In today’s briefing:
- IMAX China (1970 HK): Parent Privatisation
- Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity
- Patanjali Foods FPO – Very Well Flagged with a Decent Discount
- IMAX China (1970 HK): IMAX Corp’s Privatisation Offer
- Seven & I Merger of FMCG Arms Signals Focus on Food – And Its All Good News
- Fast Retailing (9983) | Exceptional Quarter
- Fast Retailing: Strong Performance in China & Korea, But Valuation Could Weigh on Price Performance
- Genda IPO – Has Weathered the Pandemic Better, Although Sector Doesn’t Seem to Be Growing Much
- Fenbi (2469 HK): Strong Positive Profit Alert for 1H2023
- TSE Should Shift Its Business Model from Growing Number of Listed Companies to Expanding Market Cap
IMAX China (1970 HK): Parent Privatisation
- This morning (13 July), IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share.
- The Offer price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day. Evidently, there was news leakage.
- IMAX US holds 71.63% in IMAX China, therefore the blocking stake at the Schene Meeting is 2.837% of shares out.
Fast Retailing UPs Forecasts, Which Creates A Sell/Short Opportunity
- Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
- It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good.
- Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.
Patanjali Foods FPO – Very Well Flagged with a Decent Discount
- The promoters of Patanjali Foods aim to sell up to 9% of the company via an FPO.
- The sale is being done so as to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
- We have looked at the background of the deal in our earlier note, in this note we talk about the recent update and run the deal through our ECM framework.
IMAX China (1970 HK): IMAX Corp’s Privatisation Offer
- IMAX China Holding (1970 HK) disclosed a scheme privatisation offer from IMAX Corp (IMAX US) at HK$10.00 per share, a 39.5% premium to the undisturbed price (HK$7.17 on 10 July).
- The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake.
- The offer price is final. While the offer price is light compared to peer multiples and historical share prices, the deal will likely succeed.
Seven & I Merger of FMCG Arms Signals Focus on Food – And Its All Good News
- It will take a couple of years to see financial improvement but recent reforms suggest criticism of Seven & I’s inability to change may be increasingly unfair.
- The latest in-group merger further demonstrates Seven & I’s desire to refocus on food and FMCG.It also suggests that Seven & I may double down on divestment from non-food retailing.
- The share price may fluctuate but the outlook for domestic fundamentals are better than they have been for years.
Fast Retailing (9983) | Exceptional Quarter
- Another blow out quarter for Fast Retailing – beat and raise
- Fears (well, mine) of a miss in China were unfounded
- Still, Q3 results do nothing to change the view that this is one expensive stock
Fast Retailing: Strong Performance in China & Korea, But Valuation Could Weigh on Price Performance
- Fast Retailing (9983 JP) announced its 3QFY23 results today, surpassing the consensus OP estimate by approximately 10%.
- Notably, there was strong revenue growth for Uniqlo, including in recently underperforming markets such as mainland China and South Korea.
- Despite the strong set of results, it appears that Fast Retailing is overvalued as the stock is currently trading at a valuation of over 20.0x its medium-term FY27 OP target.
Genda IPO – Has Weathered the Pandemic Better, Although Sector Doesn’t Seem to Be Growing Much
- Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
- Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
- In this note, we will undertake a peer comparison, share our earnings assumptions and discuss our thoughts on valuation.
Fenbi (2469 HK): Strong Positive Profit Alert for 1H2023
- Fenbi Ltd (2469 HK) announced after market today a very strong positive profit alert for 1H2023, with adjusted net profit up not less than 182% yoy.
- As a reminder, share price was heavily sold off in June due to pre-IPO shareholders selling, as well as weak market sentiment, niche sector, and new stock (under researched).
- Even with the recent bounce back in share price with heavy volume, Fenbi is still very undervalued.
TSE Should Shift Its Business Model from Growing Number of Listed Companies to Expanding Market Cap
- TSE, which receives listing fees from listed companies, has no choice but to take a negative attitude toward raising listing criteria that would reduce the number of listed companies.
- Behind many companies with stagnant P/Bs is the fact that managers lack stock price consciousness and companies with stock price stagnation for years eliminated and continue to be listing.
- In Japan, it is expected that industry restructuring, dissolution of parent-subsidiary listings, and going private will further increase through M&As, leading to a shakeout in the Japanese market.
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