In this briefing:
- F&F: Time to Take Profits – Up 95% This Year Driven by MLB Baseball Hats Potential in China
- Wesfarmers Puts Out A Bid for Lynas
- US Lake Charles LNG Liquefaction Plant Tendering for Contractors: Positive for TechnipFMC
- Yunji IPO Preview: Balance Sheet Points to Waning Engagement
- HK Connect Discovery Weekly: Mainland Investors Buying WH Group (2019-03-22)
1. F&F: Time to Take Profits – Up 95% This Year Driven by MLB Baseball Hats Potential in China
F&F Co Ltd (007700 KS) shares have been soaring this year (up 95% YTD), versus KOSPI which is up only 5% YTD. F&F Co has been one of the top performing stocks in KOSPI this year. We believe it is time to take profits on this name and take it out of our model portfolio.
One of the main reasons why F&F Co has been soaring this year has been due to the MLB (Major League Baseball) apparel business expansion in China. In February 2019, F&F Co secured the selling rights of the MLB branded apparel products in China from the MLB headquarters in the US.
Baseball is becoming increasingly popular in China. According to the Chinese Baseball Association, more than 4 million Chinese play the game. The historical resistance to baseball is breaking down in China. For example, In April 2018, Tencent announced a deal to live stream 125 MLB games on platforms such as its its Tencent Sports app to Chinese audiences via their computers and mobile devices.
2. Wesfarmers Puts Out A Bid for Lynas
This morning, Wesfarmers Ltd (WES AU) announced an indicative, non-binding proposal to the Board of Directors of Lynas Corp Ltd (LYC AU) to acquire Lynas at A$2.25/share, payable in cash in the form of a Scheme of Arrangement.
This is a 44.7% premium to the one-day price and a 36.4% premium to the 60-day price.
It is, however, a 0% premium to the price at which Lynas was trading on 3 December 2018, the day before the Malaysian Minister for Energy, Science, Technology, Environment and Climate imposed two pre-conditions on the rolling over of the processing licence (later in 2019), and it is a 3.2% premium to the one-year average as of 4 December 2018. On December 5th, the shares fell to A$1.65 and they have not recovered.
![](https://static-prod.smartkarma.com/images/media/000/083/187/original/Screenshot%202019-03-26%20at%206.30.50%20AM.png?1553553065)
David Blennerhassett gave an overview of the license renewal issues and timeline in Lynas: Between a Hard Place and Just Rock just a few weeks ago. It is definitely worth a read as background for those not up to speed on the situation.
This is very early, non-binding, conditional in the extreme, and conditional non-binding offers are a graveyard of Australian arbitrageurs. The Offer is not all that attractive to boot. But I expect the stock will go up anyway, and that may make for some interesting trading opportunities.
3. US Lake Charles LNG Liquefaction Plant Tendering for Contractors: Positive for TechnipFMC
Energy Transfer LP (ET US) and Royal Dutch Shell (RDSA LN) have signed a Project Framework Agreement to further develop a large-scale LNG export facility in Lake Charles, Louisiana and move toward a potential final investment decision (FID). They have started actively engaging with LNG Engineering, Procurement and Contracting (EPC) companies with a plan to issue an Invitation to Tender (ITT) in the weeks ahead. We look at the potential contract size and winners and also the other US LNG projects that could be negatively impacted. More detail on the LNG project queue for this year in: A Huge Wave of New LNG Projects Coming in the Next 18 Months: Positive for The E&C Companies.
4. Yunji IPO Preview: Balance Sheet Points to Waning Engagement
Yunji Inc. (YJ US) is a leading membership-based social e-commerce platform in China which primarily sells merchandise through its Yunji app. Yunji is also referred to as a multi-level revenue sharing platform as the business model is based on providing incentives to members to promote products and invite new members through their social networks. Yunji is seeking to raise $200 million through a Nasdaq IPO.
Our analysis of the balance sheet points to waning member engagement which does not bode well for Yunji’s long-term sustainable growth in a highly competitive market.
5. HK Connect Discovery Weekly: Mainland Investors Buying WH Group (2019-03-22)
In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.
We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.
In this insight, we highlight the WH Group, which led the inflows last week.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.