In today’s briefing:
- Yashili’s Pre-Condition EGM Approval Secured
- CTG Duty Free H-Share Listing: Not Even Attractive at the Lower End
- Looking at Hyundai Mobis Spin-Off from a Swing Trading Perspective
- Cooke Nets Tassal On Fourth Attempt
- Tassal Recommends Cooke’s A$5.23 Offer
- Upgrading Discretionary to Overweight, Downgrading Energy & Health Care to Market Weight
- Kroger Company: The Boost Membership & Other Drivers
- Altria Group: Low Health Risk Products Upside
- CENTEL : Back to Net Profit Again in 2Q22 Before Recovering up In
- Faraday Future’s Weak Q2 Results & Cash Risks Ahead of New EV Launch
Yashili’s Pre-Condition EGM Approval Secured
- Yashili International Holdings (1230 HK) independent shareholders unanimously approved the proposed transactions at the 16 August EGM, a crucial step for China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer.
- The remaining pre-condition is the completion of the 25% Yashili acquisition. The completion conditions suggest that this pre-condition is low risk and will likely be completed soon.
- The value test is only applicable to the scheme. At last close and for a November completion, the gross and annualised spread to the offer is 8.1% and 29.6%, respectively.
CTG Duty Free H-Share Listing: Not Even Attractive at the Lower End
- CTG Duty Free Group has filed for a HKEx listing and plans to raise net proceeds of US$1.98bn at the midpoint of the IPO price range of HK$143.5-165.5 per share.
- The company’s indicative IPO price range is at a 27-37% discount to the company’s last close of RMB194.75 per share.
- In this insight, we discuss our key concerns on CTG’s financials and our thoughts on the company’s valuation.
Looking at Hyundai Mobis Spin-Off from a Swing Trading Perspective
- Hyundai Mobis said it was considering a split but had not yet made a decision. This kind of response is generally seen as an ACKNOWLEDGMENT.
- The eventual goal should be to liquidate the Chung family’s Mobis stake via spin-off/merger and swap it with Kia Motors’ Mobis stake. It implies that this will be a spin-off.
- This aspect serves as an opportunity to use today’s Mobis price drop as a swing trading entry point. I would consider building a Long/Short setup with HMC at this point.
Cooke Nets Tassal On Fourth Attempt
- Tasmanian salmon producer Tassal (TGR AU) and Canadian aquaculture play Cooke have entered into a Scheme at A$5.23/share.
- The revised Offer is Cooke’s fourth bid since late May, having initially pitched A$4.67/share. Cooke has been gradually building its stake and now holds 10.5%, up from 5.4% initially.
- This Offer is done and dusted. Tassal’s board unanimously recommends shareholders vote in favour of the Scheme.
Tassal Recommends Cooke’s A$5.23 Offer
- Tassal (TGR AU) entered a scheme implementation deed with Cooke at A$5.23 per share, a 48.6% premium to the undisturbed price of A$3.52.
- The offer price is an all-time share price high. The scheme is not subject to due diligence or a financing condition. Cooke also noted that it had received FIRB approval.
- This is a done deal. At last close and for year-end payment, the gross and annualised spread to the offer is 1.8% and 4.6%, respectively.
Upgrading Discretionary to Overweight, Downgrading Energy & Health Care to Market Weight
- We continue to believe that the bear market lows have already been established.
- It remains to be seen whether the indexes will experience a meaningful pullback first, or whether we are already experiencing the initial leg of a new bull market.
- Thus far, market indexes have ignored overbought conditions, which is historically a sign of strength during the initial leg of new bull markets.
Kroger Company: The Boost Membership & Other Drivers
- Kroger Co. continued to navigate the challenging operating environment characterized by continued supply chain headwinds, including higher diesel fuel costs and inflationary cost pressures.
- The highlight of the last quarter was its launch of the Boost membership on grocery and fuel delivery.
- We provide the stock of Kroger Company with a ‘Hold’ rating with a revision in the target price.
Altria Group: Low Health Risk Products Upside
- Altria is facing a difficult macroeconomic climate since the start of 2022 which was responsible for a weaker tobacco performance.
- The company failed to meet Wall Street expectations in terms revenues despite the robust performance of Marlboro.
- The smokeable products division did generate excellent operating company income growth, while their moist smokeless tobacco brands kept boosting profitability resulting in the company delivering an earnings beat.
CENTEL : Back to Net Profit Again in 2Q22 Before Recovering up In
- Maintain BUY recommendation for CENTEL with a target price of Bt49.0.The company’s 2Q22 net profit came out above our expectation at Bt22m in 2Q22, compared with Bt44m loss in 1Q22.
- Impressive performance for hospitality business.Hotel revenue hit nine quarter high at Bt1.4bn thanks to impressive performance for Thai hotels as RevPar for Bangkok and Upcountry hotels jumped sixfold and fourfold
- Food hit 10 quarter high at Bt2.9bn (+26%YoY+11%QoQ) on the back of strong SSSG at 19% compared with 0% and 10% in 2Q21 and 1Q22 respectively.
Faraday Future’s Weak Q2 Results & Cash Risks Ahead of New EV Launch
- Faraday Future (FF) saw a Q2 net loss of $142m & cash fell by 56% QoQ to $121m. As of Aug-9th, cash sunk another 59% to $52m.
- FF’s recently lined up financing provides $52m, but comes in stages through late October, which could hinder its Q4 new flagship EV launch.
- Risk statements regarding the launch of its new EV raise concerns about supplier relationships and marketing capabilities even if its first EV is launched in Q4.
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