In this briefing:
- StubWorld: Naspers Embeds Another Layer Into Tencent
- Ruhnn (如涵) IPO Review – Expensive Influence
- Golden Agri Bull Pivots to Get Involved
- Yunji (云集) Pre-IPO Review – Poor Disclosure on Data
- F&F: Time to Take Profits – Up 95% This Year Driven by MLB Baseball Hats Potential in China
1. StubWorld: Naspers Embeds Another Layer Into Tencent
This week in StubWorld …
- There is no apparent value enhancement to Naspers Ltd (NPN SJ)‘s spinning-off and separately listing Tencent Holdings (700 HK), while there is no change in governance and no monetisation at the parent level.
Preceding my comments on Naspers are the weekly setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold – the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent – of at least 20%.
2. Ruhnn (如涵) IPO Review – Expensive Influence
Ruhnn Holding Ltd (RUHN US) is looking to raise up to US$155m in its upcoming IPO. We have previously covered the company’s fundamentals in: Ruhnn (如涵) Pre-IPO Review- Significant Concentration Risk.
In this insight, we will value the company business segments by parts, look at the deal dynamics, and run the deal through our IPO framework.
3. Golden Agri Bull Pivots to Get Involved
Golden Agri Resources (GGR SP) has started a basing process below pivot support at 0.30 as the daily MACD cycle has not been confirming recent lows for a case of underlying supportive bull divergence (sell pressure dwindling as downside momentum tapers off).
Bull divergence outlined in the MACD is supportive on a macro basis, however there is downside risk stemming from the micro rising wedge. A fresh diverging low is expected to market a price low to work into.
Immediate inflection levels at 0.30 and 0.26 will dictate near term direction out of the micro rising wedge. Ideal downside projections are noted along with a bullish resistance threshold.
4. Yunji (云集) Pre-IPO Review – Poor Disclosure on Data
Yunji Inc. (YJ US) is looking to raise about US$200m in its upcoming IPO.
YJ is a membership-based social e-commerce platform. Growth from FY2016 to FY2018 has been stupendous. Revenue has grown at a 218% CAGR while gross profit grew at 175% CAGR. Losses have been shrinking as a percentage of revenue and the company seems to be close to break even.
However, the disclosure of data is poor. There is no clear explanation how the company has achieved such strong growth in FY2018 without having to provide a proportionately larger incentive in the same period.
5. 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.
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