In today’s briefing:
- FXI Rebalance: Pop Mart, SF Holding In; China Merchant Sec, China Railway Out
- Toyota Motor (7203 JP) Outlook Amid Uncertainty Over Toyota Industries Privatization Bid
- Success Experiences Will Be Necessary for IR to Function
- Guangzhou Xiao Noodles Catering Management Pre-IPO – Fast-Growing Noodle Chain Navigates Competition
- Mao Geping IPO Lockup – Stock Is up 4x, US$400m Cornerstone Lockup Release
- Chow Tai Fook (1929 HK) – H2FY25 Outlook, Cost Management & Pricing Optimization to Drive Growth.
- Shanghai Forest Cabin Biological-Tech Pre-IPO Tearsheet
- VRA: 1Q Preview: Rebuilding Continues; Reiterate Buy Rating, $4 PT
- What’s News in Amsterdam – 4 June (ABN Amro | PostNL | Sligro Food Group | Dutch politics)
- Busy Ming Pre-IPO: Scaled up but Fragmented Market
FXI Rebalance: Pop Mart, SF Holding In; China Merchant Sec, China Railway Out
- Pop Mart (9992 HK) and S.F. Holding (6936 HK) will replace China Railway Group (390 HK) and China Merchants Securities (6099 HK) in the iShares China Large-Cap (FXI) (FXI US).
- Passive trackers will need to buy between 0.4-0.6x ADV in the adds and sell between 0.5-1.3x ADV in the deletes. There are some small capping flows too.
- There are a lot of shorts in Pop Mart (9992 HK), China Railway Group Ltd H (390 HK) and China China Merchants Securities Co Ltd (H) (6099 HK).
Toyota Motor (7203 JP) Outlook Amid Uncertainty Over Toyota Industries Privatization Bid
- Travis Lundy and Arun George have recently written extensively about Toyota Industries (6201 JP) proposed takeover. Read the details in their insights.
- Toyota Motor (7203 JP) is involved: 2 weeks ago we predicted a rally, and the rally did happen and went past our suggested profit target – time for an update.
- Toyota Motor (7203 JP) at the end of last week was overbought, according to our model. Any catalyst could trigger a sell off from here but let’s analyze the models….
Success Experiences Will Be Necessary for IR to Function
- While TSE will require companies to have IR staff, but most companies disclose that they have IR staff, there is gap with investors who believe that IR is not functioning.
- The issue is the substance issue, as most companies have disclosed that they have already conducted the information meetings included in the implementation of specific IR activities expected by TSE.
- The reason why many companies still do not make IR function may be because they do not realize the effect of IR in terms of higher stock valuations.
Guangzhou Xiao Noodles Catering Management Pre-IPO – Fast-Growing Noodle Chain Navigates Competition
- Guangzhou Xiao Noodles Catering Management (GXNCM) is looking to raise about US$200m in its upcoming Hong Kong IPO.
- GXNCM has shown strong growth momentum by expanding its network of corporate-owned restaurants and improving overall profitability, benefiting from post-COVID recovery and economies of scale, with operational performance turning positive.
- However, its reliance on price cuts to stay competitive, coupled with weakening same-store sales and a highly fragmented market, raises concerns about long-term sustainability.
Mao Geping IPO Lockup – Stock Is up 4x, US$400m Cornerstone Lockup Release
- Mao Geping Cosmetics raised around US$345m in its Hong Kong IPO. The lockup on its cornerstone investors is set to expire soon.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- In this note, we will talk about the lockup dynamics and possible placement.
Chow Tai Fook (1929 HK) – H2FY25 Outlook, Cost Management & Pricing Optimization to Drive Growth.
- Despite short-term demand headwinds, Chow Tai Fook Jewellery (1929 HK) remains well-positioned for structural growth via product premiumization(e.g.,CTF Rouge,Palace Museum), omni-channel scaling, and selective global expansion in culturally aligned markets.
- Company continues to defend margins through product mix optimization (fixed-price gold up to 25.6% of gold RSV),disciplined SG&A control, and aggressive retail network rationalization.
- Trading at ~26xx TTM P/E, it commands premium to peers, backed by industry-leading ROE (~25%),brand strength,and high dividend payout (~79%), though clear earnings rebound remains key to justify the multiple.
Shanghai Forest Cabin Biological-Tech Pre-IPO Tearsheet
- Shanghai Forest Cabin Biological-Tech Co., Ltd. (SFC) is looking to raise at least US$100m in its upcoming Hong Kong IPO. The deal will be run by Citic, and Huatai.
- SFC is the leader among China’s premium domestic skincare brands with a focus on anti-wrinkle and firming skincare market In 2024, its flagship brand, Forest Cabin.
- As of FY24, Forest Cabin had 188 SKUs with its core products at a recommended retail price range of RMB 200-800, targeting primarily consumers aged 25-40.
VRA: 1Q Preview: Rebuilding Continues; Reiterate Buy Rating, $4 PT
- We are reiterating our Buy, rating, $4 price target and projections for Vera Bradley with the company announcing 1QFY26 (April) results before the open on Wednesday.
- We believe Vera Bradley has continued to take steps to return to prominence, from returning key styles and features, adding more licensed items at both the main line and outlet stores and continuing to shift their looks to appeal to a younger customer base.
- Further, while the company remains impacted by the lag between loss of older customers and a shift to a younger group, management has been aggressive in reducing cash spend, which in the near term, unfortunately, has resulted in further main line store closures.
What’s News in Amsterdam – 4 June (ABN Amro | PostNL | Sligro Food Group | Dutch politics)
- In this edition: • ABN Amro | launches a new digital bank aimed at younger part Gen-Z segment • PostNL | not clear what Dutch cabinet crisis means for Postal Act revision • Sligro Food Group | acquisition of GEPU extends its delivery proposition • Dutch politics | Wilders pulled the plug on Dutch coalition government
Busy Ming Pre-IPO: Scaled up but Fragmented Market
- Busy Ming Group (BMG HK) is looking to raise at least US$300m in its upcoming Hong Kong IPO.
- It is a rapidly growing food and beverage retailer in China. Stores are typically located in high-traffic, high visibility, and easily accessible street-side locations.
- In this note, we look at the firm’s past performance.
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