In today’s briefing:
- StubWorld: First Pacific (142 HK) Looking Stretched
- ORIX JREIT (8954) Sponsor To Buy Units – Looks Minor, It’s Bigger
- Prices Drop, Eyes Pop: Insider Buying Update – May 2025 (Market Cap > USD 1 Billion)
- [Atour Lifestyle (ATAT US,BUY,TP US$37) Review]: Peer-Beating Performance Now W/ Shareholder Returns
- [KE Holdings (BEKE US, BUY, TP US$25) Review]: Margin Expansion and SH Return Vs. Lack of Stimulus
StubWorld: First Pacific (142 HK) Looking Stretched
- Via 49.9%-held MPIC, First Pacific Co (142 HK) is spinning off Maynilad, a provider of water and wastewater services in the Greater Manila Area, on the Philippine Stock Exchange
- Maynilad will tentatively have a market cap of US$2.7bn. Other key investors include DMCI Holdings (DMC PM) and Marubeni Corp (8002 JP). Listing is expected in July.
- I see First Pac’s discount to NAV at ~30%, around its narrowest level in a decade.
ORIX JREIT (8954) Sponsor To Buy Units – Looks Minor, It’s Bigger
- It has been a sport of the J-REITs the past 18-24mos to buy back their units at well under PNAV 1.0x and to have sponsor entities up their stakes.
- The goal? Get valuation to PNAV1+ so they can, in good faith, get the REIT to buy assets with an equity raise. Below PNAV1 would work with a rights offering.
- Now the Orix JREIT Inc (8954 JP) has announced it will triple its small holding. Meaningful portion of ADV, more meaningful portion of MRWF.
Prices Drop, Eyes Pop: Insider Buying Update – May 2025 (Market Cap > USD 1 Billion)
- May is a result season, and hence, very few companies that are out of their silent period are eligible to permit insider trading activity
- Sectors with notable activity include real estate, financials, media and renewable energy.
- Most of these stocks are close to same price levels where the insider purchases happened.
[Atour Lifestyle (ATAT US,BUY,TP US$37) Review]: Peer-Beating Performance Now W/ Shareholder Returns
- Atour (ATAT) delivered a steady C1Q25 with revenue (3.9%)/1.6% vs. our est./cons., and non-GAAP operating profit (5.0%)/5.5% vs. our est./cons.;
- We see catalysts from the “low-before-high” RevPAR trend, legacy hotel renewals and retail profitability improvement.
- We keep the TP at US$37/ADS and reiterate as travel sector TOP BUY
[KE Holdings (BEKE US, BUY, TP US$25) Review]: Margin Expansion and SH Return Vs. Lack of Stimulus
- Beike’s (BEKE) C1Q25 rev. beat our est./cons. by 4.6%/4.0% and non-GAAP NI beat est./cons. by 18%/25%, due to scale effect and cost savings;
- The near-term negative is that US-China trade truce reducing the possibility of large-scale stimulus on real estate. The near-term positive is margin expansion.
- We keep rating and TP unchanged. We see the US$1.2bn (5.0% market value) shareholder return commitment in 2025 as a major positive.
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