In today’s briefing:
- Cafe De Coral (341 HK): Immediate Upside
- Luxottica Buys Washin Optical, Paris Miki Next?
- Shiseido (4911 JP): 1Q24 Results Beat; Recovery On Track
- China Consumption Weekly (13 May 2024): Guangzhou Auto, NIO, CALT, Kuaishou, Trip.com, Seres
- Raising ROE May Require Raising Proxy Voting Guidelines
- TSLA: Chinese EV Tariffs?＄＄＄
- GoTo Gojek Tokopedia (GOTO IJ) – Metamorphosis
- Johnson Controls International: A Tale Of Acceleration in Orders and Pipeline Growth! – Major Drivers
- TBO Tek IPO Trading – Has One of the Highest Subscription Rates so Far This Year
- Investors Flock Back Into Commodity Funds & New Cocoa Narrative
Cafe De Coral (341 HK): Immediate Upside
- Cafe De Coral Holdings (341 HK) share price never really rebounded post COVID despite its operating numbers gradually improving.
- Haidilao International Holding (6862 HK) share price has rallied along with the Hang Seng Index (HSI INDEX) and Hang Seng China Enterprises Index (HSCEI INDEX) but not Cafe de Coral.
- Recent profit alert that, excluding pandemic subsidies, the group’s net profit will rise 470% YoY.
Luxottica Buys Washin Optical, Paris Miki Next?
- EssilorLuxottica has always played a long game in Japan but since 2018 the eyewear giant has been investing in local production and a growing store network.
- As reported by Mark Chadwick,Travis Lundy and myself, Luxottica has a stake in Paris Miki Holdings (7455 JP) and the Japanese firm is a key strategic interest for EssilorLuxottica.
- That Luxottica is increasing its investments in Japan retail through acquisition is evidenced by its takeover of Washin Optical, a 70-store eyewear chain, last month.
Shiseido (4911 JP): 1Q24 Results Beat; Recovery On Track
- Shiseido Company (4911 JP) reported 1Q24 results last Friday. Core operating profit declined less than expected at -10% yoy, and exceeded the management’s target.
- The beat was driven by robust growth in Japan, Americas, and EMEA, while China steadily recovered. Overall sales growth was 4% yoy in the quarter.
- As a reminder, the investment thesis for Shiseido is twofold: a recovering China mainly due to one-off concerns (nuclear wastewater), and a margin recovery story in Japan.
China Consumption Weekly (13 May 2024): Guangzhou Auto, NIO, CALT, Kuaishou, Trip.com, Seres
- The new energy vehicle producers’ ranks changed a lot in April.
- GAC began to sell batteries to outside new energy vehicle producers.
- Kuaishou’s GMV (Gross Merchandise Value) increased by 420% YoY during the Labor Day.
Raising ROE May Require Raising Proxy Voting Guidelines
- Although many institutional investors’ voting criteria apply the rule of “support the proposed appointment of top management director if one female director is nominated,” more in-depth examination should be conducted.
- Agenda based on TSE’s request isn’t easy to understand for all investors, and the current voting guidelines for domestic institutional investors make it unlikely that they will vote for it.
- The ISS ROE criteria will be raised next year, and companies may not raise ROE with bold shareholder returns until the voting guidelines for domestic institutional investors are also raised.
TSLA: Chinese EV Tariffs?＄＄＄
- Takeaways: Biden plans to quadruple US/EU tariffs on Chinese EV imports.
- This will further defend TSLA’s domestic beachhead: 1) 50% EV market share in the USA (No. 2: Ford 7% ) + 2) huge headstart over domestic auto incumbents in assembly line processes (Gigapress) & high manufacturing concentration .
- Together, this should result in superior economies of scale which translates into lower unit costs — increasingly important in a commoditizing US EV sector.
GoTo Gojek Tokopedia (GOTO IJ) – Metamorphosis
- GoTo Gojek Tokopedia (GOTO IJ) booked an encouraging set of 1Q2024 results which provided a first look at the new structure, whereby suddenly e-commerce became cashflow positive for the company.
- The company booked strong headline growth with core GMV increasing by +32% YoY, despite incentive & product spending decreasing by -31% YoY, whilst adjusted EBITDA losses fell -89% YoY.
- GoTo will drive growth less through incentives and more through innovative products, increasing the user base, and focusing on retention through its subscription products, with fintech becoming increasingly important.
Johnson Controls International: A Tale Of Acceleration in Orders and Pipeline Growth! – Major Drivers
- The second quarter performance for Johnson Controls was strong, with adjusted EPS coming in at the upper limit of company estimations.
- Johnson Controls managed to return to sales growth after experiencing a cybersecurity disturbance at the beginning of the fiscal year.
- Backed by productivity and the conversion of their higher-margin backlog, the company achieved robust margin expansion.
TBO Tek IPO Trading – Has One of the Highest Subscription Rates so Far This Year
- TBO Tek (0395045D IN) raised around US$186m in its India IPO, after pricing the deal at the top end of the range at INR920/share.
- TBO Tek is a global travel distribution platform. Its two-sided technology platform serves companies involved in the travel industry such as hotels, airlines, travel agencies and travel management companies.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.
Investors Flock Back Into Commodity Funds & New Cocoa Narrative
- Investors Flock Back Into Commodity Funds Investors are increasingly flocking to commodity funds again.
- A net €353 million flowed into funds from the Morningstar Broad Basket Commodities category in Europe in April.
- This was by far the best month for the category in over two years.
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