In today’s briefing:
- Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
- JPX-Nikkei 400 Rebal Aug 2024 – 44 IN, 41 OUT, ¥500bn of Capping, Just Under ¥1trn to Trade
- BUY/SELL/HOLD: Hong Kong Stock Updates (August 6)
- China: Passive Selling Expected Later This Month
- Brainbees Solutions (FirstCry) IPO: Key Facts, Financials and Valuations
- MSC Aug 24 Rebalance: South Africa Post-Election Tailwind? MRP, ARI Potential Adds
- Yum China (9987 HK): 2Q 2024 – Market Expansion Can’t Mask Macro Woes
- Wheat, Corn and Soy Remain Insulated From Global Shakedown
- BrainBees Solutions IPO: Five Facts Why FirstCry Is Not a First Class Company
- Beenos Inc (3328 JP): Q3 FY09/24 flash update
Alibaba (9988 HK/BABA) Dual Primary Listing: Are We There Yet?
- In its last update, Alibaba Group announced that the company was preparing for its primary listing in Hong Kong and the process was expected to complete by the end August.
- The Board meets on 14 August to approve results for the three months ending June. Could there be an announcement on the dual primary listing too?
- Mainland Chinese own between 3.5%-15.5% of companies that converted from Secondary to Dual-Primary in the last few years. Similar buying in Alibaba could take the stock higher from here.
JPX-Nikkei 400 Rebal Aug 2024 – 44 IN, 41 OUT, ¥500bn of Capping, Just Under ¥1trn to Trade
- Janaghan Jeyakumar, CFA who does the predictions for this index got 10/10 of his high conviction names, 8/10 of his medium conviction, and 50% of low conviction ADDs.
- This year, there are fewer caps but some big ones. Nearly ¥500bn of capping flow to sell.
- I see just over $6.3bn in buying and selling to be done. A half dozen names with both high ADV impact to buy and decent size.
BUY/SELL/HOLD: Hong Kong Stock Updates (August 6)
- Low Volatility and High Dividend yield stocks in Hong Kong outperformed the region during recent global market sell off.
- MGM China Holdings (2282 HK) is outperforming its peers with revenue now exceeding pre-COVID levels.
- Weibo (9898 HK) maintains a high cash flow and dividend yield in China’s tech sector. Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK) benefits from China’s new large-scale maintenance cycle.
China: Passive Selling Expected Later This Month
- The China equity markets have continued to trade lower with the CSI 300 Index outperforming other mainland indices as the National Team continues to pump money into ETFs tracking the index.
- We currently estimate selling of around US$1.39bn across 74 stocks listed on the mainland and in Hong Kong. There could be fewer deletions depending on the review date chosen.
- The potential deletes have dropped a lot since the start of the calendar year with big underperformance versus the HSCEI Index, CSI 300 Index and CSI Smallcap 500 Index.
Brainbees Solutions (FirstCry) IPO: Key Facts, Financials and Valuations
- BrainBees Solutions (0172540D IN) that operates FirstCry, India’s leading Online Mom and Child vertical, has launched a USD500 mn IPO that closes on August 8th.
- The IPO pricing suggest a post-money equity valuation of around USD 2.8 billion and an EV/Revenue multiple in the range of 3.5X-3.7X.
- Brainbees operates in an attractive online vertical noted for its high frequency purchases and long term customer relationship. However it has not built significant competitive advantages versus leading horizontal platforms.
MSC Aug 24 Rebalance: South Africa Post-Election Tailwind? MRP, ARI Potential Adds
- MSC indices are due for rebalancing in the closing auction on Friday the 30th of August. Constituent changes will be announced after the close next week Monday.
- In this note we flag Mr Price Group Ltd (MRP SJ) & African Rainbow Minerals (ARI SJ) as possible additions to the MSC SA index.
- Since our last discount update on the 22nd of July, Prosus has underperformed Naspers. The discount has widened by 1.7 percentage points to 39.6%.
Yum China (9987 HK): 2Q 2024 – Market Expansion Can’t Mask Macro Woes
- Yum China Holdings (9987 HK) reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.
- Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.
- Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China’s revenue and profit growth potential.
Wheat, Corn and Soy Remain Insulated From Global Shakedown
- Wheat, Corn and Soy gained on Monday even as US indices and commodities tumbled over recession woes.
- Weaker dollar supports stronger US exports of agri-commodities. Grains and oilseeds rise as dollar weakens.
- Technical indicators and fundamental outlook remains bearish for agri-commoties. IV remains subdued at multi-month lows.
BrainBees Solutions IPO: Five Facts Why FirstCry Is Not a First Class Company
- We highlight several red flags with regard to BrainBees Solutions (0172540D IN) operations, business strategy and governance for investors’ careful consideration.
- At the announced IPO price band of Rs440 – Rs465, Brainbees implied EV/Revenues (FY24) works out to 3.5X – 3.7X – a significant discount to India listed online retail verticals.
- Despite seemingly inexpensive relative valuations, we do not see a compelling reason to invest in the company, specially given the several red flags discussed below.
Beenos Inc (3328 JP): Q3 FY09/24 flash update
- GMV increased 21.4% YoY to JPY85.7bn, while revenue decreased 7.7% YoY to JPY20.4bn, and operating profit fell 46.6% YoY to JPY1.4bn.
- In Q3 FY09/24, GMV grew 21.4% YoY, with Global Commerce revenue up 21.3% YoY and Entertainment revenue up 6.8% YoY.
- The company recorded an extraordinary gain of JPY1.0bn from the Value Cycle segment share transfer, impacting FY09/24 results.
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