Consumer

• Concurrent with its HK$34/share VGO, L’Occitane (973 HK)‘s disinterested shareholders may be entitled to a share scrip alternative. IF afforded, up to 5% of shares out can participate.
• The big unknown is whether you receive shares of the levered-up Bidco, at some as yet undetermined scrip ratio; or keep shares of L’Occitane as-is.
• To trigger the rollover option, 10% of disinterested shareholders need to express interest by the 15th May (a Hong Kong holiday btw). A deadline without details. 

• We believe revenue will grow by 6% YoY in 4Q24, but by 11% for FY2026 (roughly 2025 calendar year).
• We believe Alibaba has been actively raising its revenue growth, but this the effect cannot be seen in the short run.
• We conclude the stock has an upside of 46% and a price target of US$120.

• The HK$34/share offer price is final, which exceeds all-time high closing price of HK$33.60/share since IPO in 2010. EUR6 billion is equivalent to a PE of 52.17x, higher than peers.
• Deploying China’s sinking market is “a good story full of imagination”. However, it may fail to bring expected profits considering increasing competition/potential price war, leading to uncertain future performance growth.
• For minority shareholders, this privatization provides an attractive opportunity to monetise their investments at a premium over market price. We don’t think the current “technical bull market” to be lasting. 

• China after-school tutoring remains one of the most attractive and visible sectors in the next 2-3 years time frame. 
• Even though New Oriental Education & Techn (EDU US) had some hiccups in FY3Q24 results, they were mainly due to factors not related to the core after-school tutoring business.
• My sector top pick is China Beststudy Education Group (3978 HK), as valuation is lower and growth is higher, though it has a much smaller market cap..

• Royal Caribbean Group has made impressive strides in reshaping the business in the first quarter of 2024.
• The company described its Q1 2024 as robust and experiencing an upward trajectory in business operations, bolstered by the consumers’ demand for vacation experiences.
• The results of Q1 2024 were significantly better than anticipated, with the company’s brands being stronger than ever and demand for vacation experiences showing consistent acceleration.

• -30% // Cocoa Bubble Has Busted Just two weeks ago, the most-active contract hit a record of almost $12,000 a ton as the industry grappled with the fallout of severe supply shortages.
• “It’s important to underscore that the recent downturn in cocoa prices is primarily a result of trading maneuvers, not a realignment of market fundamentals,” analysts at Fitch Solutions’ BMI unit said in a note, adding they expect volatility to persist.
• Volatility spiked as bigger margin requirements spurred traders to close out positions, helping to drive aggregate open interest in cocoa futures to the lowest in more than a decade.

• Investment thesis for going long on Porch Group Senior Secured Convert in the mid 50s, with a 22.5% Yield to Maturity and potential for a 75% one-year return
• Option for higher risk tolerance investors to target the 2026 Notes in the 30s for more upside
• Capital structure and background information on Porch Group’s decline in the macro environment for housing, extreme weather-related losses, and involvement in a reinsurance fraud scandal with Vesttoo highlighted

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.

• Pureprofile Ltd (ASX:PPL) is a data analytics and consumer insights company underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers.
• Pureprofile has reported a 6% increase in Q3 FY24 revenue to $10.9m and 49% decline in Q3 EBITDA to $0.5m.
• Q3 is seasonally the weakest quarter for PPL and EBITDA was affected, in part, by the change in executive remuneration policy to cash-based payments.

• Pool Corporation reported its latest Q1 earnings, posting $1.1 billion in net sales.
• Though a dip of 7% from the previous year, the figure is up 6% from the same period in 2021.
• The quarter’s performance marks the company’s fourth successive year of meeting or exceeding the $1 billion threshold in a comparatively slow seasonal quarter.

• Primo Water Corporation specializes in consumer drinking water products and services, focusing on the North American market
• Market leader in the water industry with strong growth potential and resilience in economic downturns
• Company undergoing operational improvements, attractive valuation, and compelling ESG story following the sale of its European business

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.

• Macro trends for restaurant chains are all negative: Food prices rising faster than restaurant unit prices, part-time wages rising faster than full-time.
• Toridoll’s same store sales resuming long-term underperformance trend that was broken only briefly during the pandemic.
• Stock trades at 3x the market average PBR, despite merely average RoE. Technical support has broken down.

• Ginebra San Miguel (GSMI PM) is a monopoly in the gin business in the Philippines with a 97% marketshare trading at 7x PE FY24 ( 10-Yr Revenue CAGR 15% YoY).
• After its Q1 results, it has 32% of the market cap in net cash and investments, a dividend yield of>7%, and a 5/10 Yr average ROCE of 37%/22%.
• We summarize what we learned from the annual report released on April 15th. We saw a long-term trend of increasing prices, consistent margin growth, balance sheet improvement, etc. 

• In addition to too much cash on hand to begin with, ROE is expected to continue to grow at a sluggish pace, as shareholder returns are less than profit growth.
• Given that we expect more companies to have stock price, P/B, and ROE on the agenda for the June AGM, more companies are expected to announce increases in shareholder returns.
• However, ROE is unlikely to increase significantly. Shareholder returns are certainly too small, but a more serious problem is the inability to find growth investment opportunities.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: HD Hyundai Marine Solution (443060 KS) and ZEEKR (ZK US) IPOs.
• Event-Driven developments: L’Occitane (973 HK), Chilled & Frozen Logistics Holdings (9099 JP), Kfc Holdings Japan (9873 JP), Mimasu Semiconductor Industry (8155 JP), Austal Ltd (ASB AU). 

• Tally 47 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deals was discussed on Smartkarma this week: L’Occitane (973 HK)‘s VGO from major shareholder, Reinold Geiger. A deal for KFC Holdings Japan (9873 JP) is apparently imminent. 
• Key updates took place on: CSR Ltd (CSR AU), Azure Minerals (AZS AU), CIMC Vehicle Group Co Ltd (1839 HK), and Chilled & Frozen Logistics Holdings (9099 JP).

• Geely-Backed ZEEKR set terms for U.S. IPO: EV maker offers 17.5M American depositary shares (ADSs) at the price range of $18-$21, implying a market cap of ~$4.8B at the midpoint.
• Geely Auto, Mobileye and CATL have indicated a non-binding interest in subscribing for an aggregate of up to ~$349M worth of the ADSs being offered in this offering.
• I have a positive view of ZEEKR IPO as the offering will be priced significantly below last round valuation of ~$13B.  

• Altria Group recent 2024 first quarter earnings highlighted numerous key insights into the company’s performance and future prospects.
• Altria’s CEO, Billy Gifford, highlighted that the company made significant progress despite the challenging business environment.
• The company is also committed to investment returns, as demonstrated by its sale of a portion of its investment in ABI and the subsequent expansion of its share repurchase program.

• Comcast Corporation reported Q1 earnings recently highlighted by a strategic execution where the company maintained dominance in a competitive and evolving market.
• The company’s resilient capital allocation strategy and strong balance sheet place it in a favorable position, allowing it to invest aggressively in its six diverse growth businesses- Residential Broadband, Wireless, Business Services, Theme Parks, Studios, and Streaming.
• These sectors made up more than 55% of the company’s total revenue in Q1, and this proportion is set to grow.

• Keurig Dr Pepper (KDP) has performed well in the first quarter of 2024, with solid consolidated sales growth and double-digit earnings per share (EPS) growth.
• Key drivers of this performance include healthy momentum in its U.S. refreshment beverages and international segments, alongside a significant sequential recovery in U.S. Coffee results.
• This strong start to the year has enhanced the visibility of KDP’s unchanged growth outlook for 2024.

• In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
• The list shows which companies have disclosed a policy/consideration. But no data/links. We are weeks ahead of the TSE and we have all the links.
• We created a tool to name everyone, show their reports, provide links to every document, and now a new tool. Put in a name, see the difference between the Old/New Reports.

• Multi Bintang Indonesia (MLBI IJ) showed a weak print, with sales down 10% YoY and profitability flat for Q1 FY24. Consumption was weak locally despite strong Bali tourism. 
• On the positive side, the company improved its net cash position to substantially to 900 bn Rph ( or 6% of Mkt Cap) and expanded margins by 400 bps YoY. 
• Trading at 13x FY23 PE (with a 7% dividend yield assuming a 100% payout), there is great value in this market leader (60% Mkt share) of beer consumption in Indonesia.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Lippo Karawaci
• Lippo Malls Indonesia Retail Trust
• MGM China Holdings
• SK Hynix

• Hilton has reported its first-quarter results for 2024, which the company states have continued to demonstrate the strength of Hilton’s business along with its development story.
• Although the company’s RevPAR growth found itself at the lower end of its guidance, both adjusted EBITDA and adjusted EPS exceeded predictions significantly.
• Some of Hilton’s newly announced partnerships and portfolio additions have solidified its confidence in future growth.

• Tempur Sealy International (TPX) is the industry leader in the mattress market, consistently gaining market share and outperforming competitors
• Despite a cyclical downturn in the mattress industry post-COVID, TPX is experiencing secular share gains and margin improvements
• TPX’s pending acquisition of Mattress Firm presents an attractive opportunity for investors due to its reasonable valuation and potential for growth in the years ahead

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.

• In the first quarter of 2024, O’Reilly Automotive, Inc., had a 3.4% comparable store sales growth, which was primarily driven by mid-single-digit comps in Professional.
• This marked continuous strong top line sales results and was a testament to consistent execution across all 6,200+ stores.
• The company noted that its store volumes continued to grow despite the company’s size and market share gains over the years.

• Criteria for IPOs aren’t a major issue. TSE is concerned that many companies will be in jeopardy of being delisted if the criteria for maintaining listing are raised.
• TSE will likely make “request” to Growth Market listed companies to increase their market capitalization if the criteria for maintaining listing are not raised.
• From 2025, delisting and subsequent re-listing through M&A and MBOs is expected to increase, which will lead to more investment opportunities.

• The NIFTY Index kept rising for the past few months but has stalled its advance since March. It may be about to pullback and lose some gains, in May.
• The index is currently up 2 weeks in a row, not yet strongly overbought but our model say that from a time perspective it could start to pullback next week.
• If the index does not start to pullback soon, it could rally for another 2-3 weeks.

• We are initiating coverage of Webuy Global (WBUY) with a $0.85 target valuation.
• Webuy Global is a community-based buying group platform that sells groceries, fresh produce, and packaged travel tours through its app in Indonesia and Singapore.
• The company is attempting to leverage its customer relationships to expand into additional markets where group buying has shown promise, like insurance.

• Fourlis Group sales in 2023 increased by 10% on a comparable basis, excluding Intersport Turkey and The Athlete’s Foot sales, reaching €521.3m.
• There was a significant increase in EBITDA by 21.8%, reaching €48.2m in 2023, compared to €39.6m in the previous year, due to the rationalization of operating costs and an increase in operating leverage.
• The group’s retail business showed robust performance, contributing significantly to overall revenue growth.

• Bukalapak released its 1Q2024 results this week with some palpable relief as it booked its first adjusted EBITDA but underlying revenue growth remains strong, especially for its O2O business. 
• The company saw take rates improve for both its Mitra O2O business and its marketplace businesses, helping to drive revenue growth. Costs were also reduced allowing for positive contribution margins. 
• Bukalapak is expected to see sustainable profitability accompanied by revenue growth, with the marketplace recovering with improving product mix. BUKA’S “orphan” cash pile remains an issue but valuations are attractive.

• Honasa Consumer (HONASA IN) raised about US$200m in its India IPO. Its pre-IPO investors will be released from its IPO linked lockup soon.
• HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Lalatech Holdings Co Ltd (LALA HK) , a technology driven logistics transportation platform has refiled for IPO in April and this insight focuses on data points from the latest filing.
• The company has disclosed full-year 2023 results which shows significant improvement to the company’s financials, particularly Lalatech’s profitability.
• Lalatech has continued to cutdown its operating costs, which has helped reach profits, and the company has managed to maintain growth despite spending cuts on incentives and promotions.

• The first quarter 2024 financial results of Chipotle Mexican Grill showed positive growth with a rising momentum.
• The company reported a 7% comp sales growth driven by over 5% transaction growth.
• Fueled by the company’s focus on improving throughput and successful marketing campaigns, sales rose by 14% to reach $2.7 billion.

• Park Lawn Corporation (PLC) operates funeral homes and cemeteries primarily in the US
• Recent shift in strategy towards focusing on margins and operations under new management
• Consensus estimates may undervalue the company due to overlooking recent margin improvements and potential value creation through M&A, with PLC aiming for 70% of growth through acquisitions

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 General Motors Company posted solid results in its first quarter 2024 earnings, reflecting a resilient, consistent growth trend underpinned by focus on profitability and disciplined capital allocation strategy.
• The company’s total revenue grew 8% year over year to $43 billion, a commendable performance driven by higher wholesale volumes in North America.
• A compelling aspect was its emphasis on a strategic go-to-market approach which prioritizes profitability and margins.

• Kimberly-Clark Corporation showed an optimistic performance in its first quarter for 2024, which was driven by its strategy to elevate its categories with breakthrough innovation and expand its markets.
• This strategy helps the company to navigate effectively through the ever-changing external dynamics of today’s new normal.
• There were noted improvements in volume, and the company expressed confidence about the underlying volume momentum in the business.

• We are reiterating our Buy rating, $22.50 price target and projections for Betterware de Mexico after reviewing the May Betterware catalog.
• While the YoY comparisons in SKUs become more difficult, Betterware continues to roll in new items and upgrades to key favorites to remain fresh and vital to their core customer base.
• Further, May saw the first round of the fruits of their recent sponsorship of Mexico’s Summer Olympics team and continued expansion of key licensed characters.

• Autozone is an underappreciated franchise with compelling risk-adjusted return potential
• Largest auto parts retailer by revenue with over 6,300 stores in the U.S. and international presence
• Strong growth through focus on higher margin private label sales and automotive diagnostic software, resilient business model, and impressive track record of shareholder value creation

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.

• Many companies have low liquidity since listing, with nearly half of companies having major shareholders with over 20% ownership. Raising listing criteria should considered to improve quality of the market.
• TSE seems to raise the listing criteria for Growth Market in 2025, when the transitional measures expire, but for Prime Market, TSE is likely to respond with a “request.”
• Although TSE’s “request” may be the catalyst for increasing MBOs and dissolution of parent-subsidiary listings, engagement with overseas investors over years to resolve management issues was foundation of this trend.

• We are reiterating our Buy rating, projections and price target for a.k.a. Brands with the company announcing 1Q24 (March) results after the close on Wednesday.
• We believe 1Q will be another period of rebuilding momentum and credibility, with the cleanup continuing at Culture Kings, Princess Polly adding new retail stores to the mix and rolling out new categories to become even more of a lifestyle brand and Petal & Pup leveraging new digital marketplace relationships and continued dress-driven expansion.
• Further, we believe management remains laser focused on reducing both inventory exposure and net debt.

• Hilton is a well-established franchisor of hotel brands with a history dating back to 1919
• While not offering high expected returns, Hilton is viewed as a solid business opportunity with the potential for steady growth in intrinsic value
• Through significant events like its IPO, acquisition of Promus, LBO by Blackstone, and spin-offs, Hilton has positioned itself as a stable and well-run option for investment portfolios in the global travel 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.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Indika Energy
• Melco Resorts and Entertainment (Philippines)
• PT Pertamina (Persero)

• PLC is a new addition to the VIC platform as a TSX-listed rollup company in the funeral homes and cemeteries industry with a majority of its revenue coming from the US
• The company has shifted its focus towards improving margins and operations, with plans to drive growth through M&A activities at reasonable multiples
• Consensus estimates have overlooked the potential for margin improvements and value creation from M&A, creating an opportunity for investors to capitalize on the company’s growth potential

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.

Notwithstanding its sector ‘sweet spot’ (a healthy, customisable product at a competitive price), Tortilla Mexican Grill (Tortilla) has taken the opportunity of a change in management to refine its strategy to address challenges since its successful IPO in 2021 as well as expedite growth. Significant benefit is expected from a new delivery structure to mitigate commission charges in an important part of the business (c 30% of sales), from enhanced marketing to tackle surprisingly low brand awareness and from an initial director of food to bolster menu development. With a new FY24 target of self-funded roll-out (down from 12 to eight), franchising will drive expansion as capital light and has been so successful to date. A near-doubling in H223 pre-IFRS 16 adjusted EBITDA, if from a low base, is testament to Tortilla’s recovering financials and initiatives already in place.

• Yum China Holdings (9987 HK)‘s 1Q24 earnings were weaker than the already lowered consensus expectations, as both sales and core operating profit only grew 1% yoy.
• Same-Store-Sales declined by 3% yoy, and restaurant margin declined by 2.7ppt yoy, mainly due to more discounts offered.
• China’s catering industry has changed compared to pre-COVID, where overall average selling price (ASP) is continually under pressure, and customers are increasing seeking value-for-money options.

• China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In this note, we talk about the not-so-positive aspects of the deal.

• I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
• The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
• Below I present a study using data from 2012-2023 and this year’s portfolio.

• Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
• Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• Super Hi International Holding (9658 HK) aims to raise around US$100m in its US ADR IPO. MS and Huatai are on the deal.
• Super Hi International (SHI) is a Chinese cuisine restaurant brand, operating Haidilao hot pot restaurants in the international market. 
• In this note, we talk about the deal dynamics and the listing impact.

• Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.
• Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).
• The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index

• Puig Brands (PUIG SM) will start trading next Friday 3 May at 12:00. The placement price was €24.5/share at the top of the range (which was increased due to investors’ demand).
• Puig, valued at €13,900 million, has placed 32% of its capital among qualified investors. The Puig family will retain over 90% of the voting rights through their Class A shares.
• Puig will foreseeably enter the Ibex 35 after the ordinary meeting of the Ibex Technical Advisory Committee corresponding to the month of December.

• Astra International (ASII IJ) just released 1Q2024 results, which reflected the softer auto and heavy equipment markets, although buoyed by better earnings for its finance arm, 
• The company’s headline net profit was down -14% YoY but stripping out value adjustments was only down -5% YoY, with management optimistic over the longer term. 
• Astra continues to mirror the Indonesian economy, with its latest investment in geothermal but its nickel businesses also growing. Valuations attractive on 6.6x FY2024E PER and a 7.2% dividend yield. 

• For the month of April 2024, 7 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn. 
• The average premium for the new transactions announced (or first discussed) in April was ~55%. The average premium YTD is ~42%. 
• This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

• Tesla Inc.’s first-quarter earnings for 2024 offered a critical and insightful update on the electric vehicle manufacturer’s strategy and financial performance.
• Tesla appears committed to its strategic focus on vehicle autonomy and digitisation, with CEO Elon Musk stating that the company should be viewed primarily as an AI (Artificial Intelligence) and robotics firm, underlining its commitment to Full Self-Driving (FSD) as a key future revenue stream.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.
• We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion
• We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.

• Netflix Inc.’s Q1 2024 earnings highlighted a number of impactful developments and strategic shifts that investors should consider.
• The company’s management team made it clear that while they’ll no longer be reporting quarterly membership in ARM data starting in 2025, they will continue to provide updates on key metrics including revenue, OI, OI margin, net income, EPS, and free cash flow.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
• The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
• Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.

• On 28 Feb, the Nikkei reported (an article I missed) Mitsubishi Corp (8058 JP) would seek to unload its 35% stake in Kfc Holdings Japan (9873 JP) 
• The stock popped, then continued to rise further. After the close Friday, the Nikkei reported MitCorp was close to a deal with Carlyle. A deal is apparently expected imminently.
• I expect this could be a “Split Price Deal” (like Hitachi Transport and Pasona).

• The Nikkei reports that Carlyle is in the final stages of buying Mitsubishi Corp (8058 JP)’s 35% stake in Kfc Holdings Japan (9873 JP), which will result in a tender offer. 
• The structure will likely be similar to the KDDI Corp (9433 JP)/ Lawson Inc (2651 JP) tender, where MitCorp provides an irrevocable NOT to accept but vote for share consolidation.
• The shares have been up 33.6% since Nikkei flagged the sale on 28 February. KFC Japan will trade in line with peers’ multiples at a JPY5,700 offer.  

• After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
• The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the  HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final. 
• This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.  

• Although Shein has yet to formally announce the listing destination, there is a growing anticipation that the listing venue could be London, rather than New York. 
• It has been reported that the company has more than doubled its net profit to more than US$2 billion in 2023. 
• The company is currently seeking a corporate value of nearly US$70 billion to US$90 billion in the Shein IPO which would be one of the biggest IPOs globally in 2024. 

• Japanese instant noodle manufacturer Toyo Suisan Kaisha (2875 JP) has become the newest target for activist investors in Japan.
• Nihon Global Growth Partners Management, Inc argues that Toyo Suisan’s investments are overly concentrated in its legacy businesses, despite these ventures yielding low returns.
• Therefore, they are recommending that Toyo Suisan exit its legacy businesses, increase the payout ratio to 40%, and use some of its excess cash for a share buyback of ¥20bn.

• Last week Monday, Tencent confirmed the early release of Dungeon and Fighter Mobile, a highly anticipated mobile adaptation of the computer game developed by Nexon.
• The game is expected to be released in China on the 21st of May following positive test results.
• Tencent was the 11th best performing constituent in the HSTECH index for the week (out of 30), returning 14.7%. The index ended the week up 13.4%.

• Fuyao Glass Industry Group (3606 HK) is the largest auto glass producer in the world, with an estimated 40% market share globally, and a dominant 65% market share in China.
• The investment case for Fuyao include:  ASP increase from product mix upgrade; increasing sales volume due to more auto glasses needed per car; and improving margins.
• The company has production bases in China with annual production volume of around 32.5 million units, and in US with annual production volume of around 5.5 million units.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
• Below is a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-April 2024.

• Spanning the globe for current best-in-breed auto players shows diverging action.
• New pair suggestion: Long Tesla/Short Rivian. Bottom could be in on TSLA
• Updated JD.com general status from last week’s China/Japan Note encouraging.

• Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-September and/or end-December.
• The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
• Depending on the date that the shareholding was published, there could be 14 stocks with passive inflows from global trackers while 7 could see passive outflows in May.

• China Education Group (839 HK) has turned more attractive after a valuation retreat and the return of reported and adjusted net profit to a positive trend in its 1H24 result.
• Increase in the proportion of undergraduate studies, a better subject specialisation mix, higher accommodation revenue, and a rise in international education will drive unit student revenue.
• More capacity upgrades will allow for a steady increase in student enrollment. Management expects adjusted EBITDA margin to stay stable in the next few years.

Key points

• Jumbo Interactive Ltd (ASX: JIN) operates in the online lottery industry in Australia, with a 20% market share and offering digital Australian lottery tickets through its mobile app and website.
• The company, founded in 1995 by CEO Mike Veverka, is highly cash generative and has a favorable duopolistic market structure, positioning it for potential stock value growth and expansion as more customers shift to online channels.
• JIN is viewed as a defensive investment option with strong margins and cash generation potential, particularly through its SaaS/Managed Services offering, making it an appealing choice for investors looking for long-term growth.

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.

• Decline in TPR’s stock price after acquisition announcement
• Author believes acquisition will benefit Tapestry Inc financially and strategically
• Author sees dip in stock price as buying opportunity and remains bullish on TPR’s long-term prospects

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.

• Asset Turnover and ROA deteriorated as a result of accumulating cash on hand rather than investing. There was also insufficient R&D to create products that could have stronger pricing power.
• Conditions are ripe for investment expansion, as demand for equipment replacement is rising due to long-standing CapEx restraints, and there is no need to accumulate more cash.
• Companies are now in the stage of raising return on capital to increase reinvested cash flow from the stage of temporarily increasing earnings through price pass-through.