Category

Daily Briefs

Jun 26
0

Daily Brief TMT/Internet: NCSOFT Corp, Cover Corp, Taiwan Semiconductor (TSMC), Samsung Electronics, Micron Technology, Xiao I , Formfactor Inc, Celestica, Cargurus , Belden Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • NCSoft: Corporate Split-Off of Two Divisions
  • Cover Corp (TYO 5253) – High Growth Opportunity in the Expanding VTuber Sector
  • Taiwan Tech Weekly: Declines With Nvidia; Taiwan’s Vietnam Shift Continues; UMC’s Outlook Improves
  • Tech Supply Chain Tracker (26-Jun-2024): Taiwan uses AI for medical advancements.
  • Micron Earnings – What to Expect
  • AIXI: Announces numerous real-world AI applications. The company’s financial condition remains a concern.
  • FormFactor Inc.: Revenue Diversification & Expansion In Enterprise & Consumer Markets! – Major Drivers
  • Celestica Inc.: How Will Their Expansion in Hyperscalers and Data Center Market Impact Future Growth? – Major Drivers
  • CarGurus Inc.: How Is Their International Market Expansion Progressing? – Major Drivers
  • Belden Inc.: How Are They Augmenting Their Offerings Through Strategic Acquisitions? – Major Drivers

NCSoft: Corporate Split-Off of Two Divisions

By Douglas Kim

  • On 24 June, NCSoft announced a corporate split-off of two divisions called named NC QA Company and NC IDS Company.
  • NCSoft plans to hold a shareholders meeting where to vote on the split off decision on 14 August. Effective date of the company split is scheduled for 1 October 2024.
  • The consensus estimates sales of 2.0 trillion won (up 19.2% YoY) and operating profit of 272 billion won (up 155.2% YoY) in 2025.

Cover Corp (TYO 5253) – High Growth Opportunity in the Expanding VTuber Sector

By Altay Capital

  • Cover Corp, a leading talent management company in the rapidly growing VTuber industry.
  • They’re considered the most prestigious agency and should attract the best talent.
  • Superior Underlying Performance Metrics: Cover boasts superior key performance indicators (KPIs) compared to their main competitor Anycolor, including higher engagement metrics like subscribers, hours watched, and viewership.

Taiwan Tech Weekly: Declines With Nvidia; Taiwan’s Vietnam Shift Continues; UMC’s Outlook Improves

By Vincent Fernando, CFA

  • Taiwan Shares Fall With Nvidia… SK Hynix HBM DRAM with Global Unichip? Taiwan’s Vietnam Shift Continues… Broadcom Developing an AI Chip with Bytedance
  • TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing 
  • UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ. 

Tech Supply Chain Tracker (26-Jun-2024): Taiwan uses AI for medical advancements.

By Tech Supply Chain Tracker

  • Taiwan is utilizing AI supercomputers for medical and life science innovations, showcasing a commitment to technological advancement in those fields.
  • Wistron is making a significant investment of $24.5M for a new factory in Vietnam, indicating a desire to expand production capabilities in the region for potential economic growth.
  • Samsung is poised to overtake Apple in Taiwan’s mobile market by June, highlighting the company’s competitive edge and potential dominance in the industry.

Micron Earnings – What to Expect

By Jim Handy

  • Expect Micron to report strength in AI, highlight the company’s HBM efforts, and quote McKinsey’s trillion-dollar forecast in their earnings call tomorrow
  • Although Nvidia’s growth has really helped the DRAM market, along with 2023 CapEx cuts, there are important concerns of double-ordering which could lead to a collapse soon
  • Semiconductor market revenues have leveled off since December 2023, hinting a return to more normal growth for the rest of the year

AIXI: Announces numerous real-world AI applications. The company’s financial condition remains a concern.

By Zacks Small Cap Research

  • Xiao-I (NASDAQ: AIXI) is leveraging its existing relationships and signing new clients at an impressive pace.
  • The company has announced nearly a dozen new products or relationships utilizing its AI platforms in the past two months.
  • Competition remains intense in the AI market and we think investors are questioning if Xiao-I has the financial capacity to remain competitive across multiple industries as private and public companies continue to invest heavily in its core markets.

FormFactor Inc.: Revenue Diversification & Expansion In Enterprise & Consumer Markets! – Major Drivers

By Baptista Research

  • FormFactor delivered mixed first-quarter results for the fiscal year 2024, with its revenue closely aligning with the upper end of forecasts due to robust demand in the DRAM probe card sector, corroborated by significant advancements in setting standards for testing high-bandwidth memory (HBM).
  • However, the company encountered challenges as non-GAAP earnings per share (EPS) dipped below the anticipated range primarily due to a less favorable product mix across its segments and heightened warranty costs in the Probe Cards segment.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Celestica Inc.: How Will Their Expansion in Hyperscalers and Data Center Market Impact Future Growth? – Major Drivers

By Baptista Research

  • Celestica launched the first quarter of 2023 on a robust note, demonstrating a significant enhancement in its financial metrics and strategic position.
  • The firm reported revenues of $2.21 billion, surpassing their high-end guidance and representing a year-over-year increase of 20%.
  • Notably, the adjusted earnings per share (EPS) reached $0.86, exceeding expectations by $0.39 compared to the prior year period.

CarGurus Inc.: How Is Their International Market Expansion Progressing? – Major Drivers

By Baptista Research

  • CarGurus Inc. recently disclosed its first-quarter 2024 financial results, presenting a mixed outcome with several highlights and areas of concern.
  • In terms of positives, the company reported an increase in non-GAAP consolidated adjusted EBITDA by 24% year-over-year, marking the highest first-quarter EBITDA margin in three years.
  • This growth was primarily fueled by a continued expansion in the subscription base and revenue generated from its Marketplace business, which witnessed an acceleration of 12% year-over-year growth in revenue.

Belden Inc.: How Are They Augmenting Their Offerings Through Strategic Acquisitions? – Major Drivers

By Baptista Research

  • Belden Inc., a global leader in signal transmission solutions, reported their first quarter 2024 financial results, demonstrating a performance that exceeded expectations amidst a challenging market environment.
  • Revenue for the quarter stood at $536 million with earnings per share (EPS) of $1.24, surpassing the high end of their guidance.
  • This achievement was undergirded by a sequential increase in orders by 5%, resulting in a book-to-bill ratio of 1.03, suggesting a shift toward more stable conditions.

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Jun 26
0

Daily Brief Industrials: Pylon Technologies , Eureka Forbes, Ingersoll Rand , Lyft , Mytilineos Holdings Sa and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Quiddity Leaderboard STAR 50 Sep 24: Two Changes; US$681mn One-Way; New Trade Ideas
  • India Channel Insight | Eureka Forbes (EUREKAFO IN) | Ignoring Offline Channel
  • Ingersoll Rand Inc.: How Are They Successfully Executing The Expansion of Life Sciences and Technology Sectors? – Major Drivers
  • Lyft Inc.: Optimization of Supply and Demand through Price and Incentives Management! – Major Drivers
  • Metlen Energy & Metals – A new name for its next phase

Quiddity Leaderboard STAR 50 Sep 24: Two Changes; US$681mn One-Way; New Trade Ideas

By Janaghan Jeyakumar, CFA

  • STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
  • In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the September 2024 index rebal event.
  • We currently see two ADDs and two DELs for the STAR 50 index resulting in one-way flows of US$681mn.

India Channel Insight | Eureka Forbes (EUREKAFO IN) | Ignoring Offline Channel

By Pranav Bhavsar

  • We interact with a few business partners of Eureka Forbes (EUREKAFO IN)  to understand the latest on-ground business developments.
  • Key areas that are probed include feedback on product quality and innovation, attachment rates for AMC services, key drivers of volume, improvements in service quality, and product premiumization.
  • Based on our interactions, it is quite evident that the company is not interested in developing its offline sales channels, i.e., the franchises.

Ingersoll Rand Inc.: How Are They Successfully Executing The Expansion of Life Sciences and Technology Sectors? – Major Drivers

By Baptista Research

  • Ingersoll Rand announced its results for the first quarter of 2024, indicating a solid performance underpinned by strategic initiatives and operational agility.
  • Despite facing macroeconomic challenges, the company has demonstrated its resilience and capacity to execute effectively against these headwinds.
  • Key to its strategy is the IRX initiative, an internal system designed to optimize performance and fuel growth through efficiency and innovation.

Lyft Inc.: Optimization of Supply and Demand through Price and Incentives Management! – Major Drivers

By Baptista Research

  • Lyft’s first quarter of 2024 exhibited a robust start, underpinned by notable growth across several key parameters indicative of a thriving ridesharing business in both the U.S. and Canadian markets.
  • Revenues, gross bookings, and the total number of rides all recorded substantial increases year over year.
  • The implementation of strategic changes and enhancements in the service and operational model seems to have borne fruit, reflecting in the reported financial figures and operational metrics.

Metlen Energy & Metals – A new name for its next phase

By Edison Investment Research

Mytilineos recently announced a company name change to Metlen Energy & Metals. The decision to rebrand is in line with its strategy of establishing a strong international identity. It also confirmed its intention to examine an international listing, including on the London Stock Exchange. We profile Metlen and examine how it could look in the context of an LSE listing. It would rank c 90th in the LSE’s largest index firms on market capitalisation and c 50th based on earnings, indicating potential re-rating upside. Metlen is a c€5bn market capitalisation firm listed in Athens with two core pillars: an integrated Energy business (power generation and distribution, a high-growth renewables business and gas supply and trading) and Metals (Europe’s largest integrated bauxite, alumina and aluminium producer).

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Jun 26
0

Daily Brief Health Care: Shanghai Henlius Biotech , HealthCare Global Enterprises, Pharmaessentia Corp, Akeso Biopharma Inc, Cooper Cos, FibroBiologics, GSK , Certara , Penumbra , Boston Scientific and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing
  • HCG: Emerging Centers Are Scaling Up Well
  • Pharmaessentia Corp (6446 TT): Starts 2024 on Strong Note; Reports First Operating Profit in 1Q24
  • What’s Behind Akeso’s Cadonilimab Price Cut and What’s Next?
  • The Cooper Companies Inc.: How They Are Carrying Out The Expansion and Management of MiSight and Other Specialty Products! – Major Drivers
  • FibroBiologics, Inc. – June 24, 2024
  • GlaxoSmithKline plc (GSK): What Is The Development In Terms Of Pipeline Development & Recent Technological Advancements? – Major Drivers
  • Certara Inc.: Introduction of Unified Certara Cloud Platform & Major Drivers
  • Penumbra Inc.: Expanding Global Market Access To Catalyze Growth! – Major Drivers
  • Boston Scientific Corporation: What Are Their Latest Investments in Innovative Technologies? – Major Drivers

Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing

By Xinyao (Criss) Wang

  • The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
  • Henlius’ share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
  • As usual, Fosun doesn’t consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.

HCG: Emerging Centers Are Scaling Up Well

By Ankit Agrawal, CFA

  • With emerging centers scaling up and established centers growing steadily, HCG’s profitability is growing strong. HCG’s Q4FY24 PBT grew to INR 28cr vs INR 13cr YoY and INR 3cr QoQ. 
  • With the patient mix improving for emerging centers with growing vintage, ARPOB for emerging centers has crossed INR 40000, a rise of 12.2% YoY.
  • We estimate that by FY26, HCG’s PAT could exceed INR 260cr, leading us to value HCG at a market cap of around INR 10000cr at 38x+ FY26 exit P/E.

Pharmaessentia Corp (6446 TT): Starts 2024 on Strong Note; Reports First Operating Profit in 1Q24

By Tina Banerjee

  • Pharmaessentia Corp (6446 TT) reported strong 1Q24 result, with increasing revenue and declining operating expenses. Revenue increased 86% YoY, gross margin (88%) improved, and operating expenses declined 3% YoY.
  • The company achieved operating profit (NT$18M) for the first time in 1Q24. Net profit reached NT$330M in 1Q24, versus net profit of NT$315M for 1H23.
  • Approval of Besremi in additional countries, especially China, data readouts from late-stage ET trials, and accelerating  revenue as well as improving profitability remain the near-term catalysts.

What’s Behind Akeso’s Cadonilimab Price Cut and What’s Next?

By Eric Wen

  • Cadonilimab (AK104)(PD-1/CTLA-4) achieved 7.1% market share in China’s PD-1(L1) market in 2023, up from 3.4% in 2022, ranking it No.4 in revenue market share after Tislelezumab, Keytruda and Sintilimab;
  • With six days to go, the chance to receives NMPA approval for Gastric Cancer is slim, which means the June 18 price cut is for the existing Cervical Cancer indication;
  • The big question is the price elasticity following Cadonilimab’s inclusion to NDRL. With ~110K new patients each year and only ~2,100 receiving Cadonilimab, we expect a moderate price cut.

The Cooper Companies Inc.: How They Are Carrying Out The Expansion and Management of MiSight and Other Specialty Products! – Major Drivers

By Baptista Research

  • Analyzing the latest results of The Cooper Companies, the narrative presents a compelling mixed view of the company’s trajectory with several interesting developments and challenges reporting out of its second quarter of 2024.
  • The Cooper Companies operates through two segments, CooperVision and CooperSurgical, both of which are critical in assessing the company’s overall health and prospective growth.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

FibroBiologics, Inc. – June 24, 2024

By Zacks Small Cap Research

  • We are initiating coverage of FibroBiologics, Inc. (FBLG) with an $11.00 valuation.
  • FibroBiologics is a cell therapy company focused on the development of fibroblast-based therapies for the treatment of chronic diseases with significant unmet medical needs.
  • We anticipate that a Phase 1/2 clinical trial of CYWC628, the company’s lead asset targeting diabetic foot ulcers, will be completed in Australia in 2025.

GlaxoSmithKline plc (GSK): What Is The Development In Terms Of Pipeline Development & Recent Technological Advancements? – Major Drivers

By Baptista Research

  • GSK has reported a robust start to the year with notable growth in both sales and profits, driven by strong execution and successful product launches.
  • Total sales increased by 13% to GBP 7.4 billion, with core operating profit surging by 35% to GBP 2.4 billion, and core earnings per share growing by 37% to 43.1p.
  • These figures exclude contributions from COVID solutions, underscoring the company’s success in its core operations.

Certara Inc.: Introduction of Unified Certara Cloud Platform & Major Drivers

By Baptista Research

  • Certara reported its first-quarter financial results for 2024, detailing a period of structured progress and proactive initiatives aimed at solidifying and expanding its position in the pharmaceutical software and technology-driven services space.
  • Revenues for the quarter totaled $96.7 million, marking a 7% growth on a reported basis and 6% on a constant currency basis, compared to the prior year.
  • This increment was supported by robust demand for Certara’s biosimulation software and services, complemented by a burgeoning interest in AI-enhanced products after its recent acquisition of Vyasa.

Penumbra Inc.: Expanding Global Market Access To Catalyze Growth! – Major Drivers

By Baptista Research

  • Penumbra, a global healthcare company, reported a robust start to the first quarter of 2024, showcasing notable financial and operational success.
  • The company’s primary focus on thrombectomy products, specifically within the U.S. market, has contributed significantly to its performance, supported by innovative product launches like Lightning Flash and Lightning Bolt.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Boston Scientific Corporation: What Are Their Latest Investments in Innovative Technologies? – Major Drivers

By Baptista Research

  • Boston Scientific Corporation reported robust first-quarter 2024 results that exceeded expectations, driven by an expansive and diversified product portfolio and effective execution across its various business units.
  • The company achieved an impressive 15% operationally and 13% organically in sales growth, surpassing the high-end guidance range of 7% to 9%.
  • Additionally, all business units and regions recorded notable double-digit growth during the quarter, reflecting strong market penetration and execution.

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Jun 26
0

Daily Brief Consumer: Prosus NV, Best World International, RPSG Ventures Limited, ZJLD Group , Unilever , TSE Tokyo Price Index TOPIX, Jm Smucker Co, Lkq Corp, Philip Morris International, Domino’s Pizza and more

By | Consumer, Daily Briefs

In today’s briefing:

  • NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics
  • Best World (BEST SP): The 19th July Vote Will Be Close
  • RPSG Ventures: FMCG Business Is Scaling Up Well
  • ZJLD Group (6979 HK):  AGM Takeaway + Thoughts On The Chinese Liquor Industry
  • Unilever PLC: How Will The Enhanced Productivity and Efficiency Measures Translate Into EBITDA Margins! – Major Drivers
  • In Particular, Companies with Small Market Capitalization Should Consider Going Private
  • The J. M. Smucker Company: These Are The 4 Fundamental Factors Driving Its Performance! – Financial Forecasts
  • LKQ Corporation: Adoption and Expansion of Digital and Technological Solutions! – Major Drivers
  • Philip Morris International Inc.: Is The Focus on Smoke-Free Product Portfolio Paying Off? – Major Drivers
  • Domino’s Pizza Inc.: How Are Their Franchisee and Market Pricing Strategies Evolving? – Major Drivers

NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics

By Charlotte van Tiddens, CFA

  • Naspers and Prosus released results for FY24 yesterday morning. The initial market reaction was positive, both discounts closed narrower for the day.
  • Since the appointment of Fabricio Bloisi was announced in May, both discounts have widened.
  • JSE indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R58bn, R38bn traded in the closing auction (66%).

Best World (BEST SP): The 19th July Vote Will Be Close

By David Blennerhassett

  • Two years of suspension, an “okay” Offer (following the bump), family members selling prior to and after the Offer – Best World International (BEST SP) is anything but dull. 
  • The Circular is now out for the $2.56/share Exit Offer from Best World’s founders Dora Hoan and Doreen Tan. The Offer Price will not be increased. 
  • Independent shareholders go to the vote on the 19th July. The IFA says fair & reasonable. Payment is possible late-July. But the vote is by no means a sure thing.

RPSG Ventures: FMCG Business Is Scaling Up Well

By Ankit Agrawal, CFA

  • The FMCG business has been now sustaining an annualized revenue run-rate of INR 500cr+. Q4FY24 FMCG revenue was INR 135cr+, similar to Q3FY24 and a growth of 30%+ YoY.
  • Firstsource Solutions (“Firstsource”) , the BPO business, has been sustaining its recovery after a lull period for two years. Its revenue grew 4.2% QoQ and 4.5% YoY in constant currency.
  • The Sports business revenue continue to be dominated by IPL. Having played three seasons now, RPSGV’s IPL franchise, Lucknow Super Giants (LSG), has made its place and holds significant value.

ZJLD Group (6979 HK):  AGM Takeaway + Thoughts On The Chinese Liquor Industry

By Steve Zhou, CFA

  • ZJLD Group (6979 HK) held its annual general meeting last Friday (June 21). 
  • The share price is down 21% in the last 30 days, mainly due to a major sector pullback.
  • I continue to expect 20% net profit growth for the company in 2024E.  The company is trading at 13x 2024E PE which I believe is attractive. 

Unilever PLC: How Will The Enhanced Productivity and Efficiency Measures Translate Into EBITDA Margins! – Major Drivers

By Baptista Research

  • Unilever has presented its full-year results, reflecting a mix of positive advancements and areas requiring improvement.
  • Among the highlights, Unilever reported an underlying sales growth of 7%, driven by a significant contribution from price increases at 6.8% and a marginal recovery in volume at 0.2%.
  • Notably, the 30 Power Brands demonstrated robust performance, accruing an 8.6% growth in underlying sales and contributing notably to the company’s volume growth.

In Particular, Companies with Small Market Capitalization Should Consider Going Private

By Aki Matsumoto

  • For companies facing challenges in maximizing sustainable shareholder returns, it is not a bad idea to rethink management strategies for corporate value growth in the quiet environment of going private.
  • MBOs began to attract attention as managers became more aware of the listing costs. TSE’s request last March was the product of making companies even more aware of the costs.
  • It is not easy for a company that has not been recognized in the marketplace for many years to increase its stock valuation in a short period of time.

The J. M. Smucker Company: These Are The 4 Fundamental Factors Driving Its Performance! – Financial Forecasts

By Baptista Research

  • J.M. Smucker Company, in its Fiscal 2024 Fourth Quarter, presented a mixed picture of its operational and financial stances, balancing strategic growth initiatives against persistent challenges.
  • The management outlined a cautious yet structured approach towards scaling its operations, emphasizing investment in key growth areas while navigating through ongoing market volatilities, particularly in the coffee segment.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

LKQ Corporation: Adoption and Expansion of Digital and Technological Solutions! – Major Drivers

By Baptista Research

  • LKQ Corporation reported its first quarter of 2024 earnings, revealing a mixed bag of results under a challenging economic atmosphere.
  • While the top-line revenue grew considerably, other key performance indicators softened compared to previous quarters, reflecting the impact of several external and operational headwinds.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Philip Morris International Inc.: Is The Focus on Smoke-Free Product Portfolio Paying Off? – Major Drivers

By Baptista Research

  • Philip Morris International has presented its 2024 first-quarter results, revealing significant strides in revenue and operating income facilitated by robust volume growth and effective operational execution.
  • The company has demonstrated a marked improvement in its performance across various sectors, including both its traditional combustible products and newer, smoke-free alternatives.
  • Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

Domino’s Pizza Inc.: How Are Their Franchisee and Market Pricing Strategies Evolving? – Major Drivers

By Baptista Research

  • Domino’s Pizza, Inc. recently presented its first quarter 2024 results, underpinned by a robust performance reportedly driven by strong U.S. sales, reflecting bullish growth in the carryout and lower-income cohort segments.
  • The company experienced a notable 5.6% increase in U.S. same-store sales, driven predominantly by transaction growth, which the management attributes to the enhancements in its loyalty program and promotional strategies.
  • Despite a strong domestic performance, international sales showed relatively softer growth at a rate of 0.9%.

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Jun 26
0

Most Read: Keisei Electric Railway Co, Chinese Estates Holdings, T Gaia Corp, Lotte Non Life Insurance Co, Shanghai Henlius Biotech , Midea Real Estate Holding , Hyundai Motor India , Prosus NV and more

By | Daily Briefs, Most Read

In today’s briefing:

  • [JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?
  • Chinese Estates (127 HK): Understanding The Scheme Voting
  • T-Gaia (3738 JP) – Possible Premium Takeout Story
  • Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets
  • Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price
  • Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer
  • Midea Real Estate (3990 HK): An In-Specie Distribution to Unlock Value
  • Hyundai Motor India Pre-IPO – The Positives – Quasi-Local, Riding the SUV Wave
  • NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics
  • Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing

[JAPAN ACTIVISM] Palliser Gets ISS/GL Nods for Keisei AGM Proposals – How Will The Swing Vote Swing?

By Travis Lundy

  • In Oct2023, activist Palliser Capital launched a campaign on well-known “stub trade” Keisei Electric Railway Co (9009 JP) (1.6% stake). The proposal? Monetise OLC, invest for growth, be shareholder friendly.
  • Keisei responded 3+mos ago: buyback and 1% OLC stake sale but said OLC would remain an equity affiliate. Palliser re-engaged in late April (Japanese/English and two AGM agenda items). Keisei objected.
  • Palliser made their case, Glass Lewis and ISS support Palliser. Palliser likely cannot win. The goal here isn’t to win though. It is to get enough to raise management consciousness. 

Chinese Estates (127 HK): Understanding The Scheme Voting

By David Blennerhassett

  • Chinese Estates (127 HK)‘s Scheme was always going to be a tricky affair, given Hong Kong’s 2021 M&A bloodbath – e.g.  Soho China (410 HK) & Golden Throat (6896 HK).
  • 95.95% of Disinterested Shareholders voted for the Scheme. However, the Scheme failed the “headcount test”, as it was not approved by a majority in number of Scheme Shareholders. 
  • Hong Kong abolished the headcount test in March 2014. Cayman and Bermuda-incorporated companies should follow suit. 

T-Gaia (3738 JP) – Possible Premium Takeout Story

By Travis Lundy

  • I kind of hate this, but I also can’t ignore it. Apparently, an expensive media service Reporting on Deals or about the Market for Mergers, had an article today.
  • Bloomberg carried a small blurb saying there was “speculation on a tender offer…. according to traders”. The stock is untraded, limit up.  
  • The most informative comment comes from Japanese stock market portal ‘kabutan‘ which suggests “overseas media” thinks Sumitomo Corp will sell its shares. I look at the possibilities below.

Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets

By Sanghyun Park

  • There is a high likelihood of information leaking through the lead securities firm when the tender offer prospectus is provided to branches about three days before the disclosure.
  • With the FSS’s stricter stance, tender offer candidates may act swiftly before new regulations, prompting attention to potential surges in tender offers.
  • Our approach is clear: identify short-term tender offer candidates, monitor trading volumes for spikes, and use the three-day pre-disclosure surge to time our positions effectively.

Henlius (2696 HK): Fosun Pharma’s HK$24.60 Offer at Around Half the IPO Price

By Arun George

  • Shanghai Henlius Biotech (2696 HK) disclosed a pre-conditional privatisation offer by Shanghai Fosun Pharmaceutical (Group) (2196 HK) at HK$24.60, a 36.7% premium to the undisturbed price. The offer price is final. 
  • The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). There is no minimum acceptance condition. 
  • Long term investors will be unimpressed as the offer is half the HK$49.60 IPO price. However, shareholders with blocking stakes should be supportive partly because of the share alternative option.

Henlius Biotech (2696 HK): Fosun Pharma’s “Fair” Offer

By David Blennerhassett

  • Shanghai Fosun Pharmaceutical (2196 HK) has made a HK$24.60/share Offer (best & final), in cash, for H-shares not held in Shanghai Henlius Biotech (2696 HK). A scrip alternative may be afforded. 
  • As Henlius is PRC-incorporated, this Offer is structured as a Merger by Absorption, involving a Scheme-like vote for independent H-shareholders. There is no tendering condition.
  • Pre-Conditions include NDRC, MoC, and SAFE. The Long Stop date to secure these conditions is 30th April 2025. That’s way too conservative. This should be wrapped up around mid 4Q24.

Midea Real Estate (3990 HK): An In-Specie Distribution to Unlock Value

By Arun George

  • On 25 June, Midea Real Estate Holding (3990 HK) disclosed an in-specie distribution of its PD&S business through a scrip or cash (HK$5.90 per share, 57.33% premium to undisturbed price).
  • The key condition will be approval of the distribution by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection).
  • Midea RE will remain listed with an asset-light retained business, which is estimated to be worth HK$1.93. The Group’s estimated value is HK$7.83, a 17.6% upside to the last close.

Hyundai Motor India Pre-IPO – The Positives – Quasi-Local, Riding the SUV Wave

By Sumeet Singh

  • Hyundai Motor (005387 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
  • HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
  • In this note, we talk about the positive aspects of the deal.

NPN X PRX FY24 Results: Initial Market Reaction Positive & JSE June Auction Analytics

By Charlotte van Tiddens, CFA

  • Naspers and Prosus released results for FY24 yesterday morning. The initial market reaction was positive, both discounts closed narrower for the day.
  • Since the appointment of Fabricio Bloisi was announced in May, both discounts have widened.
  • JSE indices were rebalanced in the closing auction on Friday. Turnover for the day on the JSE was R58bn, R38bn traded in the closing auction (66%).

Shanghai Henlius Biotech Privatization (2696.HK) – The Offer Price Is Disappointing

By Xinyao (Criss) Wang

  • The Cancellation Price of HK$24.60 per share is about 50% lower than the IPO price of HK$49.6 per share in 2019. So, those long-term investors would suffer big losses.
  • Henlius’ share price has outperformed the index. If it remains listed, it’s able to continue to grow and provide long-term returns for shareholders. Reasonable Cancellation Price should be above HK$30/share.
  • As usual, Fosun doesn’t consider the interests of long-term investors and shareholders. There would be some investors/shareholders vote against the privatization, but the returns for arbitrageurs is not bad.

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Jun 26
0

Daily Brief ESG: In Particular and more

By | Daily Briefs, ESG

In today’s briefing:

  • In Particular, Companies with Small Market Capitalization Should Consider Going Private

In Particular, Companies with Small Market Capitalization Should Consider Going Private

By Aki Matsumoto

  • For companies facing challenges in maximizing sustainable shareholder returns, it is not a bad idea to rethink management strategies for corporate value growth in the quiet environment of going private.
  • MBOs began to attract attention as managers became more aware of the listing costs. TSE’s request last March was the product of making companies even more aware of the costs.
  • It is not easy for a company that has not been recognized in the marketplace for many years to increase its stock valuation in a short period of time.

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Jun 26
0

Daily Brief Thematic (Sector/Industry): #18 India Insight: Tata Motors Demerger and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • #18 India Insight: Tata Motors Demerger, Kotak Bank Expands, Ather Plans IPO
  • Ohayo Japan | Nvidia Show Rolls On
  • For Chinese BEV Makers, A Potential ‘Backdoor’ to the US BEV Market May Be Shut by Mexico
  • [Blue Lotus Daily]:1211HK/LI/XPEV/NIO/BEKE/1810HK/300207SZ/300750SZ/LKNCY/9926HK/MNSO/600519CH
  • [Blue Lotus Daily – TMT Update]:700 HK/BABAUS/BIDUUS/TCOMUS/NTESUS/AAPLUS/002624 CH/259960KRX/NVDAUS
  • Leaders of Japan’s Drugstore Sector
  • Sustainable Investing Surveyor – Focus on Spruce Power Holding Corporation (SPRU)

#18 India Insight: Tata Motors Demerger, Kotak Bank Expands, Ather Plans IPO

By Sudarshan Bhandari

  • Kotak Mahindra Bank aims to add up to 200 branches in FY25
  • Ather Energy converts to a public company, planning an IPO in 2024
  • Ata Motors plans to demerge its PV and CV businesses for better synergy

Ohayo Japan | Nvidia Show Rolls On

By Mark Chadwick

  • U.S. markets were mixed on Tuesday; Dow Jones fell 299 points (-0.8%), ending a five-day win streak, while S&P 500 (+0.4%) and Nasdaq (+1.3%) rose.
  • Japan’s May machine tool orders rose 4% to 124.5 billion yen, with Asia, especially China, driving an 18% sales surge.
  • Hitachi saw a 70% rise in executives earning over 100 million yen in FY 2024, totaling 34, due to tying compensation to stock performance.

For Chinese BEV Makers, A Potential ‘Backdoor’ to the US BEV Market May Be Shut by Mexico

By Daniel Hellberg

  • Under pressure from US, Mexico appears to shut out Chinese BEV makers
  • Biden administration seems intent on keeping low-priced Chinese BEVs out
  • Next: monitor new BEV investments in MX, and policies of new prez Sheinbaum

[Blue Lotus Daily]:1211HK/LI/XPEV/NIO/BEKE/1810HK/300207SZ/300750SZ/LKNCY/9926HK/MNSO/600519CH

By Eric Wen

  • 1211 HK/LI US /XPEV US/NIO US: China and the EU have launched negotiations on electric vehicle tariffs (///////)
  • BEKE US: Existing Home Sales Increase 61% YoY in the 26th Week of 2024, Expected to Increase 19% YoY in June (+)
  • 1810 HK/ NIO US/ XPEV US/ LI US/1211 HK/300207 SZ/300750 SZ:  Xiaomi’s third model was said to be a low priced model, targeting low tier cities .(/////////////)

[Blue Lotus Daily – TMT Update]:700 HK/BABAUS/BIDUUS/TCOMUS/NTESUS/AAPLUS/002624 CH/259960KRX/NVDAUS

By Ying Pan

  • 700 HK: Institutions Report <DnF Mobile>’s First-Month Revenue Exceeds US$270mn; We Expected to Rise Further After June 20 Update(+)
  • 700 HK: Tencent’s <Peacekeeper Elite> New Version Adds Two New Playable Modes, Positive Player Recall Performance(+)
  • BABA US/BIDU US:  LLM failed Chinese Gaokao with Math the biggest challenge(+/-)

Leaders of Japan’s Drugstore Sector

By Michael Causton

  • Japan’s drugstore sector is in the midst of consolidation through organic expansion and M&A but who are the leaders and how do they compare?
  • We provide snapshot profiles on each of the key players, their current strategies and future outlook.
  • With the sector increasingly threatening the supermarket and convenience store sectors, many of these names will come to dominate Japanese retailing in the next decade.

Sustainable Investing Surveyor – Focus on Spruce Power Holding Corporation (SPRU)

By Water Tower Research

  • The WTR Sustainable Index was down 0.8% W/W versus the S&P 500 Index (up 0.6%), the Russell 2000 Index (up 0.8%), and the Nasdaq Index (up 0.2%).
  • Energy Technology (14.5% of the index) was down by 3.0%, while Industrial Climate and Ag Technology (60.3% of the index) was up by 0.2%, ClimateTech Mining was down 5.3%, andAdvanced Transportation Solutions (19.6% of index) was down 2.6%.
  • Top 10 Performers: NRM, VIHD, OESX, FNI, DCFC, PNPN, SMR, LICY, ASYS, PSIX

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Jun 26
0

Daily Brief Technical Analysis: Rotation Is the Lifeblood of a Bull Market; Still Bullish; Supports at SPX 5370-5380 and more

By | Daily Briefs, Technical Analysis

In today’s briefing:

  • Rotation Is the Lifeblood of a Bull Market; Still Bullish; Supports at SPX 5370-5380, QQQ $468-469

Rotation Is the Lifeblood of a Bull Market; Still Bullish; Supports at SPX 5370-5380, QQQ $468-469

By Joe Jasper

  • Semiconductors (SMH,SOXX,NVDA,AVGO) have been leadership since late-2022, but they’re extended and starting to see profit taking as market participants rotate into other laggard areas of the market (especially Energy).
  • The question is whether this new trend lasts a few days, or if this is the start of longer-term trend.
  • If there will be any lasting rotation away from Technology/semiconductors, SPX and QQQ would need to break strong short-term supports at 5370-5380 and $468-469, respectively. Until then, Tech/semis remain leadership

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Jun 26
0

Daily Brief ECM: Sanil Electric IPO Valuation Analysis and more

By | Daily Briefs, ECM

In today’s briefing:

  • Sanil Electric IPO Valuation Analysis
  • Hyundai Motor India Pre-IPO – The Negatives – Not All Hunky-Dory

Sanil Electric IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Sanil Electric is market cap of 1.8 trillion won or target price of 58,593 won (95% higher than the high end of the IPO price).
  • Sanil Electric has higher sales growth, operating margins, and ROE than the comps. 
  • We estimate Sanil Electric to generate sales of 283.4 billion won (up 32.1% YoY) and operating profit of 79 billion won (up 69.6% YoY) in 2024. 

Hyundai Motor India Pre-IPO – The Negatives – Not All Hunky-Dory

By Sumeet Singh

  • Hyundai Motor (005385 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
  • HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
  • In this note, we talk about the not-so-positive aspects of the deal.

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Jun 26
0

Daily Brief Credit: New World Development – Tear Sheet – Lucror Analytics and more

By | Credit, Daily Briefs

In today’s briefing:

  • New World Development – Tear Sheet – Lucror Analytics
  • Morning Views Asia: Medco Energi

New World Development – Tear Sheet – Lucror Analytics

By Leonard Law, CFA

We view New World Development (NWD) as “Medium Risk” on the LARA scale. The company is one of the leading Hong Kong-based property developers and the flagship real estate arm of the Chow Tai Fook (CTF) group. NWD has an established property-development track record in Hong Kong and Mainland China, as well as a sizeable and growing portfolio of investment properties (under the premium K11 brand) in both regions. In addition, it has a large land bank (particularly in Hong Kong), which would support its development pipeline.

Overall, we believe NWD’s credit profile is underpinned by expectation of support from the CTF group, as well as its high quality and mostly unencumbered investment property portfolio. That said, the company has high leverage and weak financial metrics.

Our fundamental Credit Bias on NWD is “Negative”. This is mainly on account of the challenging industry environment, which has pressured the company’s property development contracted sales and margins. Going forward, NWD is likely to gradually grow its rental income from investment properties, supported by contributions from newly completed assets. Positively, management has communicated a deleveraging plan, albeit this may hinge on the company’s ability to carry out further non-core asset disposals.  

Controversies are “Immaterial”. In 2021, NWD had to demolish and rebuild two out of seven blocks at The Pavilia Farm Phase 3 project, after the building contractor found construction defects during concrete strength tests. That said, the company adequately compensated affected homebuyers and commissioned an independent third party to carry out tests on the project’s Phase 1 and 2 sections. In 2008, NWD became the subject of a minor controversy after it appointed a former top civil servant (Leung Chin-man, who was Hong Kong’s Permanent Secretary for Housing, Planning and Lands from 2002 to 2005) as deputy MD and ED of NWCL. The appointment was subsequently rescinded after a public outcry. Overall, the ESG Impact on Credit is “Neutral”. 

We initiate coverage on NWD with a “Hold” recommendation on the NWDEVL notes. We believe investors with a higher risk appetite can consider investing in the three NWDEVL perpetual securities that contain coupon step-ups (in the event of non-call at their respective first call dates), considering the attractive YTC. 

Morning Views Asia: Medco Energi

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.

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