In today’s briefing:
- Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares
- Initial Thoughts on the Sono International IPO
- Sichuan Baicha Baidao Industrial IPO Lockup – Steep Losses for Pre-IPO Investors
- Devyani Intnl.: Yum Brands India Franchisee to Acquire Cloud Kitchen Operator. In Pursuit of Growth
- Millennium & Copthorne Hotels (MCK NZ): City Dev’s Final and Unconditional NZ$2.80 Offer
- Upgrading Consumer Staples to Overweight; Short-Term Bottom Potential Here
- Shakey’s Pizza (PIZZA PM) FY24 and Concall Highlights: Solid Q4 Bottomline, Strong FY25 Guidance
- M & C Hotels (MCK NZ): City Dev Blinks & Bumps
- The Key Is to Solve the Root Problem of Women Leaving Their Jobs Due to the Bias of Family Work
- BBW: Snapping the Store: Finding A Golden Egg; Reiterate Buy, $58 PT
Trading LG Chem’s Large-Scale EB Issuance Backed by LG Energy Shares
- With a $2B deal expected, LG Chem will likely issue before end June as the 2023 EB’s put date nears and redemption pressure builds amid strained financials.
- Two years ago, hedge shorting spiked post-issuance and post-exchange start, but price impact was mild—only 3% and 6% drops—likely due to strong sector sentiment then.
- Sector sentiment’s turned sharply, so more aggressive price action is likely post-EB announcement. Timing is tricky, but the setup’s worth watching closely.
Initial Thoughts on the Sono International IPO
- Sono International, the largest resort operator in Korea, is getting ready to complete its IPO in 3Q 2025.
- Company is aiming for valuation of about 3 trillion won. Treasury shares accounted for 35.93% of total outstanding shares at the end of 2024.
- One of the noticeable aspects of the company’s income statement is that although the company’s sales growth was modest from 2019 to 2024, its operating margin growth has been spectacular.
Sichuan Baicha Baidao Industrial IPO Lockup – Steep Losses for Pre-IPO Investors
- Sichuan Baicha Baidao Industrial (2555 HK) raised around US$330m in its Hong Kong IPO, in April 2024. The lockup on its pre-IPO investors is set to expire soon
- SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market in 2023, with a market share of 6.8%
- In this note, we will talk about the lockup dynamics and possible placement.
Devyani Intnl.: Yum Brands India Franchisee to Acquire Cloud Kitchen Operator. In Pursuit of Growth
- Devyani International (DEVYANI IN) which operates QSRs such as KFC, Pizza Hut in India plans to acquire Sky Gate Hospitality Pvt. Ltd., the operator of the “Biryani By Kilo”.
- This acquisition can diversify Devyani’s portfolio beyond its core quick‑service restaurant (QSR) franchises—KFC and Pizza Hut—at a time when same‑store sales growth has softened.
- With the rise of off-premise dining and food delivery post pandemic, cloud kitchens are expanding across the board thanks to scalable, asset‑light model, and ability to bypass traditional dine‑in overheads.
Millennium & Copthorne Hotels (MCK NZ): City Dev’s Final and Unconditional NZ$2.80 Offer
- City Developments (CIT SP) increased its Millennium & Copthorne Hotels Nz (MCK NZ) offer to NZ$2.80, a 24.4% premium to its previous NZ$2.25 offer. The Board will respond by 28 April.
- The offer price is final. CDL has received OIO approval and has waived all the remaining conditions. Therefore, the offer is now unconditional.
- While the revised offer remains materially below the IFA valuation and NTA, it is attractive compared to historical trading ranges. The close date for the offer remains 8 May.
Upgrading Consumer Staples to Overweight; Short-Term Bottom Potential Here
- Our intermediate-term outlook remains bearish/cautious, and we continue to believe a prolonged downturn is likely, which has been the case since our 4/1/25 Compass. However, shorter-term…
- SPX is now 4.5%-5.0% lower than last week (when we said to expect the rally to fizzle), and is testing 5100-5120 support.
- 5100-5120 has been a key level several times dating back to early 2024, and is a level to trade against to the long side.
Shakey’s Pizza (PIZZA PM) FY24 and Concall Highlights: Solid Q4 Bottomline, Strong FY25 Guidance
- Shakey’s Pizza (PIZZA PM) delivered FY24 revenue/profit growth of 13%/11% YoY. This was due to a turnaround of 9MFY24 revenue/profits from-10%/10% YoY, with Q4FY24 high season revenue/profits growing 19%/57% YoY.
- The company is experiencing a sequential improvement in its SSSG, which is continuing into Q1 FY25. It has guided double-digit growth in revenues and profits in FY25.
- Trading at 11.5x/10.2x PE for FY24/25e, with low expectations, we believe there could be a good rally post the results.
M & C Hotels (MCK NZ): City Dev Blinks & Bumps
- Back on the 20th January, Millennium & Copthorne (MCK NZ), a Kiwi hotel chain, announced that City Developments (CIT SP), its controlling shareholder, made an Offer for shares not held.
- City Dev offered NZ$2.25/share (not final), a 25% premium to last close. City held 75.86% and the Offer was (initially) conditional on a 90% holding, including shares currently held.
- The independent advisor recommended shareholders NOT accept the Offer, with a fair value range of NZ$4.40-NZ$5.00/share. City Dev has blinked, and bumped terms 24.4% to NZ$2.80/share – best and final.
The Key Is to Solve the Root Problem of Women Leaving Their Jobs Due to the Bias of Family Work
- In many cases, women are promoted as non-statutory executive officers, and there’re very few women in positions where they can be involved in making decisions about the company’s management policies.
- The bias toward women in family work, such as childbirth and child rearing, leads to women leaving workforce, and their shorter tenure has resulted in fewer women in managerial positions.
- Female executives who have been appointed after overcoming various difficulties and gaining “experience” are loss to the company, as they face the wall of homogeneity of the senior male community.
BBW: Snapping the Store: Finding A Golden Egg; Reiterate Buy, $58 PT
- We are reiterating our Buy rating, projections and $58 price target for Build-A-Bear Workshop after visiting stores in Long Island and Connecticut.
- We believe the later Easter (April 20th versus March 31st last year) was a material positive for the company, driving higher sales of multiple Easter related items and allowing for Build-A-Bear to flow in more newness, leverage their Mini Beans offerings, expand the licensed products and add new “furry friends” to the mix.
- As such, we believe Build-A-Bear, in a period of materially negative investor sentiment on the consumer, is poised to drive solid overall 1QFY25 results, and, with BBW trading under 9X our FY26 EPS and offering a dividend yield of over 2.5%, offer a compelling risk/reward for investors; we reiterate our Buy rating and $58 price target.
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