In today’s briefing:
- GMO Internet (4784) – Squeeze-Able So Squeezing, Offering Likely Gets Pulled – AVOID LIKE THE PLAGUE
- [Japan Activism/M&A] – Thinking About Positioning Around the Tsuruha/Welcia Vote
- PCOMP Index Rebalance Preview: One Set of Changes as PLUS Runs Away
- Sumber Alfaria Trijaya (AMRT IJ) – Outperforming with Essentials
- Eco-Shop IPO Trading: Tepid Retail Demand but at a Discount to 99 Speedmart
- [Alibaba (BABA US, BUY, TP US$150) Earnings Review]: Has Market Underestimated T/T Stabilization?
- Borosil Renewables Q4 FY25 Update: Domestic Strength Shines Amidst Overseas Challenges
- NWTG: Newton Golf Reports Strong 1st Quarter 2025 Revenue Growth.
- Airbnb’s Bold New Move: AI, Apps, & Affordable Stays Driving Global Surge!
- BBW: 1Q Preview: Top Line Strong; Tariff Impact Unknown; Reiterate Buy, $58 PT
GMO Internet (4784) – Squeeze-Able So Squeezing, Offering Likely Gets Pulled – AVOID LIKE THE PLAGUE
- GMO Internet (4784 JP) was created by the reverse takeover of a listed cad/media company by its parent company’s “internet infrastructure” business. GMO Internet Group ended up with ~98%.
- In the process, the stock rose 500%. Now, as part of its promise to the TSE allowing TSE Prime membership for the extraordinarily low-float target, the parent is offering shares.
- The squeeze has it at 180x Dec25e EPS, 111x EBIT, 70x book. The offering likely gets pulled and the stock isn’t shortable… so what next? Pain, and an ECLWO.
[Japan Activism/M&A] – Thinking About Positioning Around the Tsuruha/Welcia Vote
- The Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) AGMs to elect directors and approve the share exchange agreement to merge the two.
- 10% Tsuruha shareholder Orbis objects to the merger ratio AND the later tender whereby Aeon goes to 51%, saying everything is underpriced. ISS/GlassLewis recommend voting against the merger.
- I haven’t seen the proxy reports but I’ve done the math. Investors/arbs should look at the possibilities/probabilities and understand what dependencies exist. Shareholders are not helpless, no matter the outcome.
PCOMP Index Rebalance Preview: One Set of Changes as PLUS Runs Away
- With 90% of the review period for the August rebalance of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) complete, there could be one change for the index.
- DigiPlus Interactive (PLUS PM) should replace Bloomberry Resorts (BLOOM PM) in the index. Bloomberry Resorts (BLOOM PM) also has some global passive selling at the close on 30 May.
- DigiPlus Interactive (PLUS PM) is up 25x over the last couple of years and is up 46% since we identified the stock as a potential index inclusion.
Sumber Alfaria Trijaya (AMRT IJ) – Outperforming with Essentials
- Sumber Alfaria Trijaya (AMRT IJ) booked a surprisingly strong set of 1Q2025 results, going against softer consumer sentiment, underlining Alfamart as a supplier of essential goods.
- The company cut promotional spending in 1Q2025 by half, which improved profitability by 30% QoQ, but it still booked SSSG of 8.8% YoY, outperforming other consumer staples players.
- Alfamart continued to open new stores in 1Q2025, targetting 1,000 new outlets this year. This should help drive growth in 2025, along with SSSG. Valuations remain attractive versus growth prospects.
Eco-Shop IPO Trading: Tepid Retail Demand but at a Discount to 99 Speedmart
- Eco-Shop Marketing (ECO MY) raised around US$227m in its Malaysia IPO, after pricing the deal at the bottom of the range at M$1.13/share.
- It is the largest dollar chain in Malaysia, as per the number of stores it operates, as of 31 October 2024.
- In our previous notes, we talked about the company’s historical performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we talk about the trading dynamics.
[Alibaba (BABA US, BUY, TP US$150) Earnings Review]: Has Market Underestimated T/T Stabilization?
- Alibaba (BABA) reported C1Q25 top line in-line with our estimate and consensus. Taobao/Tmall (T/T) outperformed while Cainiao and Int’l commerce underperformed.
- Stabilization of domestic e-commerce is a major positive. However, on-demand e-commerce at home and video e-commerce abroad are two global growth drivers,
- We see new challenges emerging following business stabilization. We believe the management is up to the task. We keep BABA in our TOP BUY list and reiterate rating and TP.
Borosil Renewables Q4 FY25 Update: Domestic Strength Shines Amidst Overseas Challenges
- Definitive anti-dumping duty (ADD) imposed on solar glass imports from China and Vietnam until December 2029; Standalone Indian operations showed significant improvement in Q4 and FY25.
- The ADD provides a stable pricing environment and growth catalyst for domestic solar glass manufacturing. Improved domestic performance underscores resilience despite international market volatility.
- Reinforces a positive outlook for the Indian business due to favorable regulatory support and robust demand. However, the German subsidiary’s performance remains a key monitorable.
NWTG: Newton Golf Reports Strong 1st Quarter 2025 Revenue Growth.
- Newton Golf (NASDAQ: NWTG) is an innovative, technology driven golf company with a growing portfolio of golf products, including putters, golf shafts, golf grips, and other golf-related accessories.
- The company went public in August 2023 raising $11.6 million in net proceeds.
- The company announced its entry into the golf shaft market in November 2023.
Airbnb’s Bold New Move: AI, Apps, & Affordable Stays Driving Global Surge!
- Airbnb’s financial results for the first quarter of 2025 reflect both strengths and challenges as the company continues to navigate a dynamic global travel landscape.
- The company reported revenue of $2.3 billion, a 6% year-over-year increase.
- However, it’s worth noting that without the impact of foreign exchange and calendar factors such as Easter shifting from Q1 2024, this revenue growth would have been 11%.
BBW: 1Q Preview: Top Line Strong; Tariff Impact Unknown; Reiterate Buy, $58 PT
- We are reiterating our Buy rating, $58 price target and projections for Build-A-Bear Workshop with the company announcing 1QFY25 (April) results before the open on Thursday.
- We believe, driven by strong Easter and Spring offerings, further expansion of the Mini Beans, and continued growth in the franchising and commercial space, revenue for 1Q will be solid.
- That said, the near term question remains the impact of tariffs on overall margins, as Build-A-Bear purchased 58% of merchandise from China and 38% from Vietnam in FY24, with China projected by management to account for less than half of merchandise in FY25.
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