In today’s briefing:
- China Consumption Weekly (9 Dec 2024): BYD, Geely, Li Auto, Seres, Xiaomi, Arawana
- Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
- Vishal Mega Mart IPO – Showcasing the Wrong Peers, Somewhat Limited Upside
- Mao Geping Cosmetics IPO Trading – Highest Demand for This Year
- LG Electronics India IPO Preview
- Trent Ltd (TRENT IN) | LGD Can Be the Next Catalyst
- Sarimelati Kencana PT (PZZA IJ) – Emerging from the Oven
- LG Electronics India Pre-IPO Tearsheet
- JAKK: Cautiously Optimistic in an Uncertain World; Reiterate Buy, $40 PT
- Dream International (1126 HK): Updates Postcard From Hong Kong
China Consumption Weekly (9 Dec 2024): BYD, Geely, Li Auto, Seres, Xiaomi, Arawana
- BYD’s deliveries grew by 68% YoY in November 2024, which provides a positive signal for the whole NEV (New Energy Vehicle) industry.
- In November, Seres’ sales volume increased by 27% YoY with NEV up by 55% YoY.
- Arawana, the top cooking oil producer, finished acquiring 11% of Lihua’s stock.
Sanrio (8136 JP) Placement: Price Likely Determined Today; What Next?
- The Sanrio (8136 JP) placement is likely to be priced today. With the stock 8.8% lower from undisturbed, expect a small discount to today’s close.
- The stock has traded as expected over the last 9 trading days – a sharp drop followed by a strong upward move and then profit taking.
- We expect there will be strong interest in the placement and oversubscription could lead to upside from here. Shorts have increased and will look to cover into the placement.
Vishal Mega Mart IPO – Showcasing the Wrong Peers, Somewhat Limited Upside
- Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
- Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
Mao Geping Cosmetics IPO Trading – Highest Demand for This Year
- Mao Geping Cosmetics raised around US$345m in its Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the trading dynamics.
LG Electronics India IPO Preview
- LG Electronics India is getting ready to complete an IPO in India in the next several months. The IPO offering size is expected to be about US$1.8 billion.
- LG Electronics (066570 KS) plans to sell 101.8 million shares, accounting for about 15% of the post-offer paid up equity capital shares of LG Electronics India.
- If LGEI is valued at US$13 billion, then an 85% of this stake would be worth US$11.1 billion, which would be worth more than LG Electronics’s own market cap.
Trent Ltd (TRENT IN) | LGD Can Be the Next Catalyst
- Trent Ltd (TRENT IN) is best positioned to capitalize on the growing market for lab-grown diamonds (LGD) and alter its business growth trajectory.
- LGD disruptions seen in other markets are unlikely to be seen in India due to the positioning of Jewellery in Household asset allocation.
- We also believe that Trent Ltd (TRENT IN) LGD potential is underrated while the impact on Titan Co Ltd (TTAN IN) is overrated.
Sarimelati Kencana PT (PZZA IJ) – Emerging from the Oven
- Sarimelati Kencana PT (PZZA IJ) has been hard hit over the last year by the impact of the boycott due to a perception of its Israel exposure.
- The company has focused on reducing its cost base over the past year and continued to build its higher-end Ristorante format, with the boycott impact lessening since June 2024.
- PZZA management maintains that it can hit profitability in 4Q2024, with this momentum continuing into 2025, with a target to increase its new formats helping to drive recovery.
LG Electronics India Pre-IPO Tearsheet
- LG Electronics (066570 KS) is looking to raise US$1.5bn+ via part-selling its stake in LG Electronics India IPO. The deal will be run by MS, JPM, Axis, BofA and Citi.
- LG Electronics India (LGEI) was the market leader in India in major home appliances and consumer electronics (excluding mobile phones) in terms of volume in 1Q25, as per Redseer Report.
- LGEI has been the number one player in this industry for 13 consecutive years (CY11-CY23) as per the value market share in the offline channel in India, as per Redseer.
JAKK: Cautiously Optimistic in an Uncertain World; Reiterate Buy, $40 PT
- We are reiterating our Buy rating, $40 price target and projections for JAKKS Pacific after meeting with company management.
- We believe, with easy 1H2025 comparisons, the initial strength of the Moana 2 premiere, a continued focus on key emerging growth drivers (international, ABG collaboration) and basic blocking and tackling, JAKKS is well positioned to continue to drive upside.
- Further, with the company debt free and registering material free cash flow, there remains opportunities to return capital to investors.
Dream International (1126 HK): Updates Postcard From Hong Kong
- We met with the management of Dream International (1126 HK) on our trip to Hong Kong and summarize our major takeaways.
- The Plush Toy segment continues to experience growth driven by Disney revenues, but the Plastic Toys segment continues to be plagued by destocking.
- Despite a 15% YoY earnings decline on our numbers, the stock trades at 5x FY24 PE with an 11.0% dividend yield and 40% of the market cap in net cash.
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