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.

Shinko Electric (6967 JP): Tender State of Play

Shinko Electric Industries (6967 JP) pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread has narrowed from a high of 10.4% to the current 4.2%.
The narrowing spread can be attributed to the JSR Corp (4185 JP) tender launch, which suggests likely China SAMR approval, and Ibiden Co Ltd (4062 JP) giving up recent gains.
Like JSR, we expect China SAMR to allow JIC to withdraw its Shinko merger control filing. There is a good chance the tender launches before the guided late August start.

Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM

Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.

Trial Holdings IPO Trading – Demand and Valuation Are Towards the Higher Side

By Sumeet Singh

Trial Holdings (5882 JP) (TH) raised around US$259m after pricing its IPO at the top-end in its Japan IPO.
TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.

Snow Peak: Cheap MBO

By Michael Causton

Snow Peak agreement with Bain Capital to take the outdoor brand private next month seems to have been in the works for a couple of years.
Although sales are expected to rebound this year to near record highs, Snow Peak insists the domestic camping boom is over and will look at long-term growth overseas instead.
Even so, the MBO price looks cheap. Snow Peak is likely to see a rebound in domestic sales in FY2024 and its plans for overseas expansion are solid.

IntelliCentrics (6819 HK): Delisting and Special Dividend

On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.

Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

Trial Holdings IPO: Trading Debut

Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts.
The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive.

Contrarian Moves: Promoter Buying During Indian Equity Downturns

By Nimish Maheshwari

Promoter buying reflects insider confidence in the company’s future, often driven by access to undisclosed positive developments and growth opportunities.
Increased promoter stake may indicate that the market has undervalued the company, potentially presenting an opportunity for investors to buy at a discount.
Consider the broader market environment, company fundamentals, and industry trends alongside promoter buying activity to form a comprehensive investment thesis.

Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?

By Xinyao (Criss) Wang

Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards.
The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.

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Mar 21

Daily Brief Industrials: Doosan Robotics , Jeil Machine & Solution, ZTO Express Cayman , Grupo Aeromexico and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible
Jeil Machine & Solution IPO Valuation Analysis
ZTO Express Q423 Results & Guidance in One Simple Table | +32% Volume –> +2% EPS?! | AVOID
Aeromexico – Another Record Year in Prospect in 2024

Quiddity Leaderboard KOSPI 200 Jun 24: Up to Five Changes Possible

By Shifara Samsudeen, ACMA, CGMA

KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
There could be up to five changes in the KOSPI 200 index during the June 2024 index rebal event.

Jeil Machine & Solution IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Jeil M&S is target price of 24,354 won per share, which is 35% higher than the high end of the IPO price range.
We estimate the Jeil M&S to generate sales of 279 billion won (up 94.9% YoY) and operating profit of 18.1 billion won (up 928% YoY).
Jeil M&S’s main products include mixing equipment for the rechargeable battery sector. Its major customers include Samsung SDI, LG Energy Solution, and Northvolt.

ZTO Express Q423 Results & Guidance in One Simple Table | +32% Volume –> +2% EPS?! | AVOID

By Daniel Hellberg

In Q423, ZTO’s parcel volumes grew by +32% Y/Y, faster than market growth
But weak pricing resulted in EPS growth of just +2% Y/Y in the period
In FY24, management expects parcel growth to roughly halve – AVOID

Aeromexico – Another Record Year in Prospect in 2024

By Neil Glynn

Aeromexico reported record profitability in 2023 and we expect another record in 2024.
Our deep dive on the competitive landscape suggests a benign outlook as Aeromexico does not face competitor capacity growth in 2024.
The US DOT’s tentative ruling that Delta and Aeromexico must terminate their JV is a meaningful negative from 4Q24 unless their appeal is successful.

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Mar 21

Daily Brief TMT/Internet: Tencent, NEC Corp, Micron Technology, Reddit , WT Microelectronics, Coforge, Sunpower Corp, FD Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tencent (700 HK): 4Q23, Slower Growth, But Higher Margin, 37% Upside
Tencent 4Q2023: Gaming Declines Yet Again, Margins Have Further Upside
NEC (6701 JP): Generative AI (Part 2)
The First Semi-Micron to Guide 2Q24; All Good News Except MOI
Reddit IPO – Quick Thoughts on Valuation
WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better
Coforge QIP Early Look – Shares Have Corrected Since the Announcement, Last Deal Did Well
Micron Earnings: HBM Driving Price Increases in Other Sectors
Sunpower (SPWR) – Wednesday, Dec 20, 2023
Fd Technologies (FDP.LN) – Tuesday, Dec 19, 2023

Tencent (700 HK): 4Q23, Slower Growth, But Higher Margin, 37% Upside

By Ming Lu

In 4Q23, Tencent experienced a one-digit growth, but its margin improved significantly.
We believe Tencent’s social networks will stop shrinking after the company sold movie assets to China Literature.
We believe the stock will have an upside of 37.5% and a price target of HK$397 for year end 2024. Buy.

Tencent 4Q2023: Gaming Declines Yet Again, Margins Have Further Upside

Tencent (700 HK) reported 4Q results today. Both revenues and OP increased 7.1% and 42.0% YoY, however, both revenue and OP fell below consensus estimates.
The company also announced an increase to 2023 dividends and more than doublethe size of the company’s share buyback in 2024 compared to 2023.
We expect Internet VAS to grow at single-digits in 2024, however, high-margin new products to help boost margins in 2024.

NEC (6701 JP): Generative AI (Part 2)

By Scott Foster

CEO Jensen Huang’s keynote address at Nvidia’s GTC event on March 18 was a reminder that generative AI is about building secure and reliable systems, not chatting up the future.
NEC has spent three years developing its own AI supercomputer, creating the best performing Japanese-language large language model (LLM), and testing new AI products in-house before delivering them to clients.
The introduction of generative AI and LLMs into business- and industry-specific solutions should provide meaningful additions to NEC’s telecom services, social infrastructure, aerospace and national security related businesses.

The First Semi-Micron to Guide 2Q24; All Good News Except MOI

By Andrew Lu

Earlier expectation on Micron will have rooms to raise becoming a reality, largely driven by over 30% q/q NAND bit price jump for storage business in 1Q24.
10ppts stronger 2Q24 sales guidance and 3-6ppts higher gross margin guidance are driving free cash flow improvement.
AI server, PC, and smartphone driving DRAM bit demand and HBM3e/HBM4 and 1-gamma EUV DRAM slowing bit supply growth both are positive except MOI remains 15% above 5 years average.

Reddit IPO – Quick Thoughts on Valuation

By Ethan Aw

Reddit (RDDT US) is looking to raise up to US$750m in its US IPO.
Reddit is an online social media platform where users are able to join communities, engage in conversations, research, exchange goods and services as well as create new communities.
In our previous note, we talked about the company’s historical performance. In this note, we share our quick thoughts on valuation.

WT Micro GDR Early Look – Last Offering Had a Mixed Performance, This One Is Shaping up Better

WT Microelectronics (3036 TT) is looking to raise up to US$444m in its upcoming global depository receipts (GDRs) offering.
WT Microelectronics recently announced its board’s resolution to issue between 68-85m new shares in the form of GDRs, with the use of proceeds geared towards purchasing of raw materials overseas.
Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

Coforge QIP Early Look – Shares Have Corrected Since the Announcement, Last Deal Did Well

Coforge (COFORGE IN) is looking to raise around US$386m in its upcoming qualified institutional placement (QIP).
In an announcement released on Saturday, Coforge had mentioned its board’s approval to raise up to INR32bn via a QIP. Since then, the shares have corrected 9.1%.
The deal would be a large one to digest at 14 days of three month ADV. That being said, the company’s last selldown did well.

Micron Earnings: HBM Driving Price Increases in Other Sectors

By Jim Handy

Micron Technology reported very positive revenues this quarter and a return to profitability
A large part of this stems from the impact that HBM demand is constraining production of standard DDR5 DRAM, driving it into a shortage
This is good news for Micron and its DRAM competitors Samsung and SK hynix

Sunpower (SPWR) – Wednesday, Dec 20, 2023

Sunpower is facing a severe liquidity problem and may need to raise $100-300 million before January to avoid bankruptcy
The company operates as a wholesaler of residential retail solar panel systems, providing equipment to third-party developers or selling directly to residential customers
Trade credit tightening terms and potential customer hesitation due to financial instability are contributing to Sunpower’s uncertain future

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.

Fd Technologies (FDP.LN) – Tuesday, Dec 19, 2023

FD Technologies is a UK-based software and services company with a market cap of £300 million.
The company has three segments, with its KX segment being the fastest growing, accounting for around 26% of its revenue.
KX provides a time-series database solution that is expanding beyond the finance industry, with ARR expected to reach £80 million by FY24.

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Mar 21

Daily Brief Energy/Materials: CPMC Holdings, Rain Industries, TMC the metals co and more

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

In today’s briefing:

CPMC Holdings (906 HK): All Eyes on the Bids, but Underlying Still Solid
Rain Industries- Forensic Analysis
TMC the Metals Company, Inc. – Metal Competition Driving Geopolitics of Seafloor Nodules

CPMC Holdings (906 HK): All Eyes on the Bids, but Underlying Still Solid

By Osbert Tang, CFA

We are convinced that both bids for CPMC Holdings (906 HK) will go ahead, as they are progressing well. The downside risk is minimal, in our view.
The strong underlying result justifies a high price for the stock. Excluding distortions from non-recurring items in FY22, earnings have increased by 32.7% in FY23 and 26.8% in 2H23.
The stock now trades on 13.8x and 12.8x PERs for FY24 and FY25, in line with sector average; but below that for Shanghai Baosteel Packaging-A (601968 CH).

Rain Industries- Forensic Analysis

By Nitin Mangal

Rain Industries (RINDL IN) is one of the global leaders in coal tar pitch and calcined petroleum coke. The company also engages in cement manufacturing.
The company has been facing heat lately especially business related. The fact that there are goodwill impairments, reversal of DTA and costly refinancing puts Rain in a worrying shape.
The company also has seen impairment in fixed assets especially the CWIP. The company also faces high liability for its DB plan in Germany.

TMC the Metals Company, Inc. – Metal Competition Driving Geopolitics of Seafloor Nodules

By Water Tower Research

Major accomplishments and milestones. The last 12-plus months saw significant advances for TMC with respect to internal execution and achievements on both the operational and financial fronts, as well as industry and political developments that appear conducive to the company’s aim of bringing the first seafloor polymetallic nodule resource into production.
Advancing scientific knowledge and addressing concerns. As the premier player in the seafloor mining industry’s development, TMC significantly expanded its effort to deepen the scientific knowledge of deep-sea mining’s impact on local environments and, together with independent third parties, develop baseline assessment tools to evaluate the environmental impacts of seafloor mining versus land-based operations.
The company utilized the data collected during a 4Q22 large-scale pilot collection project and a follow-up environmental data collection campaign conducted in 2H23, which it shared with the international scientific community, to inform its environmental application process with the ISA.

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Mar 21

Daily Brief Health Care: IntelliCentrics Global Holding, Akeso Biopharma Inc, Lotus Pharmaceutical, Newron Pharmaceuticals, Premier Health of America and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

IntelliCentrics (6819 HK): Delisting and Special Dividend
Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?
Akeso Inc Placement – A Small One to Digest, Momentum Has Been Strong
Lotus Pharmaceutical (1795 TT): Record-High Performance in 2023; What Lies Ahead?
Newron Pharmaceuticals – Evenamide set for a pivotal year
Premier Health Of America (PHA.) – Tuesday, Dec 19, 2023

IntelliCentrics (6819 HK): Delisting and Special Dividend

On 9 February, IntelliCentrics Global Holding (6819 HK) announced the disposal of most of its assets to symplr software. On 19 March, the antitrust condition was satisfied.
The consideration will be distributed to shareholders as a special dividend. The minimum and maximum special interim dividends are US$0.52 (HK$4.08) and US$0.55 (HK$4.30) per share.
The key condition is EGM shareholder approval. Due to the irrevocables from key shareholders, the EGM vote should comfortably pass. This is a done deal.

Akeso Biopharma Placement (9926.HK) – Would Investors Be Willing to Take a Gamble?

By Xinyao (Criss) Wang

Akeso’s product sales grew rapidly in 2023, mainly driven by off-label use of AK104. Since AK104’s commercialization potential on other indications was “overdrawn” in advance, sales growth would slow afterwards.
The key investment logic of Akeso is whether/how much its BsAb pipelines would grab shares from PD-1. The high valuation has somewhat priced in AK112’s successful head-to-head trial with pembrolizumab.
If AK112 does beat Keytruda, valuation will reach a new level. If AK112 fails in critical clinical trials, it would cast a shadow on the entire BsAb pipeline of Akeso.

Akeso Inc Placement – A Small One to Digest, Momentum Has Been Strong

Akeso Biopharma Inc (9926 HK) is looking to raise US$155m from its primary placement.
Proceeds from the deal would be geared towards R&D expenditure for its preclinical programs, expediting clinical trials, and towards commercializing its existing approved products.
Accounting for 3% of shares outstanding, and representing 5.7 days of its three month ADV, the deal would be a relatively small one for the firm to digest.

Lotus Pharmaceutical (1795 TT): Record-High Performance in 2023; What Lies Ahead?

By Tina Banerjee

Lotus Pharmaceutical (1795 TT) achieved 16% revenue growth to NT$17B in 2023, while net profit increased 36% to NT$4B. Growth was mainly driven by the strong performance of Asian business.
For the first two months of 2024, the company reported revenue of NT$3B, representing 1% YoY decline. While exports grew, Asia business remained flat.
1Q24 should be flat or slightly negative for the company, while growth is expected to pick up from the later half of the year.

Newron Pharmaceuticals – Evenamide set for a pivotal year

By Edison Investment Research

Newron Pharmaceuticals has reported results for FY23, an active period for its lead asset, evenamide, being developed for treatment-resistant schizophrenia (TRS) and poorly managed schizophrenia (non-TRS). Strong 12-month data were shared in January 2024 from the Phase II trial (study 014/015) in TRS patients, and management is gearing up to launch a potentially pivotal Phase III trial. We expect the next major catalyst to be results of the Phase III trial (study 008A) in non-TRS patients, now anticipated in April. Improved liquidity following the recent equity raise and renegotiated debt repayment terms with the EIB provides headroom into 2025, by which time we anticipate a licensing deal for evenamide. We have revised our estimates, segregating evenamide’s potential across TRS and non-TRS populations, and refined some of our assumptions. Our valuation increases to CHF219.1m or CHF12.3/share (CHF7.7/share previously).

Premier Health Of America (PHA.) – Tuesday, Dec 19, 2023

By From 0 to 1 in the Stock Market

Premier Health of America is a leading healthcare staffing company in Canada with rapid growth through acquisitions
Recent transformational acquisition expected to nearly double revenues and EBITDA
CFO’s purchase of shares at $0.38 per share indicates a potential value of $1.20 per share, significant upside from current market price

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Mar 21

Daily Brief Financials: Samsung Card Co, Axis Bank Ltd, Lufax Holding , Burford Capital, Biotech Growth Trust PLC/The, Encore Capital Group and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Noteworthy Price Movements Associated with 1Q Ex-Dates Trading Setups
Axis Bank Incubates a New Entrepreneur — Its Head of Retail Branches
Quick Ideas #9
Burford Capital: Historical Returns Analysis
The Biotech Growth Trust – Onwards and upwards for performance recovery
Encore Capital Group Inc (ECPG) – Wednesday, Dec 20, 2023

Noteworthy Price Movements Associated with 1Q Ex-Dates Trading Setups

By Sanghyun Park

Investors buying on February ex-dates, perhaps due to the Value-up factor, led to a successful strategy for local managers: buying before ex-date and selling at close, yielding positive results.
On March 19th, Kia Corp (000270 KS) diverged from February’s pattern. Notably, FINANCIAL INVESTMENT sold heavily on Kia’s ex-date, a deviation from their quiet February activity.
FINANCIAL INVESTMENT’s trend of liquidating positions held since last quarter, especially for dividends, gains momentum as March ends, possibly overshadowing February’s Value-up factor.

Axis Bank Incubates a New Entrepreneur — Its Head of Retail Branches

By Hemindra Hazari

Sudden resignation of Ravi Narayanan Group-Head in charge of retail branches, retail liabilities and third party products as he wishes to pursue entrepreneurship.
Possible explanation is that the bank like other banks is finding it difficult to raise retail deposits and pressure is building up on senior management
Bank has a high LDR and reportedly the banking regulator is demanding the bank to lower its LDR. This will have consequences on future loan growth or on NIM

Quick Ideas #9

By Turtles all the way down

Another quick trade idea. A continuation of the China theme (see my last post for more info). Lufax holdings (LU). Again courtesy of JohnTill on Stocktwits.
A Chinese lending company, lending out directly and providing a peer to peer lending platform for the Chinese market.
With Ping An being a ~41% shareholder.

Burford Capital: Historical Returns Analysis

Burford’s business model is one of capital deployment.
The company reinvests proceeds from previous investments and raises private funds to act as asset manager.
Although it has temporarily escaped competition, finding refuge in the high end of the market, it is unclear how sustainable their returns are.

The Biotech Growth Trust – Onwards and upwards for performance recovery

By Edison Investment Research

The Biotech Growth Trust’s (BIOG’s) two co-managers, Geoff Hsu and Josh Golomb, at global healthcare specialist OrbiMed, believe that now could be an opportune time to consider the biotech sector as it is recovering from the longest and largest absolute and relative drawdown since 2006. The sector was negatively affected by sharply rising interest rates rather than a deterioration in industry fundamentals; indeed, the managers continue to refer to a ‘golden era’ of innovation within the biotech sector. BIOG’s relative performance has been through a difficult period given its high weighting in emerging (smaller-cap) biotech stocks, which performed significantly worse than the shares of large-cap biotech businesses during the sector sell-off.

Encore Capital Group Inc (ECPG) – Wednesday, Dec 20, 2023

Debt buyers like ECPG can accelerate growth during times of increased charge offs by credit card issuers
Growth is impacted by tough collections environment with an abundance of cheap charged off paper
Investors must consider buying these stocks when growth prospects are high and expectations have factored in collection challenges, as industry may soon enter a favorable cycle for debt buyers

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Mar 21

Daily Brief Consumer: ZOZO Inc, Giordano International, Trial Holdings, Xtep International, PDD Holdings, Carote Ltd, Maruti Suzuki India, GoTo Gojek Tokopedia Tbk PT, Mixue Group, Tempur Sealy International and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
Trial Holdings IPO: Trading Debut
Xtep International (1368 HK): Valuation Too Cheap For A >10% Growth Stock
PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY
Carote Ltd Pre-IPO Tearsheet
Maruti Suzuki India (MSIL IN): Market Leadership Position in UV Segment Bodes Well
GoTo 4Q2023: Improved Profitability and a Plan to Buyback Shares to Rescue Falling Share Price
MIXUE Pre-IPO – Initial Thoughts on Valuation
Tempur Sealy International: What Is The Latest Update On The Mattress Firm Acquisition?

The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)

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.

Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM

Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.

Trial Holdings IPO: Trading Debut

Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts.
The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive.

Xtep International (1368 HK): Valuation Too Cheap For A >10% Growth Stock

By Steve Zhou, CFA

Xtep International (1368 HK) announced in-line 2023 results, with net profit up 12% yoy and sales up 11% yoy. 2024 outlook was also satisfactory.
The company paid out 50% of its earnings in dividend, which amounted to a 5% dividend yield at current share price of HKD5.04.
The company is currently trading at 10x 2024 PE (assuming a conservative 10% net profit growth in 2024).

PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY

By Ming Lu

Both advertising revenue and commission revenue grew dramatically in 4Q23.
Chinese consumers are seeking low price goods, after the economy went weak.
PDD’s overseas brand, TEMU, is expanding rapidly in the U.S.

Carote Ltd Pre-IPO Tearsheet

By Shifara Samsudeen, ACMA, CGMA

Carote Ltd (CARO HK) is looking to raise around US$150m in its upcoming Hong Kong IPO. The bookrunners on the deal are BNP Paribas, and CMB International.
Carote is a distributor of kitchenware products. Expanding its lineup of products, the firm aims to meet its customers’ varied kitchen scenarios and enhance their culinary experience.
Initially engaged to provide original equipment manufacturing (OEM) overseas, the firm has since ventured into the online retail sector, introducing kitchenware products under its own brand name “CAROTE”.

Maruti Suzuki India (MSIL IN): Market Leadership Position in UV Segment Bodes Well

By Tina Banerjee

In Q3FY24, Maruti Suzuki India (MSIL IN) reported revenue of INR 335Bn, a growth of 14.6% YoY on the back of higher realization and volume.
EBITDA margin expanded 210bps YoY to 12.3% as higher volume, favorable commodity price played a role in tandem.
The company is planning 2x increase in its annual production capacity to about 4Mn by 2030-31. Capacity expansion plans augur well for the company in medium to long term.

GoTo 4Q2023: Improved Profitability and a Plan to Buyback Shares to Rescue Falling Share Price

GoTo Gojek Tokopedia Tbk PT (GOTO IJ) reported 4Q2023 results yesterday which shows that the company’s profitability has significantly improved.
The improvement in profitability has come at the cost of growth which has continued to decline suggesting profits may not be sustained.
GoTo announced that it has completed the Tokopedia partnership deal with TikTok and also a plan to buyback shares, subject to regulatory/shareholder approval.

MIXUE Pre-IPO – Initial Thoughts on Valuation

By Sumeet Singh

Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
In our earlier notes, we have looked at the past performance and undertaken a peer comparison. In this note, we provide our initial thoughts on valuation.

Tempur Sealy International: What Is The Latest Update On The Mattress Firm Acquisition?

By Baptista Research

This is our first report on Tempur Sealy International Inc., a global bedding company.
The company released its Q4 2023 earnings recently.
The company emphasized its strong business model, highlighting significant cash flow and a robust balance sheet.

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Mar 20

Daily Brief Australia: Boral Ltd, Orecorp Ltd, Cash Converters Intl, Empire Energy, Kinatico , Millennium Services Group Ltd, Ricegrowers Ltd, Amaero International Ltd, State Gas Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Boral (BLD AU) Rejects Seven’s Offer
Orecorp (ORR AU): Well Played Perseus
Cash Converters International – Rejuvenated and growing
Empire Energy Group Ltd
Kinatico Ltd – Q2 SaaS revenue increases 145% on the pcp
Millennium Services Group Ltd – Bid implies an EV/EBITDA multiple in line with peers
Ricegrowers Ltd – Earnings visibility improves into FY26
Ricegrowers Ltd – Earnings visibility improves into FY26
Amaero International Ltd – Several milestones tracking ahead of schedule
State Gas (ASX:GAS)

Boral (BLD AU) Rejects Seven’s Offer

Back on the 19 Feb, Seven Group Holdings (SVW AU) made a cash/scrip Offer for Boral Ltd (BLD AU) shares not owned, with certain tendering thresholds triggering more cash.
Boral has now recommended shareholders to reject the Offer after the independent expert (Grant Samuel) concluded the Offer is neither fair nor reasonable, supporting the view of Boral’s board.
Grant Samuel backed out a price range of $6.50-$7.13/share, versus SGH’s Offer of $5.96-$6.19/share; and up to $6.39/share including the conditional payments. SGH’s terms were best & final.

Orecorp (ORR AU): Well Played Perseus

After Perseus (PRU AU) announced it had secured Tanzanian Fair Competition Commission approval, Orecorp (ORR AU) continued to sit on its hands as, technically, Silvercorp (SVM CN) terms were superior.
PRU added 2% overnight bringing its stake to 22% vs SVM’s 21%. SVM said they won’t extend beyond the 22nd March. Something had to give.
This morning, PRU bumped its all-cash Offer to A$0.575/share (from A$0.55/share), with 15.6% of shares out intending to accept. SVM have five business days to counter.

Cash Converters International – Rejuvenated and growing

Cash Converters International (ASX:CCV) is a consumer finance company operating as a service provider, owner and franchisor of second-hand goods and financial services stores in Australia and internationally.
It derives its revenue from personal loans, vehicle finance, sale of goods and store services.
In recent years, the business has faced both company specific and industry headwinds involving litigation and regulatory scrutiny, but it has worked through those and evolved into a highly regulated, well-run profitable business with a clear strategic direction and multi-layered growth opportunities.

Empire Energy Group Ltd

Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
The investment case is building further with the acquisition of the Rosalind Park Gas Plant to provide an immediate, low-capital and operating-cost processing option with nameplate capacity above the Carpentaria Stage I development model.

Kinatico Ltd – Q2 SaaS revenue increases 145% on the pcp

Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ regtech company providing workforce compliance monitoring and management technology and services.
KYP has reported a 6% year-on-year increase in Q2 FY24 revenue to $7.1m, and a 145% year-on-year increase in SaaS revenue to $2.4m.
SaaS revenue accounted for 33% of total revenue for the quarter, compared to 14% in Q2 FY23.

Millennium Services Group Ltd – Bid implies an EV/EBITDA multiple in line with peers

Human services company Millennium Services Group Ltd (ASX:MIL) has entered a Scheme of Arrangement with an entity associated with Softbank Robotics Singapore for the acquisition of 100% of shares at $1.15/share cash.
Shareholders also have the option to accept a mix of cash and scrip in the new unlisted entity, with certain management committing not less than a total of 30% for this option.
The bid price represents an 89% premium to the last RaaS update note (October 23) and 360% premium from July 1, 2023.

Ricegrowers Ltd – Earnings visibility improves into FY26

Ricegrowers Limited, trading as SunRice (ASX:SGLLV), has released its H1 FY24 results, delivering RaaS adjusted EBITDA of $69m (+68%) and adjusted NPAT of $33.3m (+107%), both well above RaaS estimates of $57.6m and $25m respectively.
Divisionally the key surprise was International, delivering adjusted EBITDA of $33m, 125% above the PCP and 57% above RaaS estimates on the back of increases scale and reach, price increases and lower freight costs.
Operating cash flow was the strongest since H2 FY18 despite a high tax payment as working capital improved from lower receivables and inventory reductions.

Ricegrowers Ltd – Earnings visibility improves into FY26

Ricegrowers Limited, trading as SunRice (ASX:SGLLV), has released its H1 FY24 results, delivering RaaS adjusted EBITDA of $69m (+68%) and adjusted NPAT of $33.3m (+107%), both well above RaaS estimates of $57.6m and $25m respectively.
Divisionally the key surprise was International, delivering adjusted EBITDA of $33m, 125% above the PCP and 57% above RaaS estimates on the back of increases scale and reach, price increases and lower freight costs.
Operating cash flow was the strongest since H2 FY18 despite a high tax payment as working capital improved from lower receivables and inventory reductions.

Amaero International Ltd – Several milestones tracking ahead of schedule

Amaero International Ltd (ASX:3DA) is a global specialist in advanced materials manufacturing for the defence, aerospace, and other industrial sectors.
The company is developing a 1,000+-tonne-a-year critical metals alloy powder manufacturing facility in Tennessee, USA with its initial focus on producing refractory alloy powder, C103, a critical metal powder used in hypersonics weaponry.
On December 19, the company provided an update to investors on its progress to date this month with several milestones tracking ahead of schedule.

State Gas (ASX:GAS)