In today’s briefing:
- Chagee Holdings (CHA US) IPO: Global Index Inclusion Timeline
- Giant Biogene Placement – Great Track Record but Previous Deal Didn’t Do Well
- After Squaring Away Japfa, The Santosa Family Looks To PT Japfa
- Anta (2020 HK): Acquired Jack Wolfskin, Still Financial Momentum, Upgrade to Buy
- DKSH Malaysia (DKSH MH): Stable Business Available at Attractive Valuation
- CR Beverage (2460 HK): Keep Calm Heading into the Lock-Up Expiry
- China East Education (667 HK): In an Excellent Position
- Gleanings From the Ginebra San Miguel (GSMI PM) FY24 Annual Report
- Activist Investors Will Focus Their Approach More on Whole Assets that Aren’t Being Used Effectively
Chagee Holdings (CHA US) IPO: Global Index Inclusion Timeline
- Chagee Holdings (CHA US) is looking to raise up to US$473m in its IPO, valuing the company at up to US$5.2bn. The offering is expected to price today, list tomorrow.
- Media reports indicate that cornerstone investors have indicated demand for US$205m of the offering. There is no mention of a lock-up on those investors yet.
- The stock could be added in one global index in August (with a higher probability of inclusion in November), while inclusion in the other global index is likely in December.
Giant Biogene Placement – Great Track Record but Previous Deal Didn’t Do Well
- Giant Biogene (2367 HK) aims to raise up to US$250m via a top-up placement.
- We have followed the company since listing and its recent performance has been great. Although it doesn’t seem to need the cash and the previous deal didn’t go well.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
After Squaring Away Japfa, The Santosa Family Looks To PT Japfa
- On the 24th January, Renaldo Santosa and his family, who controlled ~75.5% of agri-play Japfa Ltd (JAP SP), pitched a Scheme Offer at S$0.62/share, a 34.8% premium to undisturbed.
- Yesterday (15th April), disinterested shareholders overwhelmingly (in terms of shares) backed the Scheme. The last day of trading is around the 9th May, and payment around the 30th May.
- The question now is whether the family now seeks to take 55.4%-held Japfa Comfeed Indonesia (JPFA IJ) private.
Anta (2020 HK): Acquired Jack Wolfskin, Still Financial Momentum, Upgrade to Buy
- The acquisition of Jack Wolfskin means the brand portfolio strategy still works.
- The financial potential is NOT as weak as the 2024 result looks.
- We conclude an upside of 40% and a price target of HK$122 for the next twelve months.
DKSH Malaysia (DKSH MH): Stable Business Available at Attractive Valuation
- Stable and free cash flow generating business available at attractive price
- Trades below book with double digit ROE and at Significant discount to its parent valuation
- Priced towards low end of historical PE and P/B ( similar to COVID valuations)
CR Beverage (2460 HK): Keep Calm Heading into the Lock-Up Expiry
- China Resources Beverage (2460 HK) trades 4.0% below its IPO of HK$14.50 per share. The first six-month lock-up period expires on 22 April.
- At the end of the first lock-up expiry, shares representing 727.1m (30.32% of outstanding) will be eligible for sale. However, there is a low risk of substantial sales.
- The fundamentals remain good, with margin improvement, beverage’s fast-paced growth, narrowing of the margin gap with Nongfu and undemanding valuation.
China East Education (667 HK): In an Excellent Position
- China East Education (667 HK) remains well-positioned in the government’s support of vocational education, despite its YTD outperformance.
- Higher average tuition per student, better cost control, accelerating growth in the “Fashion and Beauty” segment, and new course introduction are the main profit drivers.
- Net cash equals 17.2% of the share price, while other peers are struggling with debt repayment. Coupled with stronger earnings CAGR, its premium PERs are justified.
Gleanings From the Ginebra San Miguel (GSMI PM) FY24 Annual Report
- On March 21st, we attended the PSE conference in Manila and met Ginebra San Miguel (GSMI PM). We will share updates from our discussion and examine the FY24 annual report.
- For FY24, revenue/operating profits were up 16.5%/26% YoY, driven by 9% volume growth to 50.6 mn cases and operating margin expansion by 110 bps to 13.8%.
- With a PE ratio of 11.4x, a dividend yield of 5.4% (approximately 16 pesos per share), and 16% of the market capitalization held in cash, the stock merits further investigation.
Activist Investors Will Focus Their Approach More on Whole Assets that Aren’t Being Used Effectively
- It’ll be interesting on whether shareholder proposals will be passed in companies with larger market capitalization and larger institutional investor ownership, which will be the main battleground for activist investors.
- There are so many companies that are not creating the value they should be, it is no wonder that any company becomes a target for activist investors.
- As activist funds’ AUM grows, their approach is likely to focus more on overall assets that are not being used effectively, such as cash, real estate, equities, and non-core businesses.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
