In today’s briefing:
- China Internet Weekly (24Oct2022): Tencent, Alibaba, Kuaishou, JD.com, NetEase, Zhihu
- Pinduoduo: The US Expansion Could Slash Profitability While Risking Xi’s Wrath
- Kingston Financial’s HK$0.30 Privatisation Bid from Mrs Chu
- Will Elon Dump $10 Billion In Tesla This Week To Buy Twitter? Maybe Not.
- Will Philip Morris Succeed Now?
- Matahari Department Store (LPPF IJ) – Freshening Merchandise Is Paying Dividends
- Kingston Financial (1031 HK): Chu’s Scheme At HK$0.30/Share
China Internet Weekly (24Oct2022): Tencent, Alibaba, Kuaishou, JD.com, NetEase, Zhihu
- Chinese online game market size decreased by 19.1% YoY and 12.6% QoQ in 3Q22.
- Tmall, Alibaba’s direct sales app, started a mini-program in Tencent’s WeChat.
- State Post Bureau announced that it would revise the express delivery rules, especially for green packaging.
Pinduoduo: The US Expansion Could Slash Profitability While Risking Xi’s Wrath
- With growth fading in the domestic market, the Chinese e-commerce company, Pinduoduo (PDD US) has made its first overseas push with the launch of Temu.com in the US.
- However, the launch was less than impressive, especially considering that the company created a lot of excitement about its US expansion in the previous earnings call.
- Selling $10.00 earbuds at $3.70, Temu could eat a significant chunk off of Pinduoduo’s profitability in the next couple of quarters.
Kingston Financial’s HK$0.30 Privatisation Bid from Mrs Chu
- Kingston Financial (1031 HK) announced a privatisation offer from Mrs Chu, the controlling shareholder, at HK$0.30 per share, a 47.8% premium to the undisturbed price. The offer price is final.
- Key conditions include approval by at least 75% of disinterested shareholders (<10% of disinterested shareholders rejection) and the headcount test. No shareholder holds a blocking stake.
- The offer is light and the offeror is betting that the grim market conditions will sway the headcount test in its favour. Scheme document despatched by 21 December.
Will Elon Dump $10 Billion In Tesla This Week To Buy Twitter? Maybe Not.
- Elon’s Twitter funding “plan” to buy Twitter has been a disaster, time is running out, and it’s mostly his fault.
- Many in his equity pool raised back in May are trying to get out of the deal altogether.
- He still has time to salvage it without selling more Tesla.
Will Philip Morris Succeed Now?
- PMI increased the offer price by 9.4% to SEK 116/share to overcome the resistance of shareholders. PMI warns it is its final offer and keeps the 90% minimum acceptance condition.
- The revised offer represents an implied equity value of SEK 176.4 billion (USD15.8 billion, vs. USD16 billion last May) and 17.1x EV/NTM EBITDAe (vs. 17.5x in May).
- Swedish Match is trading at SEK 112.5, c. 3.1% discount to the revised offer (settlement estimated on 11 November). The market believes the sweetened offer is final. Long & tender.
Matahari Department Store (LPPF IJ) – Freshening Merchandise Is Paying Dividends
- Matahari Department Store remains an unappreciated transformational retail growth story in Indonesia with the new management team improving the merchandise mix and restarting the company’s store expansion in earnest.
- The company plans to add a total of 10 new stores this year and 12-15 new stores next year, as well as adopt an increasingly omnichannel approach to expansion.
- Matahari Department Store remains attractive from a valuation perspective trading on 8x FY23E PER with a forecast dividend of 9.9% for FY2023E, which makes it look ripe for a rerating.
Kingston Financial (1031 HK): Chu’s Scheme At HK$0.30/Share
- Chu Yuet Wah is Offering to take Kingston Financial (1031 HK) private by way of a Scheme at HK$0.30/share.
- The Cancellation price is a 47.78% premium to last close. It will not be increased.
- Disinterested shareholders comprise 25.073% of shares out, therefore a blocking stake at the Scheme meeting is 2.5073%. The headcount test also applies.
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