Daily Briefs

In the first quarter of 2024, 3M reported significant achievements and detailed the financial impacts of strategic decisions, including the successful spin-off of its Health Care business, now known as Solventum.
The separation into two distinct entities is designed to enhance focused growth and improve capital allocation tailored to different market dynamics, thereby representing a strategic realignment to boost shareholder value.
This quarter also saw the company addressing its legal challenges with settlements in the Public Water Suppliers and Combat Arms litigation, resulting in predictable future cash flows related to these issues.

Bullish Outlook Intact; Downgrading Industrials and Transportation to Underweight

By Joe Jasper

Despite some more mixed signals, a majority of market dynamics still suggests a risk-on environment. Our bullish outlook since early November 2023 remains intact with SPX and QQQ uptrends intact.
Near-Term we continue to expect to see support at the 20-day MA and 21-day EMA on the SPX (currently 5325-5330) and QQQ (currently $460-462).
Longer-Term, we’re bullish as long as the SPX is above 5191 and QQQ is above $449. We’d need to see breakdowns below these levels in order to shift to neutral.

Hutchmed China Ltd (13.HK/HCM.US) – Time to Reassess Valuation Prospects Despite the Pain Points

By Xinyao (Criss) Wang

Takeda’s sales team is fully prepared for the launch of fruquintinib in EU. 2024 full-year overseas sales may once again beat the expectations. High growth is expected from 2024 to 2026.
Peak sales of fruquintinib + savolitinib + surufatinib that recorded in HUTCHMED’s revenue is expected to be over US$750 million.Without considering other revenue, market value would reach about US$4.5 billion.
HUTCHMED’s pipeline lacks blockbuster products and the indications are small. With the rise of PROTAC, small molecule drugs would face challenges, which would test the management’s resilience in the future.

4Q Follow-Up – Copro-Holdings (7059 JP)

By Sessa Investment Research

FY2024/3 Earnings Result Summary: COPRO-HOLDINGS. Co., Ltd., (hereafter, the Company) announced the full year results for FY2024/3 after the market close on Tuesday, May 14, 2024.
The key consolidated figures include net sales of ¥24,098 mn (+28.2% YoY), operating profit of ¥2,141 mn (+62.0% YoY), ordinary profit of ¥2,211 mn (+67.0% YoY), and profit attributable to owners of parent (hereafter, net profit) of ¥1,463 mn (+69.3% YoY).
Having posted a dramatic increase in net sales due to record hiring, COPRO CONSTRUCTION. Co., Ltd., which operates the Company’s core construction technician dispatching business, made substantial contributions to increased earnings.

Sustainable Investing Surveyor – Focus on CBAK Energy Technology, Inc. (CBAT)

By Water Tower Research

The WTR Sustainable Index was down 1.7% W/W versus the S&P 500 Index (up 1.6%), the Russell 2000 Index (down 1.0%), and the Nasdaq Index (up 3.5%).
Energy Technology (14.8% of the index) was down by 0.6%, while Industrial Climate and Ag Technology (59.7% of the index) was up by 0.3%, ClimateTech Mining was down 11.4%, and Advanced Transportation Solutions (19.9% of index) was down 6.6%.
Top 10 Performers: NRM, LICY, BRDS, KULR, NEOV, PSIX, AMSC, FLUX, EOSE, VLI

Stanley Black & Decker Inc.: How Are They Executing Product Innovation and Supply Chain Optimization? – Major Drivers

Stanley Black & Decker’s first quarter of 2024 revealed a financial landscape marked by both strategic progress and ongoing market challenges.
The company’s emphasis on gross margin expansion and cash flow enhancement is key to navigating an uncertain macroeconomic environment that has negatively impacted market demand, particularly in the consumer and DIY sectors.
On a positive note, Stanley Black & Decker’s global cost reduction program is advancing well, with $1.2 billion of the planned $2 billion in cost savings already achieved.

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Jun 19

Daily Brief Consumer: Exedy Corp, Hyundai Motor , Webtoon Entertainment, L’Occitane, Lawson Inc, Corn Active Contract, COFCO Joycome Foods, Whirlpool Corp, Tyson Foods Inc Cl A and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
Webtoon Entertainment (WBTN US) IPO: Valuation Insights
L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
Webtoon Entertainment IPO – Thoughts on Valuation
KDDI and Lawson: Loyalty Points Just the Start
Momentum Trading Opportunities In Agricultural Commodities
COFCO Joycome (1610 HK): Brewing a Hog Cycle Upturn?
Whirlpool Corporation: How Are The Global Home Remodeling Trends Expected To Benefit Them? – Major Drivers
Tyson Foods: Is The Improved Live Performance and Supply-Demand Balance Here To Stay? – Major Drivers

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context

By Sanghyun Park

Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.

Webtoon Entertainment (WBTN US) IPO: Valuation Insights

Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.

L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump

By David Blennerhassett

In a long-awaited development, L’Occitane (973 HK) announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip).
This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).

Webtoon Entertainment IPO – Thoughts on Valuation

By Ethan Aw

Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
In our previous notes, we talked about the company’s historical performance and undertook a peer comparison. In this note, we share our thoughts on valuation.

KDDI and Lawson: Loyalty Points Just the Start

By Michael Causton

KDDI will complete its acquisition of a 50% share in Lawson this month and the chain will then delist.
KDDI is promising a rapid introduction of services and fresh ideas to leverage its new retail arm.
It will begin by unifying premium loyalty point membership under the Ponta brand and offer new services that it hopes will help boost share. What out LY.

Momentum Trading Opportunities In Agricultural Commodities

By Pranay Yadav

Corn futures show high potential for momentum trading, peaking in early-year gains and declining from June, matching seasonal harvest patterns in major producers like China and Brazil.
Over the past five years, momentum trading in soybean futures outperformed other crops with average annual returns of USD 13,600, though 2024 saw significant losses reflecting its counter cyclical performance.
Bearish outlook for corn in 2024 due to increased global production outlook from key regions, bearish shifts by asset managers, and USDA forecasts predicting lower season-average prices.

COFCO Joycome (1610 HK): Brewing a Hog Cycle Upturn?

By Osbert Tang, CFA

Cofco Joycome (1610 HK) is in a good position to benefit from the hog cycle upturn. China’s anti-dumping investigation into imported pork from the EU may also disrupt supply.
Its average hog price has increased by 12.7% YTD and by 1.6% YoY for 5M24. Market hog price further surged by 10.4% in the week of 12-Jun from end-May.
Its P/B of 0.78x is inexpensive at 1SD below the 5-year average. Its peers like Muyuan Foodstuff (002714 CH) and Wens Foodstuff Group (300498 CH) are also interesting.

Whirlpool Corporation: How Are The Global Home Remodeling Trends Expected To Benefit Them? – Major Drivers

Whirlpool Corporation released its first quarter 2024 results, showcasing a mixed performance amid challenging macroeconomic conditions.
While the company managed to meet its expectations, certain segments faced softness, particularly in the North American market.
The earnings highlighted strategic moves including the completion of the EMEA transaction and a promotion price increase in North America, aimed at bolstering the company’s market position and financial health.

Tyson Foods: Is The Improved Live Performance and Supply-Demand Balance Here To Stay? – Major Drivers

Tyson Foods reported a robust performance for the fiscal second quarter of 2024, showcasing notable improvements in operational efficiencies and a diversified portfolio.
The company credits its success to their focused approach on operational excellence and a strategic multi-protein offering, which benefits from a variety of market conditions.
However, peculiar challenges in different segments and the underlying uncertainty in forecasted trends indicate a complex road ahead.

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Jun 19

Daily Brief Financials: Bajaj Housing Finance, Ngern Tid Lor , Topdanmark A/S, Picton Property Income and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Bajaj Housing Finance Pre-IPO – The Positives – Strong Brand, Fast Growth
Quiddity SET 50 Jun 24 Rebal: 4 Changes Confirmed; LONGs up 5.2% Vs SHORTs in a Month
Sampo/Topdanmark: Fair Takeout Offer
Picton Property Income – Organic growth accelerating

Bajaj Housing Finance Pre-IPO – The Positives – Strong Brand, Fast Growth

By Sumeet Singh

Bajaj Housing Finance (BHF IN) is looking to raise around US$830m in its upcoming India IPO.
BHF is a non-deposit taking housing finance company engaged in mortgage lending since FY18. Its mortgage products include home loans, loans against property, lease rental discounting and developer financing.
In this note, we talk about the positive aspects of the deal.

Quiddity SET 50 Jun 24 Rebal: 4 Changes Confirmed; LONGs up 5.2% Vs SHORTs in a Month

By Janaghan Jeyakumar, CFA

The June 2024 index changes for Thailand’s SET 50 index were announced after market close yesterday (17th June 2024).
Initially we expected only three changes but after the index methodology was revised in May 2024, we revised our expectations and we had 4 expected ADDs/DELs.
All 4 expected ADDs/DELs turned out to correct. In this insight, we take a look at our estimation of expected flows and potential trade ideas based on the flow dynamics.

Sampo/Topdanmark: Fair Takeout Offer

By Jesus Rodriguez Aguilar

Sampo Oyj (SAMPO FH), top shareholder (49.5%) of Topdanmark A/S (TOP DC) is launching a recommended all-share public takeover offer to buyout the minorities (1 TOP = 1.25 SAMPO).
Despite being a cross-border merger, this deal, focused on scale and cost-cutting, is poised for success given rising costs in the insurance sector due to inflation.
My valuation as a takeover target is DKK 352/share, which indicates, in my view, that the offer is fair. Gross spread is 2.4%. I would be long the spread.

Picton Property Income – Organic growth accelerating

By Edison Investment Research

Picton Property Income’s 6% increase in the rate of quarterly DPS from Q423 demonstrates an increasing confidence in the outlook for organic income and earnings growth. The occupier market has remained robust and rents have increased across much of Picton’s diversified portfolio. Active asset management, including the repositioning of selected office assets, is unlocking the significant potential embedded in the portfolio.

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Jun 19

Most Read: Hyundai Motor India , Kagome Co Ltd, Infocom Corp, Exedy Corp, Hyundai Motor , Webtoon Entertainment, L’Occitane, E&D Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Hyundai Motor India IPO Preview
Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
Webtoon Entertainment (WBTN US) IPO: Valuation Insights
L’Occitane (973.HK) – The Privatization Is About to Succeed
L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co
Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer

Hyundai Motor India IPO Preview

By Douglas Kim

Hyundai Motor India is getting ready to complete its IPO in 2H 2024. Hyundai Motor India plans to offer up to 142.2 million shares (17.5% stake) to investors.
Hyundai Motor (005380 KS) currently owns a 100% stake in Hyundai Motor India. The IPO of Hyundai Motor India could raise as much as US$3 billion.
If Hyundai Motor India (HMI) is valued at US$25 billion and HMC sells a 17.5% stake in the company, HMC’s remaining stake in HMI would be worth nearly US$21 billion.

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase

In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
Friday they announced the Offering. Today shares fell 8+%. This is now cheap.

Blackstone Does a BIG Deal for Infocom (4348) – Minorities Get ¥6,060/Share

15 weeks ago, a specialised media outlet suggested Teijin Ltd (3401 JP) was in process to sell its stake in Infocom Corp (4348 JP).
I caught up later, after the stock had run up significantly, but writing bullishly here and here. Since then, the stock is up another 33-35%.
Today we finally got the announced deal. Blackstone will buy the stock at a valuation of ¥280bn, paying ¥6,060/share for the minority stake, and buying back Teijin’s stake at ¥4,340/share.

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.

Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context

By Sanghyun Park

Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.

Webtoon Entertainment (WBTN US) IPO: Valuation Insights

Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.

L’Occitane (973.HK) – The Privatization Is About to Succeed

By Xinyao (Criss) Wang

So far, about 49.8% of disinterested shares from Irrevocable Undertakings/Non-binding Letters of Support would accept the Share Offer. Success is within reach based on a “good enough” privatization price.
The Share Alternative is mainly aimed at investors who are hoping for the future re-listing of L’Occitane in the overseas markets – They can still get a vantage point.
However, re-listing seems still distant/uncertain. The value of Rollover Shares in the future remains uncertain. Investors would face risks if they choose the Share Alternative. The Cash Alternative is preferred.

L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump

By David Blennerhassett

In a long-awaited development, L’Occitane (973 HK) announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip).
This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).

KOSDAQ150 Adhoc Index Rebalance: Eco&Dream to Replace Paradise Co

By Brian Freitas

Paradise Co Ltd (034230 KS) will move from the KOSDAQ Market to the KOSPI Market from the open of trading on 24 June.
E&D Co Ltd (101360 KS) will be added to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the close on 21 June to replace Paradise Co Ltd (034230 KS).
Paradise Co Ltd (034230 KS) belongs to the Consumer Discretionary sector and there is a possibility of inclusion to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December.

Infocom (4348 JP): Blackstone’s Long-Awaited JPY6,060 Tender Offer

Following months of press speculation, Infocom Corp (4348 JP) announced a Blackstone (BX US) tender offer at JPY6,060 per share, a 177.3% premium to the undisturbed price.
After the share consolidation, Infocom will repurchase Teijin Ltd (3401 JP)’s stake at a share repurchase price of JPY4,231. The process is expected to be completed in early October.
The offer is a knockout bid helped by auction. This is a done deal with payment commencing from 7 August. At the last close, the gross spread was 0.5%.

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Jun 18

Daily Brief ESG: Clues to Management Change Are % Independent Directors and ….. and more

By Smartkarma Daily Briefs | Daily Briefs, ESG

In today’s briefing:

Clues to Management Change Are % Independent Directors and …..

Clues to Management Change Are % Independent Directors and …..

By Aki Matsumoto

Companies with low valuations have lower ROE, ROA, and foreign ownership as well as inferior board practices and key actions. Conversely, companies with high valuations show the opposite relationship.
Over the past year, companies that increased their valuations were those with already high valuations, return on capital and foreign ownership that further improved their earnings and increased their valuations.
This suggests that companies that have begun to make progress in management reform by improving board operations and clarifying management policies through engagement by overseas investors have achieved positive results.

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Jun 18

Daily Brief Thematic (Sector/Industry): Ohayo Japan | New Records and more

By Smartkarma Daily Briefs | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

Ohayo Japan | New Records
How to Stimulate China’s Consumption, Part III
Online Game Monitor: June 2-16, 2024
INDUSTRY REPORT – Furniture/Furnishings Weekly
The Highlights – Cannabis News for the Week Ending June 14, 2024

Ohayo Japan | New Records

By Mark Chadwick

Record Highs: The S&P 500 hit a new record, rising 0.77% to 5,473.23, driven by optimism in economic data and potential rate cuts.
Tech Surge: Major tech stocks, including Apple (+2%) and Microsoft (+1%), led gains. Broadcom surged 5.4%, while Nvidia edged slightly lower despite a record high.
Investment Optimism: Citigroup raised its S&P 500 year-end forecast to 5,600, anticipating continued tech strength and earnings growth, amid cautious hedge fund positioning and potential volatility ahead.

How to Stimulate China’s Consumption, Part III

By Andy Fu

As Chinese population ages, healthcare is a major source of consumption. Yet we are the most pessimistic for it to become a pillar of consumption;
Low healthcare spending in China is achieved by underpaying doctors and nurses. Enhancing life quality, instead of only curing disease, can meaningfully improve consumption;
However, consumer healthcare begets a larger and more common economic phenomenon, which is underpricing. The issue of underpricing stems from low compliance cost, in our opinion.

Online Game Monitor: June 2-16, 2024

By Stan Zhao

Bilibili’s <Three Kingdom: MDTX> achieved excellent results on its release day, leading us to raise our AGB estimation by ~20%.
Tencent’s <Naruto> and <Fight of Golden Spatula> have seen a rapid rise in player reputation due to the success of recent events and operations, leading us to raise their estimates;
NetEase’s <Justice Mobile> has experienced a decline in gross billings due to the game’s lifespan, while pre-registrations for <Where Winds Meet> have reached a new high. We adjusted accordingly.

INDUSTRY REPORT – Furniture/Furnishings Weekly

By Water Tower Research

Furniture/furnishings stocks trailed the broader market.
The Water Tower Research Commercial/Contract Index (-1.7%), Residential Manufacturers & Suppliers Index (-2.0%), and Home Goods Retailers Index (-2.0%) trailed the broader market indexes and the Mass Retailers Index (-1.3% to +1.3%) last week.
LOVE 1Q25 paints a picture of continued weakness in residential furniture even as the company appears to be continuing to gain share.

The Highlights – Cannabis News for the Week Ending June 14, 2024

By Water Tower Research

This week, MSOS dropped 9.34%, while YOLO fell 4.46%. All the top 10 (by enterprise value) MSOs finished down.
Verano (NEO: VRNO, OTCQX: VRNOF) -17.11% and Cannabist (NEO: CBST, OTCQX: CBSTF) -14.17% felt the most pain. Jushi (CSE: JUSH, OTCQX: JUSHF) held up best, losing 5.17% over the past five sessions.
MSOS peaked 1,223 days ago on February 10, 2021, and is in a -87.31% drawdown. .

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Jun 18

Daily Brief Event-Driven: L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional
Exedy Corp (7278 JP): Murakami Becomes a Substantial Shareholder
Hengdeli Holdings (3389 HK): Negative EV Play Halted
Quiddity Leaderboard HSTECH Sep 24: No Changes but US$425mn One-Way Flows Due to Capping
Quiddity Leaderboard HSCEI Sep 24: Two Changes Possible; US$256mn One-Way
SET50 Index Rebalance: 4 Changes Next Week; One Could Surprise
L’Occitane (973.HK) – The Privatization Is About to Succeed
India Shelter Finance US$240m Lock-Up Expiry – Multi-Bagger Gains Are Ripe for the Taking

L’Occitane (973 HK): Share Alternative a Crucial Step Towards the Offer Being Declared Unconditional

L’Occitane (973 HK) announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.
The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer.
Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).

Exedy Corp (7278 JP): Murakami Becomes a Substantial Shareholder

Murakami’s entity, City Index Eleventh, and daughter reported a 5.46% position in Exedy Corp (7278 JP). The shares purchases began two days after the Aisin (7259 JP) secondary offering.
Murakami’s average buy-in price is JPY2,607.30 per share, 2.3% higher than the recent secondary offering price of JPY2,549.
Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents suggest the latter.

Hengdeli Holdings (3389 HK): Negative EV Play Halted

By David Blennerhassett

Watch accessory play Hengdeli Holdings (3389 HK) is currently suspended pursuant to the Takeovers Code.
Potentially founder Zhang Yuping (holding 17%), CEO Tony Cheung (16%) and/or Swatch Group (UHR SW) (9.94%) may table an Offer. My money is on Zhang.
This is a very illiquid name. What is interesting is that Hengdeli has net cash of HK$1.3bn – as at 31 December 2023 – against a market cap of HK$0.59bn.

Quiddity Leaderboard HSTECH Sep 24: No Changes but US$425mn One-Way Flows Due to Capping

By Janaghan Jeyakumar, CFA

The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
In this insight, we take a look at the rankings of potential ADDs and potential DELs for the September 2024 index rebal event.
We do not see any index changes in September 2024 but there could be one-way flows of US$425mn due to capping.

Quiddity Leaderboard HSCEI Sep 24: Two Changes Possible; US$256mn One-Way

By Janaghan Jeyakumar, CFA

The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in September 2024.
Based on the current data, I see two ADDs and two DELs.

SET50 Index Rebalance: 4 Changes Next Week; One Could Surprise

By Brian Freitas

There will be 4 changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the close on 28 June.
All changes are in line with our forecasts, but one stock could be a surprise inclusion for some.
Passive trackers will need to buy 3.9% of float in I-TAIL, 3.7% of float in Berli Jucker, 1.5% of float in Ngern TidLor and 1% of float in Bangchak Corporation.

L’Occitane (973.HK) – The Privatization Is About to Succeed

By Xinyao (Criss) Wang

So far, about 49.8% of disinterested shares from Irrevocable Undertakings/Non-binding Letters of Support would accept the Share Offer. Success is within reach based on a “good enough” privatization price.
The Share Alternative is mainly aimed at investors who are hoping for the future re-listing of L’Occitane in the overseas markets – They can still get a vantage point.
However, re-listing seems still distant/uncertain. The value of Rollover Shares in the future remains uncertain. Investors would face risks if they choose the Share Alternative. The Cash Alternative is preferred.

India Shelter Finance US$240m Lock-Up Expiry – Multi-Bagger Gains Are Ripe for the Taking

By Clarence Chu

India Shelter Finance (0570670D IN) listed in India on 20th Dec 2023 after raising US$144m. The pre-IPO investors had trimmed a portion of their stakes in the IPO
India Shelter Finance (ISF) is a retail-focused HFC targeting the self-employed customer with a focus on first time home loan takers in the low and middle income group.
Coming up for six-month lockup expiry on 18th Jun 2024 are the firm’s pre-IPO shareholders and a portion of the promoters’ stakes.

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Jun 18

Daily Brief Equity Bottom-Up: The Beat Ideas- Archean Chemical: The Bromine Leader of India and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

The Beat Ideas- Archean Chemical: The Bromine Leader of India
Chiba Bank – Short Term Borrowing Surges, Just at the Wrong Time
Prodia (PRDA IJ) – Increasingly Esoteric
Closing Lufax
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – June 2024
Taiwan Tech Weekly: TSMC’s 3nm Shortage & Upcoming Price Hikes; Samsung Unveils AI Catch-Up Plan
Miroku Jyoho Service (TSE:9928)
Tech Supply Chain Tracker (18-Jun-2024): H3C partners with Foxconn on Malaysia data center investment.
Avant Group Corporation (TSE:3836)
Xero’s Price Hikes

The Beat Ideas- Archean Chemical: The Bromine Leader of India

By Sudarshan Bhandari

Archean Chemical Industries (ACI IN) is largest producer of Bromine and largest exporter of Bromine from India.
The company is doing brownfield and greenfield capex in Bromine derivatives which are Margin accretive.
Archean Chemical Industries (ACI IN) is confident about 30% volume growth in FY25.

Chiba Bank – Short Term Borrowing Surges, Just at the Wrong Time

By Daniel Tabbush

Short term borrowing rose 2.3x in the past four quarters, alongside rising interest rates
During this time, long term borrowings were actually down, so no locking in of low rates
As such, Chiba is not fully, or hardly benefiting from BOJ policy changes, with NIM down

Prodia (PRDA IJ) – Increasingly Esoteric

By Angus Mackintosh

Prodia (PRDA IJ) suffered from a seasonal downturn in 1Q2024 as Lebaran slowed its testing volumes from corporates, with opex related to Prodia Digital impacting margins in the quarter.
The company’s testing mix is shifting in a meaningful way towards esoteric testing, which commands significantly higher margins plus it is building out its genomic testing, which yields higher returns.
Investment in Prodia Digital should slow in the coming quarters, helping to improve margins. with new outlets driving revenues. Valuations are unjustifiably low with 2Q2024 numbers likely to be positive.

Closing Lufax

By Turtles all the way down

It has come to my attention that Lufax management has recently altered the terms of their convertible debt: Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.
Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.76 per Share as at the date of this circular to US$2.32 per Share upon settlement of the Special Dividend, and thus, upon full conversion, the Ping An Convertible Promissory Notes can be converted into a maximum number of 421,077,586 Shares (the “Conversion Shares”).
The Company considers that the adjustment formula is in line with market practice for anti-dilution provisions in convertible securities.

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

By Sameer Taneja

We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
While HK stocks have weak data, we persist in being long these names, keeping in mind their long-term outlook and deep value.

Taiwan Tech Weekly: TSMC’s 3nm Shortage & Upcoming Price Hikes; Samsung Unveils AI Catch-Up Plan

By Vincent Fernando, CFA

TSMC’s 3nm Shortage: Capacity Filled Until 2026 Amid Surging Demand; Strategic Price Hikes Coming Soon
Top Gainers/Losers: Taiwan Tech Rallies Alongside TSMC, Apple, Nvidia, ARM Strength
Samsung Unveils Pathway to Catch Up With TSMC in the AI Foundry Race

Miroku Jyoho Service (TSE:9928)

By Hurdle Rate

Miroku Jyoho Service (TSE:9928) , which offers on-premises, hybrid (IaaS) and cloud accounting software to Japanese enterprises of various sizes.
Our purchase is centred around the business achieving further transition to the cloud, allowing for substantial margin improvement through the accumulation of high gross margin SaaS revenue.
This transition has impacted firm profitability in the short term due to the shift in revenue recognition as quoted below by the company

Tech Supply Chain Tracker (18-Jun-2024): H3C partners with Foxconn on Malaysia data center investment.

By Tech Supply Chain Tracker

H3C and Foxconn partner in Malaysia for data center investment; Tsinghua Unigroup continues acquisitions in the tech industry.
Chinese automakers urged to invest in cleaner technologies, form strategic partnerships, and comply with EU regulations under new EV tariffs.
Microsoft & Qualcomm exceed pre-orders with AI-powered Copilot+ PC; Hyundai plans to list Indian arm; SEMICON India to showcase advancements in semiconductor industry.

Avant Group Corporation (TSE:3836)

By Hurdle Rate

Avant was founded in 1997 by the current CEO Tetsuji Morikawa and is a Japanese holding company of financial and non-financial software which have the collective goal of assisting its clientele to increase corporate value.
This includes ‘Diva’ as Japan’s foremost (43% market share) consolidated accounting software and board meetings platform in addition to ‘Avant’, a management system for corporate value enhancement through consolidation of information (Avant Cruise) , charting (Avant Chart) , and corporate value enhancement (Avant Compass).
Lastly, there is ‘Zeal’ which includes several non-financial platforms that help organise and integrate (with Avant Cruise) from external sources. And interestingly, Avant also owns and operates Internet Disclosure Co, which runs Kaijinet, a site I have frequently visited over the years.

Xero’s Price Hikes

By Hurdle Rate

This is the first blog post on the Hurdle Rate website, a series of blog posts which I intend to cover specific topics rather than unit trust investments.
From time to time I may consider company deep dives, but predominately I want to make these posts more specific in nature around the global landscape in professional and financial services.
Today’s post is going to talk about the recent bombshell that is Xero’s price hikes, a controversial topic here in Australia for the accounting industry, and a perfect start to the blogroll given my background and focus.

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Jun 18

Daily Brief ECM: Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase
Hyundai Motor India IPO Preview
Infratil Placement – Riding the AI Wave, but Deal Timing Seems Opportunistic

Kagome (2811) – Well-Flagged Slightly Dilutive Equity Financing for High ROIC Purchase