Smartkarma Daily Briefs

Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.

CSI300 Index Rebalance Preview: Potential Adds Outperforming Despite ETF Inflows

By Brian Freitas

With 85% of the review period complete, we see 11 changes for the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX) in June.
We estimate one-way turnover of 1.2% at the rebalance leading to a one-way trade of CNY 7.3bn (US$1bn). There are a lot of stocks with multiple days ADV to trade.
The potential adds have outperformed the potential deletes despite large flows from the National Team into ETFs tracking the CSI 300 Index. That support for the potential deletes will reverse.

Korea NPS Abruptly Joins Corporate Value Up Program: According to Document Obtained from NPS

By Sanghyun Park

NPS abruptly joins ‘Corporate Value Up Program’, plans to select three asset managers. Deadline: this month’s 29th; results: March 19th, possibly linked to Korea Premium Index ETF launch in mid-May.
The document outlines guidelines, allocating 90-100% to value stocks, with KOSDAQ under 20%. While benchmarked to the internally-built index, it will likely focus on Korea Premium Index and KOSDAQ Global.
The fund size is crucial. NPS will disclose details later. But still, there is considerable room to this year’s ceiling for local equity; a significant amount could flow into this.

Samsonite (1910 HK): Leader Of The Pack

By David Blennerhassett

Luggage maker Samsonite (1910 HK) is up 11.8% today, as I type, after Bloomberg reported it is working with advisers as it studies possibilities, including going private.
With the reopening of China and the ongoing recovery in travel globally, Samsonite’s net sales improved markedly across all regions. 1H23 profit gained 185.3% versus 1H22.
FY23 figures should be out in the middle of next month.

Sector ETF Rebalancing with Remarkable Price Impact History: ISC In, Wonik IPS Out

By Sanghyun Park

Will there be changes in April’s rebalancing? With two weeks left, two names are likely. Wonik IPS may be replaced by ISC Co Ltd, given a ₩150B market cap difference.
In the previous rebalancing, constituent changes had a notable price impact. Despite a passive flow impact of +1.0x ADTV, HPSP and EO Technics saw about a 15% 3-day return.
Wonik IPS is estimated to receive -4.0x ADTV, while ISC is expected to receive +1.0x ADTV. This is also quite similar to the previous rebalancing.

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Link Admin (LNK AU): 24th April Shareholder Vote

By David Blennerhassett

Back on the 18 December 2023, superannuation service provider Link Administration (LNK AU) entered into a Scheme with Mitsubishi UFJ Financial Group.
MUFJ offered Link shareholders A$2.10/share (in cash) plus a A$0.16/share dividend (25% franked), or a 32.9% premium, all-in.
The Scheme Meeting will now take place on the 24th April, with expected implementation on the 16 May. This looks done – and trading accordingly.

GoTo Gojek Tokopedia (GOTO IJ) – Warming Up the New Engines of Growth

By Angus Mackintosh

GoTo Gojek Tokopedia (GOTO IJ) 4Q2023 results revealed another sequential increase in GTV and positive adjusted EBITDA for both ODS and e-commerce, despite reduced incentive and marketing spending.
GoTo achieved positive top-line growth by expanding its total addressable market through more affordable products and a strong performance from consumer lending in fintech, coupled with great cash cost efficiencies.
2024 will be a transformational year for GoTo without the yoke of Tokopedia promotional spending but with significant cash coming in every quarter that can be used to drive growth.

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Mar 22

Daily Brief Australia: Link Administration, James Hardie Industries Plc, Nickel Industries and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Link Admin (LNK AU): Scheme Vote on 24 April
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
Morning Views Asia: Nickel Industries

Link Admin (LNK AU): Scheme Vote on 24 April

The Link Administration (LNK AU) IE considers Mitsubishi UFJ Financial (MUFG) (8306 JP)’s A$2.26 offer fair and reasonable as it is within its A$2.11-2.70 per share valuation range.
The scheme remains conditional on several regulatory approvals – FIRB, Central Bank of Ireland, Isle of Man Financial Services Authority, India SEBI, and Financial Services Agency of Japan.
Several substantial shareholders have sold or exited, lowering the scheme’s risk. At the last close and for the 16 May payment, the gross/annualised spread was 1.3%/9.7%.

Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for ASX 200, 100, 50, and 20 in the run-up to the June 2024 index rebal event.
Prior to the June 2024 review, there could be one intra-review change triggered by the completion of the Silver Lake Resources (SLR AU) / Red 5 Ltd (RED AU) deal.
Separately, I see one ASX 20 change and two ASX 100 changes for the regular rebalance in June 2024.

Morning Views Asia: 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.

Nickel Industries

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Mar 22

Daily Brief South Korea: PSK Holdings Inc, Daishin Securities and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)
Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS

Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)

By Douglas Kim

KRX announced special changes to KOSDAQ 150. Since STCube (052020 KS) has been designated as “administrative issue,” the Korea Exchange will exclude it from KOSDAQ 150 on 26 March 2024.
PSK Holdings Inc (031980 KS) will be new addition to KOSDAQ 150 index, replacing ST Cube.
PSK Holdings’ core business is providing process technology, source, and hardware for semiconductor packaging equipment.

Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS

By Douglas Kim

After the market close on 21 March, Daishin Securities announced a capital raise worth 230 billion won through RCPS. Daishin Securities currently has a market cap of 901 billion won.
Through this issue of 230 billion won in RCPS, Daishin Securities achieved 3 trillion won in equity capital, which is a condition for applying as a comprehensive financial investment business.
We are Negative on Daishin Securities in the next 6-12 months as the concerns about RCPS capital raise related shares dilution are likely to weigh negatively on its stock price.

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Mar 22

Daily Brief United States: Micron Technology, Pepsico Inc, PetroTal, Steelcase Inc Cl A, WK Kellogg , Blackline Inc, Xponential Fitness , Guess? Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Micron. Back In The Black & No Going Back
Pepsico Inc (PEP) – Thursday, Dec 21, 2023
PetroTal Corp (AIM: PTAL): Delivering on Guidance
Steelcase, Inc. – 4Q Results; Guidance Roughly In Line
Wk Kellogg Co -Spn (KLG) – Thursday, Dec 21, 2023
Blackline Inc. (BL) – Thursday, Dec 21, 2023
Xponential Fitness, Inc. (XPOF) – Thursday, Dec 21, 2023
GES; 4Q Review: Best Still in Store for GUESS?; Reiterate Buy & Raising PT

Micron. Back In The Black & No Going Back

By William Keating

Q224 revenues of $5.8 billion, up 23% QoQ and up 58% YoY. It also well above the high end of the guided range of $5.5 billion.
Net income turned positive & amounted to $476 million. This compares to a loss of $1 billion in Q124
Forecasting current quarter revenues of $6.6 billion & gross margin of 26.5% at their respective midpoints

Pepsico Inc (PEP) – Thursday, Dec 21, 2023

PepsiCo is a global company with significant presence in both snacks and beverages, generating around $80 billion in revenue
Despite the impact of COVID-19 on its business, PepsiCo has maintained strong performance
The company’s Beverages North America segment contributes a third of sales but only 22% of EBIT, while Frito Lay North America accounts for 25% of sales but 50% of EBIT

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.

PetroTal Corp (AIM: PTAL): Delivering on Guidance

By Auctus Advisors

FY23 production of 14,248 bbl/d had been reported previously and the YE23 cash position of US$105 mm (including ~US$15 mm of restricted cash) is very close to previous indications.
PetroTal is re-iterating its FY24 production guidance of ~17 mbbl/d with US$134 mm capex.
Production currently trends ahead of guidance with 24,453 bbl/d in January and 17,411 bbl/d in February.

Steelcase, Inc. – 4Q Results; Guidance Roughly In Line

By Water Tower Research

After the close Wednesday, Steelcase reported 4QFY24 non-GAAP adjusted EPS of $0.23, ahead of our $0.22 estimate and consensus of $0.21.
4QFY24 global revenue was $775 million, modestly missing our estimate by ~$9 million.
FY24 non-GAAP adjusted EPS was $0.93, up from $0.56 in FY23, and revenue was $3.16 billion, down 2.6%.

Wk Kellogg Co -Spn (KLG) – Thursday, Dec 21, 2023

WK Kellogg is a consumer staple company with low risk and attractive valuation
Recent spin-off has unlocked self-help opportunities for potential upside for patient shareholders
Projections show EBITDA margin growth, significant upside in sales growth and free cash flow, with focus on cereal brands and achieving mid-teens EBITDA margins by end of 2026, projected 100-250% total upside over three years.

Blackline Inc. (BL) – Thursday, Dec 21, 2023

BlackLine is a company that sells accounting software and Director Mika Yamamoto sold 35% of her holdings in November 2023 at $54/share.
The sale was below previous highs, raising questions about the company’s prospects in the accounting software market.
BlackLine’s niche position in bridging the gap between internal systems and third-party software streamlines manual processes for controllers, and Yamamoto’s insider behavior adds an interesting component to the company’s outlook.

Xponential Fitness, Inc. (XPOF) – Thursday, Dec 21, 2023

By Small Cap Consumer Research

Xponential Fitness has shown strong financial performance post IPO, with adjusted EBITDA increasing significantly
The company faced a coordinated short attack leading to a major drop in share price in 2023
Shares are currently undervalued with strong growth potential and valuable assets, making it an attractive investment opportunity

GES; 4Q Review: Best Still in Store for GUESS?; Reiterate Buy & Raising PT

We are reiterating our Buy rating on GES, raising our price target to $37 (from $32.50) and rolling out FY26 projections after Guess?
ended FY24 with a strong 4Q which easily beat both top and bottom line Street expectations and announced a $2.25 per share special dividend.
Further, initial FY25 projections, which incorporate the acquisition of Rag & Bone, handily beat Street top line projections and bracket bottom line expectations, even as Guess?

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Mar 22

Daily Brief China: Pop Mart International Group L, IntelliCentrics Global Holding, NetEase , Xiaomi Corp, Kuaishou Technology, BaishanCloud, Road King Infrastructure and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Pop Mart (9992 HK): International Expansion Is For Real
IntelliCentrics (6819 HK): Clean, Illiquid “Arb”
NetEase: Positive Technical Analysis Signals
Xiaomi Corp – Earnings Flash – FY 2023 Results – Lucror Analytics
KS / Kuaishou (1024 HK): 4Q23, Historical High Operating Profit
Baishan Cloud IPO Preview: Break-Even Is Likely To Be Achieved in 2024
Road King – Earnings Flash – FY 2023 Results – Lucror Analytics

Pop Mart (9992 HK): International Expansion Is For Real

By Steve Zhou, CFA

The thesis for Pop Mart International Group L (9992 HK) is the successful expansion of its international business, which made up 13% of sales in 1H23 but is growing exponentially.
This has been proved true in the latest announced 2023 results, with a 135% growth in 2023 for the international business, and a further >100% growth guidance for 2024.
The company is trading at 24x 2024 earnings, assuming a 35% net profit growth in 2024.

IntelliCentrics (6819 HK): Clean, Illiquid “Arb”

By David Blennerhassett

Back on 9th Feb 2024, healthcare technology platform IntelliCentrics Global Holding (6819 HK) announced the proposed disposal of its key operations to Symplr Software Holdings for at least US$246.5mn.
Upon completion of the sale, IntelliCentrics will declare a special dividend, then seek a listing withdrawal. A key condition to the sale was FTC/DOJ approval. That is now satisfied.
The sale/dividend/delisting requires a Scheme-like vote, with 72.1% of shares out supportive. This is a super-clean pseudo arb. Pushback? Very illiquid.

NetEase: Positive Technical Analysis Signals

By Wium Malan, CFA

Despite a disappointing 4Q2023 earnings report, NetEase (9999 HK) remains firmly amid an earnings upgrade cycle.
With NetEase touching on being oversold, near-term momentum indicators are displaying bullish signals.
NetEase currently trades more than one standard deviation below its rolling 5-year historic average PE ratio.

Xiaomi Corp – Earnings Flash – FY 2023 Results – Lucror Analytics

By Trung Nguyen

Xiaomi Corp’s FY 2023 results were better than expected in our view, with much-improved profitability. The balance sheet remains healthy, and liquidity is sound. We expect the company to continue performing well, driven by a projected recovery in the smartphone market, Xiaomi’s premiumisation strategy and strong demand in overseas markets. Global smartphone shipments remain weak, but may be bottoming out. We believe the company is well-positioned for future growth.

The smart EV development has drained less cash than we had expected so far. Xiaomi has been able to fund the investment using internal cash flow. Pricing for the SU7 (scheduled to be launched next week) has not been disclosed. The EV market in China is extremely competitive, with over 150 carmakers. Apple has exited the EV business due to a lack of competitive advantage, and Xiaomi may face the same issue. While it is unclear if Xiaomi will be successful in the EV business, we believe it may not be as detrimental to the credit as originally feared.

KS / Kuaishou (1024 HK): 4Q23, Historical High Operating Profit

By Ming Lu

Operating profit and its margin reached historical high in 4Q23.
Monthly active user base continued to expand, which is rare for other apps.
GMV (Gross Merchandise Value) of the live broadcasting sales increased rapidly by 29% YoY in 4Q23.

Baishan Cloud IPO Preview: Break-Even Is Likely To Be Achieved in 2024

By Andrei Zakharov

Baishan Cloud, China’s independent edge cloud service provider, filed to go public in Hong Kong. CICC and investment bank Haitong are the lead underwriters in this offering.
Founded in 2015, BaishanCloud (1568617D HK) is led by its CEO and Founder, Mr. HUO Tao, and a highly experienced founding team.
I believe the company will achieve a break-even this year, coupled with a strong international expansion, potential revenue acceleration and gross margin improvement as the business continues to scale up.

Road King – Earnings Flash – FY 2023 Results – Lucror Analytics

By Leonard Law, CFA

Road King’s FY 2023 results were poor, with the company’s gross margin plunging to negative 5% (FY 2022: 17%). The EBITDA and net profit margins were negative 13% and negative 30%, respectively. While Road King has continued to reduce net debt, liquidity is poor. In addition, we view negatively the company’s downbeat statement of “significant debt repayment pressure due to a lack of refinancing channels”.

We believe it is difficult to ascertain management’s willingness to honour repayments, amid the bleak business prospects. Road King has a small and dwindling land bank that might suffice for only another 1-2 years of development. Moreover, the negative gross margin suggests that the business is no longer profitable. In our view, this increases the risk that the company may opt for a holistic restructuring of the USD notes (which account for 65% of total debt) to reduce its debt load.

We move to “Not Recommended” from “Hold” on the ROADKG 6.7 ’24s.

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Mar 22

Daily Brief Japan: Chilled & Frozen Logistics Holdings, Nippon Shokubai, Sourcenext Corp, Sun*, Azbil Corp, Organo Corp, LaKeel, Hochiki Corp, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
Nippon Shokubai (4114) – Business Transformation and Scope for Improving Capital Management
SOURCENEXT (4344): Q3 FY03/24 Update
Sun* (4053): Full-Year FY12/23 Update
Azbil (6845): Q3 FY03/24 Update
Organo (6368): Q3 FY03/24 Update
LaKeel (4074): Full-Year FY12/23 Update
Hochiki (6745): Q3 FY03/24 Update
A Change in Manager’s Mindset that Has Begun Will Lower the Investment Risk for Activist Investors

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

Nippon Shokubai (4114) – Business Transformation and Scope for Improving Capital Management

By Astris Advisory Japan

Driving strategic revitalization – Nippon Shokubai is a global chemical company with competitive proprietary technology, a track record of sustained free cash flow generation, and a balance sheet with room for optimization.
It has embarked on a business transformation, strategically focused on expanding its Solutions business with higher- margin performance chemicals and identifying energy, electronics, and life science sectors as growth markets.
Organizational changes being conducted aim to enhance human resource development and conduct quicker decision-making.

SOURCENEXT (4344): Q3 FY03/24 Update

Sourcenext Corp (4344 JP) plans, develops, and sells PC software, smartphone apps, and IoT products.
In POCKETALK®, besides the existing device business, the company will focus on sales of software products, including Simultaneous Interpreter for the POCKETALK® for BUSINESS series for corporate customers.
The revision is mainly due to the extended lead time from inquiry to full-scale orders for the POCKETALK for BUSINESS Simultaneous Interpretation web browser version.

Sun* (4053): Full-Year FY12/23 Update

Sun* (4053 JP) provides consulting, software development, recruiting, and other services to companies that seek to create value or businesses, including startups.
In FY12/23, revenue was JPY12.5bn (+16.5% YoY), operating profit JPY1.8bn (+96.8% YoY), recurring profit JPY2.3bn (+99.1% YoY), and net income attributable to owners of the parent JPY1.6bn (+90.4% YoY).
Sun* does not disclose a medium-term business plan with quantitative targets, but it releases qualitative targets related to KPI growth.

Azbil (6845): Q3 FY03/24 Update

Azbil Corp (6845 JP) provides automation services for buildings, factories, and plants and also offers subsistence-related automation services in the lifestyle area.
In FY03/23, sales were JPY278.4bn (+8.5% YoY), operating profit was JPY31.3bn (+10.7% YoY), recurring profit was JPY32.1bn (+8.9% YoY), and net income attributable to owners of the parent was JPY22.6bn.
Azbil in May 2021 announced a new medium-term management plan to cover the four fiscal years from FY03/22 to FY03/25 and new long-term targets for FY03/31.

Organo (6368): Q3 FY03/24 Update

As a comprehensive water treatment engineering company, Organo Corp (6368 JP) engages in the planning, design, procurement, construction, operational management, and maintenance of water treatment plants.
In FY03/23, orders received were JPY173.5bn, revenue was JPY132.4bn, operating profit was JPY15.2bn, recurring profit was JPY16.0bn, and net income attributable to owners of the parent was JPY11.7bn.
Organo Corporation announced revisions to its full-year forecast for FY03/24.

LaKeel (4074): Full-Year FY12/23 Update

LaKeel (4074 JP) is a software development company that uses a new system development method called microservices.
In FY12/23, revenue was JPY7.7bn (+11.2% YoY), operating profit JPY775mn (+0.3% YoY), recurring profit JPY807mn (+10.3% YoY), and net income attributable to owners of the parent JPY540mn.
The company has not announced a medium-term business plan, but has medium-term targets of JPY10.0bn in revenue and an OPM of 15% to be achieved.

Hochiki (6745): Q3 FY03/24 Update

Hochiki Corp (6745 JP) is a major manufacturer of fire alarm and fire extinguishing systems.
In FY03/23, the company posted revenue of JPY85.5bn, operating profit of JPY5.6bn, recurring profit of JPY5.9bn, and net income attributable to owners of the parent of JPY4.4bn.
Hochiki Corporation announced an upward revision of its full-year FY03/24 earnings forecast.

A Change in Manager’s Mindset that Has Begun Will Lower the Investment Risk for Activist Investors

By Aki Matsumoto

In the past, value traps were macro environment that couldn’t generate profits in deflationary economy, and micro problem of managers who didn’t listen to constructive management improvement proposals from investors.
The introduction of Stewardship Code and Corporate Governance Code, and TSE’s request for change in awareness of companies, has reduced the risk of activist investors’ investment strategies flailing around in vain.
Management awareness has just begun to change, and few companies generate intrinsic value, as evidenced by the fact that ROE hasn’t begun to improve. Activist investors will continue taking interest.

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Mar 22

Daily Brief ESG: A Change in Manager’s Mindset that Has Begun Will Lower the Investment Risk for Activist Investors and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

A Change in Manager’s Mindset that Has Begun Will Lower the Investment Risk for Activist Investors

A Change in Manager’s Mindset that Has Begun Will Lower the Investment Risk for Activist Investors

By Aki Matsumoto

In the past, value traps were macro environment that couldn’t generate profits in deflationary economy, and micro problem of managers who didn’t listen to constructive management improvement proposals from investors.
The introduction of Stewardship Code and Corporate Governance Code, and TSE’s request for change in awareness of companies, has reduced the risk of activist investors’ investment strategies flailing around in vain.
Management awareness has just begun to change, and few companies generate intrinsic value, as evidenced by the fact that ROE hasn’t begun to improve. Activist investors will continue taking interest.

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Mar 22

Daily Brief Thematic (Sector/Industry): Show Me The (Dividend) Money (Part II) – Play on Japanese High Dividend Yielding Stocks and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Show Me The (Dividend) Money (Part II) – Play on Japanese High Dividend Yielding Stocks
Ohayo Japan | Stock Surge
Japan No Longer Cheap, at Fair Value Territory. Time to Be Selective!

Show Me The (Dividend) Money (Part II) – Play on Japanese High Dividend Yielding Stocks

By Mohshin Aziz

Given Japan’s meteoric share price surge in 2024, it is harder to find high yielding stocks
The high-yielding blue chip stocks were extremely popular with retail investors, and the value is now on the lesser known small-cap stocks
Our recommendations are Japan Tobacco (2914 JP) and Sankyo Co Ltd (6417 JP). For financial stocks, Tokai Tokyo Financial Holdin (8616 JP) .

Ohayo Japan | Stock Surge

By Mark Chadwick

Stocks continued their upward trajectory on Thursday, extending gains from the previous session to reach new record highs.
Micron Technology soared 14% on strong earnings, bolstering the semiconductor sector, while megacap tech stocks like Microsoft contributed to gains
The U.S. has accused Apple (AAPL -4.09%) of monopolizing the smartphone market, potentially upending the tech giant’s business model

Japan No Longer Cheap, at Fair Value Territory. Time to Be Selective!

By Mohshin Aziz

Tokyo Stock Exchange (TSE) and Bank of Japan (BOJ) coordinated efforts are working: deflation is over, equity values surging, and cash ratio as percentage of household assets is declining
Japanese investors’ participation in the equity run is modest, foreigners are buying more. While it seems unlikely at the moment, the pertinent question remains, “When will they stop dancing?”
Valuations are on par with historical averages and at similar gaps against developed market peers. The easy money had been made, Japan should be moved to tactically NEUTRAL soon.

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Mar 22

Daily Brief Industrials: Chilled & Frozen Logistics Holdings, Wincanton PLC, Organo Corp, Porvair PLC, Steelcase Inc Cl A, Braemar Shipping Services PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
GXO/Wincanton: Scheme Document
Organo (6368): Q3 FY03/24 Update
Company Update – February 9, 2024 -Porvair Plc
Steelcase, Inc. – 4Q Results; Guidance Roughly In Line
Braemar – Diversification paying dividends

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)

Chilled & Frozen Logistics Holdings (9099 JP) last week announced its “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”.
Today it announced AZ-Com Maruwa Holdings (9090 JP) had announced its intention to launch a Tender Offer on C&F Logistics without having contacted C&F first. A HOSTILE deal. Yum.
The deal is proposed at a 50% premium, with the goal of getting to a minimum of 50.00%. This will be interesting.

Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer

AZ-Com Maruwa Holdings (9090 JP) has launched a pre-conditional hostile offer for Chilled & Frozen Logistics Holdings (9099 JP) at JPY3,000 per share, a 47.0% premium to the last close.
The pre-conditions primarily relate to regulatory approvals. The tender is expected to start in early May. The Board responded that it will evaluate the offer.
The hostile offer was a reaction to the Board’s lack of engagement. The Board will struggle to reject an attractive offer, which is 37.5% higher than the all-time high.

GXO/Wincanton: Scheme Document

By Jesus Rodriguez Aguilar

GXO Logistics (GXO US) offers 605p for Wincanton PLC (WIN LN), in a strategic move worth a 104% premium, 8.6x EV/25e EBITDA, 18.2 Fwd P/E (IBES), via scheme with 34% irrevocables.
Regulators are used to monitoring this industry, gradually consolidating on a worldwide scale as a result of cost pressures. GXO has smaller scale in the UK.
I don’t think antitrust issues are going to prevent this transaction. Interloper risk is minimal (DHL, Deutsche Post would have regulatory issues). Spread is 1.00%/7.14% (gross/annualised). Long.

Organo (6368): Q3 FY03/24 Update