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Smartkarma Daily Briefs

Aug 09
0

Daily Brief Energy/Materials: POSCO Holdings, SK Innovation, Korea Zinc, Exxon Mobil, Seadrill , Neturen Co Ltd, Toyobo Co Ltd, VAALCO Energy, Mitsubishi Steel Mfg, Ovintiv and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
  • SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
  • Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong
  • [Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates
  • SDRL: Pacing Out the Year
  • Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update
  • Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update
  • VAALCO Energy (NYSE: EGY): Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24
  • Mitsubishi Steel Mfg (5632 JP): Q1 FY03/25 flash update
  • Ovintiv Inc.: Strategic Infrastructure Utilization and Expansion! – Major Drivers

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry

By Sanghyun Park

  • Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
  • August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
  • With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.

SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On

By Douglas Kim

  • SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On. 
  • The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
  • We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On. 

Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

By Douglas Kim

  • On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
  • The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain. 
  • Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels. 

[Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates

By Suhas Reddy

  • Exxon Mobil’s Q2 revenue grew 12.2% YoY and net profit increased by 17.3%. Revenue missed estimates by 0.4% while net profit exceeded expectations by 6.2%. v
  • Exxon Mobil’s Q2 oil production hit a record high since the 1999 merger, driven by strong output in Guyana and the Permian basin.
  • Exxon Mobil expects full-year expenditures to total USD 28 billion, including USD 25 billion for ExxonMobil and USD 3 billion for Pioneer.

SDRL: Pacing Out the Year

By Hamed Khorsand

  • SDRL reported second quarter results with similar commentary as its peers had previously provided. Current market conditions have resulted in contract awards being delayed even though day rates hold steady
  • The shift in the environment has meant SDRL is no longer expecting short-term drilling work in the second half for two of its vessels, Sevan Louisiana and West Phoenix. 
  • In 2025, SDRL is set to enhance its operations in Brazil with the addition of two vessels operating at high day rates.

Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update

By Shared Research

  • Revenue increased by JPY13mn (+0.1% YoY), with Specialty Steel and Wire Products up JPY171mn (+1.9%) and Induction Heating down JPY158mn (-3.1%).
  • Operating profit rose by JPY124mn (+45.9% YoY), with Specialty Steel and Wire Products up JPY104mn and Induction Heating up JPY21mn (+7.3%).
  • Full-year FY03/25 forecast progress rates: 22.5% for revenue, 19.7% for operating profit, 26.1% for recurring profit, 23.4% for net income.

Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales increased JPY8.1bn (+8.4% YoY) due to higher sales in Films, Environment and Functional Materials, and Functional Textiles.
  • Operating profit rose JPY3.2bn, with increased profit in Films, Environment and Functional Materials, Functional Textiles, and Real Estate segments.
  • Biotechnology business sales and segment profit details are missing; pharmaceuticals contract manufacturing improved profitability after FDA warning letter close-out.

VAALCO Energy (NYSE: EGY): Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24

By Auctus Advisors

  • • 2Q24 WI production was 25,411 boe/d, in line with our expectations and within the company’s guidance for 2Q24 (23.8-27 mboe/d).
  • • WI production of ~3.3 mbb/d in Cote d’Ivoire was particularly high.
  • WI production has now stabilized at ~4.5 mbbl/d.

Mitsubishi Steel Mfg (5632 JP): Q1 FY03/25 flash update

By Shared Research

  • Consolidated Q1 FY03/25 results: Revenue JPY40.6bn (-1.7% YoY), Operating profit JPY1.3bn (+66.7% YoY), Recurring profit JPY1.2bn (+87.9% YoY), Net loss JPY147mn (+345.5% YoY).
  • Segment performance: Revenue JPY20.5bn (-11.4% YoY), Operating profit JPY562mn (-40.6% YoY); Revenue JPY18.1bn (+12.1% YoY), Operating profit JPY580mn (JPY295mn loss in Q1 FY03/24).
  • Additional segments: Revenue JPY2.4bn (+8.3% YoY), Operating profit JPY157mn (+582.6% YoY); Revenue JPY1.6bn (-19.3% YoY), Operating loss JPY12mn; Revenue JPY967mn (+14.0% YoY), Operating profit JPY59mn (+145.8% YoY).

Ovintiv Inc.: Strategic Infrastructure Utilization and Expansion! – Major Drivers

By Baptista Research

  • Ovintiv recently announced results for its second quarter of 2024, highlighting continued success in execution, free cash flow generation, and shipment of shareholder returns.
  • The North American energy producer has reported a net earnings of $340 million and an impressive cash flow exceeding $1 billion, outdoing consensus estimates.
  • This performance is underscored by a production outperformance on both oil and natural gas, as well as cost efficiencies.

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Aug 09
0

Daily Brief TMT/Internet: Kyocera Corp, Fuji Soft Inc, Money Forward , Taiwan Semiconductor (TSMC), Raspberry Pi, Super Micro Computer, Nintendo, King Yuan Electronics Co, Ltd., Broadleaf and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI
  • KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid
  • Money Forward (3994): A Must-Buy Amid Yen Volatility
  • Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800
  • TSMC’s Expansion Strategy: New Plants and Rising AI Demand Shape Future Growth
  • Quiddity Leaderboard F100/​​​250 Sep 24: High-Impact F250 Potential ADDs Could Outperform the Index
  • Super Micro Computer (SMCI) May NOT Be the Next NVIDIA!
  • Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.
  • KYEC (2449.TT): In 2Q24, Revenue Exceeded Our Expectations, and GM, OPM, and EPS Surprised Us.
  • Broadleaf (3673 JP): 1H FY12/24 flash update

StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI

By David Blennerhassett

KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid

By Travis Lundy

  • KKR has announced its previously leaked takeover of Fuji Soft Inc (9749 JP). Two activists with 30+% between them have agreed to tender at ¥8,800.  
  • Given what the founder, crossholders, and other arbs own, this gets done easily. Congrats on the win to the activists. 
  • We will see more activism and more pressure on under-earning companies to go private to clean themselves up outside the public eye. Big opportunities for years.

Money Forward (3994): A Must-Buy Amid Yen Volatility

By Mark Chadwick

  • Amidst the volatility in the Japanese yen, companies like Money Forward, with a strong domestic revenue base and minimal exposure to forex risk, present an attractive investment opportunity.
  • Despite broader market uncertainties, Money Forward continues to demonstrate impressive growth, with its corporate ARR surging by 38% YoY in the most recent quarter, signaling sustained momentum.
  • The recent agreement to divest 49% of its non-core B2C segment, Money Forward ME, underscores the significant undervaluation of its core operations. 

Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800

By Arun George

  • Following media reports, Fuji Soft Inc (9749 JP) announced a pre-conditional tender offer from KKR at JPY8,800 per share, a 1.0% discount to the last close price of JPY8,890 (8 August).
  • The pre-condition is approvals under competition laws of Japan, Vietnam and possibly Belgium. The offer is anticipated to commence in mid-September.
  • The offer is a knockout bid and the culmination of an auction process. The board’s recommendation and the irrevocables from activist shareholders ensure this deal is done.

TSMC’s Expansion Strategy: New Plants and Rising AI Demand Shape Future Growth

By Uttkarsh Kohli

  • TSMC’s new plants will increase its production capacity for 3-nm chips, aiming to triple output this year. Global market share stands at 18%.
  • Major tech companies’ increased AI investments are driving demand for TSMC’s advanced semiconductors, crucial for AI and machine learning applications. 
  • TSMC’s automotive solutions output is expected to grow at a 50% CAGR through 2024, addressing global chip shortages in the auto industry.

Quiddity Leaderboard F100/​​​250 Sep 24: High-Impact F250 Potential ADDs Could Outperform the Index

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 September 2024 index rebal event.
  • There could be up to three M&A-related intra-review changes in the next few weeks.
  • Apart from that, there could be two changes for the F100 index and two other changes for the F250 index during the September 2024 review.

Super Micro Computer (SMCI) May NOT Be the Next NVIDIA!

By Baptista Research

  • Super Micro Computer, Inc. has garnered attention with its strong financial performance in Q4 2024, reporting record revenue growth driven by its AI server and data center infrastructure solutions.
  • The company’s transition to direct liquid cooling (DLC) technology and AI-focused strategies have positioned it as a key player in the rapidly evolving technology landscape.
  • With a 143% year-over-year revenue growth to $5.31 billion, SMCI has demonstrated its capability to scale and meet the increasing demand for AI infrastructure.

Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.

By Tech Supply Chain Tracker

  • Acer’s subsidiaries are driving growth, providing resilience and optimism in the face of shifts in the PC market.
  • China’s smartphone industry is experiencing a boom in the second quarter of 2024, indicating strong potential for growth.
  • A potential US ban on Chinese vehicle technology could deepen the technology rift with lasting effects, impacting various industries.

KYEC (2449.TT): In 2Q24, Revenue Exceeded Our Expectations, and GM, OPM, and EPS Surprised Us.

By Patrick Liao

  • King Yuan Electronics Co, Ltd. (2449 TT)‘s 2Q24 revenue/GM/OPM/EPS were NTD$9,035mn/40.5%/29.8%/NTD$2.2.
  • The main reasons of revenue growth shall be the AI aspects, especially the contribution from NVIDIA Corp (NVDA US).
  • For the upcoming 3Q24, we are keeping a relatively strong confidence of 5-10% growth rate for KYEC.

Broadleaf (3673 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY8.4bn, with an operating loss of JPY44mn and pre-tax profit of JPY16mn.
  • Cloud services revenue increased 63.4% YoY, while packaged systems revenue decreased 6.2% YoY.
  • Full-year FY12/24 earnings forecast revised: pre-tax profit to JPY100mn and profit attributable to owners of the parent to JPY90mn.

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Aug 09
0

Daily Brief Health Care: Paras Healthcare Limited, Suraksha Diagnostic, TSE Tokyo Price Index TOPIX, Terumo Corp, Essa Pharma , Incyte Corp, Carna Biosciences and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Paras Healthcare Pre-IPO Tearsheet
  • Suraksha Diagnostic Pre-IPO Tearsheet
  • Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral
  • Terumo Corp (4543 JP): Stellar Performance in Q1; Cost Control Measures Are Bearing Fruits
  • EPIX: Updated Masofaniten plus Enzalutamide Dose Escalation Data to be Presented at ESMO 2024
  • Incyte Corporation: A Story Of Robust Pipeline Development and Strategic Acquisitions! – Major Drivers
  • Carna Biosciences (4572 JP): 1H FY12/24 flash update

Paras Healthcare Pre-IPO Tearsheet

By Akshat Shah

  • Paras Healthcare Limited (0490145D IN) is looking to raise about US$180m in its upcoming India IPO. The deal will be run by ICICI, IIFL and Motilal Oswal.
  • Paras Healthcare is the fifth largest healthcare provider, in terms of bed capacity in North India, Bihar and Jharkhand, with an aggregate of 2,135 beds, as of March 31, 2024.
  • The company offers several clinical specialties across its hospitals including cardiac sciences, oncology, neuro sciences, gastro sciences and orthopedics and joint replacement.

Suraksha Diagnostic Pre-IPO Tearsheet

By Ethan Aw

  • Suraksha Diagnostic (1481262D IN) is looking to raise up to US$230m in its upcoming India IPO. The deal will be run by ICICI Securities, Nuvama Wealth and SBI Capital.
  • Suraksha Diagnostic is a full-service and integrated diagnostic chain. It offers a one-stop integrated solution for pathology and radiology testing, and medical consultation services to its customers.
  • It has flagship central reference laboratory, eight satellite laboratories and 194 customer touchpoints, and 146 sample collection centres (primarily franchised) as of FY24, across certain states of India.

Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

By Joe Jasper

  • We continue to believe a 1-4-month pullback/consolidation is ongoing. Important supports have been violated, including $110 on MSCI ACWI (ACWI-US) and $41 on MSCI EM (EEM-US).
  • We’re shifting our outlook to neutral on $ACWI after being bullish since early-November 2023. Major price breakdowns combined with deteriorating market dynamics have increased the odds of a topping pattern.
  • Also downgrading Japan to market weight. 7/25/24 we said “Japan’s TOPIX breaking below 2800-2815 is near-term bearish, suggests it could pull back to its long-term uptrend, or worse.”

Terumo Corp (4543 JP): Stellar Performance in Q1; Cost Control Measures Are Bearing Fruits

By Tina Banerjee

  • Terumo Corp (4543 JP) has reported record high quarterly revenue and profit in Q1FY25, thanks to strong demand across all the business segments, effects of pricing measures, and favorable Fx.
  • With the steady progress in profit improvement measures, Q1FY25 gross profit margin (53.3%) reached to its highest level since Q2FY22. Operating and net profit growth outpaced that of revenue.
  • Amid currency uncertainties and inflation, Terumo has maintained its full-year FY25 guidance issued in May. Growth will be driven by US and Europe owing to the sustained increase in demand.

EPIX: Updated Masofaniten plus Enzalutamide Dose Escalation Data to be Presented at ESMO 2024

By Zacks Small Cap Research

  • On August 5, 2024, ESSA Pharma Inc. (EPIX) announced financial results for the third quarter of fiscal year 2024 that ended June 30, 2024 and provided a business update.
  • ESSA is currently studying its lead compound, masofaniten (EPI-7386), in two clinical trials: EPI-7386-CS-001 and EPI-7386-CS-010.
  • Full results from the monotherapy arm of the -001 trial will be presented at a scientific conference in the second half of 2024 while enrollment continues in the two combination arms.

Incyte Corporation: A Story Of Robust Pipeline Development and Strategic Acquisitions! – Major Drivers

By Baptista Research

  • Incyte Corporation reported its financial performance for the second quarter of 2024 with several notable highlights and strategic decisions that significantly influence its investment profile.
  • The company’s total revenue grew by 9% year-over-year, reaching over $1 billion, primarily driven by robust sales of Jakafi and Opzelura.
  • Jakafi, particularly, showed a consistent demand increase of 9%, although net product revenues were slightly muted due to higher channel inventory levels in the previous year.

Carna Biosciences (4572 JP): 1H FY12/24 flash update

By Shared Research

  • Sales for Q2 FY12/24 were JPY316mn (-36.9% YoY), with an operating loss of JPY24mn, and sales progress at 34.1%.
  • Drug Discovery and Development segment recorded no sales, with an operating loss of JPY1.1bn, and increased R&D spending by 3.4% YoY.
  • Full-year forecast includes JPY925mn sales (+0.8% YoY) and JPY229mn operating profit (+1.8% YoY) for Drug Discovery Support segment.

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Aug 09
0

Daily Brief Financials: ProShares Bitcoin Strategy ETF, China Vanke , Custodian REIT, Jaccs Co Ltd and more

By | Daily Briefs, Financials

In today’s briefing:

  • Through The Fire And Flames
  • Morning Views Asia: China Vanke , SK Hynix, Softbank Group, Tata Motors ADR, UPL Ltd, Wynn Macau Ltd
  • Custodian Property Income REIT – Positive outlook for further growth
  • Jaccs Co Ltd (8584 JP): Q1 FY03/25 flash update

Through The Fire And Flames

By Delphi Digital

  • Unforeseen Volatility: Global risk markets plummeted, driven by external factors, showing crypto’s vulnerability to broader market trends.
  • Unique Opportunity: Crypto’s market fundamentals remain strong, presenting unique investment opportunities amidst the global risk asset purge.
  • Macro Influences: Japan’s carry trade unwind and weak jobs report led to extreme volatility, impacting both traditional and crypto markets significantly.

Morning Views Asia: China Vanke , SK Hynix, Softbank Group, Tata Motors ADR, UPL Ltd, Wynn Macau Ltd

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.

Custodian Property Income REIT – Positive outlook for further growth

By Edison Investment Research

Custodian Property Income REIT (CREI) has published its Q125 NAV and trading update. With rental growth continuing, Q125 DPS (+9% vs Q124) is in line with the full year target of 6.0p and was fully covered. The dividend-driven quarterly NAV total return was 1.6%, while the share price yield is almost 8%. Property values appear to have stabilised and CREI expects a benefit from interest rate reductions.

Jaccs Co Ltd (8584 JP): Q1 FY03/25 flash update

By Shared Research

  • Consolidated operating revenue increased by JPY887mn YoY (+1.9% YoY) due to higher deferred installment income and reversal.
  • Consolidated recurring profit fell JPY2.3bn YoY (-20.9% YoY) due to increased operating expenses and bad debt-related costs.
  • JACCS revised its full-year FY03/25 forecast, lowering operating revenue to JPY189.0bn and net income to JPY16.5bn.

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Aug 09
0

Daily Brief Consumer: Ola Electric, Tata Motors Ltd, WeRide, Adeia, Inter Parfums, United Arrows, Mondelez International, Abercrombie & Fitch Co Cl A, Round One Corp, Starbucks Corp and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand
  • Tata Motors (TTMT IN): Index Impact of DVR Cancellation
  • WeRide (WRD US) IPO: The Bull Case
  • ADEA: Streaming Loading
  • IPAR: New Line Additive to Growth
  • United Arrows (7606 JP): Q1 FY03/25 flash update
  • Mondelez International: Strategic Brand Partnerships & Diversification Catalyzing Growth! – Major Drivers
  • Abercrombie & Fitch Co Cl A – AKA; 2Q Review: Showing the Way to Upside; Reiterate Buy, $25 PT
  • Round One Corp (4680 JP): Q1 FY03/25 flash update
  • Starbucks Corporation: Expanded Digital Offerings & Rewards Program Growth & Other Major Drivers

Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand

By Sumeet Singh

  • Ola Electric managed to raise around US$734m in its India IPO.
  • Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
  • In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

Tata Motors (TTMT IN): Index Impact of DVR Cancellation

By Brian Freitas

WeRide (WRD US) IPO: The Bull Case

By Arun George

  • WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise between US$200 to US$300 million through a Nasdaq IPO.    
  • WeRide is the most commercially successful L4 autonomous driving company globally, measured by commercialization revenue in 2021, 2022 and 2023.
  • The bull case rests on a large TAM, strong product capabilities, near-term mass commercialization, articulation of a path to profitability, improving earnings quality and presence of blue-chip investors. 

ADEA: Streaming Loading

By Hamed Khorsand

  • ADEA signed several renewals in the second quarter extending out terms with current licensees and showing to investors that there is value from the portfolio of more than 11,500 patents. 
  • The deals ADEA signed in the quarter were not the headline grabbing nature, unlike those in prior quarters and those we expect the Company to sign in coming quarters. 
  • ADEA generating annual free cash flow of approximately $150 million should become a bigger factor to valuing the equity as the debt balance becomes visually smaller to investors.

IPAR: New Line Additive to Growth

By Hamed Khorsand

  • PAR had previously issued its quarterly sales update making the second quarter results more of an update on how the business is shaping out for the remainder of the year. 
  • IPAR used the Q2 earnings call to disclose its intention to enter the luxury fragrance market with its own brand in 2025. Owning a brand is not new for IPAR.
  • The consumer continuing to purchase fragrances undisturbed should create the opportunity to grow sales in the second half of the year ahead of new launches scheduled for 2025.

United Arrows (7606 JP): Q1 FY03/25 flash update

By Shared Research

  • FY03/22 revenue decreased by JPY3.2bn, cost of revenue by JPY1.3bn, and SG&A expenses by JPY1.9bn due to new accounting standards.
  • Q1 FY03/25 consolidated revenue grew 10.4% YoY, driven by increased customer count and optimized pricing, despite high raw material prices.
  • The company had 308 stores at end-Q1 FY03/25, launched new brands, and expanded internationally with a store in Bangkok.

Mondelez International: Strategic Brand Partnerships & Diversification Catalyzing Growth! – Major Drivers

By Baptista Research

  • Mondelez International delivered a solid performance in the second quarter of 2024, characterized by a fine balance between strategic pricing adjustments and robust underlying consumer demand, particularly in its key chocolate and biscuit segments.
  • The financial highlights include a 2.5% growth in organic net revenue and a notable 11.3% adjusted gross profit dollar growth.
  • This performance underpins the company’s ability to manage costs effectively and leverage pricing strategies to maintain profitability.

Abercrombie & Fitch Co Cl A – AKA; 2Q Review: Showing the Way to Upside; Reiterate Buy, $25 PT

By Small Cap Consumer Research

  • We are reiterating our Buy rating and $25 price target for AKA and raising our 2024 and 2025 projections after the company registered impressive 2Q2H top line, Adjusted EBITDA and EPS upside, raised 2024 guidance and increased the store opening roster for Princess Polly in 2024 to five, adding new locations in Irvine and Santa Clara.
  • a.k.a. Brands continues to leverage newness, fashion excitement and omnichannel expansion for their brands to capture stronger domestic market results.
  • We believe, with increased 2024 Princess Polly store openings, a focus on increasing margins in Australia, and new (and deepening) digital marketplace relationships, our projections, even after material raises for 2024 and 2025, remain conservative and we reiterate our Buy rating and $25 price target for AKA.

Round One Corp (4680 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales increased to JPY40.4bn (+12.3% YoY), with operating profit at JPY4.9bn (+25.6% YoY) and recurring profit at JPY5.0bn (+24.1% YoY).
  • In Japan, comparable store sales grew 4.8% YoY, with notable increases in bowling (10.3%), karaoke (10.1%), and SPO-CHA (8.9%).
  • In the US, sales were JPY16.8bn (+24.7% YoY), with a segment profit of JPY2.0bn (+18.6% YoY), and amusement sales up 1.3% YoY.

Starbucks Corporation: Expanded Digital Offerings & Rewards Program Growth & Other Major Drivers

By Baptista Research

  • Examining Starbucks Corporation’s third quarter fiscal year 2024 earnings, a balanced perspective highlights both strengths and areas for improvement.
  • The global coffee giant reported a mild revenue increase to $9.1 billion, marking a 1% year-over-year growth and a 6% sequential rise from the second quarter.
  • However, global comparable store sales declined by 3%, influenced by a notable 14% decrease in China, despite a relatively steady performance in Japan and modest declines in North America.

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Aug 08
0

Daily Brief ESG: Greentown China – ESG Report – Lucror Analytics and more

By | Daily Briefs, ESG

In today’s briefing:

  • Greentown China – ESG Report – Lucror Analytics
  • If We Don’t Change the Way We Used to Do Things, We Cannot Embrace Diverse Values

Greentown China – ESG Report – Lucror Analytics

By Leonard Law, CFA

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Greentown China’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”. 

If We Don’t Change the Way We Used to Do Things, We Cannot Embrace Diverse Values

By Aki Matsumoto

  • The government only considers foreign personnel as labor force and accepts them in industries where labor is in short supply and places restrictions on their transfer to other industries.
  • Imposing a Japanese language test on long-term residents who are eligible to stay in Japan may result in the loss of opportunities to recruit talented foreign personnel.
  • The government has been unable to step forward to “respect human rights and share diverse values.” If Japanese people do not change, we will never be able to embrace diversity.

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Aug 08
0

Daily Brief ECM: Brainbees Solutions (FirstCry) IPO: Key Facts and more

By | Daily Briefs, ECM

In today’s briefing:

  • Brainbees Solutions (FirstCry) IPO: Key Facts, Financials and Valuations
  • Initial Thoughts on the K Bank IPO
  • Black Sesame IPO Trading – Lackluster Demand, Combined with Bad Timing
  • BrainBees Solutions IPO: Five Facts Why FirstCry Is Not a First Class Company
  • Innoscience Pre-IPO Tearsheet

Brainbees Solutions (FirstCry) IPO: Key Facts, Financials and Valuations

By Devi Subhakesan

  • BrainBees Solutions (0172540D IN) that operates FirstCry, India’s leading Online Mom and Child vertical, has launched a USD500 mn IPO that closes on August 8th.
  • The IPO pricing suggest a post-money equity valuation of around USD 2.8 billion and an EV/Revenue multiple in the range of 3.5X-3.7X.
  • Brainbees operates in an attractive online vertical noted for its high frequency purchases and long term customer relationship. However it has not built significant competitive advantages versus leading horizontal platforms.

Initial Thoughts on the K Bank IPO

By Douglas Kim

  • In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea. 
  • A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank. 
  • K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.

Black Sesame IPO Trading – Lackluster Demand, Combined with Bad Timing

By Clarence Chu

  • Black Sesame Technologies (BLACKSES HK) raised around US$133m in its Hong Kong IPO, after pricing its IPO at the low-end.
  • Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
  • We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

BrainBees Solutions IPO: Five Facts Why FirstCry Is Not a First Class Company

By Devi Subhakesan

  • We highlight several red flags  with regard to BrainBees Solutions (0172540D IN) operations, business strategy and governance for investors’ careful consideration.
  • At the announced IPO price band of Rs440 – Rs465, Brainbees implied EV/Revenues (FY24) works out to 3.5X – 3.7X – a significant discount to India listed online retail verticals.
  • Despite seemingly inexpensive relative valuations, we do not see a compelling reason to invest in the company, specially given the several red flags discussed below.

Innoscience Pre-IPO Tearsheet

By Ethan Aw

  • Innoscience (1992276D CH) is looking to raise up to US$300m in its upcoming HK IPO. The deal will be run by CICC, and CMB International.
  • Innoscience is a Chinese-based manufacturer of Gallium Nitride (GaN) semiconductor products. It offers various types of GaN products, including GaN wafers, GaN discrete chips, GaN ICs and GaN modules. 
  • It tailors its solutions to customers in various industries such as consumer electronics, renewable energy and industrial applications, automotive electronics and data centers.

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Aug 08
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | US Recovery Fizzles Out; Not so Super Micro and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | US Recovery Fizzles Out; Not so Super Micro
  • China Strategy: Re-Assessing the Rmb Exchange Impacts
  • Japan Morning Connection: 6758 JP, 6920 JP, 7936 JP
  • # 42 India Insight: Tata Motors New EV, Airtel Postpones Right Issue, SBI Wealth Management

Ohayo Japan | US Recovery Fizzles Out; Not so Super Micro

By Mark Chadwick

  • Early gains in US stocks fizzles out; Vix volatility index remains elevated at around 28 points
  • Mixed bag of Japanese earnings; auto makers Honda and Mazda both post decent numbers on yen weakness and just having the right product in the market
  • Super Micro shares dropped 15% on Q4 results, highlighting supply-chain issues. This creates a potential buy opportunity for Nidec, down 12% since Q1.

China Strategy: Re-Assessing the Rmb Exchange Impacts

By Osbert Tang, CFA

Japan Morning Connection: 6758 JP, 6920 JP, 7936 JP

By Andrew Jackson

  • Plenty of names which continue to look oversold in the recent volatility after posting better than expected numbers yesterday including Sony and Lasertec.
  • Puma -12.6% after 2Q numbers and guidance missed, setting a negative tone for sportswear including 7936 Asics which has been in play after strong earnings and recent large share placement.
  • Numbers for Shiseido and Kose point to diverging paths, which looks conducive for the 4922-4911 pair setup.

# 42 India Insight: Tata Motors New EV, Airtel Postpones Right Issue, SBI Wealth Management

By Sudarshan Bhandari

  • Tata Motors introduces the Tata.ev app to help EV owners find and navigate to reliable charging stations.
  • Bharti Airtel postpones the call for INR15,000 crore of its rights issue.
  • SBI will deploy 2,000 executives to enhance its wealth management services, aiming to attract high-net-worth individuals.

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Aug 08
0

Daily Brief Credit: S&P Global Inc.: Expansion into Private Markets and Credit Indices As A New Avenue For Growth! – Major Drivers and more

By | Credit, Daily Briefs

In today’s briefing:

  • S&P Global Inc.: Expansion into Private Markets and Credit Indices As A New Avenue For Growth! – Major Drivers

S&P Global Inc.: Expansion into Private Markets and Credit Indices As A New Avenue For Growth! – Major Drivers

By Baptista Research

  • S&P Global demonstrated a robust performance in the second quarter of 2024, marking significant milestones and strategic advancements, achieved amidst a backdrop of market variability.
  • The company reported a 16% increase in total revenue, adjusted for divestitures, with highlights including a notable spike in transaction revenue in the Ratings division by over 60%.
  • This division’s success was propelled by increased activity in the public and private markets, notably a 70% boost in private market rating services.

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Aug 08
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Daily Brief Event-Driven: JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade
  • Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
  • Fuji Soft (9749 JP): A Rumoured KKR-Sponsored MBO
  • JPX-Nikkei 400 Rebal Aug 2024 – 44 IN, 41 OUT, ¥500bn of Capping, Just Under ¥1trn to Trade
  • China: Passive Selling Expected Later This Month
  • EURO STOXX 50: Exclusion by Sector
  • [JAPAN ACTIVISM] KKR Reportedly Plans Takeover of Fuji Soft (9749) – Relief from Activist Pressure
  • MSC Aug 24 Rebalance: South Africa Post-Election Tailwind? MRP, ARI Potential Adds
  • CR Sanjiu (000999.CH) To Acquire Tasly Pharma (600535.CH) – SOEs Have High Enthusiasm for TCM Assets

JPX Nikkei 400 Index Rebalance: A Bunch of Chunky Adds & US$6bn Trade

By Brian Freitas

  • There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
  • Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).
  • The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.

Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?

By Brian Freitas

  • In its last update, Alibaba Group announced that the company was preparing for its primary listing in Hong Kong and the process was expected to complete by the end August.
  • The Board meets on 14 August to approve results for the three months ending June. Could there be an announcement on the dual primary listing too?
  • Mainland Chinese own between 3.5%-15.5% of companies that converted from Secondary to Dual-Primary in the last few years. Similar buying in Alibaba could take the stock higher from here. 

Fuji Soft (9749 JP): A Rumoured KKR-Sponsored MBO

By Arun George

  • Nikkei and Bloomberg report that Fuji Soft Inc (9749 JP) will be privatised through a KKR-sponsored MBO at a price just below JPY9,000, a 21.8% premium to the last close.
  • The rumoured privatisation proposal is the culmination of a sale process initiated by 3D Investment Partners, the largest shareholder, in September 2023.
  • The Board will meet tomorrow to discuss the proposal. The rumoured offer represents an all-time high and a knockout bid, suggesting a done deal if a binding proposal materialises.

JPX-Nikkei 400 Rebal Aug 2024 – 44 IN, 41 OUT, ¥500bn of Capping, Just Under ¥1trn to Trade

By Travis Lundy

  • Janaghan Jeyakumar, CFA who does the predictions for this index got 10/10 of his high conviction names, 8/10 of his medium conviction, and 50% of low conviction ADDs.
  • This year, there are fewer caps but some big ones. Nearly ¥500bn of capping flow to sell. 
  • I see just over $6.3bn in buying and selling to be done. A half dozen names with both high ADV impact to buy and decent size.

China: Passive Selling Expected Later This Month

By Brian Freitas

  • The China equity markets have continued to trade lower with the CSI 300 Index outperforming other mainland indices as the National Team continues to pump money into ETFs tracking the index.
  • We currently estimate selling of around US$1.39bn across 74 stocks listed on the mainland and in Hong Kong. There could be fewer deletions depending on the review date chosen.
  • The potential deletes have dropped a lot since the start of the calendar year with big underperformance versus the HSCEI Index, CSI 300 Index and CSI Smallcap 500 Index.

EURO STOXX 50: Exclusion by Sector

By Dimitris Ioannidis

  • Cap Gemini SA (CAP FP) is estimated to be excluded from the selection list in the long-run due to being pushed way above 60% coverage in the Technology sector.
  • Merck KGaA (MRK GR) switches between in and out of the selection list because it fluctuates close to the 60% coverage of the Health Care sector.
  • Nokia OYJ (NOKIA FH) has a higher probability of deletion from SX5E if Merck KGaA (MRK GR)  qualifies to the selection list. Forecasted passive fund supply is  ~15 ADV.   

[JAPAN ACTIVISM] KKR Reportedly Plans Takeover of Fuji Soft (9749) – Relief from Activist Pressure

By Travis Lundy

  • Last year into early 2024, Fuji Soft Inc (9749 JP) – partially at the prodding of 3D Investment Partners – took in 4 subs and conducted a strategic review.
  • In January, I explored the situation here suggesting the stock had run, FujiSoft needed to liquidate more assets, but a PE firm would look at a valuation of ¥600bn.
  • Last night, the Nikkei reported that US PE Firm KKR planned to take Fuji Soft private with a TOB valued at ¥600bn. Limit up will take us to ¥560bn+.

MSC Aug 24 Rebalance: South Africa Post-Election Tailwind? MRP, ARI Potential Adds

By Charlotte van Tiddens, CFA

  • MSC indices are due for rebalancing in the closing auction on Friday the 30th of August. Constituent changes will be announced after the close next week Monday.
  • In this note we flag Mr Price Group Ltd (MRP SJ) & African Rainbow Minerals (ARI SJ) as possible additions to the MSC SA index.
  • Since our last discount update on the 22nd of July, Prosus has underperformed Naspers. The discount has widened by 1.7 percentage points to 39.6%.

CR Sanjiu (000999.CH) To Acquire Tasly Pharma (600535.CH) – SOEs Have High Enthusiasm for TCM Assets

By Xinyao (Criss) Wang

  • China Resources Sanjiu plans to acquire 28% stake in Tasly for RMB6.21 billion at RMB14.85/share. The acquisition of Tasly is in line with the strategic direction of 14th Five-Year Plan.
  • China Resources is positioned as a leading enterprise in modern industrial chain of TCM by the SASAC.Due to policy support, TCM assets are more likely to be favored by SOEs.
  • The deal is positive for Tasly, whose valuation has room to rise further, but the market seems “skeptical” about China Resources Sanjiu’s decision, leading to a lackluster share price reaction. 

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