In today’s briefing:
- S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
- A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide
- STTF Index Rebalance: The Widening Emperador Spread
- Trial Holdings IPO: Valuation Thoughts
- ECM Weekly (4th Mar 2024) – Tokyo Metro, Mixue, Xtalpi, Bharat InvIT, Renesas, ITC/BAT, Precinct
- 3/4 of the Companies Are Giving up the Opportunity to Communicate Their Value to Overseas Investors
- Carvana Co: Initiation Of Coverage – AI & 5 Major Growth Drivers! – Financial Forecasts
- Altria Group: Promotion Of Smoke-Free Products & 5 Other Factors Driving Growth! – Financial Forecasts
- Wayfair Inc: Innovation In Customer Experience & Loyalty Programs Revolutionizing Growth? – Major Drivers
- H1 FY24 a milestone result
S&P/ASX Index Rebalance (Mar 2024): Changes, Flows, Impact, Shorts & Positioning
- There is 1 change for the S&P/ASX20 Index, 2 changes for the S&P/ASX100 Index, 4 changes for the S&P/ASX200 INDEX and 14 adds/10 deletes for the S&P/ASX300 Index in March.
- The largest impact is expected on the changes to the S&P/ASX 200 (AS51 INDEX) while flows are large among changes to the S&P/ASX 20 Index and S&P/ASX 100 Index too.
- There has been a steady increase in cumulative excess volume for most stocks but there are a few where there has been a spike recently.
A/H Premium Tracker (To 1 Mar 2024): Liquid AH Premia Still Wide
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND and NORTHBOUND flows net positive. NB 5 weeks in a row. AH premia rebounded slightly. AH Premia are still wide on average. Premia curves should still shift flatter.
- Two Sessions seems like a good place to make positive public statements but recent speeches from the very top seem more oriented towards “The People Must Endure.”
STTF Index Rebalance: The Widening Emperador Spread
- The SPDR Straits Times Index ETF (STTF SP) will need to sell Emperador (EMI SP) at the close of trading on 15 March.
- Other global index trackers will need to sell Emperador (EMP PM) at the close on 15 March.
- There will be around US$55m to sell across both lines and varying liquidity has opened up a huge spread between the listings.
Trial Holdings IPO: Valuation Thoughts
- Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$236 million at the IPO reference price of JPY1,550 per share.
- We previously discussed the IPO in Trial Holdings IPO: The Investment Case.
- In this note, we discuss valuation. Our analysis suggests that Trial is attractively valued at the IPO reference price of JPY1,550. We would participate in the IPO.
ECM Weekly (4th Mar 2024) – Tokyo Metro, Mixue, Xtalpi, Bharat InvIT, Renesas, ITC/BAT, Precinct
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- On the IPO front, we took an early look at the possible summer 2024 listing of Tokyo Metro.
- For placements, there was another large selldown in Renesas Electronics (6723 JP), while ITC Ltd (ITC IN) could see one as well soon from British American Tobacco (BATS LN).
3/4 of the Companies Are Giving up the Opportunity to Communicate Their Value to Overseas Investors
- About half of the prime market companies were able to communicate to investors that they are aware of their cost of capital and are committed to share price conscious management.
- Half of the companies are reluctant to engage in constructive dialogue with investors, sustainable growth and medium-to-long-term improvement of corporate value, which is the concept of prime market listing criteria.
- A quarter of prime market listed companies disclosed in English. Since TSE requires disclosure of this information in Corporate Governance Report, disclosure in English of this document becomes more important.
Carvana Co: Initiation Of Coverage – AI & 5 Major Growth Drivers! – Financial Forecasts
- This is our first report on e-commerce player, Carvana.
- The company’s Fourth Quarter 2023 Earnings included an optimistic forecast regarding the company’s economic performance.
- The company’s fiscal year GPU (Gross Profit per Unit) augmented by nearly $1,000, setting a fresh record and exceeding their previous best in 2021.
Altria Group: Promotion Of Smoke-Free Products & 5 Other Factors Driving Growth! – Financial Forecasts
- Altria Group’s recent earnings call has raised important topics worth considering for investors.
- The company, known for its strong position in the tobacco industry, showed a clear intent to diversify into smoke-free product categories, such as heated tobacco, oral tobacco, and e-vapor.
- These steps are seen as a strategic move to cushion the company from declining cigarette volumes and broaden its consumer base, thereby improving its long-term growth prospects.
Wayfair Inc: Innovation In Customer Experience & Loyalty Programs Revolutionizing Growth? – Major Drivers
- Wayfair Inc., an American e-commerce company that sells furniture and home goods, reported their Fourth Quarter 2023 earnings.
- Wayfair recorded a 3% adjusted EBITDA margin, reflecting their third consecutive quarter of positive adjusted EBITDA and free cash flow.
- The company’s revenue base largely mirrored that of 2022, improving their free cash flow by over $1 billion in 2023.
H1 FY24 a milestone result
- Cash Converters International (ASX:CCV) is a consumer finance company operating as a service provider, owner and franchisor of second-hand goods and financial services stores in Australia and internationally.
- CCV has delivered a solid H1 FY24 with revenue growth of 34% to $191.5m (in line with RaaS $192.5) and EBITDA growth of 13% to $32.6m (15% ahead of RaaS $28.4) and NPAT of $9.8m (7% ahead of RaaS $9.2m).
- The gross loan book has grown 15% to $294m, which is all the more impressive as the business transitions away from SACC products due to regulatory change, more than offset by growth in all other products, domestically and internationally.
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