Daily Briefs

The original trade was discussed at end-April in Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket then updated here and here.
That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it’s +8.6%.
Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.

Redox IPO Lock-Up Expiry – Limited Liquidity Might Provide a Good Excuse to Sell

By Sumeet Singh

Redox (RDX AU), a chemical and ingredients distributor, raised US$270m in its IPO in Jun 2023. Some of its founding family shareholders will be released from their IPO lockup soon.
Redox primarily serves the ANZ market, and it has a presence in Malaysia and the US. It is one of the largest chemicals and ingredients distributors in Australia.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief South Korea: Sanil Electric, Classys, Coupang and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Sanil Electric IPO – Strong Profitability Growth, but Highly Dependent on Its Top Customers
Merger Between Classys and Ilooda Likely to Reduce Local Competition
Coupang Inc.: Artificial Intelligence Integration & 5 Major Growth Drivers

Sanil Electric IPO – Strong Profitability Growth, but Highly Dependent on Its Top Customers

By Ethan Aw

Sanil Electric (062040 KS) is looking to raise up to US$164m in its Korean IPO.
Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
In this note, we talk about the company’s historical performance.

Merger Between Classys and Ilooda Likely to Reduce Local Competition

By Douglas Kim

On 25 June, Classys (214150 KS) announced a merger with Ilooda (164060 KS). The merger ratio is set at 0.1405237 to 1 for Classys and Ilooda.
This merger aims to combine Classys’ expertise in high-intensity focused ultrasound (HIFU) with Ilooda’s in micro-needle radio frequency (RF) and laser technologies.
We have a positive view of this merger between Classys and Ilooda. This merger is likely to reduce the overall competition in the aesthetics devices market in Korea.

Coupang Inc.: Artificial Intelligence Integration & 5 Major Growth Drivers

Coupang has commenced 2024 with a notable performance that underscores both strengths and areas in need of meticulous attention.
During the first quarter, Coupang reported a robust 28% year-over-year growth in revenues in constant currency terms, attributed primarily to increased spending across customer cohorts, including its longest-standing customers.
This points to successful customer retention and the appealing nature of its offerings.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief United States: Broadcom , Warner Bros Discovery , Clean Harbors, Cencora , APA , Coursera , Southwest Airlines Co, Calix Inc and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Broadcom Inc: How Are They Expanding AI and Networking Technologies! – Major Drivers
Warner Bros. Discovery Inc.: A Growth Story Around Strategic Partnerships and Global Expansion! – Major Drivers
Clean Harbors Inc.: Enhancing Environmental Services Through Expanded Solutions & PFAS Regulation Response! – Major Drivers
Cencora Inc.: These Are The 6 Pivotal Factors Impacting Their Performance! – Financial Forecasts
APA Corporation: What Are The Biggest Cost Synergies from Callon Acquisition? – Major Drivers
Coursera Inc.: What Are Their Latest Innovations in Learning Platforms and Technology?
Southwest Airlines: Dissecting the Drivers of Profitability Drag
Calix Inc.: Is The Management Focus on Small and Medium Business Segments Paying Off?

Broadcom Inc: How Are They Expanding AI and Networking Technologies! – Major Drivers

Broadcom Inc. presented its second quarter fiscal year 2024 financial results, underscoring notable growth and strategic advancements, particularly through its semiconductor and software segments.
The revenue recorded was $12.5 billion, a substantial 43% increase year-on-year, buoyed significantly by the inclusion of a full quarter’s financial contribution from VMware.
Excluding this factor, revenue was up 12% from the previous year.

Warner Bros. Discovery Inc.: A Growth Story Around Strategic Partnerships and Global Expansion! – Major Drivers

Warner Bros. Discovery commenced the first quarter of 2024 with a focus on adjusting its operations for future sustainability in an industry marked by rapid disruption due to technological advancements.
The company acknowledges the transformative necessities dictated by changing consumer behaviors and the technological landscape.
On a positive note, Warner Bros. Discovery reported an encouraging increase in subscriber growth for its streaming service, Max, which saw an addition of 2 million subscribers across various regions, pushing its total Direct-to-Consumer (D2C) subscriber count towards 100 million.

Clean Harbors Inc.: Enhancing Environmental Services Through Expanded Solutions & PFAS Regulation Response! – Major Drivers

Clean Harbors reported a firm start to 2024, with various elements of the business performing strongly, though challenges linger primarily in pricing environments affecting some segments.
The Environment Services (ES) division, a pivotal part of the company’s operations, showcased an impressive 10% revenue increase, bolstered by both organic growth and strategic mergers, including recent acquisitions like Thompson and HEPACO.
With a particular strength displayed in technical services which saw an 11% spike driven by high operation volumes, ES stands out as a robust contributor to Clean Harbors’ overall financial health.

Cencora Inc.: These Are The 6 Pivotal Factors Impacting Their Performance! – Financial Forecasts

Cencora, a leading healthcare solutions company, held a discussion reviewing its fiscal 2024 second-quarter results, highlighting both strengths and areas of concern as the organization continues to navigate a complex and evolving market landscape.
The transition announcement of Bob Mauch replacing Steven Collis as CEO presents both an opportunity for continuity and the challenge of strategic execution during leadership changes.
Revenue for the quarter increased by 8%, with an adjusted EPS growth of 9%.

APA Corporation: What Are The Biggest Cost Synergies from Callon Acquisition? – Major Drivers

In APA Corporation’s first-quarter 2024 financial and operational results, the performance seemed rather mixed.
In terms of production efficiency, APA Corporation reported a notable 16% increase in U.S. oil volumes compared to the same period last year, primarily driven by its operations in the Permian Basin.
This marks the fifth consecutive quarter where the company has met or exceeded its U.S. oil production guidance, underscoring its ability to maintain production efficiency consistently.

Coursera Inc.: What Are Their Latest Innovations in Learning Platforms and Technology?

Coursera reported mixed financial results for the first quarter of 2024, reflecting progress on strategic initiatives but facing challenges in revenue growth, particularly within their consumer segment.
The company reported a 15% year-over-year increase in revenue, which, despite aligning with progression in its product offerings and user base growth, fell short of internal expectations primarily due to softness in North American paid learners.
On the positive side, Coursera continues to strengthen its platform with enhanced educational content and broader partnerships, evidenced by the addition of new professional certificates and degrees, and significant emphasis on integrating generative AI technologies into its offerings.

Southwest Airlines: Dissecting the Drivers of Profitability Drag

Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs
Our detailed analysis of Southwest’s financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector
Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite

Calix Inc.: Is The Management Focus on Small and Medium Business Segments Paying Off?

The Calix’s financial performance for the first quarter of 2024 underscores the company’s resilience amid shifting market conditions.
Calix recorded a revenue of $226.3 million, settling within the provided guidance.
This positioning affirms the continued relevance and efficacy of its platform, cloud, and managed services in driving its business agenda despite current industry challenges.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief India: Shankara Building Products L and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Shankara Building Products: Updated Forensic Analysis

Shankara Building Products: Updated Forensic Analysis

By Nitin Mangal

Shankara Building Products L (SHANKARA IN) is seeing a healthy topline growth in the last three years but this is accompanied with margin contractions.
As far as the forensics are concerned, the company does not have grave auditor red flags like earlier but there are still some eye-catching checks.
Caution must be given to the finance costs of the company which look on a higher side vis-a-vis the borrowings. Moreover, inadequate provisioning might also expose out some receivables.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief China: China Traditional Chinese Medicine, Tencent, Midea Real Estate Holding , Bayzed Health Group and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

China Traditional Chinese Medicine (570 HK): Something Is Brewing, but Nobody Knows Quite What
Tencent/Netease: One Game Approval for Tencent in June
Midea Real Estate (3990 HK): Ex-In-Specie, The Rump Is Rich
Pre-IPO Bayzed Health Group – Here Are the Concerns and Potential Risks

China Traditional Chinese Medicine (570 HK): Something Is Brewing, but Nobody Knows Quite What

By Arun George

On no news, China Traditional Chinese Medicine (570 HK) shares declined 12% today. We spoke to several readers to gauge the likely reasons for the fall.
The speculation is that the fall could be due to forced liquidation, Sinopharm’s new Chairman pulling the offer, the consortium unravelling, SAMR issues and Ping An blocking the deal.
There is clearly news behind today’s fall, but none of the above rumours seem credible. The risk/reward is attractive as the upside (25% spread) outweighs the downside (18% to undisturbed).

Tencent/Netease: One Game Approval for Tencent in June

By Ke Yan, CFA, FRM

China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
Of companies that we are monitoring, Tencent and iDreamSky clinched one approval each.

Midea Real Estate (3990 HK): Ex-In-Specie, The Rump Is Rich

By David Blennerhassett

In an unusual move, property developer Midea Real Estate Holding (3990 HK) announced the In-Specie distribution of its core ops, either in unlisted scrip, or HK$5.90/share in cash.
As this is considered a “very substantial disposal“, a Scheme-like vote from independent shareholders is required at an EGM. And controlling shareholders – with 81.13% – are required to abstain.
The EGM will be held on the 2 September, with the cash payment expected on (or before) the 18 October. The question is: what is the Rump worth?

Pre-IPO Bayzed Health Group – Here Are the Concerns and Potential Risks

By Xinyao (Criss) Wang

Bayzed’s business model is similar to that of Hygeia and Inkon Life Technology. However, Bayzed’s profit margin is largely lagging behind peers. This makes us concerned about its future profitability.
The nationwide expansion of oncology hospitals is very challenging. Bayzed’s expansion pace may not be as fast as expected if it hopes to control the quality of expansion.
Due to “heavy asset” model, Bayzed would continue to face capital pressure.The latest valuation of Bayzed in 2023 is RMB2.625 billion. We think Bayzed’s valuation should be lower than peers.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief Japan: Timee Inc, Sawai Group Holdings, Otsuka Holdings, Zuiko Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Timee Pre-IPO – The Positives – Exponential Growth Since Inception
Sawai Group (4887) – BIGLY Buyback To “Drastically” Change Capital Structure
Otsuka Holdings (4578 JP): Label Expansion of Rexulti; 1H24 Guidance Revision; New Mid-Term Plan
Zuiko Corp (6279 JP): Q1 FY02/25 flash update

Timee Pre-IPO – The Positives – Exponential Growth Since Inception

By Clarence Chu

Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
In this note, we will talk about the positive aspects of the deal.

Sawai Group (4887) – BIGLY Buyback To “Drastically” Change Capital Structure

Two years ago, generic pharmaceuticals co Sawai Group Holdings (4887 JP) traded at 10x PER, 6% ROE, and far below book. 10mos ago the price got back to 1x PBR.
By then, their US sub had partly been put into “Current Assets AFS” as it was for sale. By Dec23, it was completely there. In Jan, a “business review” announcement.
The US business sale led to a loss, but growth this year, and a new MTMP in early June. Monday, we got a HUGE buyback announcement. Today, an 8+% pop.

Otsuka Holdings (4578 JP): Label Expansion of Rexulti; 1H24 Guidance Revision; New Mid-Term Plan

By Tina Banerjee

Otsuka Holdings (4578 JP) announced FDA acceptance of indication expansion filing for Rexulti for the treatment of post-traumatic stress disorder. The FDA action date is February 8, 2025.
Due to impairment loss associated with termination of a pipeline asset, the company has reduced operating and net profit guidance for 1H24. However, 1H24 revenue guidance has been raised.
2028 revenue is expected to reach ¥2.5T, an increase of ¥480B from 2023 results, that too after absorbing the negative impact of ~¥310B for loss of exclusivity of core drugs.

Zuiko Corp (6279 JP): Q1 FY02/25 flash update

By Shared Research

Revenue: JPY3.9bn (-4.1% YoY); Operating loss: JPY133mn; Recurring loss: JPY39mn; Net loss: JPY759mn.
Revenue by product type: Adult diaper machinery JPY887mn (-48.8% YoY), Sanitary napkin machinery JPY1.1bn (+82.7% YoY).
Gross profit margin rose to 18.0% from 12.9%; Net income improved due to JPY534mn gain on sale of securities.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief Industrials: Timee Inc, Malaysia Airports Holdings, Redox, Sanil Electric, Grupo Aeromexico, Zuiko Corp, Clean Harbors, Southwest Airlines Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Timee Pre-IPO – The Positives – Exponential Growth Since Inception
Malaysia Airports (MAHB MK)’s Offer: Buckle Up!
Redox IPO Lock-Up Expiry – Limited Liquidity Might Provide a Good Excuse to Sell
Sanil Electric IPO – Strong Profitability Growth, but Highly Dependent on Its Top Customers
Mexican Airlines – Capacity Management to Drive Bumper 2024; Gains Beyond Difficult
Zuiko Corp (6279 JP): Q1 FY02/25 flash update
Clean Harbors Inc.: Enhancing Environmental Services Through Expanded Solutions & PFAS Regulation Response! – Major Drivers
Southwest Airlines: Dissecting the Drivers of Profitability Drag

Timee Pre-IPO – The Positives – Exponential Growth Since Inception

By Clarence Chu

Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
In this note, we will talk about the positive aspects of the deal.

Malaysia Airports (MAHB MK)’s Offer: Buckle Up!

By David Blennerhassett

Back on the 15th May, Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and GIP, offered to buy shares not already owned in Malaysia Airports (MAHB MK) at RM11.00/share.
The premium to undisturbed appears reasonable. The price is a life-time high. The 90% acceptance hurdle was not insurmountable, and the consortium had the flexibility to lower the %.
But the Offer is now facing unexpected political pushback, amid protests against the Israel-linked bid.

Redox IPO Lock-Up Expiry – Limited Liquidity Might Provide a Good Excuse to Sell

By Sumeet Singh

Redox (RDX AU), a chemical and ingredients distributor, raised US$270m in its IPO in Jun 2023. Some of its founding family shareholders will be released from their IPO lockup soon.
Redox primarily serves the ANZ market, and it has a presence in Malaysia and the US. It is one of the largest chemicals and ingredients distributors in Australia.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

Sanil Electric IPO – Strong Profitability Growth, but Highly Dependent on Its Top Customers

By Ethan Aw

Sanil Electric (062040 KS) is looking to raise up to US$164m in its Korean IPO.
Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
In this note, we talk about the company’s historical performance.

Mexican Airlines – Capacity Management to Drive Bumper 2024; Gains Beyond Difficult

We update forecasts for Mexican carriers Aeromexico, Viva Aerobus and Volaris following extremely strong 1Q results, driven by capacity management.
We expect each carrier to produce record performances in 2024 as pricing gains continue through the year.
However, we expect market conditions to normalise beyond 2024 and see further gains as a lot more difficult, particularly given drag from higher aircraft ownership costs.

Zuiko Corp (6279 JP): Q1 FY02/25 flash update

By Shared Research

Revenue: JPY3.9bn (-4.1% YoY); Operating loss: JPY133mn; Recurring loss: JPY39mn; Net loss: JPY759mn.
Revenue by product type: Adult diaper machinery JPY887mn (-48.8% YoY), Sanitary napkin machinery JPY1.1bn (+82.7% YoY).
Gross profit margin rose to 18.0% from 12.9%; Net income improved due to JPY534mn gain on sale of securities.

Clean Harbors Inc.: Enhancing Environmental Services Through Expanded Solutions & PFAS Regulation Response! – Major Drivers

Clean Harbors reported a firm start to 2024, with various elements of the business performing strongly, though challenges linger primarily in pricing environments affecting some segments.
The Environment Services (ES) division, a pivotal part of the company’s operations, showcased an impressive 10% revenue increase, bolstered by both organic growth and strategic mergers, including recent acquisitions like Thompson and HEPACO.
With a particular strength displayed in technical services which saw an 11% spike driven by high operation volumes, ES stands out as a robust contributor to Clean Harbors’ overall financial health.

Southwest Airlines: Dissecting the Drivers of Profitability Drag

Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs
Our detailed analysis of Southwest’s financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector
Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief Energy/Materials: Core Lithium Ltd, Harmony Gold Mining Co Ltd, Covestro AG, APA , Criterium Energy and more

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

In today’s briefing:

Tax-Loss Selling In Australia 2024 – Time To Reverse The Trade (7.2-8.6% Rtn in Two Months So Far)
Quiddity Leaderboard MV J-Gold Miners Sep 24: Mergers Mean Possible Up-And-Out DELETEs
Adnoc/Covestro: Fresh Takeover Negotiations and Valuation Scenarios
APA Corporation: What Are The Biggest Cost Synergies from Callon Acquisition? – Major Drivers
Criterium Energy Ltd (TSX-V: CEQ): Results of Work-Over Campaign Above Expectations.

Tax-Loss Selling In Australia 2024 – Time To Reverse The Trade (7.2-8.6% Rtn in Two Months So Far)

The original trade was discussed at end-April in Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket then updated here and here.
That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it’s +8.6%.
Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.

Quiddity Leaderboard MV J-Gold Miners Sep 24: Mergers Mean Possible Up-And-Out DELETEs

The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
In this insight, we take a look at the potential ADDs and DELs and our flow expectations for the index rebal event in September 2024.

Adnoc/Covestro: Fresh Takeover Negotiations and Valuation Scenarios

By Jesus Rodriguez Aguilar

On 24 June, Covestro AG (1COV GR) confirmed it has decided to enter into concrete negotiations with ADNOC regarding a potential transaction at an indicative €62/share (9.6x EV/fwd NTM EBITDA).
Covestro is trading at 8x (vs. 6.5x median of peers). To justify €70/share (sought last December), Covestro should overdeliver, but analysts and market are somehow skeptical about that.
Considering a takeout price of €62, gross spread is 12.1% and the shares are pricing a 32.5% probability of deal completion.

APA Corporation: What Are The Biggest Cost Synergies from Callon Acquisition? – Major Drivers

In APA Corporation’s first-quarter 2024 financial and operational results, the performance seemed rather mixed.
In terms of production efficiency, APA Corporation reported a notable 16% increase in U.S. oil volumes compared to the same period last year, primarily driven by its operations in the Permian Basin.
This marks the fifth consecutive quarter where the company has met or exceeded its U.S. oil production guidance, underscoring its ability to maintain production efficiency consistently.

Criterium Energy Ltd (TSX-V: CEQ): Results of Work-Over Campaign Above Expectations.

By Auctus Advisors

The work-over programme has delivered a production increase of 180 bbl/d from six wells at a total cost of US$0.36 mm.
This represents an average increase of ~30 bbl/d, which is 50% above management’s expectations (20 bbl/d).
The overall costs are on budget.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief Industrials: Timee Inc, Malaysia Airports Holdings, Redox, Sanil Electric, Grupo Aeromexico, Zuiko Corp, Clean Harbors, Southwest Airlines Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Timee Pre-IPO – The Positives – Exponential Growth Since Inception
Malaysia Airports (MAHB MK)’s Offer: Buckle Up!
Redox IPO Lock-Up Expiry – Limited Liquidity Might Provide a Good Excuse to Sell
Sanil Electric IPO – Strong Profitability Growth, but Highly Dependent on Its Top Customers
Mexican Airlines – Capacity Management to Drive Bumper 2024; Gains Beyond Difficult
Zuiko Corp (6279 JP): Q1 FY02/25 flash update
Clean Harbors Inc.: Enhancing Environmental Services Through Expanded Solutions & PFAS Regulation Response! – Major Drivers
Southwest Airlines: Dissecting the Drivers of Profitability Drag

Timee Pre-IPO – The Positives – Exponential Growth Since Inception

By Clarence Chu

Timee Inc (215A JP) is looking to raise US$290m from its Japan IPO. The IPO will be a 100% secondary selldown by existing shareholders.
Timee operates an on-demand staffing platform that connects part-time jobseekers with businesses in Japan.
In this note, we will talk about the positive aspects of the deal.

Malaysia Airports (MAHB MK)’s Offer: Buckle Up!

By David Blennerhassett

Back on the 15th May, Khazanah Nasional, the EPF, the Abu Dhabi Investment Authority, and GIP, offered to buy shares not already owned in Malaysia Airports (MAHB MK) at RM11.00/share.
The premium to undisturbed appears reasonable. The price is a life-time high. The 90% acceptance hurdle was not insurmountable, and the consortium had the flexibility to lower the %.
But the Offer is now facing unexpected political pushback, amid protests against the Israel-linked bid.

Redox IPO Lock-Up Expiry – Limited Liquidity Might Provide a Good Excuse to Sell

By Sumeet Singh

Redox (RDX AU), a chemical and ingredients distributor, raised US$270m in its IPO in Jun 2023. Some of its founding family shareholders will be released from their IPO lockup soon.
Redox primarily serves the ANZ market, and it has a presence in Malaysia and the US. It is one of the largest chemicals and ingredients distributors in Australia.
In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

Sanil Electric IPO – Strong Profitability Growth, but Highly Dependent on Its Top Customers

By Ethan Aw

Sanil Electric (062040 KS) is looking to raise up to US$164m in its Korean IPO.
Sanil Electric is a specialized company that manufactures and sells reactors, transformers, railway vehicle parts, and switchboards. As an industrial transformer manufacturer, the company mainly manufactures power and distribution transformers.
In this note, we talk about the company’s historical performance.

Mexican Airlines – Capacity Management to Drive Bumper 2024; Gains Beyond Difficult

We update forecasts for Mexican carriers Aeromexico, Viva Aerobus and Volaris following extremely strong 1Q results, driven by capacity management.
We expect each carrier to produce record performances in 2024 as pricing gains continue through the year.
However, we expect market conditions to normalise beyond 2024 and see further gains as a lot more difficult, particularly given drag from higher aircraft ownership costs.

Zuiko Corp (6279 JP): Q1 FY02/25 flash update

By Shared Research

Revenue: JPY3.9bn (-4.1% YoY); Operating loss: JPY133mn; Recurring loss: JPY39mn; Net loss: JPY759mn.
Revenue by product type: Adult diaper machinery JPY887mn (-48.8% YoY), Sanitary napkin machinery JPY1.1bn (+82.7% YoY).
Gross profit margin rose to 18.0% from 12.9%; Net income improved due to JPY534mn gain on sale of securities.

Clean Harbors Inc.: Enhancing Environmental Services Through Expanded Solutions & PFAS Regulation Response! – Major Drivers

Clean Harbors reported a firm start to 2024, with various elements of the business performing strongly, though challenges linger primarily in pricing environments affecting some segments.
The Environment Services (ES) division, a pivotal part of the company’s operations, showcased an impressive 10% revenue increase, bolstered by both organic growth and strategic mergers, including recent acquisitions like Thompson and HEPACO.
With a particular strength displayed in technical services which saw an 11% spike driven by high operation volumes, ES stands out as a robust contributor to Clean Harbors’ overall financial health.

Southwest Airlines: Dissecting the Drivers of Profitability Drag

Southwest continues to suffer revenue generation challenges and issued another profit warning today, yet pricing pressure simply exposes a lack of control over its costs
Our detailed analysis of Southwest’s financial performance illustrates it has seen labor inflation decimate its conversion of gross profit to EBITDAR, now ranking among the bottom tier of the sector
Our deep dive on peer financial performances illustrates that only American, Delta and United have managed to broadly protect gross profit/EBITDAR conversion while all others have seen labor costs bite

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Jun 27

Daily Brief TMT/Internet: Tencent, Chunghwa Telecom, Broadcom , Warner Bros Discovery , Calix Inc, King Yuan Electronics Co, Ltd. and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tencent/Netease: One Game Approval for Tencent in June
Tech Supply Chain Tracker (27-Jun-2024): AI advances tech and industry’s potential.
Broadcom Inc: How Are They Expanding AI and Networking Technologies! – Major Drivers
Warner Bros. Discovery Inc.: A Growth Story Around Strategic Partnerships and Global Expansion! – Major Drivers
Calix Inc.: Is The Management Focus on Small and Medium Business Segments Paying Off?
KYEC (2449.TT): AI Highly Growth Potential may exceed Expectation.

Tencent/Netease: One Game Approval for Tencent in June

By Ke Yan, CFA, FRM

China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
Of companies that we are monitoring, Tencent and iDreamSky clinched one approval each.

Tech Supply Chain Tracker (27-Jun-2024): AI advances tech and industry’s potential.

By Tech Supply Chain Tracker

Generative AI is driving hardware advancements and creating new industrial prospects, with Synopsys offering automation and analytics tools for chipmaking facilities in India.
Cultivating global cash cows like CHPT and Chief Telecom to enhance revenue streams, Volkswagen is investing $5 billion in Rivian to create an EV software joint venture, while Poland’s CEZAMAT boosts photonics and chip goals in Europe.
Indian electronic component production value is set to increase 5x by 2030, but slow data center expansion may affect chip sales, according to Nvidia CEO. SiFive also unveils 4th-gen essential product line to drive innovation in embedded applications.

Broadcom Inc: How Are They Expanding AI and Networking Technologies! – Major Drivers

Broadcom Inc. presented its second quarter fiscal year 2024 financial results, underscoring notable growth and strategic advancements, particularly through its semiconductor and software segments.
The revenue recorded was $12.5 billion, a substantial 43% increase year-on-year, buoyed significantly by the inclusion of a full quarter’s financial contribution from VMware.
Excluding this factor, revenue was up 12% from the previous year.

Warner Bros. Discovery Inc.: A Growth Story Around Strategic Partnerships and Global Expansion! – Major Drivers

Warner Bros. Discovery commenced the first quarter of 2024 with a focus on adjusting its operations for future sustainability in an industry marked by rapid disruption due to technological advancements.
The company acknowledges the transformative necessities dictated by changing consumer behaviors and the technological landscape.
On a positive note, Warner Bros. Discovery reported an encouraging increase in subscriber growth for its streaming service, Max, which saw an addition of 2 million subscribers across various regions, pushing its total Direct-to-Consumer (D2C) subscriber count towards 100 million.

Calix Inc.: Is The Management Focus on Small and Medium Business Segments Paying Off?