Smartkarma Daily Briefs

Key points

Brazil has been a focus of investment with over 200 million people.
Central bank has taken proactive measures to address high inflation and interest rates.
Optimism for continued rate cuts and potential investment opportunities, such as real estate company Multiplan, as economic landscape shifts in Brazil.

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.

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Feb 27

Daily Brief Energy/Materials: Alumina Ltd, CSR Ltd, Adbri, Valero Energy, Rent.com.au Ltd, Texas Pacific Land and more

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

In today’s briefing:

Alcoa (AA US) Makes an Offer for Alumina (AWC AU)
CSR (CSR AU): Saint-Gobain’s Binding Proposal at A$9.00
Alumina (AWC AU): Alcoa’s All-Scrip Non-Binding Proposal Seems Opportunistic
CSR (CSR AU): Saint Gobain Firms $9/Share Bid
Adbri (ABC AU): CRH/Barro’s Firm Offer
Valero Energy Corporation: Can The Turnaround In Refinery Operations & The Focus On Renewables Be A Game Changer? – Major Drivers
Core portal proving resilient, RentPay building scale
Rent.com.au Ltd – Core Portal Proving Resilient, RentPay Building Scale
TPL: Cashing in on Production

Alcoa (AA US) Makes an Offer for Alumina (AWC AU)

Alcoa (AA US) has made a non-binding, indicative and conditional proposal to acquire all shares in Alumina (AWC AU). Shareholders will receive 0.02854 shares of Alcoa for each Alumina share.
Alcoa (AA US) has entered into an agreement with Allan Gray Australia that gives them the right to acquire 19.9% of Alumina Ltd (AWC AU) at the same swap ratio.
Alumina Ltd (AWC AU) is a potential delete from the ASX100 Index at the March rebalance and that could provide an entry into the stock.

CSR (CSR AU): Saint-Gobain’s Binding Proposal at A$9.00

CSR Ltd (CSR AU) has entered a scheme implementation deed with Cie De Saint-Gobain (SGO FP) at A$9.00 per share, a 32.9% premium to the undisturbed price (20 February).
The offer has a ticking fee of A$0.02 per month (accrued daily) if the scheme’s effective date is delayed beyond 26 June. The offer requires FIRB approval.
The offer is attractive and represents a 15-year high. At the last close and for a mid-June payment, the gross/annualised spread is 7.4%/28.8%.

Alumina (AWC AU): Alcoa’s All-Scrip Non-Binding Proposal Seems Opportunistic

Alumina Ltd (AWC AU)‘s non-binding proposal from Alcoa (AA US) is 0.02854 Alcoa shares per Alumina share, implying a value of A$1.15, a 13.1% premium to the undisturbed price.
Alcoa has been granted a 20-business day exclusivity period. The Board intends to recommend a binding proposal. Allan Gray, the largest shareholder, is supportive.
While strategically sensible, the offer is not a knockout bid. The headcount test is a risk as retail forums suggest a majority view forming against the offer.

CSR (CSR AU): Saint Gobain Firms $9/Share Bid

On the 21st Feb, Saint-Gobain (SGO FP) made an indicative Offer to CSR Ltd (CSR AU) shareholders of A$9/share by way of a Scheme, a 34% premium to last close.
Saint-Gobain and CSR have now entered into a definitive agreement, also at $9/share. The business combination has been unanimously approved by the boards of both companies.
Conditions include CSR’s shareholder approval and FIRB signing off. No specific mention of ACCC. The transaction is expected to close in the second half of this year.

Adbri (ABC AU): CRH/Barro’s Firm Offer

Back on the 18 December 2023, construction play Adbri (ABC AU) entered into a process and exclusivity deed with CRH (CRH US) and 42.7%-shareholder Raymond Barro (Chairman).
Adbri has now entered into a Scheme Implementation Deed with CRH under which CRH will acquire all of the shares in Adbri that the Barro Group does not currently own.
Conditions include Adbri’s shareholder approval and FIRB signing off. The transaction is expected to close in June of this year.

Valero Energy Corporation: Can The Turnaround In Refinery Operations & The Focus On Renewables Be A Game Changer? – Major Drivers

Valero Energy Corporation recorded strong financial results for the fourth quarter of 2023 and the highest fourth quarter and full-year adjusted earnings in the company’s history, excluding the results of 2022.
The refining system achieved a mechanical availability of 97.4%, the highest to date, highlighting the benefits from Valero’s commitment to safe, reliable, and environmentally responsible operations.
Valero also set a record for sales volume in 2023, capturing around 1 million barrels per day, exemplifying the strength of its branded and wholesale marketing network.

Core portal proving resilient, RentPay building scale

Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
The company has reported an 11% increase in H1 FY24 revenue to $1.6m with its transactional platform, RentPay delivering a 137% increase in revenue to $0.22m, driven by a 122% increase in customers and ARPU growth of 18%.
The search portal reported a positive EBITDA of $0.092m for the half, its best result in two years and up 42% on the previous corresponding period (pcp), while RentPay posted a loss of $1.029m, flat on the pcp, and a 26% improvement on H2 FY23.

Rent.com.au Ltd – Core Portal Proving Resilient, RentPay Building Scale

Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
The company has reported an 11% increase in H1 FY24 revenue to $1.6m with its transactional platform, RentPay delivering a 137% increase in revenue to $0.22m, driven by a 122% increase in customers and ARPU growth of 18%.
The search portal reported a positive EBITDA of $0.092m for the half, its best result in two years and up 42% on the previous corresponding period (pcp), while RentPay posted a loss of $1.029m, flat on the pcp, and a 26% improvement on H2 FY23.

TPL: Cashing in on Production

By Hamed Khorsand

TPL benefited from an increase in production rates in the Permian Basin to report better than expected fourth quarter results
Production has been volatile in recent quarters depending on multiple factors. The steady state of oil above $70 a barrel and improved supply chains has resulted in production rising.
The boost in earnings has led to TPL building a cash cushion of $725.2 million and creating anxiety for many investors as to what TPL’s management would do next

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Feb 27

Daily Brief Industrials: Keisei Electric Railway Co, Grab Holdings , Hyundai Electric & Energy, Superloop Ltd, Kier Group PLC, Alight and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback
Grab Holdings (GRAB US) – Surging Ahead of Expectations
KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book
ABB Targets Superloop After Taking Out Symbio
Quiddity Leaderboard F100/250 Mar 24: One More Day to Base Date. Lots of Possibilities!
Alight Inc (ALIT) – Monday, Nov 27, 2023

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback

Keisei Electric (9009 JP) has been an outperformer since activist fund Palliser Capital called on the company sell some Oriental Land (4661 JP) shares. It has now announced another buyback.
Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Grab Holdings (GRAB US) – Surging Ahead of Expectations

By Angus Mackintosh

Grab Holdings reported nothing short of an impressive set of results for 4Q2023, booking another positive adjusted EBITDA but also an actual net profit and positive adjusted cash flow.
The company saw its mobility GMV come in above pre-COVID levels and deliveries GMV growth reaccelerated, while also reaching positive adjusted EBITDA for a second quarter.
Grab aims to deepen its engagement with users through affordable and premium offerings and a laddered pricing approach, with additional focus on financial services and advertising to come in 2024.

KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book

The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.

ABB Targets Superloop After Taking Out Symbio

The hunter becomes the hunted. After Superloop (SLC AU) failed to clinch Symbio Holdings (SYM AU) last year, Aussie Broadband (ABB AU) has now made an Offer for Superloop.
ABB’s indicative Offer provides Superloop shareholders with 0.21 new ABB shares for each Superloop share held, or an indicative Offer price of A$0.95/share, a 33.2% premium to the three-month VWAP.
ABB has picked up 19.9% in Superloop, also at A$0.95/share. Superloop has yet to respond.

Quiddity Leaderboard F100/250 Mar 24: One More Day to Base Date. Lots of Possibilities!

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the March 2024 index rebal event.
I see one change for the F100 index and two other changes for the F250 index. There could be more as there are many names close to the border.
There are also a couple of potential intra-review changes expected in the next few weeks for LXI REIT (LXI LN) and Network International Holdings (NETW LN)

Alight Inc (ALIT) – Monday, Nov 27, 2023

Key points

Alight has experienced strong organic revenue growth through recurring revenue contracts and acquisitions
Concerns have been raised about stagnant gross margins, adjusted EBITDA margins, management turnover, and stakeholder selling
Accounting validation issues further complicate the company’s financial standing and could potentially impact the stock price negatively

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Feb 27

Daily Brief Industrials: Keisei Electric Railway Co, Grab Holdings , Hyundai Electric & Energy, Superloop Ltd, Kier Group PLC, Alight and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback
Grab Holdings (GRAB US) – Surging Ahead of Expectations
KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book
ABB Targets Superloop After Taking Out Symbio
Quiddity Leaderboard F100/250 Mar 24: One More Day to Base Date. Lots of Possibilities!
Alight Inc (ALIT) – Monday, Nov 27, 2023

StubWorld: Keisei Electric Appears Stretched Amid Latest Buyback

Keisei Electric (9009 JP) has been an outperformer since activist fund Palliser Capital called on the company sell some Oriental Land (4661 JP) shares. It has now announced another buyback.
Preceding my comments on Keisei Electric are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Grab Holdings (GRAB US) – Surging Ahead of Expectations

By Angus Mackintosh

Grab Holdings reported nothing short of an impressive set of results for 4Q2023, booking another positive adjusted EBITDA but also an actual net profit and positive adjusted cash flow.
The company saw its mobility GMV come in above pre-COVID levels and deliveries GMV growth reaccelerated, while also reaching positive adjusted EBITDA for a second quarter.
Grab aims to deepen its engagement with users through affordable and premium offerings and a laddered pricing approach, with additional focus on financial services and advertising to come in 2024.

KOSPI Size Indices – Potential Migrations as Focus Is on Price to Book

The review period for the March rebalance of the KOSPI Size Indices started 1 December and will end 29 February. The changes will be implemented at the close 14 March.
We see 3 migrations from MidCap to LargeCap, 4 new adds to LargeCap, 7 migrations from LargeCap to MidCap, and 11 migrations from SmallCap to MidCap.
On average, stocks migrating from SmallCap to MidCap have the lowest price to book value and have historically outperformed stocks migrating between other categories.

ABB Targets Superloop After Taking Out Symbio

The hunter becomes the hunted. After Superloop (SLC AU) failed to clinch Symbio Holdings (SYM AU) last year, Aussie Broadband (ABB AU) has now made an Offer for Superloop.
ABB’s indicative Offer provides Superloop shareholders with 0.21 new ABB shares for each Superloop share held, or an indicative Offer price of A$0.95/share, a 33.2% premium to the three-month VWAP.
ABB has picked up 19.9% in Superloop, also at A$0.95/share. Superloop has yet to respond.

Quiddity Leaderboard F100/250 Mar 24: One More Day to Base Date. Lots of Possibilities!

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the March 2024 index rebal event.
I see one change for the F100 index and two other changes for the F250 index. There could be more as there are many names close to the border.
There are also a couple of potential intra-review changes expected in the next few weeks for LXI REIT (LXI LN) and Network International Holdings (NETW LN)

Alight Inc (ALIT) – Monday, Nov 27, 2023

Key points

Alight has experienced strong organic revenue growth through recurring revenue contracts and acquisitions
Concerns have been raised about stagnant gross margins, adjusted EBITDA margins, management turnover, and stakeholder selling
Accounting validation issues further complicate the company’s financial standing and could potentially impact the stock price negatively

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Feb 27

Daily Brief TMT/Internet: Alibaba (ADR), Taiwan Semiconductor (TSMC), Appier Group, Elan Microelectronics, King Yuan Electronics Co, Ltd., Carta Holdings, Inc., ATN International, Kinatico and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Alibaba (9988 HK): Value Proposition Looks Clean
TSMC (2330.TT; TSM.US): Foundry Market Forecast in 2030F; TSMC Had Developed The 2nm Nanosheet.
China Consumption Weekly (26 Feb 2024): Alibaba, Xpeng, HiPhi, Tuhu Car, Luckin
Appier (4180) | A Volatile Stock Despite Solid SaaS Metrics
Elan Microelectronics: 50% YoY Growth Feasible for 2024E; Now a Pricey Consensus Long
KYEC (2449.TT): 2024F Could Be a Prosperous Year Although 4Q23 Saw a 5% Decline QoQ.
Full Report – Carta Holdings (3688 JP)
ATNI: The Free Cash Flow Story Begins
Kinatico Ltd – H1 Result In-Line, SaaS Now 30%+ of Revenue
H1 result in-line, SaaS now 30%+ of revenue

Alibaba (9988 HK): Value Proposition Looks Clean

By Steve Zhou, CFA

It is well-known that Alibaba (ADR) (BABA US) is cheap (9x FY24 PE, fiscal year ending March; 8x FY23 free cash flow; net cash 25% of market cap).
Taking into account all of the major moving parts, I believe Alibaba can now be categorized as a good value stock.
Shareholder returns through buyback and dividend, minus stock-based compensation in 2023 calendar year equal to around 5% yield.

TSMC (2330.TT; TSM.US): Foundry Market Forecast in 2030F; TSMC Had Developed The 2nm Nanosheet.

By Patrick Liao

TSMC expects the foundry, semiconductor, electronics, industrial technology, and global GDP to be $0.25 trillion, $1 trillion, $3 trillion, $12 trillion, and $145 trillion, respectively, in 2030F
Transistor technology is constantly evolving, and FinFET architecture will be followed by Nanosheet and others.
In the transition, the automotive market belongs to IDM companies, but the utility of ADAS (Advanced Driver Assistance Systems) could fall under Foundry territory.

China Consumption Weekly (26 Feb 2024): Alibaba, Xpeng, HiPhi, Tuhu Car, Luckin

By Ming Lu

Alibaba plans to provide operational services to third-party sales broadcasters.
Xpeng will hire 4,000 employees and raise research budget by 40%.
Tuhu Car expected that its net profit will turn positive in 2023.

Appier (4180) | A Volatile Stock Despite Solid SaaS Metrics

By Mark Chadwick

Post FY23 results in mid-February, Appier’s stock exhibited significant volatility, despite robust financial performance.
We believe that Appier is a beneficiary of continued growth in ecommerce and increasing ubiquity of AI solutions for marketing.
Appier trades at a significant discount to global peers and domestic SaaS companies, suggesting significant upside

Elan Microelectronics: 50% YoY Growth Feasible for 2024E; Now a Pricey Consensus Long

By Vincent Fernando, CFA

Elan Guides For Strong Revenue Growth Ahead and High Margins to Continue
AI PCs Only Expected to Drive Significant Volume by 2025E; Major AI Opportunity for Touch Sensors
Elan Can Benefit From Rising Consensus Forecasts But is Pricey — We Wouldn’t Chase the Rally But Also Don’t Want to Short It

KYEC (2449.TT): 2024F Could Be a Prosperous Year Although 4Q23 Saw a 5% Decline QoQ.

By Patrick Liao

It was declined by 5% for 2023 verses 2022, which was not a surprise because the overall sentiment should be dim in 2023.
For the coming 1Q24F, it could be a bit downside by 5%, assumed as a normal seasonality.
AI demand remain the biggest driving force, and all eyes are on the CoWoS.

Full Report – Carta Holdings (3688 JP)

By Sessa Investment Research

CARTA HD strives to become “The Evolution Factory” and operates mainly in the digital marketing field.
The company was established in January 2019 through the merger of the former VOYAGE Group, which had expanded earnings by creating a series of new businesses centered on the ad tech domain, and the former Cyber Communications, the largest media rep firm in Japan.
CARTA HD holds a 3.9% share in the Japanese online advertising market.

ATNI: The Free Cash Flow Story Begins

By Hamed Khorsand

ATNI reiterated its entry into the era of generating free cash flow after spending the last several years building out its fiber network
ATNI reported fourth quarter results that showed services revenue rising sequentially. An increase in subscribers is the source for the success
To grow revenue and generate free cash flow, ATNI has expanded its broadband network to approximately 769 thousand homes passed with 367 thousand of these homes having high-speed data

Kinatico Ltd – H1 Result In-Line, SaaS Now 30%+ of Revenue

Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ regtech company providing workforce compliance monitoring and management technology and services.
KYP has reported H1 FY24 NPAT of $0.357m, a $1.13m turnaround on the previous corresponding period (pcp), and the company’s best-ever result.
The gross margin and EBITDA margin hit record levels of 67.7% and 13.4% respectively. The result was above our gross margin forecast but in line with our EBITDA estimate.

H1 result in-line, SaaS now 30%+ of revenue

Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ regtech company providing workforce compliance monitoring and management technology and services.
KYP has reported H1 FY24 NPAT of $0.357m, a $1.13m turnaround on the previous corresponding period (pcp), and the company’s best-ever result.
The gross margin and EBITDA margin hit record levels of 67.7% and 13.4% respectively.

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Feb 27

Daily Brief Health Care: Bumrungrad Hospital Pub Co, 160 Health International, Bio-Rad Laboratories A, Enhabit , QuantumPharm, Royalty Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Bumrungrad Hospital (BH TB): Record High Performance in 2023; Middle-East Performance Recovers
Pre-IPO 160 Health – The Lack of Moat Has Led to Development Falling Far Short of Expectations
Bio Rad Laboratories: Initiation of Coverage – Unveiling the Future – Next-Gen Products That Will Skyrocket Your Portfolio! – Major Drivers
Enhabit Inc (EHAB) – Monday, Nov 27, 2023
QuantumPharm (Xtalpi) Pre-IPO – The Negatives – Requires Deep Pockets to Fund Its Cash Burn
Royalty Pharma: Will The Growing Synthetic Royalty Transactions Continue Their Trend In 2024? – Major Drivers

Bumrungrad Hospital (BH TB): Record High Performance in 2023; Middle-East Performance Recovers

By Tina Banerjee

In 2023, Bumrungrad Hospital Pub Co (BH TB) reported 23% YoY revenue growth to THB25.6B, driven by 32%, 17%, and 11% YoY growth in international, expat, and Thai patients, respectively.
Driven by high margin international patients, increasing inpatient revenue, and continued cost management, gross profit, EBITDA, and net profit margin expanded in 2023.
Unrest in Middle-East remained an overhang on BH’s shares. However, revenue from Middle-East patients increased at 23.3% in H2 2023 compared to H1 2023.

Pre-IPO 160 Health – The Lack of Moat Has Led to Development Falling Far Short of Expectations

By Xinyao (Criss) Wang

160 Health collaborates with medical institutions and then get access to high-caliber medical professionals, which helps to attract patients/other business parties. So, its business model is B2B2C, similar to ClouDr.
However, ClouDr has much better performance than 160 Health, because ClouDr has established moat/barriers to more effectively monetize medical resources, while 160 Health is clearly lagging behind in this regard.
160 Health’s revenue mainly comes from sales of pharmaceutical and healthcare products, whose gross margin is very low. As the competition intensifies, the C-end customer acquisition cost would also increase.

Bio Rad Laboratories: Initiation of Coverage – Unveiling the Future – Next-Gen Products That Will Skyrocket Your Portfolio! – Major Drivers

This is our first report on life science research and clinical diagnostic products manufacturer, Bio- Rad Laboratories.
The company’s results exhibit resilience with substantial room for improvements and growth in the coming years.
Bio-Rad’s FY 2023 net sales of $2.671 billion reflect a decrease by 4.7% on a reported basis as compared to 2022.

Enhabit Inc (EHAB) – Monday, Nov 27, 2023

Key points

Enhabit Inc., the Home Health & Hospice unit spun off from Encompass Health, is undergoing a strategic review that could result in a potential sale of the company.
Analysts estimate that if the company is sold, it could fetch a price 50-100% higher than its current value, with a potential equity value of $1.0bn or $20 per share.
The opportunity for a sale exists due to the company’s undervaluation compared to its parent company, Encompass Health, as well as negative surprises in CMS rates and missed guidance, leading to activist pressure and a strategic review.

QuantumPharm (Xtalpi) Pre-IPO – The Negatives – Requires Deep Pockets to Fund Its Cash Burn

By Clarence Chu

QuantumPharm (QUP HK) (Xtalpi) is looking to raise US$200m in its upcoming Hong Kong IPO.
QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
In this note, we will talk about the not so positive aspects of the deal.

Royalty Pharma: Will The Growing Synthetic Royalty Transactions Continue Their Trend In 2024? – Major Drivers

Royalty Pharma reported a strong year of results in 2023, which demonstrated significant enhancements of its portfolio.
The company reported 9% growth in portfolio receipts and an increase in royalty receipts by 8%.
A total of $2.2 billion was deployed in cash for transactions while $4 billion in transactions was announced, making it a remarkable year for capital allocation.

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Feb 27

Daily Brief Consumer: Tsuruha Holdings, Toei Animation, Li Auto , APR, Booking Holdings, Hope Education Group Co Ltd, Rakuten Group , The Gym Group PLC, US Foods Holding Corp and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?
Toei Animation (4816 JP): The Current Playbook
Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth
Li Auto (LI US): 4Q23, High Growth and Profit, A Winner of Market Concentration, Upgraded to Hold
Trading Strategy of APR on the First Day of IPO
Booking.com (BKNG US): Buying Back Shares Until There Is None Left
Chinese Education Giant Urged to Repay Bondholders Early as Default Fears Mount
Morning Views Asia: Rakuten Group
Oxy Capital’s Pedro Sousa Thesis on High Quality, Low Cost Gym Facilities in the UK $GYM.L
US Foods: Initiation of Coverage – Major Drivers

Tsuruha (3391) And Welcia (3141) – Aeon Tsuruha Stake Buy Followed by Merger?

Over the weekend there was an article in the Nikkei saying that Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) were considering a merger. Other media outlets followed.
This has been a possible outcome. Aeon Co Ltd (8267 JP) owns 51% of Welcia, 13.6% in Tsuruha, and is negotiating to buy another 13% in Tsuruha from Oasis.
This would create a behemoth. ¥2.2trln in revenues vs ¥1trln for MatsukiyoCocokara (3088 JP). It would be 25% of the market. Questions will be asked about concentration.

Toei Animation (4816 JP): The Current Playbook

Since the US$550 million secondary placement announcement, Toei Animation (4816 JP)’s shares are down 7.0% from the undisturbed price of JPY18,560 per share (14 February).
Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Toei Animation’s shares have followed the pattern of previous large placements.
The offering will likely be priced on 27 February. Investors participating in previous large Japanese placements tend to secure positive returns.

Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth

By Michael Causton

The possible merger between Welcia and Tsuruha under Aeon has been talked about for years despite concerns from both drugstores, but may now happen.
But calling these retailers drugstores is increasingly a misnomer: FMCG-drugstores is better because they and many others in the sector, increasingly compete with FMCG retailers like supermarkets and even CVS.
This evolution is rapid so the merits of a deal make more sense when we view it from a sector five years in the future than how it is today.

Li Auto (LI US): 4Q23, High Growth and Profit, A Winner of Market Concentration, Upgraded to Hold

By Ming Lu

In 4Q23, revenue grew by 136% and operating profit was significantly higher than the market consensus.
Li Auto grew the most rapidly among the top-ten Chinese NEV sellers.
We believe Li Auto will be one of the winners after the market gets more concentrated. Upgrade to Hold.

Trading Strategy of APR on the First Day of IPO

By Douglas Kim

In this insight, we discuss a trading strategy for APR (278470 KS) which starts trading on 27 February. APR is the most anticipated IPO in Korea so far in 2024.
Our base case (6 months – 1 year) target price of APR is 370,809 won, which is 48% higher than the IPO price.
We recommend investors to take some profits off the table (30%-50%) if the share price shoots higher by 100% to 200%+ from the IPO price on the first day.

Booking.com (BKNG US): Buying Back Shares Until There Is None Left

By Mohshin Aziz

4Q23 results beat expectations with record revenues and profits and announced a maiden cash dividend of USD8.75/share (0.35% yield)
But, share price plunged by 10% on soft guidance of 4-6% YoY growth in room-night booked in 1Q24, due to the impact of high-interest rates and the ongoing wars
Good opportunity to buy on dips, stock trading at ~20x FY24 PE, ~18% discount to LT mean. Plus, there is a balance USD7.5b (6.1% shares in issue) of share buybacks

Chinese Education Giant Urged to Repay Bondholders Early as Default Fears Mount

By Caixin Global

Some global investors are urging Chinese private education giant XJ International Holdings Co. Ltd. to redeem half of its $350 million in bonds before maturity, as the creditors fear the Hong Kong-listed firm may intentionally default on repayments.
The bonds are due in 2026, but the creditors asked for the early redemption to be completed by March 2 in a letter sent to the Chinese company last month by their legal adviser, Chicago-headquartered global law firm Kirkland & Ellis LLP.
The creditors are a group of large international investors who collectively hold no less than $154 million, or about 50%, of the bonds’ outstanding principal amount, according to the letter seen by Caixin.

Morning Views Asia: Rakuten Group

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.

Rakuten Group

Oxy Capital’s Pedro Sousa Thesis on High Quality, Low Cost Gym Facilities in the UK $GYM.L

By Yet Another Value Podcast

Gym Group is a low-cost gym chain based in the UK, with 230 gyms and trading at six times EBITDA.
The company hit a rough patch during COVID but is expected to improve with new management and the ramp up of new gyms.
Public markets may be mispricing the sector due to potential earnings, energy cost normalization, and growth opportunities in the European market.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

US Foods: Initiation of Coverage – Major Drivers

This is our first report on food product manufacturer, US Foods.
The company reported solid performance in the fourth quarter and full year 2023, demonstrating strong execution of its strategy and operational discipline.
For the entire fiscal year of 2023, the company achieved record adjusted EBITDA of $1.56 billion driven by strong case growth, independent case growth of almost 7% and increased market share with targeted customer types.

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Feb 27

Daily Brief Financials: Rakuten Bank , Indiabulls Housing Finance, S&P/ASX 200, HSBC Holdings , Ethereum and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS
Big Returns on Small Investment – A Unique Special Situation in Indiabulls Housing
EQD | S&P/ASX200 Stalled, SHORT Opportunity
HSBC Takes $3 Billion Charge on BoCom Holdings
Crypto Crisp: Finally, Uniswap

Rakuten Bank (5838 JP) – Introduces a Yutai Program to Goose the Mar24 Price, Mar25 EPS

The Rakuten Bank offering in early December was a great time to buy the dip of you sold end-September. It should have been a good time to buy outright.
Unfortunately, the stock priced at ¥2,470, then closed that day at ¥2,500. That was the high for the next ten weeks. Two weeks later it was 20% lower. Ouch.
But it climbed out of the abyss, gained 35% in 8wks, then Thursday the Bank announced a new Shareholder Benefit program. Today the stock was +7%. Worth looking at details.

Big Returns on Small Investment – A Unique Special Situation in Indiabulls Housing

By Nimish Maheshwari

Indiabulls Housing’s Right Issue offers a unique opportunity to earn higher returns on smaller investment.
Indiabulls Housing is at the cusp of a turnaround: detaching its old identity maligned by various governance issues
Turnaround + Special Situation Bet – A potential opportunity to make outsized returns owing to the lower initial investment requirement in a company undergoing significant turnaround

EQD | S&P/ASX200 Stalled, SHORT Opportunity

By Nico Rosti

The ASX 200 INDEX closed last week down, and this week is barely up, it has been flat for 3 weeks and its direction is unclear.
The index may be preparing for a pullback, even though our models at the moment are not flashing yet the “go SHORT” signal. Covering LONG holdings may be wise.
Wait for prices > 7670 or the end of this week, if the index closes the week up, to increase the probability of success for a SHORT Trade.

HSBC Takes $3 Billion Charge on BoCom Holdings

By Caixin Global

HSBC Holdings Plc Wednesday reported a $3 billion write-down on its stake in a Chinese bank, underscoring challenges the British lender faces in one of its key growth markets.
Europe’s largest bank by assets took a charge on its 19.03% holding in Bank of Communications Co. Ltd. (601328.SH +1.41%), one of China’s biggest state-owned banks, after a reassessment of the accounting value-in-use, the bank said in a release of its fourth quarter financial results.
The reassessment compared the future cash flow from the asset, discounted for underlying risk, with the stake’s carrying value, which measures the cost of the asset minus depreciation factors.

Crypto Crisp: Finally, Uniswap

By Mads Eberhardt

Ethereum has surged past the 3,000 ETH/USD mark, now trading at 3,050 ETH/USD.
This increase is mainly driven by the intensifying anticipation over the potential launch of an Ethereum spot ETF, along with Ethereum’s recent breakout from a months-long period of underperformance compared to Bitcoin.
Over the last week, Ethereum has seen an 8% increase relative to Bitcoin, with the latter seeing less net inflow into exchange-traded products than the week prior.

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Feb 26

Most Read: Baimtec Material , ESR Group , Keisei Electric Railway Co, Bio-Thera Solutions Ltd, Hygon Information Technology C, Hyosung Corporation, Superloop Ltd, Taiwan Semiconductor (TSMC) – ADR, Walgreens Boots Alliance, Korea Stock Exchange KOSPI 200 and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

STAR50 Index Rebalance: Three Changes a Side; One Surprise Change
ESR Group (1821 HK): Evaluating a Potential Privatisation
Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3
STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected
Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide
Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications
Aussie Broadband’s Non-Binding Indicative Offer for Superloop
Taiwan Dual-Listings Monitor: TSMC Post-CNY Spread Persisting; Why UMC Discount Could Flip Positive
Walgreens Boots Alliance (WBA US) – How Do Dow Jones Deletes Do Historically?
Details of Korea Value-Up Initiatives & Index, Announced This Morning

STAR50 Index Rebalance: Three Changes a Side; One Surprise Change

There are three constituent changes for the SSE STAR50 (STAR50 INDEX) at the March rebalance. One inclusion and one non-inclusion are surprises.
One way turnover is estimated at 2.9% and will result in a one-way trade of CNY 4,075m with over 2.5x ADV to trade on all constituent changes.
The adds have outperformed the deletes over the last few months with a jump in the last few trading sessions. There could be more outperformance over the next two weeks.

ESR Group (1821 HK): Evaluating a Potential Privatisation

On 21 February, Bloomberg reported that due to the steep share price declines, major ESR Group (1821 HK) shareholders are considering options for their stakes, including ESR’s privatisation.
The reports also noted buyer interest in ESR’s significant assets. Past share dealings suggest that Warburg Pincus and the co-founders are the likely consortium to lead a potential privatisation.
The offer probability is low as a scheme would likely require a HK$16.00 offer, posing a funding challenge. Nevertheless, the upside remains as ESR trades at an undemanding valuation.

Keisei Electric Rail (9009) – A BUYBACK! But It’s Likely To Be Crossholders Selling in ToSTNeT-3

Keisei Electric Railway Co (9009 JP) has long been the target of activist-ish-y holders who seek to have the company monetise its 20+% stake in Oriental Land (4661 JP).
Last autumn (17-Oct-2023), Keisei was the subject of a presentation by activist-ish-y fund Palliser Capital who called the stock 43% undervalued. They want Keisei to sell some OLC shares.
Palliser wanted Keisei to use resulting monies for growth capex+shareholder return, improve IR/governance, shrink board, adopt KPIs, etc. Thursday we got an announcement of a 2.9% stock buyback.

STAR100 Index Rebalance: Ten Changes a Side; Adds Outperforming as Expected

There are 10 changes for the STAR100 Index in March. We correctly forecast all 10 deletes and got 8 of the 10 adds right.
Estimated one-way turnover is 6.8% and that results in a one-way trade of CNY 1.79bn. Nearly all constituent changes have more than 1 day of ADV to trade.
The adds have started to outperform the deletes and the index over the last couple of weeks and there could be more outperformance in the next two weeks.

Index Rebalance & ETF Flow Recap: HSCEI, HSCI, HSTECH, HSIII, STTF, Top50, Div+, FXI, FnGuide

The changes for the SSE STAR50 (STAR50 INDEX) and STAR100 Index were announced post market close on Friday.
The coming week is a full one with capping cutoffs, review cutoffs, announcements and implementations apart from futures expiries.
With China open after Lunar New Year, the National Team is back pouring money into ETFs with the largest inflows to the CSI 300, CSI 500, ChiNext and STAR50 indices.

Hyosung Corp (004800 KS): Spin-Off & KOSPI200 Index Implications

Hyosung Corporation (004800 KS) has announced that it is spinning off part of its business holdings to Hyosung New Holding Corporation in a 0.818:0.182 ratio.
The stock will remain suspended from late June to late July. We expect Hyosung Corporation (004800 KS) to maintain its index membership while the New Entity will not be added.
The dynamics between listed ETFs and non-listed passive trackers differ and we take a look at the potential index flows.

Aussie Broadband’s Non-Binding Indicative Offer for Superloop

Right on the heels of acquiring Symbio Holdings (SYM AU), Aussie Broadband (ABB AU) has made a non-binding indicative offer to take Superloop (SLC AU) private.
Superloop (SLC AU) had initiated the proposal to take Symbio Holdings (SYM AU) private before Aussie Broadband (ABB AU) swooped in. Now ABB has SLC in its sights.
The offer is a small premium and Aussie Broadband Pty Ltd (ABB AU)‘s 33.2% premium claim is disingenuous at best. Expect pushback from the Superloop Ltd (SLC AU) Board.

Taiwan Dual-Listings Monitor: TSMC Post-CNY Spread Persisting; Why UMC Discount Could Flip Positive

By Vincent Fernando, CFA

TSMC: +17.3% Premium, High Double Digit Level Persisting Since CNY
UMC: -1.5% Discount, We Believe Spread Biased to Go Positive
ChipMOS: +0.6% Premium, Collapsed from +4.6%. Now Within Typical Range.

Walgreens Boots Alliance (WBA US) – How Do Dow Jones Deletes Do Historically?

On 31 January, Walmart (WMT US) announced a 3:1 stock split. For cognoscenti, that meant a Dow Jones Industrial Avg might be in the offing.
The last change to the index was in Aug-2020, spurred by the 4:1 split for Apple (AAPL US). This time, the likely deletion candidate was Walgreens Boots Alliance (WBA US).
Indeed, last week, the Index Keepers announced Amazon.com Inc (AMZN US) would replace Walgreens Boots Alliance on 26 Feb (i.e. WBA would be booted on the close of 23 Feb).

Details of Korea Value-Up Initiatives & Index, Announced This Morning

By Sanghyun Park

The rollout of the Korea Value-Up Index has encountered a minor delay. Completion of the index is slated for 3Q, with ETFs scheduled for release in 4Q.
The government will encourage the National Pension Service to utilize it as a benchmark.
Dividend payout ratio, dividend yield, PER, and cash flow will be included as screening factors for this index, in addition to the already known factors of PBR and ROE.

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Feb 26

Daily Brief Quantitative Analysis: Hong Kong Connect Flows (Feb 23rd): CNOOC and more

By Smartkarma Daily Briefs | Daily Briefs, Quantitative Analysis

In today’s briefing:

Hong Kong Connect Flows (Feb 23rd): CNOOC, China Mobile
Northbound Flows (Feb 23rd): Moutai, CATL, Ping An Insurance, CMB, Industrial Bank, ICBC, Wuliangye
A-H Premium Weekly (Feb 23rd): SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec
HK Short Interest Weekly: Boc Aviation, Link Reit
TWSE Foreign Holding Weekly (Feb 23rd): Mediatek, TSMC, Evergreen Marine, Unimicron Tech, Novatek
KRX Foreign Holding Weekly (Feb 23rd): Hanwha Ocean, Sk Hynix, Posco Holdings, Samsung C&T

Hong Kong Connect Flows (Feb 23rd): CNOOC, China Mobile

We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of February 23rd.
The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
We highlight the weekly Hong Kong Connect flows for CNOOC, China Mobile.

Northbound Flows (Feb 23rd): Moutai, CATL, Ping An Insurance, CMB, Industrial Bank, ICBC, Wuliangye

We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of February 23rd.
We estimate the weekly inflows to be US$1,986.7 million, led by financials, consumer staples, industrials sectors, and offset by information technology, communication services.
We highlight flows for Moutai, CATL, Ping An Insurance, CMB, Industrial Bank, ICBC, Wuliangye, Agricultural Bank Of China, Inner Mongolia Yili Industrial, Wuxi Apptec.

A-H Premium Weekly (Feb 23rd): SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec

We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 122.6% as of Feb 23rd.
The average A-H premium changed by -2.1ppt week-on-week, led by utilities, materials, health care and offset by consumer staples, consumer discretionary, information technology.
We highlight weekly changes in A-H premium for SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec, Shandong Gold.

HK Short Interest Weekly: Boc Aviation, Link Reit

We analyzed the latest HK SFC report for aggregate short position as of Feb 16th.
Top short increases and decreases were tabulated for one week and four week period.
We highlight short changes in Boc Aviation, and Link Reit.

TWSE Foreign Holding Weekly (Feb 23rd): Mediatek, TSMC, Evergreen Marine, Unimicron Tech, Novatek

We analyzed the changes in foreign holdings of TWSE Stocks as of Feb 23rd which has an aggregated holding worth USD3,723.6bn.
We estimate that foreign flows to be inflows of USD4,330mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign instutions.
We highlight foreign changes in Mediatek, TSMC, Evergreen Marine, Unimicron Tech, Novatek, Wistron, Faraday Tech, Umc, Global Unichip, Quanta Computer.

KRX Foreign Holding Weekly (Feb 23rd): Hanwha Ocean, Sk Hynix, Posco Holdings, Samsung C&T