In today’s briefing:
- Aisin (7259 JP): The Current Playbook
- SHEIN: Teaming up with Reliance Retail to Re-Enter India. A Win-Win Move
- Outpacing Delivery Expectations Sends Shares Soaring. Is Tesla the Most Undervalued AI Name?
- Onward Holdings (8016 JP): Q1 FY02/25 flash update
- Whether Measures to Meet TSE’s Request Increased Certainty Will Be Tested at 2Q Financial Reporting
- Signet Jewelers: A Flexible Operating Model and Strong Free Cash Flow Conversion! – Major Drivers
- Meritage Homes Corporation: A Tale Of Community Expansion and Market Share Growth! – Major Drivers
- J & J Snack Foods Corp.: Enhanced Distribution Strategy with New Infrastructure Developments As A Critical Growth Catalyst! – Major Drivers
- Under Armour Inc.: Will Its D2C Focused International Business Strategy Pay Off? – Major Drivers
- BWMX: Snapping the Catalog: July Remains Hot; Reiterate Buy, $22.50 PT
Aisin (7259 JP): The Current Playbook
- Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
- Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
- The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.
SHEIN: Teaming up with Reliance Retail to Re-Enter India. A Win-Win Move
- SHEIN’s fast-fashion apparel is set to hit India through Reliance Retail’s platforms, marking a major comeback after the 2020 ban.
- This partnership could be a win-win, tapping into India’s booming fashion demand and offering Shein access to the world’s largest youth market, ahead of its proposed IPO.
- With Shein’s affordable styles and Reliance’s extensive network, this alliance targets the youth market, challenging brands like Tata Group’s Trent Ltd (TRENT IN) owned Zudio.
Outpacing Delivery Expectations Sends Shares Soaring. Is Tesla the Most Undervalued AI Name?
- Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
- Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
- Future remains uncertain for Tesla and its investors. Tesla shares are pricing in the launch of a lower priced model and Tesla’s Robotaxi on 8/8.
Onward Holdings (8016 JP): Q1 FY02/25 flash update
- Sales rose JPY1.5bn YoY (+2.9% YoY) to JPY51.4bn, driven by higher sales in domestic and overseas apparel businesses.
- Operating profit decreased JPY306mn YoY (-5.7% YoY) to JPY5.1bn due to a decline in domestic profit and wider overseas losses.
- Full-year forecasts revised for recurring profit and net income attributable to owners of the parent, reflecting better-than-expected affiliate performance.
Whether Measures to Meet TSE’s Request Increased Certainty Will Be Tested at 2Q Financial Reporting
- If a company hasn’t improved its return such as ROE, it’s difficult to buy its shares until the plan is more certain that cash flow will expand in the future.
- Since cash flow margin must be raised to increase cash flow, the ultimate goal is to achieve sales growth while raising the profit margin on sales.
- Cutting costs alone isn’t enough; cash must be used for investments that will lead to future growth, so cash must be used for growth investments as well as stock repurchases.
Signet Jewelers: A Flexible Operating Model and Strong Free Cash Flow Conversion! – Major Drivers
- Signet Jewelers delivered a performance that aligns with its guidance amidst a challenging retail environmen characterized by macroeconomic pressures and heightened discount activities in the jewelry sector.
- The company reported $1.5 billion in sales and $58 million in adjusted operating income, which falls within the upper half of its guidance range.
- The quarter saw a sluggish start but improved significantly with late Valentine’s Day shopping and further momentum through March and April.
Meritage Homes Corporation: A Tale Of Community Expansion and Market Share Growth! – Major Drivers
- Meritage Homes commenced the year with a remarkable first quarter in 2024, demonstrating both strong execution and a robust demand environment, yet facing challenges due to the unpredictability of interest rates and increased land and material costs.
- On the performance front, Meritage Homes reported substantial gains, with first-quarter sales orders hitting a record 3,991 homes, reflecting a 14% year-over-year increase.
- This noteworthy jump was primarily driven by healthy spring sales, an 8% cancellation rate, and robust demand across all regions, particularly from entry-level homebuyers who make up more than 90% of the order volume.
J & J Snack Foods Corp.: Enhanced Distribution Strategy with New Infrastructure Developments As A Critical Growth Catalyst! – Major Drivers
- J&J Snack Foods recently reported fiscal results for the second quarter of 2024 and showcased a promising outcome, marked by significant sales and profit growth.
- The company’s strategy and operational efficiencies appear to be paying off, with net sales reaching $357 million, an increase of 6.5% compared to the prior year.
- This results from a combination of higher volumes, new business performance, and continued robust sales in major segments like Foodservice and Retail.
Under Armour Inc.: Will Its D2C Focused International Business Strategy Pay Off? – Major Drivers
- Under Armour, the prominent athletic performance brand, reported their Q4 2024 earnings.
- While the brand maintains a strong foundation and reputation amongst consumers, recent changes in leadership and the COVID 19 pandemic have presented challenges to the company’s operations, including increased competition and changes in consumer shopping behavior.
- The company expressed a commitment to improvement by prioritizing clarity and stability amid rapid executive team changes and industry shifts.
BWMX: Snapping the Catalog: July Remains Hot; Reiterate Buy, $22.50 PT
- We are reiterating our Buy rating and $22.50 price target and slightly back-end loading our 2024 projections after reviewing the July catalog and recent foreign exchange swings between the Mexican Peso and USD.
- July continued to demonstrate normalizing trends in the Betterware catalog, with SKU levels up YoY and discounting remaining down, as the division begins to compare against more normalized results from the prior year, as supply chains reset at more historic levels.
- That said, overall pricing power remains somewhat constrained, as YoY pricing dropped 8.4%, the sixth drop, and deepest decline, this year.
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