In this briefing:
- Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
- 7-Eleven in India: Standard Franchise Model Would Require Minor Tweaks in India
- Lyft IPO Preview: Maybe We’ll Just Walk?
- Receding Political Gains to the Ruling Party, Possible Threat to the Markets
1. Sea Ltd: Follow-On Public Offering an Opportunistic Fundraising?
- We evaluate the attractiveness of Sea Ltd’s (SE US) US$1 bn follow-on public offering announced last Fri.
- This offering is a typical opportunistic fundraising as its ADR price has recently surged.
- At assumed deal price of US$21, SE post deal would trade at 4.6x 2019E P/adjusted sales (excl. 1P e-commerce sales), vs. peers average of 5.2x.
- We would recommend investors to go for the deal if it is priced at US$20 or lower.
2. 7-Eleven in India: Standard Franchise Model Would Require Minor Tweaks in India
- 7-Eleven partners up with Future Retail in an effort to enter the growing Indian Market
- Indian E-Commerce giants pose a significant threat to 7-Eleven’s plans
- 7-Eleven’s recent shift focuses more on developing markets.
- Lack of profitability in India could require changes to the standard franchise agreement in order to attract franchisees
On 28th February 2019, Seven & I Holdings (3382 JP), the operator of the world’s largest convenience store chain 7-Eleven, announced that the company has signed a master franchise agreement with Kishore Biyani’s Future Retail, the operator of the Indian large format store chain Big Bazaar, to expand the 7-Eleven convenience stores into India. Future Retail and Seven & I Holdings expect the first 7-Eleven convenience store in India to be opened in Mumbai in 2019.
3. Lyft IPO Preview: Maybe We’ll Just Walk?
Lyft Inc (0812823D US) , a leading ride-sharing company, released its IPO prospectus in order to raise 3bn USD. Our key points are below
Intro to Lyft
Lyft – a comparison vs. peers
Strengths and Weaknesses
Financials
4. Receding Political Gains to the Ruling Party, Possible Threat to the Markets
Post the downing of the Indian Air Force (IAF) MIG-21 by Pakistan over its territory and the capture and subsequent return of the pilot, the narrative which was strongly in favour of Narendra Modi and the ruling Bharatiya Janata Party (BJP) rapidly spiralled downwards. Whether the Pakistan Air Force (PAF) entered Indian air space to deliberately attack Indian targets and was driven back, or it was a lure to ambush the IAF aircraft over Pakistani airspace, is not yet clear, but the stark acknowledgement that the IAF MIG-21 had been downed and the pilot captured, and a video of his capture and interrogation broadcasted on social media, were setbacks to the Indian government and its military. Although the Indian government claimed that a PAF F-16 was brought down (although some Indian defense commentators are stating that this is evidence of the downed PAF F-16), Pakistan is denying any loss of its aircraft.
If the market was banking on a decisive Modi victory in the 2019 national elections in the immediate aftermath of the IAF strike on Bagalkot that has been dissipated with the capture and return of the IAF pilot. Unless another such event arises (or is generated), the outcome of the national elections in India will be determined by political alliances and the socio-economic conditions of the electorate; national security concerns may play a secondary role
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