In this briefing:
- Short Haidilao (海底捞) Before Earning & Lock-Up Expiry
- Japan Tobacco: No Dire Consequences Despite Late Entry to Heated Tobacco
1. Short Haidilao (海底捞) Before Earning & Lock-Up Expiry
Haidilao International, the largest Chinese cuisine player by valuation, was listed on September 26th last year and lock-up expiry will be on March 26th. The stock has returned 24% since listing.
- As it heads into lock-up expiry, we will examine Haidilao’s shareholder structure and potential shares up for sale.
- Haidilao was included in the Hong Kong Connect Scheme on December 10th, 2018 and shares held by mainland investors have been consistently increasing.
- But we think Haidilao’s valuation has built in a perfect growth scenario.
- Risk of de-rating for Haidilao warrants a short position.
Our previous coverage on Meituan Dianping
- Haidilao IPO First Glance: Legendary Hot Pot Restaurant that Will Be Hot (Part 1)
- Haidilao (海底捞) IPO: Superior Metrics in a Scalable Segment (Part 2)
- Haidilao (海底捞) IPO: Near Term Rapid Growth but Deceleration Ahead (Part 3)
- Haidilao (海底捞) IPO: Appealing Valuation at the Low End for a Branded National Champion (Part 4)
- Haidilao (海底捞) Post-IPO Trading Update: Not Much Upside from High End, Lessons from Meituan
2. Japan Tobacco: No Dire Consequences Despite Late Entry to Heated Tobacco
- Late entry to Japanese heated tobacco market resulted in Japan Tobacco (2914 JP) losing market share to peers
- New product launches to give Japan Tobacco a fighting chance against IQOS
- Early maturity of heated tobacco in Japan: a blessing in disguise for Japan Tobacco
- Pricing power is expected to be back on track in future
- PloomTECH will soon be ready to compete with IQOS at a global level
- More product offerings targeting different customer needs in reduced risk products category
- International segment volume growth driven by global flagship brands and acquisitions
- Market unjustly penalising Japan Tobacco for the early maturity of heated tobacco segment
- Transformation of dividend yield from industry worst to industry best
- Undervalued at 10.09x EV/Forward EBIT: DCF target price yields 21.8% upside
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