In today’s briefing:
- Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
- Pinduoduo (PDD US): Growth Worries Overdone
- Fu Shou Yuan (1448 HK): As Solid as It Goes
Mar24 Nikkei 225 Rebal: Zozo (3092) And Other ADDs Update
- ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
- All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others.
- Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.
Pinduoduo (PDD US): Growth Worries Overdone
- Concerns around slowdown in growth are behind the disconnect between PDD’s stellar 4Q23 results and lackluster share performance, in our view.
- We have seen this before. If history is a guide, its valuation will improve after growth hits bottom in 1Q24.
- We expect PDD to deliver 50% plus growth for 2024 and generate US$14 billion adjusted net profit. Reiterate US$240 billion target market cap or 50% upside.
Fu Shou Yuan (1448 HK): As Solid as It Goes
- Fu Shou Yuan (1448 HK)‘s net profit grew 20.1% in FY23; and if not a withholding tax of Rmb87.4m, its net profit would have increased by over 30%.
- Including a special DPS of HK$0.2139, full-year payout ratio reached 98.5%. Still, it has net cash of Rmb2.7bn or 24% of its market capitalisation.
- Profitability outlook is encouraging – structural demand increase, higher ASP, and well-contained costs. Its land reserve is enough to be consumed for 82 years.
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