Daily Briefs

• Back in August 2017, Xingxuan Technology, a privately held Cayman Islands company operating in the online food delivery space in China, was transferred by way of a statutory merger. 
• The buyer was Alibaba Group (9988 HK)-backed Rajax, the key seller, Baidu (9888 HK). The dissenter, having paid US$125mn for its shares, was offered cash/scrip worth an estimated US$42mn.
• The dissenter considered terms low-balled. The judge agreed. The uplift? 659%.

• Raymond Lifestyle (RAYMONDL IN) recently demerged from Raymond Limited.  Since Raymond Limited was part of various indexes, Raymond Lifestyle was not. Index Fund selling led to a correction.
• The correction made Raymond Lifestyle a special situation value bet.
• The cherry on the cake is strong management guidance and a foray into the untapped non branded and unorganized apparel segment

• Rakuten is a Japanese conglomerate with a diverse portfolio of businesses, including e-commerce, finance, travel, and mobile telephony.
• Founded during the late nineties global Internet boom, Rakuten has become a ubiquitous brand in Japan.
• The loyalty point system has become a key feature of Rakuten’s business model, connecting its various services together.

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• China Resources Beverage (CRB HK), China’s largest purified drinking water company, has received HK listing approval for a US$1 billion IPO.
• In CR Beverage IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on core business’ pricing pressure, a slow pace of revenue diversification, a sizeable pre-IPO dividend, and margin and FCF generation below its key peer. 

• Media reports indicate that Midea Group (000333 CH) has priced its H-shares IPO at HK$54.8/share, the top of the range. That is a 19.85% discount to the A-shares.
• Reports also indicate that the IPO was oversubscribed multiple times with Hillhouse and GIC putting in large orders. That could result in the Offer Size Adjustment Option being exercised.
• The exercise of the Offer Size Adjustment Option will take the IPO raise to HK$31bn (US$3.98bn) and index inclusion in some of the larger indices will become a lot easier.

• Comparing the number of Japanese companies in top 50 global market capitalization and Japan’s GDP as percentage of world’s GDP in 1989, it’s clear that economy and companies didn’t grow.
• Without more Japanese companies that have an edge in profitability, a key focus for long-term global investors, it will not be possible to put long-term investment money into Japanese equities.
• It is assumed that BoJ’s policy of inducing the yen to depreciate through ultra-monetary easing may have in part spoiled company managers and caused them to neglect their corporate efforts.

• DICK’S Sporting Goods’ second quarter 2024 earnings showcased a compelling financial performance, emphasizing its robust strategies and execution capacities.
• The sporting goods retailer reported an encouraging 7.8% increase in sales compared to the previous year, reaching nearly $3.5 billion.
• This result reflects not only an enhancement of average sales tickets but also an uptick in transaction volumes, signaling strengthened consumer engagement and market share.

• Casey’s General Stores wrapped up its first quarter of fiscal year 2025 with a positive outlook on its operations, financials, and strategic direction.
• Led by CEO Darren Rebelez and CFO Stephen Bramlage, the company’s performance reflected a strong start to the fiscal year with notable progress in both store operations and financial metrics.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Hormel Foods Corporation reported a robust performance in its third quarter of fiscal 2024, exhibiting a mixture of strengths across various segments and some challenges, particularly in the retail andinternational sectors.
• Starting with the positives, Hormel continued to witness healthy performance across its key retail brands.
• Brands such as Hormel Black Label Bacon, SPAM luncheon meats, and Skippy peanut butter exhibited strong growth, emphasizing successful consumer engagement and brand strength.

• Dollar Tree, a prominent American chain of discount variety stores, recently conducted its second quarter 2024 earnings call, providing varied insights into its current financial health and future expectations.
• The discussion, led by Chief Operating Officer Mike Creedon in place of CEO Rick who is currently unwell, highlighted both the company’s challenges and areas of robust performance despite a demanding macroeconomic environment.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.