In today’s briefing:
- FineToday Holdings (289A JP) IPO: The Bull Case
- FineToday Pre-IPO – The Negatives – Growth and Margins Have Wavered
- LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon
- DigiPlus (PLUS PM): Brazil License And CasinoPlus Acquisition Game Changing Catalysts For The Future
- PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin
- [Trip.com (TCOM US, BUY, TP US$74) Target Price Change]: C3Q24 Review: Domestic Story Back in Focus
- SDOT: Sadot Group reports 3rd quarter 2024 financial and operating results which showed strong growth in commodity related revenues.
- Pinduoduo: Behind Its Efficiency Edge
- Amer Sports (AS US): An Engine for Anta Sports (2020 HK)
- Mamaearth’s Inventory Issue Could Be Bigger and Long Lasting
FineToday Holdings (289A JP) IPO: The Bull Case
- FineToday Holdings Co Ltd (289A JP) is a Japanese personal care business seeking to raise up to US$500 million. It will be listed on 17 December.
- FineToday has four product categories: Hair care, Skin care, Body care, and others. Hair care is the largest category, accounting for 49.0% of 9M24 revenue.
- The bull case rests on return to revenue growth, three-pronged growth strategy, top-quartile profitability and top-tier FCF generation.
FineToday Pre-IPO – The Negatives – Growth and Margins Have Wavered
- CVC Capital is aiming to raise over US$500m, via selling some of its stake in FineToday Holdings Co Ltd (289A JP) in Japan.
- FineToday (FT) is a beauty and personal care company in Asia offering a range of products, including hair care, skin care and body care products.
- In this note, we talk about the not-so-positive aspects of the deal.
LG Chem’s Tax Alarm: Pillar Two Tax Could Soar Next Year + LGES Block Deal on the Horizon
- The local market’s buzzing that LG Chem could face a 200-300 billion KRW tax hit from Pillar Two next year, with LGES ramping up U.S. production.
- LG Chem may be reconsidering its plan to sell 2% of its LGES stake, dropping ownership below 80%, shifting the tax burden to LGES instead of itself.
- Flagging this now—LG Chem’s tax burden looms. Consider shorting LGES or a long-short with LG Chem, plus prep for the 2T KRW block deal with the pre-disclosure process.
DigiPlus (PLUS PM): Brazil License And CasinoPlus Acquisition Game Changing Catalysts For The Future
- DigiPlus Interactive (PLUS PM) presented PSE Star investor day yesterday and briefly analyzed two game-changing catalysts from the call: a) CasinoPlus acquisition and b) Brazil license.
- The expected TAM associated with e-games/Bingo in Brazil is 250 bn pesos (4 bn USD), compared to the Philippines, which is currently cycling at 160 bn pesos (Q3 PAGCOR data).
- The stock trades at 7.8x FYPE with 15% of the market cap in cash and a 3.8% dividend yield (30% payout ratio) with a seasonal uptick in Q4 FY24.
PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin
- In 3Q24, PDD released strong revenue growth, but a flat margin.
- We believe, in 2025, PDD will continue to focus on growth rather than profit.
- We conclude an upside of 43% and a price target of US$167 for 2025. Buy.
[Trip.com (TCOM US, BUY, TP US$74) Target Price Change]: C3Q24 Review: Domestic Story Back in Focus
- TCOM reported C3Q24 revenue 1.4%/1.6% higher than our est./cons., non-GAAP operating income is 12.5%/5.4% higher than our est./cons., mainly due to strong domestic sales and efficient cost control.
- We expect revenue growth to accelerate in 4Q24 and 2025,backed by domestic travel recovery and steady overseas expansion.AI powered cost saving bringing extra leverage in margin is an additional positive.
- We keep the stock as BUY rating and raise TP to US$74/ADS.
SDOT: Sadot Group reports 3rd quarter 2024 financial and operating results which showed strong growth in commodity related revenues.
- In late 2022, the company began its evolution from a consumer-focused, U.S. restaurant business into a global, food-focused organization with two distinct business units.
- The company’s largest operating unit is Sadot Agri-Foods, which is a vertically integrated international food supply chain company engaged in trading and shipping sustainable food and commodities such as soybeans, wheat and corn.
- Sadot’s legacy restaurant business is currently in the process of being divested.
Pinduoduo: Behind Its Efficiency Edge
- We compared similar growth stage of Alibaba to Pinduoduo, when GMV of both platforms increase from RMB1 trillion to RMB4 trillion, to facilitate better understanding of efficiency edge of Pinduoduo.
- Contrary to consensus, Pinduoduo didn’t do better than Alibaba on OPEX (advertising expenditure in particular), but it did extract much greater value from the ecosystem via significantly higher take-rate.
- The findings highlight how Pinduoduo aggregate user traffic at surprisingly high cost to beef up merchant competition in terms of cost optimization and user acquisition, with Pinduoduo reaping greatest value.
Amer Sports (AS US): An Engine for Anta Sports (2020 HK)
- Contribution from Amer Sports (AS US) will rise to 5.1%, 7.2%, and 8.9% of Anta Sports Products (2020 HK)‘s earnings in FY24-26, making it increasingly important.
- Amer turned around sharply YoY in 3Q24 with a net profit of US$55.8m. Its gross margin sustained an uptrend, with excellent potential for business growth in Greater China.
- Positive guidance on FY25 outlook with a low-double-digit-to-mid-teens level revenue growth, further expansion in operating margin, and continuous cuts in net finance costs.
Mamaearth’s Inventory Issue Could Be Bigger and Long Lasting
- All India Consumer Products Distributors Federation (AICPDF) has again raised concerns about Mamaearth, claiming that distributors and retailers are stuck with around INR 300 crore worth of unsold products.
- The quantum inventory concern that distributors are raising is almost 5x of what Honasa has taken the hit.
- This could bring some serious repercussions on the company’s working capital and growth plans
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