In today’s briefing:
- Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.
- Fujitsu General (6755 JP): Fujitsu (6702 JP) Supports a Light Tender Offer
- EQD | Meituan (3690 HK) In the Bear’s Grip – Popular Option Strategies and Top Trades
- Bloks Group Likely To Price IPO at High End of Range: What To Expect From First Trading-Day?
- Fosun Tourism (1992.HK) – The Logic Behind the Share Buyback and the Outlook
- BYD (1211 HK): Vehicle Deliveries Up by 40% in 2024
- AutoZone Inc.: A Tale Of Supply Chain Optimization and Tariff Management! – Major Drivers
- Coway: Doubling Total Shareholder Returns to 40% of Consolidated Net Income
- EQD | Hong Kong Index Options Weekly – HSI and HSCEI Dec 30 – Jan 03
- Nike’s Shocking Struggles: Will CEO Elliott Hill’s Turnaround Strategy Work?
Fujitsu General (6755) – Long Sale Process Finally Over. Unexciting but Uncomplicated Deal.
- In December 2019, an article in slightly odd Japanese business magazine Sentaku (選択) suggested Fujitsu Ltd (6702 JP) would imminently seek to address dual listings of subs.
- Some subs went early. The auction for Fujitsu General (6755 JP) started spring 2023, failed, started again, failed again, and the shares languished.
- Two years later we have a deal. Large privately-held company Paloma-Rheem Holdings is the buyer in a split-price deal which comes at a decent but not exorbitant premium.
Fujitsu General (6755 JP): Fujitsu (6702 JP) Supports a Light Tender Offer
- Fujitsu General (6755 JP) announced a preconditional tender offer from Paloma Rheem Holdings Co at JPY2,808 per share, a 23.5% premium to the last close.
- The offer, which is preconditional on regulatory approvals and will open in early July, is attractive compared to historical trading ranges and peer multiples.
- The process is lacking as Fujitsu declined to conduct an auction. The offer is below the midpoint of the IFA DCF valuation range, and the Board requested price.
EQD | Meituan (3690 HK) In the Bear’s Grip – Popular Option Strategies and Top Trades
- This Insight analyses Meituan (3690 HK) tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility insights are provided.
- The vast majority of traders opt for bearish strategies, but there are examples of contrarian trades.
- Although one-month implied volatility is historically low in its 7th percentile, it is above realized volatility. With an implied just below 40%, option premiums are significant in absolute terms.
Bloks Group Likely To Price IPO at High End of Range: What To Expect From First Trading-Day?
- Bloks Group, a founder-led toy maker and owner of trusted brand “Blokees”, will price its IPO this week. Shares are set to begin trading on January 10, 2025.
- I would expect strong first trading-day return as HK public offering was already 5,000+ times oversubscribed at high end of marketed price range.
- I believe investors are rationally optimistic about the company. Bloks Group IPO attracted a surge of retail investors, and the stock may skyrocket above IPO price on first trading-day.
Fosun Tourism (1992.HK) – The Logic Behind the Share Buyback and the Outlook
- Without the buyback, it’s difficult to obtain reasonable market pricing by simply transferring the equity of Fosun Tourism or the equity of core assets, which is detrimental to Fosun Group.
- To maximize returns, a wiser approach is to privatize Fosun Tourism first, then at a higher valuation level to spin off, sell, relist, attract strategic investment to “rationalize” the valuation.
- Heavy assets of Taicang/Lijiang projects would be sold. For core assets Club Med/Atlantis, the future plans could be different. It’s necessary to take a look at the Share Alternative Option.
BYD (1211 HK): Vehicle Deliveries Up by 40% in 2024
- BYD’s deliveries grew by 51% YoY in December 2024 and 41% in the year 2024.
- The Brazil event will slow down overseas expansion, but overseas deliveries account for only 10% of total vehicles.
- We believe the stock has an upside of 39% and a price target of HK$356 for the next twelve months.
AutoZone Inc.: A Tale Of Supply Chain Optimization and Tariff Management! – Major Drivers
- AutoZone’s first quarter results for 2025 present a mixed bag of outcomes shaped by challenging economic conditions and strategic focus on growth initiatives, both domestically and internationally.
- The overall sales for the quarter grew by 2.1% year-over-year, reaching $4.3 billion, with a marginal improvement in overall same-store sales, up by 1.8%.
- Within the U.S., the company experienced subdued growth in domestic same-store sales at 0.3% and a 3.2% rise in commercial sales.
Coway: Doubling Total Shareholder Returns to 40% of Consolidated Net Income
- Coway announced a significantly higher total shareholder return plan, nearly doubling total shareholder returns of consolidated net income from current 20% to about 40% in the next three years.
- Coway has low valuation multiples. It is currently trading at EV/EBITDA of 4.1x, P/E of 8.1x, and P/B of 1.4x based on 2025 consensus earnings estimates.
- We believe that the combination of improved shareholder returns and low valuation multiples are likely to lead to outperformance of Coway versus the market in the next 6-12 months.
EQD | Hong Kong Index Options Weekly – HSI and HSCEI Dec 30 – Jan 03
- Tough start to the New Year, implied vols rose with market decline on the first day of the year. Both markets are now trading at or near peak open interest.
- Volumes perked up, well ahead of the prior weeks levels with Calls still making up the bulk of trading in Hang Seng at 57% of all trades.
- Looking ahead, January has historically been one of the most volatile months of the year for HSI, trailing only October for average historic volatility.
Nike’s Shocking Struggles: Will CEO Elliott Hill’s Turnaround Strategy Work?
- Nike Inc. is at a pivotal moment as new CEO Elliott Hill endeavors to reverse a persistent sales slump and restore the company’s dominance in the highly competitive sportswear market.
- Hill, who returned to Nike after a three-decade career with the company, has pledged to refocus on sports-centric innovation and strengthen the brand’s core offerings.
- However, his task is compounded by significant missteps from his predecessor, John Donahoe, and mounting competitive threats that threaten Nike’s market position.
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