In today’s briefing:
- STI Index Rebalance Preview: Three Cheers for Emperador?
- Yum China Pursues Primary Listing Conversion On The HKEx
- Bright Scholar: Cheap Homecoming, Yet Limited Downside
- Oriental Land: Consensus Is Not in Touch with Reality
- Campus Activewear Amalgamation: Is It for Book Cleansing?
- Leapmotor IPO: The Bull Case
- China Tourism Group A/H Trading – Decent Support from Long-Only but Minimal Retail Participation
- Tapestry Inc: Digital Sales Performance
- Hyatt Hotels Corporation: Data-Driven Approach Through Knowland & Other Drivers
- Chinese Ecommerce Provider Bags 8-Digit Million Series B
STI Index Rebalance Preview: Three Cheers for Emperador?
- We expect Emperador (EMI SP) to be added to the FTSE Straits Times Index at the September rebalance after meeting the free float, market cap and liquidity requirements.
- As the lowest ranked current index constituent, we expect Comfortdelgro Corp (CD SP) will be deleted heaping pressure on the beleaguered stock with over 4 days of ADV to sell.
- Emperador (EMP PM) is an inclusion to the FTSE All-World Index and there is a lot to buy on that line from passive trackers at the close on 16 September.
Yum China Pursues Primary Listing Conversion On The HKEx
- Last week Yum China Holdings Inc (9987 HK) announced it has applied for voluntary conversion to a primary listing on the Hong Kong Stock Exchange.
- Should all necessary approvals from the HKEx be satisfied, Yum will become dual primary listed on the New York Stock Exchange and the HKEx.
- This regulatory process, facilitated by rules introduced by the HKEx over the past year, enables the de-listing of the ADRs and the smooth transition to a sole HK listing.
Bright Scholar: Cheap Homecoming, Yet Limited Downside
- Bright Scholar Education (BEDU US) (BSE), an operator of schools across China, the UK, and the US, received an Offer earlier this year from Huiyan Yang, the chairperson.
- Yang is offering US$3.32/ADS – adjusted for the recent reverse split – a 44% premium to the undisturbed price.
- Yang controls 92.5% of the votes. There is no shareholder vote on this transaction should a firm Offer unfold.
Oriental Land: Consensus Is Not in Touch with Reality
- With Q1 park attendance falling short of expectations, it seems unlikely that Oriental Land (4661 JP) will beat FY23 guidance as expected by consensus.
- The consensus medium outlook is also questionable as the management seems less keen on opening Fantasy Springs as soon as possible.
- At over 29.2x EV/consensus FY27 OP (56.5x at LSR-FY27-OP), on exaggerated medium-term growth targets, Oriental Land probably has more downside than some of the expensive tech names on the market.
Campus Activewear Amalgamation: Is It for Book Cleansing?
- Campus Activewear (CAMPUS IN) has received the court’s approval for amalgamation of Campus AI Pvt Ltd into the standalone entity.
- Amidst the plethora of positive rationale for the amalgamation, the one that stands out from the rest is the cleaning up of the books of campus activewear.
- With the amalgamation scheme, the company also gets rid of the negative capital reserve balance. Is this the only adjustment, or are there more things to clean?
Leapmotor IPO: The Bull Case
- Leapmotor (2007699D HK), a Chinese EV manufacturer, will start its listing hearing for a US$1.5 billion HKEx IPO this week, according to press reports.
- Leapmotor ranked fifth among the global pure-play EV companies and fourth among the pure-play EV companies based in China as measured by sales volume in 2021.
- The key elements of the bull case rest on a solid roadmap, executive capabilities, explosive growth, declining loss margin and declining FCF burn.
China Tourism Group A/H Trading – Decent Support from Long-Only but Minimal Retail Participation
- China Tourism Group Duty Free Corporation Limited (CDF) raised around US$2.4bn in its H-share listing in Hong Kong, after pricing its IPO at HKD158/share.
- 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 the trading dynamics.
Tapestry Inc: Digital Sales Performance
- Despite the difficult climate, Tapestry’s financial performance in the recent quarter was decent.
- It failed to meet revenue expectations of the Wall Street but managed to produce an earnings beat.
- AUR growth for handbags worldwide increased by about 20% due to this outstanding performance, intentional reductions in promotional activities, and tactical price increases.
Hyatt Hotels Corporation: Data-Driven Approach Through Knowland & Other Drivers
- Hyatt witnessed a strong recovery in group and business transient demand and saw strong levels of leisure demand.
- The management is on track to turn the high leisure demand into high rate realization, capitalize on fee increases, and enable margin expansion.
- The Hyatt management is adopting an increasingly data-driven approach and recently expanded their relationship with Knowland to deliver value across its portfolio.
Chinese Ecommerce Provider Bags 8-Digit Million Series B
- China-based Lazbao Group, an integrated service provider, has closed its series B round, raising “tens of millions of dollars.”
- Lazbao provides ecommerce services to Southeast Asia, offering supply chain management, ecommerce operations, warehousing, logistics, marketing, cross-border payments, and a digital enterprise resource planning system.
- It has operations in Indonesia, Thailand, the Philippines, Vietnam, and Malaysia.
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