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Smartkarma Daily Briefs

Dec 27
0

Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC), Taiwan Semiconductor (TSMC) – ADR and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • TSMC (2330.TT; TSM.US): The 1Q24F Revenue Outlook and the Progress for Intel, MediaTek and Samsung.
  • Taiwan Tech Weekly: PC Shares Clearly On Santa’s Nice List; Soaring After AI PC Releases; Dell Trade

TSMC (2330.TT; TSM.US): The 1Q24F Revenue Outlook and the Progress for Intel, MediaTek and Samsung.

By Patrick Liao

Taiwan Tech Weekly: PC Shares Clearly On Santa’s Nice List; Soaring After AI PC Releases; Dell Trade

By Vincent Fernando, CFA

  • PC Shares Soaring — After 1) Intel’s AI Everywhere AI chip launch, 2) Launch of First AI PCs, 3) Micron’s positive outlook for PCs in its latest results
  • Micron Analysis, Industry Takeaways: Memory Market TAM New Highs into 2025; SK Hynix Trade
  • Taiwan Dual-Listings Monitor: TSMC Premium at a Decent Short Level; ASE Short Interest Declining

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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 Financials: Hang Seng Index and more

By | Daily Briefs, Financials

In today’s briefing:

  • EQD | The LONG Case for the Hang Seng Index

EQD | The LONG Case for the Hang Seng Index

By Nico Rosti

  • The HSI INDEX closed last week down (CC=-1) at 16340.41, it is now down 5 months in a row (CC=-5), very OVERSOLD.
  • If this week the index keeps going down, it may find support soon and bounce next week. The alternative scenario is a longer correction, 2 weeks.
  • Support for a LONG trade, possibly pushed by a MONTHLY reversal,  should be found between 16200 and 15950: this is a highly speculative setup given the stubborn downtrend.

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Dec 27
0

Daily Brief Health Care: Concord Healthcare Group, Thonburi Healthcare Group and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Pre-IPO Concord Healthcare Group (PHIP Updates) – Some Points Worth the Attention
  • Thonburi Healthcare Group (THG TB): High Debt Has Clouded Near-Term Growth Prospect

Pre-IPO Concord Healthcare Group (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.
  • We’ve doubts about Concord’s endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors. 
  • Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.

Thonburi Healthcare Group (THG TB): High Debt Has Clouded Near-Term Growth Prospect

By Tina Banerjee

  • Thonburi Healthcare Group (THG TB) has underperformed most of its peers over the last six months. Thus far this year, the company’s financial performance also remained unimpressive.
  • Despite a healthy 29% YoY increase in normalized medical services revenue, normalized net profit decreased 8% YoY in 3Q23 as the company experienced significantly higher financial costs.
  • Although the company is repaying debts, debt level is still elevated and is expected to remain so in the near-term due to upcoming capex plans.

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Dec 27
0

Daily Brief Consumer: Fujitsu General, IJTT Co., Ltd., Namyang Dairy Products Co and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue
  • IJTT (7315 JP): Risk/Reward as SPARX Bumps to JPY850
  • Namyang Dairy Products: Long Legal Dispute to Be Finally Decided by Supreme Court in January 2024

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue

By Travis Lundy

  • In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
  • In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
  • The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

IJTT (7315 JP): Risk/Reward as SPARX Bumps to JPY850

By Arun George

  • IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s revised tender offer of JPY850, 4.7% premium to its previous JPY812 offer. The revised offer has been declared final.
  • The Isuzu Motors (7202 JP) share repurchase price has risen 4.0% from JPY677 to JPY704. The tender closes on 15 January 2024. All other terms are unchanged.
  • The shares are trading above the revised terms. A final offer and no competing bidder points to an unfavourable risk/reward profile – a 21% downside on a deal break. 

Namyang Dairy Products: Long Legal Dispute to Be Finally Decided by Supreme Court in January 2024

By Douglas Kim

  • The Korean Supreme Court’s ruling on the stock transfer lawsuit between Hahn & Company private equity fund and Namyang Dairy’s Chairman Hong Won-Sik is confirmed for 4 January 2024.
  • The expectation of Hahn & Co winning this legal dispute has positively impacted the share price of Namyang Dairy Products.
  • The higher probability scenario is for the Korean Supreme Court to rule in favor of Hahn & Co, agreeing with the decisions of the two lower courts in Korea.

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Dec 27
0

Most Read: Ngern Tid Lor , Daiwa House Reit Investment, Fujitsu General, Posco DX, Gumi Inc, Guangzhou Automobile Group, Seedheiwa, Hollysys Automation Technologies, IJTT Co., Ltd. and more

By | Daily Briefs, Most Read

In today’s briefing:

  • SET50 Index Rebalance: KCE Replaces TIDLOR
  • Japan – Increasing Shorts on Some Interesting Stocks
  • KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX
  • Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue
  • Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
  • SBI To Buy Gumi (3903) Shares To Up Stake to Near 30% (And Try To Avoid Impairment)
  • A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As
  • Meldia DC (1739 JP) – Open House Group Cleans Up Sanei Architecture Sub in TOB.
  • Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer
  • IJTT (7315 JP): Risk/Reward as SPARX Bumps to JPY850

SET50 Index Rebalance: KCE Replaces TIDLOR

By Brian Freitas

Japan – Increasing Shorts on Some Interesting Stocks

By Brian Freitas

  • There are a bunch of stocks that have underperformed the Nikkei 225 (NKY INDEX) and their peers and could be deleted from global passive portfolios early next year.
  • 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.
  • Shorts have started to increase on some of the stocks and there will be further positioning as we near the liquidity event.

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

By Brian Freitas

Fujitsu General (6755) – Fujitsu Wants Out, May Force the Issue

By Travis Lundy

  • In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
  • In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
  • The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

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

By Brian Freitas

SBI To Buy Gumi (3903) Shares To Up Stake to Near 30% (And Try To Avoid Impairment)

By Travis Lundy

  • Today after the close, SBI Holdings (8473 JP) made an announcement it would buy (up to) 3.0mm shares of Gumi Inc (3903 JP) shares between tomorrow and end-March 2024.
  • SBI already owns 8.8mm shares, and this would bring them close to 30.0%. 
  • SBI did not specifically say they would buy on market, but the next 400,000 shares would require a large shareholder filing amendment. 

A/H Premium Tracker (To 22 Dec 23): Wide Premia Narrow; Narrow Premia Widen. Stay Long Hs Vs As

By Travis Lundy

  • The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished.
  • STILL time to go long Hs vs As for the new year at 52wk wide discounts.

Meldia DC (1739 JP) – Open House Group Cleans Up Sanei Architecture Sub in TOB.

By Travis Lundy

  • Open House (3288 JP) took over Sanei Architecture Planning (3228 JP) this past autumn when banks forced the issue over the former CEO/owner’s mafia ties discovered in an investigation.
  • Seedheiwa (1739 JP) now better known as Meldia DC, is ~60% held by Sanei Architecture Planning, and 3% by Mr Koike. It has debt. So it needs cleaning up too.
  • This is too light for minorities, and even lighter for whole co, but it’s a done deal. 

Hollysys (HOLI US): Dazheng Ups the Ante with a US$29.00 Competing Offer

By Arun George

  • Dazheng (without Recco) has returned with a revised US$29.00 offer for Hollysys Automation Technologies (HOLI US), 9.4% higher than Ascendent Capital’s US$26.50 binding offer.
  • While Dazheng’s proposal represents an all-time high, it would likely not be a superior proposal based on the Ascendent merger agreement due to the clauses on financing and due diligence.
  • Nevertheless, to avoid the high risk that shareholders vote down the Ascendent offer and/or there are substantial dissenting shareholders, the Board will likely ask Ascendent to match Dazheng’s offer.  

IJTT (7315 JP): Risk/Reward as SPARX Bumps to JPY850

By Arun George

  • IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s revised tender offer of JPY850, 4.7% premium to its previous JPY812 offer. The revised offer has been declared final.
  • The Isuzu Motors (7202 JP) share repurchase price has risen 4.0% from JPY677 to JPY704. The tender closes on 15 January 2024. All other terms are unchanged.
  • The shares are trading above the revised terms. A final offer and no competing bidder points to an unfavourable risk/reward profile – a 21% downside on a deal break. 

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Dec 27
0

Daily Brief Thailand: Thonburi Healthcare Group and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Thonburi Healthcare Group (THG TB): High Debt Has Clouded Near-Term Growth Prospect

Thonburi Healthcare Group (THG TB): High Debt Has Clouded Near-Term Growth Prospect

By Tina Banerjee

  • Thonburi Healthcare Group (THG TB) has underperformed most of its peers over the last six months. Thus far this year, the company’s financial performance also remained unimpressive.
  • Despite a healthy 29% YoY increase in normalized medical services revenue, normalized net profit decreased 8% YoY in 3Q23 as the company experienced significantly higher financial costs.
  • Although the company is repaying debts, debt level is still elevated and is expected to remain so in the near-term due to upcoming capex plans.

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  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
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Dec 27
0

Daily Brief Australia: Qantas Airways, Orecorp Ltd and more

By | Australia, Daily Briefs

In today’s briefing:

  • Qantas Airways (QAN AU | BUY | TP:AU$6.58): Smooth Operator
  • OreCorp: Silvercorp Switches To Off-Market Bid

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 

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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Dec 27
0

Daily Brief South Korea: Namyang Dairy Products Co and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Namyang Dairy Products: Long Legal Dispute to Be Finally Decided by Supreme Court in January 2024

Namyang Dairy Products: Long Legal Dispute to Be Finally Decided by Supreme Court in January 2024

By Douglas Kim

  • The Korean Supreme Court’s ruling on the stock transfer lawsuit between Hahn & Company private equity fund and Namyang Dairy’s Chairman Hong Won-Sik is confirmed for 4 January 2024.
  • The expectation of Hahn & Co winning this legal dispute has positively impacted the share price of Namyang Dairy Products.
  • The higher probability scenario is for the Korean Supreme Court to rule in favor of Hahn & Co, agreeing with the decisions of the two lower courts in Korea.

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Dec 27
0

Daily Brief China: Air China Ltd (H), Hang Seng Index, Concord Healthcare Group and more

By | China, Daily Briefs

In today’s briefing:

  • 2024 High Conviction: Air China (753 HK) – Update on Proposed Share Placement
  • EQD | The LONG Case for the Hang Seng Index
  • Pre-IPO Concord Healthcare Group (PHIP Updates) – Some Points Worth the Attention

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.

EQD | The LONG Case for the Hang Seng Index

By Nico Rosti

  • The HSI INDEX closed last week down (CC=-1) at 16340.41, it is now down 5 months in a row (CC=-5), very OVERSOLD.
  • If this week the index keeps going down, it may find support soon and bounce next week. The alternative scenario is a longer correction, 2 weeks.
  • Support for a LONG trade, possibly pushed by a MONTHLY reversal,  should be found between 16200 and 15950: this is a highly speculative setup given the stubborn downtrend.

Pre-IPO Concord Healthcare Group (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • Concord’s financial performance seems improving on the surface,but a closer look reveals that the sudden explosive revenue increase in 2021 was mainly due to an acquisition, with potential risks behind.
  • We’ve doubts about Concord’s endogenous growth capability. If Concord’s hospitals cannot make a profit, then any further expansion is just a beautiful story and cannot bring expected returns to investors. 
  • Concord conducted a total of four rounds of financing, with a valuation of approximately RMB7.2 billion. However, based on our analysis, its valuation could be lower than peers.

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