmaceuticals (6600 HK): 19th June Shareholder Vote
  • SciClone Pharma (6600 HK): Scheme Vote on 19 June
  • KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions
  • Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT

Chilled & Frozen Logistics (9099) Gone Ballistic – Reminder of Structure, Price, and Incentives

By Travis Lundy

  • In late March, AZ-Com Maruwa Holdings (9090 JP) made an unsolicited (“hostile”) bid for Chilled & Frozen Logistics Holdings (9099 JP) at a near 50% premium at ¥3,000/share.
  • It traded through, then C&F ran a bid solicitation process, got four bids. Since the day AFTER that announcement, the stock is up 56%. We approach Alps Logistics multiples.
  • This deal doesn’t get the split price benefit that HTS and Alps Logistics did. And it is a fundamentally different logistics business. And target management dynamics are different.

FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling

By Sanghyun Park

  • Lee urgently appeard on TV today and said, “In June, we will explain whether and when short selling will be resumed, and what criteria we might use for the resumption.”
  • He noted considering flexible partial short selling resumption even if only some conditions are met, contrasting the Presidential Office’s stance from two days ago.
  • Presidential Office led short selling ban, now likely under FSC/FSS jurisdiction for resumption.

Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?

By Xinyao (Criss) Wang

  • Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards. 
  • The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
  • If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.

Henlius Biotech (2696 HK): Fosun Offer?

By David Blennerhassett

Henlius (2696 HK): Privatisation by Fosun Pharma?

By Arun George

  • Shanghai Henlius Biotech (2696 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.” The likely bidder is Fosun Pharma.
  • A merger by absorption would require approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). There could also be a 90% minimum acceptance condition. 
  • The shares are 62% below the IPO price. However, shareholders with blocking stakes would welcome an offer suggesting a 30-40% takeover premium would be sufficient.

Shift Up IPO – The Negatives – Changing Monetisation Model, Censorship Issues

By Sumeet Singh

  • Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
  • Shift Up is a South Korean games developer, which as released three games so far for the global markets.
  • In this note, we talk about the not-so-positive aspects of the deal.

SciClone Pharmaceuticals (6600 HK): 19th June Shareholder Vote

By David Blennerhassett

  • On the 28th March, Li Zhenfu (SciClone (6600 HK)‘s NED), Assicurazioni Generali (G IM), and concert parties (collectively controlling 36.61%), made an Offer at $18.80/share, a 33.9% premium to undisturbed. 
  • The Offer price is bang in line with SciClone’s March 2021 IPO price. Terms were declared final. This is a clean deal.
  • The Scheme Document is now out. The Court Meeting will be held on the 19th June. Expected payment on or before the 12 July. FWIW: IFA says fair & reasonable.

SciClone Pharma (6600 HK): Scheme Vote on 19 June

By Arun George

  • Sciclone Pharmaceuticals (6600 HK)‘s scheme document is out, and the court meeting is scheduled for 19 June. The IFA considers the HK$18.80 per share offer fair and reasonable. 
  • The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
  • This is a done deal. At the last close and for the 12 July payment, the gross and annualised spread is 2.2% and 17.3%, respectively.

KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions

By Charlotte van Tiddens, CFA

  • The KRX have announced the index changes for the KOSPI200 June review.
  • The index will be rebalanced in the closing auction on Thursday the 13th of June.
  • There will be 6 additions to the index and 6 deletions.

Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT

By Sanghyun Park

  • Unexpectedly, KRX included Cosmo AM&T (005070 KS) despite not meeting the market cap cutoff and excluded DB Hitek (000990 KS) and Lotte Energy Materials (020150 KS).
  • Cosmo AM&T’s unexpected inclusion triggers a significant one-day passive flow event through the KOSPI 200 IT, the sector index with the largest AUM.
  • Sector index rebalancing, a single-day event managed by one ETF operator, more significantly correlates flow direction with price impact. We should consider a long-short setup for these on June 13th.

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May 25
0

Daily Brief Utilities: Avangrid and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Iberdrola/Avangrid: Spread

Iberdrola/Avangrid: Spread

By Jesus Rodriguez Aguilar

  • Post-March announcement, investors bought shares of Avangrid (AGR US)  in the hope of an offer sweetening, which was flagged here, as Iberdrola got $6 billion from its Mexico exit.
  • The improved $35.75/shareoffer was made in response to potential resistance from prospective minority shareholders, as the deal needs the approval of a majority of these non-Iberdrola stakeholders.
  • Spread is 3.2%/5.55% (gross/annualised) assuming $1.4667 in dividend payments (three dividends of $0.44 and a prorated dividend of $0.1467) and settlement on 30 December. Long.

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May 25
0

Daily Brief Industrials: Uber Technologies , RAS Technology Holdings , Ctt-Correios De Portugal Sa and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Uber Technologies: Partnership Strategy and Advancements in Autonomous Vehicles! – Major Drivers
  • Ras Technology Holdings Ltd (RTH) – Friday, Feb 23, 2024
  • Ctt Correios De Portugal (CTT) – Thursday, Feb 22, 2024

Uber Technologies: Partnership Strategy and Advancements in Autonomous Vehicles! – Major Drivers

By Baptista Research

  • Uber has kicked off 2024 with positive growth, reporting a 21% year-on-year increase in rides, which equates to its gross bookings growth rate. Their user base expanded by 15%, underpinned by 7.1 million drivers and couriers operating on the platform. The firm’s record adjusted EBITDA of $1.4 billion and the generation of $4.2 billion in free cash flow over the last year reflect a significant financial upswing. However, the world of automobiles is shifting towards autonomous vehicles (AVs), posing both challenges and opportunities for Uber. The firm needs to strategize to withstand expected competition from entities like Tesla. CEO Dara Khosrowshahi maintains that breakthroughs in AV technology will eventually prove profitable for Uber, as they promise safer rides and broader accessibility. However, the transition period from human-driven to autonomous vehicles will demand a balanced approach, exploiting both to keep the business steady. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Ras Technology Holdings Ltd (RTH) – Friday, Feb 23, 2024

By Value Investors Club

  • Racing and Sports provides data, content, and SaaS solutions to global racing and wagering industries
  • Despite challenges post-IPO, such as founders selling stakes and market volatility, RAS shows solid execution and progress towards profitability
  • Considered undervalued by investors due to strong business model and impressive financial metrics, RAS remains promising in sports wagering industry

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.

Ctt Correios De Portugal (CTT) – Thursday, Feb 22, 2024

By Value Investors Club

  • CTT, a conglomerate in Portugal, has been overlooked by investors due to declining revenue in the mail segment
  • Management is returning capital to shareholders and working to address the undervaluation of the stock
  • Growth potential in express and parcel, financial services, and retail sectors could unlock hidden value for shareholders in the long run

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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May 25
0

Daily Brief TMT/Internet: Hanmi Semiconductor, DB Hitek Co., Ltd., Lenovo, Formosa Sumco Technology, Kuaishou Technology, Warner Music Group , Fox , ROBLOX , NortonLifeLock, Akamai Technologies and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions
  • Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT
  • Tech Supply Chain Tracker (25-May-2024): Global EV charger market & key players
  • Formosa Sumco Technology – Earnings, Returns, Financial Position, Worsening Dramatically
  • [Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI
  • Warner Music Group: A Tale Of Increasing Presence in Dynamic Music Markets! – Major Drivers
  • Fox Corporation: A Robust Network Portfolio and Targeted Content Strategy! – Major Drivers
  • Roblox Corporation: Will Enabling In-World Advertising Catalyze Revenue Growth? – Major Drivers
  • Gen Digital: A Story Increasing Personalization and Empowerment through AI! – Major Drivers
  • Akamai Technologies: Will The Management Focus on High-Growth Compute and Security Business Pay Off? – Major Drivers

KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions

By Charlotte van Tiddens, CFA

  • The KRX have announced the index changes for the KOSPI200 June review.
  • The index will be rebalanced in the closing auction on Thursday the 13th of June.
  • There will be 6 additions to the index and 6 deletions.

Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT

By Sanghyun Park

  • Unexpectedly, KRX included Cosmo AM&T (005070 KS) despite not meeting the market cap cutoff and excluded DB Hitek (000990 KS) and Lotte Energy Materials (020150 KS).
  • Cosmo AM&T’s unexpected inclusion triggers a significant one-day passive flow event through the KOSPI 200 IT, the sector index with the largest AUM.
  • Sector index rebalancing, a single-day event managed by one ETF operator, more significantly correlates flow direction with price impact. We should consider a long-short setup for these on June 13th.

Tech Supply Chain Tracker (25-May-2024): Global EV charger market & key players

By Tech Supply Chain Tracker

  • Global EV charger market overview with key players highlighted in the industry, including a focus on technological advancements.
  • Ex-IBM Chief Accessibility Officer seeks to revolutionize digital inclusion in Taiwan’s manufacturing sector through innovative strategies and initiatives.
  • Updates on notebook shipment for April 2024, global smartphone sales in the first quarter of 2024 as well as collaborations such as SDC & Lenovo teaming up to launch slidable display devices by 2025.

Formosa Sumco Technology – Earnings, Returns, Financial Position, Worsening Dramatically

By Daniel Tabbush

  • The company recently announced poor earnings down 56% YoY in 1Q24
  • Dwindling cash is another major concern especially with higher debt/ebitda
  • At 15-25% ROE is sensible but now back toward 5% there is less enthusiasm

[Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI

By Ying Pan

  • Kuaishou reported C1Q24 revenue, IFRS OP, and IFRS Net income inline, 58%, and 78% vs. our estimates; and inline, 67% and 86% vs. consensus
  • Company suggested contribution of Generative AI (GAI) to the growth of the advertising business to be substantial;
  • We reiterate our BUY rating and raised target price to HK$83, implying 17x PE in 2025.

Warner Music Group: A Tale Of Increasing Presence in Dynamic Music Markets! – Major Drivers

By Baptista Research

  • Warner Music Group (WMG) demonstrates its influence in the music industry with a global team that continuously delivers for its artists and drives the business forward. In the second quarter earnings call transcript, Warner Music Group specified that the total revenue increased by 7% with Recorded Music and Music Publishing increasing by 4% and 19% respectively. This growth reflects the company’s efficacy in creating and promoting music in various genres and throughout all stages of artists’ development. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Fox Corporation: A Robust Network Portfolio and Targeted Content Strategy! – Major Drivers

By Baptista Research

  • Fox Corporation reported strong Q3 fiscal year 2024 results, demonstrating its ability to distinguish itself from its peers with a 7% EBITDA growth and the steady performance of its brands. However, these results were compared against last year’s Q3 which benefited significantly from the windfall of Super Bowl LVII.
  • Fox’s total affiliate revenue fees showed promising growth, with a 4% increase driven by the benefits of recent renewals. This was evident in both the Television and Cable segments. However, advertising revenues were down due to the absence of the Super Bowl and fewer NFL broadcasts compared to the previous year. If the shortfall from NFL games were disregarded, overall advertising revenues would have increased slightly. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Roblox Corporation: Will Enabling In-World Advertising Catalyze Revenue Growth? – Major Drivers

By Baptista Research

  • Roblox Corporation reported its results of their first quarter 2024 earnings and reported that daily active users (DAUs) hit over 77 million, marking a 17% increase from the same period the year before. Year-on-year growth for users above the age of 13 was particularly impressive, at 22%.
  • Japan, a significant gaming market, reported a growth surge of 50%, while India saw similar success, boasting a growth rate of 58%.
  • There was also positive news relating to revenue, which hit $801 million, marking a 22% year-on-year rise and exceeding the company’s own projected range of $755 million to $780 million. Bookings were $923.8 million, landing firmly within the predicted guidance range of $910 million to $940 million. However, Baszucki highlighted expectations were for a higher figure, sparking some concern. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Gen Digital: A Story Increasing Personalization and Empowerment through AI! – Major Drivers

By Baptista Research

  • Gen Co., a leader in consumer cybersafety, wrapped up its fourth quarter of fiscal 2024, showing impressive financial growth and gains in operations. Over the fiscal year, the company recorded consistent operational results, making it their fifth year of organic growth. This growth is driven by an increasing awareness of cybersafety needs among consumers, making it a dynamic and compelling market opportunity. Gen’s focus solely on cybersafety sets them apart from competitors who may have other substantial interests. The company’s dedicated teams are continuously uncovering, researching, and stopping new threats. In the fiscal year ’24, over 12 billion attacks were blocked by using threat telemetry data and advanced AI capabilities. Gen’s strong technology offering on all major platforms combined with AI capabilities and market-leading visibility across the entire ecosystem has positioned the company to lead the way in consumer cybersafety. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Akamai Technologies: Will The Management Focus on High-Growth Compute and Security Business Pay Off? – Major Drivers

By Baptista Research

  • Akamai Technologies, Inc.’s first quarter earnings showed strong growth in the company’s security and compute sectors, while facing headwinds in the delivery product line. The financial results saw revenue grow to $987 million, reflecting an 8% increase year-over-year in both constant currency and reported. Non-GAAP earnings per share were reported at $1.64, a 17% increase year-over year and 18% in constant currency. Furthermore, the fast-growing parts of Akamai’s business, including security and cloud computing, grew to represent ultimately 2/3 of total revenue, with an impressive growth of 22% over Q1 of 2023.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

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May 25
0

Daily Brief Energy/Materials: Lithium Americas , Pan African Resources, Pharos Energy, Summit Midstream Partners LP, Western Midstream Partners LP, Wheaton Precious Metals and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Lithium Americas (LAC ): From Dust To Dust
  • Pan African Resources – An accounting storm in a legal teacup
  • Pharos Energy Plc (LSE: PHAR): Net cash up by ~US$21.5 mm in four months
  • Summit Midstream Partners Lp (SMLP) – Friday, Feb 23, 2024
  • Western Midstream Partners: How Is The MLP Model Evolving? – Major Drivers
  • Wheaton Precious Metals Corp.: Uninterrupted Operations Increase in Attributable Production & 3 Major Drivers

Lithium Americas (LAC ): From Dust To Dust

By Bleecker Street Research

  • LAC is a pre-revenue junior miner with aspirations to turn its lithium clay deposit at the Thacker Pass mine in Nevada into the world’s sixth-largest lithium producer by 2028, eventually rising to 25% of global supply. 
  • LAC’s Thacker Pass mine is grossly uneconomic. Using the company’s own inputs, Thacker Pass has an NPV of zero at current lithium prices, which remain far above long-term averages.
  • The Thacker Pass mine is a clay deposit mine. There does not appear to be a single operational lithium clay mine globally. Experts agree that extracting lithium from clay does not work using reasonable output price assumptions.

Pan African Resources – An accounting storm in a legal teacup

By Edison Investment Research

This morning, Pan African announced that it may have been in technical breach of the net asset test when it paid out dividends to shareholders in the five years from FY19–23 and also when it instigated its share buyback programme in 2022. As attested to by the fact that it took five years to be noticed, the apparent breach arises from the nexus of an arcane bit of legislation and a curious distinction between the presentation currency of the group (the US dollar) and its functional currency (the South African rand) and the effect of the depreciation of the latter against the former on the distributable versus undistributable reserves of Pan African Resources. Fortunately, there is a relatively simple remedy that involves a court sanctioned capital reduction process via a clever reserve juggling act. There will be no change to the number of Pan African shares in issue. However, it will require shareholder assent, which is the reason for PAF’s announcement. We believe it is in shareholders’ interest to vote in favour of these resolutions at its forthcoming general meeting on 10 June.

Pharos Energy Plc (LSE: PHAR): Net cash up by ~US$21.5 mm in four months

By Auctus Advisors

  • Production from January to the end of April was 5,755 boe/d including 4,347 boe/d in Vietnam and 1,408 bbl/d in Egypt.
  • This is in line with the company FY24 guidance of 5.2-6.5 mboe/d including 3.9-5.0 mbpoe/d in Vietnam and 1.3-1.5 mbbl/d in Egypt.
  • The FY24 capex guidance is unchanged. The key near term news flow remains the farm-out of an interest in Blocks 125 & 126 in Vietnam. Several interested farm-in parties are awaiting confirmation of timing of a rig slot and clarity on the well cost.

Summit Midstream Partners Lp (SMLP) – Friday, Feb 23, 2024

By Value Investors Club

  • Summit Midstream previously hinted at significant news in their strategic process
  • Author anticipates that this news could lead to a positive outcome and increase in stock price
  • Soft Q4 earnings due to natural gas environment are seen as a limited-term concern before the upcoming announcement

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.

Western Midstream Partners: How Is The MLP Model Evolving? – Major Drivers

By Baptista Research

  • Western Midstream Partners, LP began the first quarter of 2024 with promising results, which points towards the potential for continuing growth for current and potential investors. The company posted a record-breaking adjusted EBITDA of $608 million for the quarter. This unexpected and impressive increase is largely attributed to the substantial increase in throughput in the gas segment of their business, better than expected performances in terms of gross margin per unit, and the strong performance of the water business, indicating an overall proficiently managed operation by the firm. Looking into the specifics, the Delaware Basin saw a 3% increase, DJ Basin saw a 2% rise, and the company’s other assets also had notable growth. The oil-side, however, experienced a decline by 19% on a quarter-to quarter basis due to the divestiture of certain JVs. Yet, the DJ Basin managed to rise by 7%, and the PRB Basin rose by 15%.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

Wheaton Precious Metals Corp.: Uninterrupted Operations Increase in Attributable Production & 3 Major Drivers

By Baptista Research

  • Distinguished by generating approximately $220 million in operating cash flow and over $160 million in net earnings, Wheaton Precious Metals’ financial results for the first quarter of 2024 reveal the efficacy of its business model, particularly in the context of a rising commodity price environment. The company maintains strong cash operating margins and orchestrated the successful completion of an upfront payment of $450 million for the acquisition of the Platreef and Kudz Ze Kayah Streams from Orion Resource Partners. Wheaton Precious Metals’ strong liquidity position is evident through its holding of $306 million in cash, an undrawn revolving credit facility of $2 billion, and robust operating cash flows. These assets equip the company to meet all outstanding commitments and pursue promising mineral stream interests. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

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May 25
0

Daily Brief Financials: Hang Seng Index, Sumitomo Mitsui Financial Group, Chesapeake Financial Shares In, UOB and more

By | Daily Briefs, Financials

In today’s briefing:

  • EQD | Hang Seng Down: How Low Can the Pullback Go?
  • Japanese Bigger-Cap Banks – Rates Story Continues, with the Prospect of Equity Holdings Disposals
  • CPKF: Initiating our 2025 Estimates
  • STI Banks Book S$500M YTD Net Institutional Inflows

EQD | Hang Seng Down: How Low Can the Pullback Go?

By Nico Rosti

  • The Hang Seng Index has been rallying for 3 weeks but then last week the rise was halted and the index gave up a good chunk of the gains.
  • It seems the index has become quite volatile but this week it could go up again, or otherwise next week, the reversal is imminent given its oversold condition.
  • It’s hard to predict if the rally can continue after the bounce, the index seems a bit long-term overbought, albeit short-term oversold. A contradiction, but that is the situation now.

Japanese Bigger-Cap Banks – Rates Story Continues, with the Prospect of Equity Holdings Disposals

By Victor Galliano

  • The continued “higher for longer” interest rates in the US, along with widening JGB yields adds weight to the Bank of Japan potentially raising benchmark rates further
  • In this report, we expand our coverage of the bigger cap banks’ metrics to include the equity holdings of the top six market caps and the banks’ BoJ deposits
  • We see further upside for Japanese bank shares, especially those geared into higher domestic rates and with the potential for equity holdings disposals; we like Resona, Mizuho, SMFG and Concordia

CPKF: Initiating our 2025 Estimates

By Zacks Small Cap Research

  • We are slightly decreasing our diluted EPS estimate for 2024 by a penny, from $2.20 to $2.19, a 2% gain from 2023’s actual diluted EPS of $2.15.
  • Our initial estimate for 2025 is $2.35 per diluted share, representing a 7% gain over our 2024 estimate.
  • We expect moderate gains in net interest income in 2024 and 2025 as solid loan growth, estimated at 8% in 2024 and 8% in 2025, will be partly offset by a lower net interest margin.

STI Banks Book S$500M YTD Net Institutional Inflows

By Geoff Howie

  • DBS, OCBC and UOB have booked S$500 million in combined net institutional inflow for the 2024 year through to 23 May.
  • Combined net interest income (NII) for the trio was S$8.3 billion in 1QFY24, the sixth consecutive quarter combined NII surpassed S$8.0 billion, and up 46% from the combined S$5.7 billion in 4QFY19.
  • This compares to the trio averaging 5.8% total returns for the full 2023 year, with S$2.5 billion of combined net institutional outflow.

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