In today’s briefing:
- JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
- Yamaha Motor – Struggling But Still Too Cheap
- Li Ning (2331): Turning Positive.
- Familymart to Double Space for Hit Clothing Range
- Taste Gourmet: Update Post Management Call / Bullish
- Dongwon Industries Listens to Minority Shareholders and Changes Merger Ratio with Dongwon Enterprise
- India Channel Insight #34 | Eicher (Royal Enfield), TVS Motors, Hero MotoCorp
- Las Vegas Sands: Totally Asia Facing, Is Held Hostage to Travel Bans Remains Attractive at US$33.98
- ERW: Operational Losses Continued to Decline in 1Q22
- Leapmotor Pre-IPO – The Negatives – Related Party Sanctions, Lags Peers
JD.com Tencent Distribution – All Prosus Stock Worth US$3.5bn Could Be in CCASS Now
- On 23rd Dec 2021, Tencent declared a special dividend in the form of distribution in specie of shares of JD.com, making Prosus the third largest shareholder with a 4.2% stake.
- The actual settlement only happened on 25th Mar. On that day, the bulk of the stock that Tencent distributed moved into CCASS with the exception of shares held by Prosus.
- In this note, we talk about the shareholding pattern and increase in shares held in CCASS.
Yamaha Motor – Struggling But Still Too Cheap
- Yamaha’s 1QFY22 was weak with revenue of ¥482bn (-1.5% vs. consensus), and OP of ¥40.1bn (-17.3% vs. consensus).
- The company’s FY22 guidance remained unchanged projecting ¥2,000bn in revenue (-2.0% vs. consensus) and OP guidance of ¥190bn (-4.5% vs. consensus).
- Beating guidance significantly will now be difficult without price hikes but valuations are too cheap to ignore.
Li Ning (2331): Turning Positive.
- Q1 22 operating figures are better than the smaller peers although not exactly beating Anta.
- Launching the cafe to boost SSSG post-COVID-19 is a positive strategy.
- Its valuation is currently trading below its historical highs . Turn positive on Li Ning (2331 HK) .
Familymart to Double Space for Hit Clothing Range
- Convenience stores in Japan aren’t known for their fashion prowess although most sell the odd sock and underwear.
- FamilyMart Co Ltd (8028 JP) sees an opportunity to both expand sales categories and increase margins with higher value fashion basics supplied by its new parent Itochu Corp (8001 JP).
- Itochu is a leading fashion supplier and has created a hit product range for Familymart as well as another in cosmetics.
Taste Gourmet: Update Post Management Call / Bullish
- Taste Gourmet Group (8371 HK) held a webinar with Smartkarma on the 17th of May, highlighting the sharp and swift recovery of F&B in Hong Kong.
- Post 19th May, eight people can dine in till midnight (vs. four). With mid-May revenue tracking 109% of June 2020 (restrictions were fully relaxed), recovery should be better than expectations.
- Despite the 13% move yesterday, the stock is still cheap at 5.9x PE FY23 earnings and an 8-10% dividend yield (with a potential for further upgrades).
Dongwon Industries Listens to Minority Shareholders and Changes Merger Ratio with Dongwon Enterprise
- In a surprising move, Dongwon Industries announced that it will listen to the demands of the minority shareholders and change the merger ratio with Dongwon Enterprise.
- This is likely to have a positive impact on Dongwon Industries since it boosts the value of Dongwon Industries’ minority shareholders at the expense of controlling shareholders of Dongwon Enterprise.
- The merger price of Dongwon Industries will be raised from 248,961 won to 384,140 won (reflecting net asset value). The merger ratio will be adjusted from 1:3.8385530 to 1:2.7023475.
India Channel Insight #34 | Eicher (Royal Enfield), TVS Motors, Hero MotoCorp
- We speak to channels across West, North and South to understand the 2W demand environment
- Mid segment is still not seeing recovery, premium and lower end segment is stabilising / doing relatively better.
- Restoration of supplies and aggressive marketing strategies can aid volume recovery for TVS Motor (TVSL IN) and Eicher Motors (EIM IN)
Las Vegas Sands: Totally Asia Facing, Is Held Hostage to Travel Bans Remains Attractive at US$33.98
- DCF valuation now at $44.51 indicating stock could be 24% undervalued here.
- Sentiment on Las Vegas asset sale has turned negative as to timing as some investors believe it was hasty given the recovery of the Vegas market.
- Strong balance sheet provides long term solvency with current ratio of 2.1 as rumors of China lockdown easing persist since last week.
ERW: Operational Losses Continued to Decline in 1Q22
- Analyst meeting came out with positive tone regarding 22E outlook.We maintain BUY rating with TP Bt4.20 derived from DCF valuation (WACC=7% & Terminal growth= 2%) implying 10% discount to 23.1xPE’23.
- The company reported net loss of Bt313m in 1Q22 compared to net loss of Bt492m in 1Q21 and net loss of Bt246 in 4Q21 in line with our expectation.
- Excluding extra ordinary items, the operational losses declined YoY and QoQ to Bt313m since revenue almost doubled YoY and increased 4% QoQ to Bt646m after bottoming out in 3Q21.
Leapmotor Pre-IPO – The Negatives – Related Party Sanctions, Lags Peers
- Leapmotor (LM) aims to raise around US$1bn in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
- It focuses on the mid- to high-end segment in China’s NEV market with a price range of RMB150,000-300,000. As of end FY21, it had delivered a total of 52,832 cars.
- In this note, we talk about the not so positive aspects of the deal.
Before it’s here, it’s on Smartkarma
