In today’s briefing:
- 7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
- Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
- S&P500/400/600/Equal-Weight Flows for March 2025 Rebalance
- Alibaba Group’s AI Power Move—Can It Outpace DeepSeek and OpenAI?
- SET50 Index Rebalance Preview: VGI Could Be an Ad Hoc Add; Then 3/4 More in June
- Cocoa Prices Disconnected from Reality? // Breakout Time in Oil and FX
- Cisarua Mountain Dairy (CMRY IJ) – New Variants and Channels
- Sell Kenvue + What I’m Buying
- HK-Listed Apparel & Footwear Screener: March 2025 / Analysing JNBY, Leverstyle, And More
- Anjoy Foods Group A/H Listing – A Leader in a Fragmented Industry
7&I (3382) – Artisan Writes (Again) And 7&I Updates (Again) – More Positive Outlook Now
- On Thursday 6 March we got a Nikkei article then a company announcement for Seven & I Holdings (3382 JP)‘s proposed management measures and update on ACT Bid Process.
- It involved Isaka-san stepping down, Stephen Dacus stepping up, selling York to Bain for ¥814.7bn, IPOing 7-Eleven US, a ¥2trln share buyback over 5yrs, and ACT process update.
- It was OK. Good, bad, and ugly. But Artisan wrote a letter over the weekend and 7&i responded and suddenly, their concerns are mostly addressed and the outlook is different.
Seven & I Holdings (3382 JP): Reading Between the Lines of the Public Letter
- The Seven & I Holdings (3382 JP) Board has released a public letter to address Artisan Partners’ letter and provide more details on the Alimentation Couche-Tard (ATD CN) constructive engagement.
- The letter effectively addresses most of Artisan’s concerns. The Board is engaging with Couche-Tard, particularly by agreeing on a strategy to find a solution to secure antitrust approvals.
- However, the statement suggests that the Board retains deep scepticism that the Couche-Tard is viable and is manoeuvring to shift the blame on a failed bid on a flawed proposal.
S&P500/400/600/Equal-Weight Flows for March 2025 Rebalance
- On Friday post-close, S&P DJI announced the changes to the S&P500, S&P MidCap400, and S&P SmallCap600 Indices. The S&P500 names will get added to/deleted from the S&P500 Equal-Weight Index too.
- There will be 4 changes for the S&P500 and all 4 DELs from S&P500 are demoted to the S&P600 Index. SPDR Select and Equal-Weight Indices add up to big volumes.
- There is a theoretical quantity to trade, and an expected quantity to trade and it is worth knowing the difference. EW, of course, is still “live” for a few days.
Alibaba Group’s AI Power Move—Can It Outpace DeepSeek and OpenAI?
- Alibaba Group Holding has made a significant move in the AI space with the release of its latest artificial intelligence model, QwQ-32B, as it seeks to establish itself as China’s leading AI developer, challenging DeepSeek.
- The model, which excels in mathematical reasoning, coding, and problem-solving, demonstrates capabilities comparable to both DeepSeek’s R1 and OpenAI’s latest technology.
- However, a key differentiator is its size, as QwQ-32B operates with only 32 billion parameters compared to DeepSeek R1’s 671 billion.
SET50 Index Rebalance Preview: VGI Could Be an Ad Hoc Add; Then 3/4 More in June
- VGI PCL (VGI TB) could be added to the SET50 INDEX later this month following the Gulf Energy Development (GULF TB) / Intouch Holdings (INTUCH TB) merger.
- Then there could be 3 or 4 more changes to the index at the June rebalance. The review period has just commenced so price moves will move the list around.
- Passive trackers will need to buy around 1.85% of float in VGI PCL (VGI TB) while buying in the other stocks will be between 1-1.2% of float.
Cocoa Prices Disconnected from Reality? // Breakout Time in Oil and FX
- Breakout Time in Oil and FX During the last week there occurred many breakout patterns as the volatility in financial markets has risen significantly after president Trump introduced tariffs on Mexico and Canada.
- The Ukraine-drama also doesn’t really help to calm market participants at the moment either.
- We just highlight the technical pattern and add a few words about our current framework and how we view these markets at the moment.
Cisarua Mountain Dairy (CMRY IJ) – New Variants and Channels
- Cisarua Mountain Dairy booked a strong finish to the year in terms of sales growth despite a high base driven by premium consumer foods, but with dairy showing recovery.
- The company saw an improvement in gross margins in 4Q2024 driven by the stabilization of raw materials and product mix, but operating margins were impacted by higher promotional spending..
- Cimory will drive future growth by expanding across channels, especially general trade and with the launch of new products in both dairy and consumer food segments. Valuations remain attractive.
Sell Kenvue + What I’m Buying
I’m closing out my Kenvue (KVUE) recommendation and will be selling my shares.
Following the spin-off from Johnson & Johnson (JNJ), KVUE shares performed poorly for a variety of reasons (lockluster growth, Tylenol related litigation, etc.) that I thought were overblown.
At the time, Kenvue was trading at a sharp discount to its consumer health care peers. Today, Kenvue trades at a slight discount to peers (21 P/E vs. 23.3x for the group).
HK-Listed Apparel & Footwear Screener: March 2025 / Analysing JNBY, Leverstyle, And More
- We provide result updates for JNBY Design Ltd (3306 HK) and Lever Style (1346 HK). Separately, Crystal International (2232 HK) was added to the HSCI (eligible for trading on Stock Connect).
- We introduce Bosideng International Holdings (3998 HK) on our screen. With a 5-year average ROCE of 17%, net cash, and a 7% dividend yield, the stock is worth a look.
- Our top picks include JNBY Design Ltd (3306 HK) and Pacific Textiles (1382 HK), with a favorable mention of Nameson Holdings (1982 HK) due to its attractive dividend yield.
Anjoy Foods Group A/H Listing – A Leader in a Fragmented Industry
- Anjoy Foods Group (603345 CH), a quick-frozen food company in China, aims to raise around US$300m in its H-share listing.
- AFG was the largest quick-frozen food company in China in terms of revenue in 2023, with a market share of 6.2%, according to the Frost & Sullivan report.
- In this note, we look at its past performance and other deal dynamics that might impact the listing.
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