In today’s briefing:
- The Beat Ideas: Globus Spirits- Maize, Capex, B2C Play
- Uniqlo’s European Romance
- Nike CEO Shakeup: Challenges Ahead for Elliott Hill as He Takes the Helm of the Sneaker Giant!
- Fu Shou Yuan (1448.HK) – The Business Model Has “Flaws”
- How to Make a Non-Functioning Statutory Auditor Function
- Fund Managers Hate Commodities // EU Deforestation Law Disaster
- Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 23)
- Duplicate of JAKK: Setting Sail for Sunnier Climes; Reiterate Buy, $24 Price Target
The Beat Ideas: Globus Spirits- Maize, Capex, B2C Play
- In Q4FY24, Globus Spirits (GBSL IN) changed its raw material from rice to maize to improve the margin and stability in margins.
- Globus Spirits (GBSL IN) increased its capacity in Q4 recently 120KLPD, 60 each in Jharkhand and West Bengal.
- Recently, the government also removed the ban on using FCI grain and sugarcane for Ethanol production.
Uniqlo’s European Romance
- Uniqlo’s European arm is on a roll, with more stores, higher sales and a loyal fan base. 35% of customers were under 29 last year up from 16% in 2019.
- Uniqlo is also doing better at home but it needs the boost from newer markets given concerns over growth in China.
- And it is far too early to know whether GU’s formal launch in the US will pay off but so far so good.
Nike CEO Shakeup: Challenges Ahead for Elliott Hill as He Takes the Helm of the Sneaker Giant!
- Nike recently announced a significant leadership change, with CEO John Donahoe stepping down and longtime company veteran Elliott Hill set to take over.
- This transition comes amid a broader restructuring effort at Nike, aimed at addressing the company’s evolving business challenges.
- Donahoe, who led the company through several years of strategic shifts, including the prioritization of direct-to-consumer sales, had faced increasing pressure due to flat revenue growth and lower-than-expected guidance for fiscal 2025.
Fu Shou Yuan (1448.HK) – The Business Model Has “Flaws”
- The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.
- Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn’t require too much capital, which means the Company would have greater motivation to distribute dividends.
- The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.
How to Make a Non-Functioning Statutory Auditor Function
- Information asymmetries between shareholders/investors and board directors, between inside and outside board directors, between inside and outside statutory auditors, and between insiders and the rest are constant challenges.
- Statutory auditors cannot be dismissed and have significant powers, including the right to investigate, and since statutory auditors are board members, they can attend and speak at board meetings.
- To make statutory auditors function, establish a process for nominating statutory auditors, raise the compensation of outside auditors, and run an open board meeting where board members’ comments are respected.
Fund Managers Hate Commodities // EU Deforestation Law Disaster
- According to the latest BofA fund manager survey, investors continue to sell commodities.
- Allocation-wise we’re now back at levels we were at the beginning of the pandemic back in 2020.
- Long commodities is now a contrarian trade again.
Technically Speaking, Breakouts and Breakdowns: HONG KONG (SEPTEMBER 23)
- Hong Kong tech sector leads the market higher with increased momentum and lower volatility. Short selling has abated with unwind of HKD carry trade.
- Sands China (1928 HK) had a breakout from a Falling Wedge pattern. The share price broke above its short-term averages with increasing momentum.
- China Feihe (6186 HK) broke out from its downtrend with a Reversal from its U-Shaped Bottom. Techtronic Industries (669 HK) broke out to a new YTD high.
Duplicate of JAKK: Setting Sail for Sunnier Climes; Reiterate Buy, $24 Price Target
- We are reiterating our Buy rating and $24 price target and raising our 2024 and 2025 projections for JAKKS Pacific after the company handily beat our 2Q24 projections, as gains in the core business offset expected material weakness in content-led (i.e. movie driven) offerings.
- Further, with the recent launch of The Simpsons and Authentic Brands driven licensed offerings, the upcoming launch of key Holiday movie properties (Moana 2 and Sonic the Hedgehog 3), new owned properties and a continued focus on international expansion, we view our projections, even after our top and bottom line increases, as conservative.
- Further, with JAKK continuing to trade at a material discount to their peers, we believe the risk/reward in the name remains impressive, and we reiterate our Buy rating and $24 price target.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
