Daily Brief Equity Bottom-Up: Short – Mercedes-Benz Group AG (MBG.DE) and more

• Mercedes-Benz Group (MBG GR)’s EBIT fell 30% in 2024 and another 24% in Q12025; management expects significantly lower earnings &free cash flow in 2025 amid rising capex, weak pricing and tariffs
• China & JV Risk: 34% of units sold in China yield limited profit. EV price wars and slowing demand in the region continue to erode margins.
• Valuation Trap: Despite a low P/E (~8x FY25e), high dividend yield (~8%), the cheap valuation may be unsustainable as structural pressures mount from tariffs, EV transition costs, and falling RoS.

• Schloss Bangalore’s Rs3,500 crore IPO includes a Rs2,500 crore fresh issue largely earmarked for debt repayment, with limited allocation toward growth investments.
• The company operates 13 ultra-luxury hotels under The Leela brand, delivering premium ARR and F&B-led revenue, but with relatively modest scale versus larger peers.
• While expansion plans are underway with 678 new keys by FY28, the IPO is priced at a rich ~12x EV/Sales—significantly above Oberoi’s ~8x, despite being half its size.

• Alibaba Cloud is doubling down on globalization with a bold new strategy and 380-billion-yuan ($52.7 billion) investment plan aimed at creating a unified global cloud network and accelerate the international rollout of its AI offerings.
• The initiative seeks to establish Alibaba Cloud as the digital backbone for China’s next generation of global companies.
• Speaking at the Alibaba Cloud “Go Global Summit” on Thursday, Wu Yongming, Alibaba Group CEO and Alibaba Cloud chairman, said China’s globalization is entering a new era — one led not just by product exports but by the global rise of Chinese technology, brands and advanced manufacturing.

• After four years of behind-the-scenes development, Xiaomi has officially joined the top tier of smartphone chipmakers with the launch of its first in-house 3-nanometer system-on-chip (SoC), the Surge Xuanjie O1, along with its first self-developed 4G baseband chip, the Xuanjie T1.
• The announcement came during the company’s product launch event in Beijing on Thursday, where Xiaomi also introduced its new flagship phone 15s Pro and 7Ultra tablet — both powered by the Xuanjie O1— as well as a smartwatch using the T1 chip.
• The Xuanjie O1 is built using TSMC’s second-generation 3nm N3E process the same advanced node used in Apple’s A18 chips and Qualcomm’s Snapdragon 8 Elite.

• In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks (23 May to 6 June 2025).
• Our top 10 picks were up on average 2.4% in the past two weeks (from 9 to 23 May), outperforming KOSPI which was up 0.6% in the same period.
• The top 10 picks in this bi-weekly include Samsung Securities, LG Uplus, Amorepacific Holdings, Samsung C&T, JYP Entertainment, Nongshim, Krafton, LS Electric, F&F, and Emart. 

• Huawei Technologies Co. Ltd. unveiled its first personal computers Monday in Chengdu, with machines powered by the company’s self-developed chips and HarmonyOS operating system in a direct challenge to the long-standing dominance of Windows-Intel (Wintel) and Apple’s macOS technology.
• The MateBook Fold, priced from 23,999 yuan ($3,328), features an 18-inch foldable screen and a split keyboard, while the lighter MateBook Pro, starting at 7,999 yuan, follows a more conventional laptop design with a 14.2-inch display.
• Huawei did not disclose the specific chip used in either model, but industry observers believe the devices are equipped with the company’s Kirin X90 processor built on an Arm architecture.

• Xiaomi has its own smartphone chip! It’s the 4th announcement (2014, 2017, 2021, 2025)? Yes it is. Why it didn’t succeed before, will it work out now? It won’t.
• Mobile chip development costs US$800m-1bn, to be amortized on Xiaomi’s small volumes. The economics don’t work. It won’t give Xiaomi any performance / differentiation benefits.  
• Why now? Computex was ongoing in Taipei with 10 big-size CEOs, Nvidia, AMD, Qualcomm, Mediatek, TSMC… maybe they felt lonely in Beijing? If you bought Xiaomi, please sell.

• The Samsung Fire & Marine Insurance (000815 KS) vs. Woori Financial Group (316140 KS) Price-Ratio has deviated two standard deviations from its one-year average, highlighting a potential tactical opportunity.
• Statistical and fundamental arguments are provided for and against a relative value trade in this pair that derives from two different industries.
• Trade setup, statistical properties, factor exposure, risk management strategies, and key events are discussed.

Dentsu Group’s Q125 figures show 0.2% organic net revenue growth and an improvement in operating margin. Japan performed well, with international operations more challenged. Dentsu’s new management plan aims to drive profitability and competitiveness, particularly ex-Japan. It targets up to ¥50bn of operating cost reductions, returning the group to consistent profit growth from FY27. The ¥50bn cost of reshaping the group weighs on FY25 profits but should result in a simpler organisation. A further ¥45bn will be invested over three years with the aim of no markets being loss-making by FY26. The group will focus on the key Japanese and US markets, with the international business centred on adding value to Dentsu’s existing strengths in media. The goal is to achieve a mid-teens return on equity by the plan’s completion.

• IDEX Corporation recently reported its first-quarter results for 2025, outlining both positive performances and areas of challenge.
• The company exceeded expectations across revenue, profitability, and adjusted earnings per share, thanks to incremental cost savings and strategic price adjustments.
• This highlights IDEX’s effective operational management, despite an environment marked by policy-driven uncertainties, such as newly introduced tariffs.