Daily Briefs

By Research as a Service (RaaS)

Since Louis Dreyfus Company (LDC) first announced a A$0.51/share Offer, by way of a Scheme, on the 28 November 2023, and Olam Agri countered, there have been significant developments.
Both suitors have now tabled off-market Offers (A$0.67/share from LDC, and A$0.70/share from Olam Agri). Both Offers are open for tendering. Both have extended their closing dates numerous times.
And both suitors have also faced ACCC scrutiny. As of today, only LDC, currently holding a 20.2% stake in Namoi, is in the clear.

Hankook Tire & Technology: M&A of Hanon System Falling Apart?

By Douglas Kim

There are increasing signs that Hankook Tire & Technology’s M&A of Hanon Systems could be falling apart.
The deadline for signing the main M&A contract to purchase a 25% stake in Hanon Systems has been postponed indefinitely.
New contingent liabilities at Hanon Systems have been uncovered during the 10 week due diligence process of Hanon Systems by Hankook T&T.

Japan Airport Terminal (9706 JT): Share Price Correction Overdone, Now a Value BUY

By Mohshin Aziz

Japan Airport Terminal Co (9706 JP) (JAT) share price was deeply affected by Japan Black Monday rout, and is starting to stage a recovery.
JAT is now looking cheap against other global airports and also against its own history based on P/E, EV/EBITDA, and P/BV.
Our fair value is JPY6,050 derived from global airport peers average 2025 EV/EBITDA of 11.6x, this implies an UPSIDE of 21%. Despite the share price run-up, still good upside opportunity.

Comfortdelgro (CD): 1H Decent Result

By Henry Soediarko

1H 24 result was not disappointing, as OPM improved thanks to a few supportive measures that boosted revenue.
Taxi operating profit margin has improved since 2H 23 and is still producing a higher number than last year, thanks to the ZIG app service charge.
Comfortdelgro Corp (CD SP) is now trading at 1.2x PBR against 2x PBR 5 years ago pre COVID.

Amaero International Ltd – Capex programme extended, guidance for FY26 break even

RaaS Research has published an update report on advanced materials manufacturing group Amaero International (ASX:3DA) following its market update in which it guided to FY26 break-even and provided more granularity on its FY24 to FY26 capital expenditure progrramme.
Amaero has provided an update to shareholders including changed guidance on when it expects to reach EBITDA break-even (six months later), a revised capex schedule and the milestones it expects to pass over the next six-to-12 months (same in quantum but timing changes).
The company emphasised that the completion of C103 qualification by Amaero’s offtake counterparty (whom we believe is US defence giant Castheon) is the single most significant milestone in the company’s history.

Jiangsu Zenergy Battery Technologies Pre-IPO Tearsheet

By Ethan Aw

Jiangsu Zenergy Battery Technologies (JSZENERGY CH) is looking to raise up to US$300m in its upcoming HK IPO. The deal will be run by CICC, and CMB International.
Jiangsu Zenergy Battery Technologies (Zenergy from hereon) is an EV and energy storage system (ESS) battery manufacturer in China.
It provides integrated battery solutions, encompassing battery cells, modules, packs, racks, and battery management systems dedicated to large-scale applications of electrochemical products to interconnect omni-scenarios of land, sea and air.

More Q224 Container Carrier Results: Evergreen, Hapag-Lloyd Show Sharply Diverging Results

By Daniel Hellberg

Evergreen reported strong Q2 results, with revenue and margins both up sharply
Meanwhile, Hapag-Lloyd reported stagnant revenue and lower core profit margins
Divergent carrier performance reinforces our view that management skill matters

Careerlink (6070 JP): Q1 FY03/25 flash update

Revenue: JPY10.2bn (-10.6% YoY), Operating profit: JPY827mn (nearly flat YoY), Net income: JPY565mn (+6.7% YoY).
Business Process Outsourcing section: Revenue: JPY6.2bn (-16.2% YoY), Customer Relationship Management section: Revenue: JPY766mn (-34.7% YoY).
Office Services section: Revenue: JPY1.4bn (+11.0% YoY), Food Processing category: Revenue: JPY1.7bn (+17.6% YoY), Operating profit: JPY59mn (+64.6% YoY).

XPON: Updating our estimates to reflect the higher share count post-offering and second-quarter results. Adjusting target to 0.25/share to reflect lower energy storage market valuations.

Expion360 released full results for the second quarter which had been prereleased in the registration statement related to the recent $10 million financing and were just slightly below our expectations.
The company provided no formal guidance for 2024 and 2025 but the new home energy storage business will have to be wildly successful to avoid further (potentially significant) dilution to existing shareholders.
As we have seen in the past Expion360’s shares frequently trade independent of the fundamentals of the business.

Japan Elevator Service Holdings (6544) – Q1 FY3/25 Results Update

By Astris Advisory Japan

Q1 FY3/25 results demonstrated a strong start to the FY, with high double-digit growth for both sales (+20.9% YoY) and OP (+39.1% YoY).
Profitability improved YoY driven by 1) high demand for Repair work improving the sales mix, and 2) continued sales volume expansion driving operating leverage.
The company continues to gain maintenance market share from OEMs by remaining price- competitive, continues to expand its nationwide network, and has sufficient headcount to cater to growing demand.

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Aug 16

Daily Brief Consumer: Kangwon Land, Alibaba Group Holding , Midea Group Co Ltd A, CJ Corp, Porsche Automobil Holding , The Keepers Holdings, Evolable Asia, Murree Brewery, Pigeon Corp, Rizap Group and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Examining the September Reshuffle of the KOSPI Size Index Series
Alibaba (9988 HK/BABA): 1Q25, Growth Lower Than Expectation, But Many Expansion Plans Following
Midea Group (000333 CH): Index Implications at US$3bn Issue Size
Warren Buffett Invests in Ulta Beauty – Positive Impact on CJ Corp?
Porsche Automobile Holding: H1, Model Update, Discount to NAV
Keepers Holdings (KEEPR PM): Solid Q2 2024, >20% Growth, >20% ROCE, <8x PE, Net Cash, 6% Div Yield
Evolable Asia (6191 JP): Q3 FY09/24 flash update
Murree Brewery (MUREB) – Thursday, May 16, 2024
Pigeon Corp (7956 JP): Q2 FY12/24 flash update
Rizap Group (2928 JP): Q1 FY03/25 flash update

Examining the September Reshuffle of the KOSPI Size Index Series

By Sanghyun Park

The September KOSPI Size Index rebalancing could bring back the typical price impacts seen over the past decade, unlike the March rebalancing.
The previous rebalancing had anomalies due to newly listed stocks in LARGE and a stronger downward trend in LARGE-to-MID transitions, disrupting the expected price impact.
For September’s rebalancing, fewer distortions are expected compared to March. The NPS Mid to Small Cap fund, a key influence, shows no significant changes in benchmark or AUM.

Alibaba (9988 HK/BABA): 1Q25, Growth Lower Than Expectation, But Many Expansion Plans Following

By Ming Lu

Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce.
However, many expansion plans follow, including overseas market, physical stores, and fresh food wholesale.
We set an upside of 51% and a price target of HK$115 for March 2025.

Midea Group (000333 CH): Index Implications at US$3bn Issue Size

Midea Group Co Ltd A (000333 CH) has got approval to list on the HKEX (388 HK) and reports are that the listing could be up to US$3bn.
That issue size is around half of the maximum that the company can issue. But it would still need cornerstone investors and a nice discount on the H-shares.
The stock will still get included in some indices even with the scaled down size, and inclusion in Southbound Stock Connect is a given.

Warren Buffett Invests in Ulta Beauty – Positive Impact on CJ Corp?

By Douglas Kim

In this insight, we discuss how Warren Buffett’s recent investment in Ulta Beauty is likely to have a positive impact on CJ Corp’s valuation.
CJ Olive Young (largest shareholder is CJ Corp) is the dominant health & beauty cosmetics chain in Korea. CJ Olive Young has a similar business model to Ulta Beauty.
Our NAV analysis suggests an implied market cap of 4.7 trillion won or implied price of 160,977 won per share for CJ Corp, representing a 38% upside from current levels.

Porsche Automobile Holding: H1, Model Update, Discount to NAV

By Jesus Rodriguez Aguilar

Porsche SE is trading at a 35.3% discount to NAV, vs. 32.4% long-term average, implying a 68% probability that Porsche SE will be liable for c. €6.5 billion legal claims.
I think this is too harsh. Shares are trading at a Fwd P/E of 2.5x and a dividend yield of 7.8%, which I consider very attractive.
Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG. Porsche SE is focusing on deleveraging which should drive a reduction in the discount.

Keepers Holdings (KEEPR PM): Solid Q2 2024, >20% Growth, >20% ROCE, <8x PE, Net Cash, 6% Div Yield

By Sameer Taneja

The Keepers Holdings (KEEPR PM) reported a stellar H1 2024, with revenue up 19% YoY and profits up 23% YoY, led by volume growth of 22% YoY.
Gross margins were maintained at 28%, and operating margins were 20.6%. The company remained net cash (2.7 bn pesos) despite distributing two years worth of dividends in H1 2024
Trading at 7.7x PE, a 6% dividend yield, and with the structural tailwinds of premiumization in alcohol, we love the name.

Evolable Asia (6191 JP): Q3 FY09/24 flash update

Volume handled increased by 20.2% YoY to JPY87.1bn, with operating revenue up 10.3% YoY to JPY18.5bn.
Gross profit forecasts for Q3 FY09/24 are JPY1.2bn for July, JPY1.0bn for August, and JPY970mn for September.
Operating profit for Q3 FY09/24 was JPY2.7bn, maintaining the same level as FY09/23 while executing growth investments.

Murree Brewery (MUREB) – Thursday, May 16, 2024

By Value Investors Club

Murree Brewery is a prominent alcohol producer in Pakistan with a monopoly in the beer market.
Established in 1860, it is the oldest enterprise in Pakistan and one of the first modern breweries in the region.
The company derives half of its sales from alcohol products and the other half from non-alcoholic branded food and beverage items.

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.

Pigeon Corp (7956 JP): Q2 FY12/24 flash update

Sales increased 6.9% YoY, with Japan segment sales declining and growth in China, Singapore, and Lansinoh segments.
Operating profit decreased 10.6% YoY, with increases in Singapore and Lansinoh segments but declines in Japan and China segments.
Net income attributable to owners fell 21.7% YoY due to a suspicious transaction in China, resulting in a JPY392mn loss.

Rizap Group (2928 JP): Q1 FY03/25 flash update

Revenue increased by JPY4.2bn YoY, with chocoZAP membership revenue offsetting declines in the Lifestyle segment.
Rizap-related businesses posted revenue of JPY11.9bn, driven by chocoZAP, and MRK Holdings saw increased revenue and profit.
REXT Co., Ltd. recorded revenue of JPY10.3bn, with declines in the entertainment business but increases in the reuse business.

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Aug 16

Daily Brief Health Care: China Traditional Chinese Medicine, Asahi Intecc, Imunon , Longeveron , Medpeer Inc, Mrt Inc/Jp, Aethlon Medical , Raqualia Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls
Long 7747 Asahi Intec | Short 7733 Olympus
TCM (570 HK): A Spoonful Of Sugar …
2024 High Conviction Update: Asahi Intecc (7747 JP)- FY24 Result Tops Guidance; Positive Outlook
IMNN: Positive Results for OVATION 2 Trial Supports Advancing IMNN-001 Into Phase 3 Study
LGVN: Financial Update Highlights Successes
Medpeer Inc (6095 JP): Q3 FY09/24 Flash Update, Revision of Full-Year FY09/24 Earnings Forecast
Mrt Inc/Jp (6034 JP): 1H FY12/24 flash update
Upcoming potential milestones include the submission to the Ethics Committees at a third site in Australia and one in India
Raqualia Pharma (4579 JP): 1H FY12/24 flash update

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

China Traditional Chinese Medicine (570 HK)’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June.
The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium.
Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive.

Long 7747 Asahi Intec | Short 7733 Olympus

By Andrew Jackson

7747 Asahi Intec announced FY06/25 OP guidance of Y25.2bn, close to street expectations, pointing to substantial upside. GPM guidance has increased and continuation of strong 4Q YoY sales is expected.
Seven days of short interest outstanding could lead to a short squeeze; Earnings briefing tomorrow reinforcing these trends should be a further catalyst for upside.
With short interest now low and limited potential for further gains after the recent rebound, 7733 Olympus appears to be losing momentum, especially with China sales continuing to flag.

TCM (570 HK): A Spoonful Of Sugar …

A 14.8% gain month-to-date, including this past Monday’s 6.5% pop – you just knew something positive was taking place behind closed doors. And leaking its way into the public.
So it was no real surprise to read in the latest monthly update announcement on the HKEx that various regulatory approvals are almost, but not quite, satisfied.
The wording in the announcement strikes a positive tone. Even remaining conservative on the timeline, this could be wrapped up before year-end.

2024 High Conviction Update: Asahi Intecc (7747 JP)- FY24 Result Tops Guidance; Positive Outlook

By Tina Banerjee

Asahi Intecc (7747 JP) reported strong FY24 result, with all key parameters beating estimates. FY24 revenue exceeds ¥100B, a significant milestone of the mid-term management plan.
For FY25, Asahi Intecc has guided for revenue of ¥117B (up 9% YoY), operating profit of ¥25B (up 14% YoY), and net profit of ¥19B (up 19% YoY).
Growth will be driven by increase in overseas revenue in medical division despite the impact of stronger yen. Positive environment and strong demand enhance conviction on the long-term growth prospect.

IMNN: Positive Results for OVATION 2 Trial Supports Advancing IMNN-001 Into Phase 3 Study

On July 30, 2024, Imunon, Inc. (IMNN) announced positive topline results for the Phase 2 OVATION 2 Trial of IMNN-001 in patients with advanced ovarian cancer.
The company reported an 11.1 month increase in median overall survival (OS) compared with standard-of-care alone in the intent-to-treat (ITT) population with a hazard ratio (HR) of 0.74, which indicates a 35% improvement in survival.
For the 40% of trial participants treated with a PARP inhibitor, the HR dropped to 0.41, with a median OS in the IMNN-001 treatment arm that had not yet been reached at the time of database lock, compared with a median OS of 37.1 months in the standard-of-care arm.

LGVN: Financial Update Highlights Successes

Longeveron is focusing on using its primary treatment, Lomecel-B, to fight a rare pediatric heart birth defect that devastates families but continues to receive good FDA news regarding its treatment for Alzheimer’s Disease.
The company released its 2Q2024 earnings and highlighted advances made with its signature treatment-Lomecel-B.
The treatment has made significant progress and received multiple FDA designation for both Alzheimer’s Disease and the devastating HLHS.

Medpeer Inc (6095 JP): Q3 FY09/24 Flash Update, Revision of Full-Year FY09/24 Earnings Forecast

Sales were JPY11.4bn (+7.1% YoY), EBITDA JPY1.5bn (+10.3% YoY), operating profit JPY1.0bn (+24.7% YoY), net income JPY429mn (+5.0% YoY).
Revised FY09/24 forecast: Sales JPY14.6bn, EBITDA JPY1.8bn, operating profit JPY1.2bn, recurring profit JPY1.1bn, net income JPY1.4bn.
Segment performance: Collective Intelligence Platform sales JPY9.3bn (+8.5% YoY), Medical Institution Support sales JPY377mn (+2.6% YoY), Preventative Healthcare sales JPY1.7bn (+1.4% YoY).

Mrt Inc/Jp (6034 JP): 1H FY12/24 flash update

1H FY12/24 revenue was JPY2.2bn (-31.4% YoY), operating profit JPY97mn (-87.9% YoY), net income JPY32mn (-93.8% YoY).
Q1 FY12/24 revenue was JPY937mn (-46.9% YoY) with an operating loss of JPY103mn; Q2 revenue increased to JPY1.3bn (-12.9% YoY).
Medical Personnel Services revenue was JPY1.7bn (-4.8% YoY), Other Services revenue was JPY575mn (-61.9% YoY).

Upcoming potential milestones include the submission to the Ethics Committees at a third site in Australia and one in India

Upcoming potential milestones include the submission to the Ethics Committees at a third site in Australia and one in India, possible approval from one or both as early as FY25 2Q or 3Q and the launch of the patient enrollment process at those venues following Aethlon’s site visits.
The company expects to begin the patient enrollment process in October 2024.
We would expect AEMD to announce that the first patient has been treated possibly by year-end 2024 or early 2025.

Raqualia Pharma (4579 JP): 1H FY12/24 flash update

Operating revenue increased to JPY1.4bn (+39.1% YoY), with an operating loss of JPY154mn and a recurring loss of JPY278mn.
Royalty income from four launched products and global expansion of tegoprazan generated JPY998mn (+36.3% YoY) in 1H FY12/24.
Total operating expenses rose to JPY1.6bn (+50.9% YoY), including R&D expenses of JPY833mn (+38.0% YoY) and SG&A expenses of JPY506mn (+62.1% YoY).

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Aug 16

Most Read: Alibaba Group Holding , JTower, China Traditional Chinese Medicine, Midea Group Co Ltd A, Asahi Intecc, Kangwon Land and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

TCM (570 HK): Where’s The Floor?
Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
China TCM (570.HK) Privatization Update – Things Are Still Manageable
J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.
China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls
Midea A/H Listing – Getting Closer to the US$3bn+ Raising, Has a Narrow Window
Long 7747 Asahi Intec | Short 7733 Olympus
Examining the September Reshuffle of the KOSPI Size Index Series
TCM (570 HK): A Spoonful Of Sugar …
Midea Group (000333 CH): Index Implications at US$3bn Issue Size

TCM (570 HK): Where’s The Floor?

Just plain ugly. China Traditional Chinese Medicine (570 HK) (“TCM”) fell 11.7% yesterday. It’s down another 7.9%, on large volume, as I type. The stock is now ~35% below terms
Depending on who you talk to, the sudden move was triggered by a couple of event pods dumping stock; or the incoming CNPGC chairman is not supportive. Or perhaps both.
Since rumours surfaced early Feb as to an Offer, a basket of TCM’s peers are up 8% on average. The HSI is up 15%. TCM’s downside from here appears limited.

Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?

In its last update, Alibaba Group announced that the company was preparing for its primary listing in Hong Kong and the process was expected to complete by the end August.
The Board meets on 14 August to approve results for the three months ending June. Could there be an announcement on the dual primary listing too?
Mainland Chinese own between 3.5%-15.5% of companies that converted from Secondary to Dual-Primary in the last few years. Similar buying in Alibaba could take the stock higher from here.

China TCM (570.HK) Privatization Update – Things Are Still Manageable

By Xinyao (Criss) Wang

What disappoints investors is that privatization progress is slower-than-expected. Since approval is in “advanced stage”, August update is eye-catching. Investors may need more patience with this type of SOE deal.
The key to the success of this privatization lies in whether CNPGC is willing to abide by its commitments. If yes, CNPGC will take all measures to solve the problems.
According to our valuation calculation, even without this privatization, HK$3.5/share is fair for China TCM. Reasonable share price is above HK$5/share. Don’t forget, the privatization is still on the agenda.

J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.

JTower (4485 JP) IPOed itself Dec-2019 at ¥1,600/share. An 8-bagger in a year, fell by half, doubled, fell 70%, then doubled, fell 35%, up 50%. That’s the first 3yrs.
Since then, the trend has been lower. The stock is down 80+% in 2 years, especially painful after an equity raise at just under ¥5,000 6 months ago.
But the stock today closed at ¥1,430, and the Tender Offer is at ¥3,600. A 150% premium. That’s big, but it may be “too low.” An interesting case.

China Traditional Chinese Medicine (570 HK): Relief as Update Favours the Bulls

China Traditional Chinese Medicine (570 HK)’s monthly update reinforces the bull case. The gross spread has remained uncomfortably high since falling on no news on 26 June.
The monthly update will relieve the bulls, as the consortium has finally made the regulatory submissions. The update stresses that the filing delay is due to an unwieldy consortium.
Potential stumbling blocks remain, which should not be an issue. Nevertheless, the risk (17.7% downside to the undisturbed price)/reward (21.4% gross spread) remains attractive.

Midea A/H Listing – Getting Closer to the US$3bn+ Raising, Has a Narrow Window

By Sumeet Singh

Midea Group Co Ltd A (000333 CH) one of the world’s largest home appliance producers, aims to raise up to US$3bn in its H-share listing.
Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
We have covered the company and deal background in our previous notes. In this note, we talk about the updates since then.

Long 7747 Asahi Intec | Short 7733 Olympus

By Andrew Jackson

7747 Asahi Intec announced FY06/25 OP guidance of Y25.2bn, close to street expectations, pointing to substantial upside. GPM guidance has increased and continuation of strong 4Q YoY sales is expected.
Seven days of short interest outstanding could lead to a short squeeze; Earnings briefing tomorrow reinforcing these trends should be a further catalyst for upside.
With short interest now low and limited potential for further gains after the recent rebound, 7733 Olympus appears to be losing momentum, especially with China sales continuing to flag.

Examining the September Reshuffle of the KOSPI Size Index Series

By Sanghyun Park

The September KOSPI Size Index rebalancing could bring back the typical price impacts seen over the past decade, unlike the March rebalancing.
The previous rebalancing had anomalies due to newly listed stocks in LARGE and a stronger downward trend in LARGE-to-MID transitions, disrupting the expected price impact.
For September’s rebalancing, fewer distortions are expected compared to March. The NPS Mid to Small Cap fund, a key influence, shows no significant changes in benchmark or AUM.

TCM (570 HK): A Spoonful Of Sugar …

A 14.8% gain month-to-date, including this past Monday’s 6.5% pop – you just knew something positive was taking place behind closed doors. And leaking its way into the public.
So it was no real surprise to read in the latest monthly update announcement on the HKEx that various regulatory approvals are almost, but not quite, satisfied.
The wording in the announcement strikes a positive tone. Even remaining conservative on the timeline, this could be wrapped up before year-end.

Midea Group (000333 CH): Index Implications at US$3bn Issue Size

Midea Group Co Ltd A (000333 CH) has got approval to list on the HKEX (388 HK) and reports are that the listing could be up to US$3bn.
That issue size is around half of the maximum that the company can issue. But it would still need cornerstone investors and a nice discount on the H-shares.
The stock will still get included in some indices even with the scaled down size, and inclusion in Southbound Stock Connect is a given.

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Aug 16

Daily Brief Financials: Bank Of Baroda, KE Holdings , Yanlord Land, Teton Advisors, Defi Technologies , Ascot Corp, Arbitrum and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Indian Banks Screener 1QFYE25: Positive Focus on Value Based Smaller Caps
[KE Holdings Inc. (BEKE US, BUY, TP US$24) TP Change]: Market Share Gain Is the Main Catalyst
Yanlord Land – Earnings Flash – H1 FY 2024 Results – Lucror Analytics
Teton Advisors Inc (TETAA) – Thursday, May 16, 2024
Blowout Quarter Led by DeFi Alpha Raising 2024 EPS Estimate & Price Target
Ascot Corp (3264 JP): Q3 FY09/24 flash update
Crypto Moves #39 – The Token Unlocking Saga Is (Mostly) a One-Way Down Game

Indian Banks Screener 1QFYE25: Positive Focus on Value Based Smaller Caps

By Victor Galliano

Our positive focus remains on smaller cap Indian banks, with buys on value plays Bandhan, Baroda and UBI; we are negative on richly valued ICICI Bank and Kotak Mahindra
UBI shares have been poor performers, but its returns to 1QFYE25 have improved and it is a value stand-out; Baroda remains a favourite and Bandhan has delivered better profitability
Kotak Mahindra is the peer group’s highest return bank post credit costs, but returns are declining; ICICI also has attractive returns but we believe its credit costs are unsustainably low

[KE Holdings Inc. (BEKE US, BUY, TP US$24) TP Change]: Market Share Gain Is the Main Catalyst

By Eric Wen

KE Holdings (BEKE) reported C2Q24 revenue 12%/9% higher than our estimates/consensus, and non-GAAP NI 19%/49% higher than our estimates/consensus, due to market share gain and take rate hike.
We particularly like its business scalability, as its agent efficiency kept stable despite growing connected agents.
We maintain the stock as BUY rating and raise TP to US$24 to reflect the better growth outlook from market share gains.

Yanlord Land – Earnings Flash – H1 FY 2024 Results – Lucror Analytics

By Leonard Law, CFA

Yanlord Land’s H1/24 results were acceptable in our view. The company reported robust top-line growth, albeit margins weakened amid the difficult operating environment. Positively, Yanlord continued to reduce debt and maintain stable leverage. In addition, the company has successfully refinanced its borrowings using cheaper onshore secured debt, which has helped to improve interest costs.

That said, Yanlord’s headroom to raise future secured debt has been reduced, as the bulk of its investment properties has already been pledged. Still, the company might be able to upsize its existing secured loans with higher LTV, or issue loans backed against new assets. Meanwhile, Yanlord continues to face sales pressure and a shrinking land bank in the absence of new land acquisitions.

Teton Advisors Inc (TETAA) – Thursday, May 16, 2024

By Value Investors Club

Majority owned by Mario Gabelli, public small cap value asset manager
Market cap primarily cash, trading at depressed earnings
Potential “free option” on small/microcap rebound or merger with GAMCO, stable AUM, earned $1.00 in cash earnings in 2023

Blowout Quarter Led by DeFi Alpha Raising 2024 EPS Estimate & Price Target

Key 2Q24 takeaways include: 1) DeFi Alpha’s proprietary trading desk is increasingly adding another powerful driver to the company’s differentiated revenue model
2) the pending acquisition of Stillman Digital further augments and diversifies DEFTF’s customer base and revenue opportunities
3) management recently adopted cryptocurrencies as the company’s primary treasury reserve asset to mitigate the effects of inflation and generate higher yields on excess liquidity

Ascot Corp (3264 JP): Q3 FY09/24 flash update

Revenue increased to JPY15.1bn (+26.8% YoY), operating profit to JPY2.4bn (+95.6% YoY), and recurring profit to JPY1.3bn (+119.0% YoY).
As of end-Q3 FY09/24, progress versus full-year forecast: revenue 50.4%, operating profit 80.4%, recurring profit 84.4%, net income 63.9%.
Real estate for sale increased to JPY37.1bn (+JPY11.7bn from end-FY09/23), and total assets increased to JPY85.5bn (+JPY17.7bn).

Crypto Moves #39 – The Token Unlocking Saga Is (Mostly) a One-Way Down Game

By Mads Eberhardt

In recent years, we have seen a surge in new crypto projects launching with billion-dollar market capitalizations right from the start.
This trend includes projects like Aptos, Sui, Celestia, and others.
If you examine the top 100 cryptocurrencies, it is evident that the list increasingly comprises recently launched, highly hyped cryptocurrencies that boast valuations that would make many Nasdaq-listed companies envious.

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Aug 15

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Stocks Rise on Cool CPI and more

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

In today’s briefing:

Ohayo Japan | Stocks Rise on Cool CPI
Japan Morning Connection: Micronics, Mitsubishi Heavy, Kawasaki Heavy
60-Year Mining Tax Battle: Supreme Court’s Final Word
Online Game Monitor: July 29-August 13, 2024
# 46 India Insight: Ethanol Price Increase, Torrent Pharma and JB Chemicals, Cochin Shipyard Dredger

Ohayo Japan | Stocks Rise on Cool CPI

By Mark Chadwick

The S&P 500 extended its advance into a fifth straight day, the longest winning streak in more than month
Japan’s ruling Liberal Democratic Party (LDP) is gearing up for a contested leadership election in September as Prime Minister Fumio Kishida announced he will not seek re-election
Nike’s stock rose nearly 5% in after-hours trading amid speculation of activist involvement

Japan Morning Connection: Micronics, Mitsubishi Heavy, Kawasaki Heavy

By Andrew Jackson

Gains for Micron on the potential for DDR5 price hikes should help lift 6871 Micronics after yesterdays excessive weakness.
More cheer for US home builders after Smith Douglas number beat, adding to the upside story for Sumi Forestry and Selkisui House.
Defence related plays should remain in the spotlight with Kishida replacement candidates Ishiba and Kono both ex-defence ministers.

60-Year Mining Tax Battle: Supreme Court’s Final Word

By Nimish Maheshwari

Supreme Court ruled that States can levy cesses on mining activities, distinguishing it from Union’s authority over royalty.
Retrospective tax collection from 2005 could impose 1.5-2 lakh crore on the mining sector, heavily impacting co. like Tata Steel Ltd (TATA IN) and Coal India Ltd (COAL IN).
The ruling may exacerbate financial pressures on the mining industry, especially in high-tax states like Odisha and Jharkhand.

Online Game Monitor: July 29-August 13, 2024

By Stan Zhao

Tencent’s <LoLM> shows strong performance after anniversary event, reaching as high as No. 2 on the iOS Grossing Chart with strong player spending sentiment
NetEase’s <Justice Mobile> grossing rank continues to decline due to the game’s lifecycle, slightly lowering expectations. <Naraka: Bladepoint Mobile> revenue performance is stabilizing, with annual grossing expected around RMB 10bn
Bilibili’s <FGO> shows a strong revenue trend, currently in the top 20 on the iOS Grossing Chart, slightly raising expectations

# 46 India Insight: Ethanol Price Increase, Torrent Pharma and JB Chemicals, Cochin Shipyard Dredger

By Sudarshan Bhandari

Government Considers Ethanol Price Increase to Meet Blending 20% Targets
Torrent Pharma is seeking up to $3 billion to buy KKR’s 54% stake in JB Chemicals.
Cochin Shipyard will deliver a new dredger worth INR 800 crore to DCI by September 2025.

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Aug 15

Daily Brief ECM: Hindustan Zinc OFS Early Look – Due for a Correction and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Hindustan Zinc OFS Early Look – Due for a Correction, Large Selling Pressure Looming
P N Gadgil Jewellers Pre-IPO – Strong Revenue Growth but Margin Worry Persists

Hindustan Zinc OFS Early Look – Due for a Correction, Large Selling Pressure Looming

By Clarence Chu

Vedanta Ltd (VEDL IN) is looking to raise US$760m from selling some stake in Hindustan Zinc (HZ IN).
Overall, while the deal would represent just 2.6% of the firm’s outstanding shares, the deal is a large one to digest at 41 days of the stock’s three month ADV.
In this note, we take an early look at the deal, and comment on the deal dynamics.

P N Gadgil Jewellers Pre-IPO – Strong Revenue Growth but Margin Worry Persists

By Akshat Shah

P N Gadgil Jewellers (1742652D IN) looking to raise up to US$132m in its upcoming India IPO.
P N Gadgil Jewellers (PNGJ) is an Indian organized jewellery player. Its product offerings include traditional as well as modern and functional jewellery designs, in gold, diamond, silver and platinum.
In this note, we look at the company’s historical performance.

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Aug 15

Daily Brief Credit: Melco Resorts – Earnings Flash – H1 FY 2024 Results – Lucror Analytics and more

By Smartkarma Daily Briefs | Credit, Daily Briefs

In today’s briefing:

Melco Resorts – Earnings Flash – H1 FY 2024 Results – Lucror Analytics
Morning Views Asia: Samvardhana Motherson International Ltd, SK Hynix, Vedanta Resources

Melco Resorts – Earnings Flash – H1 FY 2024 Results – Lucror Analytics

By Leonard Law, CFA

Melco Resorts’ (MLCO) Q2/24 results were soft, but in line with expectations. The company’s earnings improved sequentially in Q2, though the pace of its earnings recovery (relative to pre-pandemic levels) and debt reduction have continued to lag peers.

During H1/24, MLCO’s net gross debt was down by just 1% from FYE 2023. Hence, the company’s leverage remained weaker than peers, with Net Debt/LTM Adjusted Property EBITDA of 5.1x (vs. 3.9x for Wynn Macau, 2.5x for Sands China and an estimated 2.1x for MGM China).

Going forward, we expect MLCO to continue generating small positive FCF and deleverage gradually, with the extent of its FCF generation likely tempered by ongoing share repurchases.

Morning Views Asia: Samvardhana Motherson International Ltd, SK Hynix, Vedanta Resources

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.

Samvardhana Motherson International Ltd
SK Hynix
Vedanta Resources

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Aug 15

Daily Brief Event-Driven: Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges, Time To Unwind
J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.
JTOWER (4485 JP): DigitalBridge’s 162% Takeover Premium Offer Is Opportunistic
Quiddity Leaderboard MV Jr Gold Miners Sep 24: Mergers Mean Possible Up-And-Out DELETEs
SET50 Index Rebalance Preview: Four Changes & A Few Close Names
Piolax (5988 JP): Murakami Becomes a Substantial Shareholder
BusinessOn Communication (138580 KS): SkyLake’s Delisting Offer
Midea A/H Listing – Getting Closer to the US$3bn+ Raising, Has a Narrow Window

Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges, Time To Unwind

The theory is that stocks which are down hard FY-to-date by end-April end up being good sells because Australians will harvest their losses into end-June.
The idea is then to buy those oversold names and hold them for 30-40 trading days. That has worked 10 out of the last 12 years hedged vs ASX200.
This year, the “sold-down” list is very heavily weighted to miners. They have continued to fall since end-June so it’s down. But hedged vs a basket of miners? It’s up.

J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.

JTower (4485 JP) IPOed itself Dec-2019 at ¥1,600/share. An 8-bagger in a year, fell by half, doubled, fell 70%, then doubled, fell 35%, up 50%. That’s the first 3yrs.
Since then, the trend has been lower. The stock is down 80+% in 2 years, especially painful after an equity raise at just under ¥5,000 6 months ago.
But the stock today closed at ¥1,430, and the Tender Offer is at ¥3,600. A 150% premium. That’s big, but it may be “too low.” An interesting case.

JTOWER (4485 JP): DigitalBridge’s 162% Takeover Premium Offer Is Opportunistic

JTower (4485 JP) has recommended a tender offer from DigitalBridge Group (DBRG US) at JPY3,600, a 161.8% premium to the undisturbed price of JPY1,375 (13 August).
Despite the hefty takeover premium, the offer is light (compared to historical trading ranges and the recent placement) and opportunistically timed (the share price has fallen 61% since 9 May).
Nevertheless, barring a spurt of activism, the offer should succeed as the required 40.7% minority acceptance rate is not onerous and should be comfortably met by Japanese cross-holders.

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

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

SET50 Index Rebalance Preview: Four Changes & A Few Close Names

Couple of weeks from the start of the review period for the December rebalance of SET 50 Index, we see four potential index changes.
There are a few stocks that are close to the inclusion zone and there could be a reordering among the non-constituents as stock prices move around.
The potential adds have outperformed the potential deletes since the start of the year with most of the outperformance coming over the last 6 weeks.

Piolax (5988 JP): Murakami Becomes a Substantial Shareholder

Murakami’s entities, City Index Eleventh and City Index Third, reported a 5.05% position in Piolax Inc (5988 JP). The purchases were from 11 June to 6 August over 60 days.
Murakami’s average buy-in price over the last 60 days was JPY2,286.61 per share, a 0.7% discount to the last close price.
Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. The former is likely as Piolax is cash-rich with a P/B less than 1x.

BusinessOn Communication (138580 KS): SkyLake’s Delisting Offer