Smartkarma Daily Briefs

• At the current stage, with the three-month review period almost complete, there will likely be two additions and two deletions: 
• Additions: KG Mobility (003620 KS) & Nexen Tire Corp (002350 KS) Deletions: Sebang Global Battery (004490 KS) & Kumho HT Inc (214330 KS)
• In the past few years, KRX Autos has shown a significant price impact for constituent changes on the rebalancing trading day. This pattern will likely repeat in the upcoming rebalancing.

• Genda Inc (9166 JP) raised around US$100m in its Japan IPO.
• Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
• In this note we will talk about the trading dynamics.

• VW’s long-term software dilemma caused delays of new EV model launch. Thus, leveraging established software capability of Xpeng could help VW catch up and shorten its R&D cycle.
• We see two benefits for Xpeng: 1) a new revenue stream from tech licensing and potential reduction of supply chain costs; 2) VW’s endorsement  could help Xpeng’s overseas expansion.
• We think the potential of Xpeng’s high-margin tech licensing being opened to more VW models and other OEMs. Our TP implies 2.5x 2024PS

• Multi Bintang Indonesia (MLBI IJ) delivered a steady Q2 2023 with revenues up 16.6% YoY and profits up 32% YoY, aided by revenue growth on alcoholic beverages of 20% YoY. 
• EBITDA margins expanded to 50% in Q2 2023 from 45% in Q1 2023 but remained flat YoY. We expect margins to continue expanding in subsequent quarters as revenues grow seasonally.
• Trading at 15.8x/13x FY23e/24e PE, with a 6.3%/7.7% dividend yield, we believe this is an excellent play on tourism recovery in Indonesia. 

• Unless 10% male/female of lawmakers, is changed, the quota system cannot be expected to be introduced. It’s not easy to replace male incumbents who have vested interests with female candidates.
• Gender wage gap relies on the low number of female managers, but there’s no sense of acceleration in the government’s goal of achieving 30% of female managers by 2030.
• The gender gap in higher education is affecting female managers and the gender wage gap. It’s important to solve this fundamental problem by providing equal higher educational opportunities through scholarships.

• The deal looked dead in the water during a week until, on 27 July, Global Auto Holdings raised its offer for Lookers PLC (LOOK LN) by 8%, to 130p/share (46.6% premium).
• The increased offer will now be carried out via takeover, and represents an implied EV of £968 million, 6.1x EV/Fwd NTM EBITDA and 9x Fwd P/E (on latest Consensus figures).
• Considering the number of failed deals in the sector, I believe the offer looks very decent and the deal should now close. Spread is 5.2%/23.7% (gross /annualised). Long. 

Tata Motors Limited (TML) has reported stronger Q1/23-24 results than expected, thanks to Jaguar Land Rover’s (JLR) impressive performance. Specifically, this business delivered much higher sales volumes, revenue, profits and FCF. In addition, better selling prices and lower raw material costs drove exceptional improvement in profitability. The financial risk profile continued to strengthen, with lower net debt and higher earnings. Liquidity remains sound.

We expect the company to continue performing well for the rest of the year. JLR’s performance in the prior year was constrained by the semiconductor supply shortage, which continues to ease. JLR also demonstrated that demand for its products is still strong. The order book remains high, providing visibility on demand. In addition, we anticipate that JLR’s re-organisation with three separate brands will enhance brand image. We see Range Rover moving up to the luxury segment from the premium segment, with an increase in selling prices and higher margins. We believe that the financial risk profile of the group and JLR will continue improving.

Britvic reported a further sequential, ie quarter-on-quarter, improvement in underlying revenue growth in Q323, albeit against a slightly easier comparator from Q322, with positive price/mix in all geographies and volume growth in all countries except for negative or ‘soft’ volumes in Brazil and France, respectively. After a somewhat wet July, ie post this trading update, in the UK’s peak trading period, it is reassuring that management confirmed FY23 revenue and EBIT will be in line with market expectations. The announced two bolt-on acquisitions are consistent with the strategy of leveraging Britvic’s existing infrastructure into new drinks categories and generating revenue and operational synergies.