In today’s briefing:
- Meilan Airport (357 HK): Takeaway from Recent Passenger Throughput
- The Clorox Co: Major Drivers
- The Estee Lauder Companies Inc.: Major Drivers
- SARIA/Devro: Increased and Final
- Different Criteria for Exercising Voting Rights for Overseas and Domestic Institutional Investors
- Sirius XM Holdings Inc.: Major Drivers
- Starbucks Corporation: Web3 Odyssey Program & Other Drivers
Meilan Airport (357 HK): Takeaway from Recent Passenger Throughput
- Strong passenger traffic year-to-date indicates that full-year passenger throughput for 2023 will be on par with 2019.
- Concerns that China resuming outbound travel could turn domestic tourists away from Hainan are overblown, overlooking the huge pent-up leisure travel demand over last three years.
- We expect investors will focus on pace and sustainability of the recovery when company announces 2022 results. Being eligible for Stock Connect Program in 2023 will be a key catalyst.
The Clorox Co: Major Drivers
- Clorox delivered a solid set of results in the previous quarter with organic sales growth in 3 to 4 segments, double-digit earnings growth, and gross margin expansion, despite the challenges in the market due to an unstable global operating environment.
- The company delivered an all-around beat and continued to work on the enhancement of its brand equity.
- Clorox has been encountering different challenges in the macro environment for the past few quarters especially after the Covid-19 tailwinds have receded.
The Estee Lauder Companies Inc.: Major Drivers
- Estee Lauder delivered a highly disappointing result despite surpassing Wall Street expectations in terms of revenues as well as earnings.
- With its business continuing to be pressured by external headwinds resulting from the pandemic, the organic net sales and the earnings per share decreased in the quarter for Estee Lauder.
- Estee Lauder should also benefit from the acquisition of Tom Ford in competing with L’Oréal.
SARIA/Devro: Increased and Final
- Shareholders have gently pressed. SARIA has upped by 4.4% (“increased and final”) its cash offer for casings manufacturer Devro to 320p+10p interim, which represents 10x EV/Fwd EBITDA and 17.1x Fwd P/E.
- The increased consideration puts the offer almost in line with market leader Viscofan’s multiples (10.2x EV/Fwd EBITDA). The initial offer was already generous, even more so now.
- The deal should complete. Spread (gross/annualised) is 1.06%/2.65%, assuming settlement by 14 July (settlement will happen the same day as the second permitted dividend payment).
Different Criteria for Exercising Voting Rights for Overseas and Domestic Institutional Investors
- The number of shareholder proposals in June 2022 was 241, significant increase from 136 in June 2021. It’s expected that the number of shareholder proposals will increase again this year.
- The increase in the percentage of shareholder proposals recommended by voting advisors can be considered an increase in shareholder proposals that are quite reasonable from the shareholder’s point of view.
- The percentage of overseas investors in favor of shareholder proposals increased, while that of domestic institutional investors remained unchanged at 7%, the same as the previous year.
Sirius XM Holdings Inc.: Major Drivers
- Sirius XM had a mixed quarterly result.
- This was a challenging environment for the company as the auto sales were the lowest in 11 years in 2022.
- Sirius XM is trying to attract more consumers to its platform and continues holding the largest share of car music outside combined terrestrial radio.
Starbucks Corporation: Web3 Odyssey Program & Other Drivers
- Starbucks delivered a disappointing set of results as it failed to meet Wall Street expectations in terms of revenues as well as earnings.
- The U.S. company-operated stores Starbucks have a decent revenue in the quarter, and so did North America overall.
- In the quarter, it launched its first Starbucks reward named Reward Together partnership with Delta Airlines.
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