Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Nike Inc. is at a pivotal moment as new CEO Elliott Hill endeavors to reverse a persistent sales slump and restore the company's dominance in the highly competitive sportswear market.</li><li>Hill, who returned to Nike after a three-decade career with the company, has pledged to refocus on sports-centric innovation and strengthen the brand’s core offerings.</li><li>However, his task is compounded by significant missteps from his predecessor, John Donahoe, and mounting competitive threats that threaten Nike’s market position.</li></ul>

Nike Inc. is at a pivotal moment as new CEO Elliott Hill endeavors to reverse a persistent sales slump and restore the company's dominance in the highly competitive sportswear market.Hill, who returned to Nike after a three-decade career with the company, has pledged to refocus on sports-centric innovation and strengthen the brand’s core offerings.However, his task is compounded by significant missteps from his predecessor, John Donahoe, and mounting competitive threats that threaten Nike’s market position.

Nike’s Shocking Struggles: Will CEO Elliott Hill's Turnaround Strategy Work?

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Hong Kong market quietly broke its downward trend channel last week, however the HSI met strong resistance at 18200 (100 Week Moving Average).</li>
<li>
<a href="https://www.smartkarma.com/entities/picc-property-casualty-h" target="_blank" data-smartkarma-citation="entities:350:1" rel="noopener">PICC Property &amp; Casualty H (2328 HK)</a> and <a href="https://www.smartkarma.com/entities/china-petroleum-chemical-h" target="_blank" data-smartkarma-citation="entities:369:1" rel="noopener">China Petroleum &amp; Chemical (386 HK)</a> broke to new highs relative to MSCI indices.  Sinopec may benefit from stronger RMB in 2H24.
</li>
<li><a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl Group Holdings (2313 HK)</a> had a short-term turnaround from its downtrend.  The company reported growth in sales and better margins in 2Q24.</li>
</ul>


Hong Kong market quietly broke its downward trend channel last week, however the HSI met strong resistance at 18200 (100 Week Moving Average).

PICC Property &amp; Casualty H (2328 HK) and China Petroleum &amp; Chemical (386 HK) broke to new highs relative to MSCI indices.  Sinopec may benefit from stronger RMB in 2H24.

Shenzhou Intl Group Holdings (2313 HK) had a short-term turnaround from its downtrend.  The company reported growth in sales and better margins in 2Q24.


Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 3)

Analyst

Steve

Shenzhou Intl Group Holdings / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nike-inc-cl-b" target="_blank" data-smartkarma-citation="entities:6658:1" rel="noopener">Nike (NKE US)</a> reported better than expected 1Q24 results this morning, with the stock up 8% in after market trading. </li>
<li>Nike's inventories declined by 10% yoy during the quarter, which bodes well for <a href="https://www.smartkarma.com/entities/shenzhou-intl-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10415:1" rel="noopener">Shenzhou Intl Group Holdings (2313 HK)</a>, as sales to Nike made up 30% of Shenzhou's sales. </li>
<li>Shenzhou is trading at 15x 2024E PE, compared to an average of 21x forward PE over the last decade. </li>
</ul>



Nike (NKE US) reported better than expected 1Q24 results this morning, with the stock up 8% in after market trading. 
Nike's inventories declined by 10% yoy during the quarter, which bodes well for Shenzhou Intl Group Holdings (2313 HK), as sales to Nike made up 30% of Shenzhou's sales. 
Shenzhou is trading at 15x 2024E PE, compared to an average of 21x forward PE over the last decade. 


Shenzhou Intl (2313 HK):  Nike's Inventories Declined By 10% Yoy in 1Q24

Topsports International Holdings / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/topsports-international-holdin" target="_blank" data-smartkarma-citation="entities:28153:1" rel="noopener">Topsports International Holdin (6110 HK)</a> is a pure-play on Nike and Adidas retail sales in China, as it is a leading retail partner of Nike and Adidas in China.</li>
<li>Nike's Greater China sales grew 12% yoy during the most recent quarter.  During the earnings call, Nike management was bullish on the prospects of the China business.</li>
<li>The company currently trades at 13x forward PE, with a forward dividend yielf of 7%.  </li>
</ul>



Topsports International Holdin (6110 HK) is a pure-play on Nike and Adidas retail sales in China, as it is a leading retail partner of Nike and Adidas in China.
Nike's Greater China sales grew 12% yoy during the most recent quarter.  During the earnings call, Nike management was bullish on the prospects of the China business.
The company currently trades at 13x forward PE, with a forward dividend yielf of 7%.  


Topsports (6110 HK):  Beneficiary Of An Improving Nike China

President, Vision Research

Robert C Prather Jr

President

Vision Research

Vision Research was formed in 2004 with the vision of generating the best possible fundamental analysis and investment research for smid cap US equities. In 2008, we broadened our coverage to include mid/large cap US stocks.  After researching a  few ideas outside the US each year for a number of years, we launched a dedicated non-US equity product at the end of 2015.  This was followed by the introduction of a product focused on IPOs in mid-2017.

Fundamental Insight

<ul>
<li>Key customers &amp; their retail partners battling excess inventory, waning consumer demand, and market share losses in certain geographies</li>
<li>Plans for capacity expansion amid demand uncertainties and alt data and macro picture may prove aggressive and along with risks of reshoring/nearshoring &amp; friend-shoring may prove margin dilutive</li>
<li>Consensus expectations for 2H23 and 2024 appear overly optimistic and valuation is not cheap given the growth profile</li>
</ul>


Key customers &amp; their retail partners battling excess inventory, waning consumer demand, and market share losses in certain geographies
Plans for capacity expansion amid demand uncertainties and alt data and macro picture may prove aggressive and along with risks of reshoring/nearshoring &amp; friend-shoring may prove margin dilutive
Consensus expectations for 2H23 and 2024 appear overly optimistic and valuation is not cheap given the growth profile


Shenzhou (2313 HK): Contract Mfr for Leading Sportswear Brands Facing Challenging Demand Outlook.

United States

NIKE, Inc. designs, develops, and markets athletic footwear, apparel, equipment, and accessory products for men, women, and children. The Company sells its products worldwide to retail stores, through its own stores, subsidiaries, and distributors.

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Nike (NKE US)

Nike’s Shocking Struggles: Will CEO Elliott Hill's Turnaround Strategy Work?

Nike Inc. is at a pivotal moment as new CEO Elliott Hill endeavors to reverse a persistent sales slump and restore the company's dominance in the...

Baptista Research

Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 3)

Hong Kong market broke its downtrend however it met strong resistance just above 18k. PICC and Sinopec broke to new highs relative to MSCI...

David Mudd

Shenzhou Intl (2313 HK): Nike's Inventories Declined By 10% Yoy in 1Q24

Note the strong share price momentum. Shenzhou (2313 HK) remains the best proxy for gaining exposure to the global sportswear sector.

Steve

Topsports (6110 HK): Beneficiary Of An Improving Nike China

Topsports International (6110 HK) is a play on improving Nike sales in China, trading at 13x forward PE and 7% forward dividend yield.

Steve

Shenzhou (2313 HK): Contract Mfr for Leading Sportswear Brands Facing Challenging Demand Outlook.

Consensus estimates do not account for customer, retailer, Asian market share shift, macro, alt data and geopolitical risks.

Robert C Prather Jr

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Market Cap (USDm)

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Nike’s Shocking Struggles: Will CEO Elliott Hill's Turnaround Strategy Work?

Nike Inc. is at a pivotal moment as new CEO Elliott Hill endeavors to reverse a persistent sales slump and restore the company's dominance in the...

Baptista Research

Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 3)

Hong Kong market broke its downtrend however it met strong resistance just above 18k. PICC and Sinopec broke to new highs relative to MSCI...

David Mudd

Shenzhou Intl (2313 HK): Nike's Inventories Declined By 10% Yoy in 1Q24

Note the strong share price momentum. Shenzhou (2313 HK) remains the best proxy for gaining exposure to the global sportswear sector.

Steve

Topsports (6110 HK): Beneficiary Of An Improving Nike China

​Topsports International (6110 HK) is a play on improving Nike sales in China, trading at 13x forward PE and 7% forward dividend yield.

Steve

Shenzhou (2313 HK): Contract Mfr for Leading Sportswear Brands Facing Challenging Demand Outlook.

Consensus estimates do not account for customer, retailer, Asian market share shift, macro, alt data and geopolitical risks.

Robert C Prather Jr

Topsports International (6110 HK) is a play on improving Nike sales in China, trading at 13x forward PE and 7% forward dividend yield.