In today’s briefing:
- A Pair Trade Between LG Chem (Common) And LG Chem (Preferred)
- HONG KONG ALPHA PORTFOLIO (March 2025)
- Sumi Mitsui Construction (1821) | Playing Both Sides
- Intel Vision Conf: New CEO Mr. TAN Does Not Hide that It Will Be Tough to Fix Intel
- Sarimelati Kencana (PZZA IJ) – Profitable New Beginnings
- Copa Airlines’ Bold Expansion Plan: 13 New Jets, Massive Profits, & Unstoppable Growth!
- [Atour Lifestyle (ATAT US, BUY, TP US$37) Review]: Higher-Quality Growth Extending into 2025
- Asia Real Estate Tracker (02-Apr-2025): Warburg Pincus buys Japan living sector.
- Capgemini (CAP FP): Back to BPO?
- Advanced Energy Industries: The 5 Major Challenges That Can Hinder Growth In 2025! Major Drivers
A Pair Trade Between LG Chem (Common) And LG Chem (Preferred)
- In this insight, we discuss a pair trade between LG Chem Ltd (051910 KS) (common) and LG Chem (051915 KS) (preferred).
- The price ratio (LG Chem common/preferred) is now at 2.16x, which is more than 2 STD (standard deviations). Our trading strategy involves revert to the mean.
- One of the key reasons why LG Chem (preferred)’s share price has fared much worse YTD than LG Chem (common) is due to much larger selling by the foreign investors.
HONG KONG ALPHA PORTFOLIO (March 2025)
- The Hong Kong Alpha simulated portfolio returned 0.97% in March outperforming its benchmark by 1.1%. Since inception the portfolio has outperformed Hong Kong indexes by 8% to 11%.
- The portfolio has generated alpha while maintaining a correlation of 0.8 and a beta of 1.05. The HK Alpha portfolio has a Sharpe ratio of 2.19 YTD.
- On 3/31/25 we sold Shanghai Electric Group Company (2727 HK) , Citic Securities (H) (6030 HK) , Sands China (1928 HK) , and Sunny Optical Technology Group (2382 HK)
Sumi Mitsui Construction (1821) | Playing Both Sides
- Murakami-Led funds have quietly amassed a 26.97% stake in Sumi Mitsui Construction while also acquiring a 5.01% stake in its subsidiary, Sumiken.
- With the Tokyo Stock Exchange clamping down on parent-child listings, Sumiken’s future as a public company looks increasingly uncertain, raising buyout speculation.
- City Index’s small stake in Sumiken may serve as a defensive move to block rival bids, reinforcing its influence over SMC’s long-term strategy.
Intel Vision Conf: New CEO Mr. TAN Does Not Hide that It Will Be Tough to Fix Intel
- CEO Mr TAN confronts what’s wrong: Intel needs better product performance, to listen to the market needs. Intel needs Foundry processes that support customers’ designs. Not the other way around.
- Product presentation very off-base: robotaxi, AI-PC, Gaudi 3 is back as Intel’s AI strategy. Foundry non-announcement: 18A risk production is starting – of course it is, otherwise 18A is flawed.
- Consensus is expecting a swift turnaround in 2026-27. There is currently no reason to believe this. On these rosy expectations, the stock trades at 19x 2026 EPS.
Sarimelati Kencana (PZZA IJ) – Profitable New Beginnings
- Sarimelati Kencana (PZZA IJ) booked a profit in 4Q2024, and the company will remain profitable in 1Q2024, with a strong uptick expected in 2Q2024 and a profit expected for FY2025.
- The company has been focused on reducing costs and improving efficiencies, booking a record gross profit margin in 4Q2024, and is now able to book a profit with lower sales.
- Sarimelati Kencana remains a leading quick-service food provider in Indonesia, with prospects improving as it starts to book sustainable profits, with significant upside if it books sales at pre-COVID levels.
Copa Airlines’ Bold Expansion Plan: 13 New Jets, Massive Profits, & Unstoppable Growth!
- Copa Holdings delivered a mixed yet robust performance in the fourth quarter and full year of 2024, illustrating its resilience and operational efficiency in a fluctuating market.
- Positively, the company reported an operating margin of 21.9% for the year, which reflects consistent execution of its business model focused on cost efficiency and operational excellence.
- An increase in capacity by 8.6% year-over-year was aligned with previous guidance.
[Atour Lifestyle (ATAT US, BUY, TP US$37) Review]: Higher-Quality Growth Extending into 2025
- Atour (ATAT) reported C4Q24 revenue 0.7%/5.8% higher than our estimate/consensus, which translate to 0.5%/4.7% higher in non-GAAP net income, thanks to hotel supply chain consolidation and pillow retail sales.
- Management’s guidance for a steeper-than-consensus decline in 2025’s RevPAR are conservative in our view. We see a “low-before-high” RevPAR pattern in 2025, supported by tightened hotel supply and government stimuli.
- We keep the TP at US$37/ADS and maintain as travel sector TOP BUY
Asia Real Estate Tracker (02-Apr-2025): Warburg Pincus buys Japan living sector.
- Warburg Pincus invests in Japan living sector by acquiring a 16,000-room portfolio.
- Proprium Capital beats out Ho Bee Land with a $228M bid for an Australian homebuilder.
- Hillhouse’s Rava secures majority stake in Dash Living with $150M investment; Ex-Macquarie exec Robson to advise on ESR privatization.
Capgemini (CAP FP): Back to BPO?
- BPO provider WNS is reported exploring a potential sale after attracting acquisition interest. The company has a market capitalisation of USD 2.89bn and operates across various sectors.
- We deem Capgemini could afford to acquire WNS, but such a move may not align with its strategic focus, despite the diversification benefits that a hypothetical acquisition would offer.
- The rise of generative AI could transform BPO, but it remains unclear whether Capgemini will pursue acquisitions in BPO, given its past strategy of focusing on cloud, digital and engineering.
Advanced Energy Industries: The 5 Major Challenges That Can Hinder Growth In 2025! Major Drivers
- Advanced Energy Industries, Inc. reported its fourth quarter and full-year 2024 financial results, demonstrating a strong finish to the year after a rocky start.
- The company achieved notable highlights, with Q4 revenue reaching $450 million, an 11% increase sequentially and 3% year-over-year, driven by strong performance in semiconductor and data center computing markets.
- Advanced Energy’s semiconductor revenue, at $227 million, marked a 15% sequential increase and 19% year-over-year growth.
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