In today’s briefing:
- MV Australia Equal Weight Index Rebalance: Float & Capping Changes to Drive Flow
- Weekly Deals Digest (10 Mar) – Trial, ARM, JSR, Nippon Express, Alumina, Azure, Genex, Vinda
- Japfa (JAP SP): Evaluating a Potential Privatisation
- Uni-President China (220 HK): 8% Dividend Yield Looks Sustainable
- Pinduoduo (PDD US): Pricing in an Imminent Slowdown
- China Consumption Weekly (11 Mar 2024): JD.com, JD Logisitics, BYD, Alibaba, NIO
- Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – March 2024
- Pan Pacific International Holdings (7532): Revision to Full-Year FY06/24 Company Forecast
MV Australia Equal Weight Index Rebalance: Float & Capping Changes to Drive Flow
- There are no constituent changes for the MVIS Australia Equal Weight Index at the March rebalance.
- Float and capping changes will result in a one-way turnover of 4.4% and in a round-trip trade of A$195m.
- We had Lendlease Group (LLC AU), IDP Education (IEL AU) and nib holdings (NHF AU) as close deletes and they will now have inflows due to capping.
Weekly Deals Digest (10 Mar) – Trial, ARM, JSR, Nippon Express, Alumina, Azure, Genex, Vinda
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Trial Holdings (5882 JP) IPO, Nippon Express Holdings (9147 JP) placement and ARM Holdings (ARM US) lock-up expiry.
- Event-Driven developments: JSR Corp (4185 JP), Alumina Ltd (AWC AU), Azure Minerals (AZS AU), Genex Power Ltd (GNX AU), Vinda International (3331 HK).
Japfa (JAP SP): Evaluating a Potential Privatisation
- On March 8, Bloomberg reported that Japfa Ltd (JAP SP) owners were considering taking it private and started talks about a loan of around US$150 million.
- Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years.
- An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.
Uni-President China (220 HK): 8% Dividend Yield Looks Sustainable
- Uni President China (220 HK), a F&B company in China, has an impressive track record of paying near 100% or over 100% of net profit in dividends since 2018.
- The company has two segments, food (mainly instant noodle), and beverage. Overall sales grew 1% yoy in 2023 while net profit jumped 36% yoy.
- Given the reasonable valuation (13x forward PE), a near 40% net cash position, and most importantly a stable 8% dividend yield, the stock looks attractive.
Pinduoduo (PDD US): Pricing in an Imminent Slowdown
- We see further upside to our previous above-consensus 4Q23 results estimates on low base, enhanced monetization, and faster TEMU expansion.
- That said, we believe market focus already shifted to outlook for 2024, in particular an imminent slowdown in 1Q24 and renewed concern around US curb on TEMU.
- 30% share price correction is pricing in the above scenario and valuation should gradually improve as PDD delivers back-loaded bottom line growth in 2024.
China Consumption Weekly (11 Mar 2024): JD.com, JD Logisitics, BYD, Alibaba, NIO
- JD.com stock price surged after its 4Q23 results and repurchase decision.
- It is not big issue that BYD sales decreased in the weak season.
- Alibaba began to close unprofitable Freshippo stores in February, but the company said it has expansion plan.
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – March 2024
- We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
- Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
- We also provide updates on released earnings for Uchi Technologies (UCHI MK), Plover Bay Technologies (1523 HK), UMP Healthcare (722 HK), and Sitoy Group Holdings (1023 HK).
Pan Pacific International Holdings (7532): Revision to Full-Year FY06/24 Company Forecast
- Pan Pacific International Holdings (7532 JP) is one of Japan’s top retailers whose core business is the Don Quijote discount store chain.
- The company recorded FY06/23 sales of JPY1,936.8bn, operating profit of JPY105.3bn, recurring profit of JPY111.0bn, and net income attributable to owners of the parent of JPY66.2bn.
- Pan Pacific International Holdings Corporation has announced a revision to its full-year earnings forecast for FY06/24, which was announced on August 16, 2023.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
