Daily Briefs

We believe total revenue will grow by 9% YoY and game revenue began to rise in 2Q24.
We believe the operating margin will continue to improve YoY in 2Q24 after the seven-year high in 1Q24.
We set the upside at 35% and the price target at HK$496 for the end of 2025.

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 10)

By David Mudd

The epicenter of the Asian ETF selloff last week was Japan, recording an outflow of nearly $100B from equity funds taking the net flows back to breakeven for the YTD.
Seazen (Formerly Future Land) (1030 HK) and Swire Properties (1972 HK) had positive announcements while New Oriental Education & Techn (9901 HK) and Yum China Holdings (9987 HK) announced earnings.
China Unicom Hong Kong (762 HK) shares are under pressure as the telco sector goes through a price war in cloud services and investors take profits from high dividend names.

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for September

Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 September.
With no constituent changes in March and 1 add/1 delete in June, there could be more changes in September with Health Care stocks among the potential inclusions.
Changes to the Hang Seng Industry Classification System (HSICS) will be implemented from the September rebalance and that will alter industry coverage.

HK Connect SOUTHBOUND Flows (To 9 Aug 2024); Tencent the Big Buy Again

SOUTHBOUND was again a net buyer, for HK$15.2bn this week (now 27wks in a row of net buying), on smallish two-way volumes. Better than the previous month but still low.
Bank net buying, which had spiked the previous week, didn’t follow through.
There were three ETFs in the top 15 SOUTHBOUND net buys this past week, reversing last week, which reversed the week before’s flows.

CPMC (906 HK) Responds To Champion’s Offer

On the 30th July 2024, packaging play CPMC Holdings (906 HK) dispatched the Composite Document for the HK$6.87/share, in cash, Offer from SASAC/NCSSF-backed Champion.
The Response Document, including the IFA opinion (with a fair & reasonable conclusion) has now been dispatched.
However, the focus remains on ORG Technology Co., Ltd. A (002701 CH)‘s superior HK$7.21/share Offer, which is currently negotiating the necessary regulatory approvals.

A/H Premium Tracker (To 9 Aug 2024): Global Market Vol. SB Bought. NB Sold. Premia Down.

Delayed this week because of the long (Japanese holiday, which I took for myself) weekend, as were the SOUTHBOUND and NORTHBOUND monitors.
SOUTHBOUND inflow strong. Tencent strong inflows. Net buying every day for two weeks. NORTHBOUND outflows large. Record foreign investor outflows from China’s capital markets this year.
As expected (with AH 20d Premia returns at multi-year highs last week), AH Premia fell slightly, with narrow premia falling more than wide premia. I’d expect more H-vs-A gains.

WeRide (WRD US) IPO: The Bear Case

By Arun George

WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
In WeRide (WRD US) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
The bear case rests on a volatile revenue profile, high customer concentration risk, widening losses that raise doubts on the path to profitability, elongated cash collection cycles and cash burn.

Alibaba (BABA US): 1Q25 Preview, Stable Growth and Margin, But Overly Impacted

We believe revenue will increase by 8% YoY in 1Q25, as most business lines have been growing.
We believe the operating margin will be stable, as cost cut plans came to an end.
We set an upside of 94% for March 2025, as we believe the stock is overly impacted.

China Consumption Weekly (12 Aug 2024): Geely, Li Auto, JD.com, Alibaba, Tencent, DDL

The retail deliveries of NEV (new energy vehicle) increased by 37% YoY in July.
One of Alibaba’s supermarket chains, Freshippo, will sell its OEM goods, on Lazada.
Tencent will formally start the game, Arena Breakout: Infinite, in August.

Mainland Connect NORTHBOUND Flows (To 9 Aug 2024): Back to Net Selling of Renewables and Consumer

By Shifara Samsudeen, ACMA, CGMA

The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
Last week saw NORTHBOUND net SELL RMB 14.8bn of A-shares. It was a big net sell week in relatively low gross NORTHBOUND volume.
HK large caps outperformed Mainland large caps generally. Tech (HSTECH vs Star50 and ChiNext) saw even better HK outperformance.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Daily Brief India: Adani Enterprises, BrainBees Solutions, Ola Electric, Aditya Vision, NIFTY Index and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Hindenburg Research Vs SEBI Chief: Allegations and Responses
Brainbees (FirstCry) IPO Trading – Decent Subscription and Valuation
Ola Electric (OLAELEC IN) : Soaring High – How Much Higher Can It Go?
Narrative and Numbers | Electronics Retail | FY24
EQD / NSE Vol Update / Controlled Detonation in Vols – Initial Jump Followed by Calmer Levels

Hindenburg Research Vs SEBI Chief: Allegations and Responses

By Nimish Maheshwari

Hindenburg Research released a report on SEBI Chief Madhabi Puri Buch, accusing her of conflicts of interest, particularly about the Adani Group.
Analysis of Responses given by Madhabi & Dhaval Buch, SEBI, 360 One and Adani.
Analysis of events and allegations made by Hindenburg on Madhabi and critical assessment on that.

Brainbees (FirstCry) IPO Trading – Decent Subscription and Valuation

By Sumeet Singh

BrainBees Solutions (FirstCry) raised around US$500m in its India IPO.
FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

Ola Electric (OLAELEC IN) : Soaring High – How Much Higher Can It Go?

By Devi Subhakesan

Ola Electric’s stock has surged since its Friday listing, despite a lukewarm IPO response. We look at a possible base-to-bullish case valuation range for Ola Electric’s stock price.
With the e2W market up 96% YoY in July and Ola Electric’s sales soaring 114%, the momentum is strong. Likely catalyst on the horizon adds to investor optimism.
Currently, on FY2026E EV/Revenue, Ola Electric trades on par with its closest Indian e2W peer.

Narrative and Numbers | Electronics Retail | FY24

By Pranav Bhavsar

We focus on two electronics retailers Electronics Mart India (EMIL IN) & Aditya Vision (AVL IN) in this Narrative & Numbers for FY24.
EMIL is a leading player in the consumer electronics industry in India, with a strong presence in South India.
AVL is a leading player in the consumer electronics industry in India, with a strong presence in Bihar, Jharkhand, and Uttar Pradesh.

EQD / NSE Vol Update / Controlled Detonation in Vols – Initial Jump Followed by Calmer Levels

By Sankalp Singh

IVs move higher in a controlled manner relative to U.S. markets. Combination of technical factors put a dampener on the Options Markets & IV turn lower by Week’s end.
Many determining factors underwent changes in Vol-Regime Model – but threshold to switch out of “High & Down” state not achieved.
Smile & Skew characteristics blow out significantly on the open but settle at lower levels by week’s close.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Daily Brief Japan: Recruit Holdings, Nippon Paint Holdings, Tokio Marine Holdings, Alfresa Holdings, MARUKA FURUSATO , Medinet Co Ltd, Minato Holdings, Kringle Pharma Inc, J Trust Co Ltd, Resorttrust Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Recruit: Labour Markets Continue to Trend Down, but Recruit’s Efforts Pay Off in 1Q
Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged
Tokio Marine Holdings – Net Profit +54% YoY, Non Life Premiums & Investment Income Are Drivers
Alfresa Holdings (2784 JP): Stellar Bottomline Growth in Q1FY25 Will Not Be Replicated in Near-Term
MARUKA FURUSATO (7128 JP): 1H FY12/24 flash update
Medinet Co Ltd (2370 JP): Q3 FY09/24 flash update
Minato Holdings (6862 JP): Q1 FY03/25 flash update
Kringle Pharma Inc (4884 JP): Q3 FY09/24 flash update
J Trust Co Ltd (8508 JP): 1H FY12/24 flash update
Resorttrust Inc (4681 JP): Q1 FY03/25 flash update

Recruit: Labour Markets Continue to Trend Down, but Recruit’s Efforts Pay Off in 1Q

Recruit Holdings (6098 JP) ’s share price has been up more than 40% YTD driven by better-than-expected earnings and an announcement to buy back ¥600bn worth shares.
The company’s 1Q earnings beat consensus and showed some recovery across all business segments, however, the labour markets are heading towards a decline.
It seems that the company has run out of investment options, and we would not rush to make an entry as worst is not over yet for the company.

Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged

By Steve Zhou, CFA

Nippon Paint Holdings (4612 JP)‘s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.
Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).
China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company.

Tokio Marine Holdings – Net Profit +54% YoY, Non Life Premiums & Investment Income Are Drivers

By Daniel Tabbush

Giant Japan insurer reports staggering June 2024 quarter YoY growth, not only from securities gains, but also strong delta in core premiums written
Weak life insurance premiums is more than offset with well controlled costs, non-life premium income, investment income
Acceleration of cross-shareholding disposals can keep income high, with AFS totaling JPY13.8 trillion with unrealized gains of JPY2.8 trillion

Alfresa Holdings (2784 JP): Stellar Bottomline Growth in Q1FY25 Will Not Be Replicated in Near-Term

By Tina Banerjee

Alfresa Holdings (2784 JP) reported just 2% YoY revenue growth to ¥722B in Q1FY25. However, with 24bps gross profit margin expansion to 6.98%, operating and net profits outpaced revenue growth.
Alfresa reiterated H1FY25 and FY25 guidance. This calls for mixed financial performance in Q2FY25, with topline growth and bottomline deterioration. Decline in profit is mainly due to higher SG&A expenses.
Anticipating lower profit this fiscal, the company has guided for dividend of ¥63 per share, compared with ¥70 per share paid in FY24.

MARUKA FURUSATO (7128 JP): 1H FY12/24 flash update

Revenue decreased to JPY78.8bn (-7.4% YoY), operating profit fell to JPY1.7bn (-46.5% YoY), and recurring profit dropped to JPY2.2bn (-40.5% YoY).
Domestic machinery sales fell 18.9% YoY, overseas machinery sales declined 35.4% YoY, and equipment tools sales in Japan decreased 1.5% YoY.
Revenue in the Construction Products segment was JPY21.8bn (-1.6% YoY), with segment profit at JPY745mn (-26.0% YoY).

Medinet Co Ltd (2370 JP): Q3 FY09/24 flash update

Sales increased by 19.8% YoY to JPY589mn, while operating, recurring, and net losses narrowed compared to Q3 FY09/23.
Gross profit rose 52.4% YoY to JPY107mn; SG&A expenses decreased by 1.2% YoY to JPY1.1bn.
Specified Cell Products Manufacturing and CDMO businesses saw sales growth, but segment loss widened due to higher sales expenses.

Minato Holdings (6862 JP): Q1 FY03/25 flash update

Revenue: JPY4.7bn (-4.4% YoY), Operating profit: JPY53mn (-83.2% YoY), Recurring profit: JPY63mn (-81.5% YoY), Net income: JPY37mn (-95.9% YoY).
Digital Device Business revenue: JPY2.4bn (+21.4% YoY), Operating profit: JPY361mn (+61.2% YoY), OPM: 14.8%.
Digital Engineering Business revenue: JPY635mn (-21.0% YoY), Operating loss: JPY84mn, ICT Products Business revenue: JPY1.5bn (-7.7% YoY), Operating loss: JPY11mn.

Kringle Pharma Inc (4884 JP): Q3 FY09/24 flash update

**Q3 FY09/24 Financial Results:** Revenue JPY61mn (+19.3% YoY), operating loss JPY580mn, net loss JPY518mn, total assets JPY2.9bn.
**Revised FY09/24 Forecast:** Sales JPY79mn, operating loss JPY1.0bn, recurring loss JPY940mn, net loss JPY942mn, net loss per share JPY147.23.
**Financial Position Changes:** Current assets JPY2.9bn, current liabilities JPY84mn, fixed liabilities JPY517mn, net assets JPY2.3bn, capital stock JPY516mn.

J Trust Co Ltd (8508 JP): 1H FY12/24 flash update

Operating revenue increased by JPY11.9bn YoY to JPY65.4bn (+22.2% YoY), driven by growth in financial and real estate businesses.
Operating profit decreased by JPY7.5bn YoY to JPY2.1bn (-78.4% YoY), with significant declines in the Real Estate Business.
Profit attributable to owners of parent decreased by 83.6% to JPY2.8bn, impacted by deferred tax liabilities reversal and forex gains.

Resorttrust Inc (4681 JP): Q1 FY03/25 flash update

Q4 sees increased repair costs and reduced profits due to off-season and intensive facility repairs.
Sales and profits are higher in quarters when new hotels open, with deferred real estate value recorded as a lump sum.
Net income attributable to owners declined YoY due to a JPY1.8bn impairment loss, despite higher sales and operating profit.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Most Read: Kokusai Electric , Nikkei 225, Descente Ltd, Conocophillips, Trend Micro Inc, Hyundai Motor, Macquarie Korea Infra Fund, Ramsay Health Care, Giant Biogene and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed
How Has the Index Rebalance Strategy Performed During Market Turmoil?
Itochu (8001 JP) Launches Lowball TOB for Descente (8114) – Buying China on the Cheap
Select Sector Indices – HUGE Impact of Proposed Constituent Weighting Changes
Trend Micro (4704) Up For Sale? Would Be a HUGE Buyout But How Huge? And Who?
Trend Micro (4704 JP): Evaluating the Privatisation Rumours
Flow Developments to Watch as the Release of the Value-Up Index Approaches
Macquarie Korea Infrastructure Fund: Rights Offering of About 500 Billion Won
Private Equity Examining Ramsay Health (RMC AU). Again.
Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for September

Kokusai Electric (6525 JP): Placement Price Could Be Determined Today; Index Impact Could Be Delayed

Kokusai Electric (6525 JP) could price their secondary offering after market close today. The stock is down 10.5% since the rumors of the placement began 7 trading sessions ago.
The Philadelphia Stock Exchange Semiconductor Index (SOX INDEX) has been dropping over the last few days and is 8.6% lower over the last 8 trading days.
Kokusai Electric (6525 JP) has been trading higher on expectations of index inclusion in August, but that could move to November now.

How Has the Index Rebalance Strategy Performed During Market Turmoil?

The market turmoil over the last few trading sessions has not been kind to a simple index rebalance strategy of buying the forecast adds and selling the forecast deletes.
The overall returns and stock specific returns indicate that trades are more crowded in some indices as compared to others and traders should consider that when position sizing.
Anecdotally, periods of negative returns are followed by periods of strong returns for the strategy as weak hands are shaken out of their positions.

Itochu (8001 JP) Launches Lowball TOB for Descente (8114) – Buying China on the Cheap

Today, Itochu Corp (8001 JP) announced it would launch a Tender Offer when approvals were received, to buy out minorities in Descente Ltd (8114 JP) at ¥4,350/share.
Itochu was buying at that price or higher, in the market, in October 2023. Earnings and book are up since then. Outlook for the Descente China Holdings affiliate? Great.
The valuation transparency is disappointing. Activists would have 3mos or so to push for more. But with friendly holders, they get very close to the minimum anyway.

Select Sector Indices – HUGE Impact of Proposed Constituent Weighting Changes

S&P DJI have started a market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover.
There is US$281bn tracking the Select Sector Indices from the SPDR ETFs. The market consultation will have a larger impact on indices where there is a high degree of concentration.
The largest inflows are expected in Apple, Conocophillips, Amazon.com and Netflix while the largest outflows will be from Microsoft, NVIDIA, Chevron, Procter & Gamble, Exxon Mobil, Costco Wholesale and Meta Platforms.

Trend Micro (4704) Up For Sale? Would Be a HUGE Buyout But How Huge? And Who?

A Reuters article overnight says Trend Micro might be up for sale. This caused the ADRs to jump 10% overnight. The remaining co-founders are 65 and 70 this year.
The stock has effectively gone sideways the last few years as Value Act has been activisting. Now one has to exercise one’s imagination to think about a possible sale price.
On a DCF basis, a PE fund couldn’t reasonably do this. Multiples are too high. That means a strategic buyer would be more likely. But Who? Why? And How much?

Trend Micro (4704 JP): Evaluating the Privatisation Rumours

By Arun George

Trend Micro Inc (4704 JP) shares rose 14.8% on Friday after Reuters reported that it is exploring a sale after attracting buyout interest.
The interest is unsurprising due to the weak share price. Since ValueAct disclosed a stake on 8 August 2022, the shares are down 0.7% vs the Nikkei 225’s 23.6% increase.
The lack of a controlling shareholder and increased cybersecurity M&A activity support the buyout interest. A privatisation price is likely to be around JPY9,000. Valuation is undemanding at last close.

Flow Developments to Watch as the Release of the Value-Up Index Approaches

By Sanghyun Park

The plan is to select 20 large-cap companies from around 30 with value-up disclosures by late August, then gradually expand the index’s constituents.
Investors seeking both dividends and value-up benefits must buy stocks individually, as ETFs lack tax advantages, potentially triggering fund shifts from dividend ETFs to value-up stocks.
We can target stocks in dividend ETFs not making value-up disclosures, as they may face overhang risk during fund migration to the value-up index.

Macquarie Korea Infrastructure Fund: Rights Offering of About 500 Billion Won

By Douglas Kim

Macquarie Korea Infra Fund (088980 KS) announced that it is proceeding with a rights offering capital increase of 500 billion won, which represents about 9.4% of its current market cap.
MKIF plans to use higher liquidity increase in the following main areas: Seoul East Underground Expressway – 215 billion won Acquisition of Hanam Data Center – 423 billion won
In the next 6-12 months, we believe MKIF has a solid chance of outperforming KOSPI (on combined capital gains/dividends basis).

Private Equity Examining Ramsay Health (RMC AU). Again.

Back in April 2022, Australia’s largest private hospital operator Ramsay Health Care (RHC AU) announced an unsolicited, non-binding Offer from KKR at A$88.00/share. Arguably, KKR dodged a bullet.
RHC’s share price took another leg down last week after RHC announced weaker-than-expected FY24 earnings; plus a write-down of its European/UK ops. RHC is now ~50% adrift of KKR’s NBIO.
Not altogether surprisingly, various media sources are reporting private equity outfits are (again) running a diagnostic check on RHC.

Hang Seng Index (HSI) Rebalance Preview: Inclusion Candidates for September

By Shifara Samsudeen, ACMA, CGMA

Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 September.
With no constituent changes in March and 1 add/1 delete in June, there could be more changes in September with Health Care stocks among the potential inclusions.
Changes to the Hang Seng Industry Classification System (HSICS) will be implemented from the September rebalance and that will alter industry coverage.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Analytics and News
✓ Events & Webinars

Aug 13

Daily Brief Utilities: Hong Kong & China Gas and more

By Smartkarma Daily Briefs | Daily Briefs, Utilities Sector

In today’s briefing:

Revisiting Hong Kong Utilities-Time to Sell?

Revisiting Hong Kong Utilities-Time to Sell?

By Rikki Malik

Hong Kong utilities have performed well on an absolute basis and even better on a relative basis this year.
We revisit our original call on them from January 2024
Continued market volatility and future US interest rate cuts will provide continued support.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Daily Brief Industrials: Adani Enterprises, Recruit Holdings, T.S. Lines, CBAK Energy Technology , CS Wind Corp, MARUKA FURUSATO , Quanta Services, U-Haul Holding , Ww Grainger Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Hindenburg Research Vs SEBI Chief: Allegations and Responses
Recruit: Labour Markets Continue to Trend Down, but Recruit’s Efforts Pay Off in 1Q
TS Lines Pre-IPO: Adjusted Book Value Approach Yields Estimated Equity Valuation of US$1.96-2.06 Bn
CBAT: Weathering the challenges in the battery cell market. Maintaining a 2.50/share target.
CS Wind (112610): Excellent Q2
MARUKA FURUSATO (7128 JP): 1H FY12/24 flash update
Quanta Services: Enhanced Utility and Communication Infrastructure Services Driving Growth! – Major Drivers
UHAL: Reports 1Q FY2025 Results: Demand for self-moving equipment rentals increases YOY after seven quarters of single-digit declines. Self-Storage continues to deliver top-line growth.
UHAL: Reports 1Q FY2024 Results: Demand for self-moving equipment rentals increases YOY after seven quarters single-digit declines. Self-Storage continues to deliver top-line growth.
W.W. Grainger Inc.: A Closer Look At A Bear’s Perspective! – Major Drivers

Hindenburg Research Vs SEBI Chief: Allegations and Responses

By Nimish Maheshwari

Hindenburg Research released a report on SEBI Chief Madhabi Puri Buch, accusing her of conflicts of interest, particularly about the Adani Group.
Analysis of Responses given by Madhabi & Dhaval Buch, SEBI, 360 One and Adani.
Analysis of events and allegations made by Hindenburg on Madhabi and critical assessment on that.

Recruit: Labour Markets Continue to Trend Down, but Recruit’s Efforts Pay Off in 1Q

Recruit Holdings (6098 JP) ’s share price has been up more than 40% YTD driven by better-than-expected earnings and an announcement to buy back ¥600bn worth shares.
The company’s 1Q earnings beat consensus and showed some recovery across all business segments, however, the labour markets are heading towards a decline.
It seems that the company has run out of investment options, and we would not rush to make an entry as worst is not over yet for the company.

TS Lines Pre-IPO: Adjusted Book Value Approach Yields Estimated Equity Valuation of US$1.96-2.06 Bn

By Daniel Hellberg

Container ships are standardized, and fleets can be “market to market” values
This approach suggests TS Lines’ equity could be worth > US$2.0 bn
However, there are some caveats that come with this valuation approach

CBAT: Weathering the challenges in the battery cell market. Maintaining a 2.50/share target.

CBAK Energy Technology continues to leverage its strong relationships with portable energy and home energy storage manufacturers to deliver solid results.
Pricing pressures remain in the broader battery cell market but CBAK’s margins remained strong in Q2.
The company recorded another profitable quarter and we think investor confidence in the company should continue to grow despite quarter-to-quarter fluctuations.

CS Wind (112610): Excellent Q2

By Henry Soediarko

CS Wind Corp (112610 KS) is one of the biggest players in wind tower globally with a substantial presence in the US.
Excellent Q2 24 operating numbers led to a sharp increase in the share price that is mainly driven by short covering.
The revenue growth occurred without sacrificing profitability, a sign that the company is in the driving seat.

MARUKA FURUSATO (7128 JP): 1H FY12/24 flash update

Revenue decreased to JPY78.8bn (-7.4% YoY), operating profit fell to JPY1.7bn (-46.5% YoY), and recurring profit dropped to JPY2.2bn (-40.5% YoY).
Domestic machinery sales fell 18.9% YoY, overseas machinery sales declined 35.4% YoY, and equipment tools sales in Japan decreased 1.5% YoY.
Revenue in the Construction Products segment was JPY21.8bn (-1.6% YoY), with segment profit at JPY745mn (-26.0% YoY).

Quanta Services: Enhanced Utility and Communication Infrastructure Services Driving Growth! – Major Drivers

Quanta Services showcased robust financial performance for the second quarter of 2024, delivering double-digit growth in revenue, adjusted EBITDA, and adjusted earnings per share.
The company reported significant strength in its backlog, achieving a record total of $31.3 billion accompanied by strong cash flow generation.
These results stem largely from ongoing demand for Quanta’s services, fueled by multiyear programs focused on developing renewable energy and power grid infrastructure in North America.

UHAL: Reports 1Q FY2025 Results: Demand for self-moving equipment rentals increases YOY after seven quarters of single-digit declines. Self-Storage continues to deliver top-line growth.

U-Haul Holding Company is the parent company of U-Haul International, the world’s largest consumer truck and trailer rental company.
U-Haul is also the third largest self-storage operator in North America.
U-Haul benefited in a leveraged manner from the increase in demand for self-moving services during the pandemic.

UHAL: Reports 1Q FY2024 Results: Demand for self-moving equipment rentals increases YOY after seven quarters single-digit declines. Self-Storage continues to deliver top-line growth.

U-Haul Holding Company is the parent company of U-Haul International, the world’s largest consumer truck and trailer rental company.
U-Haul is also the third largest self-storage operator in North America.
U-Haul benefited in a leveraged manner from the increase in demand for self-moving services during the pandemic.

W.W. Grainger Inc.: A Closer Look At A Bear’s Perspective! – Major Drivers

W.W. Grainger reported its financial results for the second quarter of 2024, reflecting a performance shaped by strategic alignments, moderate growth, and persistent macroeconomic challenges.
The company, led by Chairman and CEO D.G. Macpherson and CFO Dee Merriwether, emphasized the ongoing commitment to customer-centric innovations and operational adjustments amidst a transforming economic landscape.
Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Daily Brief TMT/Internet: Taiwan Semiconductor Co., Tencent, Webzen Inc, BusinessOn Communication, Samsung Electronics, Monolithic Power Systems, Inc, ROBLOX , UnaBiz and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TSMC’s July Revenue Hits Record NT$256.95 Billion, Boosted by AI Servers and IPhone 16 Demand
Tencent (700 HK): 2Q24 Preview, Both Growth and Margin to Improve
HK Connect SOUTHBOUND Flows (To 9 Aug 2024); Tencent the Big Buy Again
KOSDAQ150 Adhoc Index Rebalance: Webzen to Replace Connectwave
Tender Offer of BusinessOn Communications by Skylake Equity Partners
China Consumption Weekly (12 Aug 2024): Geely, Li Auto, JD.com, Alibaba, Tencent, DDL
Tech Supply Chain Tracker (13-Aug-2024): SDC signs contract with Microsoft.
Monolithic Power Systems: Expansion into AI & High-Power Solutions Catalyzing Growth! – Major Drivers
Roblox Corporation: A Tale Of Enhanced Content Discovery and Platform Engagement! – Major Drivers
IoT firm UnaBiz hits first close of US$25M pre-series C round | e27

TSMC’s July Revenue Hits Record NT$256.95 Billion, Boosted by AI Servers and IPhone 16 Demand

By Uttkarsh Kohli

TSMC’s July 2024 revenue reached NT$256.95 billion, up 23.6% MoM and 44.7% YoY. Year-to-date revenue grew by 30.5% to NT$1.52 trillion, driven by strong orders from Apple, Intel, and Nvidia.
TSMC forecasts Q3 revenue of $22.4-23.2 billion, anticipating over 25% full-year growth. July revenue already at 35% of Q3 estimates. Analysts advise against assuming these results for the entire quarter.
TSMC is capitalizing on AI and mobile demand, with analysts maintaining an “Outperform” rating with average upside of 14%, noting potential growth from 5G, HPC, and automotive sectors.

Tencent (700 HK): 2Q24 Preview, Both Growth and Margin to Improve

We believe total revenue will grow by 9% YoY and game revenue began to rise in 2Q24.
We believe the operating margin will continue to improve YoY in 2Q24 after the seven-year high in 1Q24.
We set the upside at 35% and the price target at HK$496 for the end of 2025.

HK Connect SOUTHBOUND Flows (To 9 Aug 2024); Tencent the Big Buy Again

SOUTHBOUND was again a net buyer, for HK$15.2bn this week (now 27wks in a row of net buying), on smallish two-way volumes. Better than the previous month but still low.
Bank net buying, which had spiked the previous week, didn’t follow through.
There were three ETFs in the top 15 SOUTHBOUND net buys this past week, reversing last week, which reversed the week before’s flows.

KOSDAQ150 Adhoc Index Rebalance: Webzen to Replace Connectwave

Webzen Inc (069080 KS) will replace Connectwave (119860 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) effective 16 August.
There is over 2 days of ADV to trade on both stocks though the flows are not very large.
The Connectwave (119860 KS) delisting will also have an impact on the changes to the KRX New Deal Internet Index in September.

Tender Offer of BusinessOn Communications by Skylake Equity Partners

By Douglas Kim

On 12 August, Skylake Equity Partners announced a tender offer of 6.58 million shares (28.9% stake) of BusinessOn Communication. The tender offer price is 15,849 won.
BusinessOn is one of the leading digital tax invoice software providers in Korea. It also provides digital contracts, market intelligence, banner advertising, and supply chain management services.
Skylake plans to purchase all of the shares subscribed in this deal, regardless of the subscription rate. If the public offering target quantity is successful, Skylake plans to delist BusinessOn.

China Consumption Weekly (12 Aug 2024): Geely, Li Auto, JD.com, Alibaba, Tencent, DDL

The retail deliveries of NEV (new energy vehicle) increased by 37% YoY in July.
One of Alibaba’s supermarket chains, Freshippo, will sell its OEM goods, on Lazada.
Tencent will formally start the game, Arena Breakout: Infinite, in August.

Tech Supply Chain Tracker (13-Aug-2024): SDC signs contract with Microsoft.

By Tech Supply Chain Tracker

SDC partners with Microsoft while VCs in India prioritize deep tech startups for innovation and growth.
Polish startup SEEDiA leads in smart urban infrastructure as AI hype in smart manufacturing is questioned for realistic outcomes.
Non-a-Si panels expected to dominate auto displays 2024-2029 as Indian opto-semiconductor maker acquires US-based IC equipment company.

Monolithic Power Systems: Expansion into AI & High-Power Solutions Catalyzing Growth! – Major Drivers

Monolithic Power Systems Inc. has reported a robust second quarter in 2024, reflecting a series of positive outcomes driven by strategic initiatives and diverse market engagement.
The company announced record revenues of $507.4 million, surpassing the high end of their guidance.
This performance was largely attributed to the increased demand for AI-powered solutions, an improvement in order trends across various end markets, and revenue generation from previous design wins.

Roblox Corporation: A Tale Of Enhanced Content Discovery and Platform Engagement! – Major Drivers

Roblox Corporation’s second quarter 2024 earnings discussion presented an optimistic outlook underscored by impressive financial and usage metrics.
The quarter witnessed a 31% year-over-year increase in revenue, reaching $893.5 million, surpassing the guidance.
Bookings also grew by 22% to $955 million, while daily active users (DAUs) stood at 79.5 million, marking a 21% increase from the previous year.

IoT firm UnaBiz hits first close of US$25M pre-series C round | e27

By e27

Singapore-based UnaBiz, a provider of customised IoT solutions, has announced the first close of its US$25 million pre-series C funding round with Japan’s KDDI Open Innovation Fund 3 and KYOCERA Communication Systems.
The fresh funds will be used to partner with new companies in the security industry, deepen logistics and supply chain market penetration, and expand utility with hybridisation.
This capital injection follows UnaBiz’s acquisition and integration of French IoT firm Sigfox 0G technology. In two years, UnaBiz added 4 million new devices to the global 0G Network.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Daily Brief Health Care: Ramsay Health Care, Biogen Inc, Alfresa Holdings, Innovent Biologics Inc, Moderna , Evo Commerce, Mettler Toledo International Inc, Rani Therapeutics Holdings , Resmed Inc, Revelation Biosciences and more

By Smartkarma Daily Briefs | Daily Briefs, Healthcare

In today’s briefing:

Private Equity Examining Ramsay Health (RMC AU). Again.
Biogen Inc.: How Is Their Expansion and Execution of New Product Launches Going? – Major Drivers
Alfresa Holdings (2784 JP): Stellar Bottomline Growth in Q1FY25 Will Not Be Replicated in Near-Term
2024 High Conviction Update: Innovent (1801.HK) 24Q2 – Valuation Upside Will Be Further Opened Up
Moderna Inc.: These Are The 4 Biggest Challenges That Bears Are Counting On! – Major Drivers
D2C personal care product startup Evo Commerce bags U$2.1M to expand retail touchpoints | e27
Mettler-Toledo International Inc.: 4 Reasons Why We Are Pessimistic About Their Growth! – Major Drivers
RANI: Second Quarter Results
ResMed Inc.: A Story Of Increased Market Penetration and New Patient Acquisition! – Major Drivers
REVB: Solid Balance Sheet as Positive Results Released

Private Equity Examining Ramsay Health (RMC AU). Again.

Back in April 2022, Australia’s largest private hospital operator Ramsay Health Care (RHC AU) announced an unsolicited, non-binding Offer from KKR at A$88.00/share. Arguably, KKR dodged a bullet.
RHC’s share price took another leg down last week after RHC announced weaker-than-expected FY24 earnings; plus a write-down of its European/UK ops. RHC is now ~50% adrift of KKR’s NBIO.
Not altogether surprisingly, various media sources are reporting private equity outfits are (again) running a diagnostic check on RHC.

Biogen Inc.: How Is Their Expansion and Execution of New Product Launches Going? – Major Drivers

Biogen recently reported its earnings for the second quarter of 2024.
The company, a leading biotechnology entity known for its pioneering work in neuroscience, highlighted a period of transformative growth and strategic reshuffling under President and CEO Chris Viehbacher.
Central to the earnings discussion was Biogen’s emphasis on accelerating new product launches, optimizing existing portfolios, and expanding through strategic acquisitions, notably the addition of HI-Bio.

Alfresa Holdings (2784 JP): Stellar Bottomline Growth in Q1FY25 Will Not Be Replicated in Near-Term

By Tina Banerjee

Alfresa Holdings (2784 JP) reported just 2% YoY revenue growth to ¥722B in Q1FY25. However, with 24bps gross profit margin expansion to 6.98%, operating and net profits outpaced revenue growth.
Alfresa reiterated H1FY25 and FY25 guidance. This calls for mixed financial performance in Q2FY25, with topline growth and bottomline deterioration. Decline in profit is mainly due to higher SG&A expenses.
Anticipating lower profit this fiscal, the company has guided for dividend of ¥63 per share, compared with ¥70 per share paid in FY24.

2024 High Conviction Update: Innovent (1801.HK) 24Q2 – Valuation Upside Will Be Further Opened Up

By Xinyao (Criss) Wang

Innovent’s 24H1 product revenue exceeded RMB3.7 billion.Due to anti-corruption campaign, newly marketed PD-1s are unable to be admitted to the hospitals normally, which indirectly promotes the sales performance of sintilimab.
2024 full-year product revenue is estimated to reach RMB7.7 billion. IBI363 has the potential to be blockbuster variety in global markets, which may put Innovent’s valuation on a new level.
Innovent is undervalued if market value is below RMB38.5 billion.If mazdutide is able to contribute RMB10 billion sales, Innovent’s market value would reach about RMB90-100 billion (based on 5 P/S).

Moderna Inc.: These Are The 4 Biggest Challenges That Bears Are Counting On! – Major Drivers

Moderna reported its Quarterly Earnings recently and managed a decent performance.
Positives from the quarter included advancements in Moderna’s respiratory vaccine portfolio, particularly with mRNA-1273, its COVID-19 vaccine, and new RSV vaccine, mRESVIA.
Notably, mRNA-1273 continues to be a significant product in combating COVID-19 with substantial hospitalization rates reported from the CDC for the ’23/’24 season.

D2C personal care product startup Evo Commerce bags U$2.1M to expand retail touchpoints | e27

By e27

Singapore-based Evo Commerce, an omnichannel retailer offering supplements and personal care products directly to consumers, has raised US$2.1 million in a fresh investment round.
Existing investor Shanghai-based IJK Capital Partners led the round.
Chen Capital (Min-Liang Tan’s family office), Reuben Lai (former MD of the Grab Financial Group), Octave Wellbeing Economy Fund, Orvel Ventures, Straits Angels, and Ascend Angels participated.

Mettler-Toledo International Inc.: 4 Reasons Why We Are Pessimistic About Their Growth! – Major Drivers

Mettler-Toledo International Inc. recently announced its second-quarter 2024 financial results, revealing a mix of strengths and challenges that characterized the period.
The company’s performance demonstrated its strategic flexibility in adapting to varied global market conditions, with a particular focus on enhancing operational efficiencies and optimizing its Spinnaker sales and marketing program.
During the quarter, Mettler-Toledo reported sales of $943.8 million, which represented a 2% decline in local currencies and a 4% decrease on a U.S. dollar basis, largely due to currency headwinds.

RANI: Second Quarter Results

Rani is a clinical-stage biotherapeutics company developing the ingestible robotic RaniPill (RP) that enables oral delivery of biologics & other large molecules.
Its pipeline features clinical assets RT-102 (teriparatide for osteoporosis) & RT-111 (ustekinumab for psoriasis).
Both programs have completed Ph1 trials characterizing safety tolerability & pharmaco-kinetics.

ResMed Inc.: A Story Of Increased Market Penetration and New Patient Acquisition! – Major Drivers

ResMed recently reported its fourth quarter results for the fiscal year 2024, providing a comprehensive update on its performance across various business segments.
The company demonstrated robust growth attributed to increased demand and operational excellence, with a focus on innovations in sleep apnea, digital health solutions, and home medical equipment software.
Financially, ResMed achieved a 9% increase in revenue year-over-year, amounting to $1.22 billion for the quarter.

REVB: Solid Balance Sheet as Positive Results Released

Revelation Biosciences is a life sciences company whose development of immunologic-based therapies is based on the well-established biology of phosphorylated hexaacyl disaccharide (PHAD) and its effect on the innate immune system.
The company released its 2Q2024 earnings results and showed solid cash on hand.
The company also recently announced data from its Phase 1 clinical study of its Gemini treatment.

💡 Before it’s here, it’s on Smartkarma

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

✓ Unlimited Research Summaries
✓ Personalised Alerts
✓ Custom Watchlists
✓ Company Data and News
✓ Events & Webinars

Aug 13

Daily Brief Energy/Materials: Conocophillips, CPMC Holdings, Rio Tinto PLC, Nippon Paint Holdings, Crude Oil, Natural Gas, Texas Pacific Land , Eog Resources, Mushroom Material, Celanese Corp Series A and more

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

In today’s briefing:

Select Sector Indices – HUGE Impact of Proposed Constituent Weighting Changes
CPMC (906 HK) Responds To Champion’s Offer
Selected European HoldCos and DLC: July-Aug. 9 ’24 Report
Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged
US Rig Count Climbs on Oil Rig Gains
Hurricanes More Likely to Disrupt Crude Supply and Lower Demand for Natural Gas
TPL: Oily Water of Gold
EOG Resources: What Is Their New Strategic Approach To Premium Drilling Locations? – Major Drivers
Mushroom Material nets US$5M to convert agri waste into eco-friendly packaging | e27
Celanese Corporation: Diversification and Stability of Portfolio Is Their Biggest Competitive Edge? – Major Drivers

Select Sector Indices – HUGE Impact of Proposed Constituent Weighting Changes

S&P DJI have started a market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover.
There is US$281bn tracking the Select Sector Indices from the SPDR ETFs. The market consultation will have a larger impact on indices where there is a high degree of concentration.
The largest inflows are expected in Apple, Conocophillips, Amazon.com and Netflix while the largest outflows will be from Microsoft, NVIDIA, Chevron, Procter & Gamble, Exxon Mobil, Costco Wholesale and Meta Platforms.

CPMC (906 HK) Responds To Champion’s Offer

On the 30th July 2024, packaging play CPMC Holdings (906 HK) dispatched the Composite Document for the HK$6.87/share, in cash, Offer from SASAC/NCSSF-backed Champion.
The Response Document, including the IFA opinion (with a fair & reasonable conclusion) has now been dispatched.
However, the focus remains on ORG Technology Co., Ltd. A (002701 CH)‘s superior HK$7.21/share Offer, which is currently negotiating the necessary regulatory approvals.

Selected European HoldCos and DLC: July-Aug. 9 ’24 Report

By Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos generally tightened during July and first week of August. Discounts to NAV: C.F.Alba, 45.3% (vs. 44.5% as of end of June);
GBL, 42.2% (vs. 43.6%); Heineken Holding, 16% (vs. 18.4%); Industrivärden C, 2.2% (vs. 2.4%); Investor B, 7.5% (vs. 9.9%); Porsche Automobile Holding, 34.6% (vs. 35.8%), Porsche SE reports 13 August.
Rio DLC spread tightened to 22.1% (vs. 20.7%). What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged

By Steve Zhou, CFA

Nippon Paint Holdings (4612 JP)‘s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.
Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).
China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company.

US Rig Count Climbs on Oil Rig Gains

By Suhas Reddy

US oil and gas rig count increased by two to 588 for the week ending 09/Aug, following a decline the week prior.
US oil rig count rose by three to 485, after remaining flat the previous week. Gas rigs decreased by one to 97, marking a third consecutive weekly decline.
For the week ending 02/Aug, US crude oil production hit a record 13.4 mbpd, following four weeks of steady output at 13.3 mbpd.

Hurricanes More Likely to Disrupt Crude Supply and Lower Demand for Natural Gas

By Suhas Reddy

Hurricane Debby caused 300,000 electricity customers to lose power in Florida and Georgia, reducing electricity demand, which led to natural gas prices declining.
Since the 2006 shale boom, the share of US natural gas production from the offshore Gulf of Mexico has dropped from 15% to 1.8% by 2023.
The Gulf of Mexico area accounted for 14.4% of US crude oil production in 2023. Although still a significant share, it has declined from 25.4% in 2006.

TPL: Oily Water of Gold

By Hamed Khorsand

TPL continues to use water as means to diversify from oil and gas. The low price of natural gas has put pressure on the BOE price TPL generates royalties from.
TPL missed our total revenue estimate for the second quarter due to a decline in oil and gas royalties. However, TPL’s water business remains the bright spot of the business
We continue to believe TPL’s revenue sourced outside of oil and gas royalties could draw greater investor attention and result in a higher valuation for TPL’s stock.

EOG Resources: What Is Their New Strategic Approach To Premium Drilling Locations? – Major Drivers

EOG Resources, in its Second Quarter 2024 Earnings Results Conference Call, highlighted several key aspects of its performance and strategic direction.
The company reported a substantial adjusted net income of $1.8 billion and generated $1.4 billion in free cash flow, indicating a robust financial position.
Total liquids production forecast for the year was increased by 11,800 barrels per day, and operational efficiencies were projected to reduce per unit cash operating costs by $0.15, enhancing the forecasted free cash flow to an impressive $5.7 billion for the full year.

Mushroom Material nets US$5M to convert agri waste into eco-friendly packaging | e27

By e27

Mushroom Material, a startup that converts agricultural waste into eco-friendly packaging, has secured over US$5 million in seed funding led by Wavemaker Partners and SEEDS Capital.
Icehouse Ventures, K1W1, and Black Kite Capital participated.
The investment is being used to establish a 1,300-sqm pilot plant in Auckland’s Mount Roskill in New Zealand.

Celanese Corporation: Diversification and Stability of Portfolio Is Their Biggest Competitive Edge? – Major Drivers