Consumer

On the 23 June, the Cheng family made an underwhelming voluntary conditional Offer of $1.88/share for Giordano International (709 HK).
The Offer is conditional on the family getting to more than 50% via tendering, and the Cheng’s (and concert parties) control 24.57%.
The Composite Document is now out with a first close on the 5 September. The Offer Price has now been declared final. That’s a surprise.

Merger Arb Mondays (15 Aug) – Lifestyle Intl, EVOC, Giordano, Yashili, Alliance Aviation, ResApp

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
Highest spreads are 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Resapp Health (RAP AU), Infomedia Ltd (IFM AU), Lifestyle International Holdings (1212 HK).
Lowest gross spreads are Dongzheng Automotive Finance (2718 HK), Excelpoint Technology (EXLP SP), MyDeal.com.au Ltd (MYD AU), Cocoaland Holdings (COLA MK), Giordano International (709 HK), China VAST.

Keepers Holdings: Exciting Soundbites From Management Call for H1 2022

By Sameer Taneja

The management of The Keepers Holdings, Inc. (KEEPR PM) highlighted bullish trends from their call for H1 2022 for on-premise and travel retail that bode well for H2 2022.
We believe the company is on the cusp of backward integration by acquiring its supplier, Bodegas William and Humbert (in Spain). We believe this is an exciting future catalyst.
The stock trades at 6x PE FY22e (ex-cash) with seven bn+ pesos of cash on the balance sheet representing 37% of market capitalization. We see significant upside ahead.

Hyundai Mobis: Plans to Spin Off Parts & Module Units

On 12 August, it was reported in numerous local media that Hyundai Mobis (012330 KS) plans to spin off its auto parts and module business units into two separate entities.
Hyundai Mobis has not formally announced these spin offs although local media mentioned that these spin off plans have recently been finalized.
These spin-offs by Hyundai Mobis also are likely to be preludes to the Hyundai Mobis/Hyundai Motor Group reorganization. We remain positive on Hyundai Mobis.

CTG Duty Free (601888 CH) H-Share IPO: 2Q22/Outlook Updates and Valuation Views

By Osbert Tang, CFA

At the indicated price range, or 24.8-28.6x PER for FY22F and 16.7-19.2x for FY23F, the H-share IPO of China Tourism Group Duty Free Corp (601888 CH) is not attractive enough.
2Q22 net profit is worse than it appears. Recent Sanya lockdown has wiped off half of the summer peak season which may even negatively affect demand during Golden Week.
Consensus forecasts are too optimistic and there may be another 15% downside. Given current macroenvironment, market volatility and earnings uncertainty, risk outweighs return even at the low-end of price range.

China Internet Weekly (15Aug2022): Alibaba, Tencent, Meituan, TikTok, JD, NetEase, Dingdong

By Ming Lu

Express parcels increased by 8% YoY in China in July.
TikTok was still the top non-game app in the world in July.
Meituan raised its prices of bike sharing on August 10.

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Aug 14

Daily Brief Consumer: ASICS Corp, China Tourism Group Duty Free Corp Ltd and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Asics (7936) | Strong Performance Meets Reasonable Valuation
ECM Weekly (14th Aug 2022) – China Tourism, A/H Listing, Hongjiu Fruit, Socar, Betagro, ThaiBev, GQG
Weekly Deals Digest (14 Aug) – CTG Duty Free, OZ Minerals, Lifestyle Intl., EVOC, MACA, MyDeal

Asics (7936) | Strong Performance Meets Reasonable Valuation

By Mark Chadwick

The stock price has rallied 40% since our last note. We are happy to take profit here, hence we label this insight as Bearish
The results and full year guidance hike were positive but largely currency assisted
We expect that a focus on China and Direct will drive margin expansion in the medium term

ECM Weekly (14th Aug 2022) – China Tourism, A/H Listing, Hongjiu Fruit, Socar, Betagro, ThaiBev, GQG

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, China Tourism launched its US$2.5bn IPO.
There were no major placements this week and it likely to remain that way in the near future owing to it being earnings season.

Weekly Deals Digest (14 Aug) – CTG Duty Free, OZ Minerals, Lifestyle Intl., EVOC, MACA, MyDeal

A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
ECM developments – China Tourism Group Duty Free Corp Ltd (601888 CH) has launched an H Share listing to raise US$1.9-2.2 billion.
Event-Driven developments at EVOC Intelligent Technology Company Limited H (2308 HK), Lifestyle International Holdings (1212 HK), OZ Minerals Ltd (OZL AU), MACA Ltd (MLD AU), Excelpoint Technology (EXLP SP), MyDeal.

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Aug 13

Daily Brief Consumer: China Tourism Group Duty Free Corp Ltd, Rakuten Inc, Dollar Index, Keurig Dr Pepper Inc, Monster Beverage, Clorox Company and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
CTG Duty Free H Share Listing: Valuation Insights
Rakuten: Turning a Corner
U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials
Keurig Dr Pepper Inc.: Atypique Distribution Rights & Other Developments
Monster Beverages: New Product Launches & Other Drivers
Clorox Co.: Innovation-Led Growth & Other Drivers

China Tourism Group A/H Listing – Discount Is Enticing at the Low-End

China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
In this note, we talk about the deal pricing and run the deal through our ECM framework.

CTG Duty Free H Share Listing: Valuation Insights

China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.

Rakuten: Turning a Corner

The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.

U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

By Joe Jasper

This is now the third Int’l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.

Keurig Dr Pepper Inc.: Atypique Distribution Rights & Other Developments

By Ishan Majumdar

Keurig Dr Pepper continues to battle inflationary challenges with price actions but its brand strength has been its biggest asset in the current environment.
With the higher prices, the company was able to surpass Wall Street expectations in terms of both, revenues as well as earnings.
Keurig Dr Pepper is on track to achieve 1 million linked households in the coming years thanks to its ongoing smart technology development, which is opening up new platforms like smart car delivery for pods.

Monster Beverages: New Product Launches & Other Drivers

By Ishan Majumdar

Monster Beverages continues to witness a rise in the demand for its energy drinks and this helped the company surpass Wall Street expectations in terms of revenues.
In the quarter, Monster experienced a significant rise in the cost of sales that resulted in a material reduction in gross profit.
Among major updates, Monster Beverage has recently released its foremost malt beverage, alcoholic flavored under the Monster brand.

Clorox Co.: Innovation-Led Growth & Other Drivers

By Ishan Majumdar

Clorox Co has navigated via challenging operating conditions and it failed to meet Wall Street expectations in terms of revenues.
As a part of the company’s IGNITE strategy, it has announced a streamlined operating model for creating a faster, simpler company.
One of the best ways to expand margins for Clorox has been its direct-to-consumer strategy which is gradually paying off.

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Aug 12

Daily Brief Consumer: China Tourism Group Duty Free Corp Ltd, Betagro Group, Phu Nhuan Jewelry Jsc, Tokyo Base, Chongqing Hongjiu Fruit and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Past A/H Listings Performance – Most of the Deals Haven’t Done Much
Betagro Pre-IPO – The Negatives – Muted Long Term Track Record and Operating on Razor Thin Margins
Vietnam Consumer Discretionary – Phu Nhuan Jewelry: Hedge Against Rising Inflation Rates
Tokyo Base: A Future Abroad
Chongqing Hongjiu Fruit IPO – Peer Comparison & Valuations – Growth & Margins Stand Out Among Peers

Past A/H Listings Performance – Most of the Deals Haven’t Done Much

China Tourism Group Duty Free Corporation Limited (CDF) is gearing up to launch Hong Kong’s largest listing so far this year, with a reported deal size of around US$2-3bn.
Prior to the deal launch, we’ve had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
Overall, most of the recent A/H listings haven’t done much over the first month.

Betagro Pre-IPO – The Negatives – Muted Long Term Track Record and Operating on Razor Thin Margins

By Clarence Chu

Betagro Group (1737144D TB) is looking to raise about US$600m in its upcoming Thailand IPO.
Betagro is an integrated agro-industrial and food business in Thailand. The firm’s products cover all stages of the food value chain including upstream, midstream and downstream.
Margins have fluctuated and operating/net margins are razor thin. Over a longer term period, track record hasn’t been the greatest as well.

Vietnam Consumer Discretionary – Phu Nhuan Jewelry: Hedge Against Rising Inflation Rates

Phu Nhuan Jewelry Jsc (PNJ VN) is the number one jewelry company in Vietnam.
The company is benefiting from several key catalysts including reduced social distancing measures resulting in higher store visits and sales, hedge against rising inflation, and pent up demand for jewelry.
The combination of higher expected earnings this year along with stable recent prices have resulted in more attractive valuations for the company.

Tokyo Base: A Future Abroad

By Michael Causton

Tokyo Base rebounded in 2021 thanks to strong support at home and overseas for its Japan-made designs.
The fashion retailer plans to add new concepts as well as expand more quickly overseas.
The Japanese fashion sector has taken a beating in the market but over the medium term there will be recovery for the better retailers, particularly those with potential overseas.

Chongqing Hongjiu Fruit IPO – Peer Comparison & Valuations – Growth & Margins Stand Out Among Peers

By Ethan Aw

Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
CHJF had grown at an impressive rate even in the face of COVID-19. In this note, we will undertake a peer comparison of CHJF with its listed peers.

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Aug 11

Daily Brief Consumer: China Tourism Group Duty Free Corp Ltd, The Keepers Holdings, Inc., Kirin Holdings, Xinyi Glass Holdings, Rakuten Inc, Emperador, Betagro Group, Denso Corp, Shakey’s Pizza, Phu Nhuan Jewelry Jsc and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

CTG Duty Free H Share Listing: Another False Dawn?
Keepers Holdings (KEEPR PM): Stellar Results. Significant Upside Ahead
Kirin: With Myanmar in the Rear-View Mirror, an Additional 30% Upside Is Quite Possible
Hong Kong CEO & Director Dealings – 10th August 2022
Rakuten (Neutral) – Q2 22 Results Reaction: Mobile Losses Narrow but Little Good News Beyond That
STI Index Rebalance Preview (Sep): Close to the Cutoffs
Betagro Pre-IPO – The Positives – Vertically Integrated and Weathered COVID Well
Denso (6902) | No Reason to Be Uber-Bearish
Shakey’s Pizza: Q2 2022 Recovery Far Better Than Expectations, Management Guidance Extremely Bullish
Phu Nhuan Jewelry JSC (PNJ VN) – Update – Remaining positive in 2H22

CTG Duty Free H Share Listing: Another False Dawn?

China Tourism Group Duty Free Corp Ltd (601888 CH)/CTGDF, the largest travel retail operator in the world, aims to launch an H Share listing to raise US$2-3 billion on Friday.
CTGDF is a play on the normalization of domestic travel. However, the H Share listing timing is not ideal as a vital summer travel market, Sanya, is under renewed lockdown.
The recovery timing has again shifted, with expectations of a 4Q recovery, but 2022 consensus expectations look slightly optimistic. We prefer to remain on the sidelines.

Keepers Holdings (KEEPR PM): Stellar Results. Significant Upside Ahead

By Sameer Taneja

The Keepers Holdings, Inc. (KEEPR PM) reported solid growth in its Q2 2022 results, with 30% revenue growth YoY(%) and 44% profit growth ahead of our expectations.
The stock trades at 4.5x PE ex-cash (with ~50% of the market capitalization in cash), making it a cheap discretionary consumption plays in the Philippines with good execution.
Further catalysts include the potential for making an accretive acquisition. More to follow once the company has its investor call on Friday the 12th of August 2022.

Kirin: With Myanmar in the Rear-View Mirror, an Additional 30% Upside Is Quite Possible

Kirin Holdings (2503 JP)’s 2Q22 normalized OP of ¥46.2bn from ¥500.3bn revenue was slightly above the consensus OP of ¥45.9bn from ¥500.8bn revenue.
Kirin raised its 2022 revenue and normalized OP guidance by ¥40.0bn and ¥6.0bn respectively, due to the progress of profit improvement measures mainly in Coke-Northeast and Kyowa Kirin in 1H22.
Meanwhile, Kirin is due ¥22.4bn from MEHL for the Myanmar JV. Even though this is not the fair value, receiving at least something is a bonus in our opinion.

Hong Kong CEO & Director Dealings – 10th August 2022

The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
These insights also flag those companies where shares have been pledged, both recently and ongoing.

Rakuten (Neutral) – Q2 22 Results Reaction: Mobile Losses Narrow but Little Good News Beyond That

By Kirk Boodry

Mobile losses narrowed sequentially as expected but not by much as the company missed consensus and Redex expectations for profitability
Rakuten also reported a 220K net subscriber loss in the quarter as point-chasing free users churned off when zero-yen tiers were cancelled but worringly, network coverage/capacity was also a factor
If there is a silver lining, fintech businesses Rakuten Bank and Securities posted solid results and remain on pace to IPO but negative mobile sentiment is unlikely to change

STI Index Rebalance Preview (Sep): Close to the Cutoffs

By Brian Freitas

Emperador (EMI SP) currently is just outside the inclusion zone for the FTSE Straits Times Index (STI) (STI INDEX) and a small price bump is needed for index inclusion.
If Emperador (EMI SP) is added to the index, Comfortdelgro Corp (CD SP) could be deleted as the lowest ranked index constituent.
Emperador (EMP PM) is a high probability inclusion to the FTSE All-World Index at the September SAIR and the stock could move higher over the next couple of weeks.

Betagro Pre-IPO – The Positives – Vertically Integrated and Weathered COVID Well

By Clarence Chu

Betagro Group (1737144D TB) is looking to raise about US$600m in its upcoming Thailand IPO.
Betagro is an integrated agro-industrial and food business in Thailand. The firm’s products cover all stages of the food value chain including upstream, midstream and downstream.
Betagro operates a vertically integrated model with its own production and processing capabilities. Furthermore, it utilizes a range of distribution channels for both domestic and international sales.

Denso (6902) | No Reason to Be Uber-Bearish

By Mark Chadwick

Denso started the fiscal year with an overly optimistic view of Toyota production – it is now too bearish
Chip shortages and supply disruptions are starting to ease, making it easier for automakers to meet end demand
We are bullish on the stock as we believe that Denso’s earnings will beat lowered guidance and valuations are at the bottom of the range

Shakey’s Pizza: Q2 2022 Recovery Far Better Than Expectations, Management Guidance Extremely Bullish

By Sameer Taneja

Shakey’s Pizza (PIZZA PM) reported a strong SWS of 77% YoY in H1 and 121% YoY in Q2 2022. Excluding Potato Corner (PC), recovery tracked >90% of 2019 levels.
The management guided that ex-PC recovery was over 100% in May and July, and numbers will improve with a resurgence in people at work, resulting in an upside to SWS.
We see margin upside as dine-in numbers are set to increase in H2 and the company beds down its PC acquisition; the stock trades at 16x/10x FY22/FY23e.

Phu Nhuan Jewelry JSC (PNJ VN) – Update – Remaining positive in 2H22

By Mirae Asset Securities

Analyst meeting update We participated in the analyst meeting of Phu Nhuan Jewelry JSC (PNJ) about its 1H22 business update and the board’s viewpoints on PNJ’s prospects in 2H22: ▪ PNJ’s business results recovered for the third consecutive quarter since 3Q21, with improving same-store sales growth, as: 1) Vietnam’s consumption continued to rally in 1H22, as Vietnam returned to new normalcy; and 2) PNJ’s marketing programs have served as effective promotion.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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Aug 10

Daily Brief Consumer: Kakao Pay, SOCAR, Porsche Automobil Holding Se and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

MSCI Korea: Potential Inclusions & Exclusions in August 2022 Highlighted by Locals
SOCAR IPO Book Building Results
Selected European Holdcos and DLCs: July ‘22 Report
SOCAR IPO: Order Table, Revised Terms, & Thinking Points

MSCI Korea: Potential Inclusions & Exclusions in August 2022 Highlighted by Locals

We discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement (12 August) that are being highlighted by the locals.
The potential inclusion candidates in the MSCI Korea Index emphasized by the locals in August 2022 include LG Energy Solution and Kakao Pay; potential exclusion candidate include SK Telecom.
The overall assessment of the MSCI Korea Index rebalance in August is rather mixed. There are two potential inclusions (LG Energy Solution and Kakao Pay) and one exclusion (SK Telecom).

SOCAR IPO Book Building Results

By Shifara Samsudeen, ACMA, CGMA

SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).
Our base case target price for SOCAR is 27,176 won, which is 3% lower than the IPO price of 28,000 won.
We remain Negative on this IPO due to lack of upside. There were 348 companies involved in the IPO survey with the final demand ratio of 56 to 1.

Selected European Holdcos and DLCs: July ‘22 Report

By Jesus Rodriguez Aguilar

Discounts to NAV of covered holdcos haven’t shown a clear trend during July/beginning of August. Investors have favored Swedish hodlcos, disliked GBL’s results and avoided the Heineken/Heineken Holdings trade.
Discounts to NAV: Alba, 42.8%; GBL, 34.5%; Heineken Holdings to 21.5%; Industrivärden C, 7.8%; Investor B, 14.3%; Porsche Automobile Holding to 29.4%. Rio Tinto DLC tightened to 16.2%.
Spreads tend to widen in bear markets but short term recoveries provide opportunities on tightening discounts. If anything, recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).

SOCAR IPO: Order Table, Revised Terms, & Thinking Points

By Sanghyun Park

SOCAR’s institutional subscription rate was 56.97 to 1. It is highly unusual for an institutional competition rate to be this low among IPOs worth more than ₩1T.
SOCAR eventually set the price at ₩28,000 and reduced the offering volume from 4.55M to 3.64M, resulting in deal size of ₩100B at an implied market cap of ₩970B.
Since Lotte Rental’s buying flow may be triggered earlier than expected, we may need to consider a swing trade if the price enters an oversold territory after listing.

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Aug 09

Daily Brief Consumer: Chongqing Hongjiu Fruit, Tesla Motors, Coupang and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Chongqing Hongjiu Fruit IPO: Not Very Fruitful
Tesla Splitsville
Coupang: Just About Halfway in Correction
Tesla Trading Strategy Until August 25th Stock Split

Chongqing Hongjiu Fruit IPO: Not Very Fruitful

Chongqing Hongjiu Fruit (CHF HK) focuses on managing the entire supply chain for quality fruits grown in China, Thailand and Vietnam.
The company has a portfolio of 49 fruit categories and has filed for an IPO on HKEx and plans to raise proceeds of US$300m.
CHF’s earnings growth is slowing down while margins are trending downwards and the company’s cashflow burn is increasing

Tesla Splitsville

By Vicki Bryan

Tesla will split its stock 3-1, as expected, effective August 25th.
But investors & analysts remain split over Tesla’s falling sales & profitability
And whether CEO Elon Musk has become its biggest liability.

Coupang: Just About Halfway in Correction

Leading into 2Q22 results (due 10th August 2022), we are short Coupang (CPNG US) with expectations of around 5% and 27% downside to consensus 2022 and 2023 revenue estimates.
Consensus has just about reached the halfway stage of a long correction process with current revenue estimates standing significantly above the pre-COVID trend.
Meanwhile, Coupang is under a lot of pressure to cut losses in the short term and attain the targeted long-term EBITDA margin of 7-10%.

Tesla Trading Strategy Until August 25th Stock Split

By SC Capital

Last Friday, Tesla shareholders approved a 3:1 stock split set to go into effect on August 25th. The stock has already rallied on these expectations, up 44% since mid-June lows.
We wouldn’t be surprised if CEO Elon Musk sells into the split, given his need to shore up cash for the potential Twitter buyout in October.
Both Amazon and Google outperformed the market, but sold off in the days and weeks post-split. We expect Tesla to follow this pattern, but in a more augmented fashion.

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Aug 08

Daily Brief Consumer: Lifestyle International Holdings, Yashili International Holdings, Marui Group and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Lifestyle International’s HK$5.00 Privatisation Bid
Merger Arb Mondays (08 Aug) – Yashili, Lifestyle, Link, Infomedia, Ramsay, ResApp, Alliance Aviation
Marui (8252 JP) – Increases Size of Delayed-Start Buyback, Cuts Yutai
Lifestyle (1212 HK): Thomas Yau’s Scheme

Lifestyle International’s HK$5.00 Privatisation Bid

Lifestyle International Holdings (1212 HK) announced a privatisation offer from Mr Lau, the controlling shareholder and Chairman, at HK$5.00 per scheme share, a 62.3% premium to the undisturbed price.
The offer price is final. Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
The offer price is unattractive for long-term shareholders and below average sell-side price targets. Nevertheless, this deal likely goes through as the headcount test is not applicable.

Merger Arb Mondays (08 Aug) – Yashili, Lifestyle, Link, Infomedia, Ramsay, ResApp, Alliance Aviation

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
Highest spreads are Lifestyle International Holdings (1212 HK), 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Infomedia Ltd (IFM AU), Yashili, ResApp.
Lowest gross spreads are Excelpoint Technology (EXLP SP), Frasers Hospitality Trust (FHT SP), MyDeal.com.au Ltd (MYD AU), Cocoaland Holdings (COLA MK), True Corp Pcl (TRUE TB), China VAST.

Marui (8252 JP) – Increases Size of Delayed-Start Buyback, Cuts Yutai

By Travis Lundy

Marui Group (8252 JP) was a long-suffering Japanese retailer with generally sub-standard locations and “different” customer base, and much of its income came from consumer credit.
Since a decade ago, helped by the rise of foreign tourism income, Marui has been redeveloping itself. Michael Causton‘s insights are a great help to understanding the background.
They are aiming at non-stuff retailing. Friday saw earnings, cancellation of the yutai program, a slight div hike, and an increase in the already large buyback program. It’s interesting!

Lifestyle (1212 HK): Thomas Yau’s Scheme

Thomas Yau, Lifestyle International Holdings (1212 HK)‘s controlling shareholder, is offering to take the company private by way of a Scheme at HK$5/share, a 62.3% premium to last close.
Independent shareholders comprise 23.51% of shares out, therefore the blocking stake at the forthcoming Court Meeting is 2.351% of shares out.
The Offer price is final. No dividends will be paid during the Offer period.

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Aug 07

Daily Brief Consumer: SJM Holdings, Super Hi International Holding, Yashili International Holdings, Zomato and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Last Week In Event SPACE: SJM, Yashili, Cayman Headcount, ResApp, Honda Tsushin Kogyo
Visit to a Haidilao Restaurant in London & Listing of Super Hi International in Hong Kong
(Mostly) Asia-Pac Weekly Risk Arb Wrap: ResApp, Honda Tsushin Kogyo, Yashili, Link Admin, Lifestyle
ECM Weekly (7th Aug 2022) – Zomato, Orica, China Tourism, Hongjiu Fruit, Giant Biogene, Socar

Last Week In Event SPACE: SJM, Yashili, Cayman Headcount, ResApp, Honda Tsushin Kogyo

Participate in SJM Holdings (880 HK)‘s Excess Application Auction, though one would need to bid for a fantastically large quantity of shares to get anything, because everyone else will
At a 11% gross spread to terms, and potential 4Q22 completion, Yashili(1230 HK) IS A CLEAR BUY. The world is a bit risk averse and it shows up in spreads.
The ‘headcount test‘ for Cayman-incorporated companies failed to move with the times and address the fact that the majority of shares of Hong Kong-listed companies were held by HKSCC Nominees.

Visit to a Haidilao Restaurant in London & Listing of Super Hi International in Hong Kong

In this insight, we discuss our recent visit to a Haidilao restaurant in London and the listing of Super Hi International in Hong Kong.
On 13 July, Haidilao (6862 HK) provided the IPO prospectus of Super Hi International for a separate listing in Hong Kong bourse.
By spinning off Super Hi and listing this newco in Hong Kong, Haidilao is capitalizing on its best known global brand for hot pots amid zero COVID policy in China.

(Mostly) Asia-Pac Weekly Risk Arb Wrap: ResApp, Honda Tsushin Kogyo, Yashili, Link Admin, Lifestyle

There are 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
One new deal was discussed this week on Smartkarma. Honda Tsushin Kogyo (6826 JP)‘s Tender Offer.
Key updates took place for: Resapp Health (RAP AU), Link Administration (LNK AU), and Yashili International Holdings (1230 HK).

ECM Weekly (7th Aug 2022) – Zomato, Orica, China Tourism, Hongjiu Fruit, Giant Biogene, Socar

By Clarence Chu

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
Placements continued to take center stage this week, beginning with Uber’s clean-up sale of Zomato.
Socar launched its one-day bookbuild earlier in the week. We continued looking at the upcoming deals in our pipeline.

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Aug 05

Daily Brief Consumer: SJM Holdings, Alibaba Group, Giant Biogene Holding, Toyota Motor, JD Health, Chongqing Hongjiu Fruit, Tod’s SpA, Sai Silk Kalamandir, Yamaha Corp, Nextage Co Ltd and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

SJM Holdings (880 HK) Rights Issue – Capital Raise, Unappreciated, but Interesting Trading Dynamics
Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy
Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+
Toyota’s Q1 EBIT Missed by 28%; FY3/23 Guidance Effectively Lowered
FTSE China 50 Index Rebalance Preview: One Change in Range, Couple Others Close
Hongjiu Fruit IPO: A Bitter Fruit
Della Valle/Tod’s: Lowball Minorities Buyout
Sai Silk Kalamandir Pre-IPO Tearsheet
Yamaha Corporation: Guidance Seems Optimistic With Inflation Starting to Affect Demand Conditions
Nextage (3186 JP): Long-Term Potential Not Yet Discounted

SJM Holdings (880 HK) Rights Issue – Capital Raise, Unappreciated, but Interesting Trading Dynamics

By Travis Lundy

SJM Holdings (880 HK) announced earnings on Monday and a HK$3bn Rights Issue last night designed to inject capital into Macau gaming licensee SJM Resorts.
An increase in share capital is required to pre-qualify for then tender process where the Macau Govt would allocate a 10-year gaming concession starting 1 Jan 2023.
54.7% SJM Holder/Parent Sociedade de Turismo e Diversões de Macau (STDM) had previously extended a loan to SJM designed to allow SJM to inject capital to SJM Resorts.

Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy

By Ming Lu

Alibaba’s revenue stopped growing for the first time on record.
We still believe the revenue growth rate will recover in the December quarter.
We believe the stock price will have at least an upside of 29% after a significant plunge.

Giant Biogene Pre-IPO – The Negatives – Co-Founders Have Already Cashed in US$1bn+

Giant Biogene (GB) aims to raise around US$500m in its Hong Kong IPO.
GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
In this note, we talk about the not-so-positive aspects of the deal.

Toyota’s Q1 EBIT Missed by 28%; FY3/23 Guidance Effectively Lowered

By SC Capital

Toyota’s Q1 operating profit was 28% below consensus estimates, while pretax profit only undershot by 4%. Support for 2nd & 3rd-tier suppliers was the main cause.
While full-year operating profit target was maintained & EPS slightly raised, this was due to bigger forex tailwinds. Ex-forex, FY3/23 operating profit was lowered by 28%.
Much of FY3/23’s negatives are one-off, which paves the way for higher profits in FY3/24. But support for suppliers while rivals grow earnings is somewhat of a concern.

FTSE China 50 Index Rebalance Preview: One Change in Range, Couple Others Close

By Brian Freitas

Shenzhou Intl Group Holdings (2313 HK) is a high probability deletion in September, while JD Health (6618 HK) is currently the highest ranked non-constituent stock.
There are a couple of other stocks that are close to the inclusion/exclusion thresholds and price changes over the next few weeks will determine if there are any more changes.
Short interest on JD Health (6618 HK) is high in terms of days to cover and as a percentage of free float. Covering could take the stock higher.

Hongjiu Fruit IPO: A Bitter Fruit

Chongqing Hongjiu Fruit (CHF HK), a multi-brand fruit company in China, is pre-marketing an HKEX IPO to raise US$200-300 million.
The fundamentals are uninspiring as it is delivering profitable growth with a heavy cash burn. The rising but tiny market share suggests a lack of sustainable competitive advantage.
Hongjiu Fruit aims to be the first HKEx-listed fruit distributor. Investors can likely avoid a bitter aftertaste by remaining on the sidelines.

Della Valle/Tod’s: Lowball Minorities Buyout

By Jesus Rodriguez Aguilar

The Della Valles offer €40/share (1.8 EV/Fwd Sales, c.20% premium) to buy out the minorities (LVMH stays a 10% shareholder). Minimum acceptance condition is 90%, aiming at 60.9% of float.
Tod’s is in turnaround mode (my valuation assumes it’ll be successful). A DCF valuation gives €52.21/share, a break-up valuation could reach €57.12/share, while a simpler 2.0x EV/Fwd Sales throws €43.02/share.
The shares trade above the offer and a sweetening may be needed; the offer price seems cheap on any measure. A template could be the acquisition of Creval. Long.

Sai Silk Kalamandir Pre-IPO Tearsheet

By Ethan Aw

Sai Silk Kalamandir (SSKL IN) is looking to raise about US$150m in its upcoming India IPO. The deal will be run by Motilal Oswal, Edelweiss and HDFC Bank.
Sai Silk Kalamandir (SSK) is one of the largest retailers of ethnic apparel in South India, particularly in sarees, according to Technopak.
Through its four store formats, it offers ethnic and value fashion products to various segments across different price points. As of 31 May 2022, it has 46 network stores.

Yamaha Corporation: Guidance Seems Optimistic With Inflation Starting to Affect Demand Conditions