In today’s briefing:
- [Activism Japan] Proto Corp (4298 JP) – Kaname Capital Files an Injunction? Bold Strategy, Cotton…
- Tencent Music (TME, 1698 HK): 4Q24, Historical Margins Better than Game Time
- Vesync (2148 HK): What Did the FY24 Results Tell?
- [Li Auto Inc. (LI US, SELL, TP US$20) Target Price Change]: Still No Convinced on a 2025 Turnaround
- 10 in 10 with Emperador – Embracing Premiumisation for Global Expansion
- JAKK: Being More Realistic in Uncertain Times; Reiterate Buy, $40 PT
[Activism Japan] Proto Corp (4298 JP) – Kaname Capital Files an Injunction? Bold Strategy, Cotton…
- Late on the 17th, Proto Corp (4298 JP) released a filing to the TSE saying activist-ish investor and objector to the current MBO, Kaname Capital, had filed an injunction.
- The injunction suit against two directors says procedures were unfair and the decision violated the duty of due care. They ask the Court to rule the directors halt support and…
- …that the MBO actor YOKOYAMA Hiroichi not terminate the offer on 21 March 2025. Injunction filings against directors for Tender Offers are rare for a reason.
Tencent Music (TME, 1698 HK): 4Q24, Historical Margins Better than Game Time
- TME’s revenue continued to grow in 4Q24, as shrinking game business became insignificant.
- The operating margin reached its historical high, which means music’s margin is high than game’s.
- We believe the stock price will be double at the end of 2025.
Vesync (2148 HK): What Did the FY24 Results Tell?
- While Vesync (2148 HK)‘s net profit grew 20.1% in FY24, there is a marked slowdown in 2H24 (+7.4%) vs. 1H24 (+37.5%), suggesting increased operating pressure.
- North American sales slowed to 10.7% growth in 2H24, from 13% in 1H24. The deteriorating financial and operating performance affirmed that privatisation is an exit opportunity.
- Its PER discount (on privatiation price) to peers has widened to 35-38%, compared with 25-30% in Dec. Its US exposure makes it unable to reap benefits from China market stimulus.
[Li Auto Inc. (LI US, SELL, TP US$20) Target Price Change]: Still No Convinced on a 2025 Turnaround
- Li Auto (LI) reported C4Q24 revenue 2.1%/in-line vs. estimate/consensus, and non-GAAP net income is 8.4%/10.3% vs. our estimate/consensus, thanks to OPEX savings which we believe may not be sustainable
- We cut 2025 vehicle delivery estimates by 7% and slashed net income forecasts by 33% due to delayed model launches and intensified competition
- We cut LI’s TP from US$25 to US$20 and keep at SELL.
10 in 10 with Emperador – Embracing Premiumisation for Global Expansion
- Emperador’s acquisition of Los Danzantes aligns with its “Contemporise, Premiumise, Internationalise” strategy, enhancing its premium Mezcal offerings.
- The Dalmore Distillery expansion, doubling capacity, will impact Emperador’s revenue mix 12 years post-completion.
- Whyte & Mackay’s sustainability initiatives include a Jura Biomass Boiler and carbon capture, targeting carbon neutrality by 2030.
JAKK: Being More Realistic in Uncertain Times; Reiterate Buy, $40 PT
- We are reiterating our Buy rating and $40 price target, and updating our projections after meeting with JAKKS management.
- We note since our last publication, the U.S. government has placed an additional round of 10% tariffs on China, JAKKS main manufacturing supplier.
- Further, given the current uncertain economic environment and worries over consumer spending, we believe the company’s key non-movie driven top line growth drivers will continue at a measured pace.
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