In today’s briefing:
- Ather Energy Pre-IPO Tearsheet
- Ola Electric’s Negative Noise. Maruti Suzuki’s Electric Plans: India EV Update
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 20)
- Geo Holdings (2681 Jp) – Q1 FY3/25 Results Update
- Will the Challenges that Have Taken a Decade to Make Progress Finally Be Resolved?
Ather Energy Pre-IPO Tearsheet
- Ather Energy (1207922D IN) is looking to raise about US$536m in its upcoming India IPO. The deal will be run by HSBC, Nomura, JM Fin and Axis.
- Ather is a pure play electric vehicle company in India designing and developing E2Ws, battery packs, charging infrastructure, associated software and accessories, also manufacturing battery packs and assembling E2Ws in-house.
- According to CRISIL, Ather was the third largest player by volume of E2W sales in FY24.
Ola Electric’s Negative Noise. Maruti Suzuki’s Electric Plans: India EV Update
- Ola Electric (OLAELEC IN) reportedly faces challenges with poor product service, leading to dissatisfied customers. This underscores the urgency to improve its service infrastructure and restore brand trust.
- The Indian electric two-wheeler sector saw weak sales in August, following a robust July, with Ola experiencing a sharp decline in monthly volumes and a loss of market share.
- Meanwhile, Maruti Suzuki India (MSIL IN) is gearing up for a January 2025 EV launch and is preparing to establish a 25,000-unit charging infrastructure in advance.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 20)
- Asian ETF flows have been subdued during September as markets start to react positively to Fed rate cuts.
- Sands China (1928 HK) parent Las Vegas Sands (LVS US) continued to increase its stake as Macau tourists rise. Shenzhou Intl Group Holdings (2313 HK) is seeing increased China sales.
- Metallurgical Corporation of China Ltd (1618 HK) reported a decrease in new contracts for 1H24. Kuaishou Technology (1024 HK) early investor sold most of its remaining stake in the company.
Geo Holdings (2681 Jp) – Q1 FY3/25 Results Update
- Q1 FY3/25 earnings look negative at first glance, with both sales and operating profit falling. However, the details show strong demand for GEO HOLDINGS’ core second-hand fashion business and smartphone sales, helping gross profit increase.
- The key earnings drivers were a fall in sales (-6.2% YoY to ¥100.15bn) due to difficult annual comps from new games sales.
- However, GEO HOLDINGS’ core second-hand fashion business and smartphones enjoyed robust demand, thanks to new store openings at home and overseas.
Will the Challenges that Have Taken a Decade to Make Progress Finally Be Resolved?
- Without the driving force to generate cash flow in excess of the discount rate (cost of capital), there is not enough power to push stock valuations higher and higher.
- The fact that 8% ROE is the threshold at which valuations change means that investors consider the cost of capital for Japanese equities to be roughly 8% on average.
- Little progress has been made since 10 years ago, when the Ito Report advocated “shift to corporate value management with an awareness of capital efficiency” and “engagement of institutional investors.”
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