In today’s briefing:
- 7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- [Li Auto Inc. (LI US, SELL, TP US$25) Target Price Change]: Three BEV SUV Exposed Ahead of Schedule
- Trip.com (TCOM) – Worth a Little More than EXPE or Much More?
- Li Auto (2015 HK): Short Calls To Capitalize on High Volatility Amid Cautious Outlook
- Herbalife Ltd: Momentum Accelerating; CEO Change Signals the Dawn of a New Era
- La Comer 4Q24: Another Quarter of In-Line Results (Quick View)
- Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings
- VERU: Importance of Preserving Muscle in Weight Loss with GLP-1 Obesity Drugs
- Abercrombie & Fitch Co Cl A – AKA: 4Q Preview: Gliding Into a Momentous 2025; Reiterate Buy, PT
- VNCE: Snapping the Store; Bright and Colorful for Spring; Reiterate Buy, $6 PT
7&I (3382) – MBO Off, SC “Engaging Constructively with ACT”, Skepticism Higher, Questions And More
- The MBO is off. Itochu Corp (8001 JP) has apparently not been able to agree with Ito-san on board composition/representation and management control. That the MBO is off isn’t surprising.
- 7&i says they “continue to engage constructively with ACT and alternate proposals but news articles suggest that almost 6mos after proposing an NDA, ACT still haven’t had access to financials.
- The shares are off hard today to a level below where ACT’s first bid was considered “not even worth discussing”. There will be questions at the AGM and before.
[Li Auto Inc. (LI US, SELL, TP US$25) Target Price Change]: Three BEV SUV Exposed Ahead of Schedule
- Li Auto’s (LI) share surged 13% on photos released on its official Weibo of a BEV SUV slated for release in April, two months ahead of our expectation.
- Based on information released, we dialed up LI’s BEV forecast from 73K to 106K for 2025, contributing 20% of revenue instead of 15%.
- We raise LI’s TP from US$22 to US$25 but keep at SELL.
Trip.com (TCOM) – Worth a Little More than EXPE or Much More?
- This will be another quick idea flag and different from the typical cheapish-catalyst type situations I have often written about.
- This is a superb business that I’ve been monitoring for awhile that just saw some nasty correction.
- I’ve been tweeting incessantly about this business, and shares finally collapsed yesterday despite a relatively good earnings report.
Li Auto (2015 HK): Short Calls To Capitalize on High Volatility Amid Cautious Outlook
- Li Auto (2015 HK) has surged recently due to the announcement of its new Li i8 model, accompanied by a significant rise in implied volatility.
- The elevated implied volatility, with one- and two-month levels above the 90th and 80th percentiles respectively, presents an opportunity for bearish and neutral investors to sell call options.
- March and April expirations are preferred due to the earnings release in May.
Herbalife Ltd: Momentum Accelerating; CEO Change Signals the Dawn of a New Era
- HLF recently reported 4Q24 adjusted diluted EPS of $0.36 versus $0.28 in 4Q23, up 28.6%, and above consensus of $0.19.
- Management does not provide EPS guidance.
- 4Q24 net sales of $1.21 billion were down 0.6% versus $1.22 billion in 4Q23, in line with management’s expectations for net sales in the range of down 3.0% to up 1.0% Y/Y, and slightly above consensus of $1.19 billion. Excluding currency, net sales increased 2.7% Y/Y.
La Comer 4Q24: Another Quarter of In-Line Results (Quick View)
- Revenues of P$11.4bn grew 9.9% YoY and were ahead of our estimates.
- SSS of 5.5% YoY were in line with our estimates and better than peers’ for another quarter.
- Unit and sales area growth of 6% and 7.4% YoY, respectively, further contributed to top line.
Shareholder Benefits to Return Amid Rise in Foreign Ownership and Dissolution of Cross-Shareholdings
- Most shareholder benefits items can be used in Japan. There’s history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.
- Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.
- The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.
VERU: Importance of Preserving Muscle in Weight Loss with GLP-1 Obesity Drugs
- Veru is a clinical-stage biopharmaceutical company focused on cardiometabolic and inflammatory diseases.
- Lead drug enobosarm is a selective androgen receptor modulator (SARM) in Phase 2b for obesity, specifically to preserve muscle while on GP-1s for weight loss.
- Second pipeline drug sabizabulin is a microtubule disruptor being evaluated for inflammation in atherosclerotic cardiovascular (CV) disease
Abercrombie & Fitch Co Cl A – AKA: 4Q Preview: Gliding Into a Momentous 2025; Reiterate Buy, PT
- We are reiterating our Buy rating, $30 price target and projections with the company announcing 4Q24 (December) results after the close on Thursday.
- We believe, after opening multiple Princess Polly stores before the Holiday season, expanding into Nordstrom with Petal & Pup and Princess Polly and rolling out a new inventory system at Culture Kings, a.k.a. Brands is poised for a strong 4Q (inline or slightly above, the January update) and, with many initiatives set to be fully anniversaried in 2025, we look for a solid initial annual guide.
- Further, with the NYC flagship poised to open in two weeks, and more Princess Polly owned store openings on the horizon, we believe a.k.a. Brands is poised for multi-year growth as a true omnichannel retailer.
VNCE: Snapping the Store; Bright and Colorful for Spring; Reiterate Buy, $6 PT
- We are reiterating our Buy rating, projections and $6 price target for Vince after visiting stores in Connecticut, Long Island and New Jersey.
- We believe, after a very solid Winter season, the company has shifted fully to Spring, with new styles, multiple colors and great assortments for the consumer looking to go on vacation or to stock up early for great Spring looks.
- Further, with continued expansion in men’s, shoes and accessories, Vince is clearly becoming even more of a full lifestyle destination.
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