In today’s briefing:
- Is This Chinese Biotech Going Out of Business?
- JSW Steel: Low Cost Capacity Expansion Underpin Premium Valuations
- Can Tata Motors Withstand the 25% U.S. Auto Tariffs Or It Will Collapse Further?
- Shell’s Next Phase: Leaner Operations, Stronger Cash Flow, and Higher Shareholder Returns
- Steven Madden Just Acquired Kurt Geiger—Is This The Start Of A Fashion Empire?
- Reynolds Consumer Products Reveals A New Strategy To Capture Retail Shelves Nationwide!
- Paramount Bed Holdings (7817 JP): Guidance Reaffirmed, But Sluggishness To Stay Amid Falling Margins
- Boise Cascade Is Revamping Oakdale—Could This Bold Move Help Improve Margins?
- BigCommerce’s Targeted B2B Expansion Plan & 5 Factors That Are Changing The Game!
- ARG: Highlights from Our MVC Site Visit
Is This Chinese Biotech Going Out of Business?
- This Nasdaq-listed, Hong Kong-based company hopes to apply Traditional Chinese Medicine (TCM) to significant illnesses like ADHD, but that seems unlikely. The company is a family affair, with all research provided by the CEO’s father, so one wonders how objective scientific assessment can be.
- The stock surged by more than 700% in a month without patent approval, a buyout offer, or other notable news. The CEO funded a share buyback, but rather than demonstrating faith in the company, the repurchase looked suspiciously like a way to inflate the short-term share price, possibly for an equity issue or insider self- enrichment since the CEO’s compensation is tied to market capitalization.
- This is a highly speculative business run by a family team from Hong Kong, thus little trusted in the U.S. and very volatile.
JSW Steel: Low Cost Capacity Expansion Underpin Premium Valuations
- JSW Steel has grown its domestic steelmaking capacity at CAGR of 14% over the last 2 decades (2x industry) and at 25% lower costs
- Gradual capacity ramp-up at recently completed expansion at Vijayanagar (5m) and actively pursuing 10-15mt of new capacity additions over the next 3-5 years
- Valuations: JSW Steel trades at premium to its 5yr average EV/EBITDA likely due to a) impending imposition of a 12% safeguard duty b) superior capital allocation etc.
Can Tata Motors Withstand the 25% U.S. Auto Tariffs Or It Will Collapse Further?
- The US imposed a 25% tariff on auto imports, affecting Tata Motors’ JLR unit, where the US accounts for 22% of sales.
- This could shave off 200–300 bps from JLR’s EBITDA margin or weaken US volumes if costs are passed on to consumers.
- Tata Motors’ FY25 EBIT margin guidance of ≥8.5% looks ambitious; a realistic range may shift to 6.5–7.5% without swift demand or cost-side offsets.
Shell’s Next Phase: Leaner Operations, Stronger Cash Flow, and Higher Shareholder Returns
- Shell reaffirmed its strategy, prioritizing efficiency, LNG growth, and shareholder returns, unlike BP’s strategic shift back to hydrocarbons after an aggressive renewables push.
- As the world’s largest LNG trader, Shell plans 4%-5% annual LNG sales growth, capitalizing on rising global demand while maintaining financial discipline and emissions targets
- Shell aims to save USD 5 – 7 billion by 2028, cut capex to USD 20 – 22 billion, and streamline operations to enhance free cash flow and investor returns.
Steven Madden Just Acquired Kurt Geiger—Is This The Start Of A Fashion Empire?
- Steven Madden, Ltd. reported solid financial results for the full year 2024, with revenue increasing 15.2% year over-year to $2.3 billion and diluted earnings per share rising 9% to $2.67.
- The company emphasized four key business drivers: international expansion, category diversification beyond footwear, growth in direct-to-consumer (DTC) channels, and reinforcement of its U.S. wholesale footwear business.
- International revenue rose 12%, with notable growth in the EMEA region (18%), including Europe, the Middle East, and South Africa.
Reynolds Consumer Products Reveals A New Strategy To Capture Retail Shelves Nationwide!
- Reynolds Consumer Products, Inc. reported its financial performance for the fourth quarter and full year of 2024.
- The company experienced a modest volumetric growth of 1% in the fourth quarter across its business units, which include Reynolds Cooking & Baking, Hefty Waste & Storage, Presto, and Hefty Tableware.
- Despite navigating a challenging market environment, the company achieved its strongest profitability since the COVID 19 surge in 2020, highlighted by expanded margins and earnings surpassing initial projections.
Paramount Bed Holdings (7817 JP): Guidance Reaffirmed, But Sluggishness To Stay Amid Falling Margins
- During 9MFY25, Paramount Bed Holdings Co Lt (7817 JP) reported 3% YoY revenue growth to ¥75B, mainly driven by the nursing care businesses.
- Due to higher SG&A expenses, operating profit decreased 15% YoY to ¥7.2B and net profit was down 11% YoY to ¥5.9B.
- Paramount Bed has reiterated FY25 guidance, which calls for 2% YoY revenue growth, while higher SG&A is expected to erode operating profit by almost 6% YoY.
Boise Cascade Is Revamping Oakdale—Could This Bold Move Help Improve Margins?
- Boise Cascade’s fourth quarter and full-year 2024 results reflect a mix of achievements and challenges.
- For the full year, Boise Cascade recorded a net income of $376.4 million or $9.57 per diluted share.
- This performance was supported by growth initiatives in their distribution business, notable capital investments aimed at bolstering their Engineered Wood Products (EWP) growth strategy, and significant capital returns to shareholders.
BigCommerce’s Targeted B2B Expansion Plan & 5 Factors That Are Changing The Game!
- BigCommerce’s fourth quarter and fiscal year 2024 earnings announcement revealed a mixed financial performance as the company navigates its transformational strategy towards more efficient and profitable operations.
- The company’s non-GAAP operating income showed a remarkable improvement, surpassing $19 million, which is nearly double the original forecast, while operating cash flow reached $26 million, marking a $50 million increase from 2023.
- These outcomes underscore BigCommerce’s effective cost management, attributed to decreased ineffective sales and marketing expenditure and a 10% headcount reduction.
ARG: Highlights from Our MVC Site Visit
- What you need to know: • We visited Amerigo’s MVC processing facility in Rancagua, Chile and were highly impressed with the site and plant, as well as the scale of the operation.
- • The copper price increased substantially after Q4, positioning the Company for even stronger cash flow in Q1/25.
- • For more information on ARG, you can find all our research on our website here and an interview we hosted with CEO Aurora Davidson, here.
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