Category

Daily Briefs

Aug 06
0

Daily Brief Consumer: Descente Ltd, Adani Wilmar, BYD, Ola Electric, Prada S.P.A., United Spirits, MDL Wholesale, Multi Bintang Indonesia, Kalyan Jewellers and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Itochu (8001 JP) Launches Lowball TOB for Descente (8114) – Buying China on the Cheap
  • Descente (8114 JP): Itochu’s (8001 JP) Light Pre-Conditional Offer
  • Why Adani Enterprises Shareholder Will Receive Share of Adani Wilmar?
  • China Consumption Weekly (5 Aug 2024): BYD, Tesla, Seres, Alibaba, New Oriental, TAL
  • Ola Electric IPO: Forecasts and Valuation
  • The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2)
  • Narrative and Numbers | Alcoholic Beverages | FY24
  • MDL Wholesale Pre-IPO Tearsheet
  • Multi Bintang Indonesia (MLBI IJ): Q2 2024 Mediocre, But Dividend Yield At 8% for 70% ROCE Company
  • Kalyan Jewellers:1QFY25-Glittering Performance. David Outshines Goliath in Growth

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

By Travis Lundy

  • 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.

Descente (8114 JP): Itochu’s (8001 JP) Light Pre-Conditional Offer

By Arun George

  • Descente Ltd (8114 JP) has recommended a pre-conditional tender offer from Itochu Corp (8001 JP) at JPY4,350, 16.6% premium to the undisturbed price. 
  • The pre-condition is approval under the competition laws of Japan and China. The offer is anticipated to commence in early November. In January 2019, Itochu completed a hostile partial offer.
  • While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the price is light. 

Why Adani Enterprises Shareholder Will Receive Share of Adani Wilmar?

By Nimish Maheshwari

  • Adani Enterprises (ADE IN) demerged its stake in its Food FMCG business of Adani Wilmar (AWLTD IN) to its shareholder.
  • The demerger aims to comply with SEBI’s minimum public shareholding requirement, reducing promoter stake and enhancing public stake.
  • This strategic move positions Adani Wilmar for focused growth, unlocking value for shareholders and reducing promoter selling pressure.

China Consumption Weekly (5 Aug 2024): BYD, Tesla, Seres, Alibaba, New Oriental, TAL

By Ming Lu

  • In July, BYD’s deliveries increased by 31% YoY and Tesla’s deliveries in mainland China increased by 47% YoY.
  • Alibaba Taobao will soften its “refund only” rule, but Alibaba Hellobike raised its usage price.
  • New Oriental revenue increased by 32% YoY and TAL revenue increased by 50% YoY in the May quarter.

Ola Electric IPO: Forecasts and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Ola Electric (1700674D IN) plans to raise INR55bn through fresh issue of shares while existing shareholders will offer 84.9m shares at an indicative IPO price band of INR72-76 per share.
  • We expect the company’s revenues to continue to expand and grow at much higher rates during the next few years compared to competitors in the Indian two-wheeler market.
  • Our valuation analysis suggests that Ola Electric’s IPO is attractively priced compared to peers and we would suggest subscribing for the company’s IPO.

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (August 2)

By David Mudd

Narrative and Numbers | Alcoholic Beverages | FY24

By Pranav Bhavsar

MDL Wholesale Pre-IPO Tearsheet

By Ethan Aw

  • MDL Wholesale (WMHGCZ CH) is looking to raise about US$100m in its upcoming Hong Kong IPO. The deal will be run by UBS, CMS, CMBI, Deutsche Bank, BOCI, and China Galaxy.
  • MDL Wholesale is a leading food and FMCG distribution solution provider in China, providing a broad range of customers and retailers with high-quality merchandise and convenient solutions
  • Its solutions mainly include (i) food service and distribution, (ii) welfare and gifting, (iii) retailer distribution (comprising product sales to retailers and supply chain services) and (iv) merchandise wholesale. 

Multi Bintang Indonesia (MLBI IJ): Q2 2024 Mediocre, But Dividend Yield At 8% for 70% ROCE Company

By Sameer Taneja

  • Multi Bintang Indonesia (MLBI IJ) reported Q2 2024 revenues/profits of -4.4%/-5.4% YoY. Q2 FY24 was a significant improvement over Q1 FY24, when revenues were down 10.7% YoY.
  • The company is controlling costs by keeping SG&A down by 100 bps to maintain EBITDA margins over 50%. Net cash is now at 8% of the market capitalization.
  • We believe that the company will be able to pay 500/Rph of dividends in FY24, implying an 8.3% dividend yield. Trading at 12x PE, we find this idea compelling.

Kalyan Jewellers:1QFY25-Glittering Performance. David Outshines Goliath in Growth

By Devi Subhakesan

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Aug 05
0

Daily Brief Quantitative Analysis: HK Short Interest Weekly: Tracker Fund and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • HK Short Interest Weekly: Tracker Fund, AIA, Hisense Ha, China Res Beer
  • TWSE Short Interest Weekly (Aug 2nd): Quanta Computer, Evergreen Marine, TSMC, Elite Material
  • TWSE Foreign Holding Weekly (Aug 2nd): Umc, TSMC, Hon Hai, Mediatek, Quanta Computer, Unimicron Tech
  • A-H Premium Weekly (Aug 2nd):Livzon Pharm, Asymchem Lab, Shanghai Pharm, Hangzhou Tigermed
  • KRX Foreign Holding Weekly (Aug 2nd): Hyundai Glovis, Woori Financial, Korea Aerospace
  • Northbound Flows (Aug 2nd): Wanhua Chemical, Moutai, CATL, Fuyao Glass Industry, Haier Smart Home
  • Hong Kong Connect Flows (Aug 2nd): Tencent, China Petroleum & Chemical Corporation, Power Assets

HK Short Interest Weekly: Tracker Fund, AIA, Hisense Ha, China Res Beer

By Ke Yan, CFA, FRM

  • We analyzed the latest HK SFC report for aggregate short position as of Jul 26th.
  • Top short increases and decreases were tabulated for one week and four week period. 
  • We highlight short changes in Tracker Fund, AIA, Hisense Ha, China Res Beer.

TWSE Short Interest Weekly (Aug 2nd): Quanta Computer, Evergreen Marine, TSMC, Elite Material

By Ke Yan, CFA, FRM

  • We analyzed the changes in short interest of TWSE Stocks as of Aug 2nd which has an aggregated short interest worth USD19.4bn.
  • We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases & decreases in short value, short as multiple of ADT.
  • We highlight short interest changes in Quanta Computer, Evergreen Marine, TSMC, Elite Material, Wiwynn, Gigabyte Tech, Chunghwa Telecom, Global Unichip, Innolux.

TWSE Foreign Holding Weekly (Aug 2nd): Umc, TSMC, Hon Hai, Mediatek, Quanta Computer, Unimicron Tech

By Ke Yan, CFA, FRM

  • We analyzed the changes in foreign holdings of TWSE Stocks as of Aug 2nd which has an aggregated holding worth USD902.6bn.
  • We estimate that foreign flows to be outflows of USD2,923mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
  • We highlight foreign changes in Umc, TSMC, Hon Hai, Mediatek, Quanta Computer, Unimicron Tech.

A-H Premium Weekly (Aug 2nd):Livzon Pharm, Asymchem Lab, Shanghai Pharm, Hangzhou Tigermed

By Ke Yan, CFA, FRM

  • We analyse the changes of A-H premium on 145 stocks over the last week. The average A-H premium was 110.9% as of Aug 2nd.
  • The average A-H premium changed by -0.6ppt week-on-week, led by utilities, energy, financials and offset by consumer staples, real estate, information technology.
  • We highlight weekly changes in A-H premium for Livzon Pharm, Asymchem Lab, Shanghai Pharm, Hangzhou Tigermed, Goldwind Science.

KRX Foreign Holding Weekly (Aug 2nd): Hyundai Glovis, Woori Financial, Korea Aerospace

By Ke Yan, CFA, FRM

  • We analyzed the changes in foreign holdings of KRX stocks as of Aug 2nd which has an aggregated holding worth USD547.0bn.
  • We estimate that foreign flows to be inflows of USD1,687mln. We tabulate the league table for top changes by value for 1W/4W/1Y and top stocks held by foreign institutions.
  • We highlight foreign changes in Hyundai Glovis, Woori Financial, Korea Aerospace, Samsung Biologic, Sk Hynix.

Northbound Flows (Aug 2nd): Wanhua Chemical, Moutai, CATL, Fuyao Glass Industry, Haier Smart Home

By Ke Yan, CFA, FRM

  • We analyze the weekly Shanghai/Shenzhen northbound Connect flows with our data engine for holding position as of August 2nd.
  • We estimate the weekly inflows to be US$486.3 million, led by financials, health care, utilities sectors, and offset by consumer discretionary, materials, consumer staples.
  • We highlight flows for Wanhua Chemical, Moutai, CATL, Fuyao Glass Industry, Haier Smart Home.

Hong Kong Connect Flows (Aug 2nd): Tencent, China Petroleum & Chemical Corporation, Power Assets

By Ke Yan, CFA, FRM

  • We analyze the weekly Hong Kong Connect flows with our data engine for holding position as of August 2nd.
  • The top stocks by inflows and outflows were tabulated for all market, HSCEI, mid cap and s/mid cap groups.
  • We highlight flows for Tencent, China Petroleum & Chemical Corporation, BOC, Power Assets, HSBC, China Mobile.

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Aug 05
0

Daily Brief ESG: Sustainability Has Many Companies Confused About Linking Financial and Non-Financial Information and more

By | Daily Briefs, ESG

In today’s briefing:

  • Sustainability Has Many Companies Confused About Linking Financial and Non-Financial Information

Sustainability Has Many Companies Confused About Linking Financial and Non-Financial Information

By Aki Matsumoto

  • Sustainable management should be considered in the sustainable expansion of corporate value, including shareholders’ interest, and non-financial information should provide direction based on information that isn’t feasible, including financial information.
  • Starting with appointing people who are diverse in nationality and gender to the board of directors will lead to discussing management issues with diverse opinions.
  • Significant differences exist between those companies that have improved their efforts to improve board practices and capital profitability and achieved results, and those that have only formally put board practices.

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Aug 05
0

Daily Brief Thematic (Sector/Industry): Ohayo Japan | Rising Recession Fears and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Ohayo Japan | Rising Recession Fears
  • Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP
  • China Strategy: Top 3 Ideas for the Rest of This Year
  • Short Note: China Property Recovery Upcoming with Policy Support and Rate Cut
  • GEMWeekly (2 Aug 2024): Alibaba Fee Change; China, South Korea Macro; Tencent, ByteDance

Ohayo Japan | Rising Recession Fears

By Mark Chadwick

  • Stocks fell sharply on Friday due to a weaker-than-expected July jobs report, raising recession fears.
  • Amazon slid 8.8% after missing revenue estimates, while Intel dropped 26% on weak guidance.
  • Fast Retailing reported an 8.1% year-on-year increase in domestic same-store sales for UNIQLO in June, marking four consecutive months of growth

Japan Morning Connection: 8697 JP, 7453 JP, 7453 JP

By Andrew Jackson

  • 8697 Japan Exchange and retail facing brokers such as Matsui, SBI, and Monex may do better with Cboe +4.3% given the outlook for increased trading amid higher market volatility. 
  • Japanese MedTech firms Terumo, Asahi Intecc, and Olympus underperformed globally. While FX plays a role, lower rates boost elective surgeries, making them prime candidates for a rebound.
  • NKY225 inclusion candidates 7453 Ryohin Keikaku and 7453 NRI look attractive as oversold longs as Index arbs will no doubt be rushing back as soon as the panic subsides.

China Strategy: Top 3 Ideas for the Rest of This Year

By Osbert Tang, CFA

  • Lonking Holdings (3339 HK)‘s 2H24 earnings will benefit from accelerated special purpose bond issuance and a low base. Potentially higher dividend payout is another attraction.
  • Shenzhen International (152 HK) may realise a partial gain from South China Logistics Park transformation and lower interest expenses in 2H24. Rmb appreciation will help, too.
  • Dongfang Electric (1072 HK) should witness stronger order momentum in 2H24 as demand from transmission and generation upgrades surges. Order backlog now covers 3.5x revenue.

Short Note: China Property Recovery Upcoming with Policy Support and Rate Cut

By Jacob Cheng

  • In this insight, we look at the latest policy support in China property, as well as the latest rate cut from the Central Bank
  • In the physical market, there are some signs of bottoming out, particularly in key cites such as Shanghai and Shenzhen.  Secondary market is recovering
  • If investors would like exposure in the sector, we recommend CRL (1109 HK) and COLI (688 HK), both are SOE names with almost zero bankruptcy risks

GEMWeekly (2 Aug 2024): Alibaba Fee Change; China, South Korea Macro; Tencent, ByteDance

By Wium Malan, CFA

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Aug 05
0

Daily Brief ECM: Black Sesame IPO – Paying Up-Front for Its Monetization Potential and more

By | Daily Briefs, ECM

In today’s briefing:

  • Black Sesame IPO – Paying Up-Front for Its Monetization Potential
  • ECM Weekly (5th Aug 2024) – Ola Electric, Brainbees, WeRide, Sanil, CR Beverages, Carote, Fortescue
  • Brainbees Solutions (FirstCry) IPO: Valuation Insights

Black Sesame IPO – Paying Up-Front for Its Monetization Potential

By Clarence Chu

  • Black Sesame Technologies (BLACKSES HK) is looking to raise US$143m in its Hong Kong IPO.
  • Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
  • In our earlier notes, we looked at the past performance of the deal. In this note, we discuss peers and share our thoughts on valuation.

ECM Weekly (5th Aug 2024) – Ola Electric, Brainbees, WeRide, Sanil, CR Beverages, Carote, Fortescue

By Sumeet Singh

Brainbees Solutions (FirstCry) IPO: Valuation Insights

By Arun George

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Aug 05
0

Daily Brief Event-Driven: Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher
  • Sumitomo Forestry (1911 JP): Selloff Provides Entry for Potential Index Inclusion
  • China Healthcare Weekly (Aug.4)- Taiji Group & China TCM, TCM Formula Granules VBP, Keymed’s Trouble
  • Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing
  • Merger Arb Mondays (05 Aug) – Henlius, Asia Cement, Canvest, GA Pack, CPMC, A8, Fancl
  • Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Deletion & Positioning
  • Japan CorpGovReport Details: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Aug24)
  • CPMC Holdings (906.HK) Privatization Update- Due to Risk Behind ORG’s Offer, Baosteel Is a Wiser Bet
  • EQD / NSE Vol Update / Coffee Boost for Sleepy Vol Mkts as Risk Sentiment Sours into the Weekend

Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher

By Travis Lundy

  • When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
  • Nearly 7mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 5mos ago, recommended taking profits.
  • Ibiden has now underperformed Shinko by 25+% in 2-plus weeks. GAP RISK is higher but this is a short-timer. HUGE yield to “expected” start date, so everyone assumes a delay. 

Sumitomo Forestry (1911 JP): Selloff Provides Entry for Potential Index Inclusion

By Brian Freitas

  • Sumitomo Forestry (1911 JP) is a potential inclusion to a global index at the August rebalance. If added, passive trackers will need to buy over 6x ADV.
  • Sumitomo Forestry (1911 JP) has traded lower on risk-off sentiment and further downside provides an entry point that could pay off if the stock is added to the index.
  • Sumitomo Forestry (1911 JP) has outperformed its peers but trades at similar valuations to some stocks. A long/short trade could protect the downside.

China Healthcare Weekly (Aug.4)- Taiji Group & China TCM, TCM Formula Granules VBP, Keymed’s Trouble

By Xinyao (Criss) Wang

  • TCM formula granules VBP would cause some disturbance to related enterprises’ performance, but the substitution of TCM formula granules for TCM decoction pieces is a trend, indicating long-term optimistic growth.
  • Keymed’s CM310 would probably miss the NRDL negotiation this year, which will put the Company in passive situation. Based on competitive landscape, we are worried about the performance of Keymed.
  • Unsatisfactory performance of Taiji’s shares is related to concerns on China TCM’s privatization/24H1 results.However, even without the integration with China TCM, Taiji’s market value should be more than RMB20 billion.

Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing

By Sanghyun Park

  • Local traders see interest rate cuts and value-up disclosures as key for timing Samsung Electronics 1P discount narrowing.
  • Samsung’s only realistic value-up goal beyond 50% FCF return is improving ROE, likely through a pref-skewed buyback or cancellation program.
  • If Samsung announces a value-up plan during the Bank of Korea’s rate cuts, local traders expect the 1P discount to reverse, targeting October-November for position entry.

Merger Arb Mondays (05 Aug) – Henlius, Asia Cement, Canvest, GA Pack, CPMC, A8, Fancl

By Arun George

Yuanta/​P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Deletion & Positioning

By Brian Freitas

  • Nuvoton Technology (4919 TT) should be deleted from the Yuanta/​P-Shares Taiwan Dividend Plus ETF in September and that will trigger selling of over 4 days of ADV.
  • Nuvoton Technology (4919 TT) has underperformed most of its peers since the start of the calendar year and shorts have started to increase in the stock.
  • Positioning appears light and the recent deletion from an index has increased the real float of the stock. Recent semiconductor weakness could further pressure the stock.

Japan CorpGovReport Details: TSE “Mgmt Conscious of Capital Cost/Stock Price” Details (Aug24)

By Travis Lundy

  • July saw 825 new Corporate Governance Reports filed and 8 new “Mgmt Conscious of Capital Cost/Stock Price” policies filed. June saw 1,673 and 5, respectively. That’s 2500 cos.
  • We created a tool show every report, provide links to every document, and now a new diff file tool. Put in a name, see the difference between the Old/New Reports.
  • We hope this tool will help. It is designed to be a shelf reference. We update the tool once a month, a couple of weeks ahead of the TSE.

CPMC Holdings (906.HK) Privatization Update- Due to Risk Behind ORG’s Offer, Baosteel Is a Wiser Bet

By Xinyao (Criss) Wang

  • Baosteel’s choice to maintain its original Offer may partly reflect its “confidence” in the deal. If investors bet that Huarui Offer will succeed, they need to bear some risks.
  • If investors choose to arbitrage at HK$7.21/share, annualized return is 9% assuming privatization would be completed in mid-Jan 2025.Such return may not be attractive considering the uncertainties behind the deal. 
  • If investors are optimistic about Baosteel’s final acquisition of CPMC, they can consider buying Baosteel shares, as Baosteel will become the new industry leader, with greater upside potential for valuation.

EQD / NSE Vol Update / Coffee Boost for Sleepy Vol Mkts as Risk Sentiment Sours into the Weekend

By Sankalp Singh

  • Implied Volatilities (IVs) fell post-FOMC, but reversed course as market sentiment worsened late -week. IV-jump expected as Indian markets catch up to Friday’s U.S. price action 
  • Vol-Regime Model still in a “High & Down” vol state. Will switch if large IV change on the open. Short Vega & Risk-Reversal positions will need to be reevaluated. 
  • Low PCR, OI call bias & Skew compression: All point to unguarded downside in Nifty50. Next stop 24000.

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Aug 05
0

Daily Brief Equity Bottom-Up: Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows
  • KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears
  • UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
  • Microsoft’s Strong Q2: Solid Revenue and Earnings Growth Despite Cloud Concerns
  • Taiwan Tech Weekly: Tough Start for Nvidia and Apple Supply Chains; Asustek, Novatek Results Ahead
  • DFI Retail (DFI SP): 1H2024.Pivoting to Profitable Growth with RTE Foods
  • [Q2 Earnings Review] ADM Falls Short of Expectations on Weak Results in AS&O & Nutrition Businesses
  • Ferrari (RACE US) Q2 2024: Margin Uptrend Continues, No Demand Weakness
  • Intel’s Market Meltdown: Analyzing the Struggles of a Semiconductor Leader
  • New Wave – Vaulting to Glory?

Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows

By Vincent Fernando, CFA

  • TSMC: Premium Breaks Back Down to +8.3%; 5-15% Could Now Be the Key Range
  • UMC: -2.2% Discount; Good Level to Go Long the Premium
  • ASE: Premium Breaks Down Again, Now Only +1.5%; Consider Going Long

KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

By Douglas Kim

  • In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears. 
  • We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
  • The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026. 

UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important

By Vincent Fernando, CFA

  • UMC’s latest results indicate a mild recovery for consumer, communications, and computing industries. UMC’s capacity utilization to continue improving but industry inventory correction could last until end-2024E.
  • UMC maintained 2024E capex guidance however it’s increasingly clear UMC can’t keep up the capex arms race alone. Hence we see UMC & Intel becoming closer and closer partners.
  • We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.

Microsoft’s Strong Q2: Solid Revenue and Earnings Growth Despite Cloud Concerns

By Uttkarsh Kohli

  • Q2 revenue of $64.73 billion and EPS of $2.95 surpassed expectations of $64.39 billion and $2.93, respectively. Intelligent Cloud revenue reached $28.52 billion but below analysts’ $28.68 billion expectation. 
  • Activision acquisition boosted revenue by 3 points but cut EPS by $0.06 due to lower operating income.
  • While Microsoft’s core cloud business slowed, it increased capex significantly. Uncertain GenAI monetization might shift wealth from Microsoft shareholders to Nvidia shareholders.

Taiwan Tech Weekly: Tough Start for Nvidia and Apple Supply Chains; Asustek, Novatek Results Ahead

By Vincent Fernando, CFA

  • Tough Start to the Week — Negative News for Nvidia and Apple Supply Chains
  • Key Events: Asustek & Novatek Results; Mediatek & TSMC July Sales Data
  • UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important 

DFI Retail (DFI SP): 1H2024.Pivoting to Profitable Growth with RTE Foods

By Devi Subhakesan

  • Strong recovery in 1H2024 profit growth YoY was driven by margin improvements in the food and convenience segments.
  • Double-Digit sales growth in the Ready-to-Eat (RTE) foods segment boosted margins, offsetting reduced cigarette volumes from last year’s tax increases in Hong Kong.
  • While weak consumer confidence in North Asia impacted sales, good growth in the expanding Southeast Asia business provided a positive offset.

[Q2 Earnings Review] ADM Falls Short of Expectations on Weak Results in AS&O & Nutrition Businesses

By Srinidhi Raghavendra

  • ADM’s Q2 results underperformed analyst expectations with both EPS and revenue missing analyst estimates.
  • Operating profit declined for Ag Services & Oilseeds (ASO) and Nutrition, while Carbohydrate Solutions saw an uptick, driven by margin and volume expansion in Starches and Sweeteners.
  • ADM expects weak Q3 for AS&O and Carbohydrate Solutions, with improvements expected in H2 2024. Nutrition is expected to perform strongly due to cost efficiency and volume expansion.

Ferrari (RACE US) Q2 2024: Margin Uptrend Continues, No Demand Weakness

By Sameer Taneja

  • Ferrari N.V. (RACE US) reported another strong Q2 2024, with revenues up 16% and profits up 25% YoY. EBITDA margins expanded to 39% due to pricing/personalization(20%). 
  • The company raised its guidance on revenue/EPS by 2.3%/5%, flagging Q3 would be weak as it transitions to its new ERP, but we believe the company is being conservative. 
  • Trading at 48.7x FY24e, the stock seems a tad expensive, but it’s up 28% YTD because of upgrades, which we believe will continue. 

Intel’s Market Meltdown: Analyzing the Struggles of a Semiconductor Leader

By Baptista Research

  • In a shocking turn of events, Intel Corporation, a long-standing leader in the semiconductor industry, witnessed one of its worst days on Wall Street, losing over a quarter of its market value in a single trading session.
  • The drastic drop followed the company’s announcement of a $1.6 billion net loss for the second quarter of 2024, a stark contrast to the $1.47 billion profit reported in the same period the previous year.
  • Intel’s share price plummeted by 27%, marking its steepest decline since 1974, as the company grappled with disappointing earnings, a bleak forecast, and a massive restructuring plan.

New Wave – Vaulting to Glory?

By Investment Talk

  • After a warm-up week of swimming, rowing and archery, the Olympics now kicks into top gear with the athletics.
  • Among the hottest of track and field gold medal prospects is Armand ‘Mondo’ Duplantis of Sweden.
  • On Monday evening, the 24-year-old will contest the men’s pole vault final as the defending champion from Tokyo. 

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Aug 05
0

Daily Brief Macro: The Carry Trade as Risk Driver and more

By | Daily Briefs, Macro

In today’s briefing:

  • The Carry Trade as Risk Driver
  • The Fed: A Political Institution Prepares Financial Markets for Lower Interest Rates
  • Several Factors Supporting Gold Price
  • Copper Tracker August 5th, 2024: Physical/​Equity Screens And Trades, Positive Signs For Copper
  • Factors to Watch that Influence Hong Kong and China Stock Markets in Coming Days
  • A Recession on the Horizon?
  • [CB 30/2024] Corn & Soy Tumble on Improving Weather; Chinese Demand Likely to Support Soy

The Carry Trade as Risk Driver

By Cam Hui

  • Risk appetite is undergoing a cross-asset carry trade-driven panic and a bottom is near. The equity market is sufficiently oversold and poised for a relief rally.
  • Barring some unexpected exogenous event, downside risk is limited at these levels.
  • Expect a short-term relief equity rally into August, led by small caps and value stocks.

The Fed: A Political Institution Prepares Financial Markets for Lower Interest Rates

By Said Desaque

  • The Fed has been a political institution since its inception, while its responsibilities have been changed over time.  Political pressure on the Fed is counter-cyclical will always prevail this way.
  • Markets have become decidedly more dovish about the Fed’s policy conduct as the presidential election approaches, effectively raising the ante on the Federal Open Market Committee. 
  • President Trump wishes the federal funds rate to remain unchanged until the election, but the current FOMC membership suggests at least one policy rate cut this year. 

Several Factors Supporting Gold Price

By Alex Ng

  • Gold tread new high of $2,386.10 per ounce​.  Several factors support the gold price including geopolitical instability, upcoming Fed interest rate cut, central bank purchases, and still slightly strong inflation.
  • Gold’s long-term returns are actually pretty good. Investors should hold a certain proportion of gold in their positions to increase risk-adjusted returns.
  • Currently, global investors hold too many risky assets such as stocks, resulting in a lower rate of return on such assets.

Copper Tracker August 5th, 2024: Physical/​Equity Screens And Trades, Positive Signs For Copper

By Sameer Taneja

  • Copper declined below the 9,000 USD/ton levels (WoW by -0.5%) due to weakness in financial markets caused by the Federal Reserve’s slowness in cutting rates. 
  • Positive signs for copper were the Yangshan Copper Premium inflecting into positive territory and combined inventory on all exchanges being drawn down by almost 5%. 
  • Lundin Mining (LUN CN) and BHP Group Ltd (BHP AU) will acquire Filo (FIL CN) for 4.1 bn CAD and develop the Josemaria project in Argentina. 

Factors to Watch that Influence Hong Kong and China Stock Markets in Coming Days

By Alex Ng

  • The Hang Seng Index plunged 2.1% last Friday and fell 0.5% for the week to close at 16,945 points. A total of 7.4% have been evaporated in three weeks.
  • Looking ahead to this week, the mainland will release a number of economic data, coupled with the release of blue chip stocks, it will become the focus of the market.
  • The U.S. presidential candidates may toughen their stance against China. Therefore, even the Chinese stocks are cheap in valuation, foreign investors are still cautious about absorbing Chinese stocks.

A Recession on the Horizon?

By Cam Hui

  • The markets have been rattled by a series of weak economic data, but it’s not time to panic. Economic growth is decelerating, but it’s not recessionary.
  • The Fed is correctly signaling an imminent cut in interest rates as long as inflation data remains soft.
  • The U.S. economy is in a not too hot, not too cold Goldilocks growth scenario that should be equity friendly.

[CB 30/2024] Corn & Soy Tumble on Improving Weather; Chinese Demand Likely to Support Soy

By Srinidhi Raghavendra

  • North Dakota accounts for 51% of total US spring wheat production. The region’s projected 2024 crop yield 15% higher YoY at an average of 54.5 bushels per acre.
  • Large old-crop corn inventories record yield of 183-185 bpa collectively dragging corn prices down.
  • Wheat vols rebounded last week after falling the prior week. Prices face uncertainty as strong exports, lower production in EU & China provides support against massive US harvest.

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Aug 05
0

Daily Brief South Korea: Samsung Electronics Pref Shares, KT&G Corporation and more

By | Daily Briefs, South Korea

In today’s briefing:

  • Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing
  • KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing

By Sanghyun Park

  • Local traders see interest rate cuts and value-up disclosures as key for timing Samsung Electronics 1P discount narrowing.
  • Samsung’s only realistic value-up goal beyond 50% FCF return is improving ROE, likely through a pref-skewed buyback or cancellation program.
  • If Samsung announces a value-up plan during the Bank of Korea’s rate cuts, local traders expect the 1P discount to reverse, targeting October-November for position entry.

KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears

By Douglas Kim

  • In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears. 
  • We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
  • The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026. 

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Aug 05
0

Daily Brief Singapore: Dairy Farm International Holdings and more

By | Daily Briefs, Singapore

In today’s briefing:

  • DFI Retail (DFI SP): 1H2024.Pivoting to Profitable Growth with RTE Foods

DFI Retail (DFI SP): 1H2024.Pivoting to Profitable Growth with RTE Foods

By Devi Subhakesan

  • Strong recovery in 1H2024 profit growth YoY was driven by margin improvements in the food and convenience segments.
  • Double-Digit sales growth in the Ready-to-Eat (RTE) foods segment boosted margins, offsetting reduced cigarette volumes from last year’s tax increases in Hong Kong.
  • While weak consumer confidence in North Asia impacted sales, good growth in the expanding Southeast Asia business provided a positive offset.

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