In today’s briefing:
- Investors Are Disappointed that ROE Is Not Improving, yet Companies Can’t Disclose to Improve It
- Guming Holding IPO Valuation Analysis
- China Healthcare Weekly (Feb.9) – Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies
- Weekly Deals Digest (09 Feb) – Guming, Hexaware, Shibaura, Fuji Soft, Proto, Tohto, Pentamaster
- Archer-Daniels-Midland: Strategic Simplification & Portfolio Optimization Fueling Our ‘Outperform’ Rating!
- Mondelez International: Cocoa Pricing Strategies & Market Adaptation Driving Our Optimism!
- Omnicom Group Earnings: The Flywheel & Interpublic Group Merger Are Going To Shape Its Future Beyond 2025!
- PepsiCo Inc.: Capitalizing On Away-From-Home Channels & Meal Solutions To Catalyze Growth!
- Ingredion Incorporated: Volume Growth & Market Opportunities Driving Our Optimism!
- Chipotle Mexican Grill: Dealing With Digital Engagement Complexities & Other Key Challenges In Its Path!
Investors Are Disappointed that ROE Is Not Improving, yet Companies Can’t Disclose to Improve It
- Companies with high stock price valuations are often characterized by high foreign shareholdings and high return on capital, and valuations cannot be raised simply by disclosure without improving profitability.
- Companies that proactively disclosed to TSE requests were those with large market capitalization and high foreign ownership. They usually try to use their cash effectively for investment and shareholder returns.
- Raising profit margin is the best way to improve capital profitability. It’s clear that challenge lies in restructuring the business portfolio and reorganizing the industry, which few companies could do.
Guming Holding IPO Valuation Analysis
- Our base case valuation of Guming Holding is implied target price of HKD 13.70, which is 38% higher than the high end of the IPO valuation range.
- Given the solid upside, we have a Positive view of this IPO. Our valuation sensitivity analysis suggests a range of HKD 11.09 to HKD 16.57 per share.
- Our base case valuation is based on 2025E P/S multiple of 3x, which is a 30% premium to the two closest comps (Sichuan Baicha Baidao Industrial and Helens International Holdings).
China Healthcare Weekly (Feb.9) – Vesync Is a High-Quality Company, VBP to Cover Retail Pharmacies
- Relevant departments are discussing the promotion of drugs included in VBP scope to enter retail pharmacies. However, the new business model will be detrimental to valuation performance for retail pharmacies.
- The gap in the distribution of funds among biotech companies is rapidly widening. We suggest investors focus on leading biotech rather than take risks in areas with higher uncertainties.
- Vesync is a good company. Due to the low liquidity, the Proposal presents a good opportunity for shareholders to exit. Considering its future growth potential, Share Alternative can be considered.
Weekly Deals Digest (09 Feb) – Guming, Hexaware, Shibaura, Fuji Soft, Proto, Tohto, Pentamaster
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: Hexaware Technologies (HEXW IN) seeks to raise US$1 billion, and Guming Holdings (1364 HK) seeks to raise US$202 million.
- Event-Driven developments: Shibaura Electronics (6957 JP), Fuji Soft Inc (9749 JP), Proto Corp (4298 JP), Tohto Suisan (8038 JP), Tecnos Japan (3666 JP), Pentamaster International (1665 HK).
Archer-Daniels-Midland: Strategic Simplification & Portfolio Optimization Fueling Our ‘Outperform’ Rating!
- Archer-Daniels-Midland Company (ADM) ended the fourth quarter and full year 2024 with adjusted earnings per share of $1.14 and $4.74, respectively.
- Despite challenges, the company’s approach to operational efficiency has yielded some benefits across its network, reflected in fourth-quarter operating profit of $1.1 billion and $4.2 billion for the full year.
- ADM achieved solid performance in particular segments, with increased crush volumes globally and operational efficiencies in North American soy processing.
Mondelez International: Cocoa Pricing Strategies & Market Adaptation Driving Our Optimism!
- Mondelez International reported its financial performance for the fourth quarter and full year 2024, alongside its outlook for 2025.
- In 2024, Mondelez demonstrated a strong operational performance, with mid-single-digit growth in both top-line and gross profit dollars.
- The company reported organic net revenue growth of 4.3% and adjusted gross profit growth of 5.1%, underpinned by disciplined pricing and cost management amid ongoing input cost inflation.
Omnicom Group Earnings: The Flywheel & Interpublic Group Merger Are Going To Shape Its Future Beyond 2025!
- Omnicom Group, a leading global marketing and corporate communications holding company, has reported strong third-quarter results for 2024, showing evidence of effective strategy implementation and robust financial health.
- The company has recorded an organic growth rate of 6.5%, consistent across both its total operations and specifically within the U.S market.
- This performance is primarily driven by notable achievements in the Advertising & Media and Experiential disciplines.
PepsiCo Inc.: Capitalizing On Away-From-Home Channels & Meal Solutions To Catalyze Growth!
- PepsiCo’s latest financial results and future outlook shed light on the company’s current operational dynamics and strategic priorities.
- The earnings call emphasized PepsiCo’s focus on long-term growth strategies, amplified investments, and a cautious approach to navigating a volatile economic environment.
- Here are the key takeaways from the call: PepsiCo has been keen on reinvigorating its Frito-Lay business amidst a challenging market environment.
Ingredion Incorporated: Volume Growth & Market Opportunities Driving Our Optimism!
- Ingredion Incorporated’s latest earnings report highlighted mixed results for its fourth quarter and full-year 2024 performance.
- The company saw significant double-digit adjusted earnings per share growth driven by robust sales volume growth in its Texture and Healthful Solutions segment and notable operating income growth in the Food and Industrial Ingredients segments, particularly in the U.S./Canada region.
- This growth was facilitated by the renewal of multiyear contracts that helped Ingredion recuperate inflationary impacts and improve margins.
Chipotle Mexican Grill: Dealing With Digital Engagement Complexities & Other Key Challenges In Its Path!
- Chipotle Mexican Grill’s fourth-quarter 2024 results present a mixed picture of robust growth and operational challenges.
- The company saw a 13% increase in sales, reaching $2.8 billion for the quarter, driven by a 5.4% increase in comparable sales and a notable 4% increase in transaction growth.
- For the full fiscal year 2024, sales grew by 15% to $11.3 billion, with a 7.4% increase in comparable sales including over 5% transaction growth.
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