Consumer: Giordano International, Kakao Pay, Water Oasis, Tesla Motors, Fast Retailing, Tata Consumer Products, Indian Hotels and more

• Giordano International (709 HK) announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.  
• The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.
• David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.  

• The MSCI immediately included 4.31% owned by Netmarble in Kakao Games’ float by applying one of the exception rules in Sections 3.2.4 or 3.2.5 of the MSCI GIMI Methodology Book.
• The exception rule used here must have been this one: Re-estimating free float figures resulting from the reclassification of shareholders from strategic to non-strategic.
• I can’t find a reason why this practice of the MSCI shouldn’t be equally applied to Alipay’s Kakao Pay stake.

• Water Oasis (1161 HK) reported a tepid H1 with profits coming in at 26 mn HKD, down 56.2% YoY.  This was below our expectations as the company received no subsidies.
• No interim dividend was paid as the profit in H1 was minuscule, and business had commenced on the 21st of April, impacting a month of H2.  
• Save for another lockdown in HK, we see a substantial improvement in profitability for Water Oasis (1161 HK) in H2, along with subsidies that are being paid retrospectively.

In our next Webinar, we are excited to host Analyst Chris Redl (SC Capital) who will outline his stock picks in the global automotive sector. What do major automotive names look like amidst the EV revolution? Tune in to hear more.

The webinar will be hosted on Wednesday, 29 June 2022, 17:00 SGT/HKT.

SC Capital has over 20 years’ experience covering the global automotive industry both on the Sell-side (UBS & Morgan Stanley) and Buy-side (Och-Ziff), along with a wealth of industry contacts. The current focus is on electric vehicle stocks & their supply chains, aiming is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well. From time to time, SC Capital covers opportunistic events with stocks in the manufacturing sector, food & beverage, healthcare, and tech.

• Fast Retailing (9983 JP)’s share price continues to hold at the post 2QFY22 level despite clear signs of weakness in many of its growth markets.
• Even though markets have partially priced in the losing competitiveness in the Chinese market, it still believes Fast Retailing can offset that with growth from North America and Europe businesses.
• As North America and Europe expose their true colours in the next quarterly results due mid-next month, we expect a much-needed correction to Fast Retailing’s share price.

• The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK). 
• The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering. 
• The intention is to maintain Giordano’s listing. The Offer Price has not been declared final. 

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• Hotel Brands (Traditional business): IH has introduced AHVAAN 2025 strategy, under which it expects to reach a portfolio of 300 hotels, comprising Taj (100), Vivanta and SeleQtions (75), and Ginger (125).
• For details on AHVAAN 2025, refer to IH Analyst meet report.
• As on 31st March 2022, IH has 20,581 rooms, after adding around 1,156 rooms in FY22.

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.