In today’s briefing:
- Giordano (709 HK): Interim Divy – But Perhaps Not If You Tender
- Taste Gourmet: Good Q1 2023 In the Bag, Momentum Getting Stronger
- Giordano’s Improving Outlook and Surprising Dividend Provide Deal-Break Support
- United Arrows: Rebuilding Brick by Virtual Brick
- Deliveroo: Share Buyback & Exit from Netherlands Not Enough to Offset Lack of COVID Restrictions
- Liquidity Risk Short Candidates: Bed Bath, Blink Charging, Natera, Asana
- Beauty Farm Medical and Health Industry Pre-IPO – Stable Margins & Profitable but Nothing Impressive
Giordano (709 HK): Interim Divy – But Perhaps Not If You Tender
- Giordano International (709 HK) has announced 1H22 net profit of HK$97mn compared to HK$60mn in 1H21.
- Of interest is the declaration of an interim dividend of HK$0.085/share.
- The ex-dividend date is the 20 September. Whether you get the dividend plus the Offer Price depends when the Offer closes (or is extended), and/or whether the Offer turns Unconditional.
Taste Gourmet: Good Q1 2023 In the Bag, Momentum Getting Stronger
- Taste Gourmet Group (8371 HK) reported substantial Q1 2023 numbers, with profits coming in at 16 mn HKD up 42 YoY(%) (-65 YoY(%) netting out the subsidies).
- Despite losing 21 days in April, this is a solid result as cash levels burgeoned to 95 mn HKD from 65 mn HKD (Mar FY22).
- The stock is cheap, trading at 5.1x FY23 PE and a 11.7% dividend yield ( at a 60% payout ratio), making this extremely attractive to own.
Giordano’s Improving Outlook and Surprising Dividend Provide Deal-Break Support
- Giordano International (709 HK)’s 1H22 net profit of HK$97 million was within the HK$91-101 million positive profit range. The IFA noted that interims do not change its advice.
- The Board surprisingly declared an interim dividend of HK$0.085 per share. As the ex-div falls after the final closing date, shareholders who accept the offer will not receive the dividend.
- The incrementally positive outlook and dividend highlight Giordano’s value. The results have pushed our deal break/intrinsic value to align with the VGO price.
United Arrows: Rebuilding Brick by Virtual Brick
- Like other premium fashion brands and retailers, United Arrows (7606 JP) has faced unprecedented challenges since lockdown began in March 2020.
- Sales are still 25% below 2019 levels but the select shop retailer is optimistic about the future, despite the fact that profitability has been in decline since long before Covid.
- Weaknesses remain however, including an ageing customer base and to some extent, an ageing brand.
Deliveroo: Share Buyback & Exit from Netherlands Not Enough to Offset Lack of COVID Restrictions
- Deliveroo’s recent share buyback and exit from Netherlands are not enough to offset people in the UK and Ireland trying to go back to their previous way of lives.
- On 10 August, Deliveroo (ROO LN) announced a share buyback program worth £75 million ($90.6 million) share buyback program, which represents 4.6% of its current market cap.
- Cost of living increases and millions of European consumers eating out at restaurants rather than ordering food are causing further negative impact on Deliveroo’s business.
Liquidity Risk Short Candidates: Bed Bath, Blink Charging, Natera, Asana
- Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
- Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
- Today we are flagging Bed Bath, Blink Charging, Natera, Asana.
Beauty Farm Medical and Health Industry Pre-IPO – Stable Margins & Profitable but Nothing Impressive
- Beauty Farm Medical and Health Industry (BFM HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
- Beauty Farm Medical and Health Industry (BFMHI) is China’s largest provider of daily facial and body care services in terms of revenue in 2021, according to Frost & Sullivan.
- While BFMHI has stable profitability margins and is even in a net cash position, we do not see anything to shout out loud about given its mediocre growth.
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