In today’s briefing:
- JPX Nikkei 400 Index Rebalance: Some Big Impact Names
- Samsung Electronics: Prefs Need to Catch Up
- TOPIX Inclusions: Who Is Ready (Aug 2023)
- KT Corp: A New CEO Nominated and Stronger Than Expected Results in 2Q 2023
- [ACM Research (ACMR US, BUY, TP US$30) Review]: Beat on Order Pull-In and Favorable Foreign Exchange
- First Solar Inc.: Can The New Bifacial Solar Panel Power The Future? – Major Drivers
- VeriSign Inc.: 4 Reasons Behind the Sustained Strength! – Financial Forecasts
JPX Nikkei 400 Index Rebalance: Some Big Impact Names
- There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
- Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
- There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.
Samsung Electronics: Prefs Need to Catch Up
- Over the last year, the discount of Samsung Electronics Pref Shares (005935 KS) to Samsung Electronics (005930 KS) has increased from 5% to 17%.
- The preferred shares have adequate liquidity, a large issue market cap, and now trade at a much higher dividend yield. A special dividend will further increase the dividend yield differential.
- Breaking from history, the preferred shares discount has continued to increase as the stock has moved higher. With the preferred shares trading near its widest discount, that could change.
TOPIX Inclusions: Who Is Ready (Aug 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Plus Alpha Consulting (4071 JP) will be included in TOPIX at the end of August 2023 and so far the stock has performed negatively as expected (see link).
- Our long-term TOPIX pre-event name CELSYS (3663 JP) has seen its share price decline sharply in the last few weeks which raises some important questions.
KT Corp: A New CEO Nominated and Stronger Than Expected Results in 2Q 2023
- KT Corp (030200 KS)’s shares were up 4.1% today to 32,000 won driven by better than expected results in 2Q 2023 and the nomination of a new CEO.
- KT has nominated Kim Young-Seop, the former CEO of LG CNS as the new CEO of the company.
- KT Corp has attractive valuations. It is trading at only 2.6x EV/EBITDA, 6.7x P/E, and 0.5x P/B in 2023. These valuation multiples are much cheaper than SK Telecom.
[ACM Research (ACMR US, BUY, TP US$30) Review]: Beat on Order Pull-In and Favorable Foreign Exchange
- ACMR reported C2Q23 top-line, non-GAAP EBIT, and non-GAAP net profit 22%, 130%, and 209% vs. our est., and 25%, 228%, and 248%, respectively.
- As FY guidance was unchanged, we suggest that the revenue beat was due to tool delivery faster than expected (i.e., order pull-in).
- We maintain our FY23 revenue estimate, but raise our net margin estimate to reflect the better-than-expected impact of USD appreciation on profitability.
First Solar Inc.: Can The New Bifacial Solar Panel Power The Future? – Major Drivers
- First Solar delivered an all-around beat in the most recent quarterly results.
- Driven by supportive industrial and trade policies, compelling market fundamentals, and robust customer demand, First Solar continued investing and expanding in U.S. domestic manufacturing.
- First Solar purchases Evolar AB in the search for next-generation solar cells.
VeriSign Inc.: 4 Reasons Behind the Sustained Strength! – Financial Forecasts
- VeriSign managed to exceed analyst expectations in terms of revenue as well as earnings.
- The quarter included solid financial results and renewing the.net registry agreement with ICANN.
- The financial results in the quarter showed continued strength of its business during the uncertain macroeconomic period.
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