In today’s briefing:
- Aristocrat Leisure: Recent Dip in Last 90 Days Opens an Entry Point for This Uncut Gaming Tech Gem
- A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
- Interiors Long-Term Growth in Japan a Plus for Nitori
- WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement
Aristocrat Leisure: Recent Dip in Last 90 Days Opens an Entry Point for This Uncut Gaming Tech Gem
- We have been bullish on the prospects of the Aussie gaming tech maker’s real world valuation in the light of its outstanding performance.
- The company’s relatively low institutional holding profile suggests its visibility is limited.
- WE put a one year PT on the stock at AUD$45 vs its current trade at AU$33 because it outperforms industry peers in ROE among other reasons.
A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
- Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
- If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
- If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.
Interiors Long-Term Growth in Japan a Plus for Nitori
- Growth in the Japanese home interiors and furniture markets is set to continue long-term.
- At present, just a handful of brands have any major presence led by Nitori Holdings (9843 JP) which continues to expand market share.
- With multiple formats, Nitori looks set to continue to dominate but faces competition from unlikely quarters, especially Yamada Denki (9831 JP).
WM Motor Reverse Merger and Placement – The US$2bn Merger and US$500m Planned Placement
- On 11th Jan 2023, WM Motor Technology Co Ltd announced its intention to merge with Apollo Future Mobility (860 HK) .
- WM Motor failed to list in Hong Kong last year and this is essentially its attempt to undertake a reverse merger at a valuation well below its previous funding rounds.
- In this note, we will talk about the deal dynamics and take an early look at its implications.
💡 Before it’s here, it’s on Smartkarma
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