Category

Daily Briefs

Jul 27
0

Daily Brief ESG: Rexel – ESG Report – Lucror Analytics and more

By | Daily Briefs, ESG

In today’s briefing:

  • Rexel – ESG Report – Lucror Analytics

Rexel – ESG Report – Lucror Analytics

By Leonard Law, CFA

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Rexel’s ESG as “Strong”, in line with its Social and Governance scores, while the Environmental score is “Adequate”. Controversies are “Immaterial” and Disclosure is “Strong”. 

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Jul 27
0

Daily Brief ECM: Akums Drugs and Pharmaceuticals IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation and more

By | Daily Briefs, ECM

In today’s briefing:

  • Akums Drugs and Pharmaceuticals IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation
  • Akums Drugs and Pharmaceuticals IPO: Subscribe on Favorable Industry Tailwind and Reasonable Pricing

Akums Drugs and Pharmaceuticals IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation

By Ethan Aw

  • Akums Drugs and Pharmaceuticals (0200361D IN) is looking to raise up to US$222m in its upcoming India IPO.
  • Akums Drugs and Pharmaceuticals (ADP) is a pharmaceutical contract development and manufacturing organization (CDMO) offering a comprehensive range of pharmaceutical products and services in India and overseas.
  • In our previous note, we talked about the company’s historical performance. In this note, we talk about its RHP updates and share our quick thoughts on peer comparison and valuation.

Akums Drugs and Pharmaceuticals IPO: Subscribe on Favorable Industry Tailwind and Reasonable Pricing

By Tina Banerjee

  • Akums Drugs and Pharmaceuticals, the largest India-focused CDMO, has set price band of Rs 646–679/share for its upcoming IPO. The company has blue chip and sticky clientele.
  • The Indian domestic CDMO market is forecasted to grow at a CAGR of 14.3% during FY24–28, nearly doubling its historical growth rate.
  • Akums seeks a P/E valuation of 28.7–30.2x, which seems to be reasonable compared with listed peers.

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Jul 27
0

Daily Brief Event-Driven: StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
  • Zhihu (2390 HK/ZH US)’s Cheeky Buyback
  • Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
  • Tatsuta Electric (5809 JP): Eneos Returns with a Token Bump to JPY780
  • EQD | WHAT IF The NIFTY Starts to Pullback This Week?
  • STOXX 600: First September Forecasts for Europe and Eurozone

StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low

By David Blennerhassett

  • A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
  • Preceding my comments on Amorepacific are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Zhihu (2390 HK/ZH US)’s Cheeky Buyback

By David Blennerhassett

  • Back on the 19th July, online Q&A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS). 
  • Assuming the buyback is fully taken up, chairman Yuan Zhou’s stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares). 
  • The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on  net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated. 

Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger

By Douglas Kim

  • On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
  • The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone. 
  • We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire. 

Tatsuta Electric (5809 JP): Eneos Returns with a Token Bump to JPY780

By Arun George

  • ENEOS Holdings (5020 JP) has increased the Tatsuta Electric Wire & Cable (5809 JP) tender offer price by 8.3% to JPY780 and extended the offer period to 19 August.
  • Eneos tried to get the required acceptances by refusing to bump and subsequently extending the offer period. The tactics failed as minorities required a bump due to the market re-rating. 
  • While the revised offer remains light, the token bump and deal fatigue should suffice to nudge the marginal vote to accept. At the last close, the gross/annualised spread was 5.0%/85.8%.

EQD | WHAT IF The NIFTY Starts to Pullback This Week?

By Nico Rosti

  • The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
  • While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
  • Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.

STOXX 600: First September Forecasts for Europe and Eurozone

By Dimitris Ioannidis

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Jul 27
0

Daily Brief Equity Bottom-Up: Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half
  • The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)
  • Consumer Tales #July21-26:Apple Falls from Top 5 in China, Xiaomi Tops India Smartphones
  • [Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth
  • Taiwan Semiconductor (TSMC): How Will They Deal With The Strained Production Capacity & Geopolitical Risks & Regulatory Pressures? – Major Drivers
  • AST SpaceMobile’s 25% Jump: A Satellite Breakthrough Investors Can’t Ignore!
  • [Kanzhun (BZ US, BUY, TP US$19) TP Change]: Impacted by Poor Macro but Still on Top of Competition
  • [Earnings Preview] BP’s Woes Continue: Weak Refining Margins to Squeeze Earnings
  • Tech Supply Chain Tracker (27-Jul-2024): ST cuts 2024 outlook as demand slows.
  • Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers

Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half

By Ke Yan, CFA, FRM

  • China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
  • The pace of China game approval appears to have accelerated to the same level as pre-tightening. Of companies that we are monitoring, none got any approval.
  • China’s CADPA published a semi-annual report pointing to flattish growth of gaming revenue in the first half. 

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)

By David Mudd

Consumer Tales #July21-26:Apple Falls from Top 5 in China, Xiaomi Tops India Smartphones

By Devi Subhakesan

  • Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
  • An interesting comparison between China and India smart phone markets in 2Q 2024 – highlighting differences in market size and the dominance of leading players.
  • Xiaomi Corp(1810 HK)  made a strong come back in 2Q24 in terms of sales in both the markets. In China, it saw a 17% year-on-year increase, shipping 10 million units.

[Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth

By Ying Pan

  • We expect Meituan’s C2Q24 rev. and non-IFRS NI to be 0.7% and 12.3% higher than cons, driven by resilient catering demand and eased competition.
  • We expect Meituan in-store OPM improve to 33%/35% in 2Q24/2H24 supported by increasing commission rate and cutting BD cost.
  • We maintain the stock as BUY rating and raise TP by HK$4 to HK$160/share to factor in the better profitability.

Taiwan Semiconductor (TSMC): How Will They Deal With The Strained Production Capacity & Geopolitical Risks & Regulatory Pressures? – Major Drivers

By Baptista Research

  • Taiwan Semiconductor Manufacturing Company’s (TSMC) second quarter 2024 results reveal a mixed picture of advances and challenges.
  • The revenue for the quarter was notably strong, increasing by 13.6% sequentially in NT or 10.3% in U.S. dollars.
  • This substantial growth was fueled by robust demand for the cutting-edge 3- and 5- nanometer technologies, although somewhat offset by smartphone seasonality.

AST SpaceMobile’s 25% Jump: A Satellite Breakthrough Investors Can’t Ignore!

By Baptista Research

  • AST SpaceMobile has recently made headlines with a significant leap in its ambitious mission to build the world’s first space-based cellular broadband network.
  • The company has announced the successful completion and upcoming shipment of its first five commercial satellites, marking a pivotal milestone that has already caused its stock to surge by nearly 25%.
  • These satellites, known as Bluebirds, are set to provide unprecedented global connectivity directly to standard mobile devices, bridging the digital divide and offering broadband services in previously unreachable areas.

[Kanzhun (BZ US, BUY, TP US$19) TP Change]: Impacted by Poor Macro but Still on Top of Competition

By Eric Wen

  • Due to weakening hiring demand from both manufacturing and service, we expect BZ’s cash billing to decline 5% QoQ in 2Q24, 9% below consensus. 
  • We believe BZ’s user matrices still growing and leading. The weakness is mainly attributable to the employer/hiring side;
  • We cut TP by US$3 to US$19/ADS while keep the BUY rating.

[Earnings Preview] BP’s Woes Continue: Weak Refining Margins to Squeeze Earnings

By Suhas Reddy

  • BP expects lower realised refining margins and weak oil trading to hurt earnings, with a refining margin contraction to reduce earnings by USD 500-700 million.
  • The company anticipates impairments ranging from USD 1-2 billion in Q2, including charges related to the ongoing review of its Gelsenkirchen refinery in Germany.
  • BP projects its upstream production to remain broadly flat sequentially, with stable oil output and a slight decrease in gas and low-carbon energy production.

Tech Supply Chain Tracker (27-Jul-2024): ST cuts 2024 outlook as demand slows.

By Tech Supply Chain Tracker

  • ST reduces 2024 outlook amid industrial and automotive slowdown, impacting company’s future projections.
  • VCs discuss Taiwan startups in AI industry, highlighting challenge of staying competitive in fast-evolving sector.
  • Global regulators collaborate to address market dominance of AI giants, emphasizing need for fair competition and consumer protection.

Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers

By Baptista Research

  • Netflix reported its financial performance for the second quarter, highlighting key metrics that provide insights into its current standing and future direction.
  • The company reported earnings per share of $4.88, exceeding Wall Street’s expectation of $4.74.
  • Revenue for the quarter stood at $9.56 billion, slightly above the anticipated $9.53 billion.

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Jul 27
0

Daily Brief Crypto: Dog Days of Summer and more

By | Crypto, Daily Briefs

In today’s briefing:

  • Dog Days of Summer

Dog Days of Summer

By Delphi Digital

  • Market consolidation signals opportunity, not the end: we’re just in the 2nd or 3rd inning of the crypto cycle.
  • Bitcoin and Ethereum ETFs bring unprecedented demand, setting the stage for significant market movements.
  • Solana’s on-chain activity and retail adoption make it the standout trade of this cycle.

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Jul 27
0

Daily Brief Macro: Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 26 Jul 2024 and more

By | Daily Briefs, Macro

In today’s briefing:

  • Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 26 Jul 2024
  • Central Bank Watch – We are approaching the point where the market is losing its composure
  • Nowhere to Run to Baby, Nowhere to Hide! Part 1
  • Heard From Fortress Hill: Weekly Market Observations (26 July 2024)
  • China: Struggling Middle Class and Bottom 50%
  • CX Daily: China’s Macro Leverage Ratio Edges Up to Fresh Record
  • HEW: Consolidating Risk-off
  • Sustainability and ESG Investment

Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 26 Jul 2024

By Dr. Jim Walker

  • Japanese Market: Yen strengthens, impacting stocks like Nissan with poor earnings due to weak overseas profit translation.

  • US Market: Weakening labor signals suggest possible September interest rate cuts; current economic policies may be behind the curve.

  • Global Economy: China boosts demand, India maintains fiscal policy, Korea’s GDP growth and investment stagnate.

Central Bank Watch – We are approaching the point where the market is losing its composure

By Andreas Steno

  • Markets at one point began to anticipate a risk of more than a 25 bps increase in September, and we have already seen early chatter about a rate cut from the Fed next week.
  • This is the kind of “loss of composure” we see when position squaring takes precedence over common sense.
  • We are likely approaching the point where the squaring party triggered by USDJPY is starting to impact market pricing and sentiment in nonsensical ways, as deleveraging is ongoing, even if the dust has settled a little this afternoon.

Nowhere to Run to Baby, Nowhere to Hide! Part 1

By Rikki Malik

  • Are we witnessing a short-term carry-trade unwind or trend change?
  • JPY’s strength and overall market weakness continue to go hand in hand.
  • Any near-term bounce  be used to reduce exposure in certain sectors

Heard From Fortress Hill: Weekly Market Observations (26 July 2024)

By Alex Ng

  • US tech stocks correct quite heavily,  with S&P500 down for 2.6% and Nasdaq down for 3.7% up to Thursday this week.
  • Hang Seng follows suit, declining for 2.6% for the week. However, we believe Hong Kong stocks are doomed a short-term recovery in coming weeks.
  • After treading new high last Tuesday, gold has retreated from USD2467.8 to USD2409.4. Gold is still a long-term good investment as central banks are mounting gold position.

China: Struggling Middle Class and Bottom 50%

By Alex Ng

  • Uncertainty over income and employment, adverse wealth effects from lower house prices, plus growing risk aversion, will likely mean that consumption continues to struggle.
  • We forecast slower H2 GDP growth and look for 4% in 2025.
  • Sluggish China retail sales/negative auto sales and price cuts for luxury goods suggest that China consumption is struggling.

CX Daily: China’s Macro Leverage Ratio Edges Up to Fresh Record

By Caixin Global

  • Debt /: China’s macro leverage ratio edges up to fresh record
  • China-Ukraine /: China supports Russia-Ukraine peace talks, but conditions aren’t yet ‘ripe,’ Beijing says
  • Borrowing /: China encourages ‘high quality’ companies to seek borrowing overseas

HEW: Consolidating Risk-off

By Phil Rush

  • Equity longs and FX carry trades are being unwound, indicating a general reduction of risk in consensus positions, unrelated to significant macro news or Trump’s trading.
  • The US services PMI remains strong, suggesting a healthy service sector economy.
  • Market repricing is expected to respond to policy changes next week, including a potential BOJ hike, a soft signal from the Fed regarding September, and a possible BoE rate cut, which could affect Yen strength and sterling long positions respectively.

Sustainability and ESG Investment

By Alex Ng

  • Sustainability and ESG investment has increasingly gained importance and has become not just a talking point
  • Surprisingly, China is one of the most serious countries that care about ESG, even beating America and Europe in certain sustainability aspects.
  • It is worthwhile to review UN’s 17 sustainability goals to see what each economy can do to to raise the hope of achieving them by 2030.

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Jul 27
0

Daily Brief South Korea: Amorepacific Corp, Doosan Bobcat Inc, Hana Financial and more

By | Daily Briefs, South Korea

In today’s briefing:

  • StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
  • Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger
  • GEM Banks; Focus on Value Attributes and Returns Recovery Potential

StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low

By David Blennerhassett

  • A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
  • Preceding my comments on Amorepacific are the current setup/unwind tables for Asia-Pacific Holdcos.
  • These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Doosan Bobcat Employees Involved In Major Breach of Duty + Doosan Group Pushes Ahead With Merger

By Douglas Kim

  • On 26 July, it was reported in the local media that there has been a major breach of duty by nearly 40 current/former employees at Doosan Bobcat.
  • The fact that this material breach of duty was not revealed prior to the merger announcement adds to the argument that this merger/split/delisting should be either cancelled or redone. 
  • We remain negative on all major companies involved in this deal including Doosan Bobcat and Doosan Robotics. The breach of duty at Doosan Bobcat adds to the fire. 

GEM Banks; Focus on Value Attributes and Returns Recovery Potential

By Victor Galliano

  • Among bigger cap GEM banks, we pick five longs and two shorts as our conviction calls; we add country-based equity risk premia to our screening process
  • Our core buys are Bank Mandiri from Indonesia, Hana Financial from South Korea, CIMB Group from Malaysia, Bradesco from Brazil and CCB from China; four of these are value picks
  • Our sells are Kotak Mahindra Bank and ICICI Bank from India, both richly valued larger cap banks that have benefited from past economic and political tailwinds with headwinds now emerging

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Jul 27
0

Daily Brief United States: AST SpaceMobile Inc, BP PLC, Steel Dynamics, Netflix Inc, United Airlines Holdings, Kinder Morgan, Marsh & Mclennan, Mattel Inc, Omnicom Group, Alcoa and more

By | Daily Briefs, United States

In today’s briefing:

  • AST SpaceMobile’s 25% Jump: A Satellite Breakthrough Investors Can’t Ignore!
  • [Earnings Preview] BP’s Woes Continue: Weak Refining Margins to Squeeze Earnings
  • Steel Dynamics Inc.: A Dive Into Market Dynamics and Policy Tailwinds & Other Major Drivers
  • Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers
  • United Airlines Holdings: What Is Their Strategic Response To Market Competitiveness? – Major Drivers
  • Kinder Morgan: How Are They Executing The Strategic Asset Optimization in the Permian Basin? – Major Drivers
  • Marsh & McLennan Companies: Can They Develop A Competitive Edge Through Analytics? – Major Drivers
  • Mattel Inc’s Possible Acquisition By LVMH Backed L Catterton – What Is The Expected Valuation & The Deal Rationale?
  • Omnicom Group: A Tale Of Digital Transformation and Technology Integration! – Major Drivers
  • Alcoa Corporation: What Is The Impact Of Increasing Alumina and Aluminum Prices? – Major Drivers

AST SpaceMobile’s 25% Jump: A Satellite Breakthrough Investors Can’t Ignore!

By Baptista Research

  • AST SpaceMobile has recently made headlines with a significant leap in its ambitious mission to build the world’s first space-based cellular broadband network.
  • The company has announced the successful completion and upcoming shipment of its first five commercial satellites, marking a pivotal milestone that has already caused its stock to surge by nearly 25%.
  • These satellites, known as Bluebirds, are set to provide unprecedented global connectivity directly to standard mobile devices, bridging the digital divide and offering broadband services in previously unreachable areas.

[Earnings Preview] BP’s Woes Continue: Weak Refining Margins to Squeeze Earnings

By Suhas Reddy

  • BP expects lower realised refining margins and weak oil trading to hurt earnings, with a refining margin contraction to reduce earnings by USD 500-700 million.
  • The company anticipates impairments ranging from USD 1-2 billion in Q2, including charges related to the ongoing review of its Gelsenkirchen refinery in Germany.
  • BP projects its upstream production to remain broadly flat sequentially, with stable oil output and a slight decrease in gas and low-carbon energy production.

Steel Dynamics Inc.: A Dive Into Market Dynamics and Policy Tailwinds & Other Major Drivers

By Baptista Research

  • Steel Dynamics achieved notable results in the second quarter of 2024, with some mixed performances across different operational aspects.
  • The company saw total revenues of $4.6 billion, a slight decline from the previous quarter, primarily attributed to a fall in steel prices which more than offset the stable shipment volumes.
  • Correspondingly, there was a contraction in the steel metal spread which resulted in a 26% reduction in operating income, totaling $559 million, compared to the previous quarter.

Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers

By Baptista Research

  • Netflix reported its financial performance for the second quarter, highlighting key metrics that provide insights into its current standing and future direction.
  • The company reported earnings per share of $4.88, exceeding Wall Street’s expectation of $4.74.
  • Revenue for the quarter stood at $9.56 billion, slightly above the anticipated $9.53 billion.

United Airlines Holdings: What Is Their Strategic Response To Market Competitiveness? – Major Drivers

By Baptista Research

  • The United Airlines Holdings second quarter 2024 earnings emphasized its strategic navigation through the industry’s capacity and demand fluctuations, where it maintained a leading position thanks to optimized operational tactics and strategic foresight.
  • Revenues increased by 5.7% year-over-year, totaling $15 billion, albeit with Total Revenue per Available Seat Mile (TRASM) decreasing by 2.4% due to a significant 8.3% increase in capacity.
  • This disparity between revenue growth and capacity magnification underscores the industry challenge of matching supply with demand efficiently.

Kinder Morgan: How Are They Executing The Strategic Asset Optimization in the Permian Basin? – Major Drivers

By Baptista Research

  • Kinder Morgan Inc. recently discussed various insights and forecasts regarding its business and the broader market context in which it operates.
  • The company provided a detailed analysis of trends and operational activities, revealing both positive developments and challenges.
  • This summary outlines the central points that might influence investment decisions related to Kinder Morgan.

Marsh & McLennan Companies: Can They Develop A Competitive Edge Through Analytics? – Major Drivers

By Baptista Research

  • Marsh McLennan, a global professional services firm reported strong financial results for the second quarter of 2024.
  • The results demonstrated the company’s ability to deliver growth in the short term while simultaneously investing for long-term sustainability.
  • Marsh McLennan posted a 6% increase in underlying revenue growth on top of 11% in the same period last year, reflecting strong execution across Risk and Insurance Services (RIS) and Consulting.

Mattel Inc’s Possible Acquisition By LVMH Backed L Catterton – What Is The Expected Valuation & The Deal Rationale?

By Baptista Research

  • Mattel, Inc. experienced a significant boost in its stock price after news surfaced that the private equity firm L Catterton had made a takeover bid for the toy manufacturing giant.
  • This development has attracted the attention of investors and fueled discussions about potential changes in the toy industry’s landscape, especially in relation to its long-time rival, Hasbro.
  • Let’s delve into Mattel’s business operations and explore the potential valuation it could achieve through this deal.

Omnicom Group: A Tale Of Digital Transformation and Technology Integration! – Major Drivers

By Baptista Research

  • Omnicom recently presented its results for the second quarter of 2024, highlighting a mix of positive dynamics coupled with the challenges inherent in a complex operational landscape.
  • One notable strength in the results is the recorded 5.2% organic growth, spearheaded by a formidable 6.3% growth in the U.S. market.
  • This growth was primarily driven by robust performances in advertising, media, and experiential disciplines.

Alcoa Corporation: What Is The Impact Of Increasing Alumina and Aluminum Prices? – Major Drivers

By Baptista Research

  • Alcoa’s revenue increased sequentially to $2.9 billion, driven by higher alumina and aluminum prices.
  • In the Alumina segment, third-party revenue saw a 5% rise due to increased average realized prices, despite lower shipments.
  • The Aluminum segment reported a 16% increase in third-party revenue, attributed to higher prices and increased shipments.

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Jul 27
0

Daily Brief India: Akums Drugs and Pharmaceuticals, Sun Pharmaceutical Industries, NIFTY Index and more

By | Daily Briefs, India

In today’s briefing:

  • Akums Drugs and Pharmaceuticals IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation
  • Pullback Underway; Getting Defensive; Long-Term RS Bottoms for Defensives Is a Reason for Caution
  • Akums Drugs and Pharmaceuticals IPO: Subscribe on Favorable Industry Tailwind and Reasonable Pricing
  • EQD | WHAT IF The NIFTY Starts to Pullback This Week?

Akums Drugs and Pharmaceuticals IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation

By Ethan Aw

  • Akums Drugs and Pharmaceuticals (0200361D IN) is looking to raise up to US$222m in its upcoming India IPO.
  • Akums Drugs and Pharmaceuticals (ADP) is a pharmaceutical contract development and manufacturing organization (CDMO) offering a comprehensive range of pharmaceutical products and services in India and overseas.
  • In our previous note, we talked about the company’s historical performance. In this note, we talk about its RHP updates and share our quick thoughts on peer comparison and valuation.

Pullback Underway; Getting Defensive; Long-Term RS Bottoms for Defensives Is a Reason for Caution

By Joe Jasper

  • Our long-term bullish outlook (since early-November 2023) remains intact. With that said, we believe a 1-3-month pullback has likely begun.
  • Supports to watch are at $110 on MSCI ACWI (ACWI-US) and $41-42 on MSCI EM (EEM-US), and whether these levels hold or not will determine the severity of the pullback.
  • The S&P 500 is violating its 20-day MA, Europe’s EURO STOXX 50 is breaking below 4884, and Japan’s TOPIX appears to be staging a false breakout at the 2800-2815 level

Akums Drugs and Pharmaceuticals IPO: Subscribe on Favorable Industry Tailwind and Reasonable Pricing

By Tina Banerjee

  • Akums Drugs and Pharmaceuticals, the largest India-focused CDMO, has set price band of Rs 646–679/share for its upcoming IPO. The company has blue chip and sticky clientele.
  • The Indian domestic CDMO market is forecasted to grow at a CAGR of 14.3% during FY24–28, nearly doubling its historical growth rate.
  • Akums seeks a P/E valuation of 28.7–30.2x, which seems to be reasonable compared with listed peers.

EQD | WHAT IF The NIFTY Starts to Pullback This Week?

By Nico Rosti

  • The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
  • While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
  • Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.

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Jul 27
0

Daily Brief China: Zhihu, Tencent, Smoore International Holdings, Meituan, Xiaomi Corp, Kanzhun and more

By | China, Daily Briefs

In today’s briefing:

  • Zhihu (2390 HK/ZH US)’s Cheeky Buyback
  • Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half
  • The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)
  • [Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth
  • Consumer Tales #July21-26:Apple Falls from Top 5 in China, Xiaomi Tops India Smartphones
  • [Kanzhun (BZ US, BUY, TP US$19) TP Change]: Impacted by Poor Macro but Still on Top of Competition

Zhihu (2390 HK/ZH US)’s Cheeky Buyback

By David Blennerhassett

  • Back on the 19th July, online Q&A play Zhihu (2390 HK/ZH US) announced the buyback of 46.92mn ordinary A shares (15.9% of shares out) at HK$9.11/share (US$3.50/ADS). 
  • Assuming the buyback is fully taken up, chairman Yuan Zhou’s stake will increase to 44.4% from 42.9% currently (held via A shares and the weighted-voting B shares). 
  • The key condition is a simple majority vote from independent shareholders. Zhihu is sitting on  net cash of US$764mn. A significantly larger buyback, or higher price, could have been initiated. 

Tencent/Netease: Zero for Major Names; Industry Revenue Growth Flattish in First Half

By Ke Yan, CFA, FRM

  • China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
  • The pace of China game approval appears to have accelerated to the same level as pre-tightening. Of companies that we are monitoring, none got any approval.
  • China’s CADPA published a semi-annual report pointing to flattish growth of gaming revenue in the first half. 

The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)

By David Mudd

[Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth

By Ying Pan

  • We expect Meituan’s C2Q24 rev. and non-IFRS NI to be 0.7% and 12.3% higher than cons, driven by resilient catering demand and eased competition.
  • We expect Meituan in-store OPM improve to 33%/35% in 2Q24/2H24 supported by increasing commission rate and cutting BD cost.
  • We maintain the stock as BUY rating and raise TP by HK$4 to HK$160/share to factor in the better profitability.

Consumer Tales #July21-26:Apple Falls from Top 5 in China, Xiaomi Tops India Smartphones

By Devi Subhakesan

  • Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
  • An interesting comparison between China and India smart phone markets in 2Q 2024 – highlighting differences in market size and the dominance of leading players.
  • Xiaomi Corp(1810 HK)  made a strong come back in 2Q24 in terms of sales in both the markets. In China, it saw a 17% year-on-year increase, shipping 10 million units.

[Kanzhun (BZ US, BUY, TP US$19) TP Change]: Impacted by Poor Macro but Still on Top of Competition

By Eric Wen

  • Due to weakening hiring demand from both manufacturing and service, we expect BZ’s cash billing to decline 5% QoQ in 2Q24, 9% below consensus. 
  • We believe BZ’s user matrices still growing and leading. The weakness is mainly attributable to the employer/hiring side;
  • We cut TP by US$3 to US$19/ADS while keep the BUY rating.

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