In today’s briefing:
- L’Occitane (973 HK): Conditional VGO at HK$34
- L’Occitane (973 HK): Geiger’s $34/Share Offer
- NPN X PRX Discount Update Post Tencent Early Game Release News Flow
- Fuyao Glass (3606 HK): Global Champion Benefiting From Structural Uptrend
- Monthly Chinese Tourism Tracker | Outbound Recovery Continues, but Some Regional Destinations Lag
- International Automobile Analysis
- China Consumption Weekly (29 Apr 2024): Weird Phone Mkt, Encouraging Car and Travel Mkts
- EQD | HSI Closing April Up Changes Our Forecast!
- BYD (1211 HK): Low Growth in 1Q24, But March Sales and Homemade Batteries to Support a Strong Year
- Pre-IPO Mao Geping Cosmetics – Potential Risks Behind High Gross Margins
L’Occitane (973 HK): Conditional VGO at HK$34
- L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
- The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
- Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.
L’Occitane (973 HK): Geiger’s $34/Share Offer
- After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
- The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final.
- This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.
NPN X PRX Discount Update Post Tencent Early Game Release News Flow
- Last week Monday, Tencent confirmed the early release of Dungeon and Fighter Mobile, a highly anticipated mobile adaptation of the computer game developed by Nexon.
- The game is expected to be released in China on the 21st of May following positive test results.
- Tencent was the 11th best performing constituent in the HSTECH index for the week (out of 30), returning 14.7%. The index ended the week up 13.4%.
Fuyao Glass (3606 HK): Global Champion Benefiting From Structural Uptrend
- Fuyao Glass Industry Group (3606 HK) is the largest auto glass producer in the world, with an estimated 40% market share globally, and a dominant 65% market share in China.
- The investment case for Fuyao include: ASP increase from product mix upgrade; increasing sales volume due to more auto glasses needed per car; and improving margins.
- The company has production bases in China with annual production volume of around 32.5 million units, and in US with annual production volume of around 5.5 million units.
Monthly Chinese Tourism Tracker | Outbound Recovery Continues, but Some Regional Destinations Lag
- Outbound continues to improve, March load factor matched pre-Covid level
- Appears Chinese tourists are “spreading their wings”, travelling farther afield
- Trip.com has been best YTD performer in the space; can airlines catch up?
International Automobile Analysis
- Spanning the globe for current best-in-breed auto players shows diverging action.
- New pair suggestion: Long Tesla/Short Rivian. Bottom could be in on TSLA
- Updated JD.com general status from last week’s China/Japan Note encouraging.
China Consumption Weekly (29 Apr 2024): Weird Phone Mkt, Encouraging Car and Travel Mkts
- The top five smartphone producers’ market shares got closer in the first quarter.
- The China Immigration Office announced that entry and exit of people increased by 305% YoY in 1Q24.
- China Passenger Car Association expected that new energy vehicle sales volume will grow by 37% YoY in April.
EQD | HSI Closing April Up Changes Our Forecast!
- If the Hang Seng Index (HSI INDEX) closes the month of April up (i.e. above 16541.42), our previous forecast will change (read the insight below for the detailed analysis).
- The index performed an impressive bounce from the support levels (16050) we indicated in our previous insight, it is very overbought (WEEKLY model) and may close April up.
- A continuation of the WEEKLY uptrend is in doubt, this week, while the MONTHLY situation is more complex.
BYD (1211 HK): Low Growth in 1Q24, But March Sales and Homemade Batteries to Support a Strong Year
- BYD’s revenue growth is lower than the estimate in our preview note.
- However, the recovery of sales volume in March suggests a strong year.
- We believe BYD will win the price war due to its homemade batteries.
Pre-IPO Mao Geping Cosmetics – Potential Risks Behind High Gross Margins
- MAO GEPING relies heavily on flagship brand MAOGEPING, with over-reliance risks on single brand.The strategy of focusing more on offline sales channels makes it appear less up-to-date with the times.
- Different from most brands, the influence of MAO GEPING largely comes from its founder, Mr. Maogeping, who if reduces his holdings, could have a negative impact on the Company’s business/prospects.
- Solely relying on marketing and promotion to drive performance growth is not a long-term solution.Lack of core technology and product innovation would limit MAO GEPING’s future development in fierce competition.
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