Daily Briefs

• Tesla’s Q3 10-Q reveals CFO Zach Kirkhorn was suddenly out because he was fired.
• The company also made Kirkhorn reveal any whistleblower efforts he pursued—and then declare Tesla broke no laws. Tesla threatened “legal action” if he talks to the press. 
• Is Tesla setting up its ex-CFO to take a fall?

• Shimano Q3 results show a 32% YoY net sales decline, led by a 38% drop in bike component sales, BUT both sales and profit beat expectations
• The company maintains cost control, sees improving gross margins, and reduces inventories, while cash flow and balance sheet remain strong
• With the upward revision in full-year guidance, we believe the market will look through the still challenging Q4 outlook and focus instead on 2024 normalization and relatively low valuation

• Pop Mart International Group L (9992 HK) announced at noon today a business update on 3Q23.
• Overall sales in 3Q23 grew 35-40% yoy, with domestic China sales up 25-30% yoy and international sales up 120-125% yoy. 
• Thesis intact, as the 3Q23 update showed that the international business continued to grow rapidly at 120-125% yoy growth.

• Equities not yet out of the woods, but as long as SPX is above 4165-4200, most signs point to this being a normal pullback within the ongoing bullish SPX trend.
• Similarly, the Nasdaq 100 (QQQ) is testing support at $350-$355 (the 4-month bull flag/falling wedge pattern). The Russell 2000 is also approaching 1+ year support at 1640.
• Breakdowns would be our cue to get defensive, as it would likely lead to precipitous declines. However, if supports hold, this is where risk/reward is skewed in favor of buyers.

• The current offer from Apollo of 65p/share undervalues the company. RTN ex-Leisure can achieve huge upside merely by executing the business plan. The shares have consistently traded above 65p.
• Activist investors are piling on the register and there is a strong possibility that shareholders push for an offer sweetening (c.75p). RTN is in play, another PE bidder could interlope. 
• The bid is below mid-2021 highs of around 140p. Although a 34% premium is optically good, a conservative SOTP valuation provides a fair value estimate of 78.7p/share (8.7x EV/24eEBITDA).

• MR DIY (MRDIY MK) remains a standout retailer in Malaysia with its commanding position in the home improvement space and beyond, playing into increased demand for value-for-money products.
• The slower growth last quarter came from a high base last year. 3Q2023 should see a strong rebound in growth providing a positive catalyst plus its store expansion is on-track.
• MR DIY‘s can finance its store expansion from internally generated cashflows and should start to see SSSG recover over the coming quarters. Valuations looking more reasonable as growth recovers.

• Ryohin Keikaku’s biggest weakness is its unwieldy and expensive supply chains, with hundreds of suppliers across its three main categories of household, apparel and food.
• The Muji operator just acquired a large team from one of its principle clothing supply partners, Mitsubishi, to finally streamline its supply chains and improve cost performance in clothing. 
• This should have a positive impact on its cost of goods, margins and inventory levels, allowing for quicker responses to trends at a lower price at home and overseas.

The Europe HY Trade Book for October 2023 includes current trade recommendations drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.