In today’s briefing:
- 7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback
- June Value-Up Rebalance: Hype Fading, But Key Flags Remain
- China ETF Inflows & Implications: Central Huijin’s Huge Buying
- LG Electronics India IPO: The Bull Case
- Shimano (7309) | Gears Grinding
- NIFTY Index Rally Outlook After Trump’s Tariffs PAUSE
- Somnigroup (Tempur Sealy International): Launch of New Sealy Products & Other Key Developments!
- Tesla’s Freefall: Why Sales Are Plunging, Executives Are Leaving, and Investors Are Panicking!
- Conagra Brands: Powering Through Inflation with Bold Pricing & Sourcing Moves!
- Trial Purchase of Seiyu Creates New Japanese Retail Power
7&I (3382) – FY24 Better, FY25 OK, Surprisingly Large Buyback
- Today, Seven & I Holdings (3382 JP) reported full-year earnings. The FY2025 guidance looks OK. Not overly exciting. Optically, it falls short, but 7&i guidance includes York only for H1.
- The basic outlines of strategy in the Presentation are unchanged from the 6 March strategy report. The company seems convinced an IPO of SEI is a good thing. I’m underwhelmed.
- The company also announced that it would bring forward ¥600bn of its planned 6-year ¥2trln buyback program, and execute it this year. That’s good.
June Value-Up Rebalance: Hype Fading, But Key Flags Remain
- June rebalance drops mid-May, goes live post-KOSPI 200 expiry. Back to 100 names—net outflow setup with more deletes than adds. ETFs rebalance into June 12 close.
- KRX confirmed 10 special entries for June; results likely out in May with Value-Up rebalance. 12 protected names stay. Stocks over 10% weight, like Samsung and SK Hynix, remain.
- Value-Up disclosure isn’t mandatory yet—rule starts June 2026. But compliant firms get a screening boost. Around 76 spots remain, filled via quant screen after excluding 24 protected names.
China ETF Inflows & Implications: Central Huijin’s Huge Buying
- Nearly US$22bn has flowed into mainland China listed ETFs over the last 3 trading days, reversing outflows that started in mid February.
- Central Huijin has announced that it will be increasing its ETF holdings to maintain smooth operation of China’s capital markets. The rest of the National Team will be buying too.
- There are multiple implications of the huge ETF creations in a short time frame and a reversal of flows will lead to a reversion in a bunch of trades.
LG Electronics India IPO: The Bull Case
- LG Electronics India (123D IN)/LGEIL, a subsidiary of LG Electronics (066570 KS), aims to raise up to US$1.5 billion through a secondary offering (15% of outstanding shares).
- According to Redseer, as of 30 June 2024, LGEIL was the market leader in India in major home appliances and consumer electronics (excluding mobile phones) in terms of volume.
- The bull case rests on a strong market position, solid revenue growth, top-tier operating and FCF margin profile.
Shimano (7309) | Gears Grinding
- US tariffs could sharply cut Shimano’s H2 operating profit by up to 57%, despite limited direct exposure, due to opaque supply chains via China and Taiwan.
- Valuation would look stretched at 25x EV/EBIT versus historical 20x, if earnings fall short of current guidance.
- Shimano’s ¥530bn net cash pile offers room to boost shareholder returns through buybacks or dividends.
NIFTY Index Rally Outlook After Trump’s Tariffs PAUSE
- The NIFTY Index (NIFTY INDEX) post-crash bounce peaked around 4.4% before stalling—mirroring the fading rebounds seen across global indices.
- The index has yet to reach levels attractive for shorting, but with two days remaining before the weekend, any positive tariff-related news will push the index towards the targets.
- This insight highlights key price levels for initiating tactical shorts or exiting longs, depending on the tariffs scenario that, once again, changed dramatically from one day to the next.
Somnigroup (Tempur Sealy International): Launch of New Sealy Products & Other Key Developments!
- Somnigroup Group International, formerly known as Tempur Sealy International, has undergone a significant transformation with the completion of the merger with Mattress Firm, officially operating under the new name Somnigroup Group International.
- This merger creates a global sleep solutions provider encompassing well recognized brands such as Tempur Sealy, Dreams, and Mattress Firm, each operating under their brand names within a decentralized framework.
- The financial results of Mattress Firm will be included in the forthcoming quarters.
Tesla’s Freefall: Why Sales Are Plunging, Executives Are Leaving, and Investors Are Panicking!
- Tesla is facing one of its most turbulent periods in recent memory.
- In just the past few weeks, the electric vehicle giant reported its worst quarterly deliveries since 2022, saw its stock fall over 44% from its December peak, and lost one of its top software executives.
- Tesla’s Q1 2025 vehicle deliveries came in significantly below expectations at 336,681 units, triggering a wave of analyst downgrades, with JPMorgan citing “unprecedented brand damage” as a key factor.
Conagra Brands: Powering Through Inflation with Bold Pricing & Sourcing Moves!
- Conagra Brands recently reported its third-quarter fiscal 2025 financial results.
- A nuanced analysis reveals both strengths and challenges the company is navigating in a dynamic macroeconomic environment.
- On the positive side, Conagra Brands highlighted robust consumer demand for its products.
Trial Purchase of Seiyu Creates New Japanese Retail Power
- Until last year, Trial was a Kyushu-based discount FMCG retailer, that had just completed its IPO.
- Today, it is one of the largest FMCG retailers in the country having won the bidding to acquire Seiyu from foster care under KKR.
- This is a massive development that will pressure other rivals to step up in order to compete.
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