Analyst

Steve

Equity Bottom-Up

<ul>
<li>According to various public news sources, Brazil's Suzano SA, the world's largest pulp maker, and a few private equity players may participate in the bidding for <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a>.</li>
<li>Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year.  </li>
<li>Two major drivers of share price - pulp price and competition - likely have reached the bottom and could improve in 2H23. </li>
</ul>


According to various public news sources, Brazil's Suzano SA, the world's largest pulp maker, and a few private equity players may participate in the bidding for Vinda International (3331 HK).
Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year.  
Two major drivers of share price - pulp price and competition - likely have reached the bottom and could improve in 2H23. 


Vinda International (3331 HK):  Worst Is Likely Over

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>Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-11-10/asia-pulp-paper-is-said-to-bid-for-stake-in-tissue-maker-vinda#xj4y7vzkg" target="_blank" rel="noopener">reported</a> Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring <a href="https://www.smartkarma.com/entities/essity-ab" target="_blank" data-smartkarma-citation="entities:28203:1" rel="noopener">Essity (ESSITYB SS)</a>’s controlling <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> stake at more than HK$20 per share.</li>
<li>Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.</li>
<li>Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.</li>
</ul>


Bloomberg reported Asia Pulp &amp; Paper is the latest party to have expressed interest in acquiring Essity (ESSITYB SS)’s controlling Vinda International (3331 HK) stake at more than HK$20 per share.
Vinda has three substantial shareholders. We think the most likely structure is a bidder acquiring Essity’s stake, which would trigger a mandatory general offer.
Vinda's recent update points to improving growth and margins. Peers and historical multiples imply a fair price range of HK$21-26 per share, a 7-32% premium to the last close.


Vinda International (3331 HK): Essity’s Stake Attracts More Potential Bidders

<ul>
<li>
<a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda International (3331 HK)</a> announced 3Q23 results, with net profit up 37% yoy as margins started to recover. </li>
<li>Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). </li>
<li>More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.</li>
</ul>



Vinda International (3331 HK) announced 3Q23 results, with net profit up 37% yoy as margins started to recover. 
Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). 
More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.


Vinda International (3331 HK):  Business Recovering As Expected

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On the 27 April, <a href="https://www.smartkarma.com/entities/vinda-international-holdings-limited" target="_blank" data-smartkarma-citation="entities:475:1" rel="noopener">Vinda (3331 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0427/2023042700007.pdf" target="_blank" rel="noopener">announced</a> its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See <a href="https://www.smartkarma.com/compose/insight/115530/Essity%20Mulls%20Holding%20In%20Vinda%20(3331%20HK).%20Read%20more:%20https:/skr.ma/nexgL" target="_blank" rel="noopener">Essity Mulls Holding In Vinda (3331 HK). </a>
</li>
<li>That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil's Suzano, the world's largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.</li>
<li>The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. </li>
</ul>


On the 27 April, Vinda (3331 HK) announced its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See Essity Mulls Holding In Vinda (3331 HK). 

That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil's Suzano, the world's largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.
The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. 


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

We continue to believe global equities (ACWI-US) are likely to test the recent low made on March 23, with an undercut of roughly 10% also in the cards. This expectation is supported by price action during prior major waterfall declines in past recessionary periods. With the global economy likely headed for a recession (or worse) we believe it is important to stay with the Sectors that have been outperforming amid the COVID-19 pandemic as we believe they are likely to continue outperforming. That means we are sticking primarily with Staples, Health Care, and Technology. We are also expanding our recommendations to include bottom-up ideas within several other Sectors.

Global Equities (ACWI-US) Likely to Retest the March Low

Hong Kong

Vinda International is a major hygiene company in Asia, specializing in the research, development, production, and sale of high-quality tissue paper products and personal care items. Its product lines include bathroom tissue, facial tissue, feminine care, baby care, and incontinence products. The company is headquartered in Hong Kong and was founded in 1985.

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Vinda International (3331 HK)