Consumer

• Trading comfortably through the Partial Offer terms, Sun Corp (6736 JP) may still do nothing with its Cellebrite DI (CLBT US) holding towards narrowing the NAV discount.
• Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• I kind of hate this, but I also can’t ignore it. Apparently, an expensive media service Reporting on Deals or about the Market for Mergers, had an article today.
• Bloomberg carried a small blurb saying there was “speculation on a tender offer…. according to traders”. The stock is untraded, limit up.  
• The most informative comment comes from Japanese stock market portal ‘kabutan‘ which suggests “overseas media” thinks Sumitomo Corp will sell its shares. I look at the possibilities below.

• The Best World International (BEST SP) IFA considers the S$2.56 exit offer fair and reasonable as it is towards the upper end of its S$1.36-2.69 per share valuation range. 
• The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
• The lack of activists, IFA supporting recommendations, and no competing offer suggest a done deal. At the last close, the gross spread was 2.8%.

• Asics has demonstrated impressive growth in gross profit margins, as evidenced by 4.3ppt YoY improvement in Q1 to 54.5%
• Asics has been successful in growing market share and enhancing its brand strength
• For FY2024, we now forecast a 10% YoY increase in sales to ¥628 billion and a 46% rise in OP to ¥79 billion (prev: ¥ 71b)

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• We see seven change for the ChiNext index and five changes for the ChiNext 50 index.

• Hyundai Motor (005387 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
• HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
• In this note, we talk about the positive aspects of the deal.

• Nu Ride is a SPAC with $2.5 per share in cash and $1 billion in net operating losses
• Company has $2.9 per share of net cash and $2.0 per share of perpetual preferred held by Foxconn
• Ongoing litigation actions against Foxconn and former executives could result in potential increase in net cash value to $4.5 per share

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.

• On June 24, Carlsberg announced that Pepsico had agreed to waive a change of control clause in its bottling deals with Britvic. The current proposal is 1250p (+9.5p interim).
• The offer represents an undemanding 12x EV/fwd NTM EBITDA. My standalone base case fair-value estimate is 1,056p/share. An improved offer could come >1,300p, although 1,420p (13.3x wouldn’t  be unreasonable).
• Gross spread to the revised offer is 6.2% (6.9% including interim). Shares are pricing a 72% probability of deal success. I believe Carlsberg will come with an improved offer. Long.

• We are reiterating our Buy rating.
• $10 price target and projections for Vera Bradley after visiting stores in Long Island and Connecticut.
• With the soft launch of “New Day” set for July 11th (and formal premier on July 15th, June is, with one major exception, a month for the stores to clear goods and prepare for the new offerings; replenishment has been placed on hold and the end-of-season sales have been moved up to drive lower inventories and reduce the stresses from rolling out new looks at the main line stores and shifting older goods to the outlets.

• Kuaishou and Bilibili’s GMV surged YoY during “June 18” sales.
• World of Warcraft: Wrath of the Lich King, will formally start on June 27.
• GAC Honda Automobile Ltd planned to dismiss 1700 employees, about 14% of total.

• Many Japanese managers have little idea that what belongs to shareholders is net profit and not free cash flow. This has created two problems.
• If Japanese companies, mostly manufacturers, use dividend payout ratios as a criterion for shareholder returns, cash on hand will not decline even if shareholder returns are increased to some extent.
• The inability to move beyond the concept of allocating investment and shareholder returns based on increases or decreases in cash may be the reason for the unclear cash allocation policy.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, Guzman provided some hope to the Australian market, while Webtoon Entertainment (WBTN US) and Allied Blenders & Distillers will soon test their respective markets.
• There was no dearth of placement this week, with large deals in Hong Kong, New Zealand and India.

• Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
• A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
• L’Occitane (973 HK) finally announces the share alternative.  And  Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

• Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
• The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
• I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

• 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: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
• Event-Driven developments: L’Occitane (973 HK), Exedy Corp (7278 JP), Infocom Corp (4348 JP), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU). 

• Growth of outbound Chinese travel demand strong in May as HK, Macau slow
• Domestic travel demand also showed solid growth in May and early June
• Trip.com appears reasonably cheap now that it’s dipped below US$50, BUY

• Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.
• ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
• In our previous notes, we talked about various aspects of the company. In this note, we talk about its RHP updates and our thoughts on valuation.

Games Workshop Group’s FY24 trading update provided a nice surprise on the revenue side, broadly equally split between core and licensing, and an even nicer surprise for PBT, suggesting an improvement in gross margin. We have upgraded our FY24 estimates to be consistent with the indicated figures and marginally increase our estimates for FY25, which reverts to a 52-week period accounting period.

• Companies with higher foreign shareholdings have superior board practices, suggesting that overseas investor engagement played an important role in improving management that resulted in return on capital.
• Clues to changes in management reform can be found in the percentage of independent board members, the percentage of female board members, and policy shareholdings/total assets.
• While the substance of the goals is important, the focus has shifted to management’s strong will to achieve the goals to raise valuations and return on capital.

• Volkswagen’s US ADRs (VWAPY) have underperformed in the past 5 years, despite a 3% increase with dividends
• Company’s growth guidance and margins are weaker compared to peers, leading to undervaluation of stock
• Trading at low multiples of forward earnings and free cash flow, recent free cash flow guidance for 2024 was unimpressive; preferred shares receive extra dividends but no voting rights

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.

Key points

• United Parks & Resorts (PRKS) is proposing a $500 million share repurchase authorization to decrease share count and float significantly at current prices.
• The buyback, if approved, could be completed by the end of 2024 and potentially drive double-digit EBITDA growth, leading to an 80% increase in stock price to $100.
• With a leverage of 2.5x EBITDA, the company may also be a candidate for sale or privatization, with Hill Path ownership increasing to 49% and potential for significant premium buyouts.

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.

• Manchester United is a well-known football club with a large fan base and diverse revenue sources
• The club is controlled by the Glazer family through Class B shares but Sir Jim Ratcliffe acquired a 25% stake in MANU
• Ratcliffe’s investment could signal a shift in control to SJR, making the stock appealing to investors

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.

• Taste Gourmet (8371 HK) reported revenues up 37% YoY and profits up 29% YoY (lower than our expectation of 39% profit growth) due to a slightly weaker-than-expected Q4.
• Dividends for H2 were 7.4 cents/share (overall FY24:12.9 cents), implying an 8.1% dividend yield. Net cash on the balance sheet was 143 mn HKD (23% of market cap).
• Trading at 6.7x PE FY24 (March end) and with an excellent execution track record, we believe that the company will be able to post more robust numbers in FY25. 

• The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
• Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
• There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025. 

• After watch accessory play Hengdeli Holdings (3389 HK) was suspended on the 17th June pursuant to the Takeovers Code, I didn’t hold out high hopes of a knock-out Offer.
• And on cue, CEO Tony Cheung (16%), son of founder Zhang Yuping (holding 17%), has made a Partial Offer (for 15% of shares outstanding) at HK$0.16/share, towards gaining majority control.
• That’s a 18.5% premium to last close … and a 80% discount to NAV, and a 47% discount to Hengdeli’s net cash as at 31 December 2023.

• Despite missing market consensus, Sa Sa International Hldgs (178 HK)‘s FY24 result still have silver linings. Its resumption of dividends with a 70% payout ratio is welcoming.
• Tax credit in 2H23 has distorted comparison. At pre-tax level, 2H24 profit has gone up by 29.5%. Cost management is solid, generating a 0.9pp FY24 operating margin expansion. 
• While overall 1Q25 sales have dropped, mainland China sales surged 83.9%. The macro environment should have bottomed and government efforts to attract tourists will pay off.  

• India’s passenger vehicle industry is shifting towards alternative fuels and facing intense competition, amidst changing customer preferences.
• Despite a growing vehicle market, Hyundai Motor India (HMIL) faces a tough battle to defend its market share given changing industry dynamics.
• With more competitors in the fray, including its parent group company Kia and EV leader BYD, Hyundai Motor India is in for a challenging ride.

• The first quarter earnings of J&J Snack Foods Corporation (J&J) highlights several aspects of the company’s financial health and operational performance.
• The company’s Q1 2024 results were influenced by a challenging consumer environment, with many customers witnessing yearly declines in consumer traffic and consumption.
• To counteract these trends, J&J leveraged its popular brands to optimize sales opportunities, resulting in less than a 1% sales decline.

• This is our first report on Adient, a global leader in automotive seating.
• The company has continued to focus on business performance, launch execution, and continuous improvement in FY 2024.
• Some highlights in the first fiscal quarter of 2024 include a total revenue of $3.7 billion, a slight decrease compared to the previous year’s first quarter, and an adjusted EBITDA totalling $216 million, reflecting an increase of 2%.

• This is our first report on apparel major, Kontoor Brands Inc. The company released its financial results for the fourth quarter and fiscal year 2023 in its recent earnings conference call.
• The company’s Vice President, President, Chief Executive Officer, Co-Chief Operating Officer, and Chief Financial Officer were on the call to provide insights on Kontoor’s business accomplishments and forecasts.
• One crucial undertaking announced in the conference call was Project Jeanius.

• We are reiterating our Buy rating and $3 price target for Vince Holding Corp. after the company reported slightly better-than expected 1QFY24 (April) results and reiterated FY24 guidance.
• We believe, as the Vince operating model continues to normalize in FY24, it will become increasingly clear to investors the material positives at Vince, from a focus on full price selling, strong wholesale order book, continuing emphasis on higher overall returns and a strengthening balance sheet, which we believe will drive a higher valuation for VNCE, especially with momentum ramping even higher from a “normalized” 2HFY24.
• As such, we reiterate our Buy rating and $3 price target for VNCE.

• We are reiterating our Buy rating, $25 price target and projections of a.k.a. Brands after touring the company’s Culture Kings store in Las Vegas and Princess Polly unit in Los Angeles.
• We believe both locations represent impressive retail units which will allow for continued growth (and high returns) going forward, as a.k.a. expands their retail footprint, with three new Princess Polly stores on track for a 2H24 opening.
• As such, we remain excited by the potential for the ongoing turn at the company, which we believe will be even further driven by continued retail expansion, and reiterate our Buy rating and $25 price target for AKA.

• In 2021 the JPX established new Listing Rules, and in April 2022 introduced new market segments (Prime/Standard/Growth) to much fanfare. Today, the TSE basically said those changes were meaningless.
• Today, the TSE announced proposed new rules for TOPIX constituent selection. There is a 2-month consultation period, then rules come out end-Sep 2024. Expect few changes from the Proposal.
• NextGen TOPIX will be created October 2026. 3-4 dozen ADDs, 500-600 DELETEs to create an index of 1,100-1,200 names. Some obvious large impacts 2+yrs from now, but this changes IPOs.

• Guzman Y Gomez (0817833D AU) has raised A$335.1m in a primary + secondary offering, valuing the company at A$2.23bn. The stock starts trading on the ASX Ltd (ASX AU) today.
• Just over 54% of the shares are escrowed which means there is a lot of stock that will be available for sale on listing day.
• Guzman Y Gomez (0817833D AU) could be added to the S&P/ASX 300 Index in September and there could be global index inclusions in November and December.

• Hyundai’s IR team appears to have communicated that a new shareholder return policy would be unveiled at the rescheduled CEO Investor Day in August.
• Hyundai aims to boost shareholder returns above 30% by canceling ₩800B to ₩1T in shares annually. The new dividend strategy won’t debut in August; last year’s three-year plan stands.
• Equal cancellation ratios apply to common and three types of preferred shares. August’s timing, with ISA tax reforms potentially favoring preferred shares, may enhance prefs’ price impact relative to ords.

• Understanding the audience is the number one rule in content creation and building relationships is important globally
• Min Yong Kim started her career in food and nutrition but transitioned to the entertainment industry, eventually joining Netflix
• Lessons learned include the importance of knowing your audience and the shift in thinking about content from traditional media to digital platforms

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
• Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
• In our previous notes, we talked about the company’s historical performance, undertook a peer comparison and shared our thoughts on valuation. In this note, we share additional thoughts on valuation.

• Guzman Y Gomez  raised around US$221m in its upsized Australian IPO. 
• GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
• We have looked at the company’s performance  and valuation in our past notes. In this note, we talk about the trading dynamics.

• Bloks Group, a fast-growing toy company and leader of assembly character toys, filed for a Hong Kong IPO. The company is headquartered in Shanghai, PRC, and has 410 full-time employees.
• Bloks Group has raised $200M+ to date from investors, including YF Capital, Legend Capital, Source Code Capital, Gaorong Capital and SinoMedia Asia Pacific.
• The Chinese toy maker has delivered an exceptional revenue hyper-growth of 169% y/y in 2023. Elite operating metrics and impressive financial profile make IPO attractive for investors.

• The premium fashion market in Japan is growing again and it is not just department stores.
• One of the leader is United Arrows, whose main urban chains are on a roll, up double digits, but is being held back by lower priced suburban chains.
• It will now focus more  on the premium market through aggressive category expansion, new brands and M&A.

• Even companies with high valuations and return on capital have room to further raise their return on capital and valuations because of cash allocation challenges.
• Companies whose valuations have not changed over the past year have low ROE and ROA, yet have high policy shareholdings. They have not taken steps to improve return on capital.
• As for whether many companies without high foreign ownership can raise their return on capital and valuations, strong will of management to achieve their goals is necessary.

• Market leader with growth potential – GEO HOLDINGS operates second-hand store chains 2nd STREET, GEO, OKURA, and off-price chain store Luck Rack.
• Its 2,027 domestic stores give it the leading market share in Japan.
• The company is making significant investments to extend its home advantage and build on its 2018 expansion overseas where it has 81 stores. 

• Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
• Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
• My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%. 

• Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
• Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
• ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.

• Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
• We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
• In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.

• In a long-awaited development, L’Occitane (973 HK)  announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip). 
• This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
• One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).

• Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
• Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
• In our previous notes, we talked about the company’s historical performance and undertook a peer comparison. In this note, we share our thoughts on valuation.

• KDDI will complete its acquisition of a 50% share in Lawson this month and the chain will then delist.
• KDDI is promising a rapid introduction of services and fresh ideas to leverage its new retail arm.
• It will begin by unifying premium loyalty point membership under the Ponta brand and offer new services that it hopes will help boost share. What out LY.

• Corn futures show high potential for momentum trading, peaking in early-year gains and declining from June, matching seasonal harvest patterns in major producers like China and Brazil.
• Over the past five years, momentum trading in soybean futures outperformed other crops with average annual returns of USD 13,600, though 2024 saw significant losses reflecting its counter cyclical performance.
• Bearish outlook for corn in 2024 due to increased global production outlook from key regions, bearish shifts by asset managers, and USDA forecasts predicting lower season-average prices.

• Cofco Joycome (1610 HK) is in a good position to benefit from the hog cycle upturn. China’s anti-dumping investigation into imported pork from the EU may also disrupt supply.
• Its average hog price has increased by 12.7% YTD and by 1.6% YoY for 5M24. Market hog price further surged by 10.4% in the week of 12-Jun from end-May.
• Its P/B of 0.78x is inexpensive at 1SD below the 5-year average. Its peers like Muyuan Foodstuff (002714 CH) and Wens Foodstuff Group (300498 CH) are also interesting. 

• Whirlpool Corporation released its first quarter 2024 results, showcasing a mixed performance amid challenging macroeconomic conditions.
• While the company managed to meet its expectations, certain segments faced softness, particularly in the North American market.
• The earnings highlighted strategic moves including the completion of the EMEA transaction and a promotion price increase in North America, aimed at bolstering the company’s market position and financial health.

• Tyson Foods reported a robust performance for the fiscal second quarter of 2024, showcasing notable improvements in operational efficiencies and a diversified portfolio.
• The company credits its success to their focused approach on operational excellence and a strategic multi-protein offering, which benefits from a variety of market conditions.
• However, peculiar challenges in different segments and the underlying uncertainty in forecasted trends indicate a complex road ahead.

• L’Occitane (973 HK) announced the share alternative at an exchange ratio of 10 rollover shares for each offer share, subject to a cap of 5% of outstanding shares.
• The share alternative option will help the offer and was likely required to get Pleasant Lake Partners’ support (3.25% of outstanding shares). There is minimal vocal opposition to the offer. 
• Irrevocables/Letters of support represent 49.83% of disinterested shares. An attractive offer and the share alternative facilitate meeting the minimum acceptance condition, which requires an 80% disinterested acceptance rate (ex. irrevocables).

• Murakami’s entity, City Index Eleventh, and daughter reported a 5.46% position in Exedy Corp (7278 JP). The shares purchases began two days after the Aisin (7259 JP) secondary offering.
• Murakami’s average buy-in price is JPY2,607.30 per share, 2.3% higher than the recent secondary offering price of JPY2,549.
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. Recent precedents suggest the latter.

• Watch accessory play Hengdeli Holdings (3389 HK) is currently suspended pursuant to the Takeovers Code.
• Potentially founder Zhang Yuping (holding 17%), CEO Tony Cheung (16%) and/or Swatch Group (UHR SW) (9.94%) may table an Offer. My money is on Zhang.
• This is a very illiquid name. What is interesting is that Hengdeli has net cash of HK$1.3bn – as at 31 December 2023 – against a market cap of HK$0.59bn.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• In this insight, we take a look at the rankings of potential ADDs and potential DELs for the September 2024 index rebal event.
• We do not see any index changes in September 2024 but there could be one-way flows of US$425mn due to capping.

• In January, Kagome Co Ltd (2811 JP) announced an acquisition of an additional 50% stake in a US equity affiliate. It is transformational. Incremental ROIC is truly excellent.
• At the time, they said they’d finance the purchase with a bridge loan but would sell treasury shares for ¥25bn or less to cover it. They announced the shelf then.
• Friday they announced the Offering. Today shares fell 8+%. This is now cheap. 

• The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
• In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in September 2024.
• Based on the current data, I see two ADDs and two DELs.

• Hyundai Motor India is getting ready to complete its IPO in 2H 2024. Hyundai Motor India plans to offer up to 142.2 million shares (17.5% stake) to investors. 
• Hyundai Motor (005380 KS) currently owns a 100% stake in Hyundai Motor India. The IPO of Hyundai Motor India could raise as much as US$3 billion.
• If Hyundai Motor India (HMI) is valued at US$25 billion and HMC sells a 17.5% stake in the company, HMC’s remaining stake in HMI would be worth nearly US$21 billion.  

• So far, about 49.8% of disinterested shares from Irrevocable Undertakings/Non-binding Letters of Support would accept the Share Offer. Success is within reach based on a “good enough” privatization price. 
• The Share Alternative is mainly aimed at investors who are hoping for the future re-listing of L’Occitane in the overseas markets – They can still get a vantage point.
• However, re-listing seems still distant/uncertain. The value of Rollover Shares in the future remains uncertain. Investors would face risks if they choose the Share Alternative. The Cash Alternative is preferred.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• While HK stocks have weak data, we persist in being long these names, keeping in mind their long-term outlook and deep value. 

• Companies with low valuations have lower ROE, ROA, and foreign ownership as well as inferior board practices and key actions. Conversely, companies with high valuations show the opposite relationship.
• Over the past year, companies that increased their valuations were those with already  high valuations, return on capital and foreign ownership that further improved their earnings and increased their valuations.
• This suggests that companies that have begun to make progress in management reform by improving board operations and clarifying management policies through engagement by overseas investors have achieved positive results.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Fancl Corp (4921 JP), Asia Cement China (743 HK), Ansarada Group Ltd (AND AU). 
• Lowest spreads: Tatsuta Electric Wire & Cable (5809 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Alumina Ltd (AWC AU), Nagatanien Holdings (2899 JP).

• Webtoon Entertainment (WBTN US), a global storytelling platform, seeks to raise up to US$500 million through a Nasdaq IPO.
• In Webtoon Entertainment IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on declining organic revenue, declining Korean paying ratio, a peaking Japan growth driver, optimistic market sizing, and unsustainable low marketing spending.

• For first time since 2022, carriers’ cargo revenue, yield, load factor all rising
• Asia outbound, US inbound air cargo tons both improving in early 2024
• SHEIN, Temu could account for 40%+ of US inbound air tons from CH, HK, TW

• Hyundai Motor India’s proposed IPO is an offer for sale by its parent, Hyundai Motor Company, Korea, and reported to raise USD3 billion, potentially making it India’s largest IPO ever.  
• Hyundai Motor India’s sales growth has been driven by strong domestic and export sales, both in volume and unit realisation.
• With SUVs now making up 62% of Hyundai Motor India’s domestic volumes, up from 45% in FY2021, the shift towards premium models has boosted profit margins.

• Kagome Co Ltd (2811 JP) aims to raise around US$140m to repay debt used to fund the acquisition of Ingomar in Jan 2024.
• At the time of the acquisition, the company has stated its intention to part finance the acquisition via issuance of treasury shares
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, we continued to look at Shift Up (462870 KS),  Guzman Y Gomez and Webtoon Entertainment (WBTN US), along with Mao Geping Cosmetics. 
• On the placement front, there were quite a few deals in India, while Atour Lifestyle Holdings (ATAT US) was the major Asia linked offerings.

• European Commission will impose provisional tariffs on imported Chinese battery electric vehicles.
• Zeekr’s deliveries increased by 117% YoY in 1Q24 and by 112% YoY in the first five months of 2024.
• Ant Group will pay RMB1 billion to sponsor content creators on AliPay.

• Johor Plantations Group (2368120D MK) is looking to raise US$156m in its Malaysia IPO. The IPO will consist of both primary and secondary shares.
• Johor Plantations Group (JPG) is an upstream oil palm plantation firm operating predominantly in Johor, Malaysia.
• In this note, we look at the updates since, and share our thoughts on valuation.

• Sun Corporation is trading at 40% of its net asset value and has valuable SaaS business with Cellebrite
• Activist investor involvement may unlock trapped value in the company
• Cellebrite is a top digital forensics platform serving law enforcement agencies, making Sun Corp a promising investment choice in the Japanese market

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• Since mid-May, share-price spreads have not shown a clear trend across our European liquid universe of ordinary and preferred shares (9 have tightened, 7 widened, 1 remained at same level).
• Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols, Media-for-Europe, Sixt, Volkswagen.
• Recommended trades long ordinary / short preferred shares: Henkel, SSAB Svenska Stal.

• 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: MMG (1208 HK) US$1.2 billion rights issue. Shift Up (462870 KS) and Webtoon Entertainment (WBTN US) IPOs.
• Event-Driven developments: Sun Corp (6736 JP), Fancl Corp (4921 JP), Tatsuta Electric Wire & Cable (5809 JP), Great Eastern Holdings (GE SP), A8 New Media (800 HK), Bapcor.

• IDP Education (IEL AU) and Lendlease Group (LLC AU) will be deleted from the MV Australia Equal Weight Index at the June rebalance.
• Constituent, float and capping changes will result in a one-way turnover of 5% and in a round-trip trade of A$228m.
• There are many stocks from the S&P/ASX index family that will have same way or opposing flows from VanEck Vectors Australian Equal Weight ETF (MVW AU). 

• Although few shareholder proposals will be passed, companies that receive shareholder proposals and don’t like the attention are likely to seek compromise and come to terms with shareholders before AGM.
• Companies with low valuations have significantly lower ROE, ROA, market capitalization, and foreign ownership. In order to raise valuations, the first step should be to increase return on capital.
• Companies with higher valuations can be expected to have begun to steer their board operations in an improved direction. Policy shareholding reductions can be considered as seriousness toward management improvement.

• Dollar Tree’s financial results for the first quarter of fiscal 2024 reflected a mixed performance amid operational challenges and strategic undertakings.
• In terms of expansion, Dollar Tree highlighted their proactive steps toward aggressive growth, including acquisition opportunities such as purchasing stores from the $0.99 only bankruptcy.
• Furthermore, the consolidation of its Family Dollar stores indicated a strategic reshaping, aiming at focusing resources on more profitable ventures while delving into a formal review of strategic alternatives for the Family Dollar business.

• Five Below reported mixed financial outcomes in the first quarter of 2024, encountering challenges reflected in a total sales growth of 12% paired with a comparable sales decrease of 2.3%.
• Adjusted earnings per share stood at $0.60, aligning with the lower spectrum of the company’s expectations.
• This performance highlights particular strengths and vulnerabilities in Five Below’s operational and strategic positioning within the retail sector.

• Lululemon Athletica Inc. recently shared its performance for the first quarter of 2024, showcasing a mixed set of results that present both opportunities and challenges for potential investors.
• Starting with the highlights, Lululemon achieved a 10% increase in total revenue, hitting 11% growth in constant currency terms.
• This growth was bolstered by a significant rise in international markets, particularly in China Mainland and the rest of the world, which saw increases of 52% and 30% respectively in constant currency.

• Ollie’s Bargain Outlet showcased a robust performance in the first quarter of fiscal year 2024, reflecting a strong execution of its business strategies amid challenging market conditions.
• The company delivered an overall 11% increase in net sales, totaling $509 million, driven by new store growth and a 3% uptick in comparable store sales.
• Adjusted earnings per share rose by 49% to $0.73, exceeding expectations.

• PVH Corp. delivered mixed results in the first quarter of 2024, exhibiting robust performance in some sectors while facing challenges in others due to the volatile macroeconomic environment.
• The company continued its strategic shift toward focusing on its Calvin Klein and Tommy Hilfiger brands, emphasizing high-margin direct-to consumer (DTC) sales and reducing exposure to lower-margin wholesale channels.
• This pivot is part of PVH Corp.’s long-term vision to transform into a leading brand lifestyle powerhouse.

• At Bausch + Lomb, the results for the first quarter of 2024 denote a significant advancement, manifesting a 20% constant currency revenue growth, accelerated by the robust performance across its various business units and geographical regions.
• This demonstrates a diversified growth model that is not heavily reliant on a single product line or market.
• The company’s strategic initiatives to invigorate its operational efficiency, innovation, and product launches are turning fruitful, enhancing its financial and market position.

• Wyndham Hotels & Resorts has released their first-quarter 2024 results, which reflect a blend of advanced growth metrics coupled with challenges in specific segments.
• The company reported substantial room openings globally, where openings increased by 27% year-over-year, marking the largest Q1 openings since the company went public.
• Notably, in the U.S., both sequential and yearly improvement was observed, driven by a 3.3% growth in the midscale and above segments.