In today’s briefing:
- Chow Tai Fook (1929 HK): Strong Rally, Weak Jewellery Demand. Growth Risks.
- Mandom (4917 JP): Welcome Activism as Hibiki Takes Issue with the Price
- Chery Automobile IPO (9973 HK): Valuation Insights
- Chery Auto IPO – Probably Around Fair Value, Cash and Peer Momentum Might Save the Day
- Underweight/Short Alibaba (9988 HK): Quant Model Flags Mean Reversion After 40% Post-Earnings Surge
- Physicswallah Ltd Pre-IPO Tearsheet
- Has Chewy FINALLY Cracked the Code for High-Margin Growth – What Happened In The Latest Results?
- Faraday Future to Spin Off Crypto Assets into a Standalone Company “CXC10”
- Buyback Consideration Surges 80% in 2025 to S$1.65B
- As Role of Outside Directors Becomes More Important, Is Effectiveness of BODs Improving Accordingly?
Chow Tai Fook (1929 HK): Strong Rally, Weak Jewellery Demand. Growth Risks.
- China gold jewelry demand slumped in 2Q2025, while investment demand for coins and bars remained resilient amidst rise in gold prices, according to data released by China Gold Association.
- If gold rally continues, Chow Tai Fook Jewellery (1929 HK) faces heightened demand growth risk due to reliance on the competitive, price-sensitive, consumption-driven jewellery segment.
- Chow Tai Fook’s 140% YTD rally reflects optimism on branding-driven earnings growth, but stretched valuations overlook downside risks to growth if gold prices keep rising.
Mandom (4917 JP): Welcome Activism as Hibiki Takes Issue with the Price
- On 15 September, Hibiki Path Advisors issued an open letter questioning the rationale for the Mandom Corp (4917 JP) Board to recommend a CVC-sponsored preconditional MBO at JPY1,960 per share.
- Hibiki opines that the MBO is being done at the wrong price (Hibiki’s value is JPY3,050). Some of Hibiki’s criticisms are valid, while others are not.
- CVC’s initial approach will wait for precondition satisfaction and secure additional irrevocables. However, this is a stopgap measure, and a bump is likely to occur.
Chery Automobile IPO (9973 HK): Valuation Insights
- Chery Automobile (9973 HK) is a Chinese automobile manufacturer. It has launched an HKEx IPO to raise up to US$1.2 billion.
- I previously discussed the IPO in Chery Automobile IPO: The Bull Case and Chery Automobile IPO: The Bear Case.
- In this note, I present my forecasts and valuation. My analysis suggests that the IPO price range is reasonable.
Chery Auto IPO – Probably Around Fair Value, Cash and Peer Momentum Might Save the Day
- Chery Automobile is looking to raise about US$1.2bn in its upcoming Hong Kong IPO.
- Chery Auto is a Chinese passenger vehicle company which designs, develops, manufactures and sells passenger vehicles, including internal combustion engine vehicles and new energy vehicles, both domestically and overseas.
- We have looked at the company’s past performance in our previous notes. In this note, we talk about valuations.
Underweight/Short Alibaba (9988 HK): Quant Model Flags Mean Reversion After 40% Post-Earnings Surge
- Context: The Alibaba (9988 HK) / Hang Seng Index (HSI INDEX) price-ratio deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long the Hang Seng Index and short Alibaba (9988 HK) targets a 12% return.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
Physicswallah Ltd Pre-IPO Tearsheet
- Physicswallah Limited (2076103D IN) is looking to raise about US$434m in its upcoming India IPO. The deal will be run by Axis, Kotak, GS, and JPM.
- Physicswallah Ltd (PWL) offers test preparation courses for competitive examinations, and other courses such as for upskilling, across 13 education categories, including JEE, NEET, and UPSC, among others.
- According to Redseer, PWL was among the top-five education companies in terms of revenue in India and one of the fastest-growing companies in terms of revenue growth during FY22-24.
Has Chewy FINALLY Cracked the Code for High-Margin Growth – What Happened In The Latest Results?
- Chewy’s latest financial performance in the second quarter of fiscal year 2025 showcased solid growth, with net sales increasing by approximately 9% year-over-year to $3.1 billion, surpassing the upper end of the company’s guidance range.
- This growth is particularly noteworthy in a market environment characterized by low to midsingle-digit industry growth, highlighting Chewy’s ability to capture market share.
- The company’s Autoship program, especially in consumables and health categories, played a significant role, generating $2.58 billion in customer sales and constituting 83% of total sales for the quarter.
Faraday Future to Spin Off Crypto Assets into a Standalone Company “CXC10”
- Faraday Future to spin-off its “Crypto Flywheel” / C10 Treasury assets into a separate entity (CXC10), enabling independent fundraising and clearer strategic focus.
- Post separation, Faraday Future remains an EV story, focused on vehicle development, production milestones, and shared mobility initiatives.
- The separation of the volatile, high-risk crypto assets from the EV business will reduce investor confusion and may uplift valuation by removing any conglomerate discount.
Buyback Consideration Surges 80% in 2025 to S$1.65B
- In 2025, 76 primary-listed companies in Singapore executed share buybacks totaling S$1.65 billion, an 80% increase from 2024.
- UOB, DBS, and OCBC led buybacks with a combined S$1.28 billion, driven by capital management initiatives and dividends.
- Secondary-listed Hongkong Land repurchased US$176 million shares, while City Developments completed an off-market buyback of preference shares.
As Role of Outside Directors Becomes More Important, Is Effectiveness of BODs Improving Accordingly?
- Corporate Governance Code, which makes the appointment of outside directors mandatory, was introduced in the hope of restructuring corporate governance and restoring profitability.
- We must explore why, as the role of outside directors expands and dependence on them grows, the challenges of profitability and rising stock prices remain far from being resolved.
- It’s a good idea to have half of directors be independent outside directors. Companies with fewer than that should improve the skills of the entire BOD to increase their effectiveness.
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