In today’s briefing:
- Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
- Alibaba: Accelerating Retail Sales, and a Depressed Comp Base, Bode Well for Near-Term Earnings
- Fast Retailing (9983) | Elevated Multiple and Guidance Risk
- China Internet Weekly (26Sep2022): S.F., STO, YTO, Yunda, JD Logistics, Alibaba, Baidu, Trip.com
Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
- Highest spreads – Shandong Fengxiang (9977 HK), Alliance Aviation Services (AQZ AU), Infomedia Ltd (IFM AU), Ramsay Health Care (RHC AU), 21Vianet Group (VNET US), 111 Inc (YI US).
- Lowest spreads – OZ Minerals Ltd (OZL AU), Nitro Software Ltd (NTO AU), Tyro Payments (TYR AU), MACA Ltd (MLD AU), Link Net (LINK IJ), Dongzheng Automotive Finance (2718 HK).
Alibaba: Accelerating Retail Sales, and a Depressed Comp Base, Bode Well for Near-Term Earnings
- In line with previously reported trends in Chinese retail sales growth, the large Chinese eCommerce operators reported a decline (or contraction) in GMV growth in 2Q2022.
- Following a contraction between March and May this year, China’s retail sales growth has returned to growth since June, which continued in July and accelerated in August.
- Alibaba’s next reported quarter’s annualised growth will be on an extremely depressed base.
Fast Retailing (9983) | Elevated Multiple and Guidance Risk
- Fast Retailing’s share price has risen 24% year-to-date, outperforming the index and global peers
- The share price has been driven by multiple expansion, which we believe is now at risk of reversing
- With an uncertain economic backdrop, we believe management may issue conservative guidance for the next fiscal year. We turn Bearish.
China Internet Weekly (26Sep2022): S.F., STO, YTO, Yunda, JD Logistics, Alibaba, Baidu, Trip.com
- Revenues of major express parcel companies grew rapidly in August.
- JD logistics will provide logistics service to live streaming retailers on Douyin.
- In 2Q22, revenue of Trip.com decreased by 32% YoY and operating profit turned negative.
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