In today’s briefing:
- Tsingtao Placement – Ending the Selldowns with the Biggest One so Far
- Alibaba: 4QFY22 Beats Consensus but Disappointments Could Be Around the Corner
- Asahi (2502 JP) | Is Your Glass Half Full or Half Empty?
- Pinduoduo (PDD): 1Q22, Good Quarter, But Lockdown Scares Third-Party Retailers
- Sariguna Primatirta Tbk PT (CLEO IJ) – Indonesia’s Pure Water Play
- PT Surya Citra Media Tbk (SCMA IJ) – Laying Foundations for Growth in FTA and Digital
- Heineken Malaysia (HEIM): Brewing
- MFE/Mediaset España: Start of Offer Period with Lower Success Expectations
- Harding Loevner International Small Companies Equity Fund Q1 2022 Letter
- Harding Loevner Global Small Companies Equity Fund Q1 2022 Letter
Tsingtao Placement – Ending the Selldowns with the Biggest One so Far
- Fosun aims to raise around US$527m via selling a 3.5% stake in Tsingtao.
- This is not the first selldown by Fosun, we have covered three prior deals in Dec 2020, Apr 2021 and Dec 2021.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Alibaba: 4QFY22 Beats Consensus but Disappointments Could Be Around the Corner
- Alibaba Group (9988 HK)’s 4QFY22 results were yet another disappointment with the company’s revenue growing by 8.9% YoY, a new low after slowing to 9.7% YoY in the previous quarter.
- This was mostly priced-in, considering that 4QFY22 revenue and OP exceeded consensus by 2.3% and 216% respectively.
- However, FY23 and FY24 estimates are still ambitious and there’s a lot of downside risk to consensus from 2QFY22 onwards.
Asahi (2502 JP) | Is Your Glass Half Full or Half Empty?
- Q1 cost pressures surprised the market but the share price has already discounted the news
- Underlying beer demand is solid as global economies recover from 2 years of Covid restrictions
- Improving sales mix and higher prices should offset the cost pressures. With Asahi trading at the bottom of its valuation range, our glass is half full on the stock
Pinduoduo (PDD): 1Q22, Good Quarter, But Lockdown Scares Third-Party Retailers
- PDD achieved high growth rates in main businesses and a higher operating margin in 1Q22.
- However, we believe third-party retailers are scared about the logistics problem caused by the lockdown.
- We set a downside of 17% and a price target of US$40.
Sariguna Primatirta Tbk PT (CLEO IJ) – Indonesia’s Pure Water Play
- Sariguna Primatirta Tbk PT (CLEO IJ) is Indonesia’s only pure water brand (CLEO), using US-nanotechnology and eco-friendly packaging with a market share of around 5%.
- The company has co-branded with both Alfamart and Indomaret and is launching new health-driven products such as alkaline oxygenated water as well as expanding with new factories.
- Sariguna Primatirta Tbk PT (CLEO IJ) is an uncovered yet high-quality and high growth consumer company owned by the Tanoko Family, which also owns PT Avia Avian (AVIA IJ).
PT Surya Citra Media Tbk (SCMA IJ) – Laying Foundations for Growth in FTA and Digital
- PT Surya Citra Media 1Q2022 were more about the future than the past given that its investment in new content and sporting rights depressed margins but should help drive growth.
- It has been gaining FTA TV audience share, helping to drive ad revenues. Vidio is seeing strong growth in paying subscribers with 2.5m in 1Q2022 with 4m targeted by December.
- PT Surya Citra Media Tbk (SCMA IJ) looks cheap versus history and should benefit from the economic recovery, with an increasingly diversified exposure across FTA TV and digital through Vidio.
Heineken Malaysia (HEIM): Brewing
- Malaysia’s reopening play for the consumption sector is Heineken Malaysia Bhd (HEIM MK) .
- Q1 22 revenue has bounced back to Q4 19 level and higher than Q1 2019 by 33% before taking into account the potential upside since the reopening of the nightlife.
- Compared to other consumer names in Malaysia such as Carlsberg Malaysia, British American Tobacco, Nestle (Malaysia), and QL Resources, Heineken Malaysia is trading at a discount.
MFE/Mediaset España: Start of Offer Period with Lower Success Expectations
- On 26 May, the CNMV authorized the bid. The offer period will end on 28 June. Mediaset España shareholders do not seem very excited about the offer though.
- Analysts’ median TP (Refinitiv) of Mediaset España is €6.58/share, vs. the package worth €4.452 as of 30 May, 19.4% below value upon offer announcement. Market sentiment is negative.
- As of 30 May, risk arb spread is 4.2% (MFE dividend not included). It seems increasingly unlikely that the offer is successful and Mediaset España delisted, in my view.
Harding Loevner International Small Companies Equity Fund Q1 2022 Letter
- Harding Loevner has been investing globally in high-quality, growing businesses based on disciplined industry research since 1989.
- Stock markets fell in the quarter, as the world watched in horror Russia’s invasion of Ukraine.
- While we are optimistic that China will maintain its neutrality in the war, we can’t dismiss the possibility we are wrong.
- With the volatility of stock prices thisquarter, portfolio activitypicked up as a handfulof high-quality growth companies we had long admired, but regarded as too expensive, saw their valuations fall into range.
Harding Loevner Global Small Companies Equity Fund Q1 2022 Letter
- Harding Loevner has been investing globally in high-quality, growing businesses based on disciplined industry research since 1989.
- Stock markets fell in the quarter, as the world watched in horror Russia’s invasion of Ukraine.
- While we are optimistic that China will maintain its neutrality in the war, we can’t dismiss the possibility we are wrong. In that case, we’d need to parse which companies will be hurt and helped, relatively, from a further receding of globalization.
- With the volatility of stock prices this quarter, portfolio activity picked up as a handful of high-quality growth companies we had long admired, but regarded astoo expensive, saw their valuations fall into range.
Before it’s here, it’s on Smartkarma
