In today’s briefing:
- StubWorld: PPB In The Doghouse, But These Levels Are Excessive
- MIXUE Pre-IPO – Updated Peer Comparison – Bigger, Faster, Stronger
- India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
- Tam Jai International (2217 HK) Privatization – The Offer Price Is Good
- China Education Group (839 HK): A Large Disappointment
- MIXUE Pre-IPO – Updated Thoughts on Valuation
- S&P 500 and Nasdaq 100 Breaking Out; Upside Resuming; DXY and Yields Forming Major Tops?
- Pre-IPO MIXUE Group (PHIP Updates) – Some Points Worth the Attention
- Poper (5134 JP)
- Newell Brands: Portfolio Optimization & Distribution Expansion To Expand Market Share But Will It Work?
StubWorld: PPB In The Doghouse, But These Levels Are Excessive
- PPB Group (PEP MK)‘s grains & agri arm, and four other feedmillers, has been labelled a cartel and fined by the Malaysian competition watchdog. A judicial review is ongoing.
- Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
MIXUE Pre-IPO – Updated Peer Comparison – Bigger, Faster, Stronger
- MIXUE Group Mixue Group is now looking to raise around US$500m in its upcoming Hong Kong IPO.
- MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
- In our earlier notes, we have looked at the past performance, undertaken a peer comparison and spoken about valuations. In this note, we refresh the peer comparison.
India: March Rebalance Announcement Tomorrow; Round-Trip Trade Over US$2.5bn
- The Index Maintenance Sub-Committee of NSE Indices will meet on 21 February to conduct a semi-annual and quarterly review of stocks in various Nifty equity indices.
- The changes will be announced after market close tomorrow and will be implemented at the close of trading on 28 March.
- Based on the forecast index changes and capping changes for a few indices, the round-trip trade will be over US$2.5bn and many stocks will have over 0.5x ADV to trade.
Tam Jai International (2217 HK) Privatization – The Offer Price Is Good
- Tam Jai’s performance in recent years has been consistently below expectations. Its fundamentals have undergone negative changes after IPO. Consumers’ preference change may disrupt Tam Jai’s business model.
- Based on our forecast and the Cancellation Price of HK$1.58/share, P/E will be higher than the industry average. Considering the low trading liquidity and concerns on outlook, HK$1.58/share is acceptable.
- The fundamentals/prospects of Tam Jai are different from the situation of Henlius’ privatization.We recommend investors not reject the privatization easily because internationalization won’t bring significant positive changes in short term.
China Education Group (839 HK): A Large Disappointment
- China Education Group (839 HK)‘s plunge in share price is due to management’s guidance for a 10-15% drop in adjusted net profit, significantly lower than the current consensus.
- Its decision to pause dividends for the foreseeable future on debt repayment burden and tight offshore refinancing environment for the sector has further disappointed the market.
- Based on guidance, its PER of 3.7x and nil dividend yield for FY25 make it unattractive relative to peers (1.7-2.9x PER). We shy away until things improve.
MIXUE Pre-IPO – Updated Thoughts on Valuation
- Mixue Group (MIX HK) is now looking to raise around US$500m in its upcoming Hong Kong IPO.
- MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
- In our earlier notes, we have looked at the past performance, undertaken a peer comparison and spoken about valuations. In this note, we refresh our valuation.
S&P 500 and Nasdaq 100 Breaking Out; Upside Resuming; DXY and Yields Forming Major Tops?
- We are seeing signs that this 2+ month consolidation in the S&P 500 and Nasdaq 100 (QQQ) is ready to break out to the upside. Buy/stay long.
- Part of that is the obvious; both the SPX and QQQ are breaking out to marginal new highs.
- The other part that has kept us bullish this whole time is that market dynamics have remained risk-on, which we have discussed on a weekly basis.
Pre-IPO MIXUE Group (PHIP Updates) – Some Points Worth the Attention
- MIXUE’s supply chain advantages and economies of scale remain ahead of peers. This creates a unique barrier. When peers engage in price wars, MIXUE can still gain greater cost advantages.
- MIXUE’s performance growth depends significantly on its ability to expand franchised store network. But MIXUE may have reached the growth ceiling in China market based on its current expansion speed.
- The market prefers the franchise models. Despite declining growth rate in the whole industry, MIXUE’s valuation should still be higher than peers – e.g. P/E of 17-20x is comfortable range.
Poper (5134 JP)
- An emerging leader in online software for the Japanese private education industry, run by a young founder-CEO with skin in the game
- Cheap at just 1.7x EV/Sales with a 20% target operating margin and 20-30% sustainable growth
- Question marks include outsourcing of coding to third-party firms in the PRC, the potential impact of generative AI tools and less-than-ideal capital allocation
Newell Brands: Portfolio Optimization & Distribution Expansion To Expand Market Share But Will It Work?
- Newell Brands has reported its fourth-quarter and full-year financial results for 2024, demonstrating progress in several areas amid challenging market conditions.
- The company has been implementing a new corporate strategy which has yielded positive outcomes, although it acknowledges ongoing challenges.
- Newell’s key focus for 2024 was to operationalize its new strategy and enhance its culture.
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