In today’s briefing:
- [Japan M&A/Activism] Digital HD (2389 JP) Gets a Counter + 20% – Tough But Not Impossible
- Digital Holdings (2389 JP): SilverCape Counters with a Hostile Preconditional Offer
- Levi Strauss & Co.: Product Innovation & Expansion
- Domino’s Pizza: Strategic U.S. & International Expansion to Diversify Risk While Tapping Into High-Growth Areas!
- Geely (175 HK): Possible to Beat BYD – Contrast of September Deliveries
- Companies Unable to Escape the Curse of the Unfortunate History of Misunderstanding “Cost of Equity”
- CSX Corporation Doubles Down on Growth With Massive Network Expansion Projects; What Lies Ahead?
- Bama Tea (BAMA HK) IPO: Franchise Driven Branded Volume Play Model Will Compensate Foregone Margins
- Kering – Beauty Sale to L’Oréal: Deleveraging Catalyst in a Strategic Reset
- HK-Listed Apparel & Footwear Screener Oct 2025: HK Meetings With JNBY, Leverstyle, and Nameson
[Japan M&A/Activism] Digital HD (2389 JP) Gets a Counter + 20% – Tough But Not Impossible
- Today, in something of a surprise but not a complete surprise, Silvercape came out with its own bid for Digital Holdings Inc (2389 JP) at +20% from the Hakuhodo bid.
- They make it clear that the original bid does not protect minority shareholders or give them sufficient value. This one would. Which means that is Hakuhodo’s bogey.
- It would not be impossible for Silvercape to get to its minimum hurdle, but despite being lower than Hakuhodo’s it’s not a gimme.
Digital Holdings (2389 JP): SilverCape Counters with a Hostile Preconditional Offer
- SilverCape has launched a hostile preconditional tender offer for Digital Holdings Inc (2389 JP) at JPY2,380, a 20.8% premium to the Hakuhodo Dy Holdings (2433 JP) JPY1,970 offer.
- The Board stonewalled SilverCape’s attempts to negotiate a friendly offer. SilverCape’s offer is based on EV/EBITDA multiples and will commence in late November.
- The situation shares similarities with Soft99’s contested offer. The Board is likely to oppose the SilverCape offer. Hakuhodo’s likely move will be to extend the close and disclose current acceptances.
Levi Strauss & Co.: Product Innovation & Expansion
- Levi Strauss & Co. presented a solid performance for its fiscal third quarter of 2025, characterized by notable revenue growth and strategic business transformations.
- The company reported a fourth consecutive quarter of high single-digit organic revenue growth, underscoring its continued momentum.
- A key driver of this success is Levi Strauss & Co.’s shift towards a direct-to-consumer (DTC) approach, as the DTC channel posted a strong 9% increase in sales, powered by higher units per transaction, average unit retail, and full-price sales.
Domino’s Pizza: Strategic U.S. & International Expansion to Diversify Risk While Tapping Into High-Growth Areas!
- Domino’s Pizza, Inc. reported its financial results for the third quarter of 2025, marked by strategic growth and various initiatives under its “Hungry for MORE” strategy.
- The company experienced significant growth in its U.S. market across several key performance areas, including carryout, delivery, and order count, ultimately resulting in increased market share.
- The results were bolstered by several key promotions, particularly the “Best Deal Ever,” which was a cornerstone of Domino’s success during the quarter.
Geely (175 HK): Possible to Beat BYD – Contrast of September Deliveries
- BYD is still the largest sedan maker in China, but its deliveries began to decline.
- Geely is the second largest car maker, but its deliveries surged dramatically.
- We believe Geely is the most promising company when the sedan market gets concentrated.
Companies Unable to Escape the Curse of the Unfortunate History of Misunderstanding “Cost of Equity”
- In the past, dividends paid out of net income were often mistakenly regarded as “equity costs.” Consequently, many companies have adopted the concept of payout ratio as their dividend policy.
- The increasing number of companies adopting dividend policy based on DOE may help curb the expansion of shareholders’ equity, but it hasn’t yet led to active use to raise ROE.
- Few managers still understand that entire FCF belongs to shareholders. Due to the unfortunate history of dividends mistakenly viewed as “equity costs,” few companies clearly articulate their cash allocation strategies.
CSX Corporation Doubles Down on Growth With Massive Network Expansion Projects; What Lies Ahead?
- CSX Corporation’s third quarter results present a nuanced picture of the company’s current operations, underlying challenges, and future prospects.
- During the call, CSX’s leadership highlighted several operational successes, yet acknowledged ongoing market challenges.
- The company’s operational performance has notably improved, with train velocity reaching its highest level since early 2021, and dwell time and daily cars online showing significant reductions.
Bama Tea (BAMA HK) IPO: Franchise Driven Branded Volume Play Model Will Compensate Foregone Margins
- Bama Tea (BAMA HK) launched its Hongkong IPO aiming to raise up to HK$368M. The company plans to sell 9M shares at HK$45-$50 per share.
- Bama Tea is a provider of tea leaf products in China, covering all six major types of tea leaves in China and non-tea-leaf products such as tea-ware and tea snacks.
- Amidst the highly fragmented tea consumption market Bama Tea relies on a volume play model with its branded offerings. We would recommend the investors to subscribe to the issue.
Kering – Beauty Sale to L’Oréal: Deleveraging Catalyst in a Strategic Reset
- €4 bn divestiture cuts Kering’s net debt to ~2× EBITDA, marking a decisive deleveraging under new CEO Luca de Meo.
- Balance-Sheet reset buys time for Gucci’s creative relaunch; early fashion-week feedback encouraging.
- We see moderate upside to €333–€350/share if execution sustains cost control and brand momentum.
HK-Listed Apparel & Footwear Screener Oct 2025: HK Meetings With JNBY, Leverstyle, and Nameson
- We met with JNBY Design Ltd (3306 HK), Lever Style (1346 HK), and Nameson Holdings (1982 HK) in HK. Positive developments in the businesses make them all names to explore.
- With a 50% tariff imposed on India by the US, Vietnam’s factories have now become the busiest in the region, which is a positive read-through for Nameson Holdings (1982 HK)
- The retail environment, though, is mixed with JNBY Design Ltd (3306 HK), seeing good sales momentum, while Lever Style (1346 HK) remains flattish.
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