Daily Briefs

Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

Tatsuta Electric (5809 JP) Crunch Time = Bump Time?

ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different.
The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement.

Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump

18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.
The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.

Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024

On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.
Meanwhile, starting 1 July, the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.
The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD.

NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive

With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

Beijing Capital International Airport: On Track to Break Even

By Eric Chen

The worst is behind Beijing Capital International Airport. We believe it is on track to achieve breakeven on quarterly basis in 2H24.
We see recent parking fee hikes at Daxing Airport as a signal that more will come, which is not in the price and can bring in extra option value.
Boom-And-Bust in China property sector is behind the airport’s share price cycle. The airport is at the cusp of a steady recovery driving mean reversion of valuation .

GiG Works (2375 JP): 1H FY10/24 flash update

Revenue: JPY13.0bn (-3.8% YoY); Operating profit: JPY185mn (+564.7% YoY); Recurring profit: JPY181mn (+449.7% YoY); Net income: JPY65mn (+67.6% YoY).
Revenue: JPY5.5bn (-8.0% YoY); Operating profit: JPY475mn (+22.4% YoY); Segment profit margin: 8.7% (+2.2pp YoY).
Revenue: JPY2.3bn (+19.9% YoY); Operating profit: JPY232mn (JPY104mn loss in 1H FY10/23); Segment profit margin: 9.9%.

Kirby Corp (KEX) – Wednesday, Mar 13, 2024

Kirby Corporation (KEX) is undervalued and has a strong historical performance in the tugboat and tank barge industry
Despite industry challenges including oversupply and Covid-19 impacts, KEX is expected to benefit from rising demand and falling supply
With a recession-resilient track record and potential for earnings growth, KEX presents a compelling long-term investment opportunity

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 13

Daily Brief Energy/Materials: Reliance Industries, Yankuang Energy Group, Iron Ore and more

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

In today’s briefing:

Reliance’s Next Mega Industrial Hub: The Rise of Navi Mumbai
Coal Is Back – The Real Inconvenient Truth
Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

Reliance’s Next Mega Industrial Hub: The Rise of Navi Mumbai

By Sudarshan Bhandari

Reliance Industries (RIL IN) is developing a new integrated industrial area in Navi Mumbai, part of a global economic hub.
This project, supported by a 43-year land lease and strategic partnerships, aims to attract global companies, fostering innovation and economic growth in the Fourth Industrial Revolution.
Reliance’s initiative will significantly boost Navi Mumbai’s attractiveness as an investment destination, driving regional economic growth and employment opportunities.

Coal Is Back – The Real Inconvenient Truth

By Rikki Malik

Increased demand from power plants under construction outside G-7 countries
There is constrained supply as with many other fossil fuels
We look at a basket of coal stocks with good balance sheets and increasing production

Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

By Sameer Taneja

Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
With incremental news on China’s stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term.
We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US) are good plays on the spread.

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Jun 13

Daily Brief TMT/Internet: A8 New Media, SK Telecom, Shenzhen Transsion Holdings , Sony Corp, i-mobile Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

A8 New Media (800 HK): A Scheme with a 162% Takeover Premium
Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia
Transsion (688036 CH): Global No. 4 Smartphone Producer, Revenue Up by 88% YoY in 1Q24
Tech Supply Chain Tracker (13-Jun-2024): Sony aims for profit in car camera biz by 2026.
A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.
i-mobile Co Ltd (6535 JP): Q3 FY07/24 flash update

A8 New Media (800 HK): A Scheme with a 162% Takeover Premium

A8 New Media (800 HK) disclosed a Cayman scheme privatisation offer from Mr Liu Xiaosong (Founder, Chairman, CEO) at HK$0.36 per share, a 162.8% premium to the last close price.
The massive premium is unsurprising, as A8’s EV has been negative since April 2023 due to headwinds from the weak Chinese leasing sector and uncertainty about cash use.
The high takeover premium, no shareholder holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small-cap illiquid stock.

Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

On 12 June, SK Telecom (017670 KS) confirmed that its affiliate Sapeon plans to merge with its competitor Rebellions by end of this year.
Sapeon and Rebellions’ largest global competitor is Nvidia. A key aim of the merger is to challenge Nvidia and try to take away its global dominance in AI chips.
If the combined Sapeon and Rebellion can take away just 1% market share resulting in 1% of Nvidia’s market cap, this would suggest valuation of US$31 billion.

Transsion (688036 CH): Global No. 4 Smartphone Producer, Revenue Up by 88% YoY in 1Q24

By Ming Lu

Transsion is the global No. 4 largest smartphone producer according to IDC.
In 1Q24, shipments increased by 34% YoY and revenue increased by 88% YoY.
We see the stock’s upside at 17% and the price target at RMB100.00.

Tech Supply Chain Tracker (13-Jun-2024): Sony aims for profit in car camera biz by 2026.

By Tech Supply Chain Tracker

Sony plans to achieve profitability in car camera business by 2026, aiming for 6x growth in the sector.
Samsung cancels anniversary events to focus on new management plan in response to crisis within the company.
Taiwan’s passive component makers like Yageo and Ample flourish in AI boom, indicating growth potential in semiconductor industry.

A8 Media (800 HK): A 163% Premium to Undisturbed? Yes Please.

Following a suspension on the 28th May, property rental play A8 New Media (800 HK) has now announced an Offer by way of a Scheme from chairman/founder/major shareholder Liu Xiaosong.
The Cancellation price is $0.36, a whopping 162.77% to last close. The price is final.
This is a done deal. But A8 is an illiquid micro cap.

i-mobile Co Ltd (6535 JP): Q3 FY07/24 flash update

i-mobile reported cumulative Q3 FY07/24 revenue of JPY16.3bn (+14.3% YoY), operating profit of JPY3.7bn (+9.2% YoY).
Consumer Service business cumulative Q3 revenue was JPY14.2bn (+19.4% YoY), with segment profit of JPY3.5bn (+18.9% YoY).
Online Advertising business cumulative Q3 revenue was JPY2.1bn (-11.8% YoY), with segment profit of JPY316mn (-39.3% YoY).

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Jun 13

Daily Brief Financials: CRE Inc/Japan, Element Fleet Management, Martin Currie Portfolio Invest, Road King Infrastructure, S&U PLC and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

CRE Inc/Japan (3458 JP): Q3 FY07/24 flash update
Element Fleet Management Cp (EFN.) – Wednesday, Mar 13, 2024
Martin Currie Global Portfolio Trust – Manager ‘sticking to his knitting’; positive outlook
Morning Views Asia: Nickel Industries , Road King Infrastructure, Yankuang Energy Group
S&U – Elevated regulatory impact

CRE Inc/Japan (3458 JP): Q3 FY07/24 flash update

In cumulative Q3 FY07/24, the company reported sales of JPY30.2bn (-30.0% YoY) and business profit of JPY1.3bn (-80.8% YoY).
Sales from recurring revenue businesses declined 2.8% YoY to JPY18.3bn, with segment profit falling 7.3% YoY to JPY1.9bn.
The company revised its FY07/24 year-end dividend forecast to JPY50.00 per share, including a special dividend of JPY24.00.

Element Fleet Management Cp (EFN.) – Wednesday, Mar 13, 2024

Element Fleet Management is a trusted partner for companies with large vehicle fleets, offering capital-light services and experiencing strong organic growth
The company’s non-services revenue is also growing steadily, with a solid balance sheet and high operating margins
Analysts predict mid-teens earnings growth in the coming years, with potential for the stock to trade at a higher earnings multiple and deliver a low-20s 5-year IRR for investors

Martin Currie Global Portfolio Trust – Manager ‘sticking to his knitting’; positive outlook

By Edison Investment Research

Martin Currie Global Portfolio Trust (MNP) has been managed by Zehrid Osmani since October 2018. He runs a high-conviction, relatively concentrated portfolio of quality growth companies with pricing power. The manager believes that pricing power is particularly important as he considers that consensus earnings expectations are too bullish and sticky inflation has pushed out the prospect of lower interest rates. With investors focusing on short-term economic data points and central bank commentary, Osmani expects continued share price volatility, which over the longer term should favour MNP’s portfolio of high-quality growth businesses with strong cash flows and robust balance sheets.

Morning Views Asia: Nickel Industries , Road King Infrastructure, Yankuang Energy 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.

Nickel Industries
Road King Infrastructure
Yankuang Energy Group

S&U – Elevated regulatory impact

By Edison Investment Research

S&U’s Q125 trading update disclosed increased pressure as the company steers cautiously through the changing regulatory landscape. The payment rate in the Advantage motor finance business fell to 87.7% from an average 92.1% in FY24, which led to group PBT falling by 34% to £6.9m (Q124: £10.5m) from higher impairments. The negative effects will likely have an impact on future quarters as management expects discussions with the Financial Conduct Authority (FCA) to conclude only in H2 CY24 and lending criteria were tightened at the end of Q1. On the positive side, demand remains strong, with applications at a record high. Moreover, the Aspen bridging business continues to grow rapidly, with Q1 PBT up by 36% y-o-y to a record £1.45m. We have cut our estimates for FY25 EPS by 22% to 179p and FY26 EPS by 15% to 223p for a return on equity (RoE) of 11%.

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Jun 13

Daily Brief Health Care: QuantumPharm, Medtide, Telix Pharmaceuticals, Jiangsu Hengrui Medicine, Longeveron , Grifols , Sotera Health Company, Adaptimmune Therapeutics and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

QuantumPharm IPO Trading – Lukewarm Insti Demand Combined with a Tight Float at Listing
Medtide Pre-IPO Tearsheet
Telix Pharmaceutical US ADS – Momentum Remains Strong, Offering Would Triple Its Cash Base
Jiangsu Hengrui Medicine (600276.CH) – More Downside Ahead; The Long Logic Doesn’t Exist
LGVN: Positive Trial Update and First Contract
Grifols S A (GRFS) – Wednesday, Mar 13, 2024
Sotera Health Co (SHC) – Wednesday, Mar 13, 2024
ADAP: Initiating Coverage of Leading T-Cell Therapy Company

QuantumPharm IPO Trading – Lukewarm Insti Demand Combined with a Tight Float at Listing

By Clarence Chu

QuantumPharm (QUP HK) raised US$126m from its Hong Kong IPO.
QuantumPharm is a R&D platform, utilizing quantum physics-based first-principles calculation, advanced AI, high-performance cloud computing, and scalable and standardized robotic automation to provide drug and material science R&D solutions.
We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

Medtide Pre-IPO Tearsheet

By Ethan Aw

Medtide (1268709D CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by Morgan Stanley and Citic Securities.
Medtide is the third largest peptide-focused contract research, development and manufacturing organization (CRDMO) worldwide in terms of sales revenue in 2023, according to F&S.
Its full-cycle services range from early-stage discovery, pre-clinical research and clinical development to commercial-stage production.

Telix Pharmaceutical US ADS – Momentum Remains Strong, Offering Would Triple Its Cash Base

By Clarence Chu

Telix Pharmaceuticals (TLX AU) is looking to raise around US$190m in its US ADS listing. The bookrunners on the deal are Jefferies, Morgan Stanley, Truist Securities, and William Blair.
TLX is a commercial-stage biopharmaceutical company focused on the development and commercialization of therapeutic and diagnostic radiopharmaceuticals.
In this note, we talk about the updates since our last note and current deal dynamics.

Jiangsu Hengrui Medicine (600276.CH) – More Downside Ahead; The Long Logic Doesn’t Exist

By Xinyao (Criss) Wang

Around RMB5 billion generic drugs would be included in VBP in 2024/2025 (e.g. sevoflurane/Ioversol/butorphanol tartrate). So, the assumption that all the negative effects of VBP have cleared up isn’t correct.
Hengrui’s innovative drugs would lose growth momentum after they reach peak sales. It’s difficult for Hengrui to maintain its scale expansion or achieve the over 20% YoY revenue growth.
Hengrui’s PE would fall below 30 (or even below 20) in the future, which means its valuation would start to enter a downward trend. Current high valuation cannot be justified.

LGVN: Positive Trial Update and First Contract

By Zacks Small Cap Research

Longeveron is focusing on using its primary treatment, Lomecel-B, to fight a rare pediatric heart birth defect that devastates families.
The company announced the completion of an encouraging meeting with investigators involved in the ongoing trial of Lomecel-B for the treatment of HLHS.
Additionally, the LGVN announced it has signed its first contract for the use of its state-of-the-art manufacturing facility.

Grifols S A (GRFS) – Wednesday, Mar 13, 2024

Grifols facing controversy over high debt, aggressive accounting practices, and financial sustainability doubts
Despite challenges, Grifols is a major player in blood plasma-derived therapies market and has improved margins
Company generated over EUR700m in free cash flow in 2020, expected to return to positive cash flow in 2025 with decreased costs and slowed growth investments; recent asset sale to reduce debt and new CEO joining to work towards stable financial future

Sotera Health Co (SHC) – Wednesday, Mar 13, 2024

SHC is a provider of medical device and pharmaceutical sterilization services with potential for significant upside
Operates in a duopoly market with high barriers to entry and strong customer retention
Stock is currently undervalued, providing investors with a timely opportunity to capitalize on the company’s potential

ADAP: Initiating Coverage of Leading T-Cell Therapy Company

By Zacks Small Cap Research

Adaptimmune Therapeutics plc (NASDAQ: ADAP) is a biopharmaceutical company focused on designing, developing, and delivering innovative cell therapies.
The company’s unique T-cell receptor (TCR) platform engineers T-cells to target and destroy cancers across multiple solid tumor types.
The company was founded in 2008 and is headquartered in Abingdon, United Kingdom, and Philadelphia, PA.

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Jun 13

Daily Brief Industrials: Helios Techno Holding, Tatsuta Electric Wire & Cable, Samsung C&T, Bharat Heavy Electricals, Beijing Capital International Airport (BCIA), GiG Works, Kirby Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Helios Techno Holding (6927) TOB – Today Could Be The Day
Tatsuta Electric (5809 JP) Crunch Time = Bump Time?
Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump
Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024
NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive
Beijing Capital International Airport: On Track to Break Even
GiG Works (2375 JP): 1H FY10/24 flash update
Kirby Corp (KEX) – Wednesday, Mar 13, 2024

Helios Techno Holding (6927) TOB – Today Could Be The Day

Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

Tatsuta Electric (5809 JP) Crunch Time = Bump Time?

ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different.
The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement.

Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump

18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.
The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.

Changes in Law for Allocation of Treasury Shares as New Shares Post Spin-Offs in Korea in 2H 2024

On 11 June, the FSC announced that the restrictions on allocation of treasury shares as new shares post spin-offs is expected to be made into law in 2H 2024.
Meanwhile, starting 1 July, the financial regulators will make it more difficult for Korean companies to conduct spin-offs that have separate allocation of treasury shares as new shares.
The top five stocks with highest percentage of treasury shares/outstanding shares are up on average 40.5% YTD.

NIFTY NEXT50 Index Rebalance Preview: Active Meets Passive

With a substantial part of the review period complete, there could potentially be 7 changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
Estimated one-way turnover is 17.7% resulting in a one-way trade of INR 47.2bn (US$566m). 8 stocks will have over 1x ADV to trade from passive trackers.
There are a bunch of stocks that are potential migrations between Mid Cap and Large Cap segments in the AMFI Classification system and there will be flows from active managers.

Beijing Capital International Airport: On Track to Break Even

By Eric Chen

The worst is behind Beijing Capital International Airport. We believe it is on track to achieve breakeven on quarterly basis in 2H24.
We see recent parking fee hikes at Daxing Airport as a signal that more will come, which is not in the price and can bring in extra option value.
Boom-And-Bust in China property sector is behind the airport’s share price cycle. The airport is at the cusp of a steady recovery driving mean reversion of valuation .

GiG Works (2375 JP): 1H FY10/24 flash update

Revenue: JPY13.0bn (-3.8% YoY); Operating profit: JPY185mn (+564.7% YoY); Recurring profit: JPY181mn (+449.7% YoY); Net income: JPY65mn (+67.6% YoY).
Revenue: JPY5.5bn (-8.0% YoY); Operating profit: JPY475mn (+22.4% YoY); Segment profit margin: 8.7% (+2.2pp YoY).
Revenue: JPY2.3bn (+19.9% YoY); Operating profit: JPY232mn (JPY104mn loss in 1H FY10/23); Segment profit margin: 9.9%.

Kirby Corp (KEX) – Wednesday, Mar 13, 2024

Kirby Corporation (KEX) is undervalued and has a strong historical performance in the tugboat and tank barge industry
Despite industry challenges including oversupply and Covid-19 impacts, KEX is expected to benefit from rising demand and falling supply
With a recession-resilient track record and potential for earnings growth, KEX presents a compelling long-term investment opportunity

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Jun 13

Daily Brief Consumer: Mao Geping Cosmetics, Bally’s Corporation, Cal Maine Foods, Sacks Parente Golf, Chefs’ Warehouse, Lands’ End Inc, Target Hospitality Corp, Vera Bradley and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Mao Geping Cosmetics Pre-IPO – Riding on the Founder’s Reputation
Ballys Corp (BALY) – Wednesday, Mar 13, 2024
Cal-Maine Foods Inc (CALM) – Wednesday, Mar 13, 2024
INITIATION – Sacks Parente Golf, Inc
Chefs’ Warehouse Inc (CHEF) – Wednesday, Mar 13, 2024
LE: Snapping the Catalog: Layering in Newness; Reiterate Buy Rating, $17 PT
Sifting the Debris with Target Hospitality (TH)
VRA: 1Q Review; ST Investor Focus Offers Compelling Entry Point; Reiterate Buy

Mao Geping Cosmetics Pre-IPO – Riding on the Founder’s Reputation

By Sumeet Singh

Mao Geping Cosmetics is looking to raise around US$300m in its upcoming Hong Kong IPO.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
In this note, we look at the company’s past performance.

Ballys Corp (BALY) – Wednesday, Mar 13, 2024

Bally’s Corporation is undervalued despite insiders recognizing its potential
Standard General made a buyout offer of $15/share, prompting Bally’s to form a special committee
The author predicts that Standard General will increase their bid to take Bally’s private, highlighting it as a compelling investment opportunity.

Cal-Maine Foods Inc (CALM) – Wednesday, Mar 13, 2024

Cal-Maine Foods (CALM) is a promising long-term investment with potential for around 50% upside
Stock is currently undervalued due to low historical book multiples and high short interest
Company has a cost advantage over peers and strong earnings potential, especially in the event of an avian flu outbreak

INITIATION – Sacks Parente Golf, Inc

By Zacks Small Cap Research

Sacks Parente Golf (NASDAQ: SPGC) is an innovative, technology driven golf company with a growing portfolio of golf products, including putters, golf shafts, golf grips, and other golf-related accessories.
The company went public in August 2023 raising $11.6 million in net proceeds.
The company announced its entry into the golf shaft market in November 2023.

Chefs’ Warehouse Inc (CHEF) – Wednesday, Mar 13, 2024

By Small Cap Consumer Research

Highly fragmented distribution market provides growth opportunities and market share gains
Focus on serving high-end independent restaurants gives competitive advantage
Commitment to improving efficiencies and achieving higher profit margins positions CHEF for significant upside potential

LE: Snapping the Catalog: Layering in Newness; Reiterate Buy Rating, $17 PT

We are reiterating our Buy rating, projections and $17 price target for Lands’ End after reviewing the June 2024 and June 2023 catalogs.
We believe, with Lands’ End in the heart of the swim season, the company remains focused on key new items to drive earlier purchases by customer, with new shaping swimwear products, updates to classic items such as the Tugless Tank and Starfish pants, new fabrics (gauze and rayon) and increased emphasis on seasonal winners (linen).
Further, the expansion into adjacent categories, such as dresses, after-swim looks and cover-ups, further expands the Lands’ End collection and creates a true swim-wear driven vacation lifestyle look.

Sifting the Debris with Target Hospitality (TH)

By Acid Investments

This is a quick idea possibly worth a punt from here – a hairball of sorts at this point but asymmetric to the upside.
One thing that happens in special sits land is that yeah sometimes turd hits the fan – maybe a takeover falls through, a merger breaks etc.there will rampant selling, the stock chart will look like a cliff-off and a bloodbath ensues for a short period of time.
Different investors operate with different mandates and sometimes for a certain kind, it’s just plain discipline – if you are there for the takeout and the takeout falls through, then the thesis is broken and you exit.

VRA: 1Q Review; ST Investor Focus Offers Compelling Entry Point; Reiterate Buy

By Small Cap Consumer Research

We are reiterating our Buy rating and $10 price target, leaving our FY25 EPS projection unchanged and raising our FY26 EPS to $0.68 (from $0.65) after Vera Bradley announced lower than Street consensus 1Q results, but reiterated FY25 guidance and provided a compelling overview of the upcoming shifts from the Project Restoration launch in mid-July.
As we have previously stated, the period before the launch of Project Restoration was going to be lumpy and 1Q results proved our thesis.
That said, with the company remaining cash-rich, aggressively managing inventories and expenses and with the launch of Project Restoration less than a month away, we believe the investor reaction to 1Q results is, at best, short-sighted and offers a highly compelling entry point for VRA, as the company shifts to a growth mode with a new product assortment, new store look and compelling business model.

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Jun 13

Most Read: Keisei Electric Railway Co, Helios Techno Holding, Tatsuta Electric Wire & Cable, Sciclone Pharmaceuticals, Judo Capital, A8 New Media, Mao Geping Cosmetics, SK Telecom and more

By Smartkarma Daily Briefs | 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?
In Court Today With Segantii
Helios Techno Holding (6927) TOB – Today Could Be The Day
Tatsuta Electric (5809 JP) Crunch Time = Bump Time?
Sciclone Pharmaceuticals (6600.HK) Privatization Update – Some “Unstable Factors” During Voting
ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light
Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump
A8 New Media (800 HK): A Scheme with a 162% Takeover Premium
Mao Geping Cosmetics Pre-IPO – Riding on the Founder’s Reputation
Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

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

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.

In Court Today With Segantii

Although this note does not encapsulate a trade idea, the fallout from the Capital Management Limited’s (Segantii) insider dealing case has impacted certain event trades, as the fund winds down.
On the 2nd May, the SFC commenced criminal proceedings against Segantii, its founder/ director/CIO Simon Sadler, and former trader Daniel La Rocca.
In the Eastern Magistrates’ Court this morning, we heard the prosecution’s request to transfer the case to the District Court.

Helios Techno Holding (6927) TOB – Today Could Be The Day

Rs Technologies (3445 JP) announced a TOB on Helios Techno Holding (6927 JP) 12 days ago. At a 74% premium, but that was too cheap. I discussed it here.
Shares went limit up for two days then traded huge volume the first full day last Wednesday. The lowest trade so far in open trading is 3% through terms.
57% of Shares Out Ex-Treasury have traded in five days. Anyone who bought 5% on Day 1 has to file a Large Shareholder Report today.

Tatsuta Electric (5809 JP) Crunch Time = Bump Time?

ENEOS Holdings (5020 JP) announced a deal to buy out their affiliate Tatsuta Electric Wire & Cable (5809 JP) 18 months ago. The TOB was expected to start June 2023.
June 2023 came around and China’s SAMR still hadn’t approved. ENEOS provided quarterly updates in Sep and Dec and monthly updates since. The May update was different.
The May update cut the “re-update” schedule to mid-month June. There are reasons to look at what has changed since the Dec 2022 announcement.

Sciclone Pharmaceuticals (6600.HK) Privatization Update – Some “Unstable Factors” During Voting

By Xinyao (Criss) Wang

Some shareholders have confirmed to be acting in concert at the Court Meeting, but long-term investors may vote against the privatization because they are not satisfied with the Cancellation Price.
The success rate of SciClone’s privatization is lower than that of China TCM and L’Occitane. If fails, there’s a high probability that the share price will fall back to HK$14/share.
The current share price cannot provide decent returns. Together with exchange rate risk, potential failure risks, etc., there’s no need for investors to take risks at this share price level.

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

Tatsuta Electric (5809 JP): Eneos Finally Secures SAMR Approval but Needs to Bump

18 months after announcing the offer, ENEOS Holdings (5020 JP) secured SAMR approval for the Tatsuta Electric Wire & Cable (5809 JP) tender offer at JPY720 per share.
The tender offer is expected to be launched on 21 June, subject to securing the recommendation from the special committee and the Board.
A bump is required due to the material market rerating since 21 December 2022. An offer of JPY828, a 15.1% premium to the current offer, implies a P/B of 1x.

A8 New Media (800 HK): A Scheme with a 162% Takeover Premium

A8 New Media (800 HK) disclosed a Cayman scheme privatisation offer from Mr Liu Xiaosong (Founder, Chairman, CEO) at HK$0.36 per share, a 162.8% premium to the last close price.
The massive premium is unsurprising, as A8’s EV has been negative since April 2023 due to headwinds from the weak Chinese leasing sector and uncertainty about cash use.
The high takeover premium, no shareholder holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small-cap illiquid stock.

Mao Geping Cosmetics Pre-IPO – Riding on the Founder’s Reputation

By Sumeet Singh

Mao Geping Cosmetics is looking to raise around US$300m in its upcoming Hong Kong IPO.
Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
In this note, we look at the company’s past performance.

Proposed Merger Between Rebellions and Sapeon – To Challenge Nvidia

On 12 June, SK Telecom (017670 KS) confirmed that its affiliate Sapeon plans to merge with its competitor Rebellions by end of this year.
Sapeon and Rebellions’ largest global competitor is Nvidia. A key aim of the merger is to challenge Nvidia and try to take away its global dominance in AI chips.
If the combined Sapeon and Rebellion can take away just 1% market share resulting in 1% of Nvidia’s market cap, this would suggest valuation of US$31 billion.

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Jun 12

Daily Brief Australia: Judo Capital, Bapcor Ltd, Alumina Ltd and more

By Smartkarma Daily Briefs | Australia, Daily Briefs

In today’s briefing:

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light
Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer
Alumina (AWC AU): Scheme Vote on 18 July
Bapcor (BAP AU): Bain Kicks Some Tyres
Alumina (AWU AU)’s 18th July Scheme Vote. Alcoa’s Done Deal

ASX200 Index Adhoc Rebalance: Judo Capital to Replace CSR; Positioning Appears Light

CSR Ltd (CSR AU) is expected to stop trading on 19 June following the acquisition by Cie De Saint-Gobain (SGO FP).
Judo Capital (JDO AU) will be added to the S&P/ASX 200 (AS51 INDEX) at the close on 19 June to replace CSR Ltd (CSR AU).
There has been short covering in Judo Capital over the last 3 months and there does not appear to be enough positioning for the index inclusion yet.

Bapcor (BAP AU): Bain’s Opportunistic A$5.40 Offer

In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May.
The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors.

Alumina (AWC AU): Scheme Vote on 18 July

The Alumina Ltd (AWC AU) IE considers Alcoa (AA US)’s scheme offer (0.02854 Alcoa shares per Alumina share) fair and reasonable as the terms are within its valuation range.
The offer is conditional on FIRB and Alumina/Alcoa shareholder approval. FIRB approval should be forthcoming as Alcoa already owns most of Alumina’s sole assets (AWAC).
The support of the substantive shareholders and the re-rating of Alcoa shares since 12 March (entry into a SID) has materially lowered the vote risk. This is a done deal.

Bapcor (BAP AU): Bain Kicks Some Tyres

Back in February 2022, automotive aftermarket parts provider Bapcor Ltd (BAP AU) was reportedly subject to multiple buyout proposals. BGH Capital, Quadrant, and Pacific Equity Partners were touted.
That all came to nought. Shares drifted sideways. Then down. Shares touched a four year low late last month.
After the incoming CEO had a change of heart, and weaker FY24E guidance, Bain has now tabled a cheeky A$5.40/share indicative Offer. That won’t fly; but value is evidently emerging.

Alumina (AWU AU)’s 18th July Scheme Vote. Alcoa’s Done Deal