In today’s briefing:
- Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
- China Consumption Weekly (5 Feb 2024): BYD, Li Auto, Alibaba, Sun Art
- Yaizu Suisankagaku Industry (2812 JP): Murakami Succeeds in Securing a New Tender at JPY1,350
- Metcash Placement – Not One, but Three Synergistic Acquisitions at a Go
- Cheng Family Seeks Board Control Of Giordano (709 HK)
- Tesla Inc: What Factors Will Help It Survive The Rising Competition & Tapering EV Demand? – Major Drivers
- Kimberly-Clark Corporation: Optimized pricing and volume mix strategy could be a game changer? – Major Drivers
- STCB: Setting Up for Further 2024 Growth; Reiterate Buy Rating and $0.25 PT
- Apeejay Surrendra Park Hotels IPO – Has Bounced Back Strongly, at a Decent Discount
- What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital?
Isetan-Mitsukoshi (3099) – Good Results, Higher Forecast, Higher Div, Short Sharp Buyback
- Isetan Mitsukoshi Holdings Ltd (3099 JP) on Friday announced Q3 results, a huge hike in H2 dividend (from ¥12/share guided to ¥20/share newly guided), and a buyback.
- 9mo Revenues were up 9.4%yoy (after +16.7% the previous year), OP +66.7%, and Net Profits +59.0%yoy through three quarters. Full-year Revenues, OP, and NP were all revised up slightly.
- The buyback is for up to 11mm shares, spending up to ¥15bn over the next 8 weeks. Looking at details of the shareholder structure is worthwhile.
China Consumption Weekly (5 Feb 2024): BYD, Li Auto, Alibaba, Sun Art
- BYD released its result estimate for 2023, in which net profit rose by 74% to 86% over 2022.
- Li auto delivered 31,165 vehicles in January 2024, up by 106% over 2023.
- As per rumors reported in the media, Alibaba will sell RT-Mart, a supermarket brand.
Yaizu Suisankagaku Industry (2812 JP): Murakami Succeeds in Securing a New Tender at JPY1,350
- Yaizu Suisankagaku Industry (2812 JP)/YSK has recommended Inaba’s tender offer of JPY1,350 per share, an 18.7% premium to J-STAR’s failed offer and a 9.8% premium to the last close.
- J-STAR’s offer failed as shares consistently traded above terms due to Murakami and 3D Investment Partners emerging as substantial shareholders. J-STAR extended the close but did not bump its offer.
- While Inaba’s offer values YSK below book value, Murakami is now supportive. Based on the irrevocables, the minimum acceptance condition requires a 57.2% minority acceptance rate.
Metcash Placement – Not One, but Three Synergistic Acquisitions at a Go
- Metcash Ltd (MTS AU) is looking to raise up to A$300m (US$195m) in its primary placement. The proceeds will be used to partially fund the acquisition of three businesses.
- The deal would be a large one to digest at 22.5 days of three month ADV and 8.4% dilution.
- In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.
Cheng Family Seeks Board Control Of Giordano (709 HK)
- Some 17 months after the Cheng Family failed to secure 50%+ of Giordano International (709 HK), the family are now calling an SGM to install friendly directors.
- Sino Wealth, a Cheng family’s vehicle with 24.06% of shares, has requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus appoint three other NEDs/INEDs.
- If this were to come to pass, the family would have (almost) effective control of the board. The vote will be close. And David Webb is now below 5%.
Tesla Inc: What Factors Will Help It Survive The Rising Competition & Tapering EV Demand? – Major Drivers
- Tesla Inc.’s accomplishments in 2023 were substantial, with record production and shipments of approximately 1.8 million vehicles, per the company’s Q4 2023 earnings call transcript.
- As well, in Q4, it was manufacturing vehicles at nearly 2 million cars per year, a remarkable achievement.
- Tesla’s Fremont factory alone produced 560,000 cars, solidifying its status as the highest production automotive plant in North America.
Kimberly-Clark Corporation: Optimized pricing and volume mix strategy could be a game changer? – Major Drivers
- Kimberly-Clark’s recent earnings for its fourth quarter and full year 2023 results showed both steady growth and challenges.
- They are focused on elevating categories and expanding markets for growth, a strategy which is showing promising results.
- The earnings call highlighted that the company had faced supply constraints that affected its market share.
STCB: Setting Up for Further 2024 Growth; Reiterate Buy Rating and $0.25 PT
- We are reiterating our Buy rating and $0.25 price target for Starco Brands after the company announced basically inline preliminary 2023 results and provided initial 2024 guidance for Adjusted EBITDA which bracketed our projection; as such, we are tweaking higher both our 2023 and 2034 Adjusted EBITDA projections.
- We believe Starco is ideally positioned to register material top and bottom line growth in 2024 (and beyond) and believe management has remained conservative on multiple levels in their guidance.
- We continue to view Starco as ideally positioned to lever their unique characteristics in the packaged goods space to drive consistent top and bottom line growth, and we reiterate our Buy rating and $0.25 price target for STCB.
Apeejay Surrendra Park Hotels IPO – Has Bounced Back Strongly, at a Decent Discount
- Apeejay Surrendra Park Hotel (PARK IN) (ASPH) plans to raise up to US$111m via selling a mix of primary and secondary shares in its India IPO.
- ASPH ranks as the eighth largest in India in terms of chain affiliated hotel rooms inventory as of Sep 2023, as per Horwath HTL Report.
- In this note, we talk about the past performance and our thoughts on valuations.
What Is A “Growth Market” Where Many Companies Do Not Grow in Market Cap or Raise Capital?
- In addition to the large number of micro-caps among companies listed on the Growth Market, another problem is the lack of growth in market capitalization after IPOs.
- Many managers consider IPO to be the goal, and this is evidenced by the fact that not many companies raise capital at IPO and after listing.
- The government proposed raising the market capitalization criteria for IPOs and revitalizing the secondary market for pre-listed companies. TSE is likely to review its listing criteria as early as 2025.
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