In today’s briefing:
- GMO Internet (4784) DropDown Holdco Gone Ballistic – Squeezed on Truly Tiny Float
- Sanrio (8136 JP): Global Index Inclusion in May
- BYD (1211 HK): Some Threats Before 1Q25 Result
- Dada Nexus (DADA US): Takeaways from the 13E-3 Filing
- Event Driven: Jubilant Agri & Consumer Products Demerger- Next Value Creator from the Bhartia Group?
- Lucror Analytics – Morning Views Asia
- Adastria: Cautious on the Platform Narrative, But Optimistic on Margins and Valuation Rebound
- Shandong Fengxiang (9977.HK) Privatization – Long-Term Investors May Be Unhappy with the Offer Price
- Meituan (3690 HK): Options Insights and Analysis, Skew Shift Amid Earnings Calm
- Reviewing the Demerger Arbitrage Setup for Continental AG
GMO Internet (4784) DropDown Holdco Gone Ballistic – Squeezed on Truly Tiny Float
- Gmo Ad Partners (4784 JP) has become GMO Internet as of 1 January 2025. On that day, it merged with the “internet infrastructure business” of GMO Internet (9449 JP).
- It was a kind of reverse takeover – a backdoor listing – and it on 24-Dec-2024, it was announced GMO Internet would move from TSE Standard to TSE Prime end-Jan2025.
- The stock is +300% since then. Why? A squeeze. Share count increase? 15x. Float share increase? Zero. Resulting Real World Float? 1.24% of shares out and about to shrink.
Sanrio (8136 JP): Global Index Inclusion in May
- Sanrio (8136 JP)‘s stock price dropped following the placement announcement in November. Then there was a rally in the stock amid increased volatility.
- The placement resulted in an increase in free float and the move higher in the stock could lead to Sanrio (8136 JP) being added to a global index in May.
- There is positioning in the stock but a lot of that appears to have been taken off in the last month. The stock could move higher depending on global cues.
BYD (1211 HK): Some Threats Before 1Q25 Result
- The growth rate of sales volume slowed down in March 2025.
- Geely’s sales volume reached 46% of BYD’s in 1Q25, compared to 23% in 2024.
- We set a downside of 18% and a price target of HK$300 for the next twelve months.
Dada Nexus (DADA US): Takeaways from the 13E-3 Filing
- Dada Nexus (DADA US) has filed the 13E-3 relating to the binding proposal from JD.com Inc (ADR) (JD US) at US$2.00 per ADS, a 41.8% premium to the undisturbed price.
- The 13E-3 filing provides more details on the price negotiations, required regulatory approvals and IFA valuation. Crucially, no Chinese regulatory approvals are required.
- The completion conditions are low-risk. At last close and for an end-September payment, the gross/annualised spread is 5.4%/12.1% (including the US$0.05 ADS cancellation fee).
Event Driven: Jubilant Agri & Consumer Products Demerger- Next Value Creator from the Bhartia Group?
- Separation of fertilizer division enables sharper valuation for adhesives, removing drag from losses and unlocking pure-play growth potential.
- High growth with underpriced products; margin expansion likely as brand strength builds, closing gap with Pidilite and Jyoti Resins.
- Once loss-making agri business now EBIT-positive; post-demerger focus may revive segment and surprise on valuations.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: MGM China, Adani Ports
- In the US last Thursday, March housing starts came in below estimates at negative 11.4% m-o-m (-5.4% e / 9.8% revised p) to an annualised 1.32 mn units (1.42 mn e / 1.49 mn revised p), amid high inventory levels and uncertainty over building-material costs.
- That said, building permits rose 1.6% m-o-m (-0.6% e / -1.0% p) to an annualised 1.48 mn units (1.45 mn e / 1.46 mn p).
Adastria: Cautious on the Platform Narrative, But Optimistic on Margins and Valuation Rebound
- Adastria’s “5th CHANGE” outlines a strategic pivot from specialty retail to a platform model aimed at scaling across brands, categories, and geographies while navigating domestic headwinds and evolving consumer behaviors.
- While Adastria Co Ltd (2685 JP)’s narrative emphasizes transformation, actual targets for user growth and GMV expansion appear modest, suggesting limited operational changes.
- Despite mixed views on the mid-term plan, we remain optimistic on Adastria. Gross margin normalization could drive meaningful OP upside, potentially surpassing mid-term plan targets.
Shandong Fengxiang (9977.HK) Privatization – Long-Term Investors May Be Unhappy with the Offer Price
- Based on our forecast, growth may be under pressure in 2025, but would recover in 2026/2027.The Cancellation Price is attractive for investors who want to cash out in short term.
- Some long-term investors may hope to see an improvement in Fengxiang’s fundementals and long-term performance after PAG/Abu Dhabi Investment step in. Their attitude may bring uncertainties to the privatization.
- The business logic of PAG is not a simple financial investment, but a higher pursuit. Fengxiang is a high-quality asset for PAG.Share Alternative Offer could help increase the success rate
Meituan (3690 HK): Options Insights and Analysis, Skew Shift Amid Earnings Calm
- One-Month implied volatility for Meituan (3690 HK) has decreased from recent highs to around its three-year median, while realized volatility, a lagging indicator, remains significantly higher at the 87th percentile.
- The term structure is flat, with May and June implied volatilities nearly identical, indicating no significant impact from the upcoming earnings announcement in early June.
- Open interest is spread over the next nine months, with April calls concentrated at strikes 145 to 150 and deep out of the money calls at strikes 180 to 200.
Reviewing the Demerger Arbitrage Setup for Continental AG
- Continental AG (XTRA: CON) has been high on my watch list for the past 3 months.
- Why? Because Continental is going to be spinning off its auto parts business in late 2025 and it looks like the transaction will create shareholder value.
- I was very close to buying the stock recently. But two things are holding me back for now
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