In today’s briefing:
- [JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
- Nextage (3186): One Analyst, Two Valuations, Both Wrong
- Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap
- Brainbees (FIRSTCRY IN): First Results Fail to Cheer. Lock-In Expiry May Test Stock Resilience
- Midea A/H Listing – Thoughts on A/H Premium and past A/H Listings
- Didi Global Q224 Results: EBITA Margin Up | OpCF Still Strong | But Growth Slowed Noticeably
- Li Auto (LI US): 2Q24, Look at Monthly Deliveries, But Not Quarterly Revenue
- Shortlist of High Conviction Philippines Equity Ideas – September 2024
- Las Vegas Sands Corp.: Competitive Positioning and Market Recovery Dynamics Driving Our Optimism! – Major Drivers
- Deckers Outdoor Corporation: What Are Its Latest Brand and Market Expansion Strategies? – Major Drivers
[JAPAN ACTIVISM] Murakami Group Now 19+% on Exedy (7278) – LOTS of Room Left To Run
- In late May, Toyota Group member Aisin (7259 JP) announced it would sell its 37% stake in Exedy Corp (7278 JP) . The market dropped. But that was the opportunity.
- On 30 May, I said “Buy the deal, buy in the market. It’s cheap and vulnerable.” It’s up 21.5% since (the day after). Peers are down 15-20%.
- The company completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There’s LOTS of cash left.
Nextage (3186): One Analyst, Two Valuations, Both Wrong
- Simply Wall Street published an article on Aug 20, 2024, suggesting the fair value of Nextage was ¥1,772 or 16% below the previous day’s closing price.
- Yet, on the Simply Wall Street website’s stock page for Nextage, updated on August 26, they calculate the fair value at ¥5,726, or 189% above the close on Aug 19.
- Both cannot be right. Here’s an interesting window into how markets mis-price stocks.
Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap
- Historical valuation affirms that Zhongzheng is the cheapest it has been in the past 10 years
- Chart analysis is to compliment our recent report Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play published yesterday
- Our TP of HKD12.5 is based on FY25 PE of 5x. This implies an UPSIDE POTENTIAL of 33%. It also delivers a dividend yield of ~9% at current prices.
Brainbees (FIRSTCRY IN): First Results Fail to Cheer. Lock-In Expiry May Test Stock Resilience
- BrainBees Solutions (FIRSTCRY IN) reported marginal decline in 1QFY2025 revenues and GMV (India operations) versus previous quarter, though both were up 17% YoY; fell short of market expectations.
- Key operating metrics for India business too were soft with Average Order Value slipping both on a QoQ and YoY basis, impacting GMV growth and segment margins.
- With 0% promoter holding, nearly 30%-50% shares could possibly start trading post lock-in expiry and this could test the stock’s resilience. Softbank Group(9984 JP), the biggest stake holder, owns 19.99%.
Midea A/H Listing – Thoughts on A/H Premium and past A/H Listings
- Midea Group Co Ltd A (000333 CH) aims to raise up to US$3bn in its H-share listing, as per media reports.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the company and deal background in our previous notes. In this note, we talk about the past A/H listing and possible premiums.
Didi Global Q224 Results: EBITA Margin Up | OpCF Still Strong | But Growth Slowed Noticeably
- Estimated take rate up vs year ago and vs Q124, and EBITA margin turned +ive
- However, revenue growth in core China market slowed considerably in Q224
- Cash Flow and Liquidity both appear ample, little pressure to raise new funds
Li Auto (LI US): 2Q24, Look at Monthly Deliveries, But Not Quarterly Revenue
- Monthly deliveries recovered to the 2023 level in the three months – June, July, and August 2024.
- Li Auto’s deliveries growth outperformed the China NEV market size in July.
- We set the price target at US$26.90, which is 38% above the market price.
Shortlist of High Conviction Philippines Equity Ideas – September 2024
- We are slowly building out a high-conviction coverage of ideas for the mid and small-caps in the Philippines.
- We set criteria for high ROCE, reasonable growth (10-15% YoY), strong balance sheets, and reasonable capital allocation (dividend yields), all ingredients for being multi-baggers.
- We like Ginebra San Miguel (GSMI PM), The Keepers Holdings (KEEPR PM), and DigiPlus Interactive (PLUS PM). We are building our library and will cover more names in the future.
Las Vegas Sands Corp.: Competitive Positioning and Market Recovery Dynamics Driving Our Optimism! – Major Drivers
- The latest financial results from Las Vegas Sands reflect a company navigating a complex landscape with both successes and ongoing challenges.
- The corporation, which is heavily invested in both Macao and Singapore, is experiencing different dynamics in these markets.
- These factors present a balanced view of the company’s performance and ongoing strategies.
Deckers Outdoor Corporation: What Are Its Latest Brand and Market Expansion Strategies? – Major Drivers
- Deckers Brands delivered a commendable performance in the first quarter of fiscal 2025, with a commendable revenue growth of 22% reaching $825 million.
- This surge in revenue is significantly supported by the enhanced gross margin, which impressively improved to 56.9%, accompanied by a robust 87% increase in diluted earnings per share to $4.52, compared to the same period last year.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
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