In today’s briefing:
- Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
- A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June
- Ecopro BM: Considering on a CB Issuance of 500 Billion Won
- Shanghai Longcheer: Leading ODM Vendor Leveraging Its Expertise for AR/VR
- [Baidu (BIDU US) Target Price Change]: Better Recovery with Leading Position in AIGC
- Amazon: Having A Long-Term View Doesn’t Mean You Should Disregard Immediate Risks
- IBM: Don’t Be Fooled By Recent Share Price Performance
Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
- In mid-February 2023, Citizen Watch (7762 JP) announced another buyback. It had averaged nearly two small buybacks a year for the past four years for a total of ¥10bn.
- This new one was ¥40bn, which assuming a 20% share price jump was 12% of ADV for a year. Bigly! We got the 20% jump, then not much more.
- But Citizen has been buying fiercely. In the first 25 days of trading they averaged 25.8% of volume and bought back 11.5% of shares out. There’s a story here.
A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June
- WCP will likely be included in the rebalancing of Samsung KODEX Secondary Battery Industry ETF in June. And we should consider the possibility of this happening to be quite high.
- We can expect a daily passive inflow of around 0.3x compared to WCP’s typical DTV. The practical correlation with the price should be higher than the theoretical level.
- We should consider using SKIET, which engages in the same business in the same sector, as a hedge. WCP/SKIET Long Short achieved considerable performance within the past week’s window.
Ecopro BM: Considering on a CB Issuance of 500 Billion Won
- According to Hankyung Business Daily, Ecopro BM Co Ltd (247540 KS) is considering on issuing a CB worth 500 billion won to various private equity and asset managment companies.
- We would be negative on the potential CB issuance of nearly 500 billion won by Ecopro BM.
- The potential issuance of this CB is a signal from the management that it is trying to capitalize on the recent sharp increases in share price to raise more capital.
Shanghai Longcheer: Leading ODM Vendor Leveraging Its Expertise for AR/VR
- Shanghai Longcheer Technology is a Chinese company that specializes in providing smart products and services including smart phone ODMs, tablets, VR/AR headbands, smart wearables and smart home products.
- Founded in 2022, the company is one of top three global integrated service providers of smartphone ODMs.
- Longcheer’s previous attempt to go public in 2018 was rejected, however, it has revived its IPO plans and in 2023, expressed its interest in seeking a public listing.
[Baidu (BIDU US) Target Price Change]: Better Recovery with Leading Position in AIGC
- We estimate that Baidu’s 1Q23/2023 bottom line would beat cons. by 13.2%/6.5%, mostly driven by better-than-expected recovery of ads business and cost-saving measures.
- We remain optimistic about Baidu’s AIGC leading position, because Baidu still gains the edge for its first-mover advantage and continuous investment.
- Maintain BUY rating and raise TP to US$175, implying 17.9X PE in 2023
Amazon: Having A Long-Term View Doesn’t Mean You Should Disregard Immediate Risks
- After losing nearly a third of its value, Amazon looks more attractive than a year ago.
- Investors should be mindful of recency bias when evaluating Amazon’s share price attractiveness.
- The unique business model also poses some risks that should be considered regardless of one’s investment horizon.
IBM: Don’t Be Fooled By Recent Share Price Performance
- IBM has delivered a positive return of nearly 20% over the past two years, but that has little to do with actual business performance.
- In addition to sluggish growth, IBM’s declining profitability remains a problem.Issues related to the company’s high debt load, low dividend coverage and an addiction to acquisitions have not gone away.
Being an IBM (NYSE:IBM) shareholder hasn’t been easy over the years as the market continues to make new highs, while IBM still trades at levels from 2010.
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