In today’s briefing:
- Thinking About the Ito-En (2593 JP) MSCI Index Exclusion Event
- Adways (2489 JP) – Really, Really Big News for a SmallCap
- ZJLD Group Pre-IPO – The Positives – Larger Network Led to Sales Growth. Poised for Market Tailwind
- [JD.com (JD US, SELL, TP US$48) Rating Change]: Rough Roads Ahead, DG to SELL
- ZJLD Group Pre-IPO – The Negatives – Small Fish in a Big Pond. Drunk on Inventory Buildup
- Keepers Holdings: Cycling into Good Results in Q4 2022, Good Momentum to Q1 2023
- Asics (7936) | It’s a Marathon, Not a Sprint
- [NIO (NIO US, BUY, TP US$13) Target Price Change]: Late Delivery of Key Models Hurts 1H23 Momentum
- Hello, Comeuppance: NHTSA Recalls All Teslas with Auto Pilot FSDBeta
- [Miniso(MNSO US, BUY, TP US$22) Earnings Preview]: Bring Made-In-China to the World’s Mall Economies
Thinking About the Ito-En (2593 JP) MSCI Index Exclusion Event
- Ito En Ltd (2593 JP) is a slightly strange stock in the grand scheme of things.
- It is expensive for its growth, and the shareholder register is such that it is subject to the whims and vagaries of forces over which investors may have no control.
- This time, it is MSCI. Stock prices go up, stocks go in the indices. Stock prices fall, they come out. It’s coming out this month. So who buys?
Adways (2489 JP) – Really, Really Big News for a SmallCap
- Adways Inc (2489 JP) is an ad agency, ad platform, marketing platform, and a variety of sub-platforms serving certain mobile, PC, marketing, and app development niches.
- They released earnings last Friday, but today released other – follow-on information.
- Included was a buyback – up to 5.7mm shares (13.57% of shares out) for up to ¥2bn (9% of mktcap) – over the next 5.5 months. Seems big. Look closer.
ZJLD Group Pre-IPO – The Positives – Larger Network Led to Sales Growth. Poised for Market Tailwind
- ZJLD Group (ZJLD HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO
- ZJLD is a Chinese liquor company primarily producing baijiu. As per F&S, the firm was the fourth largest privately-owned baijiu company in terms of FY21 sales.
- In this note, we will talk about the positive aspects of the deal.
[JD.com (JD US, SELL, TP US$48) Rating Change]: Rough Roads Ahead, DG to SELL
- JD’s post-CNY recovery is slower than expected, based on our checks. We suggest JD would face an unfavourable external environment going forward due to: 1) the comeback of offline commerce;
- 2) PDD’s growing penetration in high-tier cities and brand products; 3) Meituan Instashopping offers faster delivery than JD.
- We cut JD’s FY23 revenue YoY growth forecast from 13% to 11%. Our top and bottom line estimates for FY23 are (3%) and (5%) below cons. Downgrade to SELL
ZJLD Group Pre-IPO – The Negatives – Small Fish in a Big Pond. Drunk on Inventory Buildup
- ZJLD Group (ZJLD HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO.
- ZJLD is a Chinese liquor company primarily producing baijiu. As per F&S, the firm was the fourth largest privately-owned baijiu company in terms of FY21 sales.
- In this note, we will talk about the not-so-positive aspects of the deal.
Keepers Holdings: Cycling into Good Results in Q4 2022, Good Momentum to Q1 2023
- The Keepers Holdings (KEEPR PM) will announce its FY22 results in the second week of April 2023. Good results(>50% YoY profit)/high dividend payout(50%) have been catalysts for the share price.
- We believe Q1 2023 business momentum will also be good, rendering the growth story intact. The company also made a very small acquisition of “Island Mixers” from Diageo Philippines.
- Despite the move recently, the stock trades at 9.4x/7.3x FY22/23e with 8-9% of the market cap in cash. With an attractive dividend yield of 5.3% for FY23.
Asics (7936) | It’s a Marathon, Not a Sprint
- We were too early to turn bearish on Asics. Recent stock price performance has been strong
- Although rising inventories have yet to impact on margins, they are a potential red flag
- The stock is not cheap at 29x PE. The long-term financial model suggests limited upside from here
[NIO (NIO US, BUY, TP US$13) Target Price Change]: Late Delivery of Key Models Hurts 1H23 Momentum
- We expect NIO to report 4Q22 top line of RMB 16.7bn and GPM of 13.2%, missing consensus by (4%)/(0.8ppt), primarily due to COVID-related supply-chain issues and lower ASP.
- We cut TP to US$ 13, due to weak momentum and the ongoing margin pressure in 1H23. We maintain BUY, as 1) intact model cycle starting from 2H23;
- 2) the upcoming ET5 station wagon in 2H23 and the mass-market/low-end brands in 2024 will expand its scale economy, which in turn will justify the sustainability of its business model.
Hello, Comeuppance: NHTSA Recalls All Teslas with Auto Pilot FSDBeta
- NHTSA has recalled all Teslas with FSDBeta, more than 362,000 cars.
- This comes just before Tesla releases substantial upgrades to Autopilot including the return of radar.
- Which means NO legacy Teslas really are FSD hardware ready, despite what CEO Elon Musk has claimed for years when selling the option for thousands of dollars
[Miniso(MNSO US, BUY, TP US$22) Earnings Preview]: Bring Made-In-China to the World’s Mall Economies
- We expect Miniso to report C4Q22 top line, non-GAAP operating profit and GAAP net income 1.7%, (1.5%) and in-line vs. consensus. Our C1Q23 top line is 3.7% vs. the consensus;
- MNSO’s sustained growth driver to be bringing Made-In-China merchandises to the mall economies around the world; We re-evaluate the stock and maintain the Buy rating, with TP at US$22.
- The downward revisions of EPADS：1) slower offline resumption pace from Covid impact in 2022, 2) rescheduled oversea expansion paces, compared to our previous update on Nov. 23rd, 2021.
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