In today’s briefing:
- Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks
- SENSEX Index Rebalance Preview: Two Changes for Now; Third Change at the Cusp
- MIXUE Group IPO: The Leading Player that Justifies a Premium
- Thai Beverage: In Low Spirits. Now a Low- Risk Dividend Play
Alibaba (9988 HK): Results This Week; Over US$1bn Passive Selling in 3 Weeks
- Alibaba Group Holding (9988 HK) stock has rallied bigly over the last month and has gained 55% over that period.
- That has led to Alibaba‘s weight in the HSI INDEX, HSCEI INDEX, HSTECH INDEX and HSIII Index rising above the cap of 8%/12% and passives will sell on 7 March.
- We estimate passive trackers will need to sell US$1.2bn of stock due to capping. Shorts have been increasing, and quarterly results will be announced on 20 February.
SENSEX Index Rebalance Preview: Two Changes for Now; Third Change at the Cusp
- Nearing the completion of 60% of the review period, there could be two changes for the BSE SENSEX Index (SENSEX INDEX) at the June rebalance.
- With one stock right at the cusp of deletion from the index, there could be a third change too. Sector balance will be used to decide the list of inclusions.
- The forecast adds outperformed the forecast deletes in the back end of 2024 but there has been huge underperformance this calendar year as stocks with nosebleed valuations have sold off.
MIXUE Group IPO: The Leading Player that Justifies a Premium
- Mixue Group (MIX HK) has a whopping market share of 32.7% in 2023, based on number of cups sold. It also has the highest profit in the sector.
- With a strong profit record and net cash, it is a leader that captures industry growth. Its extensive network targets low-tier cities’ potential and the franchise model drives expansion.
- It justifies trading on a premium to sector average PER of 19.6x for FY25. If aligning P/B with ROE on the best-fit line, it should be priced at 5.1x pre-money.
Thai Beverage: In Low Spirits. Now a Low- Risk Dividend Play
- Thai Beverage (THBEV SP) reported marginal revenue growth and a slight decline in EBITDA for the December quarter (1QFY25), even as its spirits segment experienced a sharper drop in both.
- With its primarily Thailand-based spirits segment seemingly in a structural decline, growth in other segments must offset the impact on overall sales.
- With limited potential to unlock value from its beer division, particularly amid the sharp decline in BeerCo’s valuations, Thai Bev seems increasingly off investors’ radar.
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