Smartkarma Daily Briefs, Author at Smartkarma

Apr 12

Daily Brief Utilities: CGN New Energy Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

CGN New Energy (1811 HK): Evaluating a Potential Privatisation

CGN New Energy (1811 HK): Evaluating a Potential Privatisation

By Arun George

Bloomberg reports that CGN, the parent and largest shareholder, is reconsidering taking CGN New Energy Holdings (1811 HK) private.
CGN New Energy shares have underperformed the median peer’s shares since the announcement of CGN’s previous aborted privatisation attempt (2 March 2020) and on the last twelve-month basis.
The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer range of HK$2.80-4.30.

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Apr 12

Daily Brief Industrials: HD Hyundai Marine Solution , Cosco Shipping Energy Transportation Co. Ltd. (H), Builders Firstsource, Sixt SE, Distribution Solutions Group I and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HD Hyundai Marine Solution IPO Industry Analysis
COSCO Shipping Energy (1138 HK): Surfing the High Tide
Builders Firstsource (BLDR) – Wednesday, Jan 10, 2024
Sixt Se (SIX2) – Wednesday, Jan 10, 2024
Distribution Solutio Gro Inc (DSGR) – Wednesday, Jan 10, 2024

HD Hyundai Marine Solution IPO Industry Analysis

By Douglas Kim

In this insight, we highlight some of the important industry factors impacting HD Hyundai Marine Solution.
Eco-Friendly ships are high-value-added ships that require more parts than conventional ships and are mechanically more complex, so the unit cost of parts is higher than that of conventional ships.
Therefore, the ship AM (aftermarket) is a key industry that is expected to benefit from higher customer demand and increase service prices.

COSCO Shipping Energy (1138 HK): Surfing the High Tide

By Osbert Tang, CFA

Despite YTD strengths in share price, Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is still cheap at 5.7x PER and 0.9x P/B.
VLCC is forecast to stay undersupplied in FY24 and FY25, supporting the rates and CSET’s profitability. YTD, the VLCC rates have recovered by 19.5%.
LNG transportation generated 19% of FY23 earnings. With 40 more vessels on order, compared with a current fleet of 43, there is immense upside from this segment.

Builders Firstsource (BLDR) – Wednesday, Jan 10, 2024

By Value Investors Club

Builders FirstSource focuses on value-added and specialty products
Maintains industry-leading gross margins of 35%
Expands reach and solidifies position through strategic acquisitions and strong customer base

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.

Sixt Se (SIX2) – Wednesday, Jan 10, 2024

By Value Investors Club

Sixt is focused on increasing its market share and expanding into key markets such as Germany and Europe
The company’s strategy includes focusing on premium vehicles, strong relationships with OEMs, and utilizing franchise operations for global expansion
The Sixt family’s involvement and significant ownership stake indicate a commitment to the company’s success and continuity in leadership

Distribution Solutio Gro Inc (DSGR) – Wednesday, Jan 10, 2024

By Value Investors Club

Market gaining confidence in DSGR’s management and growth strategy for potential multiple expansion
Strong acquisition pipeline and track record of successful integrations positioning DSGR for long-term success
DSGR offers an attractive investment opportunity with potential for significant upside due to recent developments and discounted valuation

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Apr 12

Daily Brief Energy/Materials: Boral Ltd, Crude Oil, ADF Group , Geopark Ltd, PetroTal and more

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

In today’s briefing:

Boral Backs Seven’s “Enhanced” Offer
EIA Lifts Price Forecast on Higher Oil Consumption Plus Tighter Supply
DRX: Another Quarter, Another Beat; Increasing Target Price
GeoPark Limited (NYSE: GPRK): Potential Acquisition of Unconventional Producing Assets in Argentina
PetroTal Corp (AIM: PTAL): Better Balance Sheet than Expected

Boral Backs Seven’s “Enhanced” Offer

By David Blennerhassett

After Boral (BLD AU) rejected Seven Group (SVW AU)‘s cash/scrip Offer, Seven slammed the Independent Expert’s report, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
Seven has now waived certain tendering thresholds, increasing the cash terms to A$1.70/share from A$1.50/share. Boral will also pay a fully-franked dividend of A$0.26/share, providing A$0.11/share of franking credits.
The IE now considers the Offer to be reasonable. Boral’s board recommends shareholders to accept. This is done.

EIA Lifts Price Forecast on Higher Oil Consumption Plus Tighter Supply

By Suhas Reddy

EIA raised its crude oil price forecast for 2024 and 2025, cites higher global oil consumption outlook and concerns over geopolitical tensions.
The agency also increased global liquid fuels production outlook for 2024 compared to the previous month.
Increased forecast on US retail gasoline prices relative to March STEO, expects lower gasoline inventories and higher net exports drive price rise.

DRX: Another Quarter, Another Beat; Increasing Target Price

By Atrium Research

ADF Group reported Q4 & FY24 financial results this morning that beat our expectations across the board.
For Q4, revenue came in at $88.4M (+72% YoY) vs. our estimate of $77.1M and EBITDA came in at $15.5M (+164% YoY) vs. our estimate of $13.6M.
FY24 marked another stellar year for ADF as it benefits from infrastructure spending across North America and the automation capex program at its Terrebonne facility.

GeoPark Limited (NYSE: GPRK): Potential Acquisition of Unconventional Producing Assets in Argentina

By Auctus Advisors

GeoPark has submitted a binding offer to acquire a non-operated Working Interest in unconventional blocks in the Neuquen Basin in Argentina.
The offer has been accepted by the seller and the parties are working on an exclusive basis towards execution of definitive agreements.
The completion of the transaction could occur in 3Q24

PetroTal Corp (AIM: PTAL): Better Balance Sheet than Expected

By Auctus Advisors

1Q24 production of 18,518 bbl/d was in line with our expectations.
Production over the last 30 days was 20.5 mbbl/d with the recently drilled 17H well, now on pump, delivering 4,500 bbl/d.
This bodes very well for 2Q24 production given that the 18H well is expected to commence production in May.

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Apr 12

Daily Brief TMT/Internet: Bharti Hexacom, ICTK and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Bharti Hexacom IPO Trading – Strong Insti and Anchor, Retail Gave It a Miss
ICTK IPO Valuation Analysis

Bharti Hexacom IPO Trading – Strong Insti and Anchor, Retail Gave It a Miss

By Sumeet Singh

Government of India raised around US$513m via selling some of its stake in Bharti Hexacom’s IPO.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

ICTK IPO Valuation Analysis

By Douglas Kim

Our base case valuation of ICTK is target price of 28,694 won, which is 79% higher than the high end of the IPO price range.
Our base case valuation is based on P/S multiple of 20.8x using our estimated sales of 18.1 billion won in 2025.
ICTK’s operating margin improved from -129.9% in 2022 to -38.2% in 2023. We estimate its operating margin to improve further to -12.4% in 2024 and 17.7% in 2025.

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Apr 12

Daily Brief Industrials: HD Hyundai Marine Solution , Cosco Shipping Energy Transportation Co. Ltd. (H), Builders Firstsource, Sixt SE, Distribution Solutions Group I and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

HD Hyundai Marine Solution IPO Industry Analysis
COSCO Shipping Energy (1138 HK): Surfing the High Tide
Builders Firstsource (BLDR) – Wednesday, Jan 10, 2024
Sixt Se (SIX2) – Wednesday, Jan 10, 2024
Distribution Solutio Gro Inc (DSGR) – Wednesday, Jan 10, 2024

HD Hyundai Marine Solution IPO Industry Analysis

By Douglas Kim

In this insight, we highlight some of the important industry factors impacting HD Hyundai Marine Solution.
Eco-Friendly ships are high-value-added ships that require more parts than conventional ships and are mechanically more complex, so the unit cost of parts is higher than that of conventional ships.
Therefore, the ship AM (aftermarket) is a key industry that is expected to benefit from higher customer demand and increase service prices.

COSCO Shipping Energy (1138 HK): Surfing the High Tide

By Osbert Tang, CFA

Despite YTD strengths in share price, Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is still cheap at 5.7x PER and 0.9x P/B.
VLCC is forecast to stay undersupplied in FY24 and FY25, supporting the rates and CSET’s profitability. YTD, the VLCC rates have recovered by 19.5%.
LNG transportation generated 19% of FY23 earnings. With 40 more vessels on order, compared with a current fleet of 43, there is immense upside from this segment.

Builders Firstsource (BLDR) – Wednesday, Jan 10, 2024

By Value Investors Club

Builders FirstSource focuses on value-added and specialty products
Maintains industry-leading gross margins of 35%
Expands reach and solidifies position through strategic acquisitions and strong customer base

Sixt Se (SIX2) – Wednesday, Jan 10, 2024

By Value Investors Club

Sixt is focused on increasing its market share and expanding into key markets such as Germany and Europe
The company’s strategy includes focusing on premium vehicles, strong relationships with OEMs, and utilizing franchise operations for global expansion
The Sixt family’s involvement and significant ownership stake indicate a commitment to the company’s success and continuity in leadership

Distribution Solutio Gro Inc (DSGR) – Wednesday, Jan 10, 2024

By Value Investors Club

Market gaining confidence in DSGR’s management and growth strategy for potential multiple expansion
Strong acquisition pipeline and track record of successful integrations positioning DSGR for long-term success
DSGR offers an attractive investment opportunity with potential for significant upside due to recent developments and discounted valuation

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Apr 12

Daily Brief Health Care: MorphoSys AG and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Novartis/Morphosys: Start of Offer Period

Novartis/Morphosys: Start of Offer Period

By Jesus Rodriguez Aguilar

Novartis published its offer document for MorphoSys AG (MOR GR) (US: MorphoSys AG (MOR US)) following approval by BaFin. The acceptance period has commenced on 11 April, and will expire on 13 May.
I remain confident NVS’ acquisition of MOR closes on track. I maintain my TP at €68/share, $18.25/ADR offer price, as deal will highly likely close in H1, in my view.
As of 11 April, gross spread is 0.82% and the estimated annual return is 7.78%. Long and tender.

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Apr 12

Daily Brief Australia: Boral Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Boral Backs Seven’s “Enhanced” Offer

Boral Backs Seven’s “Enhanced” Offer

By David Blennerhassett

After Boral (BLD AU) rejected Seven Group (SVW AU)‘s cash/scrip Offer, Seven slammed the Independent Expert’s report, calling the Target Statement “unbalanced, selective and risks fundamentally misleading Boral minority shareholders“.
Seven has now waived certain tendering thresholds, increasing the cash terms to A$1.70/share from A$1.50/share. Boral will also pay a fully-franked dividend of A$0.26/share, providing A$0.11/share of franking credits.
The IE now considers the Offer to be reasonable. Boral’s board recommends shareholders to accept. This is done.

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Apr 12

Daily Brief Financials: Mitsui Fudosan, Bandhan Bank Ltd, Bitcoin, Chesnara PLC, China Jinmao Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

JAPAN ACTIVISM: Mitsui Fudosan (8801) Responds to Elliott with Buyback, Amended Long-Term Plan
NIFTY Bank Index Rebalance Preview: Canara Bank Still Cheap; Double Deletion for Bandhan?
Crypto Moves #23 – The Bitcoin ETFs Run the World
Chesnara (CSN): Good 2023 results set platform for future progress
Morning Views Asia: China Jinmao Holdings, Yuexiu Property

JAPAN ACTIVISM: Mitsui Fudosan (8801) Responds to Elliott with Buyback, Amended Long-Term Plan

By Travis Lundy

9 weeks ago, the FT reported Elliott Management had a stake in Mitsui Fudosan (8801 JP) and had asked them to sell cross-holdings and do a ¥1trln buyback.
The stock popped 7% the next day to ¥1302, on the highest volume since the covid crash, hesitated a day, then powered almost 20% higher through the end of March.
Today, Mitsui Fudosan responded with an Amendment to their Plan out to 2030. It has a higher dividend, a share buyback, higher EPS target growth, and higher ROE target. But…

NIFTY Bank Index Rebalance Preview: Canara Bank Still Cheap; Double Deletion for Bandhan?

By Brian Freitas

Canara Bank (CBK IN) should replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the September rebalance.
Passive trackers will need to buy nearly 2 days of ADV in Canara Bank (CBK IN) while selling over 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN).
Canara Bank (CBK IN) is one of the best performing banking stocks while Bandhan Bank Ltd (BANDHAN IN) has been the worst performer over the last two years.

Crypto Moves #23 – The Bitcoin ETFs Run the World

By Mads Eberhardt

2024 stands out as the landmark year for exchange-traded crypto products, especially those related to Bitcoin.
After years of existing somewhat separately from traditional finance, the crypto market is finally being recognized as a legitimate part of the broader financial landscape.
The United States set the stage in January by securing approval from the US Securities and Exchange Commission (SEC) for the first US-based Bitcoin spot ETFs. To any observer, it is unmistakably clear that the United States has triggered a wave of global approvals for exchange-traded crypto products.

Chesnara (CSN): Good 2023 results set platform for future progress

By Hardman & Co

Chesnara has announced its 2023 results.
Positive returns from equity markets and gains from acquisitions in the first half were somewhat offset by adverse changes to operating assumptions in the second.
Economic Value profit of £59.1m marked a good turnaround from a loss of £85.1m in 2022.

Morning Views Asia: China Jinmao Holdings, Yuexiu Property

By Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

China Jinmao Holdings
Yuexiu Property

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Apr 12

Daily Brief Consumer: Alibaba Group Holding , Fast Retailing, Melco International Development, Sichuan Baicha Baidao Industrial, TSE Tokyo Price Index TOPIX, M&C Saatchi plc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Spending on Customers Precedes Customer Spending
Fast Retailing(9983) | Not So Fast
StubWorld: Melco Gains As Lawrence Ho Buys
Baicha Baidao IPO: The Bull Case
How Long Will the Escape from Deflation Be a Greater Factor in Stock Price Rises than ROE?
M&C Saatchi – Moving into alignment

Spending on Customers Precedes Customer Spending

By Ying Pan

We expect Alibaba to report CY1Q24 top-line, non-GAAP EBITA and non-GAAP net income in-line, (14.2%) and (7.4%) vs. consensus. We cut non-GAAP EBITA by 10% and kept topline unchanged;
BABA is prioritizing growth of both AliCloud and cross-border ecommerce (AliExpress), which will weaken profitability in the near-term but is the right thing to do.
BABA is transforming itself into Chinese Microsoft with hopes of e-commerce mainly pinned on overseas. We maintain BUY and US$ 85 TP, implying 9.5x CY24 P/E.

Fast Retailing(9983) | Not So Fast

By Mark Chadwick

Fast Retail missed analyst estimates for Q2 sales and operating profit. Revenue growth slowed to 5% YoY
Full year operating profit guidance maintained at Y450 billion, just slightly below the street
The stock is trading at 27x EV/EBIT, in-line with historical averages, but still expensive in absolute terms and versus global peers

StubWorld: Melco Gains As Lawrence Ho Buys

By David Blennerhassett

Melco International (200 HK) gains as Lawrence Ho increases his position. Melco and 51.1%-held Melco Resorts (MLCO US) are the two worst performing gaming stocks over the past year.
Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Baicha Baidao IPO: The Bull Case

By Arun George

Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports.
Biacha is China’s third largest freshly-made tea shop company in terms of retail sales value in 2023, according to Frost & Sullivan.
The bull case rests on a rising market share, high revenue growth, sector-leading margins, cash generation and a strong balance sheet.

How Long Will the Escape from Deflation Be a Greater Factor in Stock Price Rises than ROE?

By Aki Matsumoto

Net profit per listed company increased 4.4 times over the 33 years from 1989 to 2023, which means only a modest 4.5% annual growth.
The reason why ROE has been sluggish since FY 2005 is due to the slow growth of Net Profit Margin, the decline of Asset Turnover, and the flat financial leverage.
When the escape from deflation becomes a reality, the key is to have products ready to pass on prices, and defense by cash alone is not sufficient for this purpose.

M&C Saatchi – Moving into alignment

By Edison Investment Research

There has been a lot going on under M&C Saatchi’s operational bonnet, so delivering FY23 results a shade above market forecasts is a good result, especially given the difficult market backdrop. Earlier issues regarding outstanding put option liabilities are in retreat, with minority interests in FY23 down to 13% from 25% in FY22, and most remaining liabilities are expected to be settled in FY24. The focus is now firmly on optimising the operational structure. There has already been good progress, simplifying and achieving greater coherence on a regional-first approach, with better alignment to how clients (and potential clients) want to utilise the group’s global capabilities. The incoming CEO, Zaid Al-Qassab, who starts in May, should be taking on the group’s navigation in less stormy waters.

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Apr 12

Daily Brief South Korea: HD Hyundai Marine Solution , ICTK and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

HD Hyundai Marine Solution IPO Industry Analysis
ICTK IPO Valuation Analysis

HD Hyundai Marine Solution IPO Industry Analysis

By Douglas Kim

In this insight, we highlight some of the important industry factors impacting HD Hyundai Marine Solution.
Eco-Friendly ships are high-value-added ships that require more parts than conventional ships and are mechanically more complex, so the unit cost of parts is higher than that of conventional ships.
Therefore, the ship AM (aftermarket) is a key industry that is expected to benefit from higher customer demand and increase service prices.

ICTK IPO Valuation Analysis

By Douglas Kim

Our base case valuation of ICTK is target price of 28,694 won, which is 79% higher than the high end of the IPO price range.
Our base case valuation is based on P/S multiple of 20.8x using our estimated sales of 18.1 billion won in 2025.
ICTK’s operating margin improved from -129.9% in 2022 to -38.2% in 2023. We estimate its operating margin to improve further to -12.4% in 2024 and 17.7% in 2025.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

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