In today’s briefing:
- Tencent Music Entertainment: A Fallen Star for High Risk Investors that Could Promise Huge Returns
- Jubilant Foodworks (JUBI IN) | Anyone Can Hold the Helm when the Sea Is CALM
- JD.com Tencent Div Distribution – The US$10bn Overhang
- Workman to Open in Ginza, Launches Workman Shoes and More Suits
- COM7: Dilution Effect Have Significant Impact to 22E EPS Growth
- Riding the EV Wave
- Tesla China Deliveries: Weaker And More Important Than You Think
- Energy cost inflation to drive margin reversion
Tencent Music Entertainment: A Fallen Star for High Risk Investors that Could Promise Huge Returns
- The US traded unit of China’s Tencent entry into digital music has lost exclusive rights to its foundational music and entertainment content due to Beijing policies.
- Stock price has been in free fall from a $31 high last March to $3.44.
- The historic term “fallen angel: applies to bonds but TME ‘s current trade suggests it could well apply to special situations in common.
Jubilant Foodworks (JUBI IN) | Anyone Can Hold the Helm when the Sea Is CALM
- Jubilant Foodworks (JUBI IN) announced the departure of its CEO Mr Pratik Pota.
- The timing of departure coupled with recent disappointment around disclosures is making the market nervous.
- As the “sea” gets stormy thanks to high food inflation and pressured “Dine-Ins”, who would be JUBI’s new captain is the key.
JD.com Tencent Div Distribution – The US$10bn Overhang
- On 23rd Dec, Tencent declared a dividend in the form of distribution in specie of 457.326m shares of JD.com, i.e. 1 share of JD.com for every 21 shares of Tencent.
- While Tencent went ex-div on 20th Jan 2022, the actual settlement of the distribution is expected to happen on or about 25th Mar 2022.
- In this note, we look at Tencent’s shareholding in order to decipher the impact on JD.com’s shares once the distribution is settled to determine who the sellers could be.
Workman to Open in Ginza, Launches Workman Shoes and More Suits
- Workman has consolidated its position as a leading domestic outdoor/sports casual retailer in the last two years.
- Growth has been less dramatic but it has developed more infrastructure and brand foundations for what it hopes will be the next big expansion.
- It is expanding the number of banners, increasing the ratio of private label and widening the number of categories it sells, including footwear and camping.
COM7: Dilution Effect Have Significant Impact to 22E EPS Growth
- We downgrade to HOLD rating with a new TP of Bt38.75 derived from 28.9xPE’22E (-0.5SD of 5-Yr trading average)to factor in negative impact from stock dividend on 22E EPS growth
- COM7 announced annual cash dividend of Bt1.00 and stock dividend (Bt0.25), XD date on 11 Mar.
- We believe the dilution effect will have a negative impact on the company’s shareholders.Recurring EPS growth should drop to-38.4%YoYin 22E,down from 23.2%YoYpre-dilution,while dividend yield will also be halved to 1.2%.
Riding the EV Wave
- EV SPACs have been all the rage over the last few years, as OEMs have raced to become the next Tesla, yet have failed to live up to the hype.
- With intense competition, production delays due to supply shortages, and high Capital Expenditure, it is clear that many of these EV startups will fail to cross the finishing line
- Taiwan based electric two-wheeler manufacturer Gogoro is looking to merge with SPAC Poema Global to boost its international expansion plans
Tesla China Deliveries: Weaker And More Important Than You Think
- Early reports of Tesla’s “strong” Feb “sales” left out critical data,
- Like Model 3 deliveries sunk like an anchor, as I expected, and Model Y pace may already be slowing.
- Critical March is now hit with a major Covid outbreak—and lockdowns.
Energy cost inflation to drive margin reversion
- We believe, it would be tough for Asahi India Glass (AIG) to sustain its present elevated profitability levels amidst steep rise in energy costs.
- We expect it to surge a further ~400bps by Q1FY23E, assuming present natural gas and crude oil prices.
- Also, logistics cost to sales is ~5-6%, and ~20% increase in fuel costs would add a further 100bps pressure on margins.
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