Smartkarma Daily Briefs

Long Nvidia vs. Short Basket of Taiwan AI Concept Stocks — The trade has held steady since our last piece with Nvidia outperforming the shorts slightly.
CES 2024 will be held January 9th to 12th. It will showcase AI expanding into a wide range of Edge AI applications such as home appliances and PCs.
One can maintain the L/S trade into CES 2024 given that the Taiwan AI Short Basket constituents are unlikely to be beneficiaries of positive news flow from the event.

Taiwan Tech Weekly: Stocks At Highs & Looking for Laggards? CES 2024 to Showcase Edge AI

Nvidia Vs. Taiwan Short Basket: Hedge Working; CES 2024 Likely Positive for Nvidia Vs. Basket
Silicon Motion: Next Wave of the Memory Recovery; High-End NAND Prices More Than Doubled From Lows
AI PC Reality Check: PC Upgrade Cycle Ahead, But Worth a 50% 1M Acer Rally? Long Dell Vs. Short Acer

Taiwan Dual-Listings Monitor: TSMC Premium Remains High; ADR Short Interest Spiked

TSMC: 9.2% Premium — Spread Fell But Remains Historically High; Short Interest Spiked for ADRs
UMC: Trading at -1.2% Discount — Still Uncompelling, Wait for Lower Levels
ASE: Drops to 7% Premium — Could Soon Be at a Level to Go Long

Marvell Technology Inc.: AI and Cloud Growth – Are They the New Tech Leaders? – Major Drivers

Marvell Technology managed to surpass Wall Street’s revenue and earnings expectations, achieving a commendable revenue of $1.42 billion, marking a 6% sequential growth above the midpoint of the provided guidance.
The data center end market witnessed revenue of $556 million in the third quarter, surpassing expectations, mainly driven by robust AI revenue.
Despite the anticipated decline in enterprise on-premise revenue, Marvell’s diverse product portfolio, including PAM4 optical products and Teralynx Ethernet switches, contributed to the broad-based growth.

Silicon Motion: Next Wave of the Memory Recovery; High-End NAND Prices More Than Doubled From Lows

Recent results from Micron and SK Hynix did not only signal a recovery for DRAM but also for NAND flash memory. Micron expects improving NAND pricing through CY2025E.
Latest data shows a surge in NAND pricing — 512GB NAND pricing is now up 116% from its 2023 lows.
Silicon Motion shares are down 5% over the last year. They have been weighed down by their terminated acquisition by MaxLinear, but now could offer a laggard play.

Baidu Inc.: A Game-Changing Strategy That’s Shaping AI’s Future! – Major Drivers

Baidu managed to exceed analyst expectations in terms of revenue as well as earnings in the most recent quarter sustaining solid revenue, profit, and cash flow.
The strategic reinvention of the product portfolio with ERNIE and ERNIE bot played a pivotal role in achieving these results.
Baidu successfully launched EB4 ahead of expectations, attributing it to a unique end-to-end 4-layer AI infrastructure and valuable user feedback.

ARM Holdings: Initiation Of Coverage & Post IPO Analysis – A Tech Giant’s New Era or a Risky Bet? – Key Drivers

ARM Holdings, post its recent IPO, presents an investment case characterized by robust growth in licensing and cautious optimism in royalties.
The company reported strong licensing revenue, surpassing expectations, which is indicative of its aggressive push in emerging markets like AI and compute subsystems.
We believe that ARM Holdings offers a compelling mix of strong licensing revenue growth and a recovering royalty segment, albeit with challenges in operating expenses and margin pressures.

Alteryx Inc.: Leading the AI Revolution – Can They Sustain the Momentum? – Major Drivers

Alteryx, Inc. delivered a solid result and managed an all-around beat in the last quarter, demonstrating commendable performance across various fronts.
These achievements were propelled by improved sales execution and heightened customer commitment to the Alteryx platform.
Alteryx’s Executive License Agreement (ELA) strategy, featuring simplified pricing and bundled features, resonated well with larger organizations.

CrowdStrike Holdings Inc.: Bringing AI-Native Cybersecurity To SMBs! – Major Drivers

CrowdStrike Holdings delivered an all-around beat in the most recent quarterly result.
The company’s commitment to innovation was underlined by strategic acquisitions, such as Bionic, expanding the Falcon Cloud Security suite.
CrowdStrike’s diverse product portfolio, including cloud security, identity threat protection, and LogScale’s next-gen SIEM, contributed to their impressive Q3 performance.

AppLovin Corporation: AI-Driven Tech Powering Advertising – A Deep Dive! – Major Drivers

AppLovin Corporation delivered an all-around beat in the previous quarter, experiencing substantial year-over-year and quarter-over-quarter revenue growth.
As part of the portfolio optimization program, the apps sector marked its first quarter of quarter-over-quarter revenue growth, generating a total revenue of $864 million, surpassing guidance with an adjusted EBITDA of $490 million, up 63% year-over-year.
In the app segment, revenue grew 5% sequentially to $360 million, representing the initial quarter of growth since the portfolio optimization initiative began.

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Jan 01

Daily Brief Energy/Materials: ADX Energy Ltd, Chariot Limited, Coterra Energy , Criterium Energy, Devon Energy, Eastman Chemical Co, ADF Group and more

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

In today’s briefing:

DRX: Q3 Financials Smash Expectations; Increasing Target Price
ADX Energy (ASX: ADX): Narrowing uncertainty and resources range at Anshof
ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme
Chariot Limited (AIM: CHAR): Like-minded farm-in partner to unlock Anchois
Coterra Energy Inc.: Initiation of Coverage – Business Strategy
Criterium Energy Ltd (TSX-V: CEQ): Sale of Bulu unlocks value and transforms the company’s balance sheet
Criterium Energy Ltd (TSX-V: CEQ): Further improvements on Mont d’Or transaction terms
Devon Energy Corporation: Reinvestment Strategy Paying Off – A Deep Dive Into Their Approach! – Major Drivers
Eastman Chemical Company: Tackling Market Instabilities – A Strategy for Success! – Major Drivers
DRX: New Contracts Announced; Increasing Target Price (Again)

DRX: Q3 Financials Smash Expectations; Increasing Target Price

By Atrium Research

What you need to know: • ADF reported stellar Q3 financials that largely beat our estimates. • Revenue came in at $82.1M (+26% YoY) vs. our estimate of $73.0M and EBITDA came in at $17.8M (+146% YoY) vs. our estimate of $7.7M.
This morning, ADF Group (DRX:TSX, ADFJF:OTC) reported Q3/24 financial results that largely beat our estimates across the board.

ADX Energy (ASX: ADX): Narrowing uncertainty and resources range at Anshof

• The Anshof-2 well encountered high quality Eocene sands with at least 12 metres vertical thickness and porosity of ~20%. • The top of the Eocene sand was encountered ~40-50 m higher than expected, suggesting a much larger and flatter structure than expected in the P50 case. • The better-than-expected reservoir quality and thicker sands suggest better well deliverability and higher flow rates, which result in a higher production plateau and lower development cost with a positive impact on NPV.

ADX Energy (ASX: ADX): Adding further exploration prospects with MND to the FY24 programme

• ADX has farmed out a 50% interest in an exploration area with in the ADX AT I licence to MND in return for a A$0.73 mm back costs payment plus A$7.34 mm funding in exploration drilling. • The exploration area farmed-out to MND includes the LICHT and IRR gas prospects. • The LICHT prospect location (16.2 bcf gross best case prospective resources) has already received a drilling permit including the environmental clearance.

Chariot Limited (AIM: CHAR): Like-minded farm-in partner to unlock Anchois

• The transaction consists of two tranches.
Energean will initially acquire 45% and 37.5% interests in the Lixus and Rissana licences respectively for US$10 mm on closing plus US$15 mm on FID.
Energean will also fund US$85 mm of gross costs including drilling the Anchois East well and up to US$7 mm seismic at Rissana.

Coterra Energy Inc.: Initiation of Coverage – Business Strategy

This is our first report on oil and gas behemoth, Coterra Energy.
The average daily production volumes in the second quarter amounted to 665 thousand barrels of oil equivalent.
In contrast, the average daily oil production reached a significant high of 95.8 thousand barrels daily, marking a significant milestone for Coterra.

Criterium Energy Ltd (TSX-V: CEQ): Sale of Bulu unlocks value and transforms the company’s balance sheet

• Criterium has signed a letter of intent to sell its 42.5% interest in Bulu for US$7.75 mm. • The company acquired the interest in Bulu for US$1.6 mm. • Criterium has previously announced a C$18.9 mm capital raise comprising a C$12.2 mm (~US$9 mm) convertible debt and C$6.7 mm (~US$4.5 mm) of new equity.

Criterium Energy Ltd (TSX-V: CEQ): Further improvements on Mont d’Or transaction terms

• The completion payment by Criterium on the closing of the Mont d’Or acquisition has been reduced by 60% to US$4.5 mm. • Only US$4.1 mm will now be repaid to Mont d’Or debt holders on completing the acquisition (US$9.6 mm previously) with US$0.5 mm being written down (US$4.3 mm previously). • On completion of the acquisition, Criterium is expected to hold US$25 mm of debt and US$8 mm in cash (including US$4.5 mm of new equity) resulting in US$17 mm in net debt (excluding US$3.0 mm of Mont d’Or residual debt to be converted into equity in 2025).

Devon Energy Corporation: Reinvestment Strategy Paying Off – A Deep Dive Into Their Approach! – Major Drivers

Devon Energy Corporation delivered mixed results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
Their disciplined capital management during the quarter maintained reinvestment rates above 50% of cash flow, doubling free cash flow compared to the previous quarter.
We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price.

Eastman Chemical Company: Tackling Market Instabilities – A Strategy for Success! – Major Drivers

Eastman Chemical delivered a mixed set of results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
The primary contributor to the decline in earnings this year was attributed to volume and mix, resulting in a variable margin decrease of approximately $450 million.
Eastman’s management is cautiously optimistic about market stability, particularly in non-discretionary sectors like pharma and medical, anticipating some modest growth.

DRX: New Contracts Announced; Increasing Target Price (Again)

By Atrium Research

What you need to know: • ADF announced the signing of a series of new contracts totalling $234M, adding to its backlog of $339M reported for Q3.
This morning, ADF Group (DRX:TSX, ADFJF:OTC) announced the signing of a series of new orders totalling $234M.
Contract Announcement In May 2023, ADF announced the signing of a large-scale contract for the first phase of a major project in the pharmaceutical sector in the Midwest.

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Jan 01

Daily Brief Industrials: Misumi Group, Deere & Co, Emerson Electric Co, Hunt (Jb) Transprt Svcs, Jacobs Solutions , Lyft , Uber Technologies , Cummins Inc, Urban-Gro and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Misumi Group (9962 JP): Heads up for 3Q Results in Late January
Deere & Company: Pricing Strategy & Market Positioning & Other Major Drivers
Emerson Electric Co.: Will The NI Acquisition Be A Game Changer? – Major Drivers
J.B. Hunt Transport Services: Will Their New Intermodal Service Revolutionize the Industry? – Major Drivers
Jacobs Solutions Inc: 4 Critical Insights From Their Latest Earnings! – Major Drivers
Lyft Inc.: Focus on Operational Excellence & Differentiated Products! – Major Drivers
Uber Technologies Inc.: Enhancing User Construct – Driving New Audience and Frequency! – Major Drivers
Cummins Inc.: Pioneering Telematics Software for Commercial Vehicles & Other Major Drivers – Financial Forecasts
UGRO: MJBiz Update: The Metamorphosis Continues; Reiterate Buy Rating & $8 PT

Misumi Group (9962 JP): Heads up for 3Q Results in Late January

By Scott Foster

The gradual upward trend in monthly sales, which has continued through November, has further to go in our estimation.
At 22x EPS guidance for FY Mar-24, the shares are at the low end of their 5-year P/E range.
Guidance remains unchanged. 3Q results are due to be announced at the end of January

Deere & Company: Pricing Strategy & Market Positioning & Other Major Drivers

Deere & Co delivered an all-around beat in the previous quarter, with operating margins nearly reaching 22%, resulting in an impressive operating cash flow of nearly $12 billion.
This success was attributed to robust market demand, effective operational execution, and improved production costs across the various business sectors.
In small ag and turf, net sales in the fourth quarter were down 13%, totaling $3.094 billion, driven by lower shipment volumes.

Emerson Electric Co.: Will The NI Acquisition Be A Game Changer? – Major Drivers

Emerson Electric’s results were disappointing as they could not meet Wall Street’s revenue and earnings expectations.
Operational excellence was evident through the execution of the Emerson management system, driving remarkable results.
The underlying sales for 2023 grew by 10%, gross profit expanded by 330 basis points to 49%, and adjusted segment EBITA expanded by 220 basis points to 25%.

J.B. Hunt Transport Services: Will Their New Intermodal Service Revolutionize the Industry? – Major Drivers

J.B.
Hunt Transport Services delivered a disappointing set of results as it was unable to meet Wall Street’s revenue and earnings expectations.
Demand is slightly increasing in some end markets, focusing on delivering big and bulky items to customers’ homes.

Jacobs Solutions Inc: 4 Critical Insights From Their Latest Earnings! – Major Drivers

Jacobs Solution Inc. delivered a mixed set of results in its most recent quarter with revenues above Wall Street expectations but below-par earnings.
Emphasizing the strategic synergies and shared operational benefits, the combination aims to be tax-efficient for Jacobs’ shareholders, with an estimated $13 billion in annual revenue and significant cost synergies.
Post-transaction, Jacobs anticipates emerging as a well-capitalized critical infrastructure and sustainability leader, building on the records set in fiscal year 2023 for revenue and free cash flow generation.

Lyft Inc.: Focus on Operational Excellence & Differentiated Products! – Major Drivers

Lyft, Inc. delivered mixed results for the previous quarter, with revenues above the analyst consensus.
A pivotal development in the quarter was the significant rise in drivers opting for Lyft, resulting in an impressive 45% year-over-year surge in the hours spent using the platform, particularly in non-incentivized hours.
The emphasis on simplifying the earning process for drivers proved successful, maintaining a stable conversion rate even as rider demand escalated.

Uber Technologies Inc.: Enhancing User Construct – Driving New Audience and Frequency! – Major Drivers

Uber Technologies delivered a mixed result in the third quarter, with revenues below market expectations, but it surpassed the analyst consensus regarding earnings.
The company reported a notable acceleration in year-on-year trip growth, reaching 25% in Q3, surpassing the growth in gross bookings for the third consecutive quarter.
Additionally, adjusted EBITDA exceeded Q3 expectations, marking the first instance of the adjusted EBITDA margin surpassing 3%.

Cummins Inc.: Pioneering Telematics Software for Commercial Vehicles & Other Major Drivers – Financial Forecasts

By Small Cap Consumer Research

Cummins delivered a mixed result in the recent quarter, with revenues above market expectations, but it failed to surpass the analyst consensus in terms of earnings.
Cummins reported strong demand across key markets and regions, with revenues reaching $8.4 billion, a 15% increase from the previous year.
In the quarter, Cummins successfully concluded the acquisition of two Faurecia commercial vehicle manufacturing plants in Columbus, Indiana, and Roermond, Netherlands.

UGRO: MJBiz Update: The Metamorphosis Continues; Reiterate Buy Rating & $8 PT

We are reiterating our Buy rating, projections and $8 price target after meeting with urban-gro management at the MJBizCon show in Las Vegas.
As such, we remain excited over the potential for urban-gro to continue to materially grow and to begin registering positive EBITDA going forward.
As such, we reiterate our Buy rating and $8 price target for UGRO.

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Jan 01

Daily Brief Health Care: Gracell Biotechnologies Inc, Cardinal Health, Cigna Group/, Eli Lilly & Co, Gilead Sciences, Illumina Inc, Insulet Corp, Medtronic Plc, Mettler Toledo International Inc, Novo Nordisk A/S and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC
Cardinal Health: The Powerhouse Behind Today’s Medical and Pharmaceutical Breakthroughs! – Major Drivers
The Cigna Group: Enhancing Their Virtual Care With The Acquisition Of Bright.md Technology Platform! – Major Drivers
Eli Lilly and Company: Expansion of Oncology Capabilities & Other Major Drivers
Gilead Sciences Inc.: 3 Major Drivers That Can Propel This Pharma Giant Forward! – Financial Forecasts
Illumina Inc: The Inside Story of Steady Revenues and Strategic Expansions! – Major Drivers
Insulet Corporation: Revolutionizing Diabetes Care with Omnipod 5! – Major Drivers
Medtronic PLC: Can The New FDA Approval Help Them Revolutionize Hypertension Treatment? – Major Drivers
Mettler-Toledo International Inc.: Major Drivers
Novo Nordisk A/S: Strategic Acquisition Of Embark Laboratories Fueling Their Growth in Obesity and Cardiometabolic Diseases! – Major Drivers

China Healthcare Weekly (Dec.31)-New Medical Device Policy, AstraZeneca to Acquire Gracell, PD-1+ADC

By Xinyao (Criss) Wang

Ministry of Finance and National Health Commission issued new policy strictly prohibiting public hospitals from borrowing to purchase medical equipment, which will change the investment logic of medical device sector.
“PD-1+ADC” is expected to replace “PD-1+chemotherapy” as the first-line standard therapy. This will be a huge market. So, good story of ADC CDMO (such as WuXi XDC) would continue.
The inspiration that AstraZeneca’s acquisition of Gracell brings to investors is IPO isn’t the only way for exit.Being acquired is also good, which will become more important in the future.

Cardinal Health: The Powerhouse Behind Today’s Medical and Pharmaceutical Breakthroughs! – Major Drivers

Cardinal Health delivered a solid result and managed an all-around beat in the last quarter, exceeding expectations and achieving significant milestones.
Consolidated enterprise results showcased a 10% increase in total revenue to $54.8 billion, primarily fueled by the Pharma segment.
Despite flat revenue of $3.8 billion in the Medical segment, the company exceeded expectations in Q1.

The Cigna Group: Enhancing Their Virtual Care With The Acquisition Of Bright.md Technology Platform! – Major Drivers

The Cigna Group surpassed Wall Street’s revenue and earnings expectations, maintaining the momentum for a sustained year in 2023.
The company’s health services and benefits platforms continue to demonstrate strength, aligning with its mission to grow and serve effectively.
They reported a total revenue of $49 billion and adjusted earnings per share of $6.77.

Eli Lilly and Company: Expansion of Oncology Capabilities & Other Major Drivers

Eli Lilly and Company delivered a positive result and managed an all-around beat in the last quarter.
The company reported a notable 37% increase in revenue compared to the same period in 2022.
Research and development expenses saw a 34% increase, primarily due to higher development expenses for late-stage assets and increased investments in early-stage research.

Gilead Sciences Inc.: 3 Major Drivers That Can Propel This Pharma Giant Forward! – Financial Forecasts

Gilead Sciences, Inc. delivered an all-around beat in the previous quarter, showcasing a 5% increase in the base business compared to the same period in 2022.
Biktarvy achieved a remarkable 12% growth from the corresponding quarter in 2022.
The increasing adoption of Trodelvy, a TROP-2-directed ADC, and cutting-edge cell therapies further fueled this upward trajectory.

Illumina Inc: The Inside Story of Steady Revenues and Strategic Expansions! – Major Drivers

Illumina delivered mixed results for the previous quarter, with revenues below the analyst consensus.
Despite lower revenue, non-GAAP net income surpassed expectations at $52 million or $0.33 per diluted share.
While Core Illumina sequencing consumables revenue dropped 4% year-over-year, clinical sequencing consumables experienced a 10% growth, mitigating the decline.

Insulet Corporation: Revolutionizing Diabetes Care with Omnipod 5! – Major Drivers

Insulet Corporation managed to exceed analyst expectations in terms of revenue as well as earnings.
During the quarter, their revenue surpassed expectations, driven by the exceptional success of Omnipod 5, the revolutionary automated insulin delivery system.
Omnipod 5’s impact was evident in accelerated new customer starts, with a remarkable 45% year-over-year revenue growth in the UK.

Medtronic PLC: Can The New FDA Approval Help Them Revolutionize Hypertension Treatment? – Major Drivers

Medtronic plc delivered an all-around beat in the previous quarter, delivering mid-single-digit revenue growth across diverse business segments and global regions.
Cardiovascular, Neuroscience, and Medical Surgical sectors all contributed to this growth, with Diabetes witnessing an acceleration to high single-digit growth.
Synergistic businesses, encompassing Aortic, Coronary, Cardiac Surgery, and Endoscopy, achieved mid-single-digit growth, with standout performances in various segments.

Mettler-Toledo International Inc.: Major Drivers

Mettler-Toledo International delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
In the third quarter, they reported sales of $942.5 million, indicating a 5% decline in local currency, while US dollar-based sales dropped by 4%, with currency effects contributing a 1% increase.
In the Industrial business, sales declined 6% in the quarter due to weak core industrial product sales, particularly in China and the Americas.

Novo Nordisk A/S: Strategic Acquisition Of Embark Laboratories Fueling Their Growth in Obesity and Cardiometabolic Diseases! – Major Drivers

Novo Nordisk A/S delivered a strong result and managed an all-around beat in the last quarter, boasting over 30% organic growth in both the top and bottom lines.
The quarter witnessed an impressive milestone, with the company reaching 40 million people affected by diabetes.
Financially, the company achieved a remarkable 33% sales growth and a 37% increase in operating profit at constant exchange rates.

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Jan 01

Daily Brief Consumer: Weiqiao Textile Co, TSE Tokyo Price Index TOPIX, Vinda International, Burlington Stores, Domino’s Pizza, Estee Lauder Companies Cl A, Dollar Tree Inc, Express, Gap Inc/The, Etsy Inc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Merger Arb Mondays (01 Jan) – Weiqiao Textile, IRC, IJTT, JSR, Shinko Electric, Hollysys, OreCorp
The Objective of an MBO Is Not to Strip Bothersome Activist Investors of Their Equity Interests
(Mostly) Asia M&A, Dec 2023: Vinda, Adbri, Perpetual, CPMC, Sigma Health, Shinko Electric
Burlington Stores Inc.: Reinventing the Off-Price Retail Model! – Major Drivers
Domino’s Pizza Inc.: Can The New AI-Driven Innovation Be A Game Changer? – Major Drivers
The Estee Lauder Companies Inc.: The AI Makeup Revolution! Is This the Future of Beauty? – Major Drivers
Dollar Tree Inc.: Can They Survive Amidst The Economic Turmoil? – Major Drivers
EXPR: Getting Clean as Near Peak Xmas; Reiterate Buy Rating, $20 PT
The Gap Inc.: How They’re Reclaiming Their Throne in the Fashion Industry! – Major Drivers
Etsy Inc: Reinventing E-Commerce with AI-Powered Curation! – Major Drivers

Merger Arb Mondays (01 Jan) – Weiqiao Textile, IRC, IJTT, JSR, Shinko Electric, Hollysys, OreCorp

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 – Irc Ltd (1029 HK), Hollysys Automation Technologies (HOLI US), JSR Corp (4185 JP), Shinko Electric Industries (6967 JP), Adbri (ABC AU), Probiotec Ltd (PBP AU).
Lowest spreads – Tietto Minerals Ltd (TIE AU), A2B Australia (A2B AU), T&K Toka Co Ltd (4636 JP), Tokyo Rakutenchi (8842 JP), Pact Group Holdings (PGH AU).

The Objective of an MBO Is Not to Strip Bothersome Activist Investors of Their Equity Interests

By Aki Matsumoto

Rather than “management with awareness of stock price,” the question is whether management is carrying out its duties toward “the goal of increasing shareholder interests,” to put it more accurately.
In determining TOB price, the question is whether independent committee was established, whether that committee actually functioned, and whether the directors performed their duties in the best interests of shareholders.
The real objective of an MBO is to restart the company for a sustainable expansion of corporate value, not to rip off the equity stake of a bothersome activist investor.

(Mostly) Asia M&A, Dec 2023: Vinda, Adbri, Perpetual, CPMC, Sigma Health, Shinko Electric

For the month of December 2023, 16 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$10bn.
The average premium for the new deals announced (or first discussed) in December was 44.7%. The average YTD is 39% (117 deals).
This compares to the average premium for all deals in 2022 (106 deals), 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 41%, 33%, 31%, and 31% respectively.

Burlington Stores Inc.: Reinventing the Off-Price Retail Model! – Major Drivers

Burlington Stores and its management reported a 6% increase in comparable store sales, aligning with the midpoint of their projected range of 5% to 7%.
Despite a slight outperformance through September, unseasonably warm weather in October impacted the growth trajectory, particularly affecting outerwear sales, an area of strength for Burlington.
Despite anticipating some variability, the company aims for mid-single-digit annual comparable store sales growth over the next five years, building on strategies implemented since 2019 to enhance its off-price model.

Domino’s Pizza Inc.: Can The New AI-Driven Innovation Be A Game Changer? – Major Drivers

The company had a 5.1% global retail sales increase, excluding foreign currency impact, propelled by positive international sales comps and net store expansion.
The US experienced a 0.9% growth in retail sales, while international retail sales, excluding foreign currency impact, saw an impressive 9.4% surge.
Positive retail sales growth, excluding foreign currency impact, contributed to improved operating income across both US and international domains.

The Estee Lauder Companies Inc.: The AI Makeup Revolution! Is This the Future of Beauty? – Major Drivers

Estee Lauder Companies Inc. delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
Despite an 11% decline in organic sales, adjusted diluted EPS exceeded expectations at $0.11, attributed to a better-than-expected adjusted operating margin.
Estee Lauder remains optimistic about sequential improvements, anticipating double-digit organic sales growth.

Dollar Tree Inc.: Can They Survive Amidst The Economic Turmoil? – Major Drivers

By Small Cap Consumer Research

Dollar Tree, Inc. delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as earnings expectations of Wall Street.
In a demanding retail landscape, Dollar Tree has demonstrated resilience amid challenges faced by lower-income consumers, including inflation and reduced government benefits.
The company’s strategic initiatives include a multi-price journey at Dollar Tree, with a growing assortment, and planogram resets at Family Dollar, enhancing product offerings.

EXPR: Getting Clean as Near Peak Xmas; Reiterate Buy Rating, $20 PT

We are reiterating our Buy rating, price target and projections for Express after visiting stores in Connecticut and Long Island.
As such, we believe Express is on track to achieve our 4Q projections.
We reiterate our Buy rating and price target.

The Gap Inc.: How They’re Reclaiming Their Throne in the Fashion Industry! – Major Drivers

The Gap, Inc. has been seeing an amazing upward momentum after it managed to surpass the revenue and earnings expectations of Wall Street.
Despite a 7% dip in revenue and a 2% decrease in comp sales, the third quarter showcased improved margins, expenses, and cash flow.
Old Navy saw a positive 1% comp, driven by women’s and back-to-school strength, while Gap brand found success in women’s and baby segments.

Etsy Inc: Reinventing E-Commerce with AI-Powered Curation! – Major Drivers

Etsy Inc managed to surpass Wall Street’s revenue and earnings expectations, marked by moderate top-line growth and sustained robust profitability.
The management’s dedication to enhancing buyer confidence was evident in the strides made to improve reliability and convenience metrics, such as estimated delivery dates, package tracking, on-time delivery, and transparent return policies.
These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

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Jan 01

Daily Brief Financials: Lifenet Insurance Company, American International Group, Metlife Inc, S&P Global and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Lifenet: Oasis Management Is Now Another Major Shareholder Besides Effissimo
American Airlines Group: Additions of New Routes & Other Major Drivers
American International Group (AIG): Acquisition of UK Protection Business & Other Major Drivers
MetLife Inc.: AI Partnerships As A Major Growth Driver! – Financial Forecasts
S&P Global: New Products and Strategies Fueling Market Domination! – Major Drivers

Lifenet: Oasis Management Is Now Another Major Shareholder Besides Effissimo

By Alec Tseung

Oasis Management has become a major shareholder in Lifenet in November. Together with another activist investor, Effissimo Capital (the largest shareholder), they now control >30% of the company.
Company announced some new partnerships/initiatives to drive growth but they don’t seem to be materially different from what it has been doing to turn around its declining VoNB.
Unless we can see a sustained trend of improving VoNB, it’s difficult to justify the premium valuation vs. the other more established peer.

American Airlines Group: Additions of New Routes & Other Major Drivers

American Airlines Group delivered mixed results for the previous quarter, with revenues below the analyst consensus.
The financial results for the third quarter showcased high revenues of approximately $13.5 billion, driven by a resilient demand environment and significant travel rewards program revenue.
American Airlines experienced steady domestic demand, with international demand fueling revenue growth, particularly in the Atlantic, Caribbean, and Central America regions.

American International Group (AIG): Acquisition of UK Protection Business & Other Major Drivers

AIG delivered mixed results for the previous quarter, with revenues well below analyst expectations, but managed an earnings beat.
In the third quarter, AIG continued to achieve remarkable results, demonstrating significant progress in strategic, operational, and financial objectives across the organization.
They had adjusted after-tax income of $1.2 billion, a 92% YoY increase, and consolidated net investment income reaching $3.3 billion, a 29% YoY increase.

MetLife Inc.: AI Partnerships As A Major Growth Driver! – Financial Forecasts

MetLife managed to exceed Wall Street’s revenue and earnings expectations, underscoring the company’s sustained business momentum.
Adjusted earnings per share, excluding these items, stood at $1.95, reflecting a significant 43% increase from the previous year.
In the US Group Benefits sector, MetLife achieved an all-time high in adjusted earnings, totaling $483 million, a 16% year-over-year increase.

S&P Global: New Products and Strategies Fueling Market Domination! – Major Drivers

S&P Global delivered strong financial performance in the third quarter, with an 11% increase in revenue and a 10% rise in adjusted EPS.
S&P Global’s strategic growth areas are accelerating, particularly in sustainability and energy transition, and private markets.
S&P Global’s Ratings division saw a robust quarter with 21% growth year-over-year, driven by a favorable environment for issuers.

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Dec 31

Most Read: Posco DX, Tongcheng Travel Holdings , Pasona Group, Jusung Engineering, China Mobile, Hollysys Automation Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer
HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)
Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO
KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX
Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
Buy Pasona As Dai-Ichi Life Amends Benefit One’s Tender Offer & Buyback Price
Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea
Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid
HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

KOSDAQ150 Index Rebalance Preview: Posco DX Listing Transfer

The KRX has preliminarily approved Posco DX (022100 KS)‘s listing transfer from the KOSDAQ Market to the KOSPI Market.
Posco DX (022100 KS) has announced that its stock will start trading on the KOSPI Market from the open on 2 January.
We expect Temc (425040 KS) to replace Posco DX (022100 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 28 December.

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace GDS (9698 HK)

Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK).

Index Rebalance & ETF Flow Recap: HSTECH, SIG/CWG, KQ150, REPT BATTERO

It was a busy week with rebalance implementations at the close of trading on Thursday in Korea and then across the region on Friday.
The SET 50 Index changes should be announced this week and the Yuanta TW Div+ ETF will continue to implement the changes till Thursday.
There were inflows to China ETFs during the week while there were big outflows from Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) ETFs.

KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX

Posco DX (022100 KS) will move from the KOSDAQ Market to the KOSPI Market on 2 January. That means KOSDAQ150 Index (KOSDQ150 INDEX) deletion at the close on 28 December.
In line with our forecast, Temc (425040 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) as a replacement.
Short interest increased in Posco DX (022100 KS) following its inclusion in a global index and there should continue to be unwinding over the next week.

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

The adhoc KOSDAQ 150 Index rebalance and the regular Nifty200 Momentum30 Index rebalance will be implemented on Thursday and the SET 50 Index rebalance will be implemented on Friday.
The review cutoff period for a whole bunch of indices ends on 29 December and the announcement of the results and implementation will take place early next year.
There were big inflows to China ETFs and to Emerging Market ETFs including iShares Core Emerging Mar (IEMG US), Vanguard Emerging Markets (VWO US) and iShares Emerging Markets (EMXC US).

Buy Pasona As Dai-Ichi Life Amends Benefit One’s Tender Offer & Buyback Price

Earlier this month, Dai Ichi Life (8750 JP) countered M3 with an unsolicited ¥1,800/share Offer of Equity Value TOB; followed by a Benefit One buyback to mop up Pasona‘s stake.
Dai-Ichi has now amended the TOB Price for minorities in Benefit One to ¥2,123/share, and the tax-equivalent price of ¥1,800/share for Pasona would be ¥1,491 on the Buyback Tender, post-squeezeout.
That price appears a bit higher for Pasona than expected, and therefore a bit lower for Benefit One minorities. Terms can still be bumped.

Investigating the Use of SSF Listing Events as Fresh Flow Trading Opportunities in Korea

By Sanghyun Park

The spot prices of the newly listed SSFs generally exhibited a notable upward trend. This trend was consistently more pronounced in KOSDAQ-listed stocks compared to KOSPI-listed ones.
Various factors, including actions by ETF operators, may contribute. Their SSF purchases could deepen contango, leading to temporary spot price increases through arb spread seekers anticipating this development.
We should focus on a potentially consistent price pattern persisting before a sufficient learning effect accumulates. The tight schedule after July increases the likelihood of similar opportunities next March.

Hollysys (HOLI US): Dazheng Consortium “Trumps” Ascendent’s Bid

On the 13 December, Bloomberg reported that the Recco-led group consortium was weighing a revised Offer to be “significantly higher than the $26.50-a-share cash offer from Ascendent Capital”
On the 24 December, a buyer consortium led by Dazheng Group announced an all-cash proposal of US$29.00/share, a 9.4% premium to Ascendent’s Offer. “Credible” financing is in place.
“The Consortium stands ready to engage with the Board“. The Board should engage. The one curious aspect of this latest Offer is the apparent absence of Recco’s involvement.

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: Seedheiwa (1739 JP)‘s (now Meldia DC) Tender Offer; and Boart Longyear (BLY AU)‘s ignominious exit.
Key updates took place on: Orecorp (ORR AU), Symbio Holdings (SYM AU), IJTT (7315 JP), Shidax Corp (4837 JP), Ohizumi Mfg (6618 JP), and Hollysys Automation Technologies (HOLI US).

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Dec 31

Daily Brief Australia: AUD and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Part Three: Australian Dollar and AGB Yields

Part Three: Australian Dollar and AGB Yields

By Untying The Gordian Knot

The Aussie Dollar is acting as a delta one to the Chinese Economic data, as the People’s Bank of China (PBOC) remains committed to maintaining the stability of the CNY.
The AUDJPY has formed an intermediate double-top pattern.
While it is likely to rebound, it could also be influenced by the difference in export growth between ROW with China and Japan.

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Dec 31

Daily Brief United States: Hollysys Automation Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Meldia DC, Boart Longyear, Orecorp, Symbio, Shidax, Hollysys

I tally 50 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Two new deals discussed this week: Seedheiwa (1739 JP)‘s (now Meldia DC) Tender Offer; and Boart Longyear (BLY AU)‘s ignominious exit.
Key updates took place on: Orecorp (ORR AU), Symbio Holdings (SYM AU), IJTT (7315 JP), Shidax Corp (4837 JP), Ohizumi Mfg (6618 JP), and Hollysys Automation Technologies (HOLI US).

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✓ Company Data and News
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Dec 31

Daily Brief China: China Mobile, Swire Pacific (A), LONGi Green Energy Technology, Ganfeng Lithium and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly
Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT
Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week
A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable

HK Connect SOUTHBOUND Flows (To 29Dec23); CNOOC & Telcos to the BUY Side, Tracker Fund Sold Bigly

SOUTHBOUND flows showing momentum tendencies this past week on a single-stock basis. Hs up vs As quite strongly. Liquid Hs even better.
SOUTHBOUND saw HK$1.2bn of net IN-flows in the 3-day week to 29 Dec. Total flows were HK$88bn.
Bullish end to year for SOUTHBOUND owners but they did not mark the close. They were, however, big buyers of high-div SOEs.

Last Week in Event SPACE: Fujitsu General, Swire Pacific, Li Ning, IJJT

The BIG Risk is that Fujitsu Ltd (6702 JP) sells its stake in Fujitsu General (6755 JP) to someone in a below-market tender offer.
Swire Pacific (A) (19 HK) may still see more outperformance from its latest buyback. But it’s up ~29% since the company announced it was buying both the As and Bs.
Li Ning (2331 HK)‘s shares continue to edge up after its founder recently increased its stake.

Mainland Connect NORTHBOUND Flows (To 29 Dec 23): Renewables Are a BIG NET BUY This Week

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net BUY RMB 18.7bn of A-shares on stronger average activity. BIG net buying flows on Weds and Thursday.
Looking at the change in the weekly position charts over the last year is striking (easiest in the Sectors table to start). Still.

A/H Premium Tracker (To 29 Dec 23): STAY Long Hs Vs As, Wide Premia in Renewables Look Vulnerable