Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.</li><li>The “rolling recession” rolled over the sector this year. Despite sales pressure, earnings improved for the best in the group, notably the commercial/contract names, residential manufacturers, and select retailers.</li><li>Costco, which includes furniture in its broad merchandise mix, reported 1QFY24 revenue of $57.8 billion, matching estimates. </li></ul>

Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.The “rolling recession” rolled over the sector this year. Despite sales pressure, earnings improved for the best in the group, notably the commercial/contract names, residential manufacturers, and select retailers.Costco, which includes furniture in its broad merchandise mix, reported 1QFY24 revenue of $57.8 billion, matching estimates. 

Furniture/Furnishings Weekly - Costco Shows Why It's Best in Class

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic figures. </li>
<li>Despite the global toys markets going into destocking cycle, the company has generated significant growth in operating profit in the past year driven by strong demand for plush stuffed toys.</li>
<li>If we assume a moderate 20% YoY increase in dividends in 2023, this would imply DPS of HKD 0.48 and this would suggest a dividend yield of 12.7% current prices. </li>
</ul>


Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic figures. 
Despite the global toys markets going into destocking cycle, the company has generated significant growth in operating profit in the past year driven by strong demand for plush stuffed toys.
If we assume a moderate 20% YoY increase in dividends in 2023, this would imply DPS of HKD 0.48 and this would suggest a dividend yield of 12.7% current prices. 


<div><div><div><div><ul style="list-style-type: disc;"><li><p>Monthly report on restaurant and retail companies. At Water Tower Research, we are introducing a new monthly report to focus exclusively on the Restaurant and Retail Industries.</p></li><li><p>Our report will focus on stock performance, short interest, an outlook for restaurant commodity costs, interesting themes, and company interviews.</p></li><li><p>In this note, we interviewed Gary Schnierow, Vice-President of Investor Relations, and Corporate Finance for Build-A-Bear Workshop, Inc. (NASDAQ: BBW). </p></li></ul></div></div></div></div>

Monthly report on restaurant and retail companies. At Water Tower Research, we are introducing a new monthly report to focus exclusively on the Restaurant and Retail Industries.Our report will focus on stock performance, short interest, an outlook for restaurant commodity costs, interesting themes, and company interviews.In this note, we interviewed Gary Schnierow, Vice-President of Investor Relations, and Corporate Finance for Build-A-Bear Workshop, Inc. (NASDAQ: BBW). 

Restaurant & Retail Roundup - Interview with Build-A-Bear Workshop (BBW)

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sml-group" target="_blank" data-smartkarma-citation="entities:36102:1" rel="noopener">SML Group (SMLGZ HK)</a> is looking to raise about US$200m in its upcoming Hong Kong IPO.</li>
<li>SML Group (SMLG) is a vertically integrated digital identification solutions provider. It primarily engages in developing, manufacturing and selling label and tag products with radio frequency identification (RFID).</li>
<li>SMLG’s revenue growth rebounded post-COVID on the back of improved consumer sentiment. However, the firm’s profitability growth has been slowing down yet it has undertaken additional debt to payout dividends.</li>
</ul>



SML Group (SMLGZ HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
SML Group (SMLG) is a vertically integrated digital identification solutions provider. It primarily engages in developing, manufacturing and selling label and tag products with radio frequency identification (RFID).
SMLG’s revenue growth rebounded post-COVID on the back of improved consumer sentiment. However, the firm’s profitability growth has been slowing down yet it has undertaken additional debt to payout dividends.


SML Group Pre-IPO - Guided Decline in Profitability but Spike in Dividend Payout

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/trial-holdings-inc" target="_blank" data-smartkarma-citation="entities:36821:1" rel="noopener">Trial Holdings (5882 JP)</a>, a discount store operator in Japan, is seeking to raise US$380 million at the IPO reference price of JPY2,000. Pricing on 26 March.</li>
<li>We previously discussed the IPO in <strong><em><a href="https://www.smartkarma.com/insights/trial-holdings-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:97757" rel="noopener">Trial Holdings IPO: The Bull Case</a></em></strong> and <em><strong><a href="https://www.smartkarma.com/insights/trial-holdings-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:97798" rel="noopener">Trial Holdings IPO: The Bear Case</a></strong></em>.  </li>
<li>In this note, we discuss valuation. Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY2,000. We would participate in the IPO.</li>
</ul>



Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$380 million at the IPO reference price of JPY2,000. Pricing on 26 March.
We previously discussed the IPO in Trial Holdings IPO: The Bull Case and Trial Holdings IPO: The Bear Case.  
In this note, we discuss valuation. Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY2,000. We would participate in the IPO.


United States

Costco Wholesale Corporation operates wholesale membership warehouses in multiple countries.  The Company sells all kinds of food, automotive supplies, toys, hardware, sporting goods, jewelry, electronics, apparel, health and beauty aids, as well as other goods.

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Costco Wholesale (COST US)

Furniture/Furnishings Weekly - Costco Shows Why It's Best in Class

Stocks have had a few good weeks and last week was another. The furniture/furnishings group has focused on restoring and defending margins.

Water Tower Research

Asian Dividend Gems: Dream International

Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic...

Douglas Kim

Restaurant & Retail Roundup - Interview with Build-A-Bear Workshop (BBW)

Monthly report on restaurant and retail companies. At Water Tower Research, we are introducing a new monthly report to focus exclusively on the...

Water Tower Research

SML Group Pre-IPO - Guided Decline in Profitability but Spike in Dividend Payout

SML Group (SMLGZ HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The firm’s profitability growth has been slowing down yet it...

Ethan Aw

Trial Holdings IPO: Valuation Insights

Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY2,000. We would participate in the IPO.

Arun George

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