In today’s briefing:
- Japanese Cosmetics: Trading Around Q3 Earnings
- Asics (7936) | Nike Air Pockets
- Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess
- Betagro IPO: The Bull Case
- Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
- Noteworthy Lockup Releases for the Next Two Months in Korea
- Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional
- Breaking SPAC Convention
- Cubic City Service Apartment Group Pre-IPO Tearsheet
Japanese Cosmetics: Trading Around Q3 Earnings
- The latest rally in Japanese cosmetics, driven by improving domestic market conditions has strangely avoided two of the big names in the market, Shiseido Company (4911 JP) & Pola Orbis.
- Although both of these names seem to offer big upside potential, we think Pola Orbis Holdings (4927 JP) has a significantly better risk-reward profile in the short term.
- We would also be inclined to hedge the market risk using Kose Corp (4922 JP) on the short side as the name has the biggest downside potential.
Asics (7936) | Nike Air Pockets
- NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).
- ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
- ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now
Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess
- Q3 deliveries were an impressive 343,830, a bit better vs my cautious 331,104 est;
- But results trailed plunging market projections & Tesla’s own guidance by 20,000-50,000;
- Even worse, the shortfall meant sales trailed production by record 22,100.
Betagro IPO: The Bull Case
- Betagro Group (1737144D TB), Thailand’s leading integrated food company, is seeking to raise US$554 million through a SET IPO, according to press reports
- Betagro plans to offer 500 million shares or 25% of the total issued shares after IPO. This will be Thailand’s second-largest listing this year after Thai Life Insurance (TLI TB).
- The key elements of the bull case rest on top quartile growth rates, a well-functioning core business, rising profitability, cash generation and declining leverage.
Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
- In early Jun 2022, Alipay raised around US$386m via selling 3.3% of outstanding shares of Kakao Pay (377300 KS). That was the first selldown by Alipay (Alibaba (ADR) (BABA US)).
- Despite pricing the shares at an enticing 11.8% discount to last close, the stock failed to hold the deal price and hasn’t looked back since.
- In this note, we will talk about the previous deal and the upcoming lockup expiry.
Noteworthy Lockup Releases for the Next Two Months in Korea
- K Car’s major shareholder is Hahn & Company, which has already fully recovered the initial investment. So, there is an actual probability that it will make an aggressive exit.
- SingEel’s 3-month IPO institutional and VCs will be released, 6.18% of SO. All of them are in a profit zone, there is a possibility that an aggressive overhang will occur.
- Kakao’s 47% holdings in Kakao Pay will be released. The possibility of lowering the stake seems quite low. Nevertheless, we must consider the risk that this will affect market sentiment.
Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional
- With the revision of Corporate Governance Code in 2021 and its listing criteria on prime market, the groundwork has been laid to some degree to facilitate functioning of compensation committee.
- Meanwhile, there are not many companies with voluntary nominating and compensation committees that disclose the authority of their nominating and compensation committees in their annual securities reports.
- Many companies, even large companies, do not even have a compensation policy in place, indicating that individual director compensation is a much lower priority to consider.
Breaking SPAC Convention
- Over the last two years, SPACs have emerged as an alternative to the traditional IPO process, especially for those who’ve found it challenging to raise money from the public markets in the past.
- In fact, SPACs have been a great investment vehicle for Space Launch firms, Electric Vehicle Upstarts and even Quantum Computing firms.
- It is surprising then that Italian Luxury Fashion House Zegna, which has a rich 110-year heritage, has decided to take the SPAC route to make its debut in the US markets rather than list in Europe or in Asia like most of its peers.
Cubic City Service Apartment Group Pre-IPO Tearsheet
- Cubic City Service Apartment Group (CCSAG HK) is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Morgan Stanley and CCB International.
- Cubic City Service Apartment Group (CCSAG) is a rental apartment services platform, which pioneered the centralized rental apartment model in China, according to the company.
- It provides rental apartments in centrally managed buildings with modern facilities. As of 30 Jun 2022 (1Q23), the company operates 76,190 apartments nationwide across 394 locations in 26 cities.
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