In today’s briefing:
- Alibaba (9988 HK): Dual Primary Listing Implications
- Pop Mart: Aggressive Overseas Expansion to Hurt Profitability
- Shenzhen Pagoda Industrial Pre-IPO – Earnings Recovered but Nothing Really Stands Out
- Alibaba (9988 HK) Pre-Earnings: Lowest Growth, Will Recover in December Quarter, Buy
- IPAR: Growth Despite Forex Headwind
Alibaba (9988 HK): Dual Primary Listing Implications
- Alibaba Group (9988 HK) currently has a Secondary Listing in Hong Kong and is looking to become dual primary listed in Hong Kong and the U.S.
- The main change will be inclusion in the Southbound Stock Connect program where mainland investors will be able to buy the stock.
- Alibaba Group (9988 HK) is capped at 8% in the HSCEI INDEX and is close to 8% of the HSI INDEX, there will be negligible impact on the dividend futures.
Pop Mart: Aggressive Overseas Expansion to Hurt Profitability
- Pop Mart’s share price has lost more than 50% YTD as resurgence of Covid in China has severely impacted the company’s operations including closure of physical stores and robo shops.
- The company also issued a profit warning last week for 1H2022 that was severely impacted by the spread of Covid-19 as well as business expansion related costs.
- We expect the company’s aggressive overseas expansion strategy to continue to impact the company’s profitability and there is further downside.
Shenzhen Pagoda Industrial Pre-IPO – Earnings Recovered but Nothing Really Stands Out
- Shenzhen Pagoda Industrial (1317437D CH) is looking to raise up to US$500m in its upcoming Hong Kong IPO.
- Shenzhen Pagoda Industrial (SPI) is a fruit retail operator in China. According to Frost & Sullivan, it ranked first among all fruit specialty retail operators in China in 2021.
- However, the firm operates in a highly fragmented industry with low market share of 1.0%, even as the largest player.
Alibaba (9988 HK) Pre-Earnings: Lowest Growth, Will Recover in December Quarter, Buy
- We believe Alibaba’s revenue growth rate will reach historical low in 1Q23, but it will recover two quarters later.
- Alibaba’s stock price fell from HK$300 in October 2020 to HK$100 today.
- We believe Alibaba has at least an upside of 43%.
IPAR: Growth Despite Forex Headwind
- IPAR continues to demonstrate the strength of the consumer’s willingness to purchase fragrances the Company develops
- IPAR announced Q2 sales of $244.7M compared to our forecast of $198.0M. The strength in the quarter was notable in the USA while the European segment had a small lift
- IPAR taking over the Donna Karan and DKNY brands should lead to greater sales performance in the second half of the year
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