Smartkarma Daily Briefs, Author at Smartkarma

Feb 06

Daily Brief ESG: What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital? and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital?

What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital?

By Aki Matsumoto

In addition to the large number of micro-caps among companies listed on the Growth Market, another problem is the lack of growth in market capitalization after IPOs.
Many managers consider IPO to be the goal, and this is evidenced by the fact that not many companies raise capital at IPO and after listing.
The government proposed raising the market capitalization criteria for IPOs and revitalizing the secondary market for pre-listed companies. TSE is likely to review its listing criteria as early as 2025.

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Feb 05

Daily Brief Industrials: BayCurrent Consulting , Sai Gon Cargo Service , Applus Services SA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Japan – Increasing Shorts on Some Interesting** Stocks
Sai Gon Cargo Service (SCS VN): 11.5x FY24e PE, ~7% Dividend Yield, >70% Net Margin Business
I Squared & TDR/Applus: Counteroffer at €11.0

Japan – Increasing Shorts on Some Interesting** Stocks

By Brian Freitas

There are some Japanese stocks that have dropped in price even as the broader market has powered higher. That could lead to the stocks being deleted from global portfolios.
The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
BayCurrent Consulting (6532 JP) is a dark horse for inclusion in the Nikkei 225 (NKY INDEX) in March and this deletion could take the stock lower before the Nikkei 225 announcement.

Sai Gon Cargo Service (SCS VN): 11.5x FY24e PE, ~7% Dividend Yield, >70% Net Margin Business

By Sameer Taneja

Sai Gon Cargo Service (SCS VN) is a cargo handling business, majority owned by the Airports Corporation Of Viet Nam (ACV VN) and Gemadept Corp (GMD VN) .
Net cash (16% of market cap), trading at 11.5x FY24e PE, with ~7% dividend yield (assuming 80% payout ratio), >75% EBITDA margins/>70% net margins, and 5 Yr Avg-ROEs >40%.
We see long-term structural growth drivers with the construction of the Long Thanh Airport, and in the short term, we see an impending cargo volume recovery.

I Squared & TDR/Applus: Counteroffer at €11.0

By Jesus Rodriguez Aguilar

Apollo had last week improved its offer price to €10.65/share of Applus Services SA (APPS SM) and acquired 21.85% of the share capital. Amber Equity signaled it continued in the race.
Amber Equity has raised to €11/share, 3.3% above Apollo’s last offer, for an implied equity value of c. €1,420 million, implied EV of €2,412 million, 6.8x EV/NTM Fwd EBITDA.
After the CNMV authorises the bid from Amber Equity, a 30-day acceptance period will open. Two most likely scenarios are either winner’s curse or the funds agree a 50-50 split.

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Feb 05

Daily Brief Energy/Materials: JSR Corp, Ssangyong Cement Industrial, Red 5 Ltd and more

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

In today’s briefing:

JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria
JSR Corporation (4185 JP): An Unwelcome US Lawsuit as Tender Start Looms
Hahn & Co Launches a Tender Offer on Remaining Shares of Ssangyong C&E
RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)

JSR (4185) – Possible Trouble in Arb Land as SUNY/CNSE Files Suit Against JSR Sub Inpria

By Travis Lundy

JSR Corp (4185 JP) announced 2 February on its website that the Research Foundation for the State University of New York (“RF SUNY”) filed suit against JSR subsidiary Inpria 25 January.
JSR claims no wrongdoing. A court order from the US District Court for the Northern District of New York denied RF SUNY’s request for a hearing by 5 February.
This may put a short-term damper on sentiment in the name, and I expect the JICC people have been working on this for a week.

JSR Corporation (4185 JP): An Unwelcome US Lawsuit as Tender Start Looms

By Arun George

The Research Foundation of the State University of New York (SUNY RF) has filed a patent infringement lawsuit against JSR Corp (4185 JP) and its subsidiary, Inpria.
SUNY RF claims the “planned tender offer will irreparably harm SUNY RF absent preliminary relief” and filed a motion for a preliminary injunction to stop JSR licensing patents to JIC.
JSR has yet to file a response, making it hard to judge the lawsuit’s merits. The best case is the PI is not granted, delaying the tender by a month.

Hahn & Co Launches a Tender Offer on Remaining Shares of Ssangyong C&E

By Douglas Kim

On 4 February, the local media reported that Hahn & Co private equity firm is launching a tender offer on the remaining shares of Ssangyong Cement Industrial (003410 KS) (Ssangyong C&E).
Tender offer price is 7,000 won (9.2% higher than the closing price on 2 February) and the tender offer amount is 702 billion won.
We believe Ssangyong C&E’s shares are likely close to the tender offer price today. We believe there is higher probability of Hahn & Co successfully completing this tender offer.

RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)

By Brian Freitas

Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a Merger of Equals that would create a mid-tier gold company.
Red 5 will acquire 100% of the shares in Silver Lake Resources and Silver Lake shareholders will receive 3.434 RED5 shares for each Silver Lake share held.
The swap ratio is near the bottom of the historical price range of the stocks and it is no wonder that Silver Lake Resources (SLR AU) is being sold today.

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

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Feb 05

Daily Brief Industrials: BayCurrent Consulting , Sai Gon Cargo Service , Applus Services SA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Japan – Increasing Shorts on Some Interesting** Stocks
Sai Gon Cargo Service (SCS VN): 11.5x FY24e PE, ~7% Dividend Yield, >70% Net Margin Business
I Squared & TDR/Applus: Counteroffer at €11.0

Japan – Increasing Shorts on Some Interesting** Stocks

By Brian Freitas

There are some Japanese stocks that have dropped in price even as the broader market has powered higher. That could lead to the stocks being deleted from global portfolios.
The deletion from passive portfolios will lead to a liquidity event at the end of February where passive trackers will need to sell multiple days of ADV.
BayCurrent Consulting (6532 JP) is a dark horse for inclusion in the Nikkei 225 (NKY INDEX) in March and this deletion could take the stock lower before the Nikkei 225 announcement.

Sai Gon Cargo Service (SCS VN): 11.5x FY24e PE, ~7% Dividend Yield, >70% Net Margin Business

By Sameer Taneja

Sai Gon Cargo Service (SCS VN) is a cargo handling business, majority owned by the Airports Corporation Of Viet Nam (ACV VN) and Gemadept Corp (GMD VN) .
Net cash (16% of market cap), trading at 11.5x FY24e PE, with ~7% dividend yield (assuming 80% payout ratio), >75% EBITDA margins/>70% net margins, and 5 Yr Avg-ROEs >40%.
We see long-term structural growth drivers with the construction of the Long Thanh Airport, and in the short term, we see an impending cargo volume recovery.

I Squared & TDR/Applus: Counteroffer at €11.0

By Jesus Rodriguez Aguilar

Apollo had last week improved its offer price to €10.65/share of Applus Services SA (APPS SM) and acquired 21.85% of the share capital. Amber Equity signaled it continued in the race.
Amber Equity has raised to €11/share, 3.3% above Apollo’s last offer, for an implied equity value of c. €1,420 million, implied EV of €2,412 million, 6.8x EV/NTM Fwd EBITDA.
After the CNMV authorises the bid from Amber Equity, a 30-day acceptance period will open. Two most likely scenarios are either winner’s curse or the funds agree a 50-50 split.

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

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

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✓ Company Data and News
✓ Events & Webinars

Feb 05

Daily Brief TMT/Internet: Hollysys Automation Technologies, Alchip Technologies, Bharti Hexacom and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Merger Arb Mondays (05 Feb) – Hollysys, JSR, Benesse, Benefit One, Glosel, OreCorp, QV Equities
Taiwan Top 50 ETF Rebalance Preview: Short Covering Drives Alchip (3661 TT) Higher
Bharti Hexacom Pre-IPO Tearsheet

Merger Arb Mondays (05 Feb) – Hollysys, JSR, Benesse, Benefit One, Glosel, OreCorp, QV Equities

By Arun George

We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – Hollysys Automation Technologies (HOLI US), Shinko Electric Industries (6967 JP), JSR Corp (4185 JP), Probiotec Ltd (PBP AU), Genetron Holdings Ltd (GTH US), Adbri (ABC AU).
Lowest spreads Pact Group Holdings (PGH AU), Tietto Minerals Ltd (TIE AU), Orecorp Ltd (ORR AU), Benesse Holdings (9783 JP), Irc Ltd (1029 HK), T&K Toka Co Ltd (4636 JP).

Taiwan Top 50 ETF Rebalance Preview: Short Covering Drives Alchip (3661 TT) Higher

By Brian Freitas

Alchip Technologies (3661 TT) could replace Feng Tay Enterprise (9910 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the March rebalance.
Alchip is trading 330% higher from a year ago and this inclusion will come on the heels of the stock being added to global indices in second half of 2023.
Short interest in Alchip Technologies (3661 TT) has more than halved over the last week and the stock price has moved higher.

Bharti Hexacom Pre-IPO Tearsheet

By Ethan Aw

Bharti Hexacom (6597372Z IN) is looking to raise up to US$1bn in its upcoming India IPO. The bookrunners are SBI Capital, Axis Capital, BOB Capital, ICICI Securities and IIFL Securities.
Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
It offers its services under the brand ‘Airtel’. BH relies on a robust network infrastructure with a mix of owned and leased assets.

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Feb 05

Daily Brief Health Care: WuXi AppTec and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Latest Impact of the US Biosecure Act on WuXi AppTec/WuXi Bio/WuXi XDC – China CXO Really Game Over?

Latest Impact of the US Biosecure Act on WuXi AppTec/WuXi Bio/WuXi XDC – China CXO Really Game Over?

By Xinyao (Criss) Wang

Based on the latest updates, it’s still uncertain to see a positive turnaround.There’ve been no effective ways to evade.Debate about restricting Chinese biopharmaceuticals has never gone away in US politics.
Nobody can say with 100% certainty whether the Bill will be passed/how much impact it will have. Until the dust settles, any rebound in share prices is difficult to sustain.
The market is preparing for the worst-case scenario, but if the final Bill is less stringent than expected, shares of WuXi AppTec and its subsidiaries would rebound.Here’re different bottom-fishing strategies.

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Feb 05

Daily Brief Consumer: Meituan, Trip.com and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Meituan (3690 HK): Turning Cautiously Positive
Monthly Chinese Tourism Tracker | China’s 2023 Recovery in Ten Charts | (January 2024)

Meituan (3690 HK): Turning Cautiously Positive

By Eric Chen

Share price of Meituan has fallen by 25% since we flagged the name as high-conviction sell for 2024 last December, due in large to its weakening fundamental and earnings cut.
We believe its competitive positioning in food delivery remains rock solid and estimates Meituan will likely command over 2/3 market share in in-store business, at the expense of margin.
The company trades at 12x/8.6x 2024/25 consensus earnings. Current valuation already priced in rather bearish outlook amidst macro concerns and intensified competition in our view. We see value emerging.

Monthly Chinese Tourism Tracker | China’s 2023 Recovery in Ten Charts | (January 2024)

By Daniel Hellberg

By one metric, outbound tourism in December improved to 89% of 2019 levels
Meanwhile, domestic activity in December remained close to pre-Covid levels
In this month’s edition we track the tourism recovery in ten illustrative charts

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Feb 05

Daily Brief Financials: Aozora Bank Ltd, Bank Rakyat Indonesia and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Aozora Bank (8304 JP) – Two Bets Too Far
Bank Rakyat Indonesia (BBRI IJ) – Pushing the Margins of Profitability

Aozora Bank (8304 JP) – Two Bets Too Far

By Victor Galliano

3QFY23 results reveal losses related to Aozora’s US CRE exposure and securities portfolio; management forecasts a FY23 loss and a 50% cut in the previously forecast FY2023 dividend
US CRE exposure is 6.6% of total loans and Aozora’s US CRE deterioration propelled the NPL ratio to 2.87% up 162bps QoQ, the worst NPL ratio of the peer group
The securities portfolio hits are in US MBS and US bond ETFs; SMFG and Mizuho have large relative FX bond exposures, but they have less duration risk

Bank Rakyat Indonesia (BBRI IJ) – Pushing the Margins of Profitability

By Angus Mackintosh

Bank Rakyat Indonesia’s results reflected its ability to offset a tighter liquidity environment with a higher margin loan mix as it continues to shift to commercial Kupedes microloans.
The bank has also seen the benefit of increasing digitalisation benefitting costs with more BRILink agents and users of mobile banking through BRIMO, which has also helped to grow CASA.
Guidance for 2024 remains positive on loan growth, NIMs, increasing leverage, and rising loan yields, with stable credit quality. Valuations look attractive relative to a forecast ROE of above 20%.

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

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Feb 05

Daily Brief Australia: Red 5 Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)

RED5 & Silver Lake Resources Merger of Equals: Market Loves It (Not!)

By Brian Freitas

Red 5 Ltd (RED AU) and Silver Lake Resources (SLR AU) have announced a Merger of Equals that would create a mid-tier gold company.
Red 5 will acquire 100% of the shares in Silver Lake Resources and Silver Lake shareholders will receive 3.434 RED5 shares for each Silver Lake share held.
The swap ratio is near the bottom of the historical price range of the stocks and it is no wonder that Silver Lake Resources (SLR AU) is being sold today.

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

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

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✓ Company Data and News
✓ Events & Webinars

Feb 05

Daily Brief South Korea: Ssangyong Cement Industrial and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Hahn & Co Launches a Tender Offer on Remaining Shares of Ssangyong C&E

Hahn & Co Launches a Tender Offer on Remaining Shares of Ssangyong C&E

By Douglas Kim

On 4 February, the local media reported that Hahn & Co private equity firm is launching a tender offer on the remaining shares of Ssangyong Cement Industrial (003410 KS) (Ssangyong C&E).
Tender offer price is 7,000 won (9.2% higher than the closing price on 2 February) and the tender offer amount is 702 billion won.
We believe Ssangyong C&E’s shares are likely close to the tender offer price today. We believe there is higher probability of Hahn & Co successfully completing this tender offer.

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

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

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

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