In today’s briefing:
- StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)
- [Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth
- Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers
- EQD | WHAT IF The NIFTY Starts to Pullback This Week?
- Omnicom Group: A Tale Of Digital Transformation and Technology Integration! – Major Drivers
- Mattel Inc’s Possible Acquisition By LVMH Backed L Catterton – What Is The Expected Valuation & The Deal Rationale?
- BWMX: 2Q Review: Managing Into the Positives; Reiterate Buy, $22.50 PT
- D.R. Horton Inc.: Efficient Land Development Strategy & Other Major Drivers
- Domino’s Pizza Inc.: Is The Efficient Store Splitting Strategy Paying Off? – Major Drivers
StubWorld’s: Amorepacific’s NAV Discount Plumbs New Multi-Year Low
- A double dose of StubWorld this week: both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels.
- Preceding my comments on Amorepacific are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (July 26)
- China’s National Team was steadily buying ETF’s during and after the Third Plenum. Southbound Connect Flows continue to be positive during July.
- Smoore International Holdings (6969 HK) , Xinjiang Goldwind Science & Technology (2208 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK) benefited from positive news sentiment this week.
- Chow Tai Fook Jewellery (1929 HK) and ASM Pacific Technology (522 HK) suffered on negative news, while Meituan (3690 HK) continued its pullback in concert with the retail food sector.
[Meituan (3690 HK, BUY, TP HK$160) TP Change]: Resilient Catering & Eased Competition Support Growth
- We expect Meituan’s C2Q24 rev. and non-IFRS NI to be 0.7% and 12.3% higher than cons, driven by resilient catering demand and eased competition.
- We expect Meituan in-store OPM improve to 33%/35% in 2Q24/2H24 supported by increasing commission rate and cutting BD cost.
- We maintain the stock as BUY rating and raise TP by HK$4 to HK$160/share to factor in the better profitability.
Netflix Inc.: Expanding Content Library & Global Reach For Continued Global Dominance! – Major Drivers
- Netflix reported its financial performance for the second quarter, highlighting key metrics that provide insights into its current standing and future direction.
- The company reported earnings per share of $4.88, exceeding Wall Street’s expectation of $4.74.
- Revenue for the quarter stood at $9.56 billion, slightly above the anticipated $9.53 billion.
EQD | WHAT IF The NIFTY Starts to Pullback This Week?
- The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
- While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
- Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.
Omnicom Group: A Tale Of Digital Transformation and Technology Integration! – Major Drivers
- Omnicom recently presented its results for the second quarter of 2024, highlighting a mix of positive dynamics coupled with the challenges inherent in a complex operational landscape.
- One notable strength in the results is the recorded 5.2% organic growth, spearheaded by a formidable 6.3% growth in the U.S. market.
- This growth was primarily driven by robust performances in advertising, media, and experiential disciplines.
Mattel Inc’s Possible Acquisition By LVMH Backed L Catterton – What Is The Expected Valuation & The Deal Rationale?
- Mattel, Inc. experienced a significant boost in its stock price after news surfaced that the private equity firm L Catterton had made a takeover bid for the toy manufacturing giant.
- This development has attracted the attention of investors and fueled discussions about potential changes in the toy industry’s landscape, especially in relation to its long-time rival, Hasbro.
- Let’s delve into Mattel’s business operations and explore the potential valuation it could achieve through this deal.
BWMX: 2Q Review: Managing Into the Positives; Reiterate Buy, $22.50 PT
- We are reiterating our Buy rating and $22.50 price target and slightly raising our projections after Betterware registered below consensus 2Q24 results, but reiterated their 2024 guidance.
- Further, while we view the 2Q miss as driven by product shortages and shipping issues which are, in the near-term, somewhat out of management’s control, we believe there were more than enough key positives, from continued turn in orders and top line at Betterware Mexico, further double-digit gains at JAFRA Mexico, earlier than expected turn at JAFRA USA and the start of expansion into the United States, for us to remain positive on BWMX and, with a dividend yield of over 9% to reiterate or Buy rating and $22.50 price target.
D.R. Horton Inc.: Efficient Land Development Strategy & Other Major Drivers
- D.R. Horton’s third-quarter 2024 earnings reflect the company’s ability to navigate a complex market landscape impacted by inflation and raised mortgage interest rates.
- Despite headwinds, the company managed a 5% increase in earnings, with a consolidated pretax income growth of 1% to $1.8 billion that could appeal to potential investors seeking steady performance.
- A vital positive from the results lies in D.R. Horton’s proven record of cash generation, producing $972 million from homebuilding operations within the first nine months ended June 30.
Domino’s Pizza Inc.: Is The Efficient Store Splitting Strategy Paying Off? – Major Drivers
- Domino’s Pizza presented their Q2 2024 earnings wherein several key developments were noted that provide both an encouraging and concerning insight for investors.
- Encouragingly, the Hungry for MORE strategy adopted by Domino’s seems to be generating positive results, as evidenced by the consecutive-quarter growth in US comp performance driven by profitable order count growth, positive order counts across its delivery and carryout businesses, as well as across all income cohorts.
- The company also reported an improvement in its international comps and consistent earnings in line with expectations.
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