In today’s briefing:
- Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept
- China Internet Weekly (13Mar2023): ZTO, Meituan, Alibaba, Trip.com, Dada, JD.com
- Shorting Event on LX International’s Potential Rights Offer for HMM Takeover
- SK Networks: 100 Billion Won in Share Buyback + 70 Billion Won in Treasury Shares Cancellation
- JD Logistics (2618 HK): 4Q22, Outside Customer Revenue Continued Surging, Buy
- ZKH Group IPO: The Bull Case
- MSCI Korea Potential Adds & Deletes in May 2023 Amid Heightened Market Volatility
- Monotaro (3064) | Pricing in Downside Risks
- Parker-Hannifin Corporation: Initiation of Coverage – The Meggitt Synergies & Other Drivers
Halcyon Agri’s Offer: IFA Says Fair. Independent Directors Say Accept
- Halcyon Agri (HACL SP) has issued the circular in response to China Hainan Rubber Industry (601118 CH)‘s conditional MGO.
- The IFA reckons the Offer is fair and reasonable. The Independent Directors recommend that shareholders accept the Offer.
- The first close is the 24 March. Hainan Rubber is under no obligation to extend the Offer beyond this date.
China Internet Weekly (13Mar2023): ZTO, Meituan, Alibaba, Trip.com, Dada, JD.com
- Grizzly Research LLC publishes a short selling report on ZTO.
- Meituan plans to shift car hailing from direct operation to a platform for third-party operators.
- Dada, which was acquired by JD.com last year, posts good 4Q22 results.
Shorting Event on LX International’s Potential Rights Offer for HMM Takeover
- The opinion rapidly spreading in the local market is that LX International is increasing its available shares by twice the amount to plan a paid-in increase for the HMM acquisition.
- The size of an offering is estimated at ₩1.2T to ₩1.5T. The short-term price impact will undoubtedly be significant for LX International having a market cap of ₩1.2T.
- The market has already witnessed a preemptive position buildup targeting this. However, since there is a time gap until the offering announcement, an entry point opportunity may still be available.
SK Networks: 100 Billion Won in Share Buyback + 70 Billion Won in Treasury Shares Cancellation
- SK Networks announced that it will repurchase 100 billion won in common shares and also cancel nearly 70 billion won of existing treasury shares.
- The combined share buyback and treasury shares cancellation will represent nearly 14% of the company’s total outstanding shares.
- The combined share buyback and treasury shares cancellation which will represent nearly 14% of the company’s total outstanding shares, will likely have a positive impact on SK Network’s share price.
JD Logistics (2618 HK): 4Q22, Outside Customer Revenue Continued Surging, Buy
- Total revenue increased by 41% YoY and revenue from external customers increased by 69% YoY in 4Q22.
- We believe total revenue will grow by 26% in 2023 and 17% in 2024.
- We also believe the stock has an upside of 58% and a price target of HK$20.
ZKH Group IPO: The Bull Case
- ZKH Group (ZKH US), a leading MRO (maintenance, repair, and operations) procurement service platform in China, is pre-marketing an NYSE IPO to raise US$200-300 million.
- The ZKH platform is for enterprise customers and the GBB platform is for micro businesses. Key backers include Tencent (700 HK) and Tiger Global.
- The key elements of the bull case rest on large addressable markets, solid customer loyalty, improving gross margin, lower operating losses and a strong balance sheet.
MSCI Korea Potential Adds & Deletes in May 2023 Amid Heightened Market Volatility
- In this insight, we discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement in May 2023 amid heightened market volatility.
- The potential inclusions (high probability) in the MSCI Korea index in May are Hanwha Aerospace and Ecopro. Potential adds (low probability) include POSCO International, Cosmo AM&T, and SM Entertainment.
- The three most likely exclusions in the MSCI Korea index in May include Lotte Shopping, SD Biosensor, and S1 Corporation.
Monotaro (3064) | Pricing in Downside Risks
- We reassess our long-term financial model for Monotaro following 2 consecutive months of weak monthly data
- Just two months into the new fiscal year, but YTD sales growth of 13% is far short of the full year target
- Our DCF valuation highlights further 21% downside assuming 10y CAGR of 10.5%
Parker-Hannifin Corporation: Initiation of Coverage – The Meggitt Synergies & Other Drivers
- This is our first report on Parker-Hannifin Corporation, a global leader in motion and control technologies.
- Parker-Hannifin delivered strong operating performance throughout the second quarter of the current fiscal and delivered an all-around beat.
- We initiate coverage on the stock of Parker-Hannifin Corporation with a ‘Hold’ rating.
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