IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a>’s 1H22 net profit is expected to be in the range of HK$91-101 million, which represents YoY growth of 52-68%. Interims will be out in early August.</li>
<li>The clear sign of a retail recovery diminishes the prospect of the Cheng family’s low-ball offer of HK$1.88 per share hitting the 50%+ minimum acceptance threshold.</li>
<li>The offer price has not been declared final suggesting that the Cheng family retains some room to test shareholder appetite with an improved offer.   </li>
</ul>



Giordano International (709 HK)’s 1H22 net profit is expected to be in the range of HK$91-101 million, which represents YoY growth of 52-68%. Interims will be out in early August.
The clear sign of a retail recovery diminishes the prospect of the Cheng family’s low-ball offer of HK$1.88 per share hitting the 50%+ minimum acceptance threshold.
The offer price has not been declared final suggesting that the Cheng family retains some room to test shareholder appetite with an improved offer.   


Giordano’s Retail Recovery Will Force the Cheng Family into a Rethink

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The healthy FY22 result of <a href="https://www.smartkarma.com/entities/bosideng-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:6537:1" rel="noopener">Bosideng International Holdings (3998 HK)</a> showed its ability to solidify leadership position and ride through higher costs with margin expansion. </li>
<li>Management expects double-digit profit growth for FY23 as it pursues targeted "2+13" expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.</li>
<li>Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. </li>
</ul>


The healthy FY22 result of Bosideng International Holdings (3998 HK) showed its ability to solidify leadership position and ride through higher costs with margin expansion. 
Management expects double-digit profit growth for FY23 as it pursues targeted "2+13" expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.
Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. 


Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a> announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.  </li>
<li>The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.</li>
<li>David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.  </li>
</ul>



Giordano International (709 HK) announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.  
The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.
David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.  


Giordano’s Conditional Offer at HK$1.88

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a> entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 8 June.  </li>
<li>It is likely that the family of Cheng Yu Tung (the largest shareholder with a 24.4% stake) could either agree to sell into the offer or roll over its shares.</li>
<li>The median trailing EV/EBITDA multiple of the precedent transactions is 5.1x, implying a privatisation price of at least HK$2.46 per share.</li>
</ul>



Giordano International (709 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 8 June.  
It is likely that the family of Cheng Yu Tung (the largest shareholder with a 24.4% stake) could either agree to sell into the offer or roll over its shares.
The median trailing EV/EBITDA multiple of the precedent transactions is 5.1x, implying a privatisation price of at least HK$2.46 per share.


Independent Research, Turtles all the way down

Turtles all the way down

Independent Research

Writing short articles about mis-priced boring stocks around the world.

<ul>
<li>I think most (value) investors go through four stages: Stage 0: Buy stuff that goes up. Especially when a lot of people around you get rich from doing it.</li>
<li>Stage 1: Invest in the future! Buy into some fancy exciting new technology that will become big some day! The Cathie Wood stage. Usually stage 1 and stage 0 go hand in hand.</li>
<li>Stage 2: Buy at low PE multiples. Some are smart and skip the first two. This stage is not bad, it should lead to slight outperformance. Can be dangerous without wide diversification as a lot of them are value traps.</li>
</ul>


I think most (value) investors go through four stages: Stage 0: Buy stuff that goes up. Especially when a lot of people around you get rich from doing it.
Stage 1: Invest in the future! Buy into some fancy exciting new technology that will become big some day! The Cathie Wood stage. Usually stage 1 and stage 0 go hand in hand.
Stage 2: Buy at low PE multiples. Some are smart and skip the first two. This stage is not bad, it should lead to slight outperformance. Can be dangerous without wide diversification as a lot of them are value traps.


China

JNBY Design is a fashion and lifestyle group that designs, markets, retails, and sells fashion apparel, accessory products, and household goods. The company offers contemporary apparel, footwear, and accessories for women, men, and children, along with household products under brands like JNBY, CROQUIS, jnby by JNBY, LESS, POMME DE TERRE, and JNBYHOME. It was founded in 1994 and is headquartered in Hangzhou, the People's Republic of China.

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JNBY Design (3306 HK)

Giordano’s Retail Recovery Will Force the Cheng Family into a Rethink

The positive profit alert diminishes the prospect of the Cheng family’s offer hitting the 50%+ voting threshold. The offer has not been declared...

Arun George

Bosideng (3998 HK): Key Takeaways from Post-FY22 Result Call, Generally Optimistic

Bosideng logged solid FY22 profit and we are confident that its leadership position, , margin expansion capability, quality management and rising...

Osbert Tang, CFA

Giordano’s Conditional Offer at HK$1.88

We think there is a 50% chance that the VGO meets the 50%+ minimum acceptance condition. Buy up to HK$1.74 per share, which implies a 50% deal...

Arun George

Giordano's Possible Privatisation Price

The median trailing EV/EBITDA multiple of the precedent transactions is 5.1x, implying a privatisation price of at least HK$2.46 per share.

Arun George

Investing in HK Stocks

If you invest in Western markets this would be enough, but not in Asian markets where the trust factor is a lot lower, and where ownership is more...

Turtles all the way down

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