7-Eleven partners up with Future Retail in an effort to enter the growing Indian Market
Indian E-Commerce giants pose a significant threat to 7-Eleven’s plans
7-Eleven’s recent shift focuses more on developing markets.
Lack of profitability in India could require changes to the standard franchise agreement in order to attract franchisees
On 28th February 2019, Seven & I Holdings (3382 JP), the operator of the world’s largest convenience store chain 7-Eleven, announced that the company has signed a master franchise agreement with Kishore Biyani’s Future Retail, the operator of the Indian large format store chain Big Bazaar, to expand the 7-Eleven convenience stores into India. Future Retail and Seven & I Holdings expect the first 7-Eleven convenience store in India to be opened in Mumbai in 2019.
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We continue to believe that equities in Europe and the UK are bottoming with the STOXX Europe 600 index breaking topside its 14-month downtrend. Helping lead the turnaround is the Personal & Household Goods supersector. We believe outperformance is set to continue and several stocks are actionable at current levels within our int’l Group CD-28 Apparel, Accessory & Luxury Goods, Europe: LVMH Moet Hennessy Louis Vuitton SE (MC-FR), Christian Dior SE (CDI-FR), Kering SA (KER-FR), Hermes International SCA (RMS-FR), adidas AG (ADS-DE), Moncler SpA (MONC-IT), PUMA SE (PUM-DE), and Bjorn Borg AB (BORG-SE). Add exposure.
In its final report into a fatal accident involving a Tesla Model S being driven in Autopilot Mode by one Joshua Brown, the NHTSA included the controversial finding that having Autopilot engaged reduced accident rates by 40%. Now, after battling both the NHTSA and Tesla for almost two years to get access to the underlying dataset, independent US-based consulting firm QCS has published a detailed report casting serious doubt on the methodology, statistics and science behind this 40% safer claim.
Meanwhile on March 2’nd 2019, in a carbon copy of the circumstances which claimed the life of Joshua Brown almost three years ago, another Tesla driver lost his life when his Model 3 crashed into a semi-trailer as it legitimately crossed his line of travel to make a right-hand turn at an uncontrolled intersection. At the time of the accident, it was unknown whether Autopilot was engaged or not. If it transpires that it was engaged, it will represent a serious blow to Tesla’s credibility not least in part due to the company’s claims that its self-driving technology is continuously learning and improving based on the experiences and data collected on a daily basis from its ever-growing fleet of vehicles on the road.
Until now, on the one-month anniversary on this latest fatality, Tesla’s silence on the matter remains deafening.
In the middle of last week, Russia’s largest chain of hypermarkets Lenta Ltd (LNTA LI)announced that it was aware that there were ongoing discussions between Luna (TPG’s holding entity, which owns 34.13% of Lenta’s capital) and Alexey Mordashov’s Severgroup, for Luna to sell its stake in Lenta to the Russian conglomerate. A day later, Lenta announced the company was aware of discussions between Severgroup and the EBRD (7.40% holder).
Reuters reported last night that Severgroup had reached an agreement to buy a 41.9% stake, excluding treasury shares, in Lenta from those two sellers, for a total of US$721mm, or US$18 per share or US$3.60 per GDR. That implies a price of US$1.75bn for the whole company.
Later last night, Lenta announced on its website (full press release here) a cash offer for all the shares had been proposed. The Offer has a pre-condition dealing with the above-mentioned transactions being approved by those who need to approve.
The Offer Price is an 8.11% premium to the last trade on 26 March – the undisturbed price, and a premium of 9.76% to the 6mo average price of US$3.28 for the GDRs.
CVC is looking to raise about US$353m through the sale of about 648m Map Aktif Adiperkasa PT (MAPA IJ) shares in the follow-on offering.
Map Aktif (MAPA) is a sports, leisure, and kids retailer in Indonesia. It is a subsidiary of Mitra Adiperkasa (MAPI IJ). The selldown might not be totally unexpected as CVC planned to exit its investment by 2020. However, post this selldown it will still have 192m share left.
Japanese Retail is in a secular decline: There are areas in retail that are worse affected than the rest
Falling foot traffic: The biggest problem for Japanese retail
Don Quijote’s recent history and growth potential
Attracting shoppers from multiple store formats helps Don Quijote to expand its target market
Don Quijote is least affected from slowdown in Chinese tourist spending
FamilyMart UNY store conversions to contribute to revenue and EBIT growth over the next five years
New store openings to cap at 25 per year because of UNY store conversions
Valuation: Market unjustly penalized Don Quijote for the UNY acquisition
Change in retail landscape to help make Don Quijote the “DON” in Japanese retail
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In its final report into a fatal accident involving a Tesla Model S being driven in Autopilot Mode by one Joshua Brown, the NHTSA included the controversial finding that having Autopilot engaged reduced accident rates by 40%. Now, after battling both the NHTSA and Tesla for almost two years to get access to the underlying dataset, independent US-based consulting firm QCS has published a detailed report casting serious doubt on the methodology, statistics and science behind this 40% safer claim.
Meanwhile on March 2’nd 2019, in a carbon copy of the circumstances which claimed the life of Joshua Brown almost three years ago, another Tesla driver lost his life when his Model 3 crashed into a semi-trailer as it legitimately crossed his line of travel to make a right-hand turn at an uncontrolled intersection. At the time of the accident, it was unknown whether Autopilot was engaged or not. If it transpires that it was engaged, it will represent a serious blow to Tesla’s credibility not least in part due to the company’s claims that its self-driving technology is continuously learning and improving based on the experiences and data collected on a daily basis from its ever-growing fleet of vehicles on the road.
Until now, on the one-month anniversary on this latest fatality, Tesla’s silence on the matter remains deafening.
In the middle of last week, Russia’s largest chain of hypermarkets Lenta Ltd (LNTA LI)announced that it was aware that there were ongoing discussions between Luna (TPG’s holding entity, which owns 34.13% of Lenta’s capital) and Alexey Mordashov’s Severgroup, for Luna to sell its stake in Lenta to the Russian conglomerate. A day later, Lenta announced the company was aware of discussions between Severgroup and the EBRD (7.40% holder).
Reuters reported last night that Severgroup had reached an agreement to buy a 41.9% stake, excluding treasury shares, in Lenta from those two sellers, for a total of US$721mm, or US$18 per share or US$3.60 per GDR. That implies a price of US$1.75bn for the whole company.
Later last night, Lenta announced on its website (full press release here) a cash offer for all the shares had been proposed. The Offer has a pre-condition dealing with the above-mentioned transactions being approved by those who need to approve.
The Offer Price is an 8.11% premium to the last trade on 26 March – the undisturbed price, and a premium of 9.76% to the 6mo average price of US$3.28 for the GDRs.
CVC is looking to raise about US$353m through the sale of about 648m Map Aktif Adiperkasa PT (MAPA IJ) shares in the follow-on offering.
Map Aktif (MAPA) is a sports, leisure, and kids retailer in Indonesia. It is a subsidiary of Mitra Adiperkasa (MAPI IJ). The selldown might not be totally unexpected as CVC planned to exit its investment by 2020. However, post this selldown it will still have 192m share left.
In addition, we have provided an updated calendar of upcoming catalysts for EVENT driven names below.
Best of luck for the new week – Arun, Venkat and Rickin
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Lyft Inc (0812823D US) has kicked off its IPO by posting its S-1 filing last Friday. Rakuten Inc (4755 JP) is Lyft’s single largest shareholder with a 13.05% stake. Rakuten has invested around $700 million to acquire its current Lyft stake and stands to make 3-4 times its investment if Lyft achieves its rumoured IPO valuation range of $20-25 billion.
Lyft’s IPO valuation range was first reported by Reuters on 20 February 2019. On the back of the news, Rakuten’s shares have so far risen around 10%. Notably, at the IPO valuation range, the Lyft stake would account for 20-25% of Rakuten’s current market cap. While the Lyft IPO will prove to be a big winner for Rakuten from an ROI perspective, we believe that from a valuation perspective, the upside is modest.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
In the middle of last week, Russia’s largest chain of hypermarkets Lenta Ltd (LNTA LI)announced that it was aware that there were ongoing discussions between Luna (TPG’s holding entity, which owns 34.13% of Lenta’s capital) and Alexey Mordashov’s Severgroup, for Luna to sell its stake in Lenta to the Russian conglomerate. A day later, Lenta announced the company was aware of discussions between Severgroup and the EBRD (7.40% holder).
Reuters reported last night that Severgroup had reached an agreement to buy a 41.9% stake, excluding treasury shares, in Lenta from those two sellers, for a total of US$721mm, or US$18 per share or US$3.60 per GDR. That implies a price of US$1.75bn for the whole company.
Later last night, Lenta announced on its website (full press release here) a cash offer for all the shares had been proposed. The Offer has a pre-condition dealing with the above-mentioned transactions being approved by those who need to approve.
The Offer Price is an 8.11% premium to the last trade on 26 March – the undisturbed price, and a premium of 9.76% to the 6mo average price of US$3.28 for the GDRs.
CVC is looking to raise about US$353m through the sale of about 648m Map Aktif Adiperkasa PT (MAPA IJ) shares in the follow-on offering.
Map Aktif (MAPA) is a sports, leisure, and kids retailer in Indonesia. It is a subsidiary of Mitra Adiperkasa (MAPI IJ). The selldown might not be totally unexpected as CVC planned to exit its investment by 2020. However, post this selldown it will still have 192m share left.
Xtep International (1368 HK) has announced a placing and top-up subscription of new shares event, creating a capital base which is 9% larger.
XTEP states that they have considered various ways of raising funds and consider that it would be in their best interests to raise equity funding through the placing and the subscription.
With the share price down 16% since the placement, we examine what this means for the company’s fundamentals and shareholders. We believe the results will prove to be mixed for management and shareholders alike. We highlight how we expect the stock ranking to react, given we the placement was only a few days back and this is yet to reflect. This special situation analysis may surprise you with the conclusions.
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Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
The company’s 4Q18 net profit was at Bt46m (+298%YoY and +8%QoQ). The result was in line with our 2018 forecast and accounted for 97% of our full-year forecast.
A YoY surge in earnings was due to a 30% increase in revenue to Bt360m, mainly from export revenue (50% revenue contribution in 3Q18 from 0% in 4Q17). A QoQ gain was caused a reduction in extra expenses for holding an annual event ‘JKN mega showcase’ in early August.
2019 earnings outlook is still decent on the back of 1.) higher revenue contribution from export market especially South East Asia (26% of revenue in 2018), 2.) CNBC studio commencement in 2Q19, and, 3.) revenue recognition from new channel subscribers (No.5, Thairath, Spring news, True4U, Nation and MONO)
We maintain our forecast and BUY rating for JKN with a target price of Bt8.80 based on 14.8xPE’19E mean of the Asia ex-Japan Consumer Discretionary Sector.
7-Eleven partners up with Future Retail in an effort to enter the growing Indian Market
Indian E-Commerce giants pose a significant threat to 7-Eleven’s plans
7-Eleven’s recent shift focuses more on developing markets.
Lack of profitability in India could require changes to the standard franchise agreement in order to attract franchisees
On 28th February 2019, Seven & I Holdings (3382 JP), the operator of the world’s largest convenience store chain 7-Eleven, announced that the company has signed a master franchise agreement with Kishore Biyani’s Future Retail, the operator of the Indian large format store chain Big Bazaar, to expand the 7-Eleven convenience stores into India. Future Retail and Seven & I Holdings expect the first 7-Eleven convenience store in India to be opened in Mumbai in 2019.
Lyft Inc (0812823D US) has kicked off its IPO by posting its S-1 filing last Friday. Rakuten Inc (4755 JP) is Lyft’s single largest shareholder with a 13.05% stake. Rakuten has invested around $700 million to acquire its current Lyft stake and stands to make 3-4 times its investment if Lyft achieves its rumoured IPO valuation range of $20-25 billion.
Lyft’s IPO valuation range was first reported by Reuters on 20 February 2019. On the back of the news, Rakuten’s shares have so far risen around 10%. Notably, at the IPO valuation range, the Lyft stake would account for 20-25% of Rakuten’s current market cap. While the Lyft IPO will prove to be a big winner for Rakuten from an ROI perspective, we believe that from a valuation perspective, the upside is modest.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
CVC is looking to raise about US$353m through the sale of about 648m Map Aktif Adiperkasa PT (MAPA IJ) shares in the follow-on offering.
Map Aktif (MAPA) is a sports, leisure, and kids retailer in Indonesia. It is a subsidiary of Mitra Adiperkasa (MAPI IJ). The selldown might not be totally unexpected as CVC planned to exit its investment by 2020. However, post this selldown it will still have 192m share left.
Xtep International (1368 HK) has announced a placing and top-up subscription of new shares event, creating a capital base which is 9% larger.
XTEP states that they have considered various ways of raising funds and consider that it would be in their best interests to raise equity funding through the placing and the subscription.
With the share price down 16% since the placement, we examine what this means for the company’s fundamentals and shareholders. We believe the results will prove to be mixed for management and shareholders alike. We highlight how we expect the stock ranking to react, given we the placement was only a few days back and this is yet to reflect. This special situation analysis may surprise you with the conclusions.
After a lacklustre week of range-bound trading, crude ended higher on Friday, though well off its session highs.
Crude was buoyed by strong investor cheer, which prompted an across-the-globe rally in the stock markets. The burst of euphoria was prompted by promising signs from the just-concluded high-level trade negotiations between the US and China in Beijing, though arguably throwing caution to the winds.
The American president fired his second tweet of the year at OPEC on Thursday. It was “very important that OPEC increase the flow of oil,” he said, because the price of oil was “getting too high.” The producers as well as market participants decided not to heed this time.
However, the pressure from Donald Trump is bound to intensify if Brent sustains a rally above $70, and OPEC and its Saudi leadership will not be able to continue ignoring it.
Aramco agreeing with the Public Investment Fund to buy 70% of petrochemicals giant Saudi Basic Industries Corp (SABIC AB) for $69.1 billion marks a new era for the companies. However, it does not mean that the Aramco IPO would be shelved, and directly or indirectly, we don’t expect it to derail Saudi Arabia’s strategy of actively managing oil supply through OPEC.
Our chart of the week shows that speculative bets on a price rally continue to return to Brent and WTI futures, but cautiously.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
7-Eleven partners up with Future Retail in an effort to enter the growing Indian Market
Indian E-Commerce giants pose a significant threat to 7-Eleven’s plans
7-Eleven’s recent shift focuses more on developing markets.
Lack of profitability in India could require changes to the standard franchise agreement in order to attract franchisees
On 28th February 2019, Seven & I Holdings (3382 JP), the operator of the world’s largest convenience store chain 7-Eleven, announced that the company has signed a master franchise agreement with Kishore Biyani’s Future Retail, the operator of the Indian large format store chain Big Bazaar, to expand the 7-Eleven convenience stores into India. Future Retail and Seven & I Holdings expect the first 7-Eleven convenience store in India to be opened in Mumbai in 2019.
Lyft Inc (0812823D US) has kicked off its IPO by posting its S-1 filing last Friday. Rakuten Inc (4755 JP) is Lyft’s single largest shareholder with a 13.05% stake. Rakuten has invested around $700 million to acquire its current Lyft stake and stands to make 3-4 times its investment if Lyft achieves its rumoured IPO valuation range of $20-25 billion.
Lyft’s IPO valuation range was first reported by Reuters on 20 February 2019. On the back of the news, Rakuten’s shares have so far risen around 10%. Notably, at the IPO valuation range, the Lyft stake would account for 20-25% of Rakuten’s current market cap. While the Lyft IPO will prove to be a big winner for Rakuten from an ROI perspective, we believe that from a valuation perspective, the upside is modest.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Xtep International (1368 HK) has announced a placing and top-up subscription of new shares event, creating a capital base which is 9% larger.
XTEP states that they have considered various ways of raising funds and consider that it would be in their best interests to raise equity funding through the placing and the subscription.
With the share price down 16% since the placement, we examine what this means for the company’s fundamentals and shareholders. We believe the results will prove to be mixed for management and shareholders alike. We highlight how we expect the stock ranking to react, given we the placement was only a few days back and this is yet to reflect. This special situation analysis may surprise you with the conclusions.
After a lacklustre week of range-bound trading, crude ended higher on Friday, though well off its session highs.
Crude was buoyed by strong investor cheer, which prompted an across-the-globe rally in the stock markets. The burst of euphoria was prompted by promising signs from the just-concluded high-level trade negotiations between the US and China in Beijing, though arguably throwing caution to the winds.
The American president fired his second tweet of the year at OPEC on Thursday. It was “very important that OPEC increase the flow of oil,” he said, because the price of oil was “getting too high.” The producers as well as market participants decided not to heed this time.
However, the pressure from Donald Trump is bound to intensify if Brent sustains a rally above $70, and OPEC and its Saudi leadership will not be able to continue ignoring it.
Aramco agreeing with the Public Investment Fund to buy 70% of petrochemicals giant Saudi Basic Industries Corp (SABIC AB) for $69.1 billion marks a new era for the companies. However, it does not mean that the Aramco IPO would be shelved, and directly or indirectly, we don’t expect it to derail Saudi Arabia’s strategy of actively managing oil supply through OPEC.
Our chart of the week shows that speculative bets on a price rally continue to return to Brent and WTI futures, but cautiously.
Sony Corp (6758 JP) is forming a bullish descending wedge/channel that once mature will chisel out an intermediate low with scope to clear medium term breakout resistance. The tactical low near 4,400 lies just above more strategic support.
Clear pivot points will help manage positioning within the bull wedge that is in the final innings.
The tactical buy level is not that far from strategic support with a more bullish macro lean.
MACD bull divergence is not only supportive into near term weakness but also points to a breakout above medium resistance. Risk lies with Sony not looking back after hitting our tactical low target.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Xtep International (1368 HK) has announced a placing and top-up subscription of new shares event, creating a capital base which is 9% larger.
XTEP states that they have considered various ways of raising funds and consider that it would be in their best interests to raise equity funding through the placing and the subscription.
With the share price down 16% since the placement, we examine what this means for the company’s fundamentals and shareholders. We believe the results will prove to be mixed for management and shareholders alike. We highlight how we expect the stock ranking to react, given we the placement was only a few days back and this is yet to reflect. This special situation analysis may surprise you with the conclusions.
After a lacklustre week of range-bound trading, crude ended higher on Friday, though well off its session highs.
Crude was buoyed by strong investor cheer, which prompted an across-the-globe rally in the stock markets. The burst of euphoria was prompted by promising signs from the just-concluded high-level trade negotiations between the US and China in Beijing, though arguably throwing caution to the winds.
The American president fired his second tweet of the year at OPEC on Thursday. It was “very important that OPEC increase the flow of oil,” he said, because the price of oil was “getting too high.” The producers as well as market participants decided not to heed this time.
However, the pressure from Donald Trump is bound to intensify if Brent sustains a rally above $70, and OPEC and its Saudi leadership will not be able to continue ignoring it.
Aramco agreeing with the Public Investment Fund to buy 70% of petrochemicals giant Saudi Basic Industries Corp (SABIC AB) for $69.1 billion marks a new era for the companies. However, it does not mean that the Aramco IPO would be shelved, and directly or indirectly, we don’t expect it to derail Saudi Arabia’s strategy of actively managing oil supply through OPEC.
Our chart of the week shows that speculative bets on a price rally continue to return to Brent and WTI futures, but cautiously.
Sony Corp (6758 JP) is forming a bullish descending wedge/channel that once mature will chisel out an intermediate low with scope to clear medium term breakout resistance. The tactical low near 4,400 lies just above more strategic support.
Clear pivot points will help manage positioning within the bull wedge that is in the final innings.
The tactical buy level is not that far from strategic support with a more bullish macro lean.
MACD bull divergence is not only supportive into near term weakness but also points to a breakout above medium resistance. Risk lies with Sony not looking back after hitting our tactical low target.
So for the disastrous January and February combined, Tesla delivered about 24,900 cars, only a third of the cars it projected for the entire first quarter.
This explains the chaos and drama which dominated March as Tesla hurried through additional price cuts and layoffs, bungled the launch of a harried new online-sales strategy, and threw together a reveal of the disappointing and far-from-ready Model Y (see my reports Tesla’s Plan B 2.0; Y Not and Tesla: Now We Know the Y, But Not the How and Tesla Bonds Go Boom).
Less convincing were Tesla’s conveniently “leaked” teases over the past couple of weeks about a “massive increase in delivery volume” and “Vehicle Delivery Help Needed!” to get a remarkable 30,000 cars to customers the last 15 days of March. Especially since several price cuts already this year have yet to reignite fading demand even for Model 3, much less the aging Models S and X amid accelerating competition from stronger rivals and Tesla’s alarming quality and service troubles which are driving away customers.
We’ve seen this quarter-end movie too many times, and investors responded last week by selling off Tesla stock and bonds to six-month lows.
Thankfully, we are just days away from finding out Tesla’s deliveries for the quarter, which the company will likely report on or before Tuesday. I’m guessing it won’t be pretty.
Market concensus estimates have been falling like meteors the past couple of weeks, and still seem far too ambitious versus my estimates.
Bond Angle analysis continues below.
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