In today’s briefing:
- IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer
- BYD (1211 HK): All NEV Stocks Plunged After Strong Industry Data – Opportunity Coming
- Fast Retailing: 1QFY24 Earnings
- VinFast’s Global Expansion As Shares Stall
- Fast Retailing (9983) | Another Stylish Quarter
- Ola Electric IPO: Negatives Outweigh the Positives
- BYD Vs Tesla: Part Deux
- Matahari Department Store (LPPF IJ) – Recovery in the Offing
- Amer Sports Pre-IPO – The Positives – Great Brands, Strong Growth
- China Catering: Channel Checks Reinforcing Our Bullish View on DPC Dash
IJTT (7315) – Last Trading Day for Still Truly Offensive Tender Offer
- In IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book I laid it out like it was. It needed a bump.
- It got a bump (IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively) to ¥850/share. From 0.46x PBR it got bumped to 0.48x PBR. For a cash-rich company.
- Taking out net cash and securities, paying off deferred tax assets and UPBOs the deal is at 0.41x operating asset book for minorities. Still offensive. Beyond negligent.
BYD (1211 HK): All NEV Stocks Plunged After Strong Industry Data – Opportunity Coming
- NEV sales volume grew by 47% YoY in December 2023 and 36% in 2023.
- BYD’s sale volume grew by 62%, higher than the industry average, 36%, in 2023.
- All NEV stocks plunged, but we still believe BYD has an upside of 61%.
Fast Retailing: 1QFY24 Earnings
- Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
- Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter.
- The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.
VinFast’s Global Expansion As Shares Stall
- After de-SPACing last August, shares in VinFast (VFS US), the EV arm of Vietnamese conglomerate Vingroup Jsc (VIC VN), went orbital, as discussed in Vingroup: VinFast’s Valuation Makes No Sense
- VinFast cratered shortly thereafter. But still trades at a hefty ~25x P/S, well above industry peers.
- Last Friday VinFast announced it was replacing both its CEO and CFO. Not a great look five months after IPOing. Even less attractive is the incoming CEO is VinGroup’s founder.
Fast Retailing (9983) | Another Stylish Quarter
- We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin.
- Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
- Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.
Ola Electric IPO: Negatives Outweigh the Positives
- Ola Electric is a vertically integrated pure EV player in India with both technology and manufacturing capabilities for EVs and EV components (including battery packs, motors and vehicle frames).
- The company has filed for an IPO to raise US$600m through the sale of new shares making it the first ever EV company to go for an IPO in India.
- Though the company’s growth story has been impressive, the sales volume is largely dependent on government subsidies raising concerns over its future prospects.
BYD Vs Tesla: Part Deux
- BYD (1211 HK) overtook Tesla Motors (TSLA US) as the largest EV maker by deliveries in December 2023.
- Tesla is suspending work at its Berlin factory temporarily due to the tension in the Red Sea, while BYD’s supply chain is all in China.
- BYD is trading at deep discount to Tesla on PEG, PER, and PBR.
Matahari Department Store (LPPF IJ) – Recovery in the Offing
- Matahari Department Store saw a slower performance in 3Q2023 but looks well set for a recovery in 4Q2023 and early 2024 with elections, Chinese New Year and Lebaran ahead.
- The company plans to increase its store count by six in 2024, with four new format Matahari Department Stores outlets and two new concept MU&KU stores.
- Matahari Department Store continues to rollout new private label brands including Suko and Anyday to target different demographics to stimulate additional demand. Valuations are attractive on a 4.9x forward PER.
Amer Sports Pre-IPO – The Positives – Great Brands, Strong Growth
- Amer Sports (AS US) plans to raise more than US$1bn in its US IPO. Proceeds will be used to pay down loans to Anta Sports Products (2020 HK) led consortium.
- Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
- In this note, we talk about the positive aspects of the deal.
China Catering: Channel Checks Reinforcing Our Bullish View on DPC Dash
- We had conversations with industry consultants and business executives from China’s catering sector to understand the impact of the country’s weak economy on consumer behavior and sector outlook for 2024.
- We expect moderate pricing competition, continued rise of social media in generating online food orders and key industry players’ increased focus on smaller-size store formats.
- While we are still cautious about the sector in general, we reiterate bullish view on DPC Dash, which we believe will outperform and has potential to double in two years.
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