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Smartkarma Daily Briefs

Dec 28
0

Daily Brief South Korea: Kum Yang, SK Inc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs
  • Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco

Kum Yang: Announces Its Shares Will Be Listed on the US Stock Market Through ADRs

By Douglas Kim

  • On 27 December, Kum Yang announced that its shares will be listed on the US stock market in the form of DRs, resulting in its shares rising by 11.7%.
  • The listing of Kum Yang ADRs is likely to have a short-term positive impact on its share price as this is likely to reduce free float of local common shares.
  • Nonetheless, over the next 6-12 months, we expect Kum Yang’s share price to trade much lower (30% or more) as its shares are highly overvalued. 

Updated NAV on SK Inc Post 660 Billion Pre-IPO Investment in SK Pharmteco

By Douglas Kim

  • It was reported today that SK Pharmteco completed a 660 billion won in pre-IPO funding valuing the company at 4 trillion won.
  • Prior to this investment, SK Inc owned a 100% stake in SK Pharmteco. After this investment, it is estimated that SK Inc will own about 83.5% stake in SK Pharmteco. 
  • Our base case valuation of SK Inc is NAV of 19.0 trillion won (NAV per share of 258,967 won), representing a 47% upside from current levels.

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Dec 28
0

Daily Brief Singapore: Grab Holdings and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Grab Holdings (GRAB US) – Risks and Rewards in 2024

Grab Holdings (GRAB US) – Risks and Rewards in 2024

By Angus Mackintosh

  • Grab Holdings looks set to move toward cashflow breakeven in 2H2024 having hit adjusted EBITDA breakeven in 3Q2023 as it successfully struck a delicate balance between growth and profitability.
  • The sale of 75% of Tokopedia by GoTo may mean more intense competition in Indonesia as it focuses on online delivery services but Grab is well-positioned to deal with this.
  • 2024 will see the potential completion of the Transcab deal plus a potential acquisition in food delivery increasing scale and competitiveness. Valuations are attractive relative to growth and financial position.

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Dec 28
0

Daily Brief Indonesia: XL Axiata and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • XL Axiata (EXCL IJ) – Riding the Wave of Price Reparation and Convergence

XL Axiata (EXCL IJ) – Riding the Wave of Price Reparation and Convergence

By Angus Mackintosh

  • XL Axiata (EXCL IJ) continues to stand as the most direct way to play the data demand in Indonesia as well as being the most convergent of the listed telcos.
  • Although it saw some seasonal slowdown in 3Q, the solid growth trajectory remains intact for this year with the completion of the Link Net restructuring driving convergence growth.
  • XL Axiata (EXCL IJ) raised data prices again in November and will continue to ride the wave of price reparation over the coming quarters in a more rational pricing environment. 

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Dec 28
0

Daily Brief India: Datamatics Global Services, Nuvama Wealth Management and more

By | Daily Briefs, India

In today’s briefing:

  • Datamatics Global Services Ltd: Forensic Analysis
  • Nuvama: Stellar Start as an Independent Listed Entity

Datamatics Global Services Ltd: Forensic Analysis

By Nitin Mangal

  • Datamatics Global Services (DATA IN) or DGSL has seen a good operational performance especially since F23, on the back of a difficult IT macro environment. 
  • Yet there are some discomforts on the forensic side, especially related to cash component. Low cash yield due to significant current account balances in subsidiaries raises alarm bells. 
  • We find opaqueness regarding some important disclosures including Ind AS 115- Revenues and Ind AS 116- Leases. Decision to increase remuneration cap size also leaves us perplexed.

Nuvama: Stellar Start as an Independent Listed Entity

By Ankit Agrawal, CFA

  • Nuvama reported its first quarterly result since its listing, as a demerged entity. It reported strong growth across all its business segments.
  • Wealth management revenues grew 30% YoY, adjusted for one-off accounting impact. Cyclical recovery in the capital markets segment further helped.
  • Nuvama has potential to scale up rapidly and grow its profitability exponentially led by growth and operating leverage. At the current valuation, an investment in Nuvama has potential to triple.

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Dec 28
0

Daily Brief United States: Hollysys Automation Technologies and more

By | Daily Briefs, United States

In today’s briefing:

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

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

By David Blennerhassett

  • 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. 

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Dec 28
0

Daily Brief China: Shenzhou Intl Group Holdings, Sinopharm Group Co Ltd H and more

By | China, Daily Briefs

In today’s briefing:

  • Shenzhou Intl (2313 HK):  Nike Guidance Cut Presents An Opportunity
  • Sinopharm Group (1099.HK) – Performance Pressure May Continue Until 2024H1

Shenzhou Intl (2313 HK):  Nike Guidance Cut Presents An Opportunity

By Steve Zhou, CFA

  • Nike (NKE US) reported 2QFY24 results last week with a guidance cut, as the company cut FY24 full-year sales guidance to around +1%, compared to +mid-single-digit in the previous guidance. 
  • Shenzhou Intl Group Holdings (2313 HK) saw its stock drop by 8% the following day, given that Nike is Shenzhou’s most important customer, making up 30% of Shenzhou’s sales. 
  • Nike’s inventory is down another 14% yoy, and down high-single-digit compared to the previous quarter 1QFY24. 

Sinopharm Group (1099.HK) – Performance Pressure May Continue Until 2024H1

By Xinyao (Criss) Wang

  • Sinopharm’s 23Q1-Q3 results were below expectations. The main reason for weak performance was due to the anti-corruption campaign, which led to profound and rapid changes in fundamentals and policy end.
  • In Q4, the impact of anti-corruption would weaken and traditional distribution business would recover.So, 23Q4 performance should be better than Q3, but 23H2 performance would still be worse than 23H1.
  • We lowered our forecast for 2023 – Revenue and net profit could achieve single-digit growth. Due to the high base in 23H1, growth in 24H1 could still be under pressure. 

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Dec 28
0

Daily Brief Japan: TSE Tokyo Price Index TOPIX, JPY and more

By | Daily Briefs, Japan

In today’s briefing:

  • Companies Keen to Reduce Administrative Costs, but Reluctant to Provide Convenience to Shareholders
  • Part Two: JGB Yields Spike Cause Yen Mayhem

Companies Keen to Reduce Administrative Costs, but Reluctant to Provide Convenience to Shareholders

By Aki Matsumoto

  • Not much progress has been made in the early disclosure of convocation notices. The key to even earlier disclosure of convocation notices is the moving up of earnings announcement dates.
  • Overseas investors require that all materials in the notice of convocation be provided translated in English, and only 27.3% of prime market listed companies have responded.
  • Few companies file their annual securities reports prior to AGMs. This can be taken as companies’ intention to provide as little detailed information as possible to shareholders prior to AGMs.

Part Two: JGB Yields Spike Cause Yen Mayhem

By Untying The Gordian Knot

  • On December 6, 2023, Deputy Gov. Ryozo Himino and other policy board members signalled increasing optimism on price and wage increases.
  • Himino said at a press conference following a meeting on Wednesday that exiting the negative rate policy would have relatively little impact on Japan’s economy.
  • “We will carefully assess the situation and consider the timing and procedure of how to exit” negative rates. 

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Dec 27
0

Daily Brief Utilities: Engie SA and more

By | Daily Briefs, Utilities Sector

In today’s briefing:

  • Quiddity Leaderboard ES50 Sep 24: Engie Close to US$1.2bn Index Flow

Quiddity Leaderboard ES50 Sep 24: Engie Close to US$1.2bn Index Flow

By Janaghan Jeyakumar, CFA

  • The ES50 Index is one of the most highly-tracked indices in Europe and the annual index review takes place in September every year.
  • This annual index review usually results in some of the most significant index flow events in Europe every year typically amounting to billions of dollars.
  • In this insight, we take an early look the names leading the race to become ADDs/DELs for the upcoming index review in September 2024.

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Dec 27
0

Daily Brief Industrials: Air China Ltd (H), Qantas Airways and more

By | Daily Briefs, Industrials

In today’s briefing:

  • 2024 High Conviction: Air China (753 HK) – Update on Proposed Share Placement
  • Qantas Airways (QAN AU | BUY | TP:AU$6.58): Smooth Operator

2024 High Conviction: Air China (753 HK) – Update on Proposed Share Placement

By Osbert Tang, CFA

  • Air China (H) (753 HK) is proposing a new share placement to raise Rmb6bn and HK$2bn. EPS dilution is manageable at 6% so we view the proposal positively.  
  • The new equity will enhance book value by 11.5% and lower its gearing by 103pp to 399.8%. The full subscription by the parent is also a vote of confidence. 
  • Recent share price weakness is due to the overall weakness in the Chinese equity market, but both macro and operating environments are improving. Selldown is unjustified.

Qantas Airways (QAN AU | BUY | TP:AU$6.58): Smooth Operator

By Mohshin Aziz

  • Qantas Airways (QAN AU) (QAN) is enjoying the best time of its life on industry consolidation benefits, demand exceeding supply to many sectors, and flourishing air cargo  
  • Domestic Australia is an ironclad goldmine, with a benign competitive environment as the archrival is busy restructuring. International sector capacity deployment is picking up, but still deep in underserved territory     
  • Target price AUD6.58 (+23% UPSIDE), based on 7x CY2024 PE – long-term historical mean. AUD500 million share buyback should provide downside support 

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Dec 27
0

Daily Brief Energy/Materials: Orecorp Ltd and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • OreCorp: Silvercorp Switches To Off-Market Bid

OreCorp: Silvercorp Switches To Off-Market Bid

By David Blennerhassett

  • On the 24 November, Silvercorp Metals (SVM CN) bumped its Scheme Offer for Orecorp Ltd (ORR AU) to A$0.19 in cash and 0.0967 new Silvercorp shares.
  • At a 40.1% premium to undisturbed and key shareholder Tim Goyder (5.14%) supportive, this looked done. Then Perseus (PRU AU) built a 19.9% stake and said it would vote no.
  • After postponing the Scheme meeting, Silvercorp and Orecorp have now agreed to an off-market takeover, on the same terms. The tendering threshold is 50.1%. 

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