Smartkarma Daily Briefs

Jersey Electricity (JEL) is intensifying its focus on energy security and electrification across Jersey by creating opportunities to accelerate growth. It successfully navigated the volatile wholesale power price environment in 2020–23, shielding its customer base from the worst inflationary pressures. However, from 2025, as older, more favourable hedges expire, this protection will diminish. Therefore, we have marginally reduced our earnings forecasts to account for the increased exposure to wholesale prices. Nonetheless, JEL remains well-positioned for continued growth, driven by decarbonisation and electrification over the long term.

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Apr 20

Daily Brief Energy/Materials: PT Avia Avian, Mmg Ltd, Reno De Medici and more

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

In today’s briefing:

PT Avia Avian (AVIA IJ) – An Attractive Tint to 2024 Prospects
Mmg Limited 1208.HK – It’s Got It All – Copper, EV’s, and AI!
Reno De Medici – ESG Report – Lucror Analytics

PT Avia Avian (AVIA IJ) – An Attractive Tint to 2024 Prospects

By Angus Mackintosh

PT Avia Avian (AVIA IJ) saw a pronounced pick up in sales in 4Q2023 and the ongoing benefit of lower raw material prices boosted margins to 5-year highs.
The company expanded its distribution in 2023 and will continue in 2024, which coupled with new product launches, especially of economic products, should help to drive higher growth in 2024.
PT Avia Avian continues to drive its express service, which also helps to push new product growth. Its market leadership and track record justify valuations with further support from dividends.

Mmg Limited 1208.HK – It’s Got It All – Copper, EV’s, and AI!

By Rikki Malik

Low-Cost producer of copper and zinc with two of the biggest ten mines in the world.
Recent mine acquisition and increased production at existing mines will grow earnings.
The supply and demand imbalance in copper will lead to higher prices.

Reno De Medici – ESG Report – Lucror Analytics

By Leonard Law, CFA

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Reno de Medici’s ESG as “Adequate”, in line with its Environmental and Governance scores. The company has a “Strong” score for the Social pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

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Apr 20

Daily Brief Industrials: Doosan Robotics , HD Hyundai Marine Solution , Carr’s Group PLC, Kondotec Inc, On Assignment, Sensata Technologies Holding P and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely
Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?
Carr’s Group – An enhanced value creation strategy
Kondotec (7438): Q3 FY03/24 Update
ASGN Incorporated: How Is The Adoption of Artificial Intelligence (AI) in Service Delivery Benefiting Them? – Major Drivers
Sensata Technologies: These Are The 4 Pivotal Factors Influencing Its Performance! – Financial Forecasts

Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
We expect up to four changes in the KOSPI 200 index during the June 2024 index rebal event (down from 5 expected last month) based on the latest available data.

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.

Carr’s Group – An enhanced value creation strategy

Carr’s Group has announced an updated strategy that offers the potential for value realisation and creation from a number of avenues. These include: value realisation of the Engineering Division; the ability to significantly reduce central costs; and longer-term value creation in the Agriculture Division as a focused business with recovery potential and a strategy to leverage its strong market positions for growth.

Kondotec (7438): Q3 FY03/24 Update

By Shared Research

Kondotec Inc (7438 JP) is a wholesaler of construction materials in the same league as companies such as Okabe Co., Ltd. (TSE PRM: 5959).
In FY03/23, sales amounted to JPY75.4bn (+14.1% YoY), operating profit came to JPY4.4bn (+21.2% YoY), recurring profit was JPY4.6bn, and net income attributable to owners of the parent was JPY2.4bn.
Kondotec Inc. announced changes to its lineup of representative directors (a change of president).

ASGN Incorporated: How Is The Adoption of Artificial Intelligence (AI) in Service Delivery Benefiting Them? – Major Drivers

ASGN Incorporated recently held its fourth quarter and full year 2023 earnings call.
The company reported solid results for the fourth quarter with revenues, gross margin and adjusted EBITDA margin all landing at the upper end or above their respective guidance ranges.
The annual revenue for 2023 amounted to approximately $4.5 billion, $2.4 billion of which was attributed to commercial and government IT consulting work.

Sensata Technologies: These Are The 4 Pivotal Factors Influencing Its Performance! – Financial Forecasts

Sensata Technologies fourth quarter and full year 2023 earnings revealed several key points investors may consider.
With growth in electrification revenue by approximately 50% year-over-year to $700 million in 2023, this trend is considered a major driver for future performance.
The company has also reduced gross and net leverage, via an updated capital allocation strategy, which places higher emphasis on organic growth and lower focus on M&A. 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.

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Apr 20

Daily Brief Industrials: Doosan Robotics , HD Hyundai Marine Solution , Carr’s Group PLC, Kondotec Inc, On Assignment, Sensata Technologies Holding P and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely
Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?
Carr’s Group – An enhanced value creation strategy
Kondotec (7438): Q3 FY03/24 Update
ASGN Incorporated: How Is The Adoption of Artificial Intelligence (AI) in Service Delivery Benefiting Them? – Major Drivers
Sensata Technologies: These Are The 4 Pivotal Factors Influencing Its Performance! – Financial Forecasts

Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
We expect up to four changes in the KOSPI 200 index during the June 2024 index rebal event (down from 5 expected last month) based on the latest available data.

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.

Carr’s Group – An enhanced value creation strategy

Kondotec (7438): Q3 FY03/24 Update

By Shared Research

Kondotec Inc (7438 JP) is a wholesaler of construction materials in the same league as companies such as Okabe Co., Ltd. (TSE PRM: 5959).
In FY03/23, sales amounted to JPY75.4bn (+14.1% YoY), operating profit came to JPY4.4bn (+21.2% YoY), recurring profit was JPY4.6bn, and net income attributable to owners of the parent was JPY2.4bn.
Kondotec Inc. announced changes to its lineup of representative directors (a change of president).

ASGN Incorporated: How Is The Adoption of Artificial Intelligence (AI) in Service Delivery Benefiting Them? – Major Drivers

ASGN Incorporated recently held its fourth quarter and full year 2023 earnings call.
The company reported solid results for the fourth quarter with revenues, gross margin and adjusted EBITDA margin all landing at the upper end or above their respective guidance ranges.
The annual revenue for 2023 amounted to approximately $4.5 billion, $2.4 billion of which was attributed to commercial and government IT consulting work.

Sensata Technologies: These Are The 4 Pivotal Factors Influencing Its Performance! – Financial Forecasts

Sensata Technologies fourth quarter and full year 2023 earnings revealed several key points investors may consider.
With growth in electrification revenue by approximately 50% year-over-year to $700 million in 2023, this trend is considered a major driver for future performance.
The company has also reduced gross and net leverage, via an updated capital allocation strategy, which places higher emphasis on organic growth and lower focus on M&A. 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.

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Apr 20

Daily Brief TMT/Internet: ASML Holding NV, Braze Inc, Arrow Electronics, Teradata Corp, Varonis Systems, Acal PLC, Workiva Inc, Frontier Communications Parent, Iridium Communications, Kyndryl Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

ASML. Maintaining 2024 Guidance Despite Sharp Decline In New Bookings
Braze Inc.: First-Party Data Investment As An Important Business Model! – Major Drivers
Arrow Electronics: What Are The Biggest Challenges In Its Transition To The IT-As-A-Service Model? – Major Drivers
Teradata Corporation: How Long Will The Growth in Cloud Annual Recurring Revenue (ARR) Last? – Major Drivers
Varonis Systems: Will Its Transition to SaaS Offering Be Smooth Enough To Warrant A Bullish Rating? – Major Drivers
discoverIE Group – FY24 EPS in line; good margin progress
Workiva Inc.: Innovations in AI and Reporting Capabilities Are Upping Their Game! – Major Drivers
Frontier Communications: Expansion of the Fiber Footprint & 3 Other Key Growth Drivers
Iridium Communications Inc.: Expanding Commercial Broadband Services To Enhance Top-Line Growth! – Major Drivers
Kyndryl Holdings: Focus on Customer Relations & Contract Changes! – Major Drivers

ASML. Maintaining 2024 Guidance Despite Sharp Decline In New Bookings

By William Keating

ASML reported Q124 revenues of €5.3 billion, in line with expectations, down 27% QoQ and down 21% YoY.
Guided Q224 for €5.95 billion, down ~23% YoY. This implies H224 will have to be much stronger than H124 in order to maintain full year 2024 guidance of flat YoY
New order intake was €3.6 billion, down significantly from the €9.2 billion in the prior quarter, and challenging the narrative of a strong growth year in 2025

Braze Inc.: First-Party Data Investment As An Important Business Model! – Major Drivers

Braze Inc. had a productive Q4 for the fiscal year 2024, reporting robust revenue growth and notable leaps in operational efficiency.
The company generated $131 million in revenue, up 33% year-over-year and 6% quarter over-quarter.
It is important to mention that these figures were achieved despite macroeconomic headwinds and tight scrutiny of budgets, reflecting the high ROI and enduring value of Braze’s customer engagement platform.

Arrow Electronics: What Are The Biggest Challenges In Its Transition To The IT-As-A-Service Model? – Major Drivers

Arrow Electronics had a decent performance in 2023 despite the challenging macroeconomic conditions and inventory-related issues.
Arrow Electronics managed to post a full-year revenue of $33.1 billion and a non-GAAP operating margin of 4.8%.
The company also reported strong cash flow from operations, enabling the repurchase of approximately $750 million in shares over the year.

Teradata Corporation: How Long Will The Growth in Cloud Annual Recurring Revenue (ARR) Last? – Major Drivers

Teradata Corporation, a leading hybrid multi-cloud analytics and data platform company, recently held its fourth quarter and full year 2023 earnings call, which indicates the company’s progress and future outlook in its sector.
The company emphasizes its focus on customer satisfaction by delivering solutions for complex data and analytics problems.
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.

Varonis Systems: Will Its Transition to SaaS Offering Be Smooth Enough To Warrant A Bullish Rating? – Major Drivers

Varonis Systems Inc. showcased strong performance in the fourth quarter and full year 2023 as they continued their transition towards Software-as-a-Service (SaaS).
The successful transition of their offerings led to an incredible growth of the SaaS Annual Recurring Revenue (ARR) from several million dollars in 2022 to approximately $125 million by the end of 2023.
This growth in SaaS ARR represented approximately 23% of the total company ARR at year-end.

discoverIE Group – FY24 EPS in line; good margin progress

discoverIE anticipates reporting FY24 underlying EPS in line with board expectations. After a period in mid-FY24 of working down inventory, customers appear to be reverting to normal ordering patterns, with Q424 organic revenue growth of 2% y-o-y and 11% q-o-q and a strong pipeline of design wins at year-end. We have revised our forecasts to reflect lower revenue, partly due to a disposal, but maintain our profit forecasts, which results in operating margin expansion in FY24 and FY25.

Workiva Inc.: Innovations in AI and Reporting Capabilities Are Upping Their Game! – Major Drivers

Workiva ended 2023 with solid Q4 results, delivering an 18% growth in subscription revenue and a non-GAAP operating profit that exceeded its guidance.
For the total of 2023, the firm overshot its earlier set guidance in February and Q3 2023, with a 20% growth in subscription revenue and 17% in total revenue.
This marks Workiva as a growth player.

Frontier Communications: Expansion of the Fiber Footprint & 3 Other Key Growth Drivers

FYBR had a strong performance in Q4, achieving key milestones and demonstrating the effectiveness of their fiber-first strategy.
The company reported EBITDA growth for the first time in over a decade, marked by the company’s hard operational execution and sustainable strategy.
Furthermore, the company ended the year with 6.5 million fiber passings, representing 65% progress towards its target of building 10 million fiber locations, making it the largest pure-play fiber provider in the country.

Iridium Communications Inc.: Expanding Commercial Broadband Services To Enhance Top-Line Growth! – Major Drivers

Iridium Communications Inc.’s fourth-quarter 2023 earnings indicated strong performance with impressive service revenue and operational EBITDA. The company reported more than $300 million in pro-forma free cash flow for the full year, emphasizing growing cash flow as its primary narrative.
The satellite communications provider has generated about $1 billion in free cash flow since turning cash flow positive in late 2019 after completing its second-generation constellation.
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.

Kyndryl Holdings: Focus on Customer Relations & Contract Changes! – Major Drivers

KD highlights several milestones on its Fiscal Third Quarter 2024 Earnings.
The company reported strong execution and accelerated progress as a leader in mission-critical IT infrastructure services.
Its strategy surrounds the creation of alliances, advanced delivery, account initiatives, KD Consult and KD Bridge, contributing to expectations of profitable growth and an increased full-year earnings outlook.

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Apr 20

Daily Brief Health Care: OSE Immuno and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

OSE Immunotherapeutics – AbbVie deal clears antitrust hurdle

OSE Immunotherapeutics – AbbVie deal clears antitrust hurdle

OSE has announced that its licence agreement with AbbVie has cleared antitrust review and has become effective. As previously noted, this is expected to support OSE’s runway extension into 2026, past key milestones and readouts for in-house assets Tedopi (non-small cell lung cancer, US Phase III trials expected to commence in Q224) and Lusvertikimab (ulcerative colitis, Phase II readouts expected in mid-2024). Following the Federal Communications Commission (FCC) mandatory waiting period, OSE is expected to receive the negotiated US$48m upfront payment from AbbVie imminently, as part of its global licence and collaboration agreement for its pre-clinical asset OSE-230, a novel monoclonal antibody being developed for the treatment of chronic and severe inflammation. OSE is also entitled to receive up to US$665m in incremental (milestone) payments as part of the deal.

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Apr 20

Daily Brief Financials: KKR & Co, S&P 500 INDEX, Mizuho Financial Group, Foxtons and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible
EQD | S&P500 Futures (ES) Deeply Oversold WEEKLY, Reversal (Probably) Imminent
Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report
Foxtons Group – FY24 underpinned by market share gains

Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELs.

EQD | S&P500 Futures (ES) Deeply Oversold WEEKLY, Reversal (Probably) Imminent

By Nico Rosti

The S&P500 has been falling for 3 weeks and 6 days, it is very oversold.
The current Market Reversal Matrix pattern suggests a high probability LONG trade for this coming week and the next.
The support price area where to enter LONG is the 4950-4900 but also higher prices between 5000 and 4950 could be a good entry point, although a bit riskier.

Potential Domestic Rate Hike Impacts Highlighted in the BoJ’s Latest Financial System Report

By Victor Galliano

The Financial System Report published on April 18th focuses on the key Japanese bank issues, including the prospect of domestic rate hikes
We focus primarily on the key take-aways from the BoJ report, in particular with relation to potential rate hikes; our key picks appear to be better geared than the average
We highlight Resona, Mizuho and Concordia in the bigger caps, with positive views on Suruga, Gunma and Tokyo Kiraboshi in the regional banks

Foxtons Group – FY24 underpinned by market share gains

Foxtons Group’s Q1 revenue grew by 9%, supported by growth in all three divisions as the strategic initiatives continue to gain significant momentum, driven by investment in staff, best-in-class bespoke IT and data platforms. This implies that Foxtons’ medium-term targets are now coming into focus. Market share is being gained in all divisions, which puts Foxtons in a good position as the sales market stabilises. We maintain our valuation of 132p/share and believe that if interest rates stabilise or ease further, there are upside risks to our forecasts.

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Apr 20

Daily Brief Consumer: China Tourism Group Duty Free, Vinfast, Nike, Muyuan Foodstuff Co Ltd A, TSE Tokyo Price Index TOPIX, Adeia, Kellogg Co, Betterware de Mexico Sab de CV, Abercrombie & Fitch Co Cl A and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

China Tourism Group Duty Free (1880 HK): Headwinds Persist
Vinfast (VFS US) – Some Respite from the US
Nike Inc.: A Tale Of Brand Elevation Through Greater Market Presence! – Major Drivers
Pullback Underway; Further Downside Limited?; Buys in Defensives and Commodity-Related Sectors
More Companies Will Choose to Go Private Because They Can’t Find an Effective Use for Their Cash
ADEA: Not Just Another Licensing Deal
WK Kellogg Co: Positive Price/Mix and Revenue Growth Management Initiatives! – Major Drivers
BWMX: 1Q Preview: Moving to the Offensive; Reiterate Buy, $22.50 PT
AKA: Initiating Coverage of a.k.a. Brands with Buy and $14 PT: Upside Ahead

China Tourism Group Duty Free (1880 HK): Headwinds Persist

By Steve Zhou, CFA

Since my previous insight on China Tourism Group Duty Free (1880 HK) in October 2023, the stock has declined 33%, and year-to-date, the stock has declined 13%.
The company faces headwinds from continued overall weakness in Hainan duty free sales and potentially increased competition in Hainan.
The company already announced preliminary 1Q24 results, with sales down 9% yoy and net profit flat. The company is trading at 18x 2024 earnings.

Vinfast (VFS US) – Some Respite from the US

By Angus Mackintosh

Vinfast (VFS US) released 1Q2023 results, with its revenues increasing three-fold YoY but falling QoQ due to the seasonal impact of Lunar New Year on both EVs and EV motorbikes.
The company saw a significant pick up in its sales to the US and continued to increase its dealer network which should drive future sales along with new models.
More than half of Vinfast sales were to related parties, which is an overhang in terms of the sustainability of its business models, whilst valuations remain above peers.

Nike Inc.: A Tale Of Brand Elevation Through Greater Market Presence! – Major Drivers

In the Q3 2024 earnings, NIKE, Inc. outlined how it is driving growth despite not performing to its potential.
The company is focusing on four key areas: a sharpened focus on sport, continuous product innovation, bolder and more distinctive brand marketing, and collaboration with wholesale partners to expand the marketplace.
A significant measure of progress is the alignment of the organization to focus on the consumer and sport.

Pullback Underway; Further Downside Limited?; Buys in Defensives and Commodity-Related Sectors

By Joe Jasper

A pullback in global equities is underway following steep uptrend violations on MSCI ACWI (ACWI-US) and EURO STOXX 50. Both are 4-5% off their highs; further downside may be limited.
Several 5%-10% pullbacks are to be expected in any given year, particularly after the historic 5-month rallies, so we view this as healthy and normal within the ongoing bull market.
ACWI-US is currently testing important support at $105; if this area were to break, next major supports are $102 and $99; this is where we would be buying.

More Companies Will Choose to Go Private Because They Can’t Find an Effective Use for Their Cash

By Aki Matsumoto

The problem lies in the fact that even with a 10% increase in net profit, ROE only grew by 0.5%. This is due to having too much cash on hand.
TSE has provided an opportunity for companies to develop measures to increase their corporate value. However, not many companies can derive concrete ways to effectively use cash.
Since many companies are expected to take time to find concrete solution to this problem, an increasing number of companies are expected to go private once they have done so.

ADEA: Not Just Another Licensing Deal

By Hamed Khorsand

ADEA announced it has licensed its intellectual property to Austrian service provider Magenta Telekom in what could be of bigger significance than what ADEA’s stock price portrays
The license is the first for ADEA with a European service provider. This is also the first major customer win ADEA has announced since becoming a standalone IP company
The size of the deal with Magenta is most likely small, but our focus is on what it could mean for ADEA. Magenta is owned by T-Mobile parent Deutsche Telekom.

WK Kellogg Co: Positive Price/Mix and Revenue Growth Management Initiatives! – Major Drivers

By Small Cap Consumer Research

During the latest earnings, W.K. Kellogg Co demonstrated its strategic plans for the future and reported strong financial results for the fourth quarter and fiscal year 2023.
The CEO, Gary Pilnick, emphasized the company’s commitment to delivering on its promises and its focus on execution and engaging its team.
The company achieved net sales at the high end of their guidance range and EBITDA margin above their guidance range indicating effective business planning.

BWMX: 1Q Preview: Moving to the Offensive; Reiterate Buy, $22.50 PT

We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico with the company announcing 1Q24 (March) results after the close on Thursday.
We believe, with momentum returning at the Betterware division, JAFRA remaining on a new product and marketing focus, the United States market becoming a larger emphasis and BWMX continuing to offer a compelling (and secure) dividend yield of 8.5%, BWMX remains well positioned to reward investors on multiple levels, and we reiterate our Buy rating and $22.50 price target.

AKA: Initiating Coverage of a.k.a. Brands with Buy and $14 PT: Upside Ahead

By Small Cap Consumer Research

We are initiating coverage of a.k.a. Brands Holding Corp.
(“a.k.a. Brands” or the “company”), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million.
The company’s brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destination; and 4) mnml, a high-quality street wear designer focused on bottoms.

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Apr 20

Most Read: Bank of Communications , Taiwan Semiconductor (TSMC), Hanmi Science, Shinko Electric Industries, Inageya Co Ltd, Hollysys Automation Technologies, KKR & Co, Doosan Robotics , HD Hyundai Marine Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

SSE50 Index Rebalance Preview: 5 Changes and US$2.7bn Round-Trip Trade
Shinko Electric (6967) – Break/Gap Risk Update
What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?
Imminent Block Deals Involving Hanmi Science Shares Due to Inheritance Tax Payments
Shinko Electric (6967 JP): Widening Spread Is an Opportunity
Inageya (8182 JP): Share Exchange Offer from USMH (3222 JP)
Hollysys (HOLI US): This Is A Buy
Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible
Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely
Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

SSE50 Index Rebalance Preview: 5 Changes and US$2.7bn Round-Trip Trade

By Brian Freitas

With the review period nearing completion, 6 stocks are in inclusion zone and 8 are in deletion zone. However, there can be a maximum of 5 changes at a review.
We estimate a one-way turnover of 7% at the June rebalance leading to a one-way trade of CNY 9.7bn (US$1.34bn). Index arb balances could increase the impact on the stocks.
The inflows into mainland China ETFs have further increased the flow and impact on the potential changes. The potential adds have continued to outperform the potential deletes.

Shinko Electric (6967) – Break/Gap Risk Update

When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
12wks ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 5wks ago, reco’d trimming.
Shinko had outperformed Ibiden, and gross spreads had come in 5+% on JSR’s approval. Spreads are now 3% wider than their narrowest, but gap risk has widened as Shinko outperforms.

What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?

By Andrew Lu

TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.
No more Moore’s Law: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.
Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.

Imminent Block Deals Involving Hanmi Science Shares Due to Inheritance Tax Payments

The local market anxiously awaits the family’s ability to pay by early May. Failure could prompt the Tax Service to sell their pledged stocks, including Hanmi Science shares.
Preventing Tax Service from selling Hanmi Science shares requires additional collateral, unlikely due to existing pledges. Rumor suggests mother and daughter may sell shares before May, followed by Tax Service.
Given negotiation uncertainty with KKR, it’s crucial to prepare for potential failure rather than solely relying on success, necessitating a pragmatic approach.

Shinko Electric (6967 JP): Widening Spread Is an Opportunity

By Arun George

Shinko Electric Industries (6967 JP)‘s pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread widened from a low of 3.1% on 14 March to 7.0%.
The widening spread can be attributed to China SAMR approval timing, earnings risk, Ibiden Co Ltd (4062 JP)’s material underperformance lowering the break price and a large fund liquidating positions.
The deal break risks remain low with the timing remaining the key risk. The current 7.0% spread is an attractive opportunity to add.

Inageya (8182 JP): Share Exchange Offer from USMH (3222 JP)

By Arun George

Inageya Co Ltd (8182 JP) announced a share exchange offer by United Super Markets (3222 JP) at 1.46 USMH shares per Inageya share.
The share exchange aligns with Aeon Co Ltd (8267 JP)’s well-flagged intention of making Inageya a wholly-owned subsidiary of USMH.
Aeon’s 50%+ shareholding in Inageya and USMH facilitates the two EGM votes. The deal metrics are broadly fair for both sets of shareholders.

Hollysys (HOLI US): This Is A Buy

By David Blennerhassett

On the 8th February 2024, 85% of Hollysys Automation (HOLI US ) shareholders present and via proxy, voted for Ascendent Capital’s Offer. After three-plus years, the end was finally in sight.
Then crickets. The merger was to complete in the 1Q. On the 15th April, HOLI released an accountant resignation notice. No word on dissenters or regulatory approvals. Shares sold off.
The accountant resignation is a nothing burger. HOLI should lift their game and provide more transparency on the outstanding merger conditions. Still, the spread is attractive. This is a buy.

Quiddity Leaderboard S&P 500 June 2024 – Minimal Changes Expected but Intrareview Changes Possible

The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
The index is reviewed quarterly. The next review will be in June 2024 and the evaluation date for the rankings for the constituent selection process is 6th June 2024.
In this insight, we take a look at the Potential ADDs and Potential DELs for the June 2024 index rebal event and the intra-review ADDs/DELs.

Quiddity Leaderboard KOSPI 200 Jun 24: Four Changes Likely

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
We expect up to four changes in the KOSPI 200 index during the June 2024 index rebal event (down from 5 expected last month) based on the latest available data.

Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?