Daily Briefs

• Every now and then, you get a tender offer proposal which is truly offensive. This is one. 
• Yes, existing ICE-related autoparts makers are under the cosh as they face down obsolesence induced by competition from EVs. Fuel tank makers like Yachiyo are at risk. 
• But this bid started at <0.3x book, and ended at <0.5x book, despite significant net financial assets and lots of unrecognised DTAs. 

• Hero Motocorp (HMCL IN)  & Harley Davidson (HOG US) launched their collaborative creation, the Harley-Davidson X440, in India.
• While this is a step in the right and anticipated direction, there are potentially grave mistakes that need to be corrected.
• For HOG, there is more to lose than to gain from this development. Additionally, Eicher Motors (EIM IN) moat around the brand and a strong riding culture is likely underrated.

• Q2 deliveries were solidly higher versus expectations, thanks to Tesla’s 11th hour fire sales on top of fire sales to move sluggish inventory. 
• The trouble is, this likely slashed already shrinking profitability while excess inventory continued to grow.
• Margins & profits probably can’t recover as more aggressive measures already are needed in Q3 just to sustain sales.

• We are bullish on Lawson and see fair value at Y7,500 per share based on 3% FY2/25 DPS of Y225/share
• The domestic convenience store business is recovering post pandemic leading to a possible earnings beat
• The market remains sceptical of mid-term growth drivers like Seijo Ishii and China expansion plans

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Natura’s ESG as “Strong”, in line with its “Strong” Environmental and Social scores. The company has an “Adequate” score for the Governance pillar. Controversies are “Immaterial” and Disclosure is “Strong”. 

• Sido Muncul (SIDO IJ) performance during COVID was stellar and posted record high revenues and earnings without sacrificing margins. 
• FY 22’s result was the first time in many years that both revenue and net income decelerated. 
• Current valuations at 19x PER and 7x PBR are not cheap, historically or relative to their peers. 

• Although more companies have recently started to use their cash for shareholder returns, this is still not enough in terms of the dividend payout ratio.
• Both sales and profits of companies haven’t increased by that amount for past 10 years. The question for the future is whether the cash on hand can be used effectively.
• It is hoped that the quality of listed companies on prime market will improve as a result of M&As involving industry restructuring, the dissolution of parent-subsidiary listings and going private.

• Lalatech Holdings Co Ltd (LALA HK) is looking to raise about US$1bn in its upcoming HK IPO.
• Lalatech operates via a marketplace model serving merchants and carriers. Its platform facilitates closed-loop transactions from online shipping order booking to intelligent order matching, and automated dispatching to after-sale services.
• We have looked at the company’s past performance and peer comparison in our earlier notes. In this note we will talk about valuations.