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Smartkarma Daily Briefs

May 13
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Toyota Hangs up on KDDI and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Toyota Hangs up on KDDI
  • US Banks – No Period on Record Since 1972 Shows Terms on Credit Card Loans so Poor
  • Optics Earnings (FN, ANET, COHR, LITE, AAOI)

Ohayo Japan | Toyota Hangs up on KDDI

By Mark Chadwick

  • The Dow extended its winning streak to eight sessions, marking its best week of the year.
  • U.S. central bank is likely to proceed with interest rate cuts this year, although the timing and magnitude of the policy adjustments are uncertain
  • Toyota plans to sell part of its stake in KDDI for approximately 200 billion yen, intending to fund investments in car electrification

US Banks – No Period on Record Since 1972 Shows Terms on Credit Card Loans so Poor

By Daniel Tabbush

  • Terms of credit on US credit card loans have surged to levels well higher than any period on record, since 1972 suggesting far worse delinquencies, risk aversion by lenders.
  • There are important implications for the 2nd and 3rd order effects on consumption in the US economy, as well as obvious 1st order implications for banks, card issuers.
  • In September 2022 delinquent card loans rates bottomed at 7.6% and this delinquency rate is now at 9.7% in December 2023.

Optics Earnings (FN, ANET, COHR, LITE, AAOI)

By Douglas O’Laughlin

  • To make my content readable, this is an optics-only earnings update.
  • I will discuss everything together and put together a high-level overview.
  • The specific things I am interested in are Marvell’s ZR and custom silicon.

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May 13
0

Daily Brief ECM: ZEEKR IPO: Strong First-Day Return and Upsized Offering and more

By | Daily Briefs, ECM

In today’s briefing:

  • ZEEKR IPO: Strong First-Day Return and Upsized Offering
  • ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

ZEEKR IPO: Strong First-Day Return and Upsized Offering

By Andrei Zakharov

  • ZEEKR, a rapidly growing premium EV maker, has successfully completed its IPO and raised ~$441M. The offering was priced at the top of the range at $21 per share.
  • The company sold a total of 21M ADSs, up from the initial target of 17.5M shares. ZEEKR’s stock soared more than 30% following its strong debut on NYSE on Friday.
  • Geely Auto, Mobileye and CATL have acquired ~14.3M ADSs and overall investor sentiment was positive. I believe ZEEKR may succeed as a high-volume EV maker worldwide.

ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

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, after a stellar showing by HD Hyundai Marine Solution (443060 KS), the coming week will be a busy one for India listings.
  • On the placement front, there were no major deals during the week. We did look at Asmedia Technology (5269 TT) planned GDR, and Wuxi XDC’s upcoming lockup expiry.

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May 13
0

Daily Brief Credit: Morning Views Asia: China Jinmao Holdings and more

By | Credit, Daily Briefs

In today’s briefing:

  • Morning Views Asia: China Jinmao Holdings, Sunny Optical Technology Group, Yuexiu Property

Morning Views Asia: China Jinmao Holdings, Sunny Optical Technology Group, Yuexiu Property

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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May 13
0

Daily Brief Equity Bottom-Up: Sumitomo Chemical (4005): To Believe Or Not To Believe and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question
  • Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked
  • China Healthcare Weekly (May12)-Policy Catalyst in Medical Device, GLP-1 Overvaluation, Pientzehuang
  • Himax: Signs of Automotive Demand Rebound; Why Demand Strength Is Different Than NXP and Infineon
  • BeiGene (6160.HK/​BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable
  • China Port Pair Opportunity: COSCO Shipping Ports Vs. China Merchants Port
  • Dream International (1126 HK)  Management Concall: 4x PE,11.4% Div Yield,40% of Mkt Cap in Cash
  • Paycloud Holdings (4015 JP)

Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question

By Michael Allen

  • Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.
  • Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.
  • The only reasonable explanation for the reaction is that the market doesn’t believe the new guidance for 3/25. This could prove to be a huge mistake.

Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked

By Scott Foster

  • MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
  • Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
  • Consolidation of the share price is likely to continue until orders and profit trends are confirmed.

China Healthcare Weekly (May12)-Policy Catalyst in Medical Device, GLP-1 Overvaluation, Pientzehuang

By Xinyao (Criss) Wang

  • The National Health Commission and eight other departments issued “Opinions on strengthening the capacity building of critical care medical services”. New policy catalysts in the medical device sector arrives.
  • Current valuations of weight-loss drug companies have “large bubble”, which have basically priced in all the potential of GLP-1s even based on optimistic assumptions. We advise investors to be rational.
  • The price of core raw materials is showing a continuous upward trend, which will inevitably cause certain difficulties for Pientzehuang’s performance growth in 2024. Valuation has more downside ahead.

Himax: Signs of Automotive Demand Rebound; Why Demand Strength Is Different Than NXP and Infineon

By Vincent Fernando, CFA

  • Automotive display driver IC leader Himax reported 1Q24 results last week that were ahead of guidance. The company also guided for rising margins.
  • Management believes 1Q24 represents a cyclical bottom for the company’s financial performance and expects automotive demand to rise in 2H24E.
  • Himax rallied but remains 55% below its 2021 highs, yet its market opportunity larger than ever. Himax could be benefitting from different positioning within automotive chips than NXP & Infineon.

BeiGene (6160.HK/​BGNE.US/688235.CH) 24Q1- A Breakeven Point Is on the Horizon, but It Is Not Stable

By Xinyao (Criss) Wang

  • The market is satisfied with BeiGene’s 24Q1 performance. The major reason for BeiGene to narrow net loss in 24Q1 was based on strong product revenue growth rather than cost control. 
  • Given the varying pace of product promotion/R&D expenditure and the changes of product sales growth, BeiGene’s adjusted loss may achieve breakeven in a certain quarter of this year (e.g. 24Q4).
  • BeiGene (6160 HK) is hard to cut costs largely. Sustained overall profitability may not be achieved until 2026 or 2027. But at least, we still see hope for a turnaround.

China Port Pair Opportunity: COSCO Shipping Ports Vs. China Merchants Port

By Osbert Tang, CFA

  • China’s two national port companies China Merchants Port (144 HK) and Cosco Shipping Ports (1199 HK) have underperformed, but exports have picked up. We see an opportunity here.
  • With a 9.2% increase in container throughput, CSPL even down by 4.8% YTD, underperformed CMPH by 12.9pp. There is room for it to catch up.
  • CSPL is also cheaper at 7x and 6.3x PERs for the next two years, making it more attractive on a relative basis.

Dream International (1126 HK)  Management Concall: 4x PE,11.4% Div Yield,40% of Mkt Cap in Cash

By Sameer Taneja

  • We summarize our gleanings from the conference call with Dream International (1126 HK) to better understand growth opportunities and future expansion plans.
  • The company is expanding in Indonesia to increase its capacity by 30 million USD ( over 830 million USD). (capacity utilization for FY23:83%).
  • Trading at 4x FY24e PE, with an 11.4% dividend yield and a 15-year average ROE of 20%, this is a stock worth exploring. 

Paycloud Holdings (4015 JP)

By Sessa Investment Research

  • 1H Results: On April 12, 2024, Paycloud Holdings Inc. announced its 2Q FY2024/8 earnings, its first earnings announcement since becoming a holding company and changing its name on March 1, 2024.
  • In 1H FY2024/8, the company reported net sales of ¥1,990 mn, adjusted EBITDA of ¥226 mn, and operating profit of ¥86 mn. It had an irregular 5-month accounting period in 1Q FY2023/8 that included the July-August 2022 earnings following a change in the accounting period of the former Valuedesign Inc., which was merged with the company.
  • As a result, the company’s earnings summary for 1H FY2024/8 show sales being down 12% YoY, adjusted EBITDA up 2% YoY, and operating profit up 237% YoY.

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May 13
0

Daily Brief Event-Driven: KDDI (9433) – Own Share Tender Offer and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)
  • HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June
  • Great Eastern Holdings (GE SP): OCBC’s Offer Needs a Bump to Achieve Privatisation Ambitions
  • Local Reports in Korea Regarding A Holdings Stake Sale Between Naver & Softbank
  • Merger Arb Mondays (13 May) – GA Pack, HEC Pharma, L’Occitane, Alps Logistics, Great Eastern
  • EQD / NSE Volatility Update / 06-May-24 to 10-May-24

KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)

By Travis Lundy

  • In May 2023, KDDI Corp (9433 JP) announced a ¥300bn buyback program, did nothing for two months, then announced a Tender Offer Buyback to buy shares from Toyota. 
  • Toyota had increased its stake years before, then KDDI bought back shares from others, so Toyota was backing its ownership down. I discussed the relationships, history, etc, here.
  • This year, KDDI announced Friday with earnings that is buying back another large stake from Toyota. 

HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June

By Brian Freitas

Great Eastern Holdings (GE SP): OCBC’s Offer Needs a Bump to Achieve Privatisation Ambitions

By Arun George

  • OCBC (OCBC SP) has announced a voluntary unconditional general offer for Great Eastern Holdings (GE SP) at S$25.60 per share, a 36.90% premium to the undisturbed price.
  • OCBC aims to privatise Great Eastern by delisting resolutions or exercising compulsory acquisition rights. The offer has not been declared final.
  • While the offer is reasonable, it is not a knockout bid which would comfortably allow OCBC to privatise through either option. A bump is highly likely.   

Local Reports in Korea Regarding A Holdings Stake Sale Between Naver & Softbank

By Sanghyun Park

  • Naver doesn’t view the sale of its A Holdings stake unfavorably; insiders suggest it’s been planning this move since last year.
  • Market speculation suggests Naver was disappointed by Softbank’s rejection of CLOVA X in LINE, prompting plans to sell A Holdings stake for AI development. A sale agreement is expected soon.
  • The method through which Softbank secures funds for this acquisition is worth the attention from a short-term trading perspective.

Merger Arb Mondays (13 May) – GA Pack, HEC Pharma, L’Occitane, Alps Logistics, Great Eastern

By Arun George

EQD / NSE Volatility Update / 06-May-24 to 10-May-24

By Sankalp Singh

  • Election-Related volatility being reflected in options. India VIX has surged 70% over the past two weeks. Quarterly IVs have seen the largest rise as they capture election result date.
  • BankNifty IVs are finally responding as the market plays catch up to the bank regulator’s new-found aggressiveness
  • Elevated Vol-of-vol observed the past few weeks. Vol-regime Switching Model continues to point to “High & Down” state. Odds of switching to a “High & Up” state are increasing.

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May 13
0

Daily Brief Macro: Five Reasons to Be Bullish and more

By | Daily Briefs, Macro

In today’s briefing:

  • Five Reasons to Be Bullish
  • Beware of the AI Hangover

Five Reasons to Be Bullish

By Cam Hui

  • A review of technical and sentiment conditions shows that stock prices are setting up for a sustained advance.
  • The combination of strong momentum, good breadth and skeptical sentiment points to higher stock prices.
  • Key risks are evidence of a disturbing relative strength by defensive sectors and an upcoming CPI report that could upend the bullish narrative.

Beware of the AI Hangover

By Cam Hui

  • We believe AI is overhyped in the short run and underhyped in the long run.
  • Recent instances of earnings report reactions of stocks in the AI ecosystem indicate excessive frothiness and even AI bellwethers like NVDIA have begun to consolidate sideways.
  • A St. Louis Fed study of the pace of technology adoption suggests that AI adoption will undergo a long cycle like the PC, so investors need to be patient.

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May 13
0

Most Read: KDDI Corp, Nissin Corp, JD.com , Yichang HEC Changjiang Pharma, Greatview Aseptic Packaging, Great Eastern Holdings, Sumitomo Chemical, Naver Corp, LG Chem and more

By | Daily Briefs, Most Read

In today’s briefing:

  • KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)
  • Nissin (9066) – Super Big Buyback Race-Walks the Governance Walk – Super Cheap Logistics Biz
  • Great Eastern (GE SP): OCBC’s S$25.60 Unconditional Offer
  • HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June
  • HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder
  • Greatview Aseptic (468 HK): Shandong Xinjufeng VGO Could Force Mengniu to Act
  • Great Eastern Holdings (GE SP): OCBC’s Offer Needs a Bump to Achieve Privatisation Ambitions
  • Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question
  • Local Reports in Korea Regarding A Holdings Stake Sale Between Naver & Softbank
  • Underexposed Flow Trading Opportunity: LONG Banks & SHORT LG Chem/Energy on June 14

KDDI (9433) – Own Share Tender Offer, Toyota To Sell (Gasp!) Redux (Another Buyback in H2 Possible)

By Travis Lundy

  • In May 2023, KDDI Corp (9433 JP) announced a ¥300bn buyback program, did nothing for two months, then announced a Tender Offer Buyback to buy shares from Toyota. 
  • Toyota had increased its stake years before, then KDDI bought back shares from others, so Toyota was backing its ownership down. I discussed the relationships, history, etc, here.
  • This year, KDDI announced Friday with earnings that is buying back another large stake from Toyota. 

Nissin (9066) – Super Big Buyback Race-Walks the Governance Walk – Super Cheap Logistics Biz

By Travis Lundy

  • Yesterday after the close, Nissin Corp (9066 JP) announced earnings (down vs last year), guidance (back up partway to last year), and a sale of securities to raise ¥6+bn.
  • Nissin also announced an employee share incentive plan (¥900mm) and an adjustment to its MTMP from Apr24 to Mar27. Much lower revenues. Same OP. Higher net. Higher Div Payout ratio.
  • They also announced a really big buyback which should be done by the time people read this. It is really big.

Great Eastern (GE SP): OCBC’s S$25.60 Unconditional Offer

By David Blennerhassett

HSTECH Index Rebalance Preview: Round-Trip Trade of US$2.4bn in June

By Brian Freitas

HEC CJ Pharma (1558 HK): Pre-Conditional Share Exchange Offer from Largest Shareholder

By Arun George

  • Yichang HEC Changjiang Pharma (1558 HK)‘s pre-conditional privatisation from Sunshine Lake Pharma comprises scrip (0.263614 new offeror H Share per HEC CJ Pharma share) and cash (special dividend of HK$1.5).
  • The pre-condition is regulatory approvals from NDRC, MOFCOM, and SAFE. The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). 
  • There is valuation uncertainty as the offeror is unlisted, and its valuation hinges on pipeline products. Nevertheless, with no shareholder close to a blocking stake, the deal should get up.   

Greatview Aseptic (468 HK): Shandong Xinjufeng VGO Could Force Mengniu to Act

By Arun George

Great Eastern Holdings (GE SP): OCBC’s Offer Needs a Bump to Achieve Privatisation Ambitions

By Arun George

  • OCBC (OCBC SP) has announced a voluntary unconditional general offer for Great Eastern Holdings (GE SP) at S$25.60 per share, a 36.90% premium to the undisturbed price.
  • OCBC aims to privatise Great Eastern by delisting resolutions or exercising compulsory acquisition rights. The offer has not been declared final.
  • While the offer is reasonable, it is not a knockout bid which would comfortably allow OCBC to privatise through either option. A bump is highly likely.   

Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question

By Michael Allen

  • Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.
  • Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.
  • The only reasonable explanation for the reaction is that the market doesn’t believe the new guidance for 3/25. This could prove to be a huge mistake.

Local Reports in Korea Regarding A Holdings Stake Sale Between Naver & Softbank

By Sanghyun Park

  • Naver doesn’t view the sale of its A Holdings stake unfavorably; insiders suggest it’s been planning this move since last year.
  • Market speculation suggests Naver was disappointed by Softbank’s rejection of CLOVA X in LINE, prompting plans to sell A Holdings stake for AI development. A sale agreement is expected soon.
  • The method through which Softbank secures funds for this acquisition is worth the attention from a short-term trading perspective.

Underexposed Flow Trading Opportunity: LONG Banks & SHORT LG Chem/Energy on June 14

By Sanghyun Park

  • Despite time until screening, predictions likely hold due to market cap gaps; all candidates are banks, benefiting from recent momentum.
  • Historical patterns show profit-taking selling affecting price impact, particularly on additions with significant pre-inclusion price rises. Monitor banks’ pre-June 14th price appreciation to anticipate impact distortions.
  • Shorting LG Chem and LG Energy Solution based on high price cointegration, consider basket-trading them before the rebalancing, using the battery sector as a long hedge.

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May 13
0

Daily Brief Energy/Materials: Sumitomo Chemical, Greatview Aseptic Packaging and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question
  • Merger Arb Mondays (13 May) – GA Pack, HEC Pharma, L’Occitane, Alps Logistics, Great Eastern

Sumitomo Chemical (4005): To Believe Or Not To Believe, That Is the Question

By Michael Allen

  • Sumitomo Chemical issued new guidance in-line for 3/24 and xx% ahead of consensus for 3/25 EBIT, yet, the shares promptly declined by 10%.
  • Traders were probably spooked by the company’s booking of ¥340bn in impairments that was ¥200bn more than published consensus, but we argue that this was more than already priced in.
  • The only reasonable explanation for the reaction is that the market doesn’t believe the new guidance for 3/25. This could prove to be a huge mistake.

Merger Arb Mondays (13 May) – GA Pack, HEC Pharma, L’Occitane, Alps Logistics, Great Eastern

By Arun George

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May 13
0

Daily Brief Industrials: Mitsubishi Heavy Industries, HD Hyundai Marine Solution , Cosco Shipping Ports, Paycloud Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked
  • ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia
  • China Port Pair Opportunity: COSCO Shipping Ports Vs. China Merchants Port
  • Paycloud Holdings (4015 JP)

Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked

By Scott Foster

  • MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
  • Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
  • Consolidation of the share price is likely to continue until orders and profit trends are confirmed.

ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

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, after a stellar showing by HD Hyundai Marine Solution (443060 KS), the coming week will be a busy one for India listings.
  • On the placement front, there were no major deals during the week. We did look at Asmedia Technology (5269 TT) planned GDR, and Wuxi XDC’s upcoming lockup expiry.

China Port Pair Opportunity: COSCO Shipping Ports Vs. China Merchants Port

By Osbert Tang, CFA

  • China’s two national port companies China Merchants Port (144 HK) and Cosco Shipping Ports (1199 HK) have underperformed, but exports have picked up. We see an opportunity here.
  • With a 9.2% increase in container throughput, CSPL even down by 4.8% YTD, underperformed CMPH by 12.9pp. There is room for it to catch up.
  • CSPL is also cheaper at 7x and 6.3x PERs for the next two years, making it more attractive on a relative basis.

Paycloud Holdings (4015 JP)

By Sessa Investment Research

  • 1H Results: On April 12, 2024, Paycloud Holdings Inc. announced its 2Q FY2024/8 earnings, its first earnings announcement since becoming a holding company and changing its name on March 1, 2024.
  • In 1H FY2024/8, the company reported net sales of ¥1,990 mn, adjusted EBITDA of ¥226 mn, and operating profit of ¥86 mn. It had an irregular 5-month accounting period in 1Q FY2023/8 that included the July-August 2022 earnings following a change in the accounting period of the former Valuedesign Inc., which was merged with the company.
  • As a result, the company’s earnings summary for 1H FY2024/8 show sales being down 12% YoY, adjusted EBITDA up 2% YoY, and operating profit up 237% YoY.

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May 13
0

Daily Brief Industrials: Mitsubishi Heavy Industries, HD Hyundai Marine Solution , Cosco Shipping Ports, Paycloud Holdings and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked
  • ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia
  • China Port Pair Opportunity: COSCO Shipping Ports Vs. China Merchants Port
  • Paycloud Holdings (4015 JP)

Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked

By Scott Foster

  • MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
  • Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
  • Consolidation of the share price is likely to continue until orders and profit trends are confirmed.

ECM Weekly (13th May 2024) – Hyundai Marine, Zeekr, Swiggy, Indegene, Aadhar, TBO, Wuxi XDC, ASMedia

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, after a stellar showing by HD Hyundai Marine Solution (443060 KS), the coming week will be a busy one for India listings.
  • On the placement front, there were no major deals during the week. We did look at Asmedia Technology (5269 TT) planned GDR, and Wuxi XDC’s upcoming lockup expiry.

China Port Pair Opportunity: COSCO Shipping Ports Vs. China Merchants Port

By Osbert Tang, CFA

  • China’s two national port companies China Merchants Port (144 HK) and Cosco Shipping Ports (1199 HK) have underperformed, but exports have picked up. We see an opportunity here.
  • With a 9.2% increase in container throughput, CSPL even down by 4.8% YTD, underperformed CMPH by 12.9pp. There is room for it to catch up.
  • CSPL is also cheaper at 7x and 6.3x PERs for the next two years, making it more attractive on a relative basis.

Paycloud Holdings (4015 JP)

By Sessa Investment Research

  • 1H Results: On April 12, 2024, Paycloud Holdings Inc. announced its 2Q FY2024/8 earnings, its first earnings announcement since becoming a holding company and changing its name on March 1, 2024.
  • In 1H FY2024/8, the company reported net sales of ¥1,990 mn, adjusted EBITDA of ¥226 mn, and operating profit of ¥86 mn. It had an irregular 5-month accounting period in 1Q FY2023/8 that included the July-August 2022 earnings following a change in the accounting period of the former Valuedesign Inc., which was merged with the company.
  • As a result, the company’s earnings summary for 1H FY2024/8 show sales being down 12% YoY, adjusted EBITDA up 2% YoY, and operating profit up 237% YoY.

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