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Smartkarma Daily Briefs

Apr 30
0

Daily Brief Technical Analysis: International Automobile Analysis and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • International Automobile Analysis

International Automobile Analysis

By Douglas Busch

  • Spanning the globe for current best-in-breed auto players shows diverging action.
  • New pair suggestion: Long Tesla/Short Rivian. Bottom could be in on TSLA
  • Updated JD.com general status from last week’s China/Japan Note encouraging.

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Apr 30
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Daily Brief ECM: Worley Placement – Largest Shareholder Selling at an Attractive Discount and more

By | Daily Briefs, ECM

In today’s briefing:

  • Worley Placement – Largest Shareholder Selling at an Attractive Discount
  • SHEIN IPO: The Biggest IPO in 2024 in London?
  • Indegene Limited Pre-IPO: Subscribe on Profitable Niche Business Model and Attractive Valuation
  • China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market
  • Pre-IPO Mao Geping Cosmetics – Potential Risks Behind High Gross Margins
  • Premier Energies Pre-IPO Tearsheet

Worley Placement – Largest Shareholder Selling at an Attractive Discount

By Clarence Chu

  • DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
  • DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
  • As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

SHEIN IPO: The Biggest IPO in 2024 in London?

By Douglas Kim

  • Although Shein has yet to formally announce the listing destination, there is a growing anticipation that the listing venue could be London, rather than New York. 
  • It has been reported that the company has more than doubled its net profit to more than US$2 billion in 2023. 
  • The company is currently seeking a corporate value of nearly US$70 billion to US$90 billion in the Shein IPO which would be one of the biggest IPOs globally in 2024. 

Indegene Limited Pre-IPO: Subscribe on Profitable Niche Business Model and Attractive Valuation

By Tina Banerjee

  • Indegene Limited (1864095D IN) has set IPO price band at INR430–452 per share. The IPO consists of fresh issue as well as OFS by existing shareholders.
  • Considering FY24 annualized post-IPO EPS of INR13.48, Indegene seeks a P/E valuation of 31.9–33.5x.
  • Considering niche business focus, proven execution capability, marquee clientele, long-standing client relationship, life science focus, and comprehensive offering, Indegene’s valuation seems quite attractive.

China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market

By Sumeet Singh

  • China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
  • China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
  • In this note, we talk about the positive aspects of the deal.

Pre-IPO Mao Geping Cosmetics – Potential Risks Behind High Gross Margins

By Xinyao (Criss) Wang

  • MAO GEPING relies heavily on flagship brand MAOGEPING, with over-reliance risks on single brand.The strategy of focusing more on offline sales channels makes it appear less up-to-date with the times.
  • Different from most brands, the influence of MAO GEPING largely comes from its founder, Mr. Maogeping, who if reduces his holdings, could have a negative impact on the Company’s business/prospects.
  • Solely relying on marketing and promotion to drive performance growth is not a long-term solution.Lack of core technology and product innovation would limit MAO GEPING’s future development in fierce competition.

Premier Energies Pre-IPO Tearsheet

By Clarence Chu

  • Premier Energies Limited (0377949D IN) is looking to raise US$300m in its upcoming India IPO. The bookrunners on the deal are JP Morgan, Kotak, and ICICI Securities.
  • Premier Energies (Premier) is a manufacturer of solar photovoltaic (PV) cells, and solar modules. It also executes EPC projects and provides follow-up O&M services.
  • As per Frost & Sullivan (F&S), the firm was the second largest domestic manufacturer in terms of annual installed capacity as of Mar 2024.

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Apr 30
0

Daily Brief Credit: Security Token Journal: Private Debt Tokens and more

By | Credit, Daily Briefs

In today’s briefing:

  • Security Token Journal: Private Debt Tokens
  • Morning Views Asia: China Hongqiao, Greentown China, Medco Energi, Yankuang Energy Group

Security Token Journal: Private Debt Tokens

By Warut Promboon

  • We have been of the opinion that tokenized real world assets (RWAs), especially tokenized debt will represent a more understandable underlying value of tokens or cryptocurrencies than Bitcoin.
  • We are positive on tokens backed by risk-free assets such as US Treasuries or even investment-grade bonds as rates products for crypto funds and fractional investments for retail investors.
  • Private debt could be the next in line to enjoy mass adoption if the legal elements and credit protection have been put in place to gain trust of institutional investors.

Morning Views Asia: China Hongqiao, Greentown China, Medco Energi, Yankuang Energy Group

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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Apr 30
0

Daily Brief Event-Driven: L’Occitane (973 HK): Conditional VGO at HK$34 and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • L’Occitane (973 HK): Conditional VGO at HK$34
  • Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent
  • KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer
  • Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
  • Pacific Smiles (PSQ AU): A Brace Of Offers
  • L’Occitane (973 HK): Geiger’s $34/Share Offer
  • Mimasu Semiconductor (8155 JP): Shin-Etsu (4063 JP)’s Pre-Conditional Tender Offer
  • Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion
  • NPN X PRX Discount Update Post Tencent Early Game Release News Flow
  • ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance

L’Occitane (973 HK): Conditional VGO at HK$34

By Arun George

  • L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
  • The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
  • Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.

Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent

By Travis Lundy

  • On 28 Feb, the Nikkei reported (an article I missed) Mitsubishi Corp (8058 JP) would seek to unload its 35% stake in Kfc Holdings Japan (9873 JP) 
  • The stock popped, then continued to rise further. After the close Friday, the Nikkei reported MitCorp was close to a deal with Carlyle. A deal is apparently expected imminently.
  • I expect this could be a “Split Price Deal” (like Hitachi Transport and Pasona).

KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer

By Arun George

  • The Nikkei reports that Carlyle is in the final stages of buying Mitsubishi Corp (8058 JP)’s 35% stake in Kfc Holdings Japan (9873 JP), which will result in a tender offer. 
  • The structure will likely be similar to the KDDI Corp (9433 JP)/ Lawson Inc (2651 JP) tender, where MitCorp provides an irrevocable NOT to accept but vote for share consolidation.
  • The shares have been up 33.6% since Nikkei flagged the sale on 28 February. KFC Japan will trade in line with peers’ multiples at a JPY5,700 offer.  

Worley (WOR): Impact of Dar Group’s A$1.4bn Sale

By Brian Freitas

  • Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
  • This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
  • The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

Pacific Smiles (PSQ AU): A Brace Of Offers

By David Blennerhassett

  • On the 18th December 2023, Pacific Smiles (PSQ AU), an operator of dental centers, announced and rejected a A$1.40/share non-binding proposal from Genesis Capital. Genesis subsequently increased its stake to 19.90%.
  • Genesis then bumped its NBIO to A$1.75/share on the 19 March and was granted due diligence on a non-exclusive basis. PSQ said it would support the revised terms if firmed. 
  • PSQ has now entered a Scheme with National Dental Care at A$1.90/share. The Offer also requires FIRB signing-off. But the proposal is a non-starter if Genesis rejects terms. 

L’Occitane (973 HK): Geiger’s $34/Share Offer

By David Blennerhassett

  • After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
  • The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the  HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final. 
  • This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.  

Mimasu Semiconductor (8155 JP): Shin-Etsu (4063 JP)’s Pre-Conditional Tender Offer

By Arun George

  • Mimasu Semiconductor Industry (8155 JP) recommended a pre-conditional tender offer from Shin Etsu Chemical (4063 JP) at JPY3,700, a 14.4% and 35.4% premium to the last close and undisturbed price, respectively. 
  • The pre-condition, which cannot be waived, is approval under the competition laws of Japan and Taiwan. The tender offer is expected to start in late July.
  • While the offer is below the mid-point of the IFA DCF valuation range and the requested price, it is 7.7% higher than the all-time high of JPY3,435. This is done. 

Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion

By Oshadhi Kumarasiri

  • Japanese instant noodle manufacturer Toyo Suisan Kaisha (2875 JP) has become the newest target for activist investors in Japan.
  • Nihon Global Growth Partners Management, Inc argues that Toyo Suisan’s investments are overly concentrated in its legacy businesses, despite these ventures yielding low returns.
  • Therefore, they are recommending that Toyo Suisan exit its legacy businesses, increase the payout ratio to 40%, and use some of its excess cash for a share buyback of ¥20bn.

NPN X PRX Discount Update Post Tencent Early Game Release News Flow

By Charlotte van Tiddens, CFA

  • Last week Monday, Tencent confirmed the early release of Dungeon and Fighter Mobile, a highly anticipated mobile adaptation of the computer game developed by Nexon.
  • The game is expected to be released in China on the 21st of May following positive test results.
  • Tencent was the 11th best performing constituent in the HSTECH index for the week (out of 30), returning 14.7%. The index ended the week up 13.4%.

ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance

By Brian Freitas

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Apr 30
0

Daily Brief Equity Bottom-Up: Fuyao Glass (3606 HK):  Global Champion Benefiting From Structural Uptrend and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Fuyao Glass (3606 HK):  Global Champion Benefiting From Structural Uptrend
  • Monthly Chinese Tourism Tracker | Outbound Recovery Continues, but Some Regional Destinations Lag
  • BSE – A Regulatory Accident?
  • Tech Supply Chain Tracker (29-Apr-2024): Apple expands supply chain in Southeast Asia, led by Vietnam.
  • China Consumption Weekly (29 Apr 2024): Weird Phone Mkt, Encouraging Car and Travel Mkts
  • BYD (1211 HK): Low Growth in 1Q24, But March Sales and Homemade Batteries to Support a Strong Year
  • BFI Finance Indonesia (BFIN IJ) – Slower Recovery in Process
  • Taiwan Semiconductor Manufacturing: Significant Artificial Intelligence (AI) Opportunities & The Returns That Lie Ahead! – Major Drivers
  • Waaree Renewable Technologies Ltd- Forensic Analysis
  • China Comm Const (1800 HK): Continue to Deliver

Fuyao Glass (3606 HK):  Global Champion Benefiting From Structural Uptrend

By Steve Zhou, CFA

  • Fuyao Glass Industry Group (3606 HK) is the largest auto glass producer in the world, with an estimated 40% market share globally, and a dominant 65% market share in China.
  • The investment case for Fuyao include:  ASP increase from product mix upgrade; increasing sales volume due to more auto glasses needed per car; and improving margins.
  • The company has production bases in China with annual production volume of around 32.5 million units, and in US with annual production volume of around 5.5 million units.

Monthly Chinese Tourism Tracker | Outbound Recovery Continues, but Some Regional Destinations Lag

By Daniel Hellberg

  • Outbound continues to improve, March load factor matched pre-Covid level
  • Appears Chinese tourists are “spreading their wings”, travelling farther afield
  • Trip.com has been best YTD performer in the space; can airlines catch up?

BSE – A Regulatory Accident?

By Sudarshan Bhandari

  • SEBI has asked BSE to pay regulatory fees on options trading based on notional turnover instead of premium turnover
  • The impact of this would 10-20% on earnings in short term
  • The bigger question lies ahead what BSE will do to offset the impact and grow its market share in derivative trading

Tech Supply Chain Tracker (29-Apr-2024): Apple expands supply chain in Southeast Asia, led by Vietnam.

By Tech Supply Chain Tracker

  • Apple diversifies supply chain, focusing on Southeast Asia, led by Vietnam, while also shifting suppliers in India.
  • MediaTek plans to boost market presence and R&D in India, targeting 30% market share in China by 2H24 with Dimensity 9400 SoC.
  • US probe into China’s RISC-V role could impact Samsung’s AI chip ambitions, while STMicroelectronics aims for 100% renewable electricity by 2027.

China Consumption Weekly (29 Apr 2024): Weird Phone Mkt, Encouraging Car and Travel Mkts

By Ming Lu

  • The top five smartphone producers’ market shares got closer in the first quarter.
  • The China Immigration Office announced that entry and exit of people increased by 305% YoY in 1Q24.
  • China Passenger Car Association expected that new energy vehicle sales volume will grow by 37% YoY in April.

BYD (1211 HK): Low Growth in 1Q24, But March Sales and Homemade Batteries to Support a Strong Year

By Ming Lu

  • BYD’s revenue growth is lower than the estimate in our preview note.
  • However, the recovery of sales volume in March suggests a strong year.
  • We believe BYD will win the price war due to its homemade batteries.

BFI Finance Indonesia (BFIN IJ) – Slower Recovery in Process

By Angus Mackintosh

  • BFI Finance Indonesia (BFIN IJ) booked a solid set of 1Q2024 numbers with improved QoQ bookings, although with some concerns over challenging market conditions slowing the recovery.
  • The NPF ratio saw an ongoing improvement, although the cost of capital increased due to higher write-offs from last year’s bookings. Revenue declined due to a shift to lower-risk products. 
  • The outlook for BFIN in 2H2024 looks more positive, with the company shifting back to higher-return products and with lower expected credit costs. Valuations are appealing on 1.5x PBV.

Taiwan Semiconductor Manufacturing: Significant Artificial Intelligence (AI) Opportunities & The Returns That Lie Ahead! – Major Drivers

By Baptista Research

  • Taiwan Semiconductor Manufacturing Company’s (TSMC) Q1 2024 earnings presented several key details about the firm’s current market standing and future performance.
  • For Q1 2024, they reported a 5.3% sequential decrease in revenue due to the impact of smartphone seasonality despite strong demand in high-performance computing (HPC).
  • Gross margin was also up to 53.1%, reflecting product mix changes, and the firm’s operating margin increased to 42%.

Waaree Renewable Technologies Ltd- Forensic Analysis

By Nitin Mangal

  • Waaree Renewable Technologies (WAREERTL IN) or (WRTL) is into Solar EPC and is a subsidiary of Waaree Energies Ltd. 
  • Revenues and order book have increased exponentially in the last few years.
  • While the business has certainly picked up, there are few forensic checks that need attention; most important being the auditor’s comment on the need to increase strength of internal controls.

China Comm Const (1800 HK): Continue to Deliver

By Osbert Tang, CFA

  • China Communications Construction (1800 HK) maintained healthy earnings growth at 10% in 1Q24, ahead of the consensus expectation of 7.3% for full-year FY24.
  • A 0.2pp gross margin expansion and positive swing in credit and asset impairments are the drivers, though higher finance costs have offset some of their benefits.
  • 1Q24 new contracts were up 10.8%, and we estimate backlog equals 4.5x FY24F revenue. Despite YTD outperformance, it is still cheap at 2.4x PER and 0.2x P/B.

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Apr 30
0

Daily Brief Crypto: Crypto Crisp: Stripe Returns to Crypto and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Crypto Crisp: Stripe Returns to Crypto

Crypto Crisp: Stripe Returns to Crypto

By Mads Eberhardt

  • It is no surprise that we have maintained a bullish stance in crypto over the past month, given the uptick in US dollar liquidity and the easing tensions between Israel and Iran.
  • Despite these factors, the market adopted a predominantly pessimistic view, highlighted by a negative futures funding rate.
  • This suggested to us that the market was misaligned with the outside environment.

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Apr 30
0

Daily Brief Macro: Steno Signals #97 – 5 reasons why the CNY will be devalued next week and how to trade it and more

By | Daily Briefs, Macro

In today’s briefing:

  • Steno Signals #97 – 5 reasons why the CNY will be devalued next week and how to trade it
  • Portfolio Watch: No respite for Asian FX.. How to deal with it?
  • Global Commodities: Takeaways from CESCO Copper Week — The only way out is up
  • Future Fed Policy Conduct: Time to Eradicate the Secular Stagnation Thesis
  • Ep. 213: Bilal Hafeez on Fed Cuts, Dollar Strength and AI Hype
  • The Week That Was in ASEAN@Smartkarma – BCA Leads, BFIN Is Back, and Thai Banks
  • Iron Ore and The China Property/Auto Stimulus Angle
  • UK Politics: Early Election?
  • Wheat Breakout & Commodity Positioning Update
  • Vietnam CPI Inflation 4.4% y-o-y in Apr-24

Steno Signals #97 – 5 reasons why the CNY will be devalued next week and how to trade it

By Andreas Steno

  • I spent last week in Asia and even though I admittedly like to see my research as edgy and contrarian, I quickly realized that most PMs in the region agreed on my take on the imminent risk of a devaluation of the CNY.
  • USD/CNH call options are popular/consensus in the Asian Macro PM space, but interestingly there is no consensus around the contagion from a devaluation of the USDCNY.
  • The discussions I had pointed in all directions, meaning that a CNY devaluation holds the potential to turn into a macro earthquake, despite it already being a consensus position.

Portfolio Watch: No respite for Asian FX.. How to deal with it?

By Andreas Steno

  • Welcome to our weekly Portfolio Watch! We have had a strong week in our portfolio with a USD-reflationary lean, but we are starting to contemplate how to deal with contagion from a continued rise in USD versus Asian FX pairs, especially if the increasing latent risk of a major devaluation of the CNY comes into fruition.
  • There is currently no respite for the Asian FX pairs as all major forward looking models point to a reacceleration of US inflation trends from the current plateau around 3.5% YoY.
  • We will look at the devaluation risks in detail tomorrow in our weekly “Steno Signals”, but will pinpoint value pockets in markets already today in our Portfolio Watch.

Global Commodities: Takeaways from CESCO Copper Week — The only way out is up

By At Any Rate

  • Copper market may be running ahead of a fundamental story, with extreme tightening in the copper concentrate market
  • Chinese demand has stepped back due to surging copper prices, but expected to acclimatize to higher price levels
  • Supply side challenges may take a couple more quarters to resolve, leading towards a tighter refined market in the future and potential supply shortfalls by 2030.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Future Fed Policy Conduct: Time to Eradicate the Secular Stagnation Thesis

By Said Desaque

  • Failure to remove policy accommodation after household balance sheets had been repaired after the global financial crisis simply prolonged the secular stagnation thesis that had been embraced by bond investors.
  • The current estimate of the real neutral federal funds rate is too low relative to potential GDP growth, presenting an opportunity for bond investors to jettison their secular stagnation thesis.
  • A structurally higher neutral Fed policy rate will impact short-term funding markets, while equity investors will need to place greater focus on long-term corporate profit growth for their returns. 

Ep. 213: Bilal Hafeez on Fed Cuts, Dollar Strength and AI Hype

By Macro Hive Conversations With Bilal Hafeez

  • Bilal, CEO and head of research at Macro Hive, shares his background and career journey in finance
  • Raised in a working-class immigrant family in Oxford, excelled academically and went to Cambridge to study economics
  • Started career in finance at JP Morgan in FX research, later moved to Deutsche bank where he specialized in building models and smart beta strategies in currency markets

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

The Week That Was in ASEAN@Smartkarma – BCA Leads, BFIN Is Back, and Thai Banks

By Angus Mackintosh

Iron Ore and The China Property/Auto Stimulus Angle

By Sameer Taneja

  • The short term is suddenly looking bullish for iron ore, as rumors abound that tier-1 cities in China may remove home-buying restrictions in May, and auto stimulus measures were announced. 
  • Cities like Chengdu and Nanjing have already announced measures to make home-buying more attractive, such as removing purchase qualifications and pilot programs for old-for-new home housing. 
  • We like 62% Fe and see it trade up to its upper limit of 130 USD/ton (vs. current 117 USD/ton). On equities, we like Vale (VALE US) .

UK Politics: Early Election?

By Alastair Newton

  • The overall outcome of this week’s local elections and by-election may not be as bad for the Conservatives as expected.
  • Rishi Sunak may be increasingly considering a snap general election.
  • This consideration comes as challenges continue to mount for the Conservatives.

Wheat Breakout & Commodity Positioning Update

By The Commodity Report

  • Going forward, Energy could face some selling flows from CTAs according to the latest CTA flow update by UBSS

  • UBS ‘Contrarian’ trades: bullish Agriculturals and LME Lead, bearish Energy, Cocoa, Lean Hogs and Platinum

  • UBS ‘Go with momentum’ trades: bullish Zinc, Aluminium, bearish Cotton, Sugar and Palladium

Vietnam CPI Inflation 4.4% y-o-y in Apr-24

By Heteronomics AI

  • Vietnam’s CPI inflation increased by 0.4pp, reaching 4.4% in April 2024, the highest since January 2023.
  • The inflation rate is 1.11 percentage points above the one-year average.
  • This indicates a renewed acceleration of inflationary pressures.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Apr 30
0

Most Read: Hainan Jinpan Smart Technology, Maruti Suzuki India, L’Occitane, Kfc Holdings Japan, WorleyParsons Ltd, Mimasu Semiconductor Industry, Toyo Suisan Kaisha and more

By | Daily Briefs, Most Read

In today’s briefing:

  • STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform
  • India: Potential Free Float Changes & Passive Flows in May
  • L’Occitane (973 HK): Conditional VGO at HK$34
  • Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent
  • Worley Placement – Largest Shareholder Selling at an Attractive Discount
  • KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer
  • Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
  • L’Occitane (973 HK): Geiger’s $34/Share Offer
  • Mimasu Semiconductor (8155 JP): Shin-Etsu (4063 JP)’s Pre-Conditional Tender Offer
  • Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion

STAR100 Index Rebalance Preview: 10 Changes as Potential Adds Outperform

By Brian Freitas

  • The review period for the June rebalance ends 30 April. We expect the changes to be announced 31 May with the implementation taking place after the close on 14 June.
  • We forecast 10 changes for the index, including migrations between the STAR 100 Index and the SSE STAR50 (STAR50 INDEX). 
  • Excluding the migrations, the potential adds have outperformed the potential deletes over the last few months and that could continue as we head to the end of the review period.

India: Potential Free Float Changes & Passive Flows in May

By Brian Freitas

  • Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-September and/or end-December.
  • The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
  • Depending on the date that the shareholding was published, there could be 14 stocks with passive inflows from global trackers while 7 could see passive outflows in May.

L’Occitane (973 HK): Conditional VGO at HK$34

By Arun George

  • L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
  • The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
  • Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.

Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent

By Travis Lundy

  • On 28 Feb, the Nikkei reported (an article I missed) Mitsubishi Corp (8058 JP) would seek to unload its 35% stake in Kfc Holdings Japan (9873 JP) 
  • The stock popped, then continued to rise further. After the close Friday, the Nikkei reported MitCorp was close to a deal with Carlyle. A deal is apparently expected imminently.
  • I expect this could be a “Split Price Deal” (like Hitachi Transport and Pasona).

Worley Placement – Largest Shareholder Selling at an Attractive Discount

By Clarence Chu

  • DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
  • DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
  • As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

KFC Holdings Japan (9873 JP): Carlyle Edging Towards a Tender Offer

By Arun George

  • The Nikkei reports that Carlyle is in the final stages of buying Mitsubishi Corp (8058 JP)’s 35% stake in Kfc Holdings Japan (9873 JP), which will result in a tender offer. 
  • The structure will likely be similar to the KDDI Corp (9433 JP)/ Lawson Inc (2651 JP) tender, where MitCorp provides an irrevocable NOT to accept but vote for share consolidation.
  • The shares have been up 33.6% since Nikkei flagged the sale on 28 February. KFC Japan will trade in line with peers’ multiples at a JPY5,700 offer.  

Worley (WOR): Impact of Dar Group’s A$1.4bn Sale

By Brian Freitas

  • Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
  • This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
  • The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

L’Occitane (973 HK): Geiger’s $34/Share Offer

By David Blennerhassett

  • After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
  • The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the  HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final. 
  • This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.  

Mimasu Semiconductor (8155 JP): Shin-Etsu (4063 JP)’s Pre-Conditional Tender Offer

By Arun George

  • Mimasu Semiconductor Industry (8155 JP) recommended a pre-conditional tender offer from Shin Etsu Chemical (4063 JP) at JPY3,700, a 14.4% and 35.4% premium to the last close and undisturbed price, respectively. 
  • The pre-condition, which cannot be waived, is approval under the competition laws of Japan and Taiwan. The tender offer is expected to start in late July.
  • While the offer is below the mid-point of the IFA DCF valuation range and the requested price, it is 7.7% higher than the all-time high of JPY3,435. This is done. 

Toyo Suisan: Activist Advocates For Legacy Divestiture & More Capital for Global Expansion

By Oshadhi Kumarasiri

  • Japanese instant noodle manufacturer Toyo Suisan Kaisha (2875 JP) has become the newest target for activist investors in Japan.
  • Nihon Global Growth Partners Management, Inc argues that Toyo Suisan’s investments are overly concentrated in its legacy businesses, despite these ventures yielding low returns.
  • Therefore, they are recommending that Toyo Suisan exit its legacy businesses, increase the payout ratio to 40%, and use some of its excess cash for a share buyback of ¥20bn.

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Apr 30
0

Daily Brief Industrials: Keisei Electric Railway Co, Waaree Renewable Technologies, China Communications Construction, Csx Corp, Equifax Inc, Epwin Group PLC, Mytilineos Holdings Sa and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Keisei Electric Railway’s Problems Are Part of a Cross-Shareholding Dissolution Process
  • Waaree Renewable Technologies Ltd- Forensic Analysis
  • China Comm Const (1800 HK): Continue to Deliver
  • CSX Corporation: Will Its Investments In Industrial Development Projects Yield Dividends? – Major Drivers
  • Equifax Inc.: Successful price/product strategy in the face of competition and customer price sensitivity! – Major Drivers
  • Epwin Group – Second earnings uplift this year after results exceed
  • Mytilineos – Strong Q1 and plans for potential London listing

Keisei Electric Railway’s Problems Are Part of a Cross-Shareholding Dissolution Process

By Aki Matsumoto

  • A solution for Keisei, similar to case of parent-subsidiary listing, is cashing OLC shares to raise profitability and growth potential of its business, to eliminate the distortion in market capitalization.
  • There is a corporate governance issue in that OLC is accepting board members from Keisei, which has below 20% equity and does not clearly explain the synergies of the business.
  • This can be viewed as part of dissolving cross-shareholdings where the company wants to obtain voting advantage without business synergies and cannot find opportunities to spend the cash it sells.

Waaree Renewable Technologies Ltd- Forensic Analysis

By Nitin Mangal

  • Waaree Renewable Technologies (WAREERTL IN) or (WRTL) is into Solar EPC and is a subsidiary of Waaree Energies Ltd. 
  • Revenues and order book have increased exponentially in the last few years.
  • While the business has certainly picked up, there are few forensic checks that need attention; most important being the auditor’s comment on the need to increase strength of internal controls.

China Comm Const (1800 HK): Continue to Deliver

By Osbert Tang, CFA

  • China Communications Construction (1800 HK) maintained healthy earnings growth at 10% in 1Q24, ahead of the consensus expectation of 7.3% for full-year FY24.
  • A 0.2pp gross margin expansion and positive swing in credit and asset impairments are the drivers, though higher finance costs have offset some of their benefits.
  • 1Q24 new contracts were up 10.8%, and we estimate backlog equals 4.5x FY24F revenue. Despite YTD outperformance, it is still cheap at 2.4x PER and 0.2x P/B.

CSX Corporation: Will Its Investments In Industrial Development Projects Yield Dividends? – Major Drivers

By Baptista Research

  • CSX Corporation had a solid start to 2024, dealing with a number of challenges, including severe weather in January and the Francis Scott Key Bridge collapse.
  • Despite these difficulties, the corporation managed to maintain a consistent momentum with a volume performance that kept moving forward.
  • The company’s management remains committed to mitigating the impact of these challenges for its customers.

Equifax Inc.: Successful price/product strategy in the face of competition and customer price sensitivity! – Major Drivers

By Baptista Research

  • Equifax Inc.’s strong start in 2024 is evident from its Q1 reported revenue of $1.389 billion, up 7%, resulting from sustained strength in mortgage revenue and global non-mortgage businesses.
  • Equifax’s adjusted EBITDA margins of 29.1% were also slightly above expectations.
  • Moreover, their adjusted earnings per share (EPS) of $1.50 a share exceeded the high end of their guidance.

Epwin Group – Second earnings uplift this year after results exceed

By Edison Investment Research

Epwin’s FY23 results were robust and management navigated inflationary pressures well. Despite some market headwinds, we have increased our FY24 and FY25 underlying operating profit estimates for the second time this year. Long-term, well-established growth trends imply that Epwin is well-placed to leverage off increasing demand for its energy-efficient and low-maintenance building products. Epwin offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on an FY24e P/E ratio of 8.3x, materially below the long-term average of 10.5x, and yields c 6%. The extended share buyback programme should help support the share price.

Mytilineos – Strong Q1 and plans for potential London listing

By Edison Investment Research

On April 25, Mytilineos (MYTIL) announced, as part of its strategic review, that it is considering a potential international listing on the London Stock Exchange (LSE) within the next 12–18 months. Listing on the LSE would demonstrate a strong vote of confidence by MYTIL in the UK market and aligns with its international growth ambitions, allowing the company to leverage its geographically diverse portfolio of operations. It would provide greater liquidity for investors and enable MYTIL to continue to expand its global presence. While pursuing an LSE listing, MYTIL will retain its listing on the Athens Exchange, demonstrating its ongoing commitment to contributing to the Greek economy, while also acting as an ambassador for Greece in the UK.

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Apr 30
0

Daily Brief Energy/Materials: WorleyParsons Ltd, Deep Yellow Ltd, Anglo American, Copper, Iron Ore, Premier Energies Limited, Schlumberger Ltd, HI-Tech Pipes, Kinder Morgan and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Worley Placement – Largest Shareholder Selling at an Attractive Discount
  • Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
  • ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
  • Anglo American (AGL, AAL): JSE Index Effects of Potential Takeover or Restructuring
  • Global Commodities: Takeaways from CESCO Copper Week — The only way out is up
  • Iron Ore and The China Property/Auto Stimulus Angle
  • Premier Energies Pre-IPO Tearsheet
  • Schlumberger Limited: The ChampionX Acquisition
  • Hi-Tech Pipes: A.G.E. Analysis
  • Kinder Morgan Inc.: Expected Growth in Power Demand Positively Impacting Future Revenues! – Major Drivers

Worley Placement – Largest Shareholder Selling at an Attractive Discount

By Clarence Chu

  • DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
  • DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
  • As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days

Worley (WOR): Impact of Dar Group’s A$1.4bn Sale

By Brian Freitas

  • Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
  • This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
  • The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.

ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance

By Brian Freitas

Anglo American (AGL, AAL): JSE Index Effects of Potential Takeover or Restructuring

By Charlotte van Tiddens, CFA

  • In this note we assess the JSE Top 40 index effect of an Anglo American restructuring or takeover by BHP, assuming the Amplats and Kumba stakes are spun out.
  • We also explore the details of BHP’s initial offer and what the market could be pricing with respect to a potential revision of BHP’s stock offer (minimum).
  • If Kumba is unbundled from Anglo American, we expect the stock to enter the JSE Top 40. Potential deletes are included in the note.

Global Commodities: Takeaways from CESCO Copper Week — The only way out is up

By At Any Rate

  • Copper market may be running ahead of a fundamental story, with extreme tightening in the copper concentrate market
  • Chinese demand has stepped back due to surging copper prices, but expected to acclimatize to higher price levels
  • Supply side challenges may take a couple more quarters to resolve, leading towards a tighter refined market in the future and potential supply shortfalls by 2030.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Iron Ore and The China Property/Auto Stimulus Angle

By Sameer Taneja

  • The short term is suddenly looking bullish for iron ore, as rumors abound that tier-1 cities in China may remove home-buying restrictions in May, and auto stimulus measures were announced. 
  • Cities like Chengdu and Nanjing have already announced measures to make home-buying more attractive, such as removing purchase qualifications and pilot programs for old-for-new home housing. 
  • We like 62% Fe and see it trade up to its upper limit of 130 USD/ton (vs. current 117 USD/ton). On equities, we like Vale (VALE US) .

Premier Energies Pre-IPO Tearsheet

By Clarence Chu

  • Premier Energies Limited (0377949D IN) is looking to raise US$300m in its upcoming India IPO. The bookrunners on the deal are JP Morgan, Kotak, and ICICI Securities.
  • Premier Energies (Premier) is a manufacturer of solar photovoltaic (PV) cells, and solar modules. It also executes EPC projects and provides follow-up O&M services.
  • As per Frost & Sullivan (F&S), the firm was the second largest domestic manufacturer in terms of annual installed capacity as of Mar 2024.

Schlumberger Limited: The ChampionX Acquisition

By Baptista Research

  • During Schlumberger’s (SLB) first quarter 2024 earnings, the company’s evenue grew by 13% YoY, and EBITDA grew in the mid-teens, in line with SLB’s full-year financial ambitions.
  • International activity fuelled the growth, with revenue increases observed in 21 of the 25 international GeoUnits.
  • North America, however, showed a decrease in activity, resulting in a 6% YoY fall in revenue.

Hi-Tech Pipes: A.G.E. Analysis

By Nitin Mangal

  • HI-Tech Pipes (HITECH IN) is engaged in manufacturing of ERW Steel Round & Section Pipes, cold Rolled Strips, coils, and colour coated sheet, etc. and has distribution across India.
  • The company has grown impressively in the last 5-7 years and has seen improved balance sheet and working capital situation.
  • However, tapering return ratios, prolonged concern on cash conversion and erosion of margins are few talking points that should be taken into account.

Kinder Morgan Inc.: Expected Growth in Power Demand Positively Impacting Future Revenues! – Major Drivers

By Baptista Research

  • Kinder Morgan’s latest quarterly earnings confirmed that the company had a robust quarter.
  • The Chairman of the Board, Mr.
  • Rich Kinder, highlighted the growth potential in the demand for natural gas, driven substantially by the increasing demand from new and expanding data centers, especially those required to support Artificial Intelligence (AI).

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