In today’s briefing:
- JCNC Is Still Overstretched Vs. Astra
- Yue Yuen (551 HK): Putting Their Best Feet Forward
- Yue Yuen Industrial Holdings (551.HK) – Challenging Prospects Overshadow Undervaluation
- Dish TV: Finale Still Awaits
- Going Private Is an Option for Both the Companies and Investors
JCNC Is Still Overstretched Vs. Astra
- Jardine Cycle & Carriage (JCNC SP) is currently trading at a ~12% discount to NAV, just outside its narrowest post-Covid.
- A key catalyst for the recent narrowing was JCNC’s inclusion in the SIMSCI Index at the end of last month.
- JCNC is expensive here – relative to historical values – and from an implied stub perspective.
Yue Yuen (551 HK): Putting Their Best Feet Forward
- Despite a softening global demand backdrop, Yue Yuen Industrial (551 HK), a global leader in the manufacture of athletic/outdoor and casual footwear, recently recorded its best 9M results since 2017.
- Yue Yuen’s shares have only just recovered from a 20-year low.
- From both a historical perspective and relative to peers, Yue Yuen is undemanding here.
Yue Yuen Industrial Holdings (551.HK) – Challenging Prospects Overshadow Undervaluation
- Yue Yuen is essentially a large traditional manufacturing company, which once benefitted from China’s cheap labor and has brilliant history. But challenges seem inevitable as labor costs gradually increase.
- Despite 22Q1-Q3 solid performance, in the environment of high inventory of brand customers and downward pressure on global economy, the order visibility of Yue Yuen in 22Q4/23Q1 could be low.
- Either domestic demand or external demand, the overall situation may not be optimistic. Yue Yuen’s valuation is basically lower than its peers. However, we still recommend investors to remain vigilant.
Dish TV: Finale Still Awaits
- Dish TV India (DITV IN) has been under the limelight for quite a while. ever since the legal tussle with shareholders.
- The last six months have seen several events happening at the corporate governance level; the trials of churn in board and the required shareholders approvals has troubled the company.
- Even though there have been monumental changes in the board such as resignation of Mr.Goel, the battle with the shareholders is still far from the finale.
Going Private Is an Option for Both the Companies and Investors
- While it’s natural for a rational investor to disagree with a company that cannot generate a return commensurate with the risk, the existence of cross-shareholdings in Japanese companies complicates matters.
- The benefit of listing is raising capital on favorable terms by trading shares at a value greater than shareholders’ equity, but there are not many Japanese companies trading at premium.
- Going private is one option for companies that are unable to find growth investment opportunities and accumulate cash on their balance sheets. In this regard, Japanese equities are of interest.
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