In today’s briefing:
- Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged
- Super Hi International US ADS – Has Been Doing Well but Doesn’t Really Need the Cash
- Leading Candidates for the First Value-Up Disclosure
- Listing of a Beauty Giant
- Astra International (ASII IJ) – Striking a Balance with Finance
- (Mostly) Asia M&A, April 2024: Austal, L’Occitane, Langham Hosp., Jastec, Mimasu, Best World, Isetan
- Tesla Inc.: Growth As An AI Company And Its Future in Power Generation and Distributed Computing! – Major Drivers
- [Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use
- Netflix Inc.: A Shift In Reporting Focus from Subscriptions to Revenue and Engagement – But What Lies Ahead? – Major Drivers
Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
- The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
- Below I present a study using data from 2012-2023 and this year’s portfolio.
Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged
- Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
- Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Super Hi International US ADS – Has Been Doing Well but Doesn’t Really Need the Cash
- Super Hi International Holding (9658 HK) aims to raise around US$100m in its US ADR IPO. MS and Huatai are on the deal.
- Super Hi International (SHI) is a Chinese cuisine restaurant brand, operating Haidilao hot pot restaurants in the international market.
- In this note, we talk about the deal dynamics and the listing impact.
Leading Candidates for the First Value-Up Disclosure
- Of utmost importance in these guidelines will be the framework for Value-up disclosure. Local authorities aim to encourage proactive disclosure, starting with companies that are well-prepared.
- Two companies are being closely watched as potential candidates for the first Value-up disclosure: CJ Cheiljedang (097950 KS) and Koh Young Technology (098460 KS).
- The rationale for us to actively engage in alpha trading with these two names stems from the strong probability that they will emerge as cornerstone constituents of the Value-up index
Listing of a Beauty Giant
- Puig Brands (PUIG SM) will start trading next Friday 3 May at 12:00. The placement price was €24.5/share at the top of the range (which was increased due to investors’ demand).
- Puig, valued at €13,900 million, has placed 32% of its capital among qualified investors. The Puig family will retain over 90% of the voting rights through their Class A shares.
- Puig will foreseeably enter the Ibex 35 after the ordinary meeting of the Ibex Technical Advisory Committee corresponding to the month of December.
Astra International (ASII IJ) – Striking a Balance with Finance
- Astra International (ASII IJ) just released 1Q2024 results, which reflected the softer auto and heavy equipment markets, although buoyed by better earnings for its finance arm,
- The company’s headline net profit was down -14% YoY but stripping out value adjustments was only down -5% YoY, with management optimistic over the longer term.
- Astra continues to mirror the Indonesian economy, with its latest investment in geothermal but its nickel businesses also growing. Valuations attractive on 6.6x FY2024E PER and a 7.2% dividend yield.
(Mostly) Asia M&A, April 2024: Austal, L’Occitane, Langham Hosp., Jastec, Mimasu, Best World, Isetan
- For the month of April 2024, 7 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
- The average premium for the new transactions announced (or first discussed) in April was ~55%. The average premium YTD is ~42%.
- This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.
Tesla Inc.: Growth As An AI Company And Its Future in Power Generation and Distributed Computing! – Major Drivers
- Tesla Inc.’s first-quarter earnings for 2024 offered a critical and insightful update on the electric vehicle manufacturer’s strategy and financial performance.
- Tesla appears committed to its strategic focus on vehicle autonomy and digitisation, with CEO Elon Musk stating that the company should be viewed primarily as an AI (Artificial Intelligence) and robotics firm, underlining its commitment to Full Self-Driving (FSD) as a key future revenue stream.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
[Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use
- Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.
- We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion
- We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.
Netflix Inc.: A Shift In Reporting Focus from Subscriptions to Revenue and Engagement – But What Lies Ahead? – Major Drivers
- Netflix Inc.’s Q1 2024 earnings highlighted a number of impactful developments and strategic shifts that investors should consider.
- The company’s management team made it clear that while they’ll no longer be reporting quarterly membership in ARM data starting in 2025, they will continue to provide updates on key metrics including revenue, OI, OI margin, net income, EPS, and free cash flow.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
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