In today’s briefing:
- Nikkei 225 Rebal – Beating a Dead Horse
- Londian Wason Energy Tech: Planning an IPO in the US in 2024 (Impact on SK Inc)
- Micron Management Calls Memory Price Trough, Improving Pricing & Profitability Ahead
- GS AM Consortium/Kahoot: Waiving of Minimum Acceptance, Spread
- KYEC (2449.TT): Beneficiary of AI with Contribution of CoWoS Testing
- IStyle Growth Following Amazon Shareholding
- Offer Results and Interim Dividend
- ARLO: Preview of the Discounted Value
- Carta Holdings (3688 Jp) -Pushing Forward with Earnings Structure Improvements
- Take-Two Interactive Software: The Games Driving Their Billion-Dollar Bookings! – Major Drivers
Nikkei 225 Rebal – Beating a Dead Horse
- The September 2023 Nikkei 225 Rebalance is tomorrow at the close. This will engender a lot of buying of three names, and a lot of selling of 3 names.
- It will also engender a funding trade of nearly ¥460bn.
- I am going to beat the dead horse and warn about certain issues with this rebalance.
Londian Wason Energy Tech: Planning an IPO in the US in 2024 (Impact on SK Inc)
- According to SCMP, Londian Wason is getting ready for an IPO in the US in 2024. Londian Wason is planning to raise nearly US$500 million in pre-IPO funding and IPO.
- SK Inc owns about 30% stake in Londian Wason, a leading copper foil maker in China. It is estimated that SK Inc’s stake is worth about US$1.1 billion.
- In 2022, Londian Wason generated sales of 1.47 trillion won. Since SK’s investment in Londian Wason in 2019, the company’s sales has been growing at more than 50% per annum.
Micron Management Calls Memory Price Trough, Improving Pricing & Profitability Ahead
- Micron’s FY4Q23 results beat expectations. The company expects to return to a positive margin by FY2H24, however projected a higher FY1Q24 loss than consensus expected.
- As suggested would be the case in our pre-results piece, the company said it sees memory prices bottoming and expects improving pricing and profitability ahead for the industry.
- While next quarter’s guidance may be weaker than some expected, we believe the key take-away is that Micron is seeing a memory prices bottom.
GS AM Consortium/Kahoot: Waiving of Minimum Acceptance, Spread
- On 28 September, Kangaroo Bidco announced that it waives the Minimum Acceptance Condition (>90% acceptances) of its best and final NOK 35/share offer for Kahoot! ASA (KAHOOT NO).
- Acceptances so far total 69.29%. The only remaining conditions are regulatory approvals from both China and United States.
- As of early afternoon 28 September, spread is 0.63%/5.55% (gross/annualised). Although volumes are thin, I expect higher volumes in the last stretch of the offer period. Recommendation: long and tender.
KYEC (2449.TT): Beneficiary of AI with Contribution of CoWoS Testing
- NVIDIA Corp (NVDA US) drives King Yuan Electronics Co, Ltd. (2449 TT) stock price, but their growth is still limited in 2023F.
- King Yuan Electronics Co, Ltd. (2449 TT) acts as a buffer for Mediatek Inc (2454 TT) end demand during 2023F.
- Although it is not yet the time to reverse the downturn in 2023F, King Yuan Electronics Co, Ltd. (2449 TT) is expected to continue its upward trend throughout 2H23F.
IStyle Growth Following Amazon Shareholding
- @Cosme continues to carve out a significant share of the cosmetics market, with record sales last year.
- @Cosme appeals to a wide cross section of the population but this is about to get even wider once it starts selling via Amazon, its biggest shareholder.
- While there is debate about whether Amazon will increase its stake, what is certain is that Amazon will help drive iStyle’s sales growth.
Offer Results and Interim Dividend
- The Offer has been accepted for 19.2% of the current share capital, which means that EQT will control 98.2% of the shares.
- Those who tendered will receive a €3.2/share interim dividend (€2.72/share net) on 4 October, and €12.8/share on 6 October. EQT doesn’t intend to seek a squeeze-out.
- Investors in SUSE who have not tendered will become soonish shareholders in an unlisted company. Buying now means an 18.8% yield (net), and hoping for a future purchase offer.
ARLO: Preview of the Discounted Value
- ARLO reporting better than expected third quarter results would rely on paid subscriber additions remaining on their current trajectory
- The pause in ARLO’s stock price creates greater upside potential as ARLO demonstrates its ability to generate positive earnings and free cash flow with each passing quarter
- ARLO has released a new line up of Essential cameras. ARLO had previously indicated it would update its Essentials cameras this year ahead of the holidays
Carta Holdings (3688 Jp) -Pushing Forward with Earnings Structure Improvements
Specific measures for structural reforms are being implemented one after another.
CARTA Holdings had announced the withdrawal from unprofitable businesses (game and hometown tax payment businesses), a ¥1 bn reduction in SG&A expenses centered on fixed costs, the integration of four direct sales subsidiaries, and other streamlining measures leading up to the 2Q FY23/12 earnings announcement, and on September 5, 2023, the company’s board of directors newly approved a resolution to call for voluntary retirement.
While the macroeconomic downturn was particularly noticeable in the April-June 2023 earnings results, with advertising companies downwardly revising their forecasts one after another, no other company has implemented such drastic measures like CARTA Holdings has, and this move is worth highlighting for its future sharp recovery.
Take-Two Interactive Software: The Games Driving Their Billion-Dollar Bookings! – Major Drivers
- Take-Two Interactive Software delivered a mixed set of results for the previous quarter with revenues above the analyst consensus.
- Notable successes were observed in titles like Graft Theft Auto Online, Grand Theft Auto V, and NBA 2K23, surpassing projections.
- The launch of San Andreas Mercenaries for Grand Theft Auto Online brought fresh content, including new missions, vehicles, and fan-requested improvements.
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