Smartkarma Daily Briefs

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

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.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

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)

By Travis Lundy

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

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

By VRS (Valuation & Research Specialists)

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.

Company Update – February 9, 2024 -Porvair Plc

Porvair plc is a specialist filtration, laboratory and environmental technology company.
The Company’s operating divisions include Aerospace & Industrial, Laboratory, and Metal Melt Quality.
The Aerospace & Industrial division designs and manufactures a broad range of specialist filtration equipment for applica- tion in aerospace and industrial applications.

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%.

Braemar – Diversification paying dividends

By Edison Investment Research

Braemar’s FY24 trading update was in line with expectations, with revenues of c £150m and underlying operating profit of c £18m. Underlying operations continue to expand and diversify and the company remains well-positioned to drive its future growth strategy. The trading outlook is promising and Braemar should be able to leverage its strong balance sheet in pursuit of strategic growth. We have maintained our underlying estimates for FY24 and FY25, but edge down the valuation based on the lower FY24 dividend expectations. The revised valuation offers nearly 100% upside.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief TMT/Internet: Link Administration, Micron Technology, PSK Holdings Inc, NetEase , Xiaomi Corp, Kuaishou Technology, Sourcenext Corp, BaishanCloud, Sun*, Azbil Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Link Admin (LNK AU): Scheme Vote on 24 April
Micron. Back In The Black & No Going Back
Special Changes in KOSDAQ 150: Deletion – STCube (052020) And Addition – PSK Holdings (031980)
NetEase: Positive Technical Analysis Signals
Xiaomi Corp – Earnings Flash – FY 2023 Results – Lucror Analytics
KS / Kuaishou (1024 HK): 4Q23, Historical High Operating Profit
SOURCENEXT (4344): Q3 FY03/24 Update
Baishan Cloud IPO Preview: Break-Even Is Likely To Be Achieved in 2024
Sun* (4053): Full-Year FY12/23 Update
Azbil (6845): Q3 FY03/24 Update

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%.

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

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

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.

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.

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.

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.

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.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Event-Driven: Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090) and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Chilled & Frozen Logistics (9099) – Hostile Takeover Launched by AZ-Com Maruwa (9090)
Link Admin (LNK AU): Scheme Vote on 24 April
Chilled & Frozen Logistics (9099 JP): AZ-COM Maruwa (9090 JP)’s Hostile Offer
IntelliCentrics (6819 HK): Clean, Illiquid “Arb”
Quiddity Leaderboard ASX Jun 24: Can Codan Become an Intra-Review ASX 200 ADD?
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
AstraZeneca/Fusion Pharma: Small Contingent Value
GXO/Wincanton: Scheme Document

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

By Travis Lundy

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.

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%.

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.

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.

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.

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

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

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.

AstraZeneca/Fusion Pharma: Small Contingent Value

AstraZeneca PLC (AZN LN) bid to acquire Fusion Pharmaceuticals (FUSN US) for $21/share (~$2 billion; 97% premium) plus a non-transferrable CRV of $3/share, for up to $2.4 billion.
The transaction is expected to close in Q2 2024, which I expect to proceed given AZN’s lack of radiopharma R&D is not likely to raise anti-trust concerns.
I set my PT to $21. CVR offers 13.6% potential gain, 2.4% annualised (likely small considering the time it might take to materialise). The market may be pricing interloper risk.

GXO/Wincanton: Scheme Document

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.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Financials: Daishin Securities, Road King Infrastructure, CI Financial, Foxtons and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Daishin Securities: Announces A Capital Raise of 230 Billion Won Through RCPS
Road King – Earnings Flash – FY 2023 Results – Lucror Analytics
Ci Financial Corp (CIX.) – Thursday, Dec 21, 2023
Foxtons Group – Medium-term targets come into view

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

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.

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

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.

Ci Financial Corp (CIX.) – Thursday, Dec 21, 2023

CI Financial Corp is a low-risk investment manager with a highly appealing valuation at 4x FCF
The company has improved business operations, including reduced debt levels, share buybacks, and support from shareholders like the chairman
With a current stock price of $14.55 and a reasonable SOTP valuation of $24-29, CI Financial Corp offers significant value for investors, especially considering potential in its various business segments.

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.

Foxtons Group – Medium-term targets come into view

By Edison Investment Research

The new strategic vision set out by the CEO is gaining significant momentum, driven by investment in staff and in best-in-class bespoke IT and data platforms, and implies that medium-term targets are now coming into focus. Market share is being gained in all divisions, which is likely to be boosted if the sales market stabilises in 2024. We have modestly raised forecasts and our valuation to 132p/share and believe that if interest rates stabilise or ease further, there are upside risks to our forecasts.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Health Care: IntelliCentrics Global Holding, Fusion Pharmaceuticals and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

IntelliCentrics (6819 HK): Clean, Illiquid “Arb”
AstraZeneca/Fusion Pharma: Small Contingent Value

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.

AstraZeneca/Fusion Pharma: Small Contingent Value

AstraZeneca PLC (AZN LN) bid to acquire Fusion Pharmaceuticals (FUSN US) for $21/share (~$2 billion; 97% premium) plus a non-transferrable CRV of $3/share, for up to $2.4 billion.
The transaction is expected to close in Q2 2024, which I expect to proceed given AZN’s lack of radiopharma R&D is not likely to raise anti-trust concerns.
I set my PT to $21. CVR offers 13.6% potential gain, 2.4% annualised (likely small considering the time it might take to materialise). The market may be pricing interloper risk.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Credit: Xiaomi Corp – Earnings Flash – FY 2023 Results – Lucror Analytics and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Xiaomi Corp – Earnings Flash – FY 2023 Results – Lucror Analytics
Road King – Earnings Flash – FY 2023 Results – Lucror Analytics
Morning Views Asia: Nickel Industries

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

By Trung Nguyen

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

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

Morning Views Asia: Nickel Industries

Nickel Industries

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Consumer: Pop Mart International Group L, Pepsico Inc, TSE Tokyo Price Index TOPIX, Nippon Suisan Kaisha, Xponential Fitness , Guess? Inc, WK Kellogg , Dowlais Group and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Pop Mart (9992 HK): International Expansion Is For Real
Pepsico Inc (PEP) – Thursday, Dec 21, 2023
A Change in Manager’s Mindset that Has Begun Will Lower the Investment Risk for Activist Investors
Nippon Suisan Kaisha (1332 JP): Food Products Business to Drive Growth In Near Term, Guidance Raised
Xponential Fitness, Inc. (XPOF) – Thursday, Dec 21, 2023
GES; 4Q Review: Best Still in Store for GUESS?; Reiterate Buy & Raising PT
Wk Kellogg Co -Spn (KLG) – Thursday, Dec 21, 2023
Dowlais Group – Motoring forward

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.

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

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.

Nippon Suisan Kaisha (1332 JP): Food Products Business to Drive Growth In Near Term, Guidance Raised

By Tina Banerjee

Nippon Suisan Kaisha (1332 JP) reported 8% YoY revenue growth in 9MFY23, driven by 17% YoY growth in food products business on higher commercial volume and prices.
However, marine products profits tumbled 39% YoY on weakening fish prices and accounting adjustments.
The company raised FY23 sales and operating profit guidance to ¥825B (up 7% YoY) and ¥29B (up 18% YoY), respectively.

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?

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.

Dowlais Group – Motoring forward

By Edison Investment Research

Dowlais Group’s first set of results were ahead of our expectations, with positive cash generation a highlight despite restructuring and demerger costs. Softer automotive markets will limit margin progress in FY24 towards the double-digit target. Despite this, margins of c 6.5% are still ahead of automotive peers, although the shares trade at a significant discount to our implied generic peer-based valuation.

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

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

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Mar 22

Daily Brief Equity Bottom-Up: Pop Mart (9992 HK): International Expansion Is For Real and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Pop Mart (9992 HK): International Expansion Is For Real
Micron. Back In The Black & No Going Back
NetEase: Positive Technical Analysis Signals
KS / Kuaishou (1024 HK): 4Q23, Historical High Operating Profit
Nippon Shokubai (4114) – Business Transformation and Scope for Improving Capital Management
SOURCENEXT (4344): Q3 FY03/24 Update
Pepsico Inc (PEP) – Thursday, Dec 21, 2023
Sun* (4053): Full-Year FY12/23 Update
Azbil (6845): Q3 FY03/24 Update
Organo (6368): Q3 FY03/24 Update

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.

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

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.

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.

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.

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

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