In today’s briefing:
- Dongfeng (489 HK): Revisiting VOYAH’s Spin-Off Valuation
- Tsuruha-Welcia: Will Scale Translate into Profit?
- A Review of Korean Small Cap Gems in 2025
- Shortlist of High Conviction Philippines Equity Ideas – December 2025, And Top Pick For 2026
- Victorian Plumbing Group – Considerable Untapped Potential (Initiation)
- GEC: Strong Progress with Development Assets
- VRA: 3Q Preview: Hints of What’s to Come; Reiterate Hold
- BBW: 3Q Review: Tariffs To Be Even Further Drag into FY26; Lowering EPS & PT
Dongfeng (489 HK): Revisiting VOYAH’s Spin-Off Valuation
- Back on the 22nd August 2025, SOE-backed Dongfeng Motor (489 HK) announced a privatisation; together with a concurrent listing of its EV arm, VOYAH. The two proposals are interconditional.
- In its October application proof, VOYAH turned a profit in 7M25. The market was implying a price-to-trailing-sales of 1.5x for VOYAH, versus the basket average of 2.1x. It’s now ~1.2x.
- Key PRC reg approvals (Mofcom/NDRC/SAFE) remain outstanding. Meanwhile, a basket of peers are down 21% since the dual proposals were announced. And their average price-to-trailing-sales are down to 1.7x.
Tsuruha-Welcia: Will Scale Translate into Profit?
- The Tsuruha and Welcia merger before the year’s close, backed by Aeon, is targeting ¥50 billion in cost savings over three years.
- As well as the massive economies of scale, consolidated procurement, revamped private brands and a unified points and customer‑ID strategy are central to this.
- However, weak food offerings, legacy stores and IT complexity still threaten sustainable profit recovery as is the question of who will be in charge.
A Review of Korean Small Cap Gems in 2025
- In this insight, we review our Korean Small Cap Gem insights that we published in 2025. We published 18 Korea Small Cap Gem Series insights in 2025.
- The 18 Korean Small Caps have generally performed well this year. They were up on average 17% and 45%, respectively one week and two weeks after the insights were published.
- Some of the best performing stocks so far this year include Chunil Express (000650 KS), Aurora World (039830 KS), Makus Inc (093520 KS), and Flitto Inc. (300080 KS).
Shortlist of High Conviction Philippines Equity Ideas – December 2025, And Top Pick For 2026
- We are gradually building a high-conviction coverage of ideas for mid and small-cap companies in the Philippines.
- We established metrics focused on high ROCE, sustainable 10-15% YoY growth, robust balance sheets, and prudent capital allocation —essential elements for identifying potential multi-bagger opportunities.
- We turn our attention to the top picks for 2026. Our overwhelming favorite is The Keepers Holdings (KEEPR PM), but we also highlight four other names.
Victorian Plumbing Group – Considerable Untapped Potential (Initiation)
- Victorian Plumbing’s FY25 results illustrate the strength of its market-leading, profitable and cash-flow generative business.
- In this initiation report we review the group’s attractive investment thesis and conclude the 40% sell-off in the past 12 months significantly undervalues the group’s potential.
- We initiate coverage with a 110p Fair Value equating to 1.1x EV / Revenues, c.11x EV/EBITDA and a c.5% FCF yield (cal 2026).
GEC: Strong Progress with Development Assets
- GEC reported FY25 and Q4 financial results yesterday with Q4 revenue of $8.4M (flat YoY).
- Q4 Adjusted EBITDA was ($3.9M) as the quarter represented a transition for the Company with the sale of SSC.
- GEC continues to advance its development assets, with GEC Oakridge expected to be completed in early 2027, adding ~450 beds (+35%).
VRA: 3Q Preview: Hints of What’s to Come; Reiterate Hold
- We are reiterating our Hold rating and projections for Vera Bradley with the company announcing 3QFY26 (October) results before the open on Thursday, December 11th.
- Given the continuing initial shifts under new management (who joined in July) and the limited ability to change product offerings until 1Q2026 (at the earliest), we believe overall financial results are not as important as are customer responses to the shift back to heritage looks, the return of key silhouettes, the launch of Outlet 2.0 at the end of the quarter and what further changes are in store going forward.
- We continue to view the changes as a positive, but await clarification on the overall implications for the company (and returns) before becoming more aggressive in VRA.
BBW: 3Q Review: Tariffs To Be Even Further Drag into FY26; Lowering EPS & PT
- We are reiterating our Buy rating, but lowering our projections and reducing our price target of BBW to $65 (from $75) after Build-A-Bear reported solid 3Q EBITDA & EPS upside, but lighter than expected revenue, and implied deep tariff impacts into 1HFY26 will serve to offset near-term positives and materially impact operating results.
- 3Q tariffs negatively impacted the company by $4 million (or a projected $0.23 in EPS) with a $6 million further negative impact in 4Q (projected $0.35 in EPS) and, we believe approximately $7 million to $9 million (projected $0.41 to $0.53 in EPS) in the first five months of FY26.
- While we view this scenario as potentially conservative, we have to face the facts that overall gross margins, if tariff impacts remain similar to 2HFY25 in 1HFY26 without any further material offsets, will significantly decline.
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