In today’s briefing:
- China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
- CTG Duty Free H Share Listing: Valuation Insights
- Rakuten: Turning a Corner
- U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials
- Keurig Dr Pepper Inc.: Atypique Distribution Rights & Other Developments
- Monster Beverages: New Product Launches & Other Drivers
- Clorox Co.: Innovation-Led Growth & Other Drivers
China Tourism Group A/H Listing – Discount Is Enticing at the Low-End
- China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
- As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
- In this note, we talk about the deal pricing and run the deal through our ECM framework.
CTG Duty Free H Share Listing: Valuation Insights
- China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
- In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
- Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.
Rakuten: Turning a Corner
- The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
- However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
- With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.
U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials
- This is now the third Int’l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
- Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
- Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.
Keurig Dr Pepper Inc.: Atypique Distribution Rights & Other Developments
- Keurig Dr Pepper continues to battle inflationary challenges with price actions but its brand strength has been its biggest asset in the current environment.
- With the higher prices, the company was able to surpass Wall Street expectations in terms of both, revenues as well as earnings.
- Keurig Dr Pepper is on track to achieve 1 million linked households in the coming years thanks to its ongoing smart technology development, which is opening up new platforms like smart car delivery for pods.
Monster Beverages: New Product Launches & Other Drivers
- Monster Beverages continues to witness a rise in the demand for its energy drinks and this helped the company surpass Wall Street expectations in terms of revenues.
- In the quarter, Monster experienced a significant rise in the cost of sales that resulted in a material reduction in gross profit.
- Among major updates, Monster Beverage has recently released its foremost malt beverage, alcoholic flavored under the Monster brand.
Clorox Co.: Innovation-Led Growth & Other Drivers
- Clorox Co has navigated via challenging operating conditions and it failed to meet Wall Street expectations in terms of revenues.
- As a part of the company’s IGNITE strategy, it has announced a streamlined operating model for creating a faster, simpler company.
- One of the best ways to expand margins for Clorox has been its direct-to-consumer strategy which is gradually paying off.
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