Smartkarma Daily Briefs

• Last week, shareholders of Seven & I Holdings (3382 JP) rejected all four of the board nominees proposed by ValueAct.
• ValueAct, seeing their higher vote count as a modest success, sent a letter to Seven & I, requesting a resumption of discussions despite the failed attempt to remove senior leadership.
• We think the company is unlikely to seriously consider Value Act’s proposals any longer, indicating the end of the investor activism campaign.

• FEMSA has placed c.€3.3 billion of Heineken NV (HEIA NA) and Heineken Holding NV (HEIO NA) shares and tap €250 million of existing 2026 Exchangeable bonds. The placement removes a major overhang.
• The holding structure (equivalence 1 HEIO NA ~ 1 HEIA NO) allows the Heineken family to control the second largest brewer worldwide, with just a 27.3% economic interest (post-FEMSA’s placement).
• The discount has tightened to 15.8%, still above the 10.4% average of the last ten years, and rather large considering such a simple structure.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Vedanta Resources
2. China Jinmao Holdings
3. Lifestyle International Holdings
4. Geely Auto
5. First Pacific Co

and more…

• The most important factor in increasing stock valuations is overseas investors, and a clue can be found in exploring what kind of companies they tend to invest in.
• It is a company with high cash holdings and a high growth policy score, i.e., a company that generates ample cash flow. This should be considered a necessary condition.
• As foreign ownership increases, shareholder returns such as share buybacks will also be implemented to review cash allocations and improve board practices, so these can be considered byproducts.