In today’s briefing:
- Bikaji Foods International IPO – Spicy Snacks
- KOSPI200 Index Rebalance Preview: Potential Changes, Excess Volumes & Pre-Positioning
- A Pair Trade Between Orion Holdings and Orion Corp
- Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
- Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
- Japanese Cosmetics: Trading Around Q3 Earnings
- Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety
- Giant Biogene IPO Trading – Demand Was Relatively Better but Still Weak
Bikaji Foods International IPO – Spicy Snacks
- Bikaji Foods (BIKAJI IN), an ethnic snacks company, is looking to raise approximately US$107m in its India IPO.
- Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs, frozen food, mathri range and cookies.
- In this note, we look at the company’s past performance.
KOSPI200 Index Rebalance Preview: Potential Changes, Excess Volumes & Pre-Positioning
- With the review period complete, we see 1 high probability change and 1 lower probability change for the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in December.
- We estimate passive trackers will need to trade over 10 days of ADV on the high probability names. There are indications that there are pre-positions built on the stocks.
- With short-sell eligibility flipping post implementation of the changes, a lot of pre-positions will be unwound prior to implementation and there will be trading opportunities on the reverse side.
A Pair Trade Between Orion Holdings and Orion Corp
- In this insight, we discuss a pair trade between Orion Holdings (001800 KS) (go long) and Orion Corp (271560 KS) (go short).
- Orion Holdings has a dividend yield of 4.6% versus 0.7% for Orion Corp. For the value investors that seek higher dividends, Orion Holdings is more attractive versus Orion Corp.
- We believe the price gap between these two stocks have widened too much in the past several months and this gap is likely to decrease again.
Xpeng (9868.HK, XPEV): Painful Year, but Payoffs for Technology Improvements Ahead
- After a 86% decline on share price YTD, we believe it’s time to revisit Xpeng.
- Having gone through all the negatives which led to Xpeng’s underperforming vs peers, we believe the market has overreacted, while the company’s advantages/technology improvements have been ignored.
- After 4 months of sales decline, company fundamentals would bottom out from November onwards with G9 starting to speak for itself.
Z Holdings (Neutral) – Q2 22 Results Reaction: Ad Sales Weak but LINE Accounts Hold Up
- Ad sales were weaker than we expected and the company has revised full-year guidance for that business down. That is not surprising in light of the macro environment
- But it also implies potential ad revenue erosion YoY in H2 which we have never seen before. Even at the worst of the Covid crisis, ad revenue growth was positive
- Management appears more confident in hitting FY22 EBITDA targets as it has room to maneuver on the timing of investment spending but we think FY23 targets are looking tougher
Japanese Cosmetics: Trading Around Q3 Earnings
- A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses
- Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
- If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.
Save Foods Inc.: A Uniquely Positioned Small-Cap In Food Safety
- This is our first research note on Save Foods Inc.
- The company is a distinguished player within the field of developing green solutions for the food industry in order to improve food safety and increase shelf life.
- With a rising number of quality inspections faced by food companies, increased awareness of foodborne illnesses, and the necessity to avoid food contamination, Save Foods’ offerings are in high demand.
Giant Biogene IPO Trading – Demand Was Relatively Better but Still Weak
- Giant Biogene (GB) raised around US$70m by pricing its HK IPO at the low-end.
- GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
- We had looked at various aspects of the deal in our previous note. In this note, we will talk about the demand for the deal and other trading dynamics.
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