In today’s briefing:
- The Beat Ideas- Archean Chemical: The Bromine Leader of India
- Chiba Bank – Short Term Borrowing Surges, Just at the Wrong Time
- Prodia (PRDA IJ) – Increasingly Esoteric
- Closing Lufax
- Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – June 2024
- Taiwan Tech Weekly: TSMC’s 3nm Shortage & Upcoming Price Hikes; Samsung Unveils AI Catch-Up Plan
- Miroku Jyoho Service (TSE:9928)
- Tech Supply Chain Tracker (18-Jun-2024): H3C partners with Foxconn on Malaysia data center investment.
- Avant Group Corporation (TSE:3836)
- Xero’s Price Hikes
The Beat Ideas- Archean Chemical: The Bromine Leader of India
- Archean Chemical Industries (ACI IN) is largest producer of Bromine and largest exporter of Bromine from India.
- The company is doing brownfield and greenfield capex in Bromine derivatives which are Margin accretive.
- Archean Chemical Industries (ACI IN) is confident about 30% volume growth in FY25.
Chiba Bank – Short Term Borrowing Surges, Just at the Wrong Time
- Short term borrowing rose 2.3x in the past four quarters, alongside rising interest rates
- During this time, long term borrowings were actually down, so no locking in of low rates
- As such, Chiba is not fully, or hardly benefiting from BOJ policy changes, with NIM down
Prodia (PRDA IJ) – Increasingly Esoteric
- Prodia (PRDA IJ) suffered from a seasonal downturn in 1Q2024 as Lebaran slowed its testing volumes from corporates, with opex related to Prodia Digital impacting margins in the quarter.
- The company’s testing mix is shifting in a meaningful way towards esoteric testing, which commands significantly higher margins plus it is building out its genomic testing, which yields higher returns.
- Investment in Prodia Digital should slow in the coming quarters, helping to improve margins. with new outlets driving revenues. Valuations are unjustifiably low with 2Q2024 numbers likely to be positive.
Closing Lufax
- It has come to my attention that Lufax management has recently altered the terms of their convertible debt: Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.
- Based on the terms and conditions of the Ping An Convertible Promissory Notes, as a result of the Special Dividend, the Conversion Price will be adjusted from US$12.76 per Share as at the date of this circular to US$2.32 per Share upon settlement of the Special Dividend, and thus, upon full conversion, the Ping An Convertible Promissory Notes can be converted into a maximum number of 421,077,586 Shares (the “Conversion Shares”).
- The Company considers that the adjustment formula is in line with market practice for anti-dilution provisions in convertible securities.
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – June 2024
- We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
- Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
- While HK stocks have weak data, we persist in being long these names, keeping in mind their long-term outlook and deep value.
Taiwan Tech Weekly: TSMC’s 3nm Shortage & Upcoming Price Hikes; Samsung Unveils AI Catch-Up Plan
- TSMC’s 3nm Shortage: Capacity Filled Until 2026 Amid Surging Demand; Strategic Price Hikes Coming Soon
- Top Gainers/Losers: Taiwan Tech Rallies Alongside TSMC, Apple, Nvidia, ARM Strength
- Samsung Unveils Pathway to Catch Up With TSMC in the AI Foundry Race
Miroku Jyoho Service (TSE:9928)
- Miroku Jyoho Service (TSE:9928) , which offers on-premises, hybrid (IaaS) and cloud accounting software to Japanese enterprises of various sizes.
- Our purchase is centred around the business achieving further transition to the cloud, allowing for substantial margin improvement through the accumulation of high gross margin SaaS revenue.
- This transition has impacted firm profitability in the short term due to the shift in revenue recognition as quoted below by the company
Tech Supply Chain Tracker (18-Jun-2024): H3C partners with Foxconn on Malaysia data center investment.
- H3C and Foxconn partner in Malaysia for data center investment; Tsinghua Unigroup continues acquisitions in the tech industry.
- Chinese automakers urged to invest in cleaner technologies, form strategic partnerships, and comply with EU regulations under new EV tariffs.
- Microsoft & Qualcomm exceed pre-orders with AI-powered Copilot+ PC; Hyundai plans to list Indian arm; SEMICON India to showcase advancements in semiconductor industry.
Avant Group Corporation (TSE:3836)
- Avant was founded in 1997 by the current CEO Tetsuji Morikawa and is a Japanese holding company of financial and non-financial software which have the collective goal of assisting its clientele to increase corporate value.
- This includes ‘Diva’ as Japan’s foremost (43% market share) consolidated accounting software and board meetings platform in addition to ‘Avant’, a management system for corporate value enhancement through consolidation of information (Avant Cruise) , charting (Avant Chart) , and corporate value enhancement (Avant Compass).
- Lastly, there is ‘Zeal’ which includes several non-financial platforms that help organise and integrate (with Avant Cruise) from external sources. And interestingly, Avant also owns and operates Internet Disclosure Co, which runs Kaijinet, a site I have frequently visited over the years.
Xero’s Price Hikes
- This is the first blog post on the Hurdle Rate website, a series of blog posts which I intend to cover specific topics rather than unit trust investments.
- From time to time I may consider company deep dives, but predominately I want to make these posts more specific in nature around the global landscape in professional and financial services.
- Today’s post is going to talk about the recent bombshell that is Xero’s price hikes, a controversial topic here in Australia for the accounting industry, and a perfect start to the blogroll given my background and focus.
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