In today’s briefing:
- Meidong: Insights from Call with the Management for H1 2022
- ESG Analysis: How Labor Issues and Unfair Practices Led to the Boycott of SPC SAMLIP CO.,LTD.
- Yamada Denki (9831) Buyback Progress Strong But Big Impact To Come
- KOSPI 200 December Rebalancing Safe Play
- Weekly Deals Digest (04 Sep) – Giordano, BYD, Link Net, MACA, Nitro, Nearmap, Leapmotor, Onewo
- Nikkei 225 Sep 2022 Review Update
- (Mostly) Asia-Pac Weekly Risk Arb Wrap: Nitro Software, MACA, Giordano, Link Net
- Macy’s Inc: Survival In A Challenging Macro Environment & Other Factors
Meidong: Insights from Call with the Management for H1 2022
- China MeiDong Auto (1268 HK) presents an excellent investment opportunity, trading at 13.3x/8.1x FY22/23e, post street estimate revisions downwards with a dividend yield of 6.0%/10% (assuming an 80% payout).
- China MeiDong Auto (1268 HK) ‘s integration of Starchase is progressing better than we expected, with metrics on inventory dramatically improving. We believe the management will focus on aftersales now.
- The company will join the EV bandwagon by collaborating on aftersales with players having operational (not financial) difficulties performing this service, presenting a good opportunity for the company.
ESG Analysis: How Labor Issues and Unfair Practices Led to the Boycott of SPC SAMLIP CO.,LTD.
- Protests against unfair labor exploitation and labor union suppression by workers continue gaining traction by civil society and leading to the boycott of SPC SAMLIP CO.,LTD(005610).
- France’s leading labor union organization, the CGT (Confédération Générale du Travail), held a rally in front of the Paris Baguette store in Paris condemning SPC partners’ unfair labor practices.
- Dunkin’s headquarters, run by SPC affiliate BR Korea Co, Ltd has been known to be engaged in unfair practices against franchisees.
Yamada Denki (9831) Buyback Progress Strong But Big Impact To Come
- In early May 2022, Yamada Denki (9831 JP) launched a GINORMOUS buyback program. I wrote about it suggesting the company meant business. The stock popped outright and vs Peers.
- Then it fell back, and has only recently started moving back up. Surprising given buyback dynamics but it may have been overhang. If so, that overhang should be gone now.
- And the stock is cheap, a chunk of the register is sticky, so this could get squeezier now.
KOSPI 200 December Rebalancing Safe Play
- Although not many, there are strong candidates for a safe play aimed at constituent change. Inclusion: Lotte Confectionery & Exclusion: Samyang Holdings
- Lotte Confectionery’s average daily market cap must fall by more than 30% to be pushed out of the borderline. Samyang Holdings’s market cap gap to the second-lowest one is 17%.
- The trading volume of these two is so small that a significant passive impact (relative to DTV) will likely occur. We should consider a little more aggressive approach, timing-wise.
Weekly Deals Digest (04 Sep) – Giordano, BYD, Link Net, MACA, Nitro, Nearmap, Leapmotor, Onewo
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments – Leapmotor (2007699D HK) and Onewo Space-Tech (ONEWO HK) are pre-marketing a US$1.5 billion and US$2.0 billion HKEx IPO, respectively.
- Event-Driven developments – BYD (1211 HK), Giordano International (709 HK), MACA Ltd (MLD AU), Nitro Software Ltd (NTO AU), Link Net (LINK IJ).
Nikkei 225 Sep 2022 Review Update
- The Nikkei 225 rebalance will likely be announced this week. I continue to be slightly off-kilter, expecting Nidec, SMC, and Oriental Land to replace Unitika, Oki Electric, and Toho Zinc.
- Others would expect Hoya to replace Maruha Nichiro instead of Oriental Land replacing Toho Zinc, but I think it Nikkei Sector balance may matter. It could go either way.
- Tactically speaking, cumulative volumes and Real World Float tell you how you might trade this.
(Mostly) Asia-Pac Weekly Risk Arb Wrap: Nitro Software, MACA, Giordano, Link Net
- There are 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- One new deal was discussed this week: Potentia’s rejected proposal for Nitro Software Ltd (NTO AU).
- Key updates took place for MACA Ltd (MLD AU), Giordano International (709 HK), and Link Net (LINK IJ).
Macy’s Inc: Survival In A Challenging Macro Environment & Other Factors
- Despite the increasingly difficult consumer environment, Macy’s delivered a decent quarterly result which also happened to be an all-around beat.
- Its $5.6 billion in quarterly net sales exceeded its projections, despite a 1.6% decline in comparable owned plus licenced sales.
- Elevated inventory levels within particular categories were caused by the high industry-wide inventory levels and the decline in consumer discretionary spending.
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