In today’s briefing:
- The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
- Kirin Looks To Take Blackmores Private
- Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
- Alibaba Cloud Slashes Prices to Spur Revenue Growth Before Possible IPO
- JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
- Blackmores (BKL AU): Kirin’s Binding A$95.00 Offer
- Tianneng Power (819): Value Trap?
- Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29
- GTX: Q1 Sets Growth in Motion
The Fast Retailing (9983) Selldown Conundrum – Not Now, But Soon… Then For A Long Time
- Fast Retailing (9983 JP) announced Q2 earnings two weeks ago. Revenues were good. OP was good. And the company raised full-year forecasts for Sales, OP, Pre-tax, and Net Profit.
- The stock popped sharply. It isn’t “cheap” but it is under-owned, actively. And revenues up 20%yoy is a very good look.
- The Conundrum: the more active investors decide they like it, the more there is to sell. That creates interesting opportunities.
PCOMP Index Rebalance Preview: MPI Tender Offer Opens Up an Index Spot
- Based on data to the close on 27 April, we do not expect any changes to the Philippines Stock Exchange PSEi Index (PCOMP INDEX) at the August rebalance.
- However, the Metro Pacific Investments Co (MPI PM) tender offer and voluntary delisting will open up an index spot that will need to be filled.
- At the current time, Bloomberry Resorts (BLOOM PM) is the highest ranked non-index constituent and is the most likely replacement.
Kirin Looks To Take Blackmores Private
- Japan’s Kirin Holdings (2503 JP) has proposed taking Aussie vitamin play Blackmores Ltd (BKL AU) private by way of a Scheme at A$95/share.
- That’s a 23.7% premium to last close, and represents 23.1x LTM December 2022 EBITDA.
- Irrevocables are 18% of shares out. This Scheme requires clearance from ACCC, FIRB – and China’s SAMR.
Kirin’s Bid for Blackmores: Leveraging Regulatory Expertise to Enter China’s Supplement Market
- Kirin Holdings (2503 JP) is eyeing the vitamin game with a proposal to buy Blackmores at AU$95 per share, representing a 23.7% premium over the stock’s most recent closing price.
- Blackmores Ltd (BKL AU)‘s expertise in navigating China’s stringent regulations could be the missing piece for Kirin to gain access to the lucrative supplement market in China.
- Our main concern is Kirin’s history of unsuccessful overseas business acquisitions, particularly outside of its core beer business.
Alibaba Cloud Slashes Prices to Spur Revenue Growth Before Possible IPO
- Alibaba Group Holding Ltd. slashed prices for its core cloud services by as much as 50% and offered free trials of some cloud products for as long three months, fueling competition in an already crowded market.
- Through the price cut, Alibaba Cloud hopes to make the cost of its cloud services significantly lower than costs offered by other data centers
- The valuation of cloud companies is generally based on the price-to-sales ratio rather than the price-to-earnings ratio
JVC Kenwood (6632) – After Two Banner Years, Earnings to Fall, but Large Buyback For 6mos
- Today, JVC KENWOOD (6632 JP) announced earnings, its forecast for this next year, and the outlines of its new Mid-Term Management Plan.
- That plan has the run to 2025 seeing sales rise slightly, Operating margins rising slightly. EBITDA margins at last year’s level or better, and Operating CF like last year.
- They also announced a buyback which they hoped would help them boost ROE and PBR to 1.0x as quickly as possible. The TSE pressure is working.
Blackmores (BKL AU): Kirin’s Binding A$95.00 Offer
- Blackmores Ltd (BKL AU) has entered a binding proposal with Kirin Holdings (2503 JP) at A$95.00 per share, a 23.7% premium to the undisturbed price (16 April).
- The offer is attractive. Marcus Blackmore, the largest shareholder, will vote in favour of the offer. Regulatory approvals should be forthcoming.
- The scheme meeting is in July. At the last close, the gross and annualised spread for a late August payment is 0.8% and 2.2%, respectively.
Tianneng Power (819): Value Trap?
- Tianneng Power International (819 HK) is a supplier of Chinese EV 2-wheelers and has enjoyed decent growth in the past few years.
- The correlation of top-line growth with its customers suddenly turned negative, a warning sign.
- Is it really cheap at 0.6x PBV? Maybe not, given the current status and the lead time before the recycling business is fully operational.
Even Though the June AGM Was Spread over 4 Days, 26.4% of the Companies Were Concentrated on June 29
- This year, 26.4% of companies will hold AGMs on June 29. The trend will continue, with 1/4 companies holding AGMs on the day before the last business day of June.
- Electronic provision of shareholder meeting materials (3-4 weeks in advance) and electronic voting platforms for institutional investors progressed, mainly for prime market listed companies.
- The mismatch between supply and demand continues, with only 26.9% of companies providing English translations of business reports (materials for AGMs), a much-needed service for global institutional investors.
GTX: Q1 Sets Growth in Motion
- GTX benefited from steady order rates and product mix in the first quarter allowing the Company to surpass initial expectations. Automakers have increased production levels as semiconductor availability has improved.
- For GTX, an expanded product offering beyond purely turbochargers is fueling revenue growth
- GTX reported sales of $970 million in the first quarter of 2023 compared to $898 million in the fourth quarter of 2022. The improvement in results was related to demand
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