In today’s briefing:
- Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang
- The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private
- Lawson & KDDI: Not Just Because Japanese E-Commerce Is an Omnichannel Model
- L’Occitane (973 HK): Here We Go Again
- Nissan’s Renault Led Selldown Updates – Lack of Ampere Listing Brings Back the US$4bn Overhang
- New World Development (17 HK): Stock Trading Cheap as Passive Selling Nears
- An Optimal Way to Sourcing and Screening Data for Low PBR Theme Stocks in Korea
- Quiddity Primer for KOSPI 200 Index Rebal Events (2024)
- China Traditional Chinese Med (570 HK): Third Time’s the Charm as Sinopharm Revives Its Interest?
- China Traditional Chinese Medicine (570.HK) – Will This Privatization Rumor Come True ?
Bud APAC (1876 HK): Nursing a Hangover; Now Comes a Passive Overhang
- Budweiser Brewing APAC (1876 HK) has seen investors run for the hills over the last year. The halving of the stock price could mean deletion from passive portfolios.
- Other Hong Kong listed brewers, China Resources Beer Holdings (291 HK) and Tsingtao Brewery Co Ltd H (168 HK) have been beaten down too and have underperformed their Asian peers.
- The deletion from passive portfolios could provide a buying opportunity in Budweiser Brewing APAC (1876 HK) at the end of February (or earlier if the stock drops due to positioning).
The Next Step in Lawson’s Big Boots Adventure – KDDI and MitCorp to Take It Private
- Today, just before the close, the Nikkei sprung a headline saying KDDI Corp (9433 JP) would take over Lawson Inc (2651 JP). The stock immediately headed to limit up.
- Post-Close, details emerged. KDDI will buy the 50% that MitCorp does not own, this will become a 50/50 JV. TOB launch at ¥10,360 will be in April. Squeezeout in September.
- This appears to be the Next Step in Lawson’s Big Boots Adventure. The premium is too light. The price is too low. And that is not counting the synergies.
Lawson & KDDI: Not Just Because Japanese E-Commerce Is an Omnichannel Model
- KDDI’s agreement with Lawson and Mitsubishi to make a tender offer for the convenience store chain is a game-changer for what has become a slow growth convenience store sector.
- There are myriad potential synergies across e-commerce, new store types and also the promising new revenue stream of retail media. Lawson may be worth more than KDDI’s offer suggests.
- And while Lawson may be behind Seven Eleven and Familymart, on some KPIs, like HQ revenues, it is No. 1 and also matches Seven Eleven on same-store sales.
L’Occitane (973 HK): Here We Go Again
- From 2018 onward, French beauty retailer L’Occitane (973 HK) has apparently drawn interest from the likes of Advent International and its controlling shareholder Chairman Reinold Geiger – amongst others.
- There is substance to these “Offers” – Geiger confirmed in August 2023 he was contemplating a conditional voluntary general Offer. He holds 72.65% of shares out according to the HKEx.
- The latest news, with no definitive source, is that Blackstone is mulling the possibility of teaming up with Geiger on a buyout.
Nissan’s Renault Led Selldown Updates – Lack of Ampere Listing Brings Back the US$4bn Overhang
- One year ago we looked at the arrangement between Nissan (7201 JP) and Renault (RNO FP) regarding their relationship, which left Renault with a 28% Nissan stake to be sold.
- Since then, Renault has undertaken one selldown but its recent announcement of Ampere’s listing cancellation once again raises the possibility of a further selldown of Nissan’s stake by Renault.
- In this note, we talk about the updates since our previous note and the impact of the Ampere listing delay.
New World Development (17 HK): Stock Trading Cheap as Passive Selling Nears
- New World Development (17 HK) stock has continued to drop and the decrease in market cap should result in selling from passive trackers at the end of the month.
- New World Development (17 HK) has underperformed its peers and now trades at cheaper valuations on most parameters.
- Passive trackers will need to sell over 100m shares of New World Development. That could provide liquidity for investors that see value and for shorts to cover their positions.
An Optimal Way to Sourcing and Screening Data for Low PBR Theme Stocks in Korea
- We can use KRX to access PER, PBR, and dividend yield. However, except for PER, the data, being based on the most recent information, limits its usefulness for proactive positions.
- So, we should look into FnGuide, which aggregates and provides exclusive consensus data. This website also requires payment for access.
- However, FnGuide provides some data for free, including PBR. Therefore, we can make use of this within the scope of its free offerings.
Quiddity Primer for KOSPI 200 Index Rebal Events (2024)
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- KOSPI 200 is also used as the underlying index for various financial products such as ETPs, ELS, index funds, and futures/options.
- In this insight, we take a brief look at the index selection methodology and the historical price and volume performance of KOSPI 200 index rebalance baskets.
China Traditional Chinese Med (570 HK): Third Time’s the Charm as Sinopharm Revives Its Interest?
- Bloomberg reports that Sinopharm is reviving its interest in privatising China Traditional Chinese Medicine (570 HK)/CTCM. Sinopharm has contacted banks about financing and is considering partnering with other investors.
- Sinopharm’s best bet is to partner with Ping An Insurance Group of (601318 CH) and privatise through a scheme. In this scenario, no disinterested shareholder would hold a blocking stake.
- Due to Sinopharm’s previous privatisation attempts, shareholders will be wary of the latest rumour. Nevertheless, the valuation is undemanding compared to peer multiples.
China Traditional Chinese Medicine (570.HK) – Will This Privatization Rumor Come True ?
- We once again heard privatization rumor of China TCM, but China TCM denied it at this stage. We still recommend investors to remain vigilant until receive definite official announcement.
- One important background of privatization is the integration of SOE carried out in recent years. We do not rule out the possibility that Taiji Group would drive this privatization.
- It may not be an optimal time for the proposal of privatization by major shareholders. Other shareholders may not want to give up high-quality stocks, which makes privatization challenging.
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