Daily Briefs

Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact.
New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
I expect the ask needs to change, and the agenda item needs to be difficult to be against.

Fast Retailing (9983) | Q3 Masterclass

By Mark Chadwick

Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations.
Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19%
Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium

Yoshinoya Holdings (9861 JP): Q1 FY02/25 flash update

Sales increased by 7.4% YoY to JPY47.5bn, driven by store expansion and effective product and sales strategies.
Operating profit decreased by 38.6% YoY to JPY880mn, impacted by rising labor and raw material costs.
Net income attributable to owners of the parent fell by 33.5% YoY to JPY681mn, despite higher sales and price revisions.

Nitto Kogyo Corporation (6651 JP) – 4Q Follow-Up

By Sessa Investment Research

NITTO KOGYO Corporation (hereafter, the Company) announced its earnings results for FY2024/3 on May 15, 2024.
In addition to posting record net sales, the Company recorded profit growth for all three of its segments.
While the price of raw materials and parts rose, the Company’s gross profit margin improved 1.4 ppt YoY to 26.8%.

Adopting DOE Is Step Forward, but Explanation Needed to Step into Strategic Allocation of Cash Flow

By Aki Matsumoto

Since non-cash expenses are added to net profit for many manufacturing companies, cash on hand will not decrease at all if the dividend policy is based on net profit.
Using DOE as the basis for dividend policy would help improve ROE because it places certain constraints on the expansion of shareholders’ equity.
However, the challenge for raising ROE is the strategic allocation of excess cash on hand and cash flow to shareholder returns and growth investments to improve profitability.

Softcreate Holdings (3371 JP): Coverage initiation

In FY03/24, revenue grew 15.1% YoY to JPY27.9bn, operating profit increased 19.6% YoY to JPY5.2bn, recurring profit increased 19.3% YoY to JPY5.4bn, and net income attributable to owners of the parent increased 19.0% YoY to JPY3.3bn.
In the EC Solutions business, revenue increased 16.7% YoY to JPY15.6bn, and recurring profit rose 17.8% YoY to JPY4.0bn, mainly due to growth in revenue from e-commerce site development and e-commerce cloud services.
In the IT Solutions business, revenue grew 12.7% YoY to JPY12.5bn and recurring profit rose 8.2% YoY to JPY2.8bn owing to higher revenue from IT cloud services and security and infrastructure construction.

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Jul 12

Daily Brief Industrials: Doosan Robotics , Canvest Environmental Protection Group, Keisei Electric Railway Co, JUNJIN Construction & Robot, Duratec Ltd, Sunrun Inc, CMA CGM SA, Nitto Kogyo, Kbr Inc, bpost SA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
Canvest (1381 HK): Evaluating A Privatisation
[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
Junjin Construction and Robot IPO Preview
Duratec: Leveraging Technologies For Infrastructure Maintenance Leading to Strong Financials
Sunrun Inc.: How Are They Expanding Storage Solutions? – Major Drivers
CMA CGM – ESG Report – Lucror Analytics
Nitto Kogyo Corporation (6651 JP) – 4Q Follow-Up
KBR Inc.: Expansion in the Energy Sector Driving Our Bullish Thesis? – Major Drivers
Bpost (BPOST BB) – Thursday, Apr 11, 2024

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

Canvest (1381 HK): Evaluating A Privatisation

Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%.
There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
I expect the ask needs to change, and the agenda item needs to be difficult to be against.

Junjin Construction and Robot IPO Preview

Junjin Construction & Robot is getting ready to complete its IPO in KOSPI in August. The IPO price range is from 13,800 won to 15,700 won.
The IPO offering is from 42.5 billion won to 48.3 billion won. The book building for the institutional investors is from 30 July to 5 August.
The integration of robotics into construction processes is a cornerstone of Junjin’s operations. Its main product is the concrete pump vehicle which pumps cement or concrete at a construction site.

Duratec: Leveraging Technologies For Infrastructure Maintenance Leading to Strong Financials

By Pyari Menon

Duratec Ltd (DUR AU) with strong financials, a robust order pipeline and ability to leverage technologies makes it a solid small-cap infrastructure maintenance and asset protection play
Shares are at least 30% below fair value given profitability, growth and order book profile. Historical numbers suggest solid execution of a diverse service contract portfolio.
Duratec is a play on growing need for more efficient, accurate and innovative approach for proactive infrastructure inspections and maintenance.

Sunrun Inc.: How Are They Expanding Storage Solutions? – Major Drivers

Sunrun reported a dynamic first quarter of 2024, marked by a strategic emphasis on storage installations complemented by solar capacity, reflecting a broader company transformation towards a storage-first business approach.
During the period, Sunrun surpassed its guidance expectations for both solar and storage installations, with storage systems installed on 50% of new residential customers, a significant increase from the prior year.
This surge in storage adoption has notably bolstered the company’s margin profile since storage installations tend to carry higher margins compared to traditional solar-only setups.

CMA CGM – 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 CMA CGM’s ESG as “Adequate”, in line with its Environmental and Governance pillars, while the Social pillar is “Strong”. Controversies are “Immaterial” and Disclosure is “Adequate”. The group notably received a CDP score of A- for 2023.

Nitto Kogyo Corporation (6651 JP) – 4Q Follow-Up

By Sessa Investment Research

NITTO KOGYO Corporation (hereafter, the Company) announced its earnings results for FY2024/3 on May 15, 2024.
In addition to posting record net sales, the Company recorded profit growth for all three of its segments.
While the price of raw materials and parts rose, the Company’s gross profit margin improved 1.4 ppt YoY to 26.8%.

KBR Inc.: Expansion in the Energy Sector Driving Our Bullish Thesis? – Major Drivers

KBR Inc. reported a strong start to the fiscal year 2024, with key performances in safety, financial metrics, and strategic operations showing promising signs.
The company saw a 7% year-over-year increase in consolidated revenues, reaching $1.8 billion, a record since their transformation in 2020.
Adjusted EBITDA also surpassed expectations, improving by 14% year-over-year with a boost in margins.

Bpost (BPOST BB) – Thursday, Apr 11, 2024

Decline in traditional mail delivery business
Challenges from declining mail volumes, regulatory constraints, and failed diversification attempt
New management, focus on efficiency, and parcels business expansion leading to potential growth for bpost

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 12

Daily Brief TMT/Internet: Netmarble , Taiwan Semiconductor (TSMC), Taiwan Semiconductor (TSMC) – ADR, Baidu , China Communications Services Corp Ltd., Wolfspeed, Fabrinet, Rambus, Softcreate Holdings, Viavi Solutions and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat
TSMC’s June Revenue Declined 9.5% MoM. Should We Be Worried?
TSMC (2330.TT; TSM.US): The 25% YoY Growth Rate Will Be Expected in 2024.
The Heat Is On: News Flow and Sentiment China/Hong Kong (July 12)
China Communications Services Corp. (552.HK)-Riding the AI Wave…
Wolfspeed Inc.: Will Its Strategic Focus on Electric Vehicle Market Become The Single Biggest Growth Lever? – Major Drivers
Fabrinet: Why We Are Pessimistic Despite The Rapid Growth in Datacom Driven by AI Applications! – Major Drivers
Rambus Inc.: A Story Of Market Expansion through Silicon IP Portfolio! – Major Drivers
Softcreate Holdings (3371 JP): Coverage initiation
Viavi Solutions Inc.: A Dive Into The Market Dynamics and Competitive Strategies in Network Expansion! – Major Drivers

Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat

This block deal has an unusual PSR (price swap return) contract at ₩58,200, the July 10th closing price, likely preventing Netmarble’s typical stock price correction today.
In 2022, a similar-sized local PSR transaction involved Doosan Bobcat Inc, with 9.9 million shares and a PSR swap price of ₩37,500.
As for Doosan Bobcat, the stock initially dropped but rebounded near the PSR swap price, prompting local brokerages, focused on PSR fee income, to sell rather than realize capital gains.

TSMC’s June Revenue Declined 9.5% MoM. Should We Be Worried?

By William Keating

June 2024 revenues of NT$207.87 billion, a decrease of 9.5% MoM but an increase of 32.9% YoY
Q224 revenue of US$20.9 billion, $457 million above the high end, up 10.5% QoQ and up 33.7% YoY. It was also TSMC’s highest revenue quarter ever
At NT$1,266,154 (around US$39 billion), TSMC’s YTD revenues are up 28% YoY, well in line with the company’s forecast for a >20% YoY increase in 2024.

TSMC (2330.TT; TSM.US): The 25% YoY Growth Rate Will Be Expected in 2024.

By Patrick Liao

Taiwan Semiconductor (TSMC) – ADR (TSM US) could reach a growth rate of 25% YoY this year, with a very promising outlook for 2025.
Artificial Intelligence (AI) remains the primary focus, with plans to continue expanding capacity in 2H24 and 2025.
The demand from Apple (AAPL US) is expected to drive higher growth in 2H24.

The Heat Is On: News Flow and Sentiment China/Hong Kong (July 12)

By David Mudd

Onshore Equity ETF flows in China continued to be positive for 8th week. Southbound Connect flows in July are lower than June.
Baidu, Bilibili and GDS have had positive share price moves on the back of news flow.
The container shipping segment has had a sharp pullback on positive Middle East news and cement maker CNBM flags a loss in the first half.

China Communications Services Corp. (552.HK)-Riding the AI Wave…

By Rikki Malik

Stable, Steady, State-owned Enterprise with upside from policy push on AI
Lowly rated company with a new cyclical growth story in a strategic sector
Good balance sheet with the opportunity to raise payouts and yields.

Wolfspeed Inc.: Will Its Strategic Focus on Electric Vehicle Market Become The Single Biggest Growth Lever? – Major Drivers

Wolfspeed, a leading vertically integrated silicon carbide company, shared its fiscal Q3 2024 results, emphasizing accomplishments in operational performance yet acknowledging the market’s undervaluation of its potential.
A key point of focus was their Mohawk Valley facility’s substantial progress towards increasing utilization and revenue generation.
Facility enhancements and strategic shifts in production capacities were regularly discussed, reflecting an agile response to market demands, particularly within the electric vehicle sector.

Fabrinet: Why We Are Pessimistic Despite The Rapid Growth in Datacom Driven by AI Applications! – Major Drivers

Fabrinet Q3 of Fiscal Year 2024 reflects a robust performance exceeding its own forecasts with a notable increase in revenue and earnings per share (EPS).
The company reported a record revenue of $731.5 million, representing a 10% year-over-year growth and a 3% sequential increase from the previous quarter.
Non-GAAP EPS was also impressive at $2.39, marking a significant rise from previous periods and exceeding the guidance provided by the company.

Rambus Inc.: A Story Of Market Expansion through Silicon IP Portfolio! – Major Drivers

Rambus Inc. delivered favorable results for the first quarter of fiscal year 2024, demonstrating resilience and strategic agility amid varied market conditions.
A pivotal aspect of Rambus Inc.’s growth strategy involves diversifying its product offerings, including the expansion into DDR5 server Power Management Integrated Circuits (PMICs), which complements its existing memory interface chips.
This development is well-timed, as the industry increases demands for enhanced memory performance driven by applications like AI.

Softcreate Holdings (3371 JP): Coverage initiation

In FY03/24, revenue grew 15.1% YoY to JPY27.9bn, operating profit increased 19.6% YoY to JPY5.2bn, recurring profit increased 19.3% YoY to JPY5.4bn, and net income attributable to owners of the parent increased 19.0% YoY to JPY3.3bn.
In the EC Solutions business, revenue increased 16.7% YoY to JPY15.6bn, and recurring profit rose 17.8% YoY to JPY4.0bn, mainly due to growth in revenue from e-commerce site development and e-commerce cloud services.
In the IT Solutions business, revenue grew 12.7% YoY to JPY12.5bn and recurring profit rose 8.2% YoY to JPY2.8bn owing to higher revenue from IT cloud services and security and infrastructure construction.

Viavi Solutions Inc.: A Dive Into The Market Dynamics and Competitive Strategies in Network Expansion! – Major Drivers

Viavi Solutions, a prominent network testing company, recently disclosed its financial results for the third quarter of Fiscal Year 2024, revealing mixed outcomes in a challenging market environment.
The company reported a total net revenue of $246 million, marking a modest year-over-year decline of 0.7% and a sequential drop of 3.3%.
This revenue, although slightly above the lower end of their forecasted range, underscores the cautious spending patterns observed across several of its customer segments, particularly within enterprise solutions.

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Jul 12

Daily Brief Energy/Materials: Glencore Plc, PetroTal and more

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

In today’s briefing:

Glencore (GLEN): Green Light from Canada for $6.9bn Acquisition of EVR. Demerger on the Table.
PetroTal Corp: Unrestricted Cash Position Increased by >30% During the Last Quarter

Glencore (GLEN): Green Light from Canada for $6.9bn Acquisition of EVR. Demerger on the Table.

By Dimitris Ioannidis

Following the regulatory approval from the Government of Canada, Glencore’s cash acquisition of 77% stake in Teck’s Elk Valley Resources (EVR) is expected to close on 11 July 2024.
The cash acquisition is forecasted not to cause any passive fund flows based on the deal structure.
The potential demerger introduces the risk for Glencore approaching the exit threshold of STOXX Europe 50. This is yet undetermined due to the long time horizon.

PetroTal Corp: Unrestricted Cash Position Increased by >30% During the Last Quarter

By Auctus Advisors

2Q24 production of 18,290 bbl/d was very near our forecasts of 18.5 mbbl/d but marginally below the company target of ~19 mbbl/d.
A brief river blockade impacted production but production in June was 20,555 bbl/d.
• Well 19H has achieved production rates of ~8.5 mbbl/d during the initial 7 days of production.

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Jul 12

Daily Brief Health Care: Shanghai Henlius Biotech , Pacific Smiles, Alteogen Inc, Recce Ltd, Monogram Orthopaedics , Teladoc Health, Inc., Tg Therapeutics and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges
Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!
Henlius (2696): Here Comes The Scrip Option
Alteogen (196170 KS): Transitioning Toward Becoming Commercial Stage Biotech Company
Recce Pharmaceuticals – Taking a closer look at diabetic foot infections
Monogram Orthopaedics Inc (MGRM) – Thursday, Apr 11, 2024
Teladoc Health Inc.: Why Their Expansion of Integrated Care and Chronic Care Programs Is Making Us Bullish? – Major Drivers
Tg Therapeutics Inc (TGTX) – Thursday, Apr 11, 2024

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

By Arun George

Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion.
Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC.

Pacific Smiles’ (PSQ AU) Scheme Vote: Say “aaaarrrghhhh”?!

After what appeared indecisiveness from Genesis Capital, Crescent Capital’s National Dental Care snuck in on the 29th April and entered into a Scheme with Pacific Smiles (PSQ AU) at A$1.90/share.
The Scheme Meeting is the 1st August with expected implementation on the 19th August. The IE (Deloitte) reckoned terms are fair & reasonable. All good right? Not quite.
The Takeovers Panel has concluded Genesis Capital, with 19.9% of shares out, is free to vote. Assuming Genesis votes against the Scheme, Crescent Capital’s Offer is effectively dead.

Henlius (2696): Here Comes The Scrip Option

Shanghai Fosun Pharmaceutical (Group) (2196 HK)‘s (SFP) “Merger by Absorption” HK$24.60/share cash Offer for H-shares not held in Shanghai Henlius Biotech (2696 HK), tentatively includes a scrip alternative.
The first hurdle for the share option – valid letters of interest from those shareholders wishing to rollover – was secured yesterday. SCP still has the discretion on providing scrip.
But if SFP had any lingering doubts whether to offer scrip, that was answered earlier this week with the emergence of a substantial shareholder who is typically a pre-IPO investor.

Alteogen (196170 KS): Transitioning Toward Becoming Commercial Stage Biotech Company

By Tina Banerjee

Alteogen Inc (196170 KS) received approval for first product, Tergase, a recombinant human hyaluronidase liquid product, in Korea. Tergase increases penetration during intramuscular or subcutaneous injection and local anesthesia.
With excellent safety profile compared to existing animal-derived hyaluronidase products, Tergase stands to emerge as a promising alternative in the global hyaluronidase market estimated to be $1B in near future.
Alteogen’s subsidiary, Altos Biologics submitted marketing authorization approval to the European Medicines Agency for Eylea biosimilar. Approval is expected by next year.

Recce Pharmaceuticals – Taking a closer look at diabetic foot infections

By Edison Investment Research

We highlight the opportunity of topical RECCE® 327 (R327) to address diabetic foot infections (DFIs), which is the leading cause of limb morbidity in diabetic patients and an area of unmet need as currently available topical drugs have limited effectiveness. Recce is planning to initiate a Phase III registration-enabling study in H2 CY24 in Indonesia. We anticipate that positive results from the trial could lead to Recce’s earliest R327 commercialisation opportunity, through a launch in South-East Asia in the DFI indication in H2 CY26. The company announced an A$10m equity financing that is expected to extend its runway into FY26. We now obtain an rNPV valuation of A$688.5m (or A$3.07 per share), versus A$661.3m (or A$3.27 per share) previously. The reduced value per share is due to the anticipated increase in share count post-financing.

Monogram Orthopaedics Inc (MGRM) – Thursday, Apr 11, 2024

Monogram Orthopaedics Inc. is an overvalued, pre-revenue stock trading at 10x cash with financial concerns, heavily shorted and planning to issue more shares, potentially leading to a stock price crash.
The stock saw an 80% increase following a press release mentioning Nvidia, but the spike is expected to be short-lived.
MGRM lacks significant institutional investors and its largest shareholders include a supplier, board members, and a hospital that licensed technology to the company. With $13.6 million in cash, the company may need to raise equity soon.

Teladoc Health Inc.: Why Their Expansion of Integrated Care and Chronic Care Programs Is Making Us Bullish? – Major Drivers

Teladoc Health recently reported its first quarter results for 2024, which provide insights into the company’s financial health and strategic directions during its transition period.
The company is actively seeking a new CEO while focusing on strengthening its market leadership in total care solutions and improving both top and bottom line performance.
During the first quarter, Teladoc Health surpassed both revenue and adjusted EBITDA expectations set by the company.

Tg Therapeutics Inc (TGTX) – Thursday, Apr 11, 2024

TG Therapeutics focuses on developing treatments for B-cell mediated diseases, including their flagship product Briumvi for Multiple Sclerosis
The company has a pipeline of other products such as Umbralisib, TG-1701, and TG-1801 in development
Briumvi is an anti-CD20 monoclonal antibody targeted at specific types of MS, showcasing the company’s commitment to addressing unmet medical needs in the field

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Jul 12

Daily Brief Industrials: Doosan Robotics , Canvest Environmental Protection Group, Keisei Electric Railway Co, JUNJIN Construction & Robot, Duratec Ltd, Sunrun Inc, CMA CGM SA, Nitto Kogyo, Kbr Inc, bpost SA and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
Canvest (1381 HK): Evaluating A Privatisation
[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
Junjin Construction and Robot IPO Preview
Duratec: Leveraging Technologies For Infrastructure Maintenance Leading to Strong Financials
Sunrun Inc.: How Are They Expanding Storage Solutions? – Major Drivers
CMA CGM – ESG Report – Lucror Analytics
Nitto Kogyo Corporation (6651 JP) – 4Q Follow-Up
KBR Inc.: Expansion in the Energy Sector Driving Our Bullish Thesis? – Major Drivers
Bpost (BPOST BB) – Thursday, Apr 11, 2024

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

Canvest (1381 HK): Evaluating A Privatisation

Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%.
There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
I expect the ask needs to change, and the agenda item needs to be difficult to be against.

Junjin Construction and Robot IPO Preview

Junjin Construction & Robot is getting ready to complete its IPO in KOSPI in August. The IPO price range is from 13,800 won to 15,700 won.
The IPO offering is from 42.5 billion won to 48.3 billion won. The book building for the institutional investors is from 30 July to 5 August.
The integration of robotics into construction processes is a cornerstone of Junjin’s operations. Its main product is the concrete pump vehicle which pumps cement or concrete at a construction site.

Duratec: Leveraging Technologies For Infrastructure Maintenance Leading to Strong Financials

By Pyari Menon

Duratec Ltd (DUR AU) with strong financials, a robust order pipeline and ability to leverage technologies makes it a solid small-cap infrastructure maintenance and asset protection play
Shares are at least 30% below fair value given profitability, growth and order book profile. Historical numbers suggest solid execution of a diverse service contract portfolio.
Duratec is a play on growing need for more efficient, accurate and innovative approach for proactive infrastructure inspections and maintenance.

Sunrun Inc.: How Are They Expanding Storage Solutions? – Major Drivers

Sunrun reported a dynamic first quarter of 2024, marked by a strategic emphasis on storage installations complemented by solar capacity, reflecting a broader company transformation towards a storage-first business approach.
During the period, Sunrun surpassed its guidance expectations for both solar and storage installations, with storage systems installed on 50% of new residential customers, a significant increase from the prior year.
This surge in storage adoption has notably bolstered the company’s margin profile since storage installations tend to carry higher margins compared to traditional solar-only setups.

CMA CGM – ESG Report – Lucror Analytics

By Leonard Law, CFA

Nitto Kogyo Corporation (6651 JP) – 4Q Follow-Up

By Sessa Investment Research

NITTO KOGYO Corporation (hereafter, the Company) announced its earnings results for FY2024/3 on May 15, 2024.
In addition to posting record net sales, the Company recorded profit growth for all three of its segments.
While the price of raw materials and parts rose, the Company’s gross profit margin improved 1.4 ppt YoY to 26.8%.

KBR Inc.: Expansion in the Energy Sector Driving Our Bullish Thesis? – Major Drivers

KBR Inc. reported a strong start to the fiscal year 2024, with key performances in safety, financial metrics, and strategic operations showing promising signs.
The company saw a 7% year-over-year increase in consolidated revenues, reaching $1.8 billion, a record since their transformation in 2020.
Adjusted EBITDA also surpassed expectations, improving by 14% year-over-year with a boost in margins.

Bpost (BPOST BB) – Thursday, Apr 11, 2024

Decline in traditional mail delivery business
Challenges from declining mail volumes, regulatory constraints, and failed diversification attempt
New management, focus on efficiency, and parcels business expansion leading to potential growth for bpost

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Jul 12

Daily Brief Financials: Avanse Financial Services, Custodian REIT and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Avanse Financial Services Pre-IPO – The Positives – Fast Growth in an Expanding Industry
Avanse Financial Services Pre-IPO – The Negatives – Immigration Issues
Custodian Property Income REIT – Organic growth paying dividends

Avanse Financial Services Pre-IPO – The Positives – Fast Growth in an Expanding Industry

By Sumeet Singh

Avanse Financial Services is looking to raise up to US$419m in its upcoming India IPO.
Avanse Financial Services (AFS) is an education focused non-banking financial company (NBFC) operating in India.
In this note, we look at the company’s past performance.

Avanse Financial Services Pre-IPO – The Negatives – Immigration Issues

By Sumeet Singh

Avanse Financial Services is looking to raise up to US$419m in its upcoming India IPO.
Avanse Financial Services (AFS) is an education focused non-banking financial company (NBFC) operating in India.
In this note, we talk about the not-so-positive aspects of the deal.

Custodian Property Income REIT – Organic growth paying dividends

By Edison Investment Research

Custodian Property Income REIT’s (CREI’s) confidence in its organic growth outlook is reflected in accelerated, fully covered DPS growth. Reversionary income potential is strong and, with the occupier market remaining robust, average rental values have continued to increase, providing ongoing support for the company’s enhanced income strategy. The prospective dividend yield is 7.8% and the expected decline in interest rates should benefit earnings and support property valuations and NAV.

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Jul 12

Daily Brief Consumer: Fast Retailing, ADF Foods , Jollibee Foods, Saint Bella, Taste Gourmet, Kimberly-Clark De Mexico-A, Yoshinoya Holdings, Spectrum Brands Holdings, Inc, Target Corp and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
Fast Retailing (9983) | Q3 Masterclass
The Beat Ideas: ADF Foods- A Spicy Investment Opportunity with Growth Potential
Jollibee’s (JFC PM) Risky Bet: Compose Coffee Acquisition in a Competitive Market
Saint Bella Pre-IPO Tearsheet
Taste Gourmet (8371 HK): GEM to Mainboard Listing Catalyst in Play
Actinver Research – Health & Personal Care: Healthy revaluation expected (Coverage Initiation)
Yoshinoya Holdings (9861 JP): Q1 FY02/25 flash update
Spin-Off Analysis: Spectrum Brands Holdings Inc. (SPB) To Spin-Off Home & Personal Care Business
Target Corp (TGT) – Thursday, Apr 11, 2024

Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data

Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact.
New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

Fast Retailing (9983) | Q3 Masterclass

By Mark Chadwick

Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations.
Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19%
Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium

The Beat Ideas: ADF Foods- A Spicy Investment Opportunity with Growth Potential

By Sudarshan Bhandari

ADF Foods (ADFL IN) is undergoing significant expansions, including brownfield projects in Nadiad and Nasik, and a greenfield project in Surat.
These projects are expected to boost revenue significantly, enhance operational efficiency, and support the company’s growth plans.
Company will almost double its revenue in 3 years and similarly PAT will also grow, which makes it attractive on valuation side as well.

Jollibee’s (JFC PM) Risky Bet: Compose Coffee Acquisition in a Competitive Market

By Devi Subhakesan

Jollibee Foods (JFC PM) recently acquired Compose Coffee, the second-largest take-out chain in South Korea’s competitive value coffee retail segment.
While the acquisition presents growth opportunities for Jollibee, the intense competition and inherent challenges of the value coffee retail segment warrant caution.
With Jollibee’s Coffee & Tea business vertical now growing into a meaningful size, we recommend listing it separately to enhance visibility, accountability and unlock shareholder value.

Saint Bella Pre-IPO Tearsheet

By Ethan Aw

Saint Bella (SAINT HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by UBS and Citic Securities.
Saint Bella (SB) is a comprehensive family care group in China, focusing on premium services and products that addresses demand from the lifestyle-minded younger generation.
It is the largest postpartum care and recovery group in terms of revenue from ultra-premium postpartum centers in 2023, according to F&S.

Taste Gourmet (8371 HK): GEM to Mainboard Listing Catalyst in Play

By Sameer Taneja

On 5th July 2024, Taste Gourmet (8371 HK) submitted an application to Hkex to transfer the listing of all its issued Shares from GEM to the Main Board.
The company’s case is strong as it meets all the criteria proposed by the exchange, but there is no assurance that it will obtain relevant approval from the exchange.
Trading at 6.4x/5.2x PE FY24/25e with 25% of the market cap in net cash and a trailing yield of 8.5%, we believe a mainboard listing would provide incremental visibility.

Actinver Research – Health & Personal Care: Healthy revaluation expected (Coverage Initiation)

By Actinver

Within Consumer, we see Health & Personal Care as mostly defensive.
While perfect conditions are hard to align, or remain, these days, we see mostly favorable conditions ahead for this segment, at least where it matters the most.
Throughout the last years, consumers have faced a wide array of HPC options, some of them later phased out as companies started to focus on their core products amid rising costs.

Yoshinoya Holdings (9861 JP): Q1 FY02/25 flash update

Sales increased by 7.4% YoY to JPY47.5bn, driven by store expansion and effective product and sales strategies.
Operating profit decreased by 38.6% YoY to JPY880mn, impacted by rising labor and raw material costs.
Net income attributable to owners of the parent fell by 33.5% YoY to JPY681mn, despite higher sales and price revisions.

Spin-Off Analysis: Spectrum Brands Holdings Inc. (SPB) To Spin-Off Home & Personal Care Business

By Garvit Bhandari

SPB plans to spin-off its home & personal care (HPC) business into a separate listed company (SpinCo). The parent will retain Global Pet Care and Home & Garden business units.
The separation will allow SPB to allocate capital and resources more efficiently towards higher growth categories. SPB (ex SpinCo) will be a higher-growth, higher margin business.
HPC business (low-growth and low-margin) has been a drag on the overall valuation of SPB. The spin-off will unlock value as SPB (ex SpinCo) will command higher multiple post spin.

Target Corp (TGT) – Thursday, Apr 11, 2024

Target aggressively markdown prices to clear excess inventory and maintain momentum in the business
Despite challenges, Target navigated through the shifting consumer landscape and drove positive sales growth, albeit at a slower rate
Target strategically adjusted inventory management and focused on growing categories to stay strong in the retail market

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Jul 12

Most Read: Kokusai Electric , Doosan Robotics , Linklogis, Fast Retailing, Canvest Environmental Protection Group, Keisei Electric Railway Co, Netmarble , Puig Brands , Shanghai Henlius Biotech and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO
Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat
Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes
Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data
Canvest (1381 HK): Evaluating A Privatisation
[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance
Fast Retailing (9983) | Q3 Masterclass
Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat
Puig Brands Joins the IBEX35
Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

Kokusai Elec (6525) ¥300bn+ Offering at ATH – Almost a Second IPO

Today post-close we got confirmation of yesterday’s Reuters scoop of a secondary selldown on Kokusai Electric (6525 JP) after the stock fell 7.2% in heavy volume.
KKR HKE LP and KSP Kokusai LLC (Koch) will together sell 52.5mm shares plus another 7.8mm+ in the greenshoe. Split is 50/50 domestic/international.
This is 60+mm shares against 51mm shares held by non-passive holders ex-Capital (who has been selling). It’s a lot of stock at a high price.

Details of Two Doosan Mergers Involving Enerbility, Robotics, & Bobcat

The restructuring plan of Doosan Group announced today primarily consists of two merger events aimed at transferring the stake in Doosan Bobcat held by Doosan Enerbility to Doosan Robotics.
The 50% price cut on Doosan Enerbility’s share price for merging with Doosan Robotics boosts Robotics’ advantage. This resulted in a swap spread opening with Doosan Bobcat.
Considering an arbitrage strategy in the Doosan Robotics and Doosan Bobcat swap needs caution due to shareholder approval risks, especially with Doosan Enerbility’s low controlling stake potentially complicating the process.

Hang Seng Internet & IT Index (HSIII) Rebalance Preview: Three Adds/Deletes & Capping Changes

By Brian Freitas

The review cutoff date for the September rebalance of the HSIII was 28 June. The changes will be announced on 16 August and become effective after the close 6 September.
There could be 3 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
Capping will result in passives buying Kuaishou Technology (1024 HK) and JD.com (9618 HK) while selling Meituan (3690 HK) and Tencent (700 HK).

Fast Retailing (9983) – Great (Bte) Earnings Now Out of The Way; Anticipating End-July Capping Data

Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact.
New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

Canvest (1381 HK): Evaluating A Privatisation

Since waste-to-energy play Canvest Environmental Protection (1381 HK) announced a possible privatisation from Grandblue Environment (600323 CH) at $4.90/share (a 20.7% premium to undisturbed), shares are up just 6.4%.
There’s a lot to pack in here, not the least being this is an indicative Pre-Conditional Offer.
But the fact the announcement mentions rolling over a specific number of shares of the controlling shareholders (7.23%), suggests negotiations are well advanced. So we explore.

[JAPAN ACTIVISM] Keisei Elec (9009) AGM Result Not Salutary, Tough To Win On This Stance

A week ago, the Keisei Electric Railway Co (9009 JP) AGM took place. The activist which had proposed a shareholder resolution saw ISS and Glass Lewis support.
But that was to no avail as the shareholder proposal got 29.89% of the votes, and 26.15% of total voting rights. This likely informs the near-term future of such proposals.
I expect the ask needs to change, and the agenda item needs to be difficult to be against.

Fast Retailing (9983) | Q3 Masterclass

By Mark Chadwick

Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations.
Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19%
Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium

Trading Setup Targeting the Netmarble PSR Contract, as Seen in the Case of Doosan Bobcat

This block deal has an unusual PSR (price swap return) contract at ₩58,200, the July 10th closing price, likely preventing Netmarble’s typical stock price correction today.
In 2022, a similar-sized local PSR transaction involved Doosan Bobcat Inc, with 9.9 million shares and a PSR swap price of ₩37,500.
As for Doosan Bobcat, the stock initially dropped but rebounded near the PSR swap price, prompting local brokerages, focused on PSR fee income, to sell rather than realize capital gains.

Puig Brands Joins the IBEX35

By Jesus Rodriguez Aguilar

The Technical Advisory Committee (CAT) in an extraordinary meeting adds Puig Brands (PUIG SM) to the IBEX 35 index and removes Melia Hotels International Sa (MEL SM).
Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.
Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.

Henlius (2696 HK): Dilemma as the Scrip Pre-Condition Met and a Substantial Shareholder Emerges

By Arun George

Shanghai Henlius Biotech (2696 HK) announced that the share alternative pre-condition was satisfied. However, the share alternative offer remains at Shanghai Fosun Pharmaceutical (Group) (2196 HK)’s discretion.
Loyal Valley Capital (LVC), a pre-IPO investor, emerged as a substantial shareholder on 10 July, the deadline for submitting letters of interest for the share alternative offer.
The likely scenario is that the offer succeeds as the co-founders enter rollover arrangements, and a share alternative is introduced, which is taken by QIA and LVC.

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Jul 11

Daily Brief South Korea: Shift Up, Shinsung Tongsang, Doosan Enerbility and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Trading Strategy of Shift Up on the First Day of IPO
Shinsung Tongsang (005390 KS)’s Cheeky Delisting Offer
Doosan Enerbility: A Key Beneficiary of Potential Nuclear Power Projects Win in the Czech Republic

Trading Strategy of Shift Up on the First Day of IPO

In this insight, we discuss a trading strategy for Shift Up which starts trading on 11 July. Shift Up is one of the most anticipated IPOs in Korea this year.
Our base case (6 months – 1 year) target price of Shift Up is 95,510 won, which is 59% higher than the IPO price.
We recommend investors to take some profits (about 50% of invested capital) if the share price shoots higher by 100% or more from the IPO price on the first day.

Shinsung Tongsang (005390 KS)’s Cheeky Delisting Offer

Last month, apparel play Shinsung Tongsang (005390 KS) announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.
Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting.
Shinsung’s share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?

Doosan Enerbility: A Key Beneficiary of Potential Nuclear Power Projects Win in the Czech Republic