In today’s briefing:
- DFI Retail (DFI SP): Up 90% in a Year + Special Dividend. Cash Out or Hold Tight?
- [7732 JP] KKR–JIC Take-Private of Topcon: Strategic Bet on Digital Eye Care
- [JD.com, Inc (JD US, SELL, TP US$24) TP Change]: C2Q25 Preview: Near Term Loss Pressure Imminent
- Tencent/Netease: Zero Approval in July
- The Bunny Returns: Playboy’s Market Comeback
- Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – July 2025
- Korea Small Cap Gem #41: Korea Fuel Tech (FT) Corp
- GE Aerospace’s New Focus: How LEAP Engine Retrofits & $4B in Services Could Up Their Game!
- GCL Tech (3800): Why Wait?
- Kinder Morgan: Haynesville Gas Gathering Expansion for Robust Growth Potential In Pipeline Utilization!
DFI Retail (DFI SP): Up 90% in a Year + Special Dividend. Cash Out or Hold Tight?
- DFI Retail’s strategic shift from portfolio investor to focused operator has unlocked over US$900 million, with US$600 million returned to shareholders via a US¢44.3 per share special dividend announced yesterday.
- Underlying profit rose 39% in 1HFY2025, driven by lower financing costs and strong performance in the Health & Beauty segment.
- On its investor call, DFI Retail Group Holdings (DFI SP) acknowledged sector headwinds and outlined plans for cost control, margin focus, and digital monetisation to offset weak revenue growth.
[7732 JP] KKR–JIC Take-Private of Topcon: Strategic Bet on Digital Eye Care
- KKR and JIC Capital launched a ¥348B (~$2.3B) MBO for Topcon (7732 JP) at ¥3,300/share, offering an ~88% premium.
- The deal implies ~78x FY25 P/E and ~37x FY26E P/E—pricing in Eye Care’s high-margin growth while Positioning remains a cyclical drag.
- Long term, Eye Care is well-positioned to scale globally as AI diagnostics and SaaS platforms unlock sustained double-digit growth.
[JD.com, Inc (JD US, SELL, TP US$24) TP Change]: C2Q25 Preview: Near Term Loss Pressure Imminent
- We expect JD.com to report C2Q25 revenue/adjusted operating profit growth of 16%/(63%) YoY, which is 2%/(50%) vs. cons. due to the takeout subsidies.
- Despite the surge in new users, we remain skeptical on the ST effectiveness of food delivery (FD) cross-selling. We expect 2025 FD losses at RMB29bn.
- We keep JD as SELL and cut TP from US$25 to US$24.
Tencent/Netease: Zero Approval in July
- China announced game approval for the July batch. The number of games approved remained at a higher level than 2023.
- The pace of China game approval appears to have accelerated to the same level as pre-tightening.
- In July, 7 listed companies that we tracked received zero domestic game approval. Having said that, overall sentiment is improving and gaming names have performed well YTD.
The Bunny Returns: Playboy’s Market Comeback
- Playboy, Inc. (Nasdaq: PLBY) is undergoing a transformation to an asset-light business model centered around its iconic brand, positioning the company for sustainable profitability
- The strategy is starting to yield tangible improvements in profitability, as evidenced by its return to positive adjusted EBITDA in Q1 2025.
- Playboy’s current valuation (2.7x EV/2025 sales) does not fully reflect its long-term earnings potential. As licensing continues to scale and margins expand, the company is poised for a meaningful re-rating.
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – July 2025
- We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
- We add Asian Terminals (ATI PM) to our value conviction list. Read Asian Terminals Inc (ATI PM): Steady And Cheap Container Port Terminal Operator
- Our top picks are Asian Terminals (ATI PM), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Philippine Stock Exchange (PSE PM), and Ginebra San Miguel (GSMI PM).
Korea Small Cap Gem #41: Korea Fuel Tech (FT) Corp
- Korea Fuel Tech (123410 KS) is the 41st company in our Korea Small Cap Gem Series.
- Korea Fuel Tech (FT) Corp is a Korean automotive components manufacturer specializing in emissions control systems, fuel system parts, and other auto plastic parts.
- Three key investment highlights include key beneficiary of growing demand for carbon canisters used in hybrid vehicles, compelling valuations, and sharp increase in operating margins/ROE.
GE Aerospace’s New Focus: How LEAP Engine Retrofits & $4B in Services Could Up Their Game!
- General Electric Company (GE) Aerospace’s second quarter of 2025 earnings report reflects a robust performance and a constructive outlook characterized by growth in revenue, profits, and operational efficiencies.
- The company continues to leverage its strong position within the aerospace industry, both in commercial and defense sectors, to sustain and enhance its performance metrics.
- In the reported quarter, GE Aerospace exhibited solid growth across several financial parameters.
GCL Tech (3800): Why Wait?
- Suffering from overcapacity for a while, the company is a beneficiary of the Chinese government policy to consolidate the solar industry.
- At 0.6x PBR and a share price at HKD 1.3, far from its high at HKD 4, sounds like a bargain.
- Management has conducted one share buy back this year and share price rallied afterwards.
Kinder Morgan: Haynesville Gas Gathering Expansion for Robust Growth Potential In Pipeline Utilization!
- Kinder Morgan Inc. (KMI) delivered quarterly results that highlighted notable financial performance and forwardlooking business prospects, especially in the context of the growing international demand for natural gas.
- Positively, Kinder Morgan reported strong financial growth, with adjusted EBITDA and EPS increasing by 6% and 12% respectively compared to the second quarter of 2024.
- The company expects to exceed its budget for 2025, buoyed by the promising acquisition of Outrigger Energy.
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