In today’s briefing:
- BYD Company: Moves to Top Auto Holding in EM
- Pinduoduo (PDD US): Deciphering Massive 1Q Beat
- Challenger Technologies (CHLG SP): Loo Family/Dymon Asia’s Skinny Unconditional S$0.56 Offer
- Golf Digest Online (3319 JP) – Follow-Up Q1 FY2023/12
- Challenger Tech’s Derisory Unconditional Offer
- How Long Will Small Modifications Continue, Avoiding Discussion of the Essential Issues?
- NFC Indonesia (NFCX IJ) – From O2O to Clean Energy on Two Wheels
BYD Company: Moves to Top Auto Holding in EM
- Investment levels in BYD Company Limited H Shares have reached record highs among active Emerging Market funds.
- On a fund level, between 10/31/2022 and 04/30/2023, 22 funds opened new positions in BYD, led by Vontobel MTX Sustainable (+2.4%) and Putnam Emerging Markets (+1.95%).
- BYD has risen up the ranks to become the most widely held and largest weight in the autos sector, surpassing Kia Corp and Mahindra & Mahindra over the last 2-years.
Pinduoduo (PDD US): Deciphering Massive 1Q Beat
- 1Q massive beat was driven by TEMU, higher-than expected take rates and other income, in order of importance.
- We remain confident PDD’s China online marketplace business will face increasing growth headwinds, but also acknowledge that TEMU has been growing on track with lower-than-expected losses.
- Earnings growth from PDD’s domestic business will be largely offset by losses incurred by TEMU for 2023. Strong 1Q has not fundamentally changed deceleration trend of full-year bottom-line growth trajectory.
Challenger Technologies (CHLG SP): Loo Family/Dymon Asia’s Skinny Unconditional S$0.56 Offer
- Challenger Technologies (CHLG SP) has disclosed a voluntary unconditional offer from Dymon Asia and the Loo Family at S$0.56 per share, a 1.8% premium to the undisturbed price (29 May).
- The little to no offer premium will leave minorities aggrieved. Hitting the 90% compulsory acquisition threshold implies a minority acceptance rate of 31.3%. The offer has not been declared final.
- The offer is set to follow the recent SGX voluntary unconditional offer playbook – a lowball offer followed by declaring the offer final after a cursory bump.
Golf Digest Online (3319 JP) – Follow-Up Q1 FY2023/12
- On May 4, GOLFTEC announced the launch of “SkyTrak+,” a premium version of the award-winning and No.1 best-selling consumer launch monitor, now offering tour level accuracy and performance at a price that is still only a fraction of the top-ofthe-line commercial-use product.
- Having largely completed the integration of SkyTrak business during the 1Q, the GOLFTEC ANYWHERE initiative is now going into full swing.
- Since our 4Q FY22/12 Follow-up Report, GDO’s share price has declined another 12.7%, the decline from the peak now equal to the -64% seen in the case 1 shown below.
Challenger Tech’s Derisory Unconditional Offer
- Consumer electronics retailer Challenger Technologies (CHLG SP) has announced a voluntary unconditional cash offer of S$0.56/share. The Offer price has not been declared final.
- The Offeror is led by Dymon Asia Private Equity and Challenger’s CEO Loo Leong Thye, who collectively hold 54.37%.
- Including other Loo family members and additional irrevocables, there is a high probability Challenger breaches the public float at the conclusion of the offer and be suspended.
How Long Will Small Modifications Continue, Avoiding Discussion of the Essential Issues?
- The number of workers expected to be in short supply could further expand if parameters change, such as decrease in working-age population due to further decline in the birth rate.
- Even if the current foreign technical internship system relaxes the “no change of employer” restriction somewhat, changing the status of residence to permanent residence has not been points of discussion.
- Government has avoided discussions that lead to the acceptance of foreign nationals based on permanent residency and as a result, the problems of population decline and worker shortages have worsened.
NFC Indonesia (NFCX IJ) – From O2O to Clean Energy on Two Wheels
- NFC Indonesia (NFCX IJ) provides exposure to Indonesia’s O2O ecosystem as a technology-driven digital product aggregator, FMCG supplier, and advertiser covering modern trade, general trade, and e-commerce.
- The company provides screen-based iCloud-enabled indoor advertising across mini-markets and increasingly for general trade. This provides a high-margin recurring income base which only currently covers 50% of mini-markets currently.
- NFCX is the current leader in the 2W EV market in Indonesia through its Volta brand, with the most extensive battery swapping buildout, and with further capacity expansion to come.
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