In today’s briefing:
- Vishal Mega Mart (VMM IN) Placement: PE Selling Will Lead to Large Passive Buying
- BYD (1211 HK): Authorities Halting Severe Competition Throughout Industry and Industry Chain
- Cao Cao Pre-IPO: Grossly Overvalued
- BYD (1211 HK) Outlook Following Regulatory Pushback on Market Dominance
- CaoCao IPO (2643 HK): Valuation Insights
- StubWorld: Melco (200 HK) Needs To Fall
- Chinese Tea Chain: An Impromptu Snapshot Visit at Sunac Mall – Mixue, Chagee, Goodme, ChaPanda
- Shiseido (4911) | Beauty in the Bargain Bin
- Foshan Haitian: Upsized at Top Price. Near Term Upside, Long Term Value Play.
- Foshan Haitian Flavouring & Food Company Hong Kong IPO Valuation Analysis
Vishal Mega Mart (VMM IN) Placement: PE Selling Will Lead to Large Passive Buying
- Reports indicate that Kedaara Capital Fund is looking to sell 22% of Vishal Mega Mart at a floor price of INR 110/share, a 11.9% discount to the last close.
- The placement will lead to a huge increase in the free float for the stock and Vishal Mega Mart could be added to a global index in August.
- Vishal Mega Mart is also an inclusion to another global index at the close on Friday and we could see more buying in the stock following the increase in float.
BYD (1211 HK): Authorities Halting Severe Competition Throughout Industry and Industry Chain
- BYD announced that the company would provide price discounts for 22 models.
- BYD has scale advantage over other NEV car makers and the NEV industry has bargaining power over suppliers and dealers.
- The auto association and the Ministry of Industry are trying to protect small companies from bankruptcy.
Cao Cao Pre-IPO: Grossly Overvalued
- CaoCao (2643 HK) is looking to raise up to $236m in its upcoming Hong Kong IPO.
- It is a ride hailing platform in China originally incubated by Geely Group connecting passengers and drivers to deliver consistent and high-quality ride experiences.
- In this note, we examine the IPO dynamics, and look at the firm’s valuation.
BYD (1211 HK) Outlook Following Regulatory Pushback on Market Dominance
- As reported by Ming Lu, Chinese regulators are pushing back against BYD (1211 HK)’s dominance, which has strained smaller domestic EV competitors. Read his latest BYD insight for more details.
- In a recent insightwe signaled BYD was tactically overbought. The stock fell rapidly right after.
- The stock is currently mildly oversold according to our WEEKLY model: it could fall a bit more, but if this week closes in negative territory there could be a rebound.
CaoCao IPO (2643 HK): Valuation Insights
- CaoCao (2643 HK) has launched its IPO to raise US$236 million at HK$41.94 per share. The shares will be listed on 25 June.
- I previously discussed the IPO in CaoCao IPO: The Bull Case and CaoCao IPO: The Bear Case.
- In this note, I present my forecasts and discuss valuation. My analysis suggests that CaoCao is at best fairly valued at the offer price. Therefore, avoid the IPO.
StubWorld: Melco (200 HK) Needs To Fall
- Melco International Development (200 HK)‘s fully-paid rights shares commence trading today. Melco is down just ~14% since announcing a one-for-two rights issue; and 13% above the TERP.
- Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Chinese Tea Chain: An Impromptu Snapshot Visit at Sunac Mall – Mixue, Chagee, Goodme, ChaPanda
- We recently visited Guangzhou city, a tier one city in China, on a vacation trip.
- One of the malls that we visited happened to have several listed tea chain stores.
- We took a snapshot of the shop traffic and noted the difference in locations of various stores. We also ordered tea drinks from two of these stores.
Shiseido (4911) | Beauty in the Bargain Bin
- Shiseido’s core brand remains strong, but years of weak growth, high costs, and tariff risks have pushed valuations to deeply discounted, near-decade lows.
- Early signs from Japan show margin recovery is possible; aggressive cost-cutting could double core operating margins and unlock significant upside if execution holds.
- If management fails to deliver, Shiseido’s global brand equity, strategic footprint, and low valuation make it an obvious acquisition target for PE or industry buyers.
Foshan Haitian: Upsized at Top Price. Near Term Upside, Long Term Value Play.
- Foshan Haitian has priced its Hong Kong offer at the top end (HKD36.3/share) and upsized it to 279 million shares, raising a strong HKD10.1 billion (USD1.3 billion).
- With a massive 696x oversubscription and nearly half the deal secured by cornerstone investors, the stock could see a lively debut when it lists on June 19th.
- We believe Foshan Haitian Flavouring (3288 HK) lacks a clear catalyst for growth and hence the growth expectations built into its Hong Kong pricing may prove difficult to materialise.
Foshan Haitian Flavouring & Food Company Hong Kong IPO Valuation Analysis
- On 17 June, Bloomberg reported that Foshan Haitian Flavouring & Food Company has raised HK$10.1 billion after a strong remand for its shares to be listed in Hong Kong.
- We estimate the company to generate revenue of 29.4 billion RMB (up 9.2% YoY) and net profit of 6.8 billion RMB (up 7.1% YoY) in 2025.
- Our valuation analysis suggests that Foshan Haitian is undervalued. Our base case valuation suggests implied market cap of 286 billion CNY, which represents 25% higher than current levels.
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