Daily Briefs

The WTR Sustainable Index was up 3.6% W/W versus the S&P 500 Index (up 4.7%), the Russell 2000 Index (up 8.6%) and the Nasdaq Index (down 3.7%).
Energy Technology (13.8% of the index) was down 0.3%, while Industrial Climate and Ag Technology (48.0% of the index) was up 5.3%, ClimateTech Mining was down 3%, and Advanced Transportation Solutions (20.8% of index) was up 3.2%.
Top 10 Performers: EXROF, FREY, GWTI-US, ZEV, BE, PSIX, NEOV, LICY, SMR-US

US Biofuels Outlook – Five Trends to Watch in 2025

Despite the US biofuels industry facing challenges in 2024, including oversupplied renewable credit markets, lower-than- expected voluntary demand, election uncertainty, and a drop in profits, the industry made progress in many areas, including the advancement of sustainable aviation fuel (SAF) projects and hubs.
We highlight five biofuel trends that will continue to have an impact in 2025.
In 2024, the lack of guidance from the US Treasury Department on the 45Z clean fuel tax credit continued to be a key source of concern among biofuels producers, SAF project developers, and farmers.

Biopharma Week in Review – November 11, 2024

We review last week’s biopharma news for meaningful clinical data, regulatory updates, research innovation, and M&A.
Last week, election headlines and earnings dominated the news cycle.
The Trump win could be positive for biopharma if RFK Jr.’s influence can be held in check.

Cannabis Trends Update – Five Factors That Will Drive 2025

2024 is shaping up to be another difficult year for cannabis investors.
The lack of federal reform and Florida failing to pass Amendment 3 have dampened spirits and lowered expectations, stock prices, and valuations as we head into the new year.
Below are five factors we expect to have an impact on the cannabis industry in 2025.

Furniture/Furnishings Weekly Post-Election Market Swings – November 11, 2024

The markets moved sharply higher on Tuesday’s election results, with the ‘risk-on’ trade, lower uncertainty, enhanced prospects for domestic manufacturing given the incoming administration’s views on trade, and hopes for a ‘lighter’ regulatory approach boosting stocks.
The Water Tower Research Commercial/Contract Furniture Index was up 6.2% and the WTR Mass Retailers Index was up 4.7% for the week, while the WTR Residential Manufacturers & Suppliers Index was flat and the Home Goods Retailers Index was down 3%. The DJ30 and S&P 500 were both up 5% and the R2K was up 8.2%.
How should we explain this divergence? The Commercial/Contract Index likely benefited from expectations for stronger GDP growth and better profits, both catalysts for corporate investment.

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Nov 14

Daily Brief ECM: Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail
Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged
Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering
Initial Thoughts on the Klarna IPO
Zinka Logistics Pre-IPO – Continued Financial Underperformance in a Highly Fragmented Market
GMM Group Pre-IPO: Tuning into Thailand’s Digital Music Boom
Niva Bupa Health Insurance IPO Trading – Demand Lagged Recent Listings

Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail

The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP).
This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.

Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged

By Sumeet Singh

Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
This will be a large deal for the stock to digest and doesn’t appear to have been particularly well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.

Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering

Kansai Electric Power (9503 JP) has announced primary and secondary offerings of up to 223.1 million shares (including overallotment) and a third-party allotment of 29.1 million shares.
JPY239.9 billion of proceeds will be used to improve energy efficiency and decarbonisation, while other funds will be used for data centres, renewable energy and overseas investments.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 26 and 29 November (likely 26 November).

Initial Thoughts on the Klarna IPO

By Douglas Kim

On 12 November, Klarna announced that it confidentially filed public offering paperwork. The company is getting ready for an IPO in 1H 2025.
Klarna’s valuation reached as high as $45 billion in 2021 which declined to as low as $6.5 billion. Its valuation has recently risen to about $14.6 billion.
Klarna generated 13.27 billion SEK in revenue (US$1.2 billion) in 1H 2024 (up 27% YoY). Operating margin improved significantly from -18% in 1H 2023 to -2% in 1H 2024.

Zinka Logistics Pre-IPO – Continued Financial Underperformance in a Highly Fragmented Market

By Akshat Shah

Blackbuck (1355652D IN) is looking to raise around US$130m in its India IPO.
Zinka Logistics (Blackbuck) is India’s largest digital platform for truck operators (in terms of number of users), with 963,345 truck operators transacting on its platform in FY24, as per Redseer.
In this note, we talk about the company’s historical performance.

GMM Group Pre-IPO: Tuning into Thailand’s Digital Music Boom

By Nicholas Tan

GMM Music (2465778D TB) is looking to raise at least US $100m in its upcoming Thai IPO.
It is part of the largest, sprawling, public listed media conglomerate, GMM Grammy, and operates a pure play music business covering the entire value chain.
In this note, we look at the firm’s past performance.

Niva Bupa Health Insurance IPO Trading – Demand Lagged Recent Listings

By Clarence Chu

Niva Bupa Health Insurance (1226871D IN) raised around US$260m in its India IPO.
Niva Bupa Health Insurance (Niva Bupa) is a health insurance firm. Its portfolio consists of health (including retail and group), personal accident, and travel insurance.
We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the trading dynamics.

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Nov 14

Daily Brief Event-Driven: Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
NTPC Green Energy IPO: Offer Details & Index Inclusion Timeline
StubWorld: Hanwha Corp; Genscript Biotech/Legend Biotech
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce
Go Digit IPO Lockup – Promoters and Investors Could Look to Sell in the US$2.1bn Release

Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value

In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering

Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

NTPC Green Energy IPO: Offer Details & Index Inclusion Timeline

NTPC Green Energy Ltd (2214556D IN) is looking to raise INR 100bn (US$1.19bn) in its IPO. That will value the company at INR 910bn (US$10.8bn) at the top end.
The anchor allocations will be completed early next week, and the stock is expected to start trading on 27 November.
The stock will not get Fast Entry to global indices with the earliest inclusion scheduled for June 2025. So, limited passive buying in the medium-term.

StubWorld: Hanwha Corp; Genscript Biotech/Legend Biotech

By David Blennerhassett

Hanwha Corporation (000880 KS) is “expensive” on my monitor. But that doesn’t paint the whole picture. And what’s up with Genscript Biotech (1548 HK)‘s deconsolidation of Legend Biotech (LEGN US)?
Preceding my comments on Hanwha and Genscript Biotech/Legend Biotech are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

INDIA: Index Changes Due to the 45 New Additions to the F&O Segment

The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.

7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce

Yesterday a news article from Bloomberg suggested 7&i was “considering” an MBO. Seven & I Holdings (3382 JP) later confirmed they had received a non-binding proposal from ITO Junro/family.
The initial number was ¥9trln. If market cap? High. If EV, too low. That would have implied a price just over the first “grossly inadequate” ACT price.
There is a lot we don’t know. This changes the landscape. It probably shifts the range trade, but it will shift more when we get more clarity on ITO-san’s price.

Go Digit IPO Lockup – Promoters and Investors Could Look to Sell in the US$2.1bn Release

By Sumeet Singh

Go Digit General Insurance raised US$315m in its India IPO in May 2024, via selling a mix of primary and secondary shares. Its IPO lockup is set to expire soon.
Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
In this note, we will talk about the lockup dynamics and possible placement.

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Nov 14

Daily Brief Equity Bottom-Up: Tencent (700 HK): 3Q24 and more

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

In today’s briefing:

Tencent (700 HK): 3Q24, Better Game Revenue and Better Gross Margins
Trump Trade: Korean Construction Vs Military Stocks Amid Potential End of War in Ukraine?
Sea (SE US): Strong 3Q, Upbeat Management Talk Fires up the Stock
Episode 93: Arm/QCOM Earnings, Trump Presidency Impact on Semis, NVDA Preview
Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 13)
Never Too Late to Chase the Rally! Prologis, the World’s Leading Logistics Company
Paladin Pummelled 29% on Production Downgrade
SharkNinja Inc.: Its Efforts Towards Product Innovation & Diversification & Major Drivers
Tech Supply Chain Tracker (14-Nov-2024): Foxconn reforms boost Sharp’s profits.
Nexon (3659) | Down 17% on Quarterly Miss!

Tencent (700 HK): 3Q24, Better Game Revenue and Better Gross Margins

By Ming Lu

In 3Q24, game revenue increased by 13% YoY, higher than our estimate, 9% YoY.
The gross margins of all business lines improve in 3Q24, especially “others”.
We set the upside at 50% and the price target at HK$605 for the end of 2025. Buy.

Trump Trade: Korean Construction Vs Military Stocks Amid Potential End of War in Ukraine?

By Douglas Kim

Although it is UNCERTAIN when the wars in Ukraine and the Middle East will end, if these wars indeed come to an end, this could POSITIVELY IMPACT Korean construction sector.
The end of the wars in Ukraine and the Middle East is likely to NEGATIVELY IMPACT the Korean military/defense sector.
The major Korean construction companies have low valuation multiples. On the other hand, the major Korean military/defense companies have high valuation multiples.

Sea (SE US): Strong 3Q, Upbeat Management Talk Fires up the Stock

By Devi Subhakesan

Sea (SE US) ‘s management expects all three business segments – ecommerce, financial services and entertainment – to deliver high growth and profitability in 2025, supported by strong macro-eceonomic tailwind.
It’s GAAP revenue was US$4.3 billion, up 30.8% year-on-year and net income was US$153.3 million, as compared to total net loss of US$(144.0) million for 3Q2023.
Its e-commerce business achieved positive adjusted EBITDA in 3Q 2024 in both Asia markets and Brazil.

Episode 93: Arm/QCOM Earnings, Trump Presidency Impact on Semis, NVDA Preview

By The Circuit

ARM reported good numbers with steady guidance for the coming quarter.
Qualcomm’s earnings performed well, but concerns exist over rising costs and potential loss of customers.
Uncertainty surrounds US government policies on semiconductor manufacturing and trade with China, impacting industry players like Intel and Nvidia.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 13)

By David Mudd

Although Hong Kong markets have slumped after Trump’s election, mainland China’s markets have gained. Southbound net buying of HK stocks hit a 2024 high on the day Trump won.
Sands China (1928 HK) had a breakout from a double top as Macau recorded good Golden Week arrivals. Blue Moon Group Holdings (6993 HK) had a breakout after 3 years.
CanSino Biologics (6185 HK) formed a breakout after a new vaccine was approved and it reported better results. Haidilao International Holding (6862 HK) share price advanced as it expands stores.

Never Too Late to Chase the Rally! Prologis, the World’s Leading Logistics Company

By Jacob Cheng

US market continues to see historical high; in the real estate space, we look at Prologis, the world’s largest logistics company
We like the sector on the back of strong structural demand drivers and depleting supply. Logistics is the future and we think Prologis is the name to own
Broader real estate index is up 8.3% YTD, while PLD is down -15% YTD. Valuation is attractive, we think PLD has room to catch up

Paladin Pummelled 29% on Production Downgrade

By Money of Mine

Paladin Energy faces water supply disruptions from NAM Water in Namibia, leading to a drop in guidance for Langer Heinrich uranium mine.
The company has adjusted its FY25 uranium production guidance from 4-4.2 million pounds to 3-3.6 million pounds.
Despite the challenges, Paladin Energy remains confident in meeting customer delivery obligations and has flexibility in contracts to manage the situation.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

SharkNinja Inc.: Its Efforts Towards Product Innovation & Diversification & Major Drivers

By Baptista Research

SharkNinja’s third quarter of 2024 financial performance highlighted several strengths and strategic initiatives that point to its robust market position and growth trajectory, balanced by some areas of concern that underline potential risks.
Displaying a strong performance in adjusted net sales and adjusted EBITDA growth, SharkNinja reported substantial year-over-year increases, demonstrating resilience and strategic agility in a fluctuating economic environment.
The global teams’ efforts mirrored in a 35% rise in adjusted net sales and 26% growth in adjusted EBITDA, showcasing strong operational execution and market responsiveness.

Tech Supply Chain Tracker (14-Nov-2024): Foxconn reforms boost Sharp’s profits.

By Tech Supply Chain Tracker

Foxconn’s reforms at Sharp result in significant profit growth in 2Q24.
Taiwan supply chains brace for impact of Trump’s imminent global tariffs.
Apple to boost iPhone production in India following Trump victory, taking advantage of evolving global trade dynamics.

Nexon (3659) | Down 17% on Quarterly Miss!

By Mark Chadwick

Nexon’s 3Q24 earnings report saw its stock dip -17% as revenue missed guidance and foreign exchange losses weighed on the bottom line.
Nexon’s operating profit rose +11% y/y to ¥51 billion, with an operating margin of 38%
The stock is trading at 8.5x EBITDA, which makes it very attractive versus the sector

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Nov 14

Daily Brief Macro: Weather Favorable For Rubber In Thailand But Can Trouble Indonesia and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Weather Favorable For Rubber In Thailand But Can Trouble Indonesia, Vietnam
The Drill: A Look at Trump’s Policy and Their Impacts
US CPI Keeps December Cut Alive
Steno Signals #126: Disentangling the ECB Schnabel Speech – How Will QT Develop from Here?
At Any Rate: Treasury Futures Quarterly Roll

Weather Favorable For Rubber In Thailand But Can Trouble Indonesia, Vietnam

By Vinod Nedumudy

Thailand likely to receive less rains in the coming one-month period
Indonesia, Vietnam, Cambodia likely to have above normal rains
WMO predicts 60% chances of La Nina developing

The Drill: A Look at Trump’s Policy and Their Impacts

By Ulrik Simmelholt

Before we get to Trump, we need to quickly discuss OPEC and their recent cut in demand forecasts.
This reduction hints at an unwillingness to increase production in the near future.
Saudi Arabia is key here, as it holds the largest excess capacity, and a production hike from them could swing the market and send prices below $50 USD in the blink of an eye.

US CPI Keeps December Cut Alive

By Phil Rush

US inflation’s unsurprising October print should reassure market expectations for a December rate cut after pricing became overextended by post-election exuberance.
Although the seasonally adjusted rates annualised above the target again, unadjusted rates are trending at dovishly subdued levels, with no headline exceptions since April.
These numbers are arguably old news but don’t discourage a December cut. The shocks from Trump policies won’t hit until 2025 and pre-empting them seems too presumptive.

Steno Signals #126: Disentangling the ECB Schnabel Speech – How Will QT Develop from Here?

By Andreas Steno

We’re at a critical juncture in sovereign bond markets, with liquidity running razor-thin and the game changing fast.
German Bunds, traditionally rock-solid, are now trading through swaps and nearing zero on cross-currency swaps (ESTRON/SOFR) – a first in modern market history.
The takeaway? Major central banks, especially the ECB, are pressing too hard on QT, and the markets are about to hit back hard if they don’t ease up soon.

At Any Rate: Treasury Futures Quarterly Roll

By At Any Rate

Discussion on US elections and Fed policy implications
Impact of policy uncertainty on calendar spreads and wild card options
Investor positioning and its influence on various bond contracts

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Nov 14

Daily Brief South Korea: Hyundai Engineering & Construction and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Trump Trade: Korean Construction Vs Military Stocks Amid Potential End of War in Ukraine?

Trump Trade: Korean Construction Vs Military Stocks Amid Potential End of War in Ukraine?

By Douglas Kim

Although it is UNCERTAIN when the wars in Ukraine and the Middle East will end, if these wars indeed come to an end, this could POSITIVELY IMPACT Korean construction sector.
The end of the wars in Ukraine and the Middle East is likely to NEGATIVELY IMPACT the Korean military/defense sector.
The major Korean construction companies have low valuation multiples. On the other hand, the major Korean military/defense companies have high valuation multiples.

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Nov 14

Daily Brief Japan: Seven & I Holdings, Kansai Electric Power, Nexon, Tokyo Electron, Azoom, TSE Tokyo Price Index TOPIX and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail
Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged
KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering
Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering
Nexon (3659) | Down 17% on Quarterly Miss!
Tokyo Electron (8035 JP): 1H FY03/25 flash update
7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce
Azoom (3496 JP): Full-year FY09/24 flash update
Parent-Subsidiary Listings Are a Microcosm of Japanese Stocks: Change to Value-Creation Is Long Away

Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value

In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.

Kansai Electric (9503 JP) – HUGE Equity Offering To Stuff Retail

The past few years, large equity offerings have either been IPOs or secondary offerings (without dilution). Today we get a big dilutive secondary offering from Kansai Electric Power (9503 JP).
This is ~223mm shares or roughly ¥530bn against a current market cap of ¥2.1+trln. A 25% increase in share count. It is quite dilutive, but the stock is not rich.
Because dilutive, not overly-well-flagged, and mostly retail, this could get hammered. The div is not high enough to make it attractive, so one has to appreciate high earnings yield.

Kansai Electric Placement – A US$3.5bn Raising Which Doesn’t Appear Well Flagged

By Sumeet Singh

Kansai Electric Power (9503 JP) plans to raise up to US$3.5bn (including over-allocation) to partly fund its investment plans.
This will be a large deal for the stock to digest and doesn’t appear to have been particularly well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.

KEPCO (9503 JP): Index Implications of US$3.5bn Primary + Secondary Offering

Kansai Electric Power (9503 JP) is looking to raise up to US$3.5bn via a primary offering and a sale of Treasury shares. Pricing date is between 26-29 November.
Kansai Electric Power (9503 JP) is among the better performing stocks from the Electric Utilities industry and trades at higher valuations compared to its peers.
There will be a fair bit of passive buying with around 29% of the offering being bought at the time of settlement of the shares.

Kansai Electric Power (9503 JP): A US$3.5 Billion Primary/Secondary Offering

Kansai Electric Power (9503 JP) has announced primary and secondary offerings of up to 223.1 million shares (including overallotment) and a third-party allotment of 29.1 million shares.
JPY239.9 billion of proceeds will be used to improve energy efficiency and decarbonisation, while other funds will be used for data centres, renewable energy and overseas investments.
Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 26 and 29 November (likely 26 November).

Nexon (3659) | Down 17% on Quarterly Miss!

By Mark Chadwick

Nexon’s 3Q24 earnings report saw its stock dip -17% as revenue missed guidance and foreign exchange losses weighed on the bottom line.
Nexon’s operating profit rose +11% y/y to ¥51 billion, with an operating margin of 38%
The stock is trading at 8.5x EBITDA, which makes it very attractive versus the sector

Tokyo Electron (8035 JP): 1H FY03/25 flash update

By Shared Research

In 1H FY03/25, the company reported revenue of JPY1.12tn, operating profit of JPY313.9bn, and net income of JPY243.9bn.
The revised full-year forecast for FY03/25 includes revenue of JPY2.40tn and operating profit of JPY680.0bn.
The company announced a JPY70.0bn share buyback plan, acquiring up to 3.5mn shares, representing 0.8% of outstanding shares.

7&I (3382 JP) – An ITO Family MBO? With Itochu? At ¥9trln? Maybe. Information Is Scarce