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Smartkarma Daily Briefs

Apr 04
0

Daily Brief Japan: Kokusai Electric , TSE Tokyo Price Index TOPIX, Gajah Tunggal and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kokusai Electric (6525 JP): The US$4.8 Billion Lock up Expiry
  • The Rising Number of Young People Unmarried Is the Cause of Low Birthrate. What Should Companies Do?
  • Morning Views Asia: Gajah Tunggal, Rakuten, Road King Infrastructure, SK Hynix

Kokusai Electric (6525 JP): The US$4.8 Billion Lock up Expiry

By Arun George

  • Kokusai Electric (6525 JP)’s 180-day IPO lock-up period for 71% of outstanding shares expires on 22 April. The shares exiting the lock-up period are worth US$4.8 billion.
  • The likely seller will be KKR & (KKR US) as it was the sole selling shareholder in the IPO. The shares are currently trading at 2.4x the IPO price.
  • Kokusai anticipates a return to growth and margin improvement in FY24. However, Kokusai trades at a material premium to peer multiples and is fully priced. 

The Rising Number of Young People Unmarried Is the Cause of Low Birthrate. What Should Companies Do?

By Aki Matsumoto

  • The essence of the declining birthrate problem is the increasing number of young people who aren’t getting married, but the government has been mismatched in focusing support on married couples.
  • Since the reasons for unwillingness to marry are “financial reasons” for men and “limitation of activities and time” for women, along with increased income, child-rearing and housework shouldn’t burden women.
  • Companies should shift to business model that allows them to raise profit margins without resorting to cost-cutting, raise employee salaries, and create work environment that supports child-rearing and family responsibilities.

Morning Views Asia: Gajah Tunggal, Rakuten, Road King Infrastructure, SK Hynix

By Leonard Law, CFA

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

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Apr 04
0

Daily Brief China: Langham Hospitality Inv Ss, Li Auto , Nongfu Spring , Country Garden Services, Oriental Watch, Hansoh Pharmaceutical Group , Anton Oilfield, Beijing Biostar Pharmaceuticals Co Ltd, Gajah Tunggal and more

By | China, Daily Briefs

In today’s briefing:

  • Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation
  • HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June
  • Nongfu Spring (9633 HK):  Strong Results Overshadowed By Short Term Negative Publicitiy
  • Quiddity Leaderboard for Hang Seng Index Jun 24: Could Country Garden Services Get Deleted?
  • Oriental Watch 398 HK: Slow 4Q FY24, Resting On A 14% Yield, With 70% of Mkt Cap in Cash
  • Hansoh Pharmaceutical (3692 HK): Performance Improves in 2H23; Innovative Drugs to Continue to Roar
  • Anton Oilfield – Earnings Flash – FY 2023 Results – Lucror Analytics
  • Pre-IPO Beijing Biostar Pharmaceuticals- Core Product Has Obvious Defects; Outlook Is Not Optimistic
  • Morning Views Asia: Gajah Tunggal, Rakuten, Road King Infrastructure, SK Hynix

Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

By Arun George

  • Langham Hospitality Inv Ss (1270 HK) received a notice from Great Eagle Holdings (41 HK), the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.
  • The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.
  • Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.

HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June

By Brian Freitas

  • With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
  • Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.
  • Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).

Nongfu Spring (9633 HK):  Strong Results Overshadowed By Short Term Negative Publicitiy

By Steve Zhou, CFA

  • Nongfu Spring (9633 HK) announced a set of strong 2023 results last week, with 2H23 net profit up 62% yoy and sales up 33% yoy. 
  • The best performing category in 2023 has been tea beverage products (30% of sales), which grew 83% yoy for the year and 105% yoy in 2H23, picking up speed.
  • Nongfu Spring is trading at 33x 2024 earnings, which I believe is attractive. 

Quiddity Leaderboard for Hang Seng Index Jun 24: Could Country Garden Services Get Deleted?

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in June 2024.
  • The index changes for the June 2024 index rebal will be announced on 17th May 2024.
  • The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.

Oriental Watch 398 HK: Slow 4Q FY24, Resting On A 14% Yield, With 70% of Mkt Cap in Cash

By Sameer Taneja

  • Oriental Watch (398 HK)  has begun Q4 2024 slowly, with its SSSG dropping by double-digit levels in all its major markets (HK/China and Macau).
  • As the year almost draws to a close, we expect profits to drop 10-15% YoY for FY24 and the company to pay out 100%, resulting in a 14% dividend yield.
  • The company also has 1.2 bn HKD of net cash, representing 70% of its market capitalization. Additionally, it has 700 mn HKD of investment property. 

Hansoh Pharmaceutical (3692 HK): Performance Improves in 2H23; Innovative Drugs to Continue to Roar

By Tina Banerjee

  • Hansoh Pharmaceutical Group (3692 HK) reported a whopping 55% YoY net profit growth to RMB3 billion on just 13% YoY revenue growth to RMB6 billion in 2H23.
  • Revenue from innovative drugs zoomed 52% YoY to RMB4 billion and its proportion to total revenue increased to 73% in 2H23 from 54% in 2H22 and 62% in 1H23.
  • Although Hansoh is not expected to receive marketing approval for any in-house innovative product in 2024, existing portfolio of innovative drugs will continue to drive the growth of the company.

Anton Oilfield – Earnings Flash – FY 2023 Results – Lucror Analytics

By Trung Nguyen

Anton Oilfield’s FY 2023 results were strong, with revenue growth accelerating to levels not registered since H1/19. The strong FCF boosted the cash balance. The company’s financial risk profile improved significantly, with Net Debt/EBITDA below 1x and healthy interest coverage ratios. Liquidity is adequate.

We expect the business’ positive momentum to continue in FY 2024. H1 is projected to be significantly better y-o-y, while H2 is anticipated to improve only marginally due to the high base effect.

Pre-IPO Beijing Biostar Pharmaceuticals- Core Product Has Obvious Defects; Outlook Is Not Optimistic

By Xinyao (Criss) Wang

  • Besides the core product Utidelone Injection, the rest pipelines are mostly related to the indications expansion/new formulations R&D for Utidelone Injection. Excessive dependence on single product is hard to improve. 
  • We’re not optimistic about the future sales growth of Utidelone Injection due to fierce competition/inconvenient administration methods/expired patent protection. Biostar is facing survival risks if new financing cannot be obtained.
  • Biostar’s post-investment valuation is already RMB4.49 billion. Given the gloomy sentiment and the concerns about the pipeline/prospects, we think it could fall below this valuation level after IPO in HKEX.

Morning Views Asia: Gajah Tunggal, Rakuten, Road King Infrastructure, SK Hynix

By Leonard Law, CFA

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

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Apr 04
0

Daily Brief Equity Bottom-Up: Tesla Q1 Deliveries: Look Out Below and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Tesla Q1 Deliveries: Look Out Below
  • Nongfu Spring (9633 HK):  Strong Results Overshadowed By Short Term Negative Publicitiy
  • Oriental Watch 398 HK: Slow 4Q FY24, Resting On A 14% Yield, With 70% of Mkt Cap in Cash
  • Hansoh Pharmaceutical (3692 HK): Performance Improves in 2H23; Innovative Drugs to Continue to Roar
  • Century Communities Inc: A Story Of Expansion Through Mergers & Acquisitions! – Major Drivers
  • D.R. Horton (DHI) – Wednesday, Jan 3, 2024
  • Life Time Group Holdings Inc.: Initiation Of Coverage – Unveiling the 4 Major Forces Propelling Its Success! – Major Drivers
  • Pendragon Plc (PDG LN) – Wednesday, Jan 3, 2024
  • Shake Shack Inc.: Initiation Of Coverage – The 4 Fundamental Aspects Fueling Its Growth Uncovered! – Major Drivers
  • Carnival Corporation & plc: Are Its Brand Strengthening Efforts Paying Off? – Major Drivers

Tesla Q1 Deliveries: Look Out Below

By Vicki Bryan

  • Q1 Deliveries trailed plunging market consensus, my even lower number, and Tesla’s expectations as sales crashed while it overproduced to a new record cumulative excess inventory which jumped 70% y/y
  • This doesn’t square with Tesla’s explanation that sales were hurt by ongoing production issues—much like when the company used the same excuse for the disappointing Q3 2023. 
  • This time deliveries were much lower, the miss versus market expectations much worse, and the deep well of unsold inventories even more formidable.

Nongfu Spring (9633 HK):  Strong Results Overshadowed By Short Term Negative Publicitiy

By Steve Zhou, CFA

  • Nongfu Spring (9633 HK) announced a set of strong 2023 results last week, with 2H23 net profit up 62% yoy and sales up 33% yoy. 
  • The best performing category in 2023 has been tea beverage products (30% of sales), which grew 83% yoy for the year and 105% yoy in 2H23, picking up speed.
  • Nongfu Spring is trading at 33x 2024 earnings, which I believe is attractive. 

Oriental Watch 398 HK: Slow 4Q FY24, Resting On A 14% Yield, With 70% of Mkt Cap in Cash

By Sameer Taneja

  • Oriental Watch (398 HK)  has begun Q4 2024 slowly, with its SSSG dropping by double-digit levels in all its major markets (HK/China and Macau).
  • As the year almost draws to a close, we expect profits to drop 10-15% YoY for FY24 and the company to pay out 100%, resulting in a 14% dividend yield.
  • The company also has 1.2 bn HKD of net cash, representing 70% of its market capitalization. Additionally, it has 700 mn HKD of investment property. 

Hansoh Pharmaceutical (3692 HK): Performance Improves in 2H23; Innovative Drugs to Continue to Roar

By Tina Banerjee

  • Hansoh Pharmaceutical Group (3692 HK) reported a whopping 55% YoY net profit growth to RMB3 billion on just 13% YoY revenue growth to RMB6 billion in 2H23.
  • Revenue from innovative drugs zoomed 52% YoY to RMB4 billion and its proportion to total revenue increased to 73% in 2H23 from 54% in 2H22 and 62% in 1H23.
  • Although Hansoh is not expected to receive marketing approval for any in-house innovative product in 2024, existing portfolio of innovative drugs will continue to drive the growth of the company.

Century Communities Inc: A Story Of Expansion Through Mergers & Acquisitions! – Major Drivers

By Baptista Research

  • Century Communities has reported its Q4 and Full-Year 2023 results, which demonstrated notable growth and profitability.
  • The company’s Q4 deliveries hit a record high of 3,157 homes, reflecting a 9% year-on-year increase, and the year 2023 marked the firm’s 21st consecutive year of profitability.
  • The housing market also witnessed considerable improvement, contributing to the company’s success.

D.R. Horton (DHI) – Wednesday, Jan 3, 2024

By Value Investors Club

  • D.R. Horton is a leading homebuilder with high returns on equity and strong balance sheets, yet trades at a low price-to-earnings ratio.
  • The company has shifted to being asset-light, generating significant free cash flow and maintaining a strong balance sheet.
  • With a focus on market share expansion and efficiency, D.R. Horton is positioned as a growth company in a stable industry.

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.

Life Time Group Holdings Inc.: Initiation Of Coverage – Unveiling the 4 Major Forces Propelling Its Success! – Major Drivers

By Baptista Research

  • Life Time Group Holdings, Inc.’s Q4 2023 earnings call emphasized impressive financial performance and strategic growth plans.
  • The revenue increased by 18.2% in Q4, driven by a rise of 20.9% in membership dues and enrollment fees, and an 11% increase in in-center revenue.
  • Access memberships increased by 5.2%, ending the year with over 763,000 memberships, while average monthly dues stood at $183, a rise of 13.2% from the previous year.

Pendragon Plc (PDG LN) – Wednesday, Jan 3, 2024

By Value Investors Club

  • Pendragon sells UK car dealer and leasing businesses to Lithia Motors, leaving behind dealer management software segment Pinewood Technologies
  • Dividend payout from sale proceeds leaves Pinewood with around 20 million GBP of net cash
  • With Lithia Motors owning shares and potential for growth through software rollout, there is significant upside potential in Pinewood’s valuation at a low multiple of 8x TTM EBITDA

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.

Shake Shack Inc.: Initiation Of Coverage – The 4 Fundamental Aspects Fueling Its Growth Uncovered! – Major Drivers

By Baptista Research

  • Shake Shack Inc. delivered an impressive 2023 full year, marking transformative milestones and exhibiting substantial profitable growth.
  • Key metrics indicate a steady growth of 24% year-over-year in the company’s system-wide sales, reaching a record $1.7 billion.
  • The company launched 85 total restaurants (an unprecedented number in a single year) and ended 2023 with 518 Shake Shacks worldwide.

Carnival Corporation & plc: Are Its Brand Strengthening Efforts Paying Off? – Major Drivers

By Baptista Research

  • Carnival Corporation plc recently released its Q1 2024 earnings.
  • The company’s CEO, Josh Weinstein, and CFO, David Bernstein, detailed its financial performance.
  • Despite recent disruptions caused by an event at the Francis Scott Key Bridge, which is expected to have a less than $10 million full-year impact, the company reported a strong first quarter.

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Apr 04
0

Daily Brief Event-Driven: Estimating Participation Rate for Hyundai HS Tender Offer and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Estimating Participation Rate for Hyundai HS Tender Offer, Currently at a 5% Spread
  • Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation
  • HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June
  • Tender Offer of 25% of Hyundai Home Shopping Shares by Hyundai GF Holdings
  • ABFRL’s Demerger: A Game-Changer or a Gamble?
  • Quiddity Leaderboard for Hang Seng Index Jun 24: Could Country Garden Services Get Deleted?

Estimating Participation Rate for Hyundai HS Tender Offer, Currently at a 5% Spread

By Sanghyun Park

  • It is somewhat unusual that there is still a spread of over 5%. This likely reflects concerns about the relatively high intensity of allocation risk.
  • Retail: 30%, Institutions: 16% of float shares (46%). Retailers may contribute 20%, institutions 10-15%. Total tender rate: 30-35%.
  • In that case, it means that roughly 70% of our holdings could be tendered. And at this level, it seems reasonable enough to target the current spread of 5%.

Langham Hospitality Investments (1270 HK): Great Eagle (41 HK)’s Possible Scheme Privatisation

By Arun George

  • Langham Hospitality Inv Ss (1270 HK) received a notice from Great Eagle Holdings (41 HK), the largest unitholder, that it intends to present a detailed proposal for scheme privatisation.
  • The privatisation interest is unsurprising, as the unit price has declined by 43% over the last twelve months. A tough 2023 did not help the declining sentiment.
  • Our methodology for triangulating the potential offer price results in a range of HK$0.63-1.76. Our best guess is an offer of around HK$0.85, a 47% premium to the last close.

HSTECH Index Rebalance Preview: Round-Trip Trade of US$1.5bn in June

By Brian Freitas

  • With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
  • Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.
  • Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).

Tender Offer of 25% of Hyundai Home Shopping Shares by Hyundai GF Holdings

By Douglas Kim

  • On 3 April, it was reported that Hyundai G.F. Holdings will be conducting a tender offer of 3 million shares of Hyundai Home Shopping (25% of outstanding shares). 
  • The tender offer price is 64,200 won. The main reason for this tender offer is to meet the regulatory requirement of a holding company by 2025. 
  • We are positive on the tender offer of a 25% stake in Hyundai Home Shopping by Hyundai G.F. Holdings.

ABFRL’s Demerger: A Game-Changer or a Gamble?

By Nimish Maheshwari

Quiddity Leaderboard for Hang Seng Index Jun 24: Could Country Garden Services Get Deleted?

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at a group of names with reasonably high likelihood of being involved in index changes for the Hang Seng Index in June 2024.
  • The index changes for the June 2024 index rebal will be announced on 17th May 2024.
  • The HSI selection process is highly subjective and does not follow clear-cut rules. This insight is simply an attempt to provide readers with an overall understanding of the possible scenarios.

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Apr 03
0

Daily Brief Industrials: HD Hyundai Marine Solution , Austal Ltd, China Communications Construction and more

By | Daily Briefs, Industrials

In today’s briefing:

  • HD Hyundai Marine Solutions IPO: Valuation Insights
  • What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
  • Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
  • China Comm Const (1800 HK): A Nice Surprise

HD Hyundai Marine Solutions IPO: Valuation Insights

By Arun George

What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene

By Sanghyun Park

  • Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
  • Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
  • The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.

Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter

By David Blennerhassett

  • Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
  • Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments. 
  • Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.

China Comm Const (1800 HK): A Nice Surprise

By Osbert Tang, CFA

  • China Communications Construction (1800 HK) believes its FY24 new contracts and revenue growth can be faster than FY23, particularly fuelled by strategic new industries and overseas. 
  • Its end-FY23 contract backlog of Rmb3.45trn (+1.8% YoY) translates into coverage of 4.1x of FY24F revenue, providing a secured stream of revenue over the next few years.
  • Its improving cash flow allows for a 1pp increase in the payout ratio. Efforts in realising underlying asset value should narrow its 82% discount to book value.

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Apr 03
0

Daily Brief TMT/Internet: CELSYS, SK Square , KT Corp, Taiwan Semiconductor (TSMC), Horizon Robotics, Solid State PLC, Spirent Communications and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • TOPIX Inclusions: Who Is Ready (Apr 2024)
  • SK Square: Higher NAV Driven by Its Holding in SK Hynix
  • Hyundai Motor Group Becomes the Largest Shareholder of KT Corp
  • TSMC (2330.TT; TSM.US): 2Q24F Preview; TSMC Is Anticipated to Receive ~US$5Bn from the US Chip Act.
  • Horizon Robotics Pre-IPO Tearsheet
  • Solid State – Anticipating record adjusted PBT in FY24
  • Keysight/Spirent: Recommended Competing Offer

TOPIX Inclusions: Who Is Ready (Apr 2024)

By Janaghan Jeyakumar, CFA

  • Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
  • There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.
  • There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate CELSYS (3663 JP) is one of them.

SK Square: Higher NAV Driven by Its Holding in SK Hynix

By Douglas Kim

  • SK Square owns a 20.07% stake in SK Hynix which is now worth 27.2 trillion won. SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix.
  • SK Square has benefited from increased capital allocation to low P/B stocks in Korea due to the Corporate Value Up program. SK Square is trading at P/B of 0.7x. 
  • Amid the tremendous demand for Nvidia’s AI related chips, this has also benefited several Korean companies including SK Hynix and SK Square. 

Hyundai Motor Group Becomes the Largest Shareholder of KT Corp

By Douglas Kim

  • Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%. 
  • Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT. 
  • Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.

TSMC (2330.TT; TSM.US): 2Q24F Preview; TSMC Is Anticipated to Receive ~US$5Bn from the US Chip Act.

By Patrick Liao

  • TSMC Q2 2024 outlook is expected to increase by approximately 5% QoQ, with 2024 projected Capex to see a slight uptick. 
  • Intel is expected to adopt TSMC N3B technology in 2Q24F, while we anticipate that MediaTek will transition to N3E by the end of 3Q24F.  
  • Intel has received financial assistance of US$8 billion through the US Chips and Science Act, and TSMC is also projected to receive around US$5 billion.

Horizon Robotics Pre-IPO Tearsheet

By Sumeet Singh

  • Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities International.
  • Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
  • HR was the first and the largest Chinese company providing integrated ADAS and AD solutions in terms of annual installation volume since 2021, according to CIC.

Solid State – Anticipating record adjusted PBT in FY24

By Edison Investment Research

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.

Keysight/Spirent: Recommended Competing Offer

By Jesus Rodriguez Aguilar

  • Keysight Technologies In (KEYS US) and Spirent Communications (SPT LN) have agreed a recommended 201.5p/share cash acquisition via Scheme of Arrangement, an increase of 26.5p (15.1%) relative to Viavi Solutions (VIAV US)‘s Offer.
  • Spirent, with some scarcity value, should be able to improve its cyclicality as part of Keysight. A counteroffer from Viavi looks unlikely unless Silver Lake significantly increases its stake.
  • Gross spread is 1.99%. Using Keysight’s forecast s about completion, at best, estimated annual return would be 3.51% while at worst, 1.88%. This suggests there may be better opportunities elsewhere.

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Apr 03
0

Daily Brief Energy/Materials: JSR Corp, VanEck Gold Miners ETF/USA, Texas Pacific Land , Criterium Energy, Nickel Industries and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?
  • JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder
  • More Long-Term Breakouts in Energy, Utilities, Gold Miners; Bullish Outlook Intact
  • TPL: Price & Production
  • Criterium Energy Ltd (TSX-V: CEQ): Growth within cashflow
  • Morning Views Asia: China Hongqiao, Nickel Industries

JSR (4185 JP) – Activist Murakami-San Goes to 5+%! Bumpitrage? Appraisal Rights? A Technicality?

By Travis Lundy

JSR Corporation (4185 JP): Murakami Becomes a Substantial Shareholder

By Arun George

  • Murakami’s City Index Eleventh entity reported a 5.11% position in JSR Corp (4185 JP). The share purchases started on 19 March, the day of the tender start.
  • Murakami’s average buy-in price of JPY4,346.22 per share is broadly in line with the JPY4,350 tender offer. 
  • Murakami’s disclosure suggests two possibilities: starting an activist campaign for a bump or pursuing the appraisal process to determine a fair value. We think the latter is likely. 

More Long-Term Breakouts in Energy, Utilities, Gold Miners; Bullish Outlook Intact

By Joe Jasper

  • We remain bullish on the S&P 500 and Nasdaq 100 (QQQ), as they both refuse to close below their 20-day MAs or 21-day EMAs for more than 2-3 consecutive days.
  • Once we do get 2-3 closes below the 20-day MAs on SPX and QQQ, it would mark the beginning of a pullback (a potentially rapid one, at that)
  • Next supports currently at 4983-5050 on the S&P 500 and $425-$433 on QQQ (gap supports from 2/22/24), but anything in the 4800-4930 SPX range is a buyable pullback.

TPL: Price & Production

By Hamed Khorsand

  • The best combination of events for TPL is energy prices and production going up. This year, production levels in the Permian Basin recovered quickly from the seasonal decline.
  • The hinderance to TPL’s quarter could come from the price of natural gas, which declined throughout much of the first quarter due to the warmer winter weather
  • A majority of TPL’s revenue is from crude oil and natural gas royalties with production becoming the biggest factor in each quarter

Criterium Energy Ltd (TSX-V: CEQ): Growth within cashflow

By Auctus Advisors

  • The FY24 guidance reflects a self-funded development and debt repayment programme.
  • While a reduced capital programme, we believe this is a prudent strategy with upside optionality should additional funds from the Bulu sale or higher oil prices materialize.
  • As a result of the Bulu sale not completed yet, Criterium is carrying more debt than we expected (the repayment of US$5.5 mm of debt in March would have also triggered a US$3.8 mm debt write down).

Morning Views Asia: China Hongqiao, Nickel Industries

By Leonard Law, CFA

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

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Apr 03
0

Daily Brief Industrials: HD Hyundai Marine Solution , Austal Ltd, China Communications Construction and more

By | Daily Briefs, Industrials

In today’s briefing:

  • HD Hyundai Marine Solutions IPO: Valuation Insights
  • What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene
  • Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter
  • China Comm Const (1800 HK): A Nice Surprise

HD Hyundai Marine Solutions IPO: Valuation Insights

By Arun George

What’s Additionally Being Heard on Hanwha’s Austal Deal from Korea’s Local Scene

By Sanghyun Park

  • Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
  • Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
  • The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.

Austal (ASB AU): Hanwha’s NBIO Is A Non-Starter

By David Blennerhassett

  • Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
  • Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments. 
  • Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.

China Comm Const (1800 HK): A Nice Surprise

By Osbert Tang, CFA

  • China Communications Construction (1800 HK) believes its FY24 new contracts and revenue growth can be faster than FY23, particularly fuelled by strategic new industries and overseas. 
  • Its end-FY23 contract backlog of Rmb3.45trn (+1.8% YoY) translates into coverage of 4.1x of FY24F revenue, providing a secured stream of revenue over the next few years.
  • Its improving cash flow allows for a 1pp increase in the payout ratio. Efforts in realising underlying asset value should narrow its 82% discount to book value.

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Apr 03
0

Daily Brief Health Care: IntelliCentrics Global Holding, Aster DM Healthcare Ltd, Sciclone Pharmaceuticals, Legend Biotech Corp, OSE Immuno and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • IntelliCentrics (6819 HK): 18th April “Scheme” Vote
  • Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point
  • Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity
  • Legend Biotech Corp (LEGN.US) – FDA’s Upcoming Decision on Carvykti Will Change the Whole Landscape
  • OSE Immunotherapeutics – Pipeline momentum builds into FY24

IntelliCentrics (6819 HK): 18th April “Scheme” Vote

By David Blennerhassett

  • Soon-To-Be ex-healthcare technology platform play IntelliCentrics Global Holding (6819 HK) is a pseudo risk arb. 
  • IntelliCentrics is selling its key ops, declaring a special dividend from the sale proceeds, subsequently being wound up, then delisted. 
  • Shareholders have the option of voting on a raft of resolutions on the 18th April. Irrevocables total 72.1%. This is done. Just the final dividend amount needs to be confirmed.

Aster DM Healthcare Ltd (ASTERDM IN): Recent Correction Can Be a Good Entry Point

By Tina Banerjee

  • Aster DM Healthcare Ltd (ASTERDM IN) shares took a beating as Olympus Capital offloaded ~49M shares at a price range of INR405.00–406.72 (~7% discount to the last close price).
  • GCC business separation is expected to complete in Q4FY24. Aster DM plans to consider distributing 70–80% of the upfront consideration of $903M as dividend to its shareholders.
  • Stake sale by Olympus Capital is not a warning sign for the company. Despite CGHS rate overhang, we think recent pullback in Aster DM share provides an attractive entry point.

Sciclone Pharmaceuticals (6600.HK) – The Privatization Offers a Good Exit Opportunity

By Xinyao (Criss) Wang

  • Zadaxin is the biggest performance driver of SciClone. However, due to the challenge of generic drugs/VBP, sales of Zadaxin wouldn’t maintain strong growth momentum.  SciClone’s revenue/profit would face a significant decline.
  • The capital participating the IPO had reduced their holdings or exit entirely. Considering the low valuation/poor liquidity in HKEX, we think this privatization provides investors with a great exit opportunity.
  • For arbitrage investors, the annualized return depends on the time it takes to complete the privatization (e.g. about 5%-10%). If the privatization fails, share price could fall back to HK$14.

Legend Biotech Corp (LEGN.US) – FDA’s Upcoming Decision on Carvykti Will Change the Whole Landscape

By Xinyao (Criss) Wang

  • The sBLA of Carvykti is under review by FDA with a target PDUFA date of April 5. If approved for 2L therapy, Carvykti would become “a game changer” in MM treatment.
  • The peak sales of US$5 billion is becoming possible. From this perspective, as Carvykti advances towards earlier line treatment, the subsequent valuation leap of legend Bio is becoming more certain.
  • However, considering lower gross margin and Legend Bio/J&J’s 50/50 split ratio, Legend Bio’s market value performance could be inferior to BeiGene. Investors should also closely monitor the changes in macro.

OSE Immunotherapeutics – Pipeline momentum builds into FY24

By Edison Investment Research

OSE Immunotherapeutics’ (OSE’s) FY23 update summarised an active period for its clinical pipeline that was capped by the post-period $713m deal with AbbVie for preclinical asset OSE-230. The company is anticipated to hit meaningful milestones in 2024 with its lead immuno-oncology asset, Tedopi, gearing up for the confirmatory pivotal Phase III trial in Q224 and lead immuno-inflammation programme, Lusvertikimab, set to report Phase II top-line results in mid-2024. OSE-230 (being developed as a treatment for chronic inflammation) is also anticipated to enter the clinic this year, potentially tiggering another milestone payment for OSE. Gross cash of €18.7m at end-FY23 was fortified by the AbbVie $48m upfront payment and expected €5.8m in research tax credit, extending the cash runway into 2026, past several key milestones. We update our estimates for the FY23 results and adjust the launch timelines for the partnered programmes (from 2028 to 2029). Our valuation adjusts to €317.1m or €14.6 per share (from €311.3m or €14.4/share previously).

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Apr 03
0

Daily Brief Financials: Bajaj Finance Ltd, Commonwealth Bank of Australia, China Vanke , Abacus Life , Bitcoin, Cls Holdings, Information Services and more

By | Daily Briefs, Financials

In today’s briefing:

  • [#20] Namaste India 🙏 | Bajaj Finance’s Catch Up
  • CBA – Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies
  • China Vanke – Earnings Flash – FY 2023 Results – Lucror Analytics
  • Abacus Life Inc (ABL) – Tuesday, Jan 2, 2024
  • Crypto Crisp: Where’s the Volatility?
  • CLS Holdings USA, Inc. – City Trees Expands into New York
  • Information Services Corporation – A busy end to a record FY23

[#20] Namaste India 🙏 | Bajaj Finance’s Catch Up

By Pranav Bhavsar

CBA – Sharply Higher Past Due Loans, but Not Impaired, Alongside Surge of Australia Insolvencies

By Daniel Tabbush

  • It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
  • CBA’s past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
  • Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL

China Vanke – Earnings Flash – FY 2023 Results – Lucror Analytics

By Leonard Law, CFA

China Vanke’s FY 2023 numbers were somewhat soft in our view. While its top line and profitability declined in tandem with industry trends, the company’s property development gross margin remained robust (relative to peers) at c. 15%. Negatively, OCF (after interest and tax) was weak and net debt continued to rise. Leverage and coverage metrics deteriorated, but remained at reasonable levels (vs. peers).

Vanke’s liquidity at the holdco level is likely tight. In particular, the migration of bank borrowings to the project level has pressured the company’s holdco-level financing. The development may also indicate lenders’ reduced risk appetite towards Vanke. In addition, we view negatively that management did not disclose the amount of cash held under escrow restrictions. Moreover, it is unclear whether the Shenzhen government would provide extraordinary support (above and beyond market-oriented measures) to the company.

Abacus Life Inc (ABL) – Tuesday, Jan 2, 2024

By Value Investors Club

  • ABL’s SPAC merger did not generate significant proceeds, leading to limited research coverage and low visibility in the market
  • Investors have identified ABL as a promising long-term investment with the potential for a 20% return on equity over the next five years
  • ABL’s unique trading setup, with only 1.5 million shares available for trading due to insider ownership and a staggered lock-up period, presents challenges and opportunities for investors. Additionally, a $15 million share repurchase program has been announced, further adding to the intrigue surrounding the company.

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.

Crypto Crisp: Where’s the Volatility?

By Mads Eberhardt

  • As we predicted in the last few weeks’ Crypto Crisp, the crypto market has been relatively stable in recent weeks.
  • However, things are beginning to shift.
  • During a speech in San Francisco on Friday, Federal Reserve Chairman Jerome Powell mentioned that robust economic growth in the US allows Federal Reserve officials to take their time with interest rate cuts.

CLS Holdings USA, Inc. – City Trees Expands into New York

By Water Tower Research

  • CLS Holdings is a vertically integrated cannabis company with core operations in Nevada.
  • The company owns and operates Oasis cannabis dispensary, one of the leading stores in Las Vegas.
  • CLS also has a state-of-the art extraction and manufacturing facility in Nevada and a suite of top-performing brands.

Information Services Corporation – A busy end to a record FY23

By Edison Investment Research

In FY23, Information Services Corporation (ISC) enjoyed year-on-year top-line and adjusted operating profit growth, augmented by consistent organic expansion of its Services division and incremental earnings from fee uplifts linked to the Master Service Agreement (MSA) extension. Management’s encouraging FY24 guidance reflects organic growth potential from the Services division, alongside a full-year impact of earnings accretion from fee adjustments. We have raised our valuation modestly from C$37/share to C$40/share, which implies 48% upside.

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