Smartkarma Daily Briefs

• It is somewhat unusual that there is still a spread of over 5%. This likely reflects concerns about the relatively high intensity of allocation risk.
• Retail: 30%, Institutions: 16% of float shares (46%). Retailers may contribute 20%, institutions 10-15%. Total tender rate: 30-35%.
• In that case, it means that roughly 70% of our holdings could be tendered. And at this level, it seems reasonable enough to target the current spread of 5%.

• With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
• Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.
• Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).

• On 3 April, it was reported that Hyundai G.F. Holdings will be conducting a tender offer of 3 million shares of Hyundai Home Shopping (25% of outstanding shares). 
• The tender offer price is 64,200 won. The main reason for this tender offer is to meet the regulatory requirement of a holding company by 2025. 
• We are positive on the tender offer of a 25% stake in Hyundai Home Shopping by Hyundai G.F. Holdings.

• Aditya Birla Fashion and Retail Ltd (ABFRL IN) on 1st April announced a vertical demerger and separate listing of its matured and asset-light Madura brand portfolio.
• Assessment of demerger: whether it is seriously a value creation opportunity or just a strategic gimmick for merger-demerger in Mega Bull Run.
• Valuation of Aditya Birla Fashion and Retail Ltd (ABFRL IN) , whether any juice left in the company?

• Nongfu Spring (9633 HK) announced a set of strong 2023 results last week, with 2H23 net profit up 62% yoy and sales up 33% yoy. 
• The best performing category in 2023 has been tea beverage products (30% of sales), which grew 83% yoy for the year and 105% yoy in 2H23, picking up speed.
• Nongfu Spring is trading at 33x 2024 earnings, which I believe is attractive. 

• Q1 Deliveries trailed plunging market consensus, my even lower number, and Tesla’s expectations as sales crashed while it overproduced to a new record cumulative excess inventory which jumped 70% y/y
• This doesn’t square with Tesla’s explanation that sales were hurt by ongoing production issues—much like when the company used the same excuse for the disappointing Q3 2023. 
• This time deliveries were much lower, the miss versus market expectations much worse, and the deep well of unsold inventories even more formidable.

• Oriental Watch (398 HK)  has begun Q4 2024 slowly, with its SSSG dropping by double-digit levels in all its major markets (HK/China and Macau).
• As the year almost draws to a close, we expect profits to drop 10-15% YoY for FY24 and the company to pay out 100%, resulting in a 14% dividend yield.
• The company also has 1.2 bn HKD of net cash, representing 70% of its market capitalization. Additionally, it has 700 mn HKD of investment property. 

• Century Communities has reported its Q4 and Full-Year 2023 results, which demonstrated notable growth and profitability.
• The company’s Q4 deliveries hit a record high of 3,157 homes, reflecting a 9% year-on-year increase, and the year 2023 marked the firm’s 21st consecutive year of profitability.
• The housing market also witnessed considerable improvement, contributing to the company’s success.

• D.R. Horton is a leading homebuilder with high returns on equity and strong balance sheets, yet trades at a low price-to-earnings ratio.
• The company has shifted to being asset-light, generating significant free cash flow and maintaining a strong balance sheet.
• With a focus on market share expansion and efficiency, D.R. Horton is positioned as a growth company in a stable industry.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The essence of the declining birthrate problem is the increasing number of young people who aren’t getting married, but the government has been mismatched in focusing support on married couples.
• Since the reasons for unwillingness to marry are “financial reasons” for men and “limitation of activities and time” for women, along with increased income, child-rearing and housework shouldn’t burden women.
• Companies should shift to business model that allows them to raise profit margins without resorting to cost-cutting, raise employee salaries, and create work environment that supports child-rearing and family responsibilities.