Daily Brief Equity Bottom-Up: Grab Holdings (GRAB US) – GoTo Merger Rears Its Head? and more

• Press reports suggest that a merger between GoTo Gojek Tokopedia and Grab is back on the table, which is ironic given the progress of both companies towards profitability. 
• Any merger may encounter anti-trust issues in Indonesia, with some fallout for drivers and potentially merchants, which may encounter resistance from the government and even potential demonstrations but not insurmountable.
• Grab should book a net profit in 2025 plus higher growth, as its barbell strategy gains traction, but a GoTo merger could move the dial towards much higher profitability.

• Switch slowdown: Nintendo’s Q3 revenue and profit fell sharply as the ageing console nears the end of its cycle, missing hardware sales expectations.
• Guidance cut: Full-year revenue and profit forecasts were lowered, but investors remain focused on the upcoming Switch 2 launch.
• Muted upside: Switch 2 is an incremental upgrade, unlikely to expand the market significantly or boost Nintendo’s valuation beyond its current fair value of ¥9,000 per share.

• LVC increased its holding of Henlius by 1,110,900 shares on January 23, reflecting its high recognition of the Company and optimism on its prospects, despite the biosimilar VBP headwinds.
• Even with concerns, LVC still repeatedly invested in Henlius at a valuation far higher than its actual value, offering support with real money during pre-IPO stage.
• Lin Lijun’s dissenting vote was a deliberate decision. We are interested to see Lin’s next move. Lin should have a very clear understanding of the true value of Henlius.

• Religare Enterprises (RELG IN)’s saga intensifies as CEO Rashmi Saluja sues her own company amid takeover bids by the Burman family, amid insider trading allegations.
• The battle, initially a takeover bid, has evolved into an ED probe, halting shareholder meetings and raising serious governance concerns.
• Everything lies in the hands of Religare’s shareholder since to gain the helm again Rashmi needs more than 50% votes in the upcoming meeting on 7-Feb.

• Multi Bintang Indonesia (MLBI IJ)  saw significant inflection in Q3 FY24, with revenue and net profit growth of 21.9% and 35%, respectively. Strong growth is anticipated in Q4’s high season.
• Our confidence in MLBI’s Q4 stems from Bali’s impressive tourism statistics, registering a 17% YoY increase in Q3 FY24 and 19% YoY in Q4 FY24 (up to November).
• With a 10.4x FY24e PE valuation, over 9% dividend yield, and historical ROCEs surpassing 80%, we believe the share price is at a turning point.

• Excel Industries (EXL IN) faced severe financial declines in FY24 but showed early Q2 FY25 improvement through higher export revenues and better margins amid strategic capacity expansion and new partnerships.
• Its diversified product portfolio, especially DETC, and proactive R&D investments are key to overcoming volatility, making Excel Industries pivotal in sustaining India’s chemical innovation despite market headwinds.
• Investors should note that despite recent downturns, targeted expansion and strategic partnerships could reverse performance trends, revealing potential long-term value if operational challenges are resolved.

• IWG is the largest co working flex office company in the world, with brands like Regus, Spaces, HQ signature and The Lights
• The company has been profitable and has grown through a capital light strategy of managed and franchise models
• The stock is currently undervalued, with potential for significant growth in earnings and free cash flow from the managed business in the upcoming years

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• Revenue increased 31.1% YoY to JPY2.5bn, with HENNGE One revenue at JPY2.3bn and Professional Service at JPY175mn.
• Operating profit rose 37.3% YoY to JPY529mn, with a margin of 21.1% and SG&A expenses at JPY1.6bn.
• Gross profit reached JPY2.1bn, gross margin at 85.5%, and advertising expenses increased 68.8% YoY to JPY157mn.

• Gaw Capital secures $260M investment for Hong Kong CSI Properties, demonstrating confidence in the real estate market.
• CapitaLand Ascott Trust makes significant acquisition with purchase of 2 Japanese hotels worth $140M, expanding their portfolio.
• Hines JV embarks on condo complex development on Delhi’s Birla Mills site, reflecting growing investment interest in India’s real estate sector.