Daily Briefs

Sanil Electric (062040 KS), a Korean industrial transformer manufacturer, is seeking to raise up to US$165 million.
In Sanil Electric IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on rapidly slowing growth, high customer concentration, mid-tier revenue growth and mid-tier FCF margin compared to peers.

Selected European HoldCos and DLC: June’24 Report

Discounts to NAV of covered holdcos didn’t follow a clear trend during June. Discounts to NAV: C.F.Alba, 44.5% (vs. 46.8%); GBL, 43.6% (vs. 42.9%); Heineken Holding, 18.4% (vs. 18.3%);
Industrivärden C, 2.4% (vs. 2.5%); Investor B, 9.9% (vs. 12%); Porsche Automobile Holding, 35.8% (vs. 35.3%). Rio DLC spread tightened to 20.7% (vs. 23%).
What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

DFR Gold – Termination of coverage

Edison Investment Research is terminating coverage on Oxford Cannabinoid Technologies (OCTP), Britvic (BVIC), Ultimovacs (ULTI), DFR Gold (DFR), The Merchants Trust (MRCH), PB Holding (PBH) and Biodexa Pharmaceuticals (BDRX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.

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Jul 02

Daily Brief Industrials: Keisei Electric Railway Co, Toenec Corp, Spirit Aerosystems Holdings, Inc, Lindbergh SpA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keisei Electric Investor Activism Update: The Vote Count Could Shake Keisei’s Board
Toenec (1946 JP) Offering – Nearly $50mm on SmallCap Utility Infra Co as Chubu EPCO Sells Down
Boeing/Spirit AeroSystems: All-Stock Deal
Lindbergh (LDB) – Monday, Apr 1, 2024

Keisei Electric Investor Activism Update: The Vote Count Could Shake Keisei’s Board

By Oshadhi Kumarasiri

Palliser’s proposal failed to meet the challenging two-thirds threshold at the AGM. Given the ownership landscape, this outcome was anticipated.
Palliser nearing 50% approval at Keisei’s AGM could signify a triumph, potentially leading to significant pressure on management and a positive shift in share price performance.
Keisei Electric Railway Co (9009 JP)‘s valuation, now attractively low post a 33% drop and with a potential OP guidance hike, presents minimal downside at a 26.0x EV/OP multiple.

Toenec (1946 JP) Offering – Nearly $50mm on SmallCap Utility Infra Co as Chubu EPCO Sells Down

Today, Toenec Corp (1946 JP) – an integrated facilities company 50+% owned by Chubu Electric Power Co (9502 JP) announced Chubu EPCO would sell down 7.7% to go to 43%+.
This is surprising. It suggests there are more selldowns to come. It’s also “big” at 88 days of ADV and about 26% of Max Real World Float (85% retail).
This is an odd sell-down. Chubu EPCO obviously doesn’t want to buy it in. That means overhang for years.

Boeing/Spirit AeroSystems: All-Stock Deal

On July 1, Boeing Co (BA US) announced a definitive agreement to acquire Spirit Aerosystems Holdings, Inc (SPR US) in an expected all-share deal valued at c.$4.7 billion, or $37.25/share.
Consideration is calculated using a floating exchange ratio ($37.25 divided by 15-day VWAP) with a collar. 0.20466 using Boeing’s last closing share price, which implies 3.9% dilution for Boeing’s shareholders.
The offer price is 6.4% above consensus price target median ($35), and reasonable, reflecting some control premium. The valuation represents 10.1x EV/2025 EBITDA based on IBES estimates. Long spread.

Lindbergh (LDB) – Monday, Apr 1, 2024

By Value Investors Club

Lindbergh S.p.A. provides specialized logistics services for industrial maintenance & repair operations in Italy and France, with high barriers to entry
Strong unit economics with zero customer and revenue churn most years, over 90% of revenue from recurring contracts
Recent expansion into B2C thermohydraulic MRO services market in Italy, strong competitive advantage and potential for growth

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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Jul 02

Daily Brief TMT/Internet: Shift Up, Hollysys Automation Technologies, SenseTime Group , Tesla , Chenqi Technology Limited, Toyo Corp, SK Hynix, Shanghai Voicecomm Information Technology, Will Semiconductor Shan and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Shift Up IPO Book Building Results Analysis
Hollysys (HOLI US): Ascendent Finally Obtains Regulatory Approvals
HSCEI Index Rebalance Preview: Two Changes Likely in September
Shift Up IPO: Details, Bookbuilding & Index Inclusion
Elon Wins $56B Package Re-Vote and Shift to Texas. Now What for Tesla?
Chenqi Technology Pre-IPO – PHIP Updates – Sales Growth Accelerated but Sustainability in Question
Toyo Corporation (8151 JP) – Initiating Coverage
Tech Supply Chain Tracker (02-Jul-2024): India boosts smartphone exports with iPhone manufacturers.
Shanghai Voicecomm IPO Preview: Superior Growth Profile and Collaboration With Baidu on ERNIE Bot
Mainland Connect NORTHBOUND Flows (To 28 June 2024): BIG Consumer Name Selling Again

Shift Up IPO Book Building Results Analysis

Shift Up reported solid IPO book building results. Shift Up’s IPO price has been determined at 60,000 won won, which is at the high end of the IPO price range.
According to Hankyung Business Daily, the demand ratio was 223 to 1. Shift Up will start trading on 11 July.
Our base case valuation of Shift Up is market cap of 5.7 trillion won or target price of 95,510 won (59% higher than the IPO price of 60,000 won).

Hollysys (HOLI US): Ascendent Finally Obtains Regulatory Approvals

Six months after announcing a binding proposal, Ascendent has obtained all the Chinese regulatory approvals for its US$26.50 Hollysys Automation Technologies (HOLI US) offer.
The gross spread was wide due to the information vacuum, which has resulted in various conspiracy theories and rumours circulating.
The two remaining conditions required for close are the maximum dissenting cap (should be waived) and minimum net cash condition (satisfied). At the last close, the gross spread was 22.5%.

HSCEI Index Rebalance Preview: Two Changes Likely in September

SenseTime Group (20 HK) and JD Logistics (2618 HK) are potential deletions while PICC Property & Casualty (2328 HK) and New Oriental Education & Techn (9901 HK) are potential adds.
Estimated one-way turnover at the rebalance is 1.8% resulting in a one-way trade of HK$950m. Official capping will be based off the close of trading on 3 September.
There will be 1-2x ADV to buy on the adds and over 2x ADV to sell in JD Logistics. The impact on SenseTime is lower given the recent surge in volume.

Shift Up IPO: Details, Bookbuilding & Index Inclusion

Shift Up (462870 KS) will raise KRW 435bn (US$315m) in its IPO, valuing the company at KRW 3,482bn (US$2.52bn). Listing is expected later this month.
Competition for the shares has been fierce with institutional investors indicating demand for 226x the number of shares on offer at prices higher than the top end of the range.
Inclusion in the KOSPI 200 looks likely in June 2025, while inclusion in global indices is likely in December. But there could be some passive inflows in September.

Elon Wins $56B Package Re-Vote and Shift to Texas. Now What for Tesla?

By Uttkarsh Kohli

Despite achieving significant milestones, Elon Musk’s $56 billion compensation package was voided in January 2024 due to a flawed approval process, ruled a Delaware judge.
Tesla’s shareholders voted to reinstate Musk’s package in June 2024, but the lawsuit continues, and the contract’s future remains uncertain.
Tesla faces challenges with slow EV sales growth, rising competition, and the need for lower-cost models, which may impact stock performance despite Musk’s ongoing leadership.

Chenqi Technology Pre-IPO – PHIP Updates – Sales Growth Accelerated but Sustainability in Question

By Ethan Aw

Chenqi Technology Limited (CT HK) is looking to raise US$130m in its upcoming Hong Kong IPO, after downsizing from an earlier reported float of US$300m.
Chenqi Technology (Chenqi) is a mobility technology and service company in China, founded by the GAC Group and Tencent.
In our previous note, we talked about the company’s historical performance. In this note, we talk about its PHIP updates.

Toyo Corporation (8151 JP) – Initiating Coverage

By Astris Advisory Japan

Toyo Corporation is a trading company specializing in measurement technologies.
With several initiatives and strong structural demand in the electric vehicles space in particular, we expect the company to achieve higher revenue and profitability.
Higher recurring revenue and proprietary product ratios will support a margin improvement in the future.

Tech Supply Chain Tracker (02-Jul-2024): India boosts smartphone exports with iPhone manufacturers.

By Tech Supply Chain Tracker

Indian smartphone exports boosted by iPhone makers as Xiphera introduces quantum security improvements in crypto solutions
Ola Electric pioneers solid-state batteries for electric vehicles, while SK Hynix invests $75 billion to dominate HBM Market for AI Chips
China nationalizes rare earth resources as airlines struggle with high costs to achieve sustainable fuel goals, Foxconn denies mistreating married women in India

Shanghai Voicecomm IPO Preview: Superior Growth Profile and Collaboration With Baidu on ERNIE Bot

By Andrei Zakharov

Shanghai Voicecomm Information Technology Co., an IT solution provider for enterprise-level users in China, plans to price its IPO by July 10, 2024 and raise ~HK$664M.
CICC is leading the offering in Hong Kong and the IPO is expected to be priced at HK$152.10 per H share, implying a market cap of ~HK$5.4B or ~$690M.
Cornerstone investors have agreed to acquire ~1.8M H shares, representing 41% of the offer shares or ~5% of the total outstanding shares.

Mainland Connect NORTHBOUND Flows (To 28 June 2024): BIG Consumer Name Selling Again

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 SELL RMB 11.8bn of A-shares. NORTHBOUND bought utilities and raw materials and sold everything else, especially consumer names. Appliances remain on the sell side.
It is notable that net flows as a percentage of value traded are clearly “short gamma”, which is to say, sector underperformers are being sold, not bought.

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Jul 02

Daily Brief Industrials: Keisei Electric Railway Co, Toenec Corp, Spirit Aerosystems Holdings, Inc, Lindbergh SpA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Keisei Electric Investor Activism Update: The Vote Count Could Shake Keisei’s Board
Toenec (1946 JP) Offering – Nearly $50mm on SmallCap Utility Infra Co as Chubu EPCO Sells Down
Boeing/Spirit AeroSystems: All-Stock Deal
Lindbergh (LDB) – Monday, Apr 1, 2024

Keisei Electric Investor Activism Update: The Vote Count Could Shake Keisei’s Board

By Oshadhi Kumarasiri

Palliser’s proposal failed to meet the challenging two-thirds threshold at the AGM. Given the ownership landscape, this outcome was anticipated.
Palliser nearing 50% approval at Keisei’s AGM could signify a triumph, potentially leading to significant pressure on management and a positive shift in share price performance.
Keisei Electric Railway Co (9009 JP)‘s valuation, now attractively low post a 33% drop and with a potential OP guidance hike, presents minimal downside at a 26.0x EV/OP multiple.

Toenec (1946 JP) Offering – Nearly $50mm on SmallCap Utility Infra Co as Chubu EPCO Sells Down

Today, Toenec Corp (1946 JP) – an integrated facilities company 50+% owned by Chubu Electric Power Co (9502 JP) announced Chubu EPCO would sell down 7.7% to go to 43%+.
This is surprising. It suggests there are more selldowns to come. It’s also “big” at 88 days of ADV and about 26% of Max Real World Float (85% retail).
This is an odd sell-down. Chubu EPCO obviously doesn’t want to buy it in. That means overhang for years.

Boeing/Spirit AeroSystems: All-Stock Deal

On July 1, Boeing Co (BA US) announced a definitive agreement to acquire Spirit Aerosystems Holdings, Inc (SPR US) in an expected all-share deal valued at c.$4.7 billion, or $37.25/share.
Consideration is calculated using a floating exchange ratio ($37.25 divided by 15-day VWAP) with a collar. 0.20466 using Boeing’s last closing share price, which implies 3.9% dilution for Boeing’s shareholders.
The offer price is 6.4% above consensus price target median ($35), and reasonable, reflecting some control premium. The valuation represents 10.1x EV/2025 EBITDA based on IBES estimates. Long spread.

Lindbergh (LDB) – Monday, Apr 1, 2024

By Value Investors Club

Lindbergh S.p.A. provides specialized logistics services for industrial maintenance & repair operations in Italy and France, with high barriers to entry
Strong unit economics with zero customer and revenue churn most years, over 90% of revenue from recurring contracts
Recent expansion into B2C thermohydraulic MRO services market in Italy, strong competitive advantage and potential for growth

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Jul 02

Daily Brief Financials: Agricultural Bank Of China, New World Development, Target Healthcare REIT PLC, Merchants Trust, Bitcoin, Alpha Bank AE, Banco del Bajio SA and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

HK Connect SOUTHBOUND Flows (To 28 June 2024); Still a Net Buy, but Less Strong. Financials Dominate
New World Development – ESG Report – Lucror Analytics
Target Healthcare REIT – Enhanced portfolio metrics and interest savings
The Merchants Trust – Termination of coverage
Crypto Crisp: A Trump Win Is A Win For Crypto
Alpha Bank – Moody’s raise to investment grade
Banamex Update and Mexican Banks’ April Data – First Look at Early 2Q 2024 Trends

HK Connect SOUTHBOUND Flows (To 28 June 2024); Still a Net Buy, but Less Strong. Financials Dominate

SOUTHBOUND was again a net buyer, for HK$9.3bn this week, on smallish two-way volumes. Banks were a big buy.
It is not clear how much of this is H/A discounts, expected dividend tax removal, shareholder return KPIs for SOE CEOs, upcoming Third Plenum policy, or national team buying…
But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

New World Development – 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 New World Development’s ESG as “Strong”, in line with its Environmental score, while the Social and Governance scores are “Adequate”. Controversies are “Immaterial” and Disclosure is “Strong”.

Target Healthcare REIT – Enhanced portfolio metrics and interest savings

Target Healthcare REIT has sold four of its care homes for £44.5m to the incumbent tenant, modestly ahead of the carried value. The homes have performed well since being acquired as part of the significant portfolio transaction in late 2021, but their sale enhances key portfolio average metrics such as age, floor space and unexpired lease term, has been completed at a lower yield than the portfolio average and enables the company to reduce exposure to more expensive debt.

The Merchants Trust – Termination of coverage

Crypto Crisp: A Trump Win Is A Win For Crypto

By Mads Eberhardt

As we step into July, anticipation surrounds the distribution of 141,686 bitcoins from the defunct Mt. Gox exchange to its creditors, most of whom are former clients.
Despite the looming release of these bitcoins, which have been locked away for over a decade, the crypto market saw an uptick over the weekend.
This rise occurred even after the German government transferred an additional $94 million worth of bitcoins to exchanges this morning.

Alpha Bank – Moody’s raise to investment grade

On 27 June, Moody’s upgraded Alpha Bank’s long-term senior-unsecured debt rating by two notches to Baa3 (Ba2 previously), its long- and short-term deposit ratings by one notch to Baa3/P-3 (Ba1/NP previously) and its long- and short-term counterparty credit risk (CCR) rating by one notch to Baa2/P-2 (Baa3/P-3 previously). The move takes Moody’s key ratings on Alpha to investment grade for the first time in 14 years. This is a further positive development for Alpha as it continues to execute its strategy and demonstrate recurring profitability and capital generation. S&P, Fitch and Capital Intelligence currently assign BB- (sub-investment grade) long-term debt ratings to Alpha Bank.

Banamex Update and Mexican Banks’ April Data – First Look at Early 2Q 2024 Trends

By Victor Galliano

We review Citibank’s upcoming division of CitiBanamex and the forthcoming legacy Banamex IPO; given the market’s recent wobbles, we shave down the Banamex IPO valuation
Sector trends to January show continued loan growth; although funding costs have not risen to April, credit costs are worsening, with some evidence of rising NPL ratios
BanBajio generates an ROE of 27%, whilst well capitalized and on very modest multiples; we are now neutral on Banorte, from being cautious, due to its less demanding valuation

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Jul 02

Daily Brief Health Care: APT Medical and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

STAR50 Index Rebalance Preview: Two Changes & Over US$1.2bn to Trade

STAR50 Index Rebalance Preview: Two Changes & Over US$1.2bn to Trade

The review period for the September rebalance ends 31 July. We expect the changes to be announced 30 August with the implementation taking place after the close on 13 September.
We expect the index committee to continue using a 6-month minimum listing history resulting in two changes to the index.
One-Way turnover is estimated at 3.5% resulting in a one-way trade of CNY 4.5bn (US$618m). Passive trackers will need to trade 4-8x ADV on the index changes.

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Jul 02

Daily Brief Consumer: L’Occitane, Aisin , Mitsubishi Motors, Hyundai Mobis, Precot, Hyundai Motor , Taste Gourmet, Health And Happiness (H&H), Britvic PLC and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

L’Occitane (973 HK): Conditional Offer Opens
Aisin (7259) | Nine Months Ago
Quiddity JPX-Nikkei 400 Rebal 2024: Final Expectations
Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024
Precot Limited: A Niche Technical Textile Player
Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2024
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – July 2024
L’Occitane (973 HK): Tendering Now Open
Morning Views Asia: Health And Happiness (H&H)
Britvic – Termination of coverage

L’Occitane (973 HK): Conditional Offer Opens

The L’Occitane (973 HK) IFA opines that Reinold Geiger’s conditional voluntary cash (HK$34.00) or scrip offer (10 rollover shares for each share, subject to a cap) is fair and reasonable.
Irrevocable/Letters of support have nudged lower from 49.83% (17 June) to 47.66% of disinterested shares due to Southeastern Asset Management selling its shares.
Nevertheless, the scrip option, an attractive offer and no vocal opposition should facilitate achieving the minimum acceptance condition. At the last close, the gross spread was 2.4%.

Aisin (7259) | Nine Months Ago

By Mark Chadwick

Nine months have passed since Aisin announced a transformative MTP. Investors remain sceptical that it will deliver higher returns.
Improving margins on hybrid transmissions, new products for BEVs and better capital allocation could deliver 70% upside for investors.
The key risk is the assumption that operating margins can rise above 8% versus the historical average of 5%.

Quiddity JPX-Nikkei 400 Rebal 2024: Final Expectations

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index provider in August every year. The reference period for the August 2024 index rebal event is now complete.
In this insight, we take a look at our final expectations for ADDs and DELs.

Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.
Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.
These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).

Precot Limited: A Niche Technical Textile Player

By Sudarshan Bhandari

Niche Player in Cotton yarn spinning and Technical Textile with decadal experience.
Expansion in Technical Textile during FY24 will significantly improve the margin profile and revenue for the company.
Peer Comparison and assessment at multiple metrics to assess the suitability of investment.

Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2024

In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2024.
The recent push for Korea Value Up program has helped to push up prices of numerous Korean preferred stocks including Hyundai Motor (005385 KS).
On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – July 2024

By Sameer Taneja

We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
Despite weak data, HK stock earnings and dividend payouts in the results have been resilient, resulting in solid dividend yields of over 10%.

L’Occitane (973 HK): Tendering Now Open

By David Blennerhassett

Exactly two weeks after the scrip alternative was announced, L’Occitane (973 HK)‘s Composite Document has been issued. The Offer is now open for acceptances.
The IFA (Somerley) considers terms to be fair & reasonable. A lifetime high coupled with a scrip option – yes, this is fair.
Keep an eye on CCASS moves prior to the first closing date, the 23rd July. I have a call with the FA tomorrow. Hit me up with any questions.

Morning Views Asia: Health And Happiness (H&H)

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.

Health And Happiness (H&H)

Britvic – Termination of coverage

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Jul 02

Daily Brief Australia: Rio Tinto Ltd, Pureprofile Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

Selected European HoldCos and DLC: June’24 Report
Pureprofile RaaS Webinar Transcript 28 June 2024
Pureprofile Ltd – i-Link acquisition extends customer reach, EPS +ve in FY25f

Selected European HoldCos and DLC: June’24 Report

By Research as a Service (RaaS)

Discounts to NAV of covered holdcos didn’t follow a clear trend during June. Discounts to NAV: C.F.Alba, 44.5% (vs. 46.8%); GBL, 43.6% (vs. 42.9%); Heineken Holding, 18.4% (vs. 18.3%);
Industrivärden C, 2.4% (vs. 2.5%); Investor B, 9.9% (vs. 12%); Porsche Automobile Holding, 35.8% (vs. 35.3%). Rio DLC spread tightened to 20.7% (vs. 23%).
What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

Pureprofile RaaS Webinar Transcript 28 June 2024

RaaS Research Group conducted a webinar with Pureprofile’s Managing Director Martin Filz and CFO/COO Melinda Sheppard on 28 June following the $1.25m acquisition of i-Link Research Solutions.
This is a transcript of the webinar.

Pureprofile Ltd – i-Link acquisition extends customer reach, EPS +ve in FY25f

By Research as a Service (RaaS)

RaaS Research Group has published an update report on data analytics company Pureprofile (ASX:PPL) following the $1.25m acquisition of i-Link Research Solutions, on an estimated FY24 revenue multiple of 0.46x.
Pureprofile notes that i-Link generated revenue of ~$2.7m in FY24, that it was cash-flow positive, and that there would be cost synergies from the i-Link principals not continuing with the business and existing staff moving to Pureprofile’s offices.
We have incorporated the acquisition in our forecasts, resulting in a 5% upgrade to our FY25f revenue and underlying EBITDA forecast and a 6% increase to our FY25f underlying EPS estimate.

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Jul 02

Daily Brief South Korea: Shift Up, Hyundai Mobis, Hyundai Motor , Sanil Electric and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Shift Up IPO Book Building Results Analysis
Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024
Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2024
Shift Up IPO: Details, Bookbuilding & Index Inclusion
Sanil Electric IPO: The Bear Case

Shift Up IPO Book Building Results Analysis

Shift Up reported solid IPO book building results. Shift Up’s IPO price has been determined at 60,000 won won, which is at the high end of the IPO price range.
According to Hankyung Business Daily, the demand ratio was 223 to 1. Shift Up will start trading on 11 July.
Our base case valuation of Shift Up is market cap of 5.7 trillion won or target price of 95,510 won (59% higher than the IPO price of 60,000 won).

Korean Holdcos Vs Opcos Gap Trading Opportunities in 3Q 2024

In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.
Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.
These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).

Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2024

In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2024.
The recent push for Korea Value Up program has helped to push up prices of numerous Korean preferred stocks including Hyundai Motor (005385 KS).
On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.

Shift Up IPO: Details, Bookbuilding & Index Inclusion

Shift Up (462870 KS) will raise KRW 435bn (US$315m) in its IPO, valuing the company at KRW 3,482bn (US$2.52bn). Listing is expected later this month.
Competition for the shares has been fierce with institutional investors indicating demand for 226x the number of shares on offer at prices higher than the top end of the range.
Inclusion in the KOSPI 200 looks likely in June 2025, while inclusion in global indices is likely in December. But there could be some passive inflows in September.

Sanil Electric IPO: The Bear Case