In today’s briefing:
- Toyota Industries (6201 JP): Vocal Activism Gathering Pace
- Treasury Cancellation Bill Latest: 10% Holding Cap for Existing Ones — Targets Screened in Excel
- Travel Food Services IPO: Capitalizing on the Global Airport F&B Boom
- Zhou Liu Fu (6168 HK): Are We or the Market Wrong?
- Meituan Possible US$4bn Selldown – Will End up Being Well-Flagged but Sentiment Isn’t Great
- Brightstar Lottery (fka IGT) Capital Return is Better Than Expected
- Nameson Holdings (1982 HK) FY25 Concall And Results: Yield At 14% Following Weak Season
- LE: 2H Signposts: Moving Past the Gap to Growth; Reiterate Buy, $20 PT
- JAKK: 2H Signposts: Creating the New Normal; Reiterating Buy Rating, $40 PT
- VRA: 2H Signposts: Greater Urgency…Is It Enough?
Toyota Industries (6201 JP): Vocal Activism Gathering Pace
- Toyota Industries (6201 JP)’s preconditional tender offer from Toyota Fudosan is susceptible to a bump if there is enough vocal opposition from minorities.
- In July, two public pieces have sharply criticised the offer – the Asian Corporate Governance Association (ACGA) on 2 July and Sloane Robinson Investment Management on 8 July.
- Some of the criticism has merit, while others do not. Nevertheless, these letters are the first and right step to agitate for terms that are closer to TICO’s intrinsic value.
Treasury Cancellation Bill Latest: 10% Holding Cap for Existing Ones — Targets Screened in Excel
- Market focus is now on retroactive impact — existing treasury holdings above 10% must be canceled within a year, flipping earlier expectations that they’d be exempt.
- DP’s fast-tracking the bill, targeting a September vote and mid-October go-live, with this Commercial Act tweak topping their legislative priority list.
- Excel below shows 230 stocks above the 10% treasury cap, including 35 large-caps — prime candidates for momentum trades as the mandatory buyback burn bill gains steam.
Travel Food Services IPO: Capitalizing on the Global Airport F&B Boom
- Travel Food Services leads India’s airport QSR sector with a 24% market share and expands internationally through strategic partnerships, capitalizing on the growing global travel F&B market.
- With a debt-free balance sheet and robust margins, TFS ensures scalable growth through strategic joint ventures and partnerships, minimizing capital expenditure while expanding operations.
- With its diverse brand portfolio and a presence in high-traffic airports across India and abroad. The company’s expansion into new airports ensures sustained growth in the travel food services sector.
Zhou Liu Fu (6168 HK): Are We or the Market Wrong?
- Zhou Liu Fu Jewellery (6168 HK) has an impressive debut, but it is currently expensive, at 4.33x PEG with just a 3-year EPS CAGR of 4.7%.
- It is overpriced by ROE vs. P/B, given it stands higher than the best-fit line. Its inferior market position in the industry makes it deserve to trade below.
- At 20% discount to Chow Tai Fook Jewellery (1929 HK), it should value at HK$27.80. Even at par, it still implies an 8.5% downside.
Meituan Possible US$4bn Selldown – Will End up Being Well-Flagged but Sentiment Isn’t Great
- As per news reports, Prosus NV (PRX NA) could look to sell some/all of its Meituan (3690 HK) stake, worth around US$4bn
- Prosus has held its stake for a few years, owing to the dividend payout by Tencent, but Meituan appears to be planning to take on one of its subsidiaries.
- In this note, we will talk about the possible selldown and other deal dynamics.
Brightstar Lottery (fka IGT) Capital Return is Better Than Expected
- Brightstar Lottery (fka IGT) announced a better than expected capital return program following the closing of the Apollo transaction.
- Brightstar will pay a $3 special dividend (7/14 ex date) and buy back $500MM of stock.
- Brightstar is in a quiet period, but I would expect it to aggressively buy back stock following its earnings report on July 29, 2025.
Nameson Holdings (1982 HK) FY25 Concall And Results: Yield At 14% Following Weak Season
- Nameson Holdings (1982 HK) reported FY25 revenue/net profit declines of 0.6%/5.3% YoY, respectively, primarily driven by a margin contraction of approximately 40 basis points.
- The company declared a 1.5-cent final dividend (total dividend 11.3 cents/share), maintaining a 75% payout ratio, resulting in a 14% yield on the current share price.
- The stock trades at a 5.5x FY26e PE with a 3x EV-EBITDA and a 14% dividend yield, assuming the company can maintain flat earnings for FY26.
LE: 2H Signposts: Moving Past the Gap to Growth; Reiterate Buy, $20 PT
- We are reiterating our Buy rating, $20 price target and projections for Lands’ End as we look at key trends for 2HFY25 and beyond.
- We believe Lands’ End is poised to move into the next phase of the transformation of the company into a higher margin, higher return global brand, as the recently launched licensing initiatives begin expanding the overall category levels, as opposed to shifting prior owned categories into licensing relationships which, while driving higher return on assets, led to YoY revenue declines.
- Further, with continued international expansion (both owned and licensed) on tap, further key wins at Lands’ End Outfitters and the potential to continue to drive higher returns (and sales) in the core business as the company shifts the business model, we believe Lands’ End remains well situated to drive further top and bottom line upside, and we reiterate our Buy rating and $20 price target.
JAKK: 2H Signposts: Creating the New Normal; Reiterating Buy Rating, $40 PT
- We are reiterating our Buy rating, $40 price target and projections for JAKKS Pacific as we look at key trends for 2H2025 and beyond.
- With toy production, especially on the lower end, firmly established in China, and with limited near term options, JAKKS will, as they have done throughout their 30-year history, have to transform to maximize overall returns.
- We believe management has the financial firepower, relationships and product offerings to maintain their strong market position and once again quickly return to driving solid top and bottom line growth.
VRA: 2H Signposts: Greater Urgency…Is It Enough?
- We are reiterating our projections as we look ahead for Vera Bradley as we enter 2Q earnings season.
- Give the tumultuous last year, with Project Restoration launched and almost immediately abhorred by the company’s OG shoppers, management then rethinking and softening the impact and reviving key pieces of the prior business model, followed by the recent resignation of the prior CEO and CFO, a new CFO and Executive Chairperson hiring and search for a new CEO, VRA investors can be excused for suffering a case of whiplash.
- That said, we believe there remains a basis for the company to build on; given that we do not know where the ultimate goal for Vera Bradley is currently, we are rating VRA a Hold.
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