Daily Briefs

SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.

Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: Expected ADDs Could Outperform Expected DELs

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
We see seven change for the ChiNext index and five changes for the ChiNext 50 index.

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

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.

China Gas Holdings (384 HK): Still Warrants a Look

By Osbert Tang, CFA

China Gas Holdings (384 HK)‘s FY24 result is distorted by non-recurring items and provisions. Adjusted net profit, however, has declined by only 4.3%, and is only 2.6% below consensus.
FY25 guidance looks positive as a 6% increase in dollar margin and a 5% increase in gas volume are expected. The Apr-May operating figures support such projections.
China Gas maintained its DPS despite a drop in reported profit, showcasing its confidence. Assuming the same dividend in FY25 and FY26, it will sit on a yield of 7%.

China Oilfield Services 2883.HK – Capitalising on the Boom in Offshore Exploration

By Rikki Malik

The largest player in Asia in the offshore oil services sector with limited competition
Business dynamics trending up as offshore exploration is the focus of many energy majors
Recent sell-off due to concerns over Aramco drilling delays provide a good entry point

Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated

By Xinyao (Criss) Wang

Dong-E-E-Jiao’s performance is exciting. The first-ever equity incentive plan fully demonstrates the new management team’s confidence in the future development of the Company. There’s potential for another leap in valuation.
Our 2024 forecast is net profit to reach RMB1.4 billion, up 20% YoY. Reasonable valuation is 25-30x P/E.If market value falls below RMB35 billion, this is a great buying opportunity.
Dong-E-E-Jiao is worth long-term holding due to attractive dividend policy. China Resources may further improve dividend payout, which is in line with the major trend for SOE to increase dividends.

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Jun 25

Daily Brief Japan: Mitsui & Co Ltd, Sun Corp, T Gaia Corp, Japan Hotel Reit Investment, ASICS Corp, Softbank Group, Torex Semiconductor, Nakanishi Inc, Intloop and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Mitsui & Co (8031) – ¥100bn Overnight Equity Offering
StubWorld: Sun Corp (6736 JP) Running Out Of Puff?
Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest
T-Gaia (3738 JP) – Possible Premium Takeout Story
Japan Hotel REIT Placement – Relatively Large Deal but It Is Accretive
Asics (7936) | Raising the Bar
Morning Views Asia: Softbank Group
4Q Follow-Up – Torex Semiconductor (6616 JP)
Nakanishi Inc (7716 JP): Acquisition and Fx to Nourish Topline; Margin Expansion in Near-Term
INTLOOP (9556 JP) – Preparing for Sustained Growth over the Medium Term

Mitsui & Co (8031) – ¥100bn Overnight Equity Offering

Today after the close, Mitsui & Co Ltd (8031 JP) announced that MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) would sell 14.9mm shares in an offering.
This will get priced today or tomorrow, sold to institutional investors. This is ¥107bn, 4 days of ADV and 1% of shares out. It is not dilutive.
Mitsui & Co has a buyback program with ¥123bn left til end-Sep, when presumably it will reload. Looks easy today, but measuring Mitsui & Co vs Peers is less flattering.

StubWorld: Sun Corp (6736 JP) Running Out Of Puff?

Trading comfortably through the Partial Offer terms, Sun Corp (6736 JP) may still do nothing with its Cellebrite DI (CLBT US) holding towards narrowing the NAV discount.
Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest

By Clarence Chu

MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) are looking to raise US$691m from trimming their respective stakes in Mitsui & Co Ltd (8031 JP).
While this appears to be another cross-shareholding unwind in Japan, we would argue that the selldown isn’t outright well-flagged given the uncertainty of timing the selldown.
In this note, we will talk about the placement and run the deal through our ECM framework.

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

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.

Japan Hotel REIT Placement – Relatively Large Deal but It Is Accretive

By Sumeet Singh

Japan Hotel Reit Investment (8985 JP) aims to raise around US$214m to partly fund the acquisition of four hotel assets.
The company has undertaken a number of deals in the past, most of which have managed to perform well.
In this note, we will talk about the placement and run the deal through our ECM framework.

Asics (7936) | Raising the Bar

By Mark Chadwick

Asics has demonstrated impressive growth in gross profit margins, as evidenced by 4.3ppt YoY improvement in Q1 to 54.5%
Asics has been successful in growing market share and enhancing its brand strength
For FY2024, we now forecast a 10% YoY increase in sales to ¥628 billion and a 46% rise in OP to ¥79 billion (prev: ¥ 71b)

Morning Views Asia: Softbank Group

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.

Softbank Group

4Q Follow-Up – Torex Semiconductor (6616 JP)

By Sessa Investment Research

While current underlying demand has yet to show signs of a strong recovery, progress has been made in inventory adjustments in the distribution supply chain, and TOREX expects a recovery in sales from the 2H of 2024, and the top priority for this term is strengthening sales expansion initiatives.
Regarding the initial FY25/3 consolidated OP forecast, in addition to a contribution of ¥1,150mn from the +8.7% YoY increase in net sales, the decrease of ¥2,370mn in inventory write-downs in manufacturing cost of sales will drive a strong recovery in OP.
Although capex is set to decline -31.9% YoY to ¥3,600mn (mainly for equipment being installed in the new Phenitec Kagoshima Fab clean room), having peaked out last term, depreciation will increase +27.7% YoY to ¥3,000mn as the new clean room has started operations.

Nakanishi Inc (7716 JP): Acquisition and Fx to Nourish Topline; Margin Expansion in Near-Term

By Tina Banerjee

Nakanishi Inc (7716 JP) guided for 25% revenue growth to ¥74B for 2024, driven by an additional ¥12B revenue contribution from DCI and 6% growth in dental business to ¥47B.
EBITDA is expected to improve from 2025 due to normalization of the personnel expenses and depreciation. 2026 EBITDA margin (26.8%) will improve significantly over 2024 (23.9%).
Amid slow global consumption, Nakanishi’s cost-effective products offer strong value proposition. The company is expected to meet 2024 guidance and no negative surprise (downward revision in last year) is expected.

INTLOOP (9556 JP) – Preparing for Sustained Growth over the Medium Term

By Astris Advisory Japan

Q1-3 FY7/24 results were in line with unchanged guidance. Gross margin increased from 22.9% to 24.0% YoY, a positive development as the company selectively raised consultant prices.
With the scope for further increases, we believe the company can achieve sustainable double-digit sales growth in the medium term.
Profitability is also set to improve via pricing as well as 1) scaling the newly-established strategic consulting subsidiary with high gross margins and 2) improving the sales mix by growing direct business with customers, as opposed to solely acting as freelancers and providing staff from business partners.

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Jun 25

Daily Brief Industrials: Mitsui & Co Ltd, TBEA Co Ltd A, Intloop , Steelcase Inc Cl A, Toro Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Mitsui & Co (8031) – ¥100bn Overnight Equity Offering
Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest
Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers
INTLOOP (9556 JP) – Preparing for Sustained Growth over the Medium Term
Steelcase, Inc. – Revising Revenue and EPS Estimates Following 1QFY25 Results
Toro Co (TTC) – Monday, Mar 25, 2024

Mitsui & Co (8031) – ¥100bn Overnight Equity Offering

Today after the close, Mitsui & Co Ltd (8031 JP) announced that MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) would sell 14.9mm shares in an offering.
This will get priced today or tomorrow, sold to institutional investors. This is ¥107bn, 4 days of ADV and 1% of shares out. It is not dilutive.
Mitsui & Co has a buyback program with ¥123bn left til end-Sep, when presumably it will reload. Looks easy today, but measuring Mitsui & Co vs Peers is less flattering.

Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest

By Clarence Chu

MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) are looking to raise US$691m from trimming their respective stakes in Mitsui & Co Ltd (8031 JP).
While this appears to be another cross-shareholding unwind in Japan, we would argue that the selldown isn’t outright well-flagged given the uncertainty of timing the selldown.
In this note, we will talk about the placement and run the deal through our ECM framework.

Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers

SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.

INTLOOP (9556 JP) – Preparing for Sustained Growth over the Medium Term

By Astris Advisory Japan

Q1-3 FY7/24 results were in line with unchanged guidance. Gross margin increased from 22.9% to 24.0% YoY, a positive development as the company selectively raised consultant prices.
With the scope for further increases, we believe the company can achieve sustainable double-digit sales growth in the medium term.
Profitability is also set to improve via pricing as well as 1) scaling the newly-established strategic consulting subsidiary with high gross margins and 2) improving the sales mix by growing direct business with customers, as opposed to solely acting as freelancers and providing staff from business partners.

Steelcase, Inc. – Revising Revenue and EPS Estimates Following 1QFY25 Results

By Water Tower Research

We introduce our new revenue and earnings estimates and full financial model following
Steelcase’s 1QFY25 earnings beat versus consensus and WTR estimates.
Steelcase posted 1QFY25 adjusted EPS of $0.16 versus $0.09 in 1QFY24, beating consensus of $0.10 and our estimate of $0.11.

Toro Co (TTC) – Monday, Mar 25, 2024

By Research as a Service (RaaS)

TTC sells gas-powered outdoor power equipment to professional customers with Pro sales being the main source of revenue
They also serve residential customers and have a wide range of products including mowers, snow equipment, and large machinery for infrastructure markets
A key focus of the short case against the company is their involvement in providing credit extension through quasi-off-balance sheet financing vehicles like Red Iron

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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Jun 25

Daily Brief Utilities: China Gas Holdings, Spruce Power Holding , Telecom Plus and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

China Gas Holdings (384 HK): Still Warrants a Look
Spruce Power Holding Corporation – Initiating Coverage
Telecom Plus – Unique proposition drives customer growth

China Gas Holdings (384 HK): Still Warrants a Look

By Osbert Tang, CFA

China Gas Holdings (384 HK)‘s FY24 result is distorted by non-recurring items and provisions. Adjusted net profit, however, has declined by only 4.3%, and is only 2.6% below consensus.
FY25 guidance looks positive as a 6% increase in dollar margin and a 5% increase in gas volume are expected. The Apr-May operating figures support such projections.
China Gas maintained its DPS despite a drop in reported profit, showcasing its confidence. Assuming the same dividend in FY25 and FY26, it will sit on a yield of 7%.

Spruce Power Holding Corporation – Initiating Coverage

By Water Tower Research

Spruce Power Holding Corporation (Spruce) is one of the largest third-party owner-operators of residential solar assets.
The company is not an installer of solar assets and instead grows through the acquisition of mature portfolios of residential solar assets and contracts.
Spruce’s portfolio consists of residential solar power purchase agreements (PPAs) and solar lease agreements (SLAs) and has grown at a 29% CAGR since 2018, reaching 75,000 home solar assets and contracts.

Telecom Plus – Unique proposition drives customer growth

By Edison Investment Research

The attractiveness of Telecom Plus’s (TEP’s) bundled utility proposition underpins the progress made in FY24, with record profits and customer numbers. The normalisation of energy prices in the year was offset by growing non-energy prices, while the growth in the customer base to over one million clients helped to boost profits. Management expects to deliver 10–15% growth in net customers in the medium term and is confident in the outlook.

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Jun 25

Daily Brief Energy/Materials: Kama Holdings, Crude Oil, Gold, China Oilfield Services H, Chariot Limited, Santana Minerals, Ballymore Resources Ltd, Nanoco Group PLC, Amplify Energy and more

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

In today’s briefing:

The Beat Ideas: Kama Holdings- A Growing Player at Deep Discount
US Crude Oil Output at Risk as Rig Count Plummets
Fund Managers Reduce Commodities Again
China Oilfield Services 2883.HK – Capitalising on the Boom in Offshore Exploration
Chariot Limited (AIM: CHAR): Key step towards developing future gas to industry business onshore Morocco
Santana Minerals Ltd – Reviving the gold rush of Bendigo in Otago
Ballymore Resources Limited – High-Grade Gold in the FNQ
Nanoco Group – Sensing the opportunity
Amplify Energy Corp (AMPY) – Monday, Mar 25, 2024

The Beat Ideas: Kama Holdings- A Growing Player at Deep Discount

By Sudarshan Bhandari

Kama Holdings (KHL IN)is available at 80% discount to its NAV.
Kama Holdings (KHL IN) is Holding company of SRF Ltd (SRF IN), which has tailwind across segments.
If the discount were to narrow from 81% to 56%, the price of Kama Holdings (KHL IN) could potentially double, assuming all other factors remain constant.

US Crude Oil Output at Risk as Rig Count Plummets

By Suhas Reddy

US oil rig count falls to 485 as of the week ending on 21/June, its lowest since January 2022.
US oil and gas rig count is falling as producers prioritize shareholder returns over increasing output.
Rising labour and equipment costs along with macroeconomic uncertainties further discourage producers from adding rigs.

Fund Managers Reduce Commodities Again

By The Commodity Report

Fund managers recently reduced their broad commodity position as well as energy position, compared to last month, according to the latest BofA survey.
Compared to the long-term z-score, fund managers are now heavily under-positioned in energy but close to neutral positioned in broad commodities.
In a recent note, Goldman Sachs explained their views about commodities if inflation would re-accelerate again – or in detail beat the market estimates and lead to an inflation upside surprise.

China Oilfield Services 2883.HK – Capitalising on the Boom in Offshore Exploration

By Rikki Malik

The largest player in Asia in the offshore oil services sector with limited competition
Business dynamics trending up as offshore exploration is the focus of many energy majors
Recent sell-off due to concerns over Aramco drilling delays provide a good entry point

Chariot Limited (AIM: CHAR): Key step towards developing future gas to industry business onshore Morocco

By Auctus Advisors

Chariot has signed Heads of Terms with Vivo Energy for the future offtake from the Loukos onshore licence where natural gas has been encountered at Dartois.
Up to 3 mmcf/d would be initially sold to the CNG midstream business under a long-term gas sales agreement.
Vivo intends to design, fund, construct and operate a CNG plant and virtual distribution network to transport natural gas from a number of sources to existing and new industrial customers in Morocco.

Santana Minerals Ltd – Reviving the gold rush of Bendigo in Otago

RaaS Research Group has published a report on Santana Minerals (ASX:SMI) ahead of the company presenting at the Sydney Mining Club on July 4.
SMI is developing the Bendigo-Ophir gold project in the Otago region of New Zealand.
The project has a combined mineral resource estimate of 37Mt at 2.1gpt for 2.5Moz of gold using a cut-off grade of 0.5gpt.

Ballymore Resources Limited – High-Grade Gold in the FNQ

By Research as a Service (RaaS)

RaaS Research Group has published a report on Ballymore Resources ahead of the company presenting at the Sydney Mining Club on July 4.
BMR is an exploration company with a portfolio of projects across northern Queensland which range from early-stage target generation and discovery through to resource delineation.
BMR’s most advanced asset is the Dittmer project located ~20km west of Proserpine in which the company has identified probable extensions to the previously mined orebody at depth and down plunge.

Nanoco Group – Sensing the opportunity

By Edison Investment Research

With the successful Samsung litigation now in the rear-view mirror, Nanoco’s focus will be fully on building the business as a developer, manufacturer and licensor of nanomaterials. With its extensive expertise in quantum dots, validated IP and high-volume manufacturing facilities backed up by a strong balance sheet, we believe that the business has a robust platform for growth. Partnerships with STMicroelectronics and an Asian chemicals supplier position Nanoco strongly to participate in the anticipated adoption of infrared sensors in handsets and a wide range of other devices. If all goes to plan, there could be an inflection in revenues from late FY25 or FY26. We believe the FY24e EV of £15m significantly overlooks Nanoco’s commercial potential and the value of its validated IP.

Amplify Energy Corp (AMPY) – Monday, Mar 25, 2024

Amplify Energy has been praised for its quality asset base in recent write-ups
Despite a rise in stock price, enterprise value has only seen modest increase due to debt repayment efforts and improved reserves
Author believes Amplify Energy is currently undervalued with potential catalysts in the near future; will focus on value of Beta and management’s planned actions.

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Jun 25

Daily Brief TMT/Internet: NVIDIA Corp, Taiwan Semiconductor (TSMC), Softbank Group, Torex Semiconductor, Aviat Networks and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Mega Caps Thrive But Other Tech Firms Are Punished for Lack of AI-Linked Earnings Potential
Tech Supply Chain Tracker (25-Jun-2024): Konrad Young pushes Taiwan-UK collab in quantum tech
Morning Views Asia: Softbank Group
4Q Follow-Up – Torex Semiconductor (6616 JP)
Aviat Networks Inc. (AVNW) – Monday, Mar 25, 2024

Mega Caps Thrive But Other Tech Firms Are Punished for Lack of AI-Linked Earnings Potential

By Uttkarsh Kohli

Mega cap stocks like Nvidia, Alphabet, and Microsoft surpass lofty market expectations, in the latest earnings season leading to continued rallies.
Profits from AI innovations are accumulating predominantly at the bottom of the supply chain, benefiting large hardware and cloud service providers.
Smaller tech companies, including Salesforce, MongoDB, and Dell, have experienced sharp corrections due to lofty expectations and their limited capacity to generate significant AI revenue.

Tech Supply Chain Tracker (25-Jun-2024): Konrad Young pushes Taiwan-UK collab in quantum tech

By Tech Supply Chain Tracker

Former TSMC R&D director Konrad Young advocates for a partnership between Taiwan and the UK in quantum technology.
Chinese car brands attract young Thai consumers with innovative smart cockpit features, winning over the market.
Xiaomi implements strategic changes in India after a decade of entering the market, adapting to new trends and demands.

Morning Views Asia: Softbank Group

By Leonard Law, CFA

Softbank Group

4Q Follow-Up – Torex Semiconductor (6616 JP)

By Sessa Investment Research

While current underlying demand has yet to show signs of a strong recovery, progress has been made in inventory adjustments in the distribution supply chain, and TOREX expects a recovery in sales from the 2H of 2024, and the top priority for this term is strengthening sales expansion initiatives.
Regarding the initial FY25/3 consolidated OP forecast, in addition to a contribution of ¥1,150mn from the +8.7% YoY increase in net sales, the decrease of ¥2,370mn in inventory write-downs in manufacturing cost of sales will drive a strong recovery in OP.
Although capex is set to decline -31.9% YoY to ¥3,600mn (mainly for equipment being installed in the new Phenitec Kagoshima Fab clean room), having peaked out last term, depreciation will increase +27.7% YoY to ¥3,000mn as the new clean room has started operations.

Aviat Networks Inc. (AVNW) – Monday, Mar 25, 2024

Aviat Networks has successfully turned around its business in the telecom equipment sector despite challenges
The company has outperformed larger competitors by focusing on execution during the COVID boom-bust cycle
Despite investor caution due to competitive landscape and poor sector valuations, Aviat Networks’ fundamentals are strong and outpacing its stock performance, positioning it well for future growth

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Jun 25

Daily Brief Industrials: Mitsui & Co Ltd, TBEA Co Ltd A, Intloop , Steelcase Inc Cl A, Toro Co and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Mitsui & Co (8031) – ¥100bn Overnight Equity Offering
Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest
Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers
INTLOOP (9556 JP) – Preparing for Sustained Growth over the Medium Term
Steelcase, Inc. – Revising Revenue and EPS Estimates Following 1QFY25 Results
Toro Co (TTC) – Monday, Mar 25, 2024

Mitsui & Co (8031) – ¥100bn Overnight Equity Offering

Today after the close, Mitsui & Co Ltd (8031 JP) announced that MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) would sell 14.9mm shares in an offering.
This will get priced today or tomorrow, sold to institutional investors. This is ¥107bn, 4 days of ADV and 1% of shares out. It is not dilutive.
Mitsui & Co has a buyback program with ¥123bn left til end-Sep, when presumably it will reload. Looks easy today, but measuring Mitsui & Co vs Peers is less flattering.

Mitsui & Co Placement – Another Cross-Shareholding Unwind, This Is a Small One to Digest

By Clarence Chu

MS&AD Insurance (8725 JP) and Sumitomo Mitsui Financial Group (8316 JP) are looking to raise US$691m from trimming their respective stakes in Mitsui & Co Ltd (8031 JP).
While this appears to be another cross-shareholding unwind in Japan, we would argue that the selldown isn’t outright well-flagged given the uncertainty of timing the selldown.
In this note, we will talk about the placement and run the deal through our ECM framework.

Quiddity Leaderboard SSE50/180 Dec 24: Some Expected DELs Could Underperform Peers

SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
We currently estimate one-way flows to be US$1.4bn and US$235mn for the SSE 50 and 180, respectively.

INTLOOP (9556 JP) – Preparing for Sustained Growth over the Medium Term

By Astris Advisory Japan

Q1-3 FY7/24 results were in line with unchanged guidance. Gross margin increased from 22.9% to 24.0% YoY, a positive development as the company selectively raised consultant prices.
With the scope for further increases, we believe the company can achieve sustainable double-digit sales growth in the medium term.
Profitability is also set to improve via pricing as well as 1) scaling the newly-established strategic consulting subsidiary with high gross margins and 2) improving the sales mix by growing direct business with customers, as opposed to solely acting as freelancers and providing staff from business partners.

Steelcase, Inc. – Revising Revenue and EPS Estimates Following 1QFY25 Results

By Water Tower Research

We introduce our new revenue and earnings estimates and full financial model following
Steelcase’s 1QFY25 earnings beat versus consensus and WTR estimates.
Steelcase posted 1QFY25 adjusted EPS of $0.16 versus $0.09 in 1QFY24, beating consensus of $0.10 and our estimate of $0.11.

Toro Co (TTC) – Monday, Mar 25, 2024

TTC sells gas-powered outdoor power equipment to professional customers with Pro sales being the main source of revenue
They also serve residential customers and have a wide range of products including mowers, snow equipment, and large machinery for infrastructure markets
A key focus of the short case against the company is their involvement in providing credit extension through quasi-off-balance sheet financing vehicles like Red Iron

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✓ Company Data and News
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Jun 25

Daily Brief Health Care: Shanghai Henlius Biotech , Dong E E Jiaoco Ltd A, Nakanishi Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

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
Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated
Nakanishi Inc (7716 JP): Acquisition and Fx to Nourish Topline; Margin Expansion in Near-Term

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

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.

Dong E E Jiao (000423.CH) – Big Dividends and Potential Leap in Valuation Are Highly Anticipated

By Xinyao (Criss) Wang

Dong-E-E-Jiao’s performance is exciting. The first-ever equity incentive plan fully demonstrates the new management team’s confidence in the future development of the Company. There’s potential for another leap in valuation.
Our 2024 forecast is net profit to reach RMB1.4 billion, up 20% YoY. Reasonable valuation is 25-30x P/E.If market value falls below RMB35 billion, this is a great buying opportunity.
Dong-E-E-Jiao is worth long-term holding due to attractive dividend policy. China Resources may further improve dividend payout, which is in line with the major trend for SOE to increase dividends.

Nakanishi Inc (7716 JP): Acquisition and Fx to Nourish Topline; Margin Expansion in Near-Term

By Tina Banerjee

Nakanishi Inc (7716 JP) guided for 25% revenue growth to ¥74B for 2024, driven by an additional ¥12B revenue contribution from DCI and 6% growth in dental business to ¥47B.
EBITDA is expected to improve from 2025 due to normalization of the personnel expenses and depreciation. 2026 EBITDA margin (26.8%) will improve significantly over 2024 (23.9%).
Amid slow global consumption, Nakanishi’s cost-effective products offer strong value proposition. The company is expected to meet 2024 guidance and no negative surprise (downward revision in last year) is expected.

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Jun 25

Daily Brief Financials: Kalyani Investment, Lotte Non Life Insurance Co, Japan Hotel Reit Investment, Avanse Financial Services, Midea Real Estate Holding , Bitcoin Pro, Lincoln National, Bitcoin and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Unlocking Value: SEBI’s New Special Call Auction Mechanism Explained
Chronic Insider Trading in the Korean Tender Offer Market & Time Positions for Short-Term Targets
Japan Hotel REIT Placement – Relatively Large Deal but It Is Accretive
Avanse Financial Services Pre-IPO Tearsheet
Midea Real Estate (3990 HK): Divesting Property Development Business (Cash Option At 57% Premium)
Liquidity Headwinds Play Catch Up
Lincoln National Corp (LNC) – Monday, Mar 25, 2024
Crypto Crisp: There it was, the height of Mt. Gox fear

Unlocking Value: SEBI’s New Special Call Auction Mechanism Explained

By Nimish Maheshwari

SEBI introduced the SPECIAL CALL AUCTION framework for Listed Holding Companies to unlock the value.
The first special call auction is set to take place in October.
Some companies are trading at a discount of more than 50% or even 80%, post this framework, shares will be traded at fair value.

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.

Japan Hotel REIT Placement – Relatively Large Deal but It Is Accretive

By Sumeet Singh

Japan Hotel Reit Investment (8985 JP) aims to raise around US$214m to partly fund the acquisition of four hotel assets.
The company has undertaken a number of deals in the past, most of which have managed to perform well.
In this note, we will talk about the placement and run the deal through our ECM framework.

Avanse Financial Services Pre-IPO Tearsheet

By Ethan Aw

Avanse Financial Services (1288481D IN) is looking to raise up to US$419m in its upcoming India IPO. The bookrunners will be JPM, Nomura, Kotak, Avendus, Nuvama Wealth and SBI Capital.
Avanse Financial Services (AFS) is an education focused non-banking financial company (NBFC) operating in India.
It offers full stack education products ranging from education loans for students to growth capital for education institutions through education infrastructure loans.

Midea Real Estate (3990 HK): Divesting Property Development Business (Cash Option At 57% Premium)

By Steve Zhou, CFA

Midea Real Estate Holding (3990 HK) announced last night a proposal for distribution in specie of the property development business to shareholders.
The proposal allows shareholders to select between receiving pro rata shares in the PrivateCo, or the cash alternative at HKD5.90 per share, a 57% premium to last close at HKD3.75.
I believe this is a good deal for minority shareholders. The company (ex. property development business) will continue to be listed on the HKSE after the distribution.

Liquidity Headwinds Play Catch Up

By Delphi Digital

BTC faces headwinds as global liquidity contracts, impacting recent price action.
Spot BTC ETFs initially fueled highs, but inflows and volumes are now declining.
Crypto markets need a major catalyst to counteract waning liquidity support.

Lincoln National Corp (LNC) – Monday, Mar 25, 2024

LNC is poised for growth in the U.S. life insurance market due to improving fundamentals, positive earnings per share revisions, and an attractive valuation
Despite past challenges with capital and credibility, management has successfully addressed issues and reshaped the business, leading to a clear roadmap for future growth
With potential catalysts on the horizon, LNC has significant upside potential and the possibility of a shift in investor sentiment in the near future.

Crypto Crisp: There it was, the height of Mt. Gox fear

By Mads Eberhardt

It was only a matter of time. Today, Mt. Gox confirmed that it will begin distributing its Bitcoin and Bitcoin Cash holdings to creditors, primarily former clients, starting in July.
The announcement did not specify the exact date or the timeline for the repayments.
The crypto market reacted poorly to this news, with Bitcoin dropping nearly 4% since the announcement this morning.

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Jun 25

Daily Brief Consumer: Sun Corp, T Gaia Corp, Best World International, ASICS Corp, Gambol Pet Group , Hyundai Motor India , Nu Ride, Britvic PLC, Vera Bradley and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

StubWorld: Sun Corp (6736 JP) Running Out Of Puff?
T-Gaia (3738 JP) – Possible Premium Takeout Story
Best World (BEST SP): EGM Vote on 19 July
Asics (7936) | Raising the Bar
Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: Expected ADDs Could Outperform Expected DELs
Hyundai Motor India Pre-IPO – The Positives – Quasi-Local, Riding the SUV Wave
Nu Ride (NRDE) – Friday, Mar 22, 2024
Carlsberg/Britvic: Awaiting a Third Proposal
VRA: Snapping the Store: The Calm before the “New Day;” Reiterate Buy, $10 PT

StubWorld: Sun Corp (6736 JP) Running Out Of Puff?

Trading comfortably through the Partial Offer terms, Sun Corp (6736 JP) may still do nothing with its Cellebrite DI (CLBT US) holding towards narrowing the NAV discount.
Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

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

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.

Best World (BEST SP): EGM Vote on 19 July

By Arun George

The Best World International (BEST SP) IFA considers the S$2.56 exit offer fair and reasonable as it is towards the upper end of its S$1.36-2.69 per share valuation range.
The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
The lack of activists, IFA supporting recommendations, and no competing offer suggest a done deal. At the last close, the gross spread was 2.8%.

Asics (7936) | Raising the Bar

By Mark Chadwick

Asics has demonstrated impressive growth in gross profit margins, as evidenced by 4.3ppt YoY improvement in Q1 to 54.5%
Asics has been successful in growing market share and enhancing its brand strength
For FY2024, we now forecast a 10% YoY increase in sales to ¥628 billion and a 46% rise in OP to ¥79 billion (prev: ¥ 71b)

Quiddity Leaderboard ChiNext & ChiNext 50 Dec 24: Expected ADDs Could Outperform Expected DELs

The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
We see seven change for the ChiNext index and five changes for the ChiNext 50 index.

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.

Nu Ride (NRDE) – Friday, Mar 22, 2024