In today’s briefing:
- China E-Commerce: Is Still a Dead Cat
- Polaris Holdings (3010): Experiencing a Growth Renaissance
- Merger of PGA Tour, DP World Tour, & LIV Golf – Impact on Fila Holdings and Acushnet
- PDD/Shein/Tiktok: Temu Continues to Experience Rapid Growth, a Summary of Our Recent Channel Checks
- Estee Lauder: Premium Valuations Are Not Always Justified
- Liberty/Telenet: Opening of Acceptance Period
China E-Commerce: Is Still a Dead Cat
- Positive surprises in profitability during Q1 2023 failed to reverse the long-term decline of Chinese e-commerce, possibly due to market recognition of the temporary impact of cost-cutting and monetization efforts.
- In our opinion, robust growth in GMV is fundamentally essential to reverse the long-term downward trend of the Chinese e-commerce sector.
- Chinese e-commerce sector no longer discloses GMV, but Express delivery volume indicates a 20% decline in parcel volumes compared to 2021, potentially reflecting a decrease in GMV.
Polaris Holdings (3010): Experiencing a Growth Renaissance
- The waiting is over – Q4 FY3/2023 results highlighted 1) continued recovery in the hotel industry spurred by domestic and overseas traveler demand, 2) improvement in profit structure through business model transformation and increased accommodation demand has led to an increase in revenue, and 3) the completion of the acquisition of Red Planet’s business in the Philippines highlights the company’s expansion into overseas operations.
- However, as the tourism industry in Japan is in a full-fledged recovery phase, the company believes it can achieve sustained growth.
- Sound financial foundations – the company’s recapitalization strategy has been a success, and we maintain our view that there will be positive free cash flow generation in FY3/2024.
Merger of PGA Tour, DP World Tour, & LIV Golf – Impact on Fila Holdings and Acushnet
- In the past several days, one of the biggest news in the global sports industry has been the merger of PGA Tour, DP World Tour, and LIV Golf.
- We believe that this merger is likely to have a positive impact on the global golf industry, including on Fila Holdings (081660 KS) and Acushnet Holdings (GOLF US).
- If this merger successfully completed this year, there is a good possibility of a pick-up in golf related equipment sales and profits for Acushnet and Fila Holdings starting 2024.
PDD/Shein/Tiktok: Temu Continues to Experience Rapid Growth, a Summary of Our Recent Channel Checks
- We recently interviewed some Temu merchants, and the main conclusion is that Temu continues to experience rapid growth despite the chaos.
- Temu’s GMV reached a new high in May; Temu faces upcoming challenges from Shein and TikTok, as they are also about to launch their fully managed models.
- Moreover, Temu’s unit economics (UE) has not seen further improvement for several months, and the supply of goods has been a problem;
Estee Lauder: Premium Valuations Are Not Always Justified
- Estée Lauder continues to make new lows as risks related to its premium valuation and business concentration materialize.
- Estée Lauder’s return on capital is also facing long-lasting headwinds.
- The company will remain too richly priced for the time being, according to the company’s CEO.
Liberty/Telenet: Opening of Acceptance Period
- Telenet has announced the publication of the prospectus. The Board of Directors of Telenet has prepared a response memorandum in which it sets out its recommendation of the Offer.
- The offer is opportunistic and optically generous, with neither interloper risk nor sweetening to be expected. I believe most investors will cash out. Liberty could eventually drop the acceptance threshold.
- Given the ambiguity surrounding both the company and the sector in Belgium, I still think Liberty might acquire Telenet for almost a bargain. Spread is 2.38%/19.8% (gross/annualised).
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