Smartkarma Daily Briefs

During the period under consideration, i.e. February 28th 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
The MA-10 line at the beginning of the period considered was moving above the MA-20 line.
From March 7th until March 22nd the MA-10 line trend changed and was moving below the MA-20.

UK Paying More for Fewer Workers

By Phil Rush

UK unemployment jumped surprisingly far in February 2024 to hit 4.2% as employment fell. More long-term jobless suggests this is neither a new shock nor too disinflationary.
Average earnings growth surged by 0.7% m-o-m, meaning the wage bill still rose despite fewer jobs. Regular pay growth is in rude health at 6% y-o-y or 2.1% in real terms.
Wage settlements are stuck at 5%, with a skew higher into April. Embedded inflation expectations are too high and demand tight policy despite some cyclical softening.

Positioning Watch – Volatility Is Back, but Markets Still Lean into USD Duration.. God Knows Why..

By Andreas Steno

Hi everyone, and welcome back to our weekly positioning / sentiment overview, which will be delivered to you right as firefighters have hopefully put out the fire at the old exchange building in Copenhagen..
Markets have started the week off where they left last week, with the USD wrecking ball continuing to prevail, posing headwinds for equity and fixed income markets as Fed pricing has more or less turned upside down lately.
We generally positioned for this repricing of USD fixed income, but were caught wrongfooted in a few trades along the way admittedly.

Regional Economics: Bumpy Disinflation Makes Rate Cuts in 2024 a Big If

By Manu Bhaskaran

The latest US inflation print is emblematic that economies worldwide will face difficulties in achieving the “last mile” of disinflation.
Volatile food and energy prices, as well as geopolitical disturbances to supply chains, will continue to cause problems for Asian central banks.
Despite continued tightness in monetary policy, we still expect Asian economies to grow respectably in 2024.

South Korea Politics: Policy Constraints Loom After Legislative Polls

By Manu Bhaskaran

President Yoon Suk Yeol suffered a major political setback in the recent parliamentary polls, with the main opposition party winning a clear majority in the National Assembly.
Simmering public discontent from rising costs of living and doctors’ strikes to protest against Yoon’s plan to increase medical school intake drove voters to the opposition.
Yoon’s parliamentary defeat and the contrasting domestic policy agenda of the Democratic Party means greater political paralysis ahead.

Canada CPI Inflation 2.9% y-o-y (consensus 2.9%) in Mar-24

By Heteronomics AI

Canada’s annual CPI inflation rate in March 2024 increased to 2.9%, matching market expectations and marking the highest growth since December 2023.
Despite this, disinflation has resulted in the current rate being 0.42 percentage points below the one-year average.
The core measures continued to slow down, more than what was anticipated.

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 17

Daily Brief Energy/Materials: Fuji Oil Co Ltd, S&P 500 INDEX, Fmc Corp, Energy Transfer LP, Equinor ASA, Coterra Energy , Seadrill , Sealed Air Corp and more

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

In today’s briefing:

Idemitsu (5019): First SumiChem’s, Now JERA’s Stake in Fuji Oil (5017) To Go to 22%. It’s Coming…
The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting
FMC Corporation: Performance of Diamides Business and Other Portfolios Driving Growth? – Major Drivers
Energy Transfer LP: A Deep Dive Analysis Of Its Competitive Advantage Amidst The Current Volatility!- Major Drivers
Energy Transfer LP: A Deep Dive Analysis Of Its Competitive Advantage Amidst The Current Volatility!- Major Drivers
Equinor ASA: Continued Growth In Natural Gas and Oil Portfolio A Temporary Phenomenon? – Major Drivers
Coterra Energy Inc.: These Are The 6 Major Growth Drivers & 3 Biggest Challenges For The Company! – Financial Forecasts
SDRL: Tighter Outlook, PT to $80
Sealed Air Corporation: Initiation Of Coverage – What Is Its Core Business Strategy? – Major Drivers

Idemitsu (5019): First SumiChem’s, Now JERA’s Stake in Fuji Oil (5017) To Go to 22%. It’s Coming…

In the mid-late teens, four refinery groups merged to create two refinery groups – JX and Tonen General became JXTG under ENEOS Holdings (5020 JP) and Idemitsu took over ShowaShell.
When Idemitsu got ShowaShell, it got 50+% in Toa Oil Co Ltd (5008 JP), 6.58% of Fuji Oil Co Ltd (5017 JP). In 2020, they tried to buy in Toa.
That was delayed by an activist. Today, Idemitsu announced they had gone to 23% in Fuji Oil. That stake will go up before it goes down.

The Pullback Finally Begins; SPX and NDX Testing 2-Month Supports; Market Dynamics Shifting

By Joe Jasper

We’ve discussed for months that we’ll need to see SPX and NDX (QQQ) close below their 20-day MAs/21-dayEMAs for more than 2-3 consecutive days in order to get more cautious.
Today (Tuesday) marks 3 consecutive days as the DXY climbs to test major $106 resistance, and amid 10- and 30-year Treasury yields breaking above long-term resistances. Caution is warranted.
Still, in order for there to be a meaningful pullback, important 2-month supports that are currently being tested would need to break, including 4983-5050 on SPX and $425-$433 on QQQ.

FMC Corporation: Performance of Diamides Business and Other Portfolios Driving Growth? – Major Drivers

Based on the fourth-quarter 2023 earnings, FMC Corporation’s performance suggests a mixed investment climate.
Although the company’s plan largely revolves around elements they manage, such as NPI sales and restructuring initiatives, the transition of the crop chemicals market implies a challenging year ahead.
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.

Energy Transfer LP: A Deep Dive Analysis Of Its Competitive Advantage Amidst The Current Volatility!- Major Drivers

In the Second Quarter Fiscal 2024 Earnings Conference Call, Bill.com recorded robust profitable growth despite a challenging macro environment as small and medium-sized businesses (SMBs) continue to manage their spending cautiously.
The company reported year-over-year revenue growth of 22%, non-GAAP net income growth of 48%, and a non-GAAP net income margin of 23%.
It sees prospects for further growth once SMBs begin spending for expansion.

Energy Transfer LP: A Deep Dive Analysis Of Its Competitive Advantage Amidst The Current Volatility!- Major Drivers

Energy Transfer LP reported a transformative year, marking significant changes across the organization and its global workforce of 22,000.
The company successfully established itself as an independent public entity while maintaining a trajectory of profitable growth.
The year saw a 5% organic growth, evenly distributed across all business segments and geographic regions, highlighting its broad-based growth capabilities.

Equinor ASA: Continued Growth In Natural Gas and Oil Portfolio A Temporary Phenomenon? – Major Drivers

Equinor delivered strong results for the third quarter, with adjusted earnings of $8 billion ($2.7 billion after tax) despite lower prices than in the previous year, indicating the company’s stability in market fluctuations.
However, net operating income was $7.5 billion and net income was $2.5 billion, lower than adjusted earnings.
The company is on track to deliver promising cash flows of around $20 billion annually till 2030, exhibiting robust revenue growth.

Coterra Energy Inc.: These Are The 6 Major Growth Drivers & 3 Biggest Challenges For The Company! – Financial Forecasts

Coterra Energy displayed excellent financial results, exceeding oil, natural gas, and BOE (barrels of oil equivalent) guidance for Q4 with below capital guide.
Oil volumes demonstrated year-over-year growth of 10%, while the company declared a 5% growth for the BOE. The company’s capital is expected to vary between $1.75 billion to $1.95 billion for 2024, investing approximately 60% of projected cash flow.
In terms of geographic investment, focus will be placed on boosting investment in the Permian and Anadarko basins while retrenching in the Marcellus.

SDRL: Tighter Outlook, PT to $80

By Hamed Khorsand

SDRL enters the second quarter with drill ships undergoing special surveys and day rates slowly creeping higher.
The drill ship market has experienced an increase in day rates on the expectation stacked ships eventually become available. We do not believe this will ever be the case
We are leaving our 2024 earnings model unchanged and raising our 2025 adjusted EBITDA outlook to $677 million from $615 million

Sealed Air Corporation: Initiation Of Coverage – What Is Its Core Business Strategy? – Major Drivers

Sealed Air Corporation, in its Q4 2023 earnings, reported sales of $1.4 billion and an adjusted EBITDA of $274 million.
The results align with the company’s projection, reflecting the ongoing challenges from fluctuating protein cycles and downtrading in the food division as well as a reassured seasonal pickup in the protective segment.
For the fiscal year of 2023, Sealed Air posted sales of $5.5 billion, slightly over the midpoint of its guidance, along with an adjusted EBITDA of $1.1 billion.

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Apr 17

Daily Brief Industrials: Nidec Corp, Deutsche Lufthansa , Contemporary Amperex Technology (CATL), Voltas Ltd, Encore Wire, Lonking Holdings, J&T Global Express , Spirit Airlines, Norcros PLC, Singapore Post and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Nidec (6594) | Liquid Cooling Overheats Stock
European Airlines – Assessing Fuel Price Risk to Earnings
Contemporary Amperex Technology (300750 CH) 1Q24 Better than Expected
[#22] Namaste India 🙏 | Voltas Ltd (VOLT IN) | Margin Pressure to Continue
Prysmian/Encore Wire: Agreed Offer
Lonking (3339 HK): Policy Tailwind
J&T Global Express IPO Lock-Up Expiry – Tiny Float with 87%+ Stake Lockup Release Worth >US$8.8bn
Spirit Airlines (SAV Bonds) – Tuesday, Jan 16, 2024
Company Update – Norcros Plc
kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company”

Nidec (6594) | Liquid Cooling Overheats Stock

By Mark Chadwick

Nidec’s share price rose by 7% on the largest volume day of the year and on a day where the Nikkei declined by 2%.
The move followed an announcement that Nidec will enhance its CDUs production line in Thailand by 10x by June 2024. CDUs are used to cool AI servers in data centres
The market impact of 250 billion yen implies a sales impact of 69 billion yen, which is far too high for 24,000 units per year

European Airlines – Assessing Fuel Price Risk to Earnings

By Neil Glynn

Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.
Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.
Ryanair is comfortably most insulated given margin and balance sheet strength.

Contemporary Amperex Technology (300750 CH) 1Q24 Better than Expected

By Mohshin Aziz

CATL announced its 1Q24 net profit of CNY9.2B (+19% YoY), which straight out blew past market expectations
The fear of ever-declining battery prices is overstated, as CATL has clearly shown it can take lower margins and boost ROEs via higher inventory turnover and high utilisation rates
Our fair value of CNY253 (+27% UPSIDE) is derived by 23x 2024 PE ratio, which is 1SD below its historical mean. CATL is currently trading at exceptionally low valuations

[#22] Namaste India 🙏 | Voltas Ltd (VOLT IN) | Margin Pressure to Continue

By Pranav Bhavsar

Our flash checks across a couple of dealers indicate pressure on margins across the industry. Voltas Ltd (VOLT IN) is trying hard to gain market share.
Other names discussed include PNB Housing Finance Ltd (PNBHOUSI IN), Vedant Fashions (MANYAVAR IN) and Bandhan Bank Ltd (BANDHAN IN).
Varun Beverages (VBL IN) and Schaeffler India (SCHFL IN) show up as interesting ARs to read.

Prysmian/Encore Wire: Agreed Offer

By Jesus Rodriguez Aguilar

Prysmian SpA (PRY IM) agreed to acquire Encore Wire (WIRE US) for $290/share in cash, 29% premium to 90-day VWAP, implied EV of €4,264 million, 11x EV/NTM EBITDA and 16.9x Fwd P/E.
Encore wire has traded at an average 6.4x EV/EBITDA and 10.6x P/E over the last 5 years. I set my TP at $290. Synergies could be valued at $51/share.
The shares are trading slightly above the offer price. Gross spread is +0.2%. The volume traded since announcement has been very strong. There is room for some sweetening. Long.

Lonking (3339 HK): Policy Tailwind

By Osbert Tang, CFA

Lonking Holdings (3339 HK)‘s demand should pick up in 2H24 supported by the government’s “Action plan to promote large-scale equipment renewals and consumer goods trade-ins”.
Industry volume sales have already witnessed a narrower YoY decline in Mar, with solid exports of wheel loaders and domestic sales of excavators.
After going ex- in late-May, its PER will drop to 7.0x and yield will rise to 6.6%. Net cash of HK$1.56/share is more than fully cover its share price.

J&T Global Express IPO Lock-Up Expiry – Tiny Float with 87%+ Stake Lockup Release Worth >US$8.8bn

By Sumeet Singh

J&T Global Express, a global logistics provider, raised about US$500m in its Hong Kong IPO in Oct 2023. Its pre-IPO investors will be released from its IPO linked lockup soon.
As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 25.4% market share as per 2023 parcel volume.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

Spirit Airlines (SAV Bonds) – Tuesday, Jan 16, 2024

By Value Investors Club

Invest in Spirit 8% bonds due 9/20/2025
Spirit Airlines has strong cash position and available credit
Bonds are guaranteed by Spirit Airlines and backed by assets such as Airbus A320 airplanes

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Company Update – Norcros Plc

Norcros plc is a United Kingdom-based supplier of bathroom and kitchen products.
The principal activities of the Company and its subsidiaries are the design, manufacture, and distribution of a range of bathroom and kitchen products, mainly in the United Kingdom and South Africa.
In the United Kingdom, it offers a range of bathroom and kitchen products for domestic and commercial applications.

kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company”

By Geoff Howie

kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company” Its Group Chief Financial Officer Vincent Yik explains its strategy.
With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.

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Apr 17

Daily Brief TMT/Internet: Kokusai Electric , HPSP, Hollysys Automation Technologies, Wipro Ltd, Taiwan Semiconductor (TSMC) – ADR, Megastudyedu Co, Ltd., Cainiao Smart Logistics Network, Novatek Microelectronics Corp, DXC Technology Co, IAC and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
Market Chats About What Really Went Down with HPSP This Morning
Hollysys (HOLI US): Keep Calm as Closing Date Slips
Quiddity Leaderboard BSE/SENSEX Jun 24: Jio Financial Addition Creates New Possibilities
Taiwan Tech Weekly: Apple Suppliers Slump on IPhone; PC Volumes Back to Growth; TSMC & ASML Results
Megastudy Education: A Major Shareholder Return Policy in 2024-2026
Cancelling CaiNiao’s IPO: What It Means for China’s Express Sector (+Comment on Implied Valuation)
Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.
DXC Technology Company: Will Its Enhanced Go-to-Market Strategy and Business Execution Catalyze Growth? – Major Drivers
IAC/ InterActiveCorp: Is The Improved User Experience and Premium Traffic Growth Here To Stay? – Major Drivers

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry

Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details.

Market Chats About What Really Went Down with HPSP This Morning

By Sanghyun Park

This morning’s HPSP (403870 KS) situation began with Maekyung’s report, indicating Crescendo PE contacted local bankers for the controlling stake sale.
The surge in HPSP’s stock price after Maekyung’s report suggests Crescendo PE’s tacit approval, implying their involvement in the news’s emergence.
Despite the likely confirmed sale of Crescendo PE’s stake, timing remains uncertain due to disclosure rules. Continued monitoring is vital, considering potential market reactions later.

Hollysys (HOLI US): Keep Calm as Closing Date Slips

On 15 April, Hollysys Automation Technologies (HOLI US) issued a 6-K filing stating that Ascendent remains in the process of obtaining regulatory approvals.
The gross spread has widened to 8% as the closing date has slipped from the end of March guidance, and an updated timeline is lacking.
A delay in securing regulatory approvals is not uncommon. However, regulatory approvals should be forthcoming as the transaction involves Chinese entities (including a SASAC entity) acquiring a Chinese-focused company.

Quiddity Leaderboard BSE/SENSEX Jun 24: Jio Financial Addition Creates New Possibilities

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the June 2024 index rebal event.
Wipro Ltd (WPRO IN)‘s deletion from Sensex is imminent but there are question marks over the top replacement names as this involves some subjectivity.
For BSE 100, Jio Financial Services (JIOFIN IN) is a new potential ADD and that has caused major changes to the index change expectations I had previously.

Taiwan Tech Weekly: Apple Suppliers Slump on IPhone; PC Volumes Back to Growth; TSMC & ASML Results

By Vincent Fernando, CFA

Apple supply chain names are falling due concerns about weak iPhone shipments. Global PC shipments returned to growth as per IDC data.
TSMC and ASML results this week and will be cruical for the market. Can TSMC rally again to achieve new highs or will it continue trading lower?
Nanya Technology sees DRAM Industry pricing rising through 2024E; but is underperforming financially.

Megastudy Education: A Major Shareholder Return Policy in 2024-2026

By Douglas Kim

On 16 April, Megastudyedu Co, Ltd. (215200 KS) announced a major shareholder return plan, driving up its share price by 14.2% to 60,400 won.
Driven by this attractive shareholder return plan combined with improving fundamentals, we believe that Megastudy Education’s shares could continue to outperform the market in the next several months.
The total shareholder returns including share buybacks/cancellation and dividends are 60% of the company’s non-consolidated net profit from 2024 to 2026.

Cancelling CaiNiao’s IPO: What It Means for China’s Express Sector (+Comment on Implied Valuation)

By Daniel Hellberg

A few weeks ago, Alibaba announced it would not seek IPO for CaiNiao
The change of plans could force BABA/CaiNiao to re-focus on profitability
BABA will reportedly buy rest of CaiNiao at US$10.2 bn valuation — cheap!

Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.

By Patrick Liao

Novatek Microelectronics Corp (3034 TT)‘s sales in 1Q24 showed a 6.2% YoY growth, implying a positive growth outlook for 2024F compared to 2023.
Looking ahead to 2Q24F forecasts, the anticipated orders from United Microelectronics Corp (2303 TT) could have a positive impact on Novatek’s 1Q24 sales.
A significant growth is expected after 2Q24, particularly following Novatek’s qualification for the Apple (AAPL US) iPhone 16.

DXC Technology Company: Will Its Enhanced Go-to-Market Strategy and Business Execution Catalyze Growth? – Major Drivers

During Q3, DXC Technology was observed to have solid performance with the company’s organic revenue growth falling within the guidance range.
The free cash flow saw an increase of 26% compared to the prior year, amounting to an impressive $585 million.
However, the report points to declines in various areas such as organic revenue growth, a 4.5% year-over-year decrease, mainly due to the decline in resale revenues.

IAC/ InterActiveCorp: Is The Improved User Experience and Premium Traffic Growth Here To Stay? – Major Drivers

InterActiveCorp (IAC) has undergone changes throughout 2023 that resulted in substantial earnings growth in the fourth quarter, which is an encouraging indication of the company’s overall strategic direction.
Among the company’s accomplishments are a solid level of service professional retention, better targeting of service professionals, and improvements in its paid marketing, resulting in higher margins.
Notably, IAC’s European segment showed strong growth, demonstrating the effectiveness of its strategies when applied in different markets.

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✓ Company Data and News
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Apr 17

Daily Brief Industrials: Nidec Corp, Deutsche Lufthansa , Contemporary Amperex Technology (CATL), Voltas Ltd, Encore Wire, Lonking Holdings, J&T Global Express , Spirit Airlines, Norcros PLC, Singapore Post and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Nidec (6594) | Liquid Cooling Overheats Stock
European Airlines – Assessing Fuel Price Risk to Earnings
Contemporary Amperex Technology (300750 CH) 1Q24 Better than Expected
[#22] Namaste India 🙏 | Voltas Ltd (VOLT IN) | Margin Pressure to Continue
Prysmian/Encore Wire: Agreed Offer
Lonking (3339 HK): Policy Tailwind
J&T Global Express IPO Lock-Up Expiry – Tiny Float with 87%+ Stake Lockup Release Worth >US$8.8bn
Spirit Airlines (SAV Bonds) – Tuesday, Jan 16, 2024
Company Update – Norcros Plc
kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company”

Nidec (6594) | Liquid Cooling Overheats Stock

By Mark Chadwick

Nidec’s share price rose by 7% on the largest volume day of the year and on a day where the Nikkei declined by 2%.
The move followed an announcement that Nidec will enhance its CDUs production line in Thailand by 10x by June 2024. CDUs are used to cool AI servers in data centres
The market impact of 250 billion yen implies a sales impact of 69 billion yen, which is far too high for 24,000 units per year

European Airlines – Assessing Fuel Price Risk to Earnings

By Neil Glynn

Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.
Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.
Ryanair is comfortably most insulated given margin and balance sheet strength.

Contemporary Amperex Technology (300750 CH) 1Q24 Better than Expected

By Mohshin Aziz

CATL announced its 1Q24 net profit of CNY9.2B (+19% YoY), which straight out blew past market expectations
The fear of ever-declining battery prices is overstated, as CATL has clearly shown it can take lower margins and boost ROEs via higher inventory turnover and high utilisation rates
Our fair value of CNY253 (+27% UPSIDE) is derived by 23x 2024 PE ratio, which is 1SD below its historical mean. CATL is currently trading at exceptionally low valuations

[#22] Namaste India 🙏 | Voltas Ltd (VOLT IN) | Margin Pressure to Continue

By Pranav Bhavsar

Our flash checks across a couple of dealers indicate pressure on margins across the industry. Voltas Ltd (VOLT IN) is trying hard to gain market share.
Other names discussed include PNB Housing Finance Ltd (PNBHOUSI IN), Vedant Fashions (MANYAVAR IN) and Bandhan Bank Ltd (BANDHAN IN).
Varun Beverages (VBL IN) and Schaeffler India (SCHFL IN) show up as interesting ARs to read.

Prysmian/Encore Wire: Agreed Offer

By Jesus Rodriguez Aguilar

Prysmian SpA (PRY IM) agreed to acquire Encore Wire (WIRE US) for $290/share in cash, 29% premium to 90-day VWAP, implied EV of €4,264 million, 11x EV/NTM EBITDA and 16.9x Fwd P/E.
Encore wire has traded at an average 6.4x EV/EBITDA and 10.6x P/E over the last 5 years. I set my TP at $290. Synergies could be valued at $51/share.
The shares are trading slightly above the offer price. Gross spread is +0.2%. The volume traded since announcement has been very strong. There is room for some sweetening. Long.

Lonking (3339 HK): Policy Tailwind

By Osbert Tang, CFA

Lonking Holdings (3339 HK)‘s demand should pick up in 2H24 supported by the government’s “Action plan to promote large-scale equipment renewals and consumer goods trade-ins”.
Industry volume sales have already witnessed a narrower YoY decline in Mar, with solid exports of wheel loaders and domestic sales of excavators.
After going ex- in late-May, its PER will drop to 7.0x and yield will rise to 6.6%. Net cash of HK$1.56/share is more than fully cover its share price.

J&T Global Express IPO Lock-Up Expiry – Tiny Float with 87%+ Stake Lockup Release Worth >US$8.8bn

By Sumeet Singh

J&T Global Express, a global logistics provider, raised about US$500m in its Hong Kong IPO in Oct 2023. Its pre-IPO investors will be released from its IPO linked lockup soon.
As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 25.4% market share as per 2023 parcel volume.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

Spirit Airlines (SAV Bonds) – Tuesday, Jan 16, 2024

By Value Investors Club

Invest in Spirit 8% bonds due 9/20/2025
Spirit Airlines has strong cash position and available credit
Bonds are guaranteed by Spirit Airlines and backed by assets such as Airbus A320 airplanes

Company Update – Norcros Plc

Norcros plc is a United Kingdom-based supplier of bathroom and kitchen products.
The principal activities of the Company and its subsidiaries are the design, manufacture, and distribution of a range of bathroom and kitchen products, mainly in the United Kingdom and South Africa.
In the United Kingdom, it offers a range of bathroom and kitchen products for domestic and commercial applications.

kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company”

By Geoff Howie

kopi-C with SingPost’s CFO: “We’re building a Singapore-branded global logistics company” Its Group Chief Financial Officer Vincent Yik explains its strategy.
With the decline in demand for postal services over the years, Singapore Post (SingPost), the country’s postal service provider, is pivoting to the logistics sector to survive and thrive, shares its Group Chief Financial Officer Vincent Yik.

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Apr 17

Daily Brief Consumer: Belle Fashion Group, GHCL Textiles, Shakey’s Pizza, Nitori Holdings, Columbia Sportswear Co, Constellation Brands, Carmax Inc, Conagra Foods, Colgate Palmolive Co, Lands’ End Inc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Belle Fashion IPO: The Investment Case
GHCL Textile: The Undervalued & Turnaround Play
Shakey’s Pizza FY23 Concall Highlights: Challenging Q1 FY24, Smoother Road Ahead in H2
Nitori: One of the Best Bets in Japan Consumer Markets
Columbia Sportswear Company: Enhancing DTC Experience & Strengthening Its Retail Presence Across The Globe! – Major Drivers
Constellation Brands: What Is Its Portfolio Transformation Strategy in Wine and Spirits? – Major Drivers
CarMax Inc: How Are They Embracing Generative AI For Improving Efficiency & Strategic Expansion? – Major Drivers
Conagra Brands: Investments in the Frozen Segment & 5 Pivotal Factors Driving Growth! – Financial Forecasts
Colgate-Palmolive: What Is Its New Approach To Market Expansion & Its New Pricing Strategy? – Major Drivers
LE: Snapping the Catalog: Features, Focus Lead the Way; Reiterate Buy, $14 PT

Belle Fashion IPO: The Investment Case

Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO.
Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage.

GHCL Textile: The Undervalued & Turnaround Play

By Sudarshan Bhandari

Company recently demerged from Ghcl Ltd (GHCL IN) and guiding for 30% revenue growth and double margins from here onwards with cotton prices being stable.
A Debt Free Textile company available at 0.56x Price to Book with growth plan in progress and adding Value added products in its portfolio.
Due to Forced selling from DII, FII company remained undervalued, now with changing margin profile, the Company will be available at a cheap valuation compared to peers.

Shakey’s Pizza FY23 Concall Highlights: Challenging Q1 FY24, Smoother Road Ahead in H2

By Sameer Taneja

Shakey’s Pizza (PIZZA PM) had a disappointing end to FY23 despite the 32% YoY systemwide sales and 23% YoY profit growth. 4Q FY23 sales/profits were +15% YoY/-21% YoY.
Network expansion was a solid 369 outlets (base of 1772 outlets), primarily led by Potato Corner (359 outlets). Expansion in FY24 was guided at over 400+ outlets (1+ bn Pesos).
Stock trades at 15.6x FY23 earnings and 13x FY24e with mid-teens growth on the top/bottom line guided by the company for FY24

Nitori: One of the Best Bets in Japan Consumer Markets

By Michael Causton

Leading furniture retailer Nitori recently announced it would work with French platform developer Mirakl to build an online marketplace. The site will be available late 2024 or early 2025.
Nitori wants the mall to contribute 20% of revenues by 2032 within a sales target of ¥3 trillion, when overseas store numbers are expected to be double those in Japan.
But, founder Akio Nitori says he wants to see overseas sales much higher than official targets and may well get there through close targeting of the rising Asian middle class.

Columbia Sportswear Company: Enhancing DTC Experience & Strengthening Its Retail Presence Across The Globe! – Major Drivers

In the recent fourth quarter 2023 financial results, Columbia Sportswear highlighted some key achievements and challenges they faced throughout the year.
This provides an informative insight into both the company’s strengths and weaknesses moving forward, forming a neutral foundation for an investment thesis and resulting summary analysis.
A cornerstone of Columbia Sportwear’s strategy in 2023 was their inventory reduction plan.

Constellation Brands: What Is Its Portfolio Transformation Strategy in Wine and Spirits? – Major Drivers

Constellation Brands reported strong Q3 results, driven by robust performance in their beer business, achieving over 8% depletion growth for its beer portfolio.
This performance is a testament to continued strong consumer demand and contributed to the company’s 55th consecutive quarter of depletion growth and tenth leading share gains.
The company also executed $215 million of share repurchases in Q3, maintaining its net leverage ratio at 3.2x, excluding Canopy equity and earnings.

CarMax Inc: How Are They Embracing Generative AI For Improving Efficiency & Strategic Expansion? – Major Drivers

CarMax, a leading used car retailer in the United States, reported its Q3 fiscal year 2024 results indicating a continuation of a strategic plan that has led to sequential year-over-year improvements across key business areas for four consecutive quarters.
Total sales for Q3 FY ’24 were $6.1 billion, down by 5% compared to the previous year due to lower retail and wholesale prices and lower retail volume, partially offset by higher wholesale volume.
Retail unit sales declined by 2.9% while used unit comps were down by 4.1%.

Conagra Brands: Investments in the Frozen Segment & 5 Pivotal Factors Driving Growth! – Financial Forecasts

Conagra Brands maintained an overall positive tone regarding its performance and future prospects in its latest earnings.
While there were signs of optimism and forward-looking strategies, there were also concerns about certain aspects of its operations and broader market conditions.
The company was seen focusing heavily on volume as being crucial for growth.

Colgate-Palmolive: What Is Its New Approach To Market Expansion & Its New Pricing Strategy? – Major Drivers

By Small Cap Consumer Research

The fourth-quarter earnings of Colgate-Palmolive were decent and the company demonstrated impressive resilience in 2023, focusing on sustainable organic sales growth, rebuilding margins and strengthening cash flow performance amid an increasingly challenging operating environment.
However, some challenges persist, such as geopolitical unrest, foreign exchange headwinds and industry shifts, which might impact results in 2024.
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.

LE: Snapping the Catalog: Features, Focus Lead the Way; Reiterate Buy, $14 PT

We are reiterating our Buy rating, $14 price target and projections after reviewing the company’s early summer catalogs for April 2023 and 2024.
We remain impressed by the shifts in the catalogs, from a deeper focus on features and story telling, impressive gains in swimwear and related accessories, expansion of categories such as outerwear, totes and lifestyle apparel, shifts in footwear that we believe will presage the relaunch of the category as a licensed item and overall similar pricing.
We continue to believe Lands’ End is on the right track to drive higher returns and strong consistent profitability, and reiterate our Buy rating and $14 price target.,

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Apr 17

Daily Brief Financials: JPY, Hang Seng Index, IP Group PLC, Tetragon Financial Group Ltd/F, Vista Land & Lifescapes and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Comment on Exchange Rate – USD/JPY – March 29, 2024
EQD | Hang Seng Down: Upcoming Bounce May Not Mean Rally Continuation
IP Group – Several potential portfolio catalysts on the horizon
Tetragon Financial Group – FY23 growth driven by idiosyncratic factors
Morning Views Asia: Vista Land & Lifescapes

Comment on Exchange Rate – USD/JPY – March 29, 2024

During the period under consideration, i.e. February 28th 2024 to March 29th, 2024, the USD/JPY pair fluctuated between 146 and 152 Yen per 1 Dollar.
The MA-10 line at the beginning of the period considered was moving above the MA-20 line.
From March 7th until March 22nd the MA-10 line trend changed and was moving below the MA-20.

EQD | Hang Seng Down: Upcoming Bounce May Not Mean Rally Continuation

By Nico Rosti

The HSI INDEX is currently down for the 2nd week in a row and it is quite oversold on a WEEKLY basis.
A temporary reversal could come as soon as this week or next week, but we don’t think this will mark a restart of the previous rally.
Look at the 16250-16050 area to go LONG, this is the area where the index most likely will print a temporary bottom.

IP Group – Several potential portfolio catalysts on the horizon

By Edison Investment Research

IP Group’s NAV declined by 13% in total return (TR) terms in FY23, affected by continued soft valuations across venture capital (VC) markets, as well as funding delays at some of its holdings. That said, management indicated that many of IP Group’s portfolio companies continued to make strong progress. Its maturing portfolio offers a number of potential NAV triggers and is now available at a wide 59% discount to NAV. We note that, as at end-2023, only 14% of IP Group’s portfolio was valued based on funding rounds completed more than 12 months ago and 46% of its private portfolio was valued by a third-party specialist. IP Group’s holding-level liquidity was solid, with gross cash of £227m (or 19% of NAV) and 87% of its portfolio holdings (by value) had a cash runway to 2025 or beyond.

Tetragon Financial Group – FY23 growth driven by idiosyncratic factors

By Edison Investment Research

Tetragon Financial Group (Tetragon) posted a 6.4% net asset value (NAV) per share total return (TR) in US dollar terms in FY23. Tetragon’s returns normally have a low correlation with broader markets, and therefore its FY23 performance was below the 26.3% return of the S&P 500 Index, which rallied on the artificial intelligence (AI) theme. Tetragon’s FY23 return on equity (RoE) of 5.5% was below its target of 10–15% pa. That said, its performance since listing was within the target range at 11.3%. Tetragon continues payouts to its shareholders, distributing US$83.6m in FY23 through buybacks and dividends (3.0% of opening NAV), with the dividend yield standing at 4.4%.

Morning Views Asia: Vista Land & Lifescapes

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.

Vista Land & Lifescapes

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Apr 17

Daily Brief Health Care: Illumina Inc, JTEC Corp/Osaka, Akeso Biopharma Inc, Edwards Lifesciences, BenQ BM Holding Cayman Corp., Actinogen Medical, Teva Pharmaceutical Sp Adr and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Illumina Inc: Will Its Market Dominance In Genetic Analysis Last In The Long Term? – Major Drivers
JTEC Corp (3446) – Embarking on a Multi-Year Runway of Growth with Technological Advantage
[Blue Lotus Healthcare Sector Update]: Bottom-Fishing at the Bottom of the Business Cycle
Edwards Lifesciences Corporation: Will Its Investments in Field Expansion and Patient Activation Programs Pay Off? – Major Drivers
Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model
Actinogen Medical – First patient dosed in Phase IIb XanaMIA study
Teva Pharmaceuticals (TEVA) – Tuesday, Jan 16, 2024

Illumina Inc: Will Its Market Dominance In Genetic Analysis Last In The Long Term? – Major Drivers

Illumina reports a successful 2023 but is bracing for a challenging 2024 amid continued macroeconomic hurdles.
The company delivered a higher-than-expected consolidated revenue of approximately $1.12 billion in the fourth quarter, marking an increase of 4% year over year.
CEO Jacob Thaysen highlighted the latest product, NovaSeq X, as the most successful high-throughput product launch in the company’s history.

JTEC Corp (3446) – Embarking on a Multi-Year Runway of Growth with Technological Advantage

By Astris Advisory Japan

JTEC Corp is a specialist technology innovator, and a global market leader in customized X-ray mirrors used in synchrotron radiation and X-ray free-electron laser facilities worldwide.
With its competitive advantage in technology through high R&D spending and strong partnerships with academic and research institutions, the company is switching back to a robust growth trajectory driven by 1) normalized business conditions post- COVID-19,
2) new construction and upgrade demand for synchrotron radiation facilities, particularly from China, and 3) business expansion in the life sciences and semiconductor sectors.

[Blue Lotus Healthcare Sector Update]: Bottom-Fishing at the Bottom of the Business Cycle

By Eric Wen

C1Q24 was marked by liquidity crises in innovative drug and medical device, and depressed margin in digital health. We believe this is a buying opportunity;
PD-1 has recovered nicely in C2H23 and exceeded our expectation made for 2023.We forecast 20% YoY growth in 2024.Further,pipeline maturity has led to new drugs in autoimmune and metabolic drugs;
Biosimilar has proven to be part of the solution to deal with low paying ability of Chinese healthcare and denial of access to the high paying US healthcare market.

Edwards Lifesciences Corporation: Will Its Investments in Field Expansion and Patient Activation Programs Pay Off? – Major Drivers

Edwards Lifesciences, a medical technology company specializing in artificial heart valves and hemodynamic monitoring, recently reported the Fourth Quarter 2023 Earnings, where insights about the company’s past performance and future prospects were shared.
The company’s CEO, Bernard Zovighian, highlighted a strong financial performance in 2023, with a sales increment of 12% reaching up to $6 billion, building a strong presence across all four product groups.
Investments in research and development went beyond $1 billion, and it hit strategic milestones like the introduction of innovative technologies for sustainable growth.

Pre-IPO BenQ BM Holding – Profitability Will Be Disappointing Due To “Flaws” In Business Model

By Xinyao (Criss) Wang

The business model for general hospitals is not good (e.g. heavy assets, challenging operations, low profits, difficult to replicate and expand nationwide), which has never been a profitable business.
BenQ’s profitability is not attractive if compared with for-profit specialized hospitals. The “benefit chain” of hospitals is actually very complicated, which makes it challenging to attract/retain good medical talents.
BenQ’s overall revenue growth could slow down in the future. Its profit margin is also not attractive. It would be difficult for BenQ to achieve a high valuation after IPO.

Actinogen Medical – First patient dosed in Phase IIb XanaMIA study

By Edison Investment Research

Actinogen Medical announced that the first randomised patient in its Phase IIb XanaMIA trial of lead candidate Xanamem received their first treatment on Friday 12 April. This study is designed to enrol c 220 patients with cognitive impairment (CI) associated with biomarker-positive mild-to-moderate Alzheimer’s disease (AD), as confirmed through an elevated level of phosphorylated Tau-181 (pTau-181) protein in their blood at baseline. The study has commenced at 13 Australian sites and will concentrate on domestic sites for the first c 100 patients, and initial efficacy and safety results will be analysed when these patients reach 24 weeks of treatment. These results are now expected in mid-CY25 (vs prior guidance of H1 CY25) and Actinogen expects to expand the trial to US study sites following this interim readout. In the near term, the next material milestone for the company will be results, now expected in early Q3 CY24 (vs Q2 CY24 previously), from its Phase IIa XanaCIDD study in patients with CI and major depressive disorder (MDD).

Teva Pharmaceuticals (TEVA) – Tuesday, Jan 16, 2024

By Value Investors Club

Teva Pharmaceuticals and Viatris Inc are leading global generic pharmaceutical manufacturers with diverse drug portfolios.
Both companies are currently undervalued and are anticipated to see substantial shareholder returns in 2024.
Despite challenges in the US generic drug industry, Teva and Viatris are poised for significant upside potential in the near future.

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Apr 17

Most Read: Pasona Group, Kokusai Electric , Sichuan Baicha Baidao Industrial, Fuji Oil Co Ltd, HPSP, Hollysys Automation Technologies, Belle Fashion Group, Megastudyedu Co, Ltd. and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Pasona (2168 JP) Special Div – Too Small to Matter
Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry
Kokusai Electric IPO Lock-Up – KKR Will Be Tempted by the US$2.7bn Release but Might Have to Wait
Baicha Baidao (2555 HK) IPO: Valuation Insights
Idemitsu (5019): First SumiChem’s, Now JERA’s Stake in Fuji Oil (5017) To Go to 22%. It’s Coming…
Market Chats About What Really Went Down with HPSP This Morning
Hollysys (HOLI US): Keep Calm as Closing Date Slips
Multiple Positive Catalysts Ahead Of Q124 Earnings Season
Belle Fashion IPO: The Investment Case
Megastudy Education: A Major Shareholder Return Policy in 2024-2026

Pasona (2168 JP) Special Div – Too Small to Matter

On Friday, Pasona Group (2168 JP) announced its expected use of funds into the May 2024 results, including a special dividend plan, investment for growth, and “strengthening the operating platform.”
The plan will disappoint. The stock may get hit hard. The truth is somewhere in the middle. This is where active stewardship matters. So get stewarding.
A special div paid over 5yrs should be paid one-shot, now. If the company has plans worth supporting, set KPIs now, ask for money later. Good plans get good money.

Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry

Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details.

Kokusai Electric IPO Lock-Up – KKR Will Be Tempted by the US$2.7bn Release but Might Have to Wait

By Sumeet Singh

KKR raised around US$730m via selling some stake in Kokusai Electric (6525 JP) Japan IPO in Sep 2023. Its remaining stake will be released from its IPO linked lockup soon.
KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

Baicha Baidao (2555 HK) IPO: Valuation Insights

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, has launched an HKEx IPO to raise US$330 million. The shares will be listed on 23 April.
We previously discussed the IPO in Baicha Baidao IPO: The Bull Case and Baicha Baidao IPO: The Bear Case.
There are no cornerstone investors. Our valuation analysis suggests that Baicha is fairly valued at the HK$17.50 IPO price. Therefore, we would pass on the IPO.

Idemitsu (5019): First SumiChem’s, Now JERA’s Stake in Fuji Oil (5017) To Go to 22%. It’s Coming…

In the mid-late teens, four refinery groups merged to create two refinery groups – JX and Tonen General became JXTG under ENEOS Holdings (5020 JP) and Idemitsu took over ShowaShell.
When Idemitsu got ShowaShell, it got 50+% in Toa Oil Co Ltd (5008 JP), 6.58% of Fuji Oil Co Ltd (5017 JP). In 2020, they tried to buy in Toa.
That was delayed by an activist. Today, Idemitsu announced they had gone to 23% in Fuji Oil. That stake will go up before it goes down.

Market Chats About What Really Went Down with HPSP This Morning

By Sanghyun Park

This morning’s HPSP (403870 KS) situation began with Maekyung’s report, indicating Crescendo PE contacted local bankers for the controlling stake sale.
The surge in HPSP’s stock price after Maekyung’s report suggests Crescendo PE’s tacit approval, implying their involvement in the news’s emergence.
Despite the likely confirmed sale of Crescendo PE’s stake, timing remains uncertain due to disclosure rules. Continued monitoring is vital, considering potential market reactions later.

Hollysys (HOLI US): Keep Calm as Closing Date Slips

On 15 April, Hollysys Automation Technologies (HOLI US) issued a 6-K filing stating that Ascendent remains in the process of obtaining regulatory approvals.
The gross spread has widened to 8% as the closing date has slipped from the end of March guidance, and an updated timeline is lacking.
A delay in securing regulatory approvals is not uncommon. However, regulatory approvals should be forthcoming as the transaction involves Chinese entities (including a SASAC entity) acquiring a Chinese-focused company.

Multiple Positive Catalysts Ahead Of Q124 Earnings Season

By William Keating

PC, Smartphone Unit shipments both registering YoY growth in Q124
TSMC will beat guidance & likely guide Q224 up ~5% QoQ. Samsung’s pre earnings showed strong recovery in operating profit
Server unit shipments are on a ~17% YoY growth run rate

Belle Fashion IPO: The Investment Case