Smartkarma Daily Briefs

• In my stub monitor flagged in StubWorld: Toyota Industries/Motors, GMO Internet, I see Melco International Development (200 HK) is trading “cheap” to Melco Resorts & Entertainment (MLCO US).
• Last month, Melco proposed one new rights share for two existing shares at a subscription price of HK$1.0286/share, a 72.93% discount to undisturbed, and a 64.28% discount to the TERP.
• Lawrence Ho will backstop ~54% of the rights, if need be. Depending on the level of support for the rights, expect Lawrence to further chip away against minorities.

• Total travelers grew by 26% YoY in China in 1Q25, up from 13% YoY in 4Q24.
• Trip.com’s total revenue grew by 16% YoY in 1Q25, among which hotel booking grew by 23%.
• We believe operating margin will be stable, as the growth of sales and market expense has been slowing down.

• Given the rapid aging of Japan’s population, if the current composition of the board of directors continues, the number of directors will further age in the future.
• A board that embraces diverse age range is likely to embrace people with diverse backgrounds and skillsets, and a diverse board composition is likely to have positive impact on management.
• In Japan, with strong peer pressure, CEOs controlling human resources, % independent directors and female board members in 40% and 15%, many companies are hesitant to hire talent they need.

• JD.com C1Q25 revenue exceeded our estimate/consensus by 2.4%/4.3% and adjusted NI by 19%/20%, thanks to better-than-expected cross selling from trade-in subsidies and gross margin;
• We, however, raise full year new businesses operating loss from RMB(6bn) to RMB(12bn). We estimate 80% of the loss will come from food delivery;
• In lieu of the continued uncertainty in take-out investments, we remove JD.com from TOP BUY while cut TP from US$58 to US$54.

• Welspun Living targets INR 15,000 crore revenue by FY27, focusing on debt reduction and expanding its non-core businesses, diversifying its growth and financial resilience.
• The company’s emphasis on sustainability and innovation, including renewable energy initiatives, positions it as a leader in eco-friendly home textiles, responding to market shifts.
• Despite fierce competition, Welspun Living’s strong brand portfolio and global presence reaffirm its leadership in the home textiles market, making it well-positioned for long-term growth.

The key takeaways from Topps Tiles’ (TPT’s) H125 results are: 1) there is meaningful progress on the Mission 365 initiatives announced one year ago; 2) the company is back into revenue and profit growth despite inflationary cost pressures, demonstrating its operational gearing; and 3) management is in the early stages of being able to manage CTD Tiles, which is much needed following a prolonged CMA review during which trading has been relatively weak. The more encouraging trends in trading that were evident in H125 have continued into strong current trading in the first seven weeks of H225, with 9.5% y-o-y revenue growth at the group level.

Borussia Dortmund’s strong Q325 results reflect a relatively busy football schedule with just under one-half of the cumulative home games of the season played in the period. It is safe to say the most important result came after the Q325 results were published, as the first team qualified to play in the Champions League in 2025/2026. An impressive surge with seven wins in the last eight games took the club to the treasured fourth position, having been in 11th position prior to those games and fifth ahead of the final game. The last time the team was in the top four of the Bundesliga this season was after the third game. The replacement of the first team coach at the end of January 2025 certainly has paid off. We make no change to our estimates.

• Key 1Q25 takeaways include: 1) rising trade-in activity continues to drive growth, powerful lead indicators around ongoing government subsidies on new mobile phones, accelerating momentum with JD.com, and continued growth in AHS offline stores 2) more recent initiatives to enhance AHS Recycle’s brand, with a focus on the company’s comprehensive suite of services and competitive pricing, likely further stimulates growth in 1P business volumes and related contributions and 3) while management remains focused on reinvesting in the business to further accelerate top line growth, we look for senior officials to increasingly return excess capital to shareholders as profitability continues to scale via ongoing share repurchases and the potential for introducing a regular quarterly dividend in the not-too-distant future.

• Eastroc Beverage Group (605499 CH) (EB), a China-based functional beverage company, aims to raise around US$1bn in its H-share listing.
• According to Frost & Sullivan (F&S), EB has been the largest functional beverage company in China in terms of sales volume for four consecutive years since 2021.
• In this note, we look at its past performance and other deal dynamics that might impact the listing.

• We are reiterating our Buy rating, projections and $58 price target for Build-A-Bear Workshop after visiting stores in Connecticut and Long Island.
• After a strong Mother’s Day, the company has pivoted to the traditional graduation season with exciting new looks and “furry friends” to drive material purchases.
• However, the big new driver is the launch of the Build-A-Bear Fruit Stand display, which combines furry friends and Mini Beans into a compelling and colorful offering to drive multiple seasonal purchases.