In today’s briefing:
- Alibaba’s Sum of the Parts Valuation: Why the Initial Excitement May Be Overblown
- Hong Kong CEO & Director Dealings (30 Mar): Tian An, CSPC Pharmaceutical, Li Auto
- XPeng Inc (9868 HK) – Bullish Technical Triggers Confirm MT Uptrend – Target 25-30% Upswing
- Huolala Parent Lalatech Files for Hong Kong IPO
- Cisarua Mountain Dairy (CMRY IJ) – Bedding Down with a Portfolio of Growth Products
- Mitra Adiperkasa (MAPI IJ) – Multi-Channel in Motion
- Risk Taking by Managers Is Key, Weather Changing the Game or Creating a New Business
Alibaba’s Sum of the Parts Valuation: Why the Initial Excitement May Be Overblown
- Alibaba Group (9988 HK)‘s shares rallied after announcing the business split, with investors believing that the sum of parts could be worth more than the current valuation.
- Our analysis shows that NAV is only 12% higher than the current valuation, contrary to the idea of a significantly higher sum of parts value.
- Therefore, we would be looking to short Alibaba (ADR) (BABA US) yet again once this initial excitement settles.
Hong Kong CEO & Director Dealings (30 Mar): Tian An, CSPC Pharmaceutical, Li Auto
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- Stocks mentioned include Tian An China Investment (28 HK), CSPC Pharmaceutical Group (1093 HK), and Li Auto (2015 HK).
XPeng Inc (9868 HK) – Bullish Technical Triggers Confirm MT Uptrend – Target 25-30% Upswing
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- XPeng Inc (9868 HK) has this week broken above the falling wedge pattern that captured its Dec/Mar correction. The bullish trend breakout in the weekly RSI confirms the uptrend bias.
- Wedge patterns are commonly referred to as “Half Mast” patterns. They typically occur in the middle of trends, making textbook targets easy to calculate. Target 56.10 (+29%) in Q2 2023.
Huolala Parent Lalatech Files for Hong Kong IPO
- Lalatech Holdings Co. Ltd., the operator of on-demand delivery services known as Lalamove in Hong Kong and other global markets and as Huolala on the Chinese mainland, filed for an initial public offering Tuesday on the Hong Kong Stock Exchange.
- The company didn’t disclose a fundraising target or a timeline.
- The startup originally filed an IPO application confidentially in U.S. in June 2021 with an aim to raise at least $1 billion, but it later pulled out of the plan after Beijing’s crackdown on overseas share sales.
Cisarua Mountain Dairy (CMRY IJ) – Bedding Down with a Portfolio of Growth Products
- Cisarua Mountain Dairy (CMRY IJ) is one of the most interesting consumer staples players in Indonesia, with a leading position in dairy and specifically yoghurt, and increasingly premium consumer foods.
- 4Q2022 saw a slowdown in sales growth as consumers returned to the mall due to inflationary pressure but December saw a sharp recovery and 2023 should see continued recovery.
- Flavoured UHT Milk and a new Yoghurt stick aimed at the mass market will help to fuel growth and raw material cost pressures have started to alleviate. Valuations are attractive.
Mitra Adiperkasa (MAPI IJ) – Multi-Channel in Motion
- Mitra Adiperkasa continus to execute on its unified retail model that utilises multiple channels to serve customers but offline activity has picked up most, driving a very strong 4Q2022.
- The company continues to see improving margins across the board as sales growth has picked up across all segments. Online sales also remained relevant at 9% of sales in 2022.
- Mitra Adiperkasa continues to recover, utilising its MAPCLUB members to drive sales through more effective targeted promotions and efficiencies. Valuations are attractive versus historical levels.
Risk Taking by Managers Is Key, Weather Changing the Game or Creating a New Business
- Since listed companies have abundant cash reserves even if interest rates rise, they will use their cash to pay down debt but they are unlikely to use it for investments.
- Cash is piling up on balance-sheet resulting from the inability to invest in growth and get out of the game of sharing the pie of the existing stable domestic market.
- In order to raise profit margins significantly, a manager may find growth and invest in non-existing businesses or introduce game-changing products that disrupt the stability of the market.
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