In today’s briefing:
- [JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
- Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
- Webtoon Entertainment (WBTN US) IPO: Valuation Insights
- L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
- Webtoon Entertainment IPO – Thoughts on Valuation
- KDDI and Lawson: Loyalty Points Just the Start
- Momentum Trading Opportunities In Agricultural Commodities
- COFCO Joycome (1610 HK): Brewing a Hog Cycle Upturn?
- Whirlpool Corporation: How Are The Global Home Remodeling Trends Expected To Benefit Them? – Major Drivers
- Tyson Foods: Is The Improved Live Performance and Supply-Demand Balance Here To Stay? – Major Drivers
[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
- Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
- Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
- My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%.
Pref-Centred Dividend Plays with Expanded ISA Tax Benefits in Value-Up Context
- Local stock market focuses on ISA tax benefits expansion; political push for higher tax-exempt limits seen as pivotal event.
- Investors expect dividend stocks to outperform due to ISA tax advantages: tax exemptions within limits and lower 9.9% taxation on excess amounts, boosting ISA-based equity investments.
- ETF influence declining; ISA tax benefits may boost dividend plays, heightening interest in preferred stocks tied to efforts to redeem them, impacting equity costs.
Webtoon Entertainment (WBTN US) IPO: Valuation Insights
- Webtoon Entertainment (WBTN US) is a global storytelling platform. Webtoon has launched a Nasdaq IPO to raise US$270-315 million at a US$18.00 to US$21.00 price range.
- We previously discussed the IPO in Webtoon Entertainment IPO: The Bull Case and Webtoon Entertainment (WBTN US) IPO: The Bear Case.
- In this note, we outline our forecasts and valuation. Our valuation analysis suggests that Webtoon is attractively valued at the IPO price range.
L’Occitane (973 HK): No, PLP Is Not Getting A Back-End Bump
- In a long-awaited development, L’Occitane (973 HK) announced during the lunchbreak yesterday, a scrip alternative. Plus Pleasant Lake Partners (PLP) (3.25%) will accept the Offer (either in cash or scrip).
- This was positive news. And the market reacted accordingly, up ~1.0% in the afternoon session.
- One quirk in the doc was the perception those electing the scrip alternative may get a higher % in the unlisted Offeror. A back-end bump for PLP? (Hint: No).
Webtoon Entertainment IPO – Thoughts on Valuation
- Webtoon Entertainment (WBTN US) is looking to raise up to US$315m in its US IPO, down from an earlier reported float of US$500m.
- Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
- In our previous notes, we talked about the company’s historical performance and undertook a peer comparison. In this note, we share our thoughts on valuation.
KDDI and Lawson: Loyalty Points Just the Start
- KDDI will complete its acquisition of a 50% share in Lawson this month and the chain will then delist.
- KDDI is promising a rapid introduction of services and fresh ideas to leverage its new retail arm.
- It will begin by unifying premium loyalty point membership under the Ponta brand and offer new services that it hopes will help boost share. What out LY.
Momentum Trading Opportunities In Agricultural Commodities
- Corn futures show high potential for momentum trading, peaking in early-year gains and declining from June, matching seasonal harvest patterns in major producers like China and Brazil.
- Over the past five years, momentum trading in soybean futures outperformed other crops with average annual returns of USD 13,600, though 2024 saw significant losses reflecting its counter cyclical performance.
- Bearish outlook for corn in 2024 due to increased global production outlook from key regions, bearish shifts by asset managers, and USDA forecasts predicting lower season-average prices.
COFCO Joycome (1610 HK): Brewing a Hog Cycle Upturn?
- Cofco Joycome (1610 HK) is in a good position to benefit from the hog cycle upturn. China’s anti-dumping investigation into imported pork from the EU may also disrupt supply.
- Its average hog price has increased by 12.7% YTD and by 1.6% YoY for 5M24. Market hog price further surged by 10.4% in the week of 12-Jun from end-May.
- Its P/B of 0.78x is inexpensive at 1SD below the 5-year average. Its peers like Muyuan Foodstuff (002714 CH) and Wens Foodstuff Group (300498 CH) are also interesting.
Whirlpool Corporation: How Are The Global Home Remodeling Trends Expected To Benefit Them? – Major Drivers
- Whirlpool Corporation released its first quarter 2024 results, showcasing a mixed performance amid challenging macroeconomic conditions.
- While the company managed to meet its expectations, certain segments faced softness, particularly in the North American market.
- The earnings highlighted strategic moves including the completion of the EMEA transaction and a promotion price increase in North America, aimed at bolstering the company’s market position and financial health.
Tyson Foods: Is The Improved Live Performance and Supply-Demand Balance Here To Stay? – Major Drivers
- Tyson Foods reported a robust performance for the fiscal second quarter of 2024, showcasing notable improvements in operational efficiencies and a diversified portfolio.
- The company credits its success to their focused approach on operational excellence and a strategic multi-protein offering, which benefits from a variety of market conditions.
- However, peculiar challenges in different segments and the underlying uncertainty in forecasted trends indicate a complex road ahead.
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