Category

Daily Briefs

Aug 09
0

Daily Brief South Korea: POSCO Holdings, SK Innovation, Korea Zinc and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
  • SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
  • Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry

By Sanghyun Park

  • Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
  • August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
  • With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.

SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On

By Douglas Kim

  • SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On. 
  • The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
  • We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On. 

Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

By Douglas Kim

  • On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
  • The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain. 
  • Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels. 

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Aug 09
0

Daily Brief United States: Super Micro Computer, Exxon Mobil, Black Sesame Technologies, ProShares Bitcoin Strategy ETF, Adeia, Xylem Inc, Inter Parfums, Seadrill , Corning Inc, Boeing Co and more

By | Daily Briefs, United States

In today’s briefing:

  • Super Micro Computer (SMCI) May NOT Be the Next NVIDIA!
  • [Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates
  • Chinese Auto Chip Maker Black Sesame to Raise $143 Million in Hong Kong IPO
  • Through The Fire And Flames
  • ADEA: Streaming Loading
  • Xylem Inc.: Strategic Focus On Emerging Markets & Diverse Portfolio Driving Our Bullish Thesis! – Major Drivers
  • IPAR: New Line Additive to Growth
  • SDRL: Pacing Out the Year
  • Corning Incorporated: Strategic Pricing Developments & Expansion into Optical Connectivity Solutions for GenAI! – Major Drivers
  • Boeing’s Rocky Runway: Is It Worth the Risk?

Super Micro Computer (SMCI) May NOT Be the Next NVIDIA!

By Baptista Research

  • Super Micro Computer, Inc. has garnered attention with its strong financial performance in Q4 2024, reporting record revenue growth driven by its AI server and data center infrastructure solutions.
  • The company’s transition to direct liquid cooling (DLC) technology and AI-focused strategies have positioned it as a key player in the rapidly evolving technology landscape.
  • With a 143% year-over-year revenue growth to $5.31 billion, SMCI has demonstrated its capability to scale and meet the increasing demand for AI infrastructure.

[Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates

By Suhas Reddy

  • Exxon Mobil’s Q2 revenue grew 12.2% YoY and net profit increased by 17.3%. Revenue missed estimates by 0.4% while net profit exceeded expectations by 6.2%. v
  • Exxon Mobil’s Q2 oil production hit a record high since the 1999 merger, driven by strong output in Guyana and the Permian basin.
  • Exxon Mobil expects full-year expenditures to total USD 28 billion, including USD 25 billion for ExxonMobil and USD 3 billion for Pioneer.

Chinese Auto Chip Maker Black Sesame to Raise $143 Million in Hong Kong IPO

By Caixin Global

  • Black Sesame Technologies Inc., a Chinese system-on-a-chip designer focused on autonomous driving systems, is seeking to raise up to HK$1.12 billion ($143 million) from its initial public offering (IPO) in Hong Kong.
  • The listing will be the second IPO under the new Chapter 18C listing rules introduced in March 2023, which allow companies engaged in specialty technologies to list in Hong Kong even if they are not yet profitable or unable to meet the Main Board’s earnings requirements.
  • QuantumPharm Inc., a Shenzhen-based AI drug researcher backed by Tencent Holdings Ltd., debuted on June 13 as the first, raising HK$1.13 billion.

Through The Fire And Flames

By Delphi Digital

  • Unforeseen Volatility: Global risk markets plummeted, driven by external factors, showing crypto’s vulnerability to broader market trends.
  • Unique Opportunity: Crypto’s market fundamentals remain strong, presenting unique investment opportunities amidst the global risk asset purge.
  • Macro Influences: Japan’s carry trade unwind and weak jobs report led to extreme volatility, impacting both traditional and crypto markets significantly.

ADEA: Streaming Loading

By Hamed Khorsand

  • ADEA signed several renewals in the second quarter extending out terms with current licensees and showing to investors that there is value from the portfolio of more than 11,500 patents. 
  • The deals ADEA signed in the quarter were not the headline grabbing nature, unlike those in prior quarters and those we expect the Company to sign in coming quarters. 
  • ADEA generating annual free cash flow of approximately $150 million should become a bigger factor to valuing the equity as the debt balance becomes visually smaller to investors.

Xylem Inc.: Strategic Focus On Emerging Markets & Diverse Portfolio Driving Our Bullish Thesis! – Major Drivers

By Baptista Research

  • Xylem’s performance in the second quarter of 2024 has exceeded expectations across several key metrics.
  • The company has demonstrated strong financial and operational results, driven by strategic initiatives and market expansion efforts, particularly with the integration of Evoqua.
  • This synergy has not only strengthened their market position but also brought about cost efficiencies.

IPAR: New Line Additive to Growth

By Hamed Khorsand

  • PAR had previously issued its quarterly sales update making the second quarter results more of an update on how the business is shaping out for the remainder of the year. 
  • IPAR used the Q2 earnings call to disclose its intention to enter the luxury fragrance market with its own brand in 2025. Owning a brand is not new for IPAR.
  • The consumer continuing to purchase fragrances undisturbed should create the opportunity to grow sales in the second half of the year ahead of new launches scheduled for 2025.

SDRL: Pacing Out the Year

By Hamed Khorsand

  • SDRL reported second quarter results with similar commentary as its peers had previously provided. Current market conditions have resulted in contract awards being delayed even though day rates hold steady
  • The shift in the environment has meant SDRL is no longer expecting short-term drilling work in the second half for two of its vessels, Sevan Louisiana and West Phoenix. 
  • In 2025, SDRL is set to enhance its operations in Brazil with the addition of two vessels operating at high day rates.

Corning Incorporated: Strategic Pricing Developments & Expansion into Optical Connectivity Solutions for GenAI! – Major Drivers

By Baptista Research

  • Corning Inc. reported strong second quarter results for 2024, surpassing its sales and EPS guidance.
  • This positive performance was largely driven by the rapid uptake of its new optical connectivity products designed for generative AI applications.
  • These products cater to a new network within data centers which requires significantly higher bandwidth to connect GPUs, resulting in roughly ten times more fiber connections compared to traditional setups.

Boeing’s Rocky Runway: Is It Worth the Risk?

By Baptista Research

  • Boeing has long been a dominant player in the aerospace industry, but recent developments suggest that the company may be facing turbulent times ahead.
  • Despite its strong market position and a robust backlog of orders, Boeing is grappling with significant technical and safety challenges that are raising red flags for investors.
  • The company’s ongoing issues with manufacturing defects, regulatory scrutiny, and delays in key programs are casting a shadow over its future prospects.

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Aug 09
0

Daily Brief India: Ola Electric, Tata Motors Ltd, Paras Healthcare Limited, Suraksha Diagnostic, TSE Tokyo Price Index TOPIX and more

By | Daily Briefs, India

In today’s briefing:

  • Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand
  • Tata Motors (TTMT IN): Index Impact of DVR Cancellation
  • Paras Healthcare Pre-IPO Tearsheet
  • Suraksha Diagnostic Pre-IPO Tearsheet
  • Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand

By Sumeet Singh

  • Ola Electric managed to raise around US$734m in its India IPO.
  • Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
  • In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

Tata Motors (TTMT IN): Index Impact of DVR Cancellation

By Brian Freitas

Paras Healthcare Pre-IPO Tearsheet

By Akshat Shah

  • Paras Healthcare Limited (0490145D IN) is looking to raise about US$180m in its upcoming India IPO. The deal will be run by ICICI, IIFL and Motilal Oswal.
  • Paras Healthcare is the fifth largest healthcare provider, in terms of bed capacity in North India, Bihar and Jharkhand, with an aggregate of 2,135 beds, as of March 31, 2024.
  • The company offers several clinical specialties across its hospitals including cardiac sciences, oncology, neuro sciences, gastro sciences and orthopedics and joint replacement.

Suraksha Diagnostic Pre-IPO Tearsheet

By Ethan Aw

  • Suraksha Diagnostic (1481262D IN) is looking to raise up to US$230m in its upcoming India IPO. The deal will be run by ICICI Securities, Nuvama Wealth and SBI Capital.
  • Suraksha Diagnostic is a full-service and integrated diagnostic chain. It offers a one-stop integrated solution for pathology and radiology testing, and medical consultation services to its customers.
  • It has flagship central reference laboratory, eight satellite laboratories and 194 customer touchpoints, and 146 sample collection centres (primarily franchised) as of FY24, across certain states of India.

Downgrading Japan; Stay Defensive; Downgrading Outlook on Global Equities $ACWI to Neutral

By Joe Jasper

  • We continue to believe a 1-4-month pullback/consolidation is ongoing. Important supports have been violated, including $110 on MSCI ACWI (ACWI-US) and $41 on MSCI EM (EEM-US).
  • We’re shifting our outlook to neutral on $ACWI after being bullish since early-November 2023. Major price breakdowns combined with deteriorating market dynamics have increased the odds of a topping pattern.
  • Also downgrading Japan to market weight. 7/25/24 we said “Japan’s TOPIX breaking below 2800-2815 is near-term bearish, suggests it could pull back to its long-term uptrend, or worse.”

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Aug 09
0

Daily Brief China: WeRide, China Vanke and more

By | China, Daily Briefs

In today’s briefing:

  • WeRide (WRD US) IPO: The Bull Case
  • Morning Views Asia: China Vanke , SK Hynix, Softbank Group, Tata Motors ADR, UPL Ltd, Wynn Macau Ltd

WeRide (WRD US) IPO: The Bull Case

By Arun George

  • WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise between US$200 to US$300 million through a Nasdaq IPO.    
  • WeRide is the most commercially successful L4 autonomous driving company globally, measured by commercialization revenue in 2021, 2022 and 2023.
  • The bull case rests on a large TAM, strong product capabilities, near-term mass commercialization, articulation of a path to profitability, improving earnings quality and presence of blue-chip investors. 

Morning Views Asia: China Vanke , SK Hynix, Softbank Group, Tata Motors ADR, UPL Ltd, Wynn Macau Ltd

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.

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Aug 09
0

Daily Brief Japan: Kyocera Corp, Fuji Soft Inc, Money Forward , Terumo Corp, en Japan Inc, Broadleaf, Epco Co Ltd, Neturen Co Ltd, Toyobo Co Ltd and more

By | Daily Briefs, Japan

In today’s briefing:

  • StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI
  • KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid
  • Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800
  • Money Forward (3994): A Must-Buy Amid Yen Volatility
  • Terumo Corp (4543 JP): Stellar Performance in Q1; Cost Control Measures Are Bearing Fruits
  • en Japan Inc (4849 JP): Q1 FY03/25 flash update
  • Broadleaf (3673 JP): 1H FY12/24 flash update
  • Epco Co Ltd (2311 JP): 1H FY12/24 flash update
  • Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update
  • Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update

StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI

By David Blennerhassett

KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid

By Travis Lundy

  • KKR has announced its previously leaked takeover of Fuji Soft Inc (9749 JP). Two activists with 30+% between them have agreed to tender at ¥8,800.  
  • Given what the founder, crossholders, and other arbs own, this gets done easily. Congrats on the win to the activists. 
  • We will see more activism and more pressure on under-earning companies to go private to clean themselves up outside the public eye. Big opportunities for years.

Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800

By Arun George

  • Following media reports, Fuji Soft Inc (9749 JP) announced a pre-conditional tender offer from KKR at JPY8,800 per share, a 1.0% discount to the last close price of JPY8,890 (8 August).
  • The pre-condition is approvals under competition laws of Japan, Vietnam and possibly Belgium. The offer is anticipated to commence in mid-September.
  • The offer is a knockout bid and the culmination of an auction process. The board’s recommendation and the irrevocables from activist shareholders ensure this deal is done.

Money Forward (3994): A Must-Buy Amid Yen Volatility

By Mark Chadwick

  • Amidst the volatility in the Japanese yen, companies like Money Forward, with a strong domestic revenue base and minimal exposure to forex risk, present an attractive investment opportunity.
  • Despite broader market uncertainties, Money Forward continues to demonstrate impressive growth, with its corporate ARR surging by 38% YoY in the most recent quarter, signaling sustained momentum.
  • The recent agreement to divest 49% of its non-core B2C segment, Money Forward ME, underscores the significant undervaluation of its core operations. 

Terumo Corp (4543 JP): Stellar Performance in Q1; Cost Control Measures Are Bearing Fruits

By Tina Banerjee

  • Terumo Corp (4543 JP) has reported record high quarterly revenue and profit in Q1FY25, thanks to strong demand across all the business segments, effects of pricing measures, and favorable Fx.
  • With the steady progress in profit improvement measures, Q1FY25 gross profit margin (53.3%) reached to its highest level since Q2FY22. Operating and net profit growth outpaced that of revenue.
  • Amid currency uncertainties and inflation, Terumo has maintained its full-year FY25 guidance issued in May. Growth will be driven by US and Europe owing to the sustained increase in demand.

en Japan Inc (4849 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales decreased 1.5% YoY to JPY16.2bn, while operating profit increased 124.2% YoY to JPY1.7bn.
  • Cost of sales decreased 9.2% YoY to JPY3.2bn, and SG&A expenses declined 7.1% YoY to JPY11.3bn.
  • Overseas segment sales declined due to external factors, with a 43.8% YoY drop in operating profit to JPY135mn.

Broadleaf (3673 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY8.4bn, with an operating loss of JPY44mn and pre-tax profit of JPY16mn.
  • Cloud services revenue increased 63.4% YoY, while packaged systems revenue decreased 6.2% YoY.
  • Full-year FY12/24 earnings forecast revised: pre-tax profit to JPY100mn and profit attributable to owners of the parent to JPY90mn.

Epco Co Ltd (2311 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY2.8bn (+16.2% YoY), with operating profit at JPY173mn (+216.5% YoY).
  • Renewable Energy Service business revenue was JPY688mn (+27.2% YoY), with a recurring loss of JPY25mn.
  • Design Service business revenue was JPY1.1bn (+14.7% YoY), with recurring profit at JPY174mn (+33.3% YoY).

Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update

By Shared Research

  • Revenue increased by JPY13mn (+0.1% YoY), with Specialty Steel and Wire Products up JPY171mn (+1.9%) and Induction Heating down JPY158mn (-3.1%).
  • Operating profit rose by JPY124mn (+45.9% YoY), with Specialty Steel and Wire Products up JPY104mn and Induction Heating up JPY21mn (+7.3%).
  • Full-year FY03/25 forecast progress rates: 22.5% for revenue, 19.7% for operating profit, 26.1% for recurring profit, 23.4% for net income.

Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales increased JPY8.1bn (+8.4% YoY) due to higher sales in Films, Environment and Functional Materials, and Functional Textiles.
  • Operating profit rose JPY3.2bn, with increased profit in Films, Environment and Functional Materials, Functional Textiles, and Real Estate segments.
  • Biotechnology business sales and segment profit details are missing; pharmaceuticals contract manufacturing improved profitability after FDA warning letter close-out.

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Aug 09
0

Daily Brief Industrials: en Japan Inc, Epco Co Ltd, Xylem Inc, Illinois Tool Works, Boeing Co, Pilot Corp, Sbs Holdings, Seika Corp, Stanley Black & Decker, Toyo Tanso and more

By | Daily Briefs, Industrials

In today’s briefing:

  • en Japan Inc (4849 JP): Q1 FY03/25 flash update
  • Epco Co Ltd (2311 JP): 1H FY12/24 flash update
  • Xylem Inc.: Strategic Focus On Emerging Markets & Diverse Portfolio Driving Our Bullish Thesis! – Major Drivers
  • Illinois Tool Works Inc.: These Are The 4 Biggest Challenges In Its Path! – Major Drivers
  • Boeing’s Rocky Runway: Is It Worth the Risk?
  • Pilot Corp (7846 JP): 1H FY012/24 flash update
  • Sbs Holdings (2384 JP): 1H FY12/24 flash update
  • Seika Corp (8061 JP): Q1 FY03/25 flash update
  • Stanley Black & Decker Inc.: A Detailed Look At A Bear’s Perspective! – Financial Forecasts
  • Toyo Tanso (5310 JP): 1H FY12/24 flash update

en Japan Inc (4849 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales decreased 1.5% YoY to JPY16.2bn, while operating profit increased 124.2% YoY to JPY1.7bn.
  • Cost of sales decreased 9.2% YoY to JPY3.2bn, and SG&A expenses declined 7.1% YoY to JPY11.3bn.
  • Overseas segment sales declined due to external factors, with a 43.8% YoY drop in operating profit to JPY135mn.

Epco Co Ltd (2311 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY2.8bn (+16.2% YoY), with operating profit at JPY173mn (+216.5% YoY).
  • Renewable Energy Service business revenue was JPY688mn (+27.2% YoY), with a recurring loss of JPY25mn.
  • Design Service business revenue was JPY1.1bn (+14.7% YoY), with recurring profit at JPY174mn (+33.3% YoY).

Xylem Inc.: Strategic Focus On Emerging Markets & Diverse Portfolio Driving Our Bullish Thesis! – Major Drivers

By Baptista Research

  • Xylem’s performance in the second quarter of 2024 has exceeded expectations across several key metrics.
  • The company has demonstrated strong financial and operational results, driven by strategic initiatives and market expansion efforts, particularly with the integration of Evoqua.
  • This synergy has not only strengthened their market position but also brought about cost efficiencies.

Illinois Tool Works Inc.: These Are The 4 Biggest Challenges In Its Path! – Major Drivers

By Baptista Research

  • Analyzing the financial results of Illinois Tool Works (ITW) for the second quarter of 2024 reveals a nuanced picture, highlighting both challenges and efficiencies within the company’s operations.
  • In the second quarter, ITW reported revenues that slightly underperformed expectations due to continued moderation in short-cycle demand across their product portfolio.
  • Specifically, a 1% or approximately $50 million shortfall was noted compared to the projected revenues, should the demand have remained stable from the first quarter levels.

Boeing’s Rocky Runway: Is It Worth the Risk?

By Baptista Research

  • Boeing has long been a dominant player in the aerospace industry, but recent developments suggest that the company may be facing turbulent times ahead.
  • Despite its strong market position and a robust backlog of orders, Boeing is grappling with significant technical and safety challenges that are raising red flags for investors.
  • The company’s ongoing issues with manufacturing defects, regulatory scrutiny, and delays in key programs are casting a shadow over its future prospects.

Pilot Corp (7846 JP): 1H FY012/24 flash update

By Shared Research

  • Revenue grew JPY4.2bn (+6.9% YoY), driven by higher revenue in Europe, Asia, and the Americas segments.
  • Operating profit decreased JPY2.1bn (-17.7% YoY) due to growth investments and higher advertising expenses, despite a 4.3% YoY increase in total segment profit.
  • Revised FY12/24 forecast: revenue JPY126.0bn (+6.2% YoY), operating profit JPY18.0bn (-5.3% YoY), net income JPY14.0bn (+2.5% YoY).

Sbs Holdings (2384 JP): 1H FY12/24 flash update

By Shared Research

  • Sales decreased JPY927mn (-0.4%) YoY, primarily due to declines in the Logistics and Property Management businesses.
  • Operating profit fell JPY3.3bn (-23.1%) YoY, with significant declines in the Logistics and Property Management segments.
  • The company achieved 49.3% of its sales target and 52.2% of its operating profit target for the full year.

Seika Corp (8061 JP): Q1 FY03/25 flash update

By Shared Research

  • Q1 FY03/25 revenue increased 7.5% YoY to JPY20.5bn, with operating profit up 39.6% YoY to JPY1.3bn.
  • Energy business revenue grew 3.7% YoY to JPY7.2bn, profit increased 104.4% YoY to JPY603mn.
  • Revised forecast: FY03/25 revenue JPY92.0bn, operating profit JPY5.2bn, recurring profit JPY6.6bn, net income JPY6.5bn.

Stanley Black & Decker Inc.: A Detailed Look At A Bear’s Perspective! – Financial Forecasts

By Baptista Research

  • Stanley Black & Decker’s Q2 2024 financial results reveal a mixed landscape, characterized by both forward momentum in operational strategies and ongoing market challenges.
  • The company reported a revenue of $4 billion for the quarter, reflecting a 3% decline year-over-year.
  • However, a 1% organic growth was driven by strong performances from brands like DEWALT and segments such as Outdoor and Engineered Fastening.

Toyo Tanso (5310 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY26.3bn, up 10.8% YoY, driven by growth in special graphite and compound materials.
  • Operating profit for 1H FY12/24 increased 26.0% YoY to JPY5.8bn, with an OPM improvement to 22.1%.
  • Recurring profit rose 31.0% YoY to JPY7.0bn, and net income attributable to owners of the parent grew 24.9% YoY.

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Aug 09
0

Daily Brief Industrials: en Japan Inc, Epco Co Ltd, Xylem Inc, Illinois Tool Works, Boeing Co, Pilot Corp, Sbs Holdings, Seika Corp, Stanley Black & Decker, Toyo Tanso and more

By | Daily Briefs, Industrials

In today’s briefing:

  • en Japan Inc (4849 JP): Q1 FY03/25 flash update
  • Epco Co Ltd (2311 JP): 1H FY12/24 flash update
  • Xylem Inc.: Strategic Focus On Emerging Markets & Diverse Portfolio Driving Our Bullish Thesis! – Major Drivers
  • Illinois Tool Works Inc.: These Are The 4 Biggest Challenges In Its Path! – Major Drivers
  • Boeing’s Rocky Runway: Is It Worth the Risk?
  • Pilot Corp (7846 JP): 1H FY012/24 flash update
  • Sbs Holdings (2384 JP): 1H FY12/24 flash update
  • Seika Corp (8061 JP): Q1 FY03/25 flash update
  • Stanley Black & Decker Inc.: A Detailed Look At A Bear’s Perspective! – Financial Forecasts
  • Toyo Tanso (5310 JP): 1H FY12/24 flash update

en Japan Inc (4849 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales decreased 1.5% YoY to JPY16.2bn, while operating profit increased 124.2% YoY to JPY1.7bn.
  • Cost of sales decreased 9.2% YoY to JPY3.2bn, and SG&A expenses declined 7.1% YoY to JPY11.3bn.
  • Overseas segment sales declined due to external factors, with a 43.8% YoY drop in operating profit to JPY135mn.

Epco Co Ltd (2311 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY2.8bn (+16.2% YoY), with operating profit at JPY173mn (+216.5% YoY).
  • Renewable Energy Service business revenue was JPY688mn (+27.2% YoY), with a recurring loss of JPY25mn.
  • Design Service business revenue was JPY1.1bn (+14.7% YoY), with recurring profit at JPY174mn (+33.3% YoY).

Xylem Inc.: Strategic Focus On Emerging Markets & Diverse Portfolio Driving Our Bullish Thesis! – Major Drivers

By Baptista Research

  • Xylem’s performance in the second quarter of 2024 has exceeded expectations across several key metrics.
  • The company has demonstrated strong financial and operational results, driven by strategic initiatives and market expansion efforts, particularly with the integration of Evoqua.
  • This synergy has not only strengthened their market position but also brought about cost efficiencies.

Illinois Tool Works Inc.: These Are The 4 Biggest Challenges In Its Path! – Major Drivers

By Baptista Research

  • Analyzing the financial results of Illinois Tool Works (ITW) for the second quarter of 2024 reveals a nuanced picture, highlighting both challenges and efficiencies within the company’s operations.
  • In the second quarter, ITW reported revenues that slightly underperformed expectations due to continued moderation in short-cycle demand across their product portfolio.
  • Specifically, a 1% or approximately $50 million shortfall was noted compared to the projected revenues, should the demand have remained stable from the first quarter levels.

Boeing’s Rocky Runway: Is It Worth the Risk?

By Baptista Research

  • Boeing has long been a dominant player in the aerospace industry, but recent developments suggest that the company may be facing turbulent times ahead.
  • Despite its strong market position and a robust backlog of orders, Boeing is grappling with significant technical and safety challenges that are raising red flags for investors.
  • The company’s ongoing issues with manufacturing defects, regulatory scrutiny, and delays in key programs are casting a shadow over its future prospects.

Pilot Corp (7846 JP): 1H FY012/24 flash update

By Shared Research

  • Revenue grew JPY4.2bn (+6.9% YoY), driven by higher revenue in Europe, Asia, and the Americas segments.
  • Operating profit decreased JPY2.1bn (-17.7% YoY) due to growth investments and higher advertising expenses, despite a 4.3% YoY increase in total segment profit.
  • Revised FY12/24 forecast: revenue JPY126.0bn (+6.2% YoY), operating profit JPY18.0bn (-5.3% YoY), net income JPY14.0bn (+2.5% YoY).

Sbs Holdings (2384 JP): 1H FY12/24 flash update

By Shared Research

  • Sales decreased JPY927mn (-0.4%) YoY, primarily due to declines in the Logistics and Property Management businesses.
  • Operating profit fell JPY3.3bn (-23.1%) YoY, with significant declines in the Logistics and Property Management segments.
  • The company achieved 49.3% of its sales target and 52.2% of its operating profit target for the full year.

Seika Corp (8061 JP): Q1 FY03/25 flash update

By Shared Research

  • Q1 FY03/25 revenue increased 7.5% YoY to JPY20.5bn, with operating profit up 39.6% YoY to JPY1.3bn.
  • Energy business revenue grew 3.7% YoY to JPY7.2bn, profit increased 104.4% YoY to JPY603mn.
  • Revised forecast: FY03/25 revenue JPY92.0bn, operating profit JPY5.2bn, recurring profit JPY6.6bn, net income JPY6.5bn.

Stanley Black & Decker Inc.: A Detailed Look At A Bear’s Perspective! – Financial Forecasts

By Baptista Research

  • Stanley Black & Decker’s Q2 2024 financial results reveal a mixed landscape, characterized by both forward momentum in operational strategies and ongoing market challenges.
  • The company reported a revenue of $4 billion for the quarter, reflecting a 3% decline year-over-year.
  • However, a 1% organic growth was driven by strong performances from brands like DEWALT and segments such as Outdoor and Engineered Fastening.

Toyo Tanso (5310 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY26.3bn, up 10.8% YoY, driven by growth in special graphite and compound materials.
  • Operating profit for 1H FY12/24 increased 26.0% YoY to JPY5.8bn, with an OPM improvement to 22.1%.
  • Recurring profit rose 31.0% YoY to JPY7.0bn, and net income attributable to owners of the parent grew 24.9% YoY.

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Aug 09
0

Most Read: Alibaba Group Holding , Kyocera Corp, Topsports International Holdings, Fuji Soft Inc, Ola Electric, POSCO Holdings, Money Forward , Tata Motors Ltd and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
  • [JAPAN ACTIVISM] KKR Reportedly Plans Takeover of Fuji Soft (9749) – Relief from Activist Pressure
  • StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI
  • China: Passive Selling Expected Later This Month
  • KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid
  • Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand
  • Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
  • Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800
  • Money Forward (3994): A Must-Buy Amid Yen Volatility
  • Tata Motors (TTMT IN): Index Impact of DVR Cancellation

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

By Brian Freitas

  • 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. 

[JAPAN ACTIVISM] KKR Reportedly Plans Takeover of Fuji Soft (9749) – Relief from Activist Pressure

By Travis Lundy

  • Last year into early 2024, Fuji Soft Inc (9749 JP) – partially at the prodding of 3D Investment Partners – took in 4 subs and conducted a strategic review.
  • In January, I explored the situation here suggesting the stock had run, FujiSoft needed to liquidate more assets, but a PE firm would look at a valuation of ¥600bn.
  • Last night, the Nikkei reported that US PE Firm KKR planned to take Fuji Soft private with a TOB valued at ¥600bn. Limit up will take us to ¥560bn+.

StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI

By David Blennerhassett

China: Passive Selling Expected Later This Month

By Brian Freitas

  • The China equity markets have continued to trade lower with the CSI 300 Index outperforming other mainland indices as the National Team continues to pump money into ETFs tracking the index.
  • We currently estimate selling of around US$1.39bn across 74 stocks listed on the mainland and in Hong Kong. There could be fewer deletions depending on the review date chosen.
  • The potential deletes have dropped a lot since the start of the calendar year with big underperformance versus the HSCEI Index, CSI 300 Index and CSI Smallcap 500 Index.

KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid

By Travis Lundy

  • KKR has announced its previously leaked takeover of Fuji Soft Inc (9749 JP). Two activists with 30+% between them have agreed to tender at ¥8,800.  
  • Given what the founder, crossholders, and other arbs own, this gets done easily. Congrats on the win to the activists. 
  • We will see more activism and more pressure on under-earning companies to go private to clean themselves up outside the public eye. Big opportunities for years.

Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand

By Sumeet Singh

  • Ola Electric managed to raise around US$734m in its India IPO.
  • Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
  • In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry

By Sanghyun Park

  • Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
  • August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
  • With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.

Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800

By Arun George

  • Following media reports, Fuji Soft Inc (9749 JP) announced a pre-conditional tender offer from KKR at JPY8,800 per share, a 1.0% discount to the last close price of JPY8,890 (8 August).
  • The pre-condition is approvals under competition laws of Japan, Vietnam and possibly Belgium. The offer is anticipated to commence in mid-September.
  • The offer is a knockout bid and the culmination of an auction process. The board’s recommendation and the irrevocables from activist shareholders ensure this deal is done.

Money Forward (3994): A Must-Buy Amid Yen Volatility

By Mark Chadwick

  • Amidst the volatility in the Japanese yen, companies like Money Forward, with a strong domestic revenue base and minimal exposure to forex risk, present an attractive investment opportunity.
  • Despite broader market uncertainties, Money Forward continues to demonstrate impressive growth, with its corporate ARR surging by 38% YoY in the most recent quarter, signaling sustained momentum.
  • The recent agreement to divest 49% of its non-core B2C segment, Money Forward ME, underscores the significant undervaluation of its core operations. 

Tata Motors (TTMT IN): Index Impact of DVR Cancellation

By Brian Freitas

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Aug 09
0

Daily Brief TMT/Internet: Kyocera Corp, Fuji Soft Inc, Money Forward , Taiwan Semiconductor (TSMC), Raspberry Pi, Super Micro Computer, Nintendo, King Yuan Electronics Co, Ltd., Broadleaf and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI
  • KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid
  • Money Forward (3994): A Must-Buy Amid Yen Volatility
  • Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800
  • TSMC’s Expansion Strategy: New Plants and Rising AI Demand Shape Future Growth
  • Quiddity Leaderboard F100/​​​250 Sep 24: High-Impact F250 Potential ADDs Could Outperform the Index
  • Super Micro Computer (SMCI) May NOT Be the Next NVIDIA!
  • Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.
  • KYEC (2449.TT): In 2Q24, Revenue Exceeded Our Expectations, and GM, OPM, and EPS Surprised Us.
  • Broadleaf (3673 JP): 1H FY12/24 flash update

StubWorld: Barito Renewables Rolling Over – More To Come. Also Kyocera/KDDI

By David Blennerhassett

KKR ¥8,800 Takeover of Fuji Soft (9749) – Details and Arb Grid

By Travis Lundy

  • KKR has announced its previously leaked takeover of Fuji Soft Inc (9749 JP). Two activists with 30+% between them have agreed to tender at ¥8,800.  
  • Given what the founder, crossholders, and other arbs own, this gets done easily. Congrats on the win to the activists. 
  • We will see more activism and more pressure on under-earning companies to go private to clean themselves up outside the public eye. Big opportunities for years.

Money Forward (3994): A Must-Buy Amid Yen Volatility

By Mark Chadwick

  • Amidst the volatility in the Japanese yen, companies like Money Forward, with a strong domestic revenue base and minimal exposure to forex risk, present an attractive investment opportunity.
  • Despite broader market uncertainties, Money Forward continues to demonstrate impressive growth, with its corporate ARR surging by 38% YoY in the most recent quarter, signaling sustained momentum.
  • The recent agreement to divest 49% of its non-core B2C segment, Money Forward ME, underscores the significant undervaluation of its core operations. 

Fuji Soft (9749 JP): KKR Pre-Conditional Tender Offer at JPY8,800

By Arun George

  • Following media reports, Fuji Soft Inc (9749 JP) announced a pre-conditional tender offer from KKR at JPY8,800 per share, a 1.0% discount to the last close price of JPY8,890 (8 August).
  • The pre-condition is approvals under competition laws of Japan, Vietnam and possibly Belgium. The offer is anticipated to commence in mid-September.
  • The offer is a knockout bid and the culmination of an auction process. The board’s recommendation and the irrevocables from activist shareholders ensure this deal is done.

TSMC’s Expansion Strategy: New Plants and Rising AI Demand Shape Future Growth

By Uttkarsh Kohli

  • TSMC’s new plants will increase its production capacity for 3-nm chips, aiming to triple output this year. Global market share stands at 18%.
  • Major tech companies’ increased AI investments are driving demand for TSMC’s advanced semiconductors, crucial for AI and machine learning applications. 
  • TSMC’s automotive solutions output is expected to grow at a 50% CAGR through 2024, addressing global chip shortages in the auto industry.

Quiddity Leaderboard F100/​​​250 Sep 24: High-Impact F250 Potential ADDs Could Outperform the Index

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the September 2024 index rebal event.
  • There could be up to three M&A-related intra-review changes in the next few weeks.
  • Apart from that, there could be two changes for the F100 index and two other changes for the F250 index during the September 2024 review.

Super Micro Computer (SMCI) May NOT Be the Next NVIDIA!

By Baptista Research

  • Super Micro Computer, Inc. has garnered attention with its strong financial performance in Q4 2024, reporting record revenue growth driven by its AI server and data center infrastructure solutions.
  • The company’s transition to direct liquid cooling (DLC) technology and AI-focused strategies have positioned it as a key player in the rapidly evolving technology landscape.
  • With a 143% year-over-year revenue growth to $5.31 billion, SMCI has demonstrated its capability to scale and meet the increasing demand for AI infrastructure.

Tech Supply Chain Tracker (09-Aug-2024): Acer subs drive growth, boost resilience amid PC changes.

By Tech Supply Chain Tracker

  • Acer’s subsidiaries are driving growth, providing resilience and optimism in the face of shifts in the PC market.
  • China’s smartphone industry is experiencing a boom in the second quarter of 2024, indicating strong potential for growth.
  • A potential US ban on Chinese vehicle technology could deepen the technology rift with lasting effects, impacting various industries.

KYEC (2449.TT): In 2Q24, Revenue Exceeded Our Expectations, and GM, OPM, and EPS Surprised Us.

By Patrick Liao

  • King Yuan Electronics Co, Ltd. (2449 TT)‘s 2Q24 revenue/GM/OPM/EPS were NTD$9,035mn/40.5%/29.8%/NTD$2.2.
  • The main reasons of revenue growth shall be the AI aspects, especially the contribution from NVIDIA Corp (NVDA US).
  • For the upcoming 3Q24, we are keeping a relatively strong confidence of 5-10% growth rate for KYEC.

Broadleaf (3673 JP): 1H FY12/24 flash update

By Shared Research

  • Revenue for 1H FY12/24 was JPY8.4bn, with an operating loss of JPY44mn and pre-tax profit of JPY16mn.
  • Cloud services revenue increased 63.4% YoY, while packaged systems revenue decreased 6.2% YoY.
  • Full-year FY12/24 earnings forecast revised: pre-tax profit to JPY100mn and profit attributable to owners of the parent to JPY90mn.

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Aug 09
0

Daily Brief Energy/Materials: POSCO Holdings, SK Innovation, Korea Zinc, Exxon Mobil, Seadrill , Neturen Co Ltd, Toyobo Co Ltd, VAALCO Energy, Mitsubishi Steel Mfg, Ovintiv and more

By | Daily Briefs, Energy & Materials Sector

In today’s briefing:

  • Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry
  • SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On
  • Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong
  • [Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates
  • SDRL: Pacing Out the Year
  • Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update
  • Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update
  • VAALCO Energy (NYSE: EGY): Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24
  • Mitsubishi Steel Mfg (5632 JP): Q1 FY03/25 flash update
  • Ovintiv Inc.: Strategic Infrastructure Utilization and Expansion! – Major Drivers

Trading Opportunities from the Rise of Sector Pairs Trading Using SSFs & MM Unwinding at Expiry

By Sanghyun Park

  • Trading opportunities arise when overseas traders’ SSF positions face unwinding by local market makers, who enter SSF positions and take opposing spot positions, unwinding at expiry.
  • August-Expiry SSF data shows reverse flow impact by local market makers today, with varying degrees of impact per stock but an observable overall trend.
  • With ongoing market volatility in Korea, consider setups targeting price impacts from reverse flows of sector pairs trading on the next SSF expiration date.

SK Innovation: Considering on Using Its Treasury Shares to Inject Capital into SK On

By Douglas Kim

  • SK Innovation is considering on using its treasury shares to inject capital into its EV battery making subsidiary SK On. 
  • The appraisal rights exercise price is 111,943 won per share (15% higher than current price). Many minority shareholders are likely to exercise their appraisal rights in SK Innovation.
  • We remain Bearish on SK Innovation. We continue to be negative on the SK Innovation and SK E&S merger. Plus, we are concerned about the continued weakness at SK On. 

Korea Zinc: Impressive Capital Return Plans and a Big Price Gap Between Korea Zinc and Young Poong

By Douglas Kim

  • On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
  • The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain. 
  • Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels. 

[Earnings Review] Production Surge in Guyana and Permian Aids Exxon Beat Profit Estimates

By Suhas Reddy

  • Exxon Mobil’s Q2 revenue grew 12.2% YoY and net profit increased by 17.3%. Revenue missed estimates by 0.4% while net profit exceeded expectations by 6.2%. v
  • Exxon Mobil’s Q2 oil production hit a record high since the 1999 merger, driven by strong output in Guyana and the Permian basin.
  • Exxon Mobil expects full-year expenditures to total USD 28 billion, including USD 25 billion for ExxonMobil and USD 3 billion for Pioneer.

SDRL: Pacing Out the Year

By Hamed Khorsand

  • SDRL reported second quarter results with similar commentary as its peers had previously provided. Current market conditions have resulted in contract awards being delayed even though day rates hold steady
  • The shift in the environment has meant SDRL is no longer expecting short-term drilling work in the second half for two of its vessels, Sevan Louisiana and West Phoenix. 
  • In 2025, SDRL is set to enhance its operations in Brazil with the addition of two vessels operating at high day rates.

Neturen Co Ltd (5976 JP): Q1 FY03/25 flash update

By Shared Research

  • Revenue increased by JPY13mn (+0.1% YoY), with Specialty Steel and Wire Products up JPY171mn (+1.9%) and Induction Heating down JPY158mn (-3.1%).
  • Operating profit rose by JPY124mn (+45.9% YoY), with Specialty Steel and Wire Products up JPY104mn and Induction Heating up JPY21mn (+7.3%).
  • Full-year FY03/25 forecast progress rates: 22.5% for revenue, 19.7% for operating profit, 26.1% for recurring profit, 23.4% for net income.

Toyobo Co Ltd (3101 JP): Q1 FY03/25 flash update

By Shared Research

  • Sales increased JPY8.1bn (+8.4% YoY) due to higher sales in Films, Environment and Functional Materials, and Functional Textiles.
  • Operating profit rose JPY3.2bn, with increased profit in Films, Environment and Functional Materials, Functional Textiles, and Real Estate segments.
  • Biotechnology business sales and segment profit details are missing; pharmaceuticals contract manufacturing improved profitability after FDA warning letter close-out.

VAALCO Energy (NYSE: EGY): Low capex redevelopment of Ebouri confirmed. Material exploration drilling in Canada in 2H24

By Auctus Advisors

  • • 2Q24 WI production was 25,411 boe/d, in line with our expectations and within the company’s guidance for 2Q24 (23.8-27 mboe/d).
  • • WI production of ~3.3 mbb/d in Cote d’Ivoire was particularly high.
  • WI production has now stabilized at ~4.5 mbbl/d.

Mitsubishi Steel Mfg (5632 JP): Q1 FY03/25 flash update

By Shared Research

  • Consolidated Q1 FY03/25 results: Revenue JPY40.6bn (-1.7% YoY), Operating profit JPY1.3bn (+66.7% YoY), Recurring profit JPY1.2bn (+87.9% YoY), Net loss JPY147mn (+345.5% YoY).
  • Segment performance: Revenue JPY20.5bn (-11.4% YoY), Operating profit JPY562mn (-40.6% YoY); Revenue JPY18.1bn (+12.1% YoY), Operating profit JPY580mn (JPY295mn loss in Q1 FY03/24).
  • Additional segments: Revenue JPY2.4bn (+8.3% YoY), Operating profit JPY157mn (+582.6% YoY); Revenue JPY1.6bn (-19.3% YoY), Operating loss JPY12mn; Revenue JPY967mn (+14.0% YoY), Operating profit JPY59mn (+145.8% YoY).

Ovintiv Inc.: Strategic Infrastructure Utilization and Expansion! – Major Drivers

By Baptista Research

  • Ovintiv recently announced results for its second quarter of 2024, highlighting continued success in execution, free cash flow generation, and shipment of shareholder returns.
  • The North American energy producer has reported a net earnings of $340 million and an impressive cash flow exceeding $1 billion, outdoing consensus estimates.
  • This performance is underscored by a production outperformance on both oil and natural gas, as well as cost efficiencies.

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