In today’s briefing:
- DCM Takeover for Keiyo (8168) – Pretty Easy Deal
- Shenzhou Intl (2313 HK): Nike’s Inventories Declined By 10% Yoy in 1Q24
- Matahari Department Store (LPPF IJ) – Transforming and Trendy
- RPSG Ventures: Strong Profitability from IPL
- Disclosure of Management Strategies with Cost of Capital and Stock Price in Mind Is Still Limited
- Keiyo (8168 JP): DCM’s JPY1,300 Tender Offer
- Shiyue Daotian IPO – PHIP Updates & Quick Thoughts on Valuation
- Victoria – ESG Report – Lucror Analytics
DCM Takeover for Keiyo (8168) – Pretty Easy Deal
- Today after the close, DCM Holdings (3050 JP) announced it would launch a friendly takeover by Tender Offer for Keiyo Co Ltd (8168 JP)
- This is totally not a surprise. They signed a Business and Capital Alliance in 2017. DCM bought more at a premium last autumn. This takeover was obvious in the long-term.
- There are enough friendly holders to get this done. Activism would be hard unless it was really cheap, which it does not seem to be, but process wasn’t great.
Shenzhou Intl (2313 HK): Nike’s Inventories Declined By 10% Yoy in 1Q24
- Nike (NKE US) reported better than expected 1Q24 results this morning, with the stock up 8% in after market trading.
- Nike’s inventories declined by 10% yoy during the quarter, which bodes well for Shenzhou Intl Group Holdings (2313 HK), as sales to Nike made up 30% of Shenzhou’s sales.
- Shenzhou is trading at 15x 2024E PE, compared to an average of 21x forward PE over the last decade.
Matahari Department Store (LPPF IJ) – Transforming and Trendy
- Matahari Department Store (LPPF IJ) is the key player in the department store space in Indonesia with a significant transformation well underway to drive future growth and profitability.
- The company had a slightly disappointing Lebaran performance given some seasonal disparities but continues to make significant progress in revamping its merchandise mix, with a strong omnichannel yielding results.
- Matahari Department Store (LPPF IJ) looks exceptionally cheap on 4.0x FY2024E PER, and with a dividend yield of 20.0% and with earnings expected to rebound in 2024E.
RPSG Ventures: Strong Profitability from IPL
- Helped by the share in the incremental IPL media rights value, RPSG Venture’s (RPSGV) revenue from the sports business revenue jumped to INR 590cr+ in Q1FY24 vs INR 300cr+ YoY.
- Losses in the FMCG business narrowed to INR 63cr vs INR 90cr YoY and INR 70cr QoQ. FMCG revenues continue to be at around INR 400cr+ annualized run-rate.
- RPSGV’s BPO business, Firstsource Solutions (FSOL IN) saw stabilization in de-growth and margins. Margins expanded by 375bp during Q1FY24.
Disclosure of Management Strategies with Cost of Capital and Stock Price in Mind Is Still Limited
- Regardless of “TSE request,” only 31% of prime market listed companies disclosed “measures to realize management with awareness of cost of capital and stock price” in their corporate governance reports.
- The lack of ready disclosure measures on companies’ side seems to be the reason why few companies disclosed information, but many of those that did are also poor in content.
- For companies with large shareholders and low P/B, the parent company has not yet TOB or sold the company, which may be the reason for the delay in disclosure.
Keiyo (8168 JP): DCM’s JPY1,300 Tender Offer
- Keiyo Co Ltd (8168 JP) has recommended DCM Holdings (3050 JP)’s tender offer of JPY1,300 per share, a 58.3% premium to the undisturbed price (29 September).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 35.68% ownership ratio.
- Irrevocables represent a 0.88% ownership ratio. The minimum acceptance condition (lower limit) requires a 50.4% minority acceptance rate, which is achievable as the offer price represents a ten-year high.
Shiyue Daotian IPO – PHIP Updates & Quick Thoughts on Valuation
- Shiyue Daotian (1892269D CH) is looking to raise up to US$108m in its Hong Kong IPO, after downsizing from an earlier reported float of US$200m.
- Shiyue Daotian is a pantry staple food company in China, providing consumers with pre-packaged premium rice, whole grain, bean, and dried food products.
- In our previous notes, we covered the company’s performance. In this note, we will cover the firm’s PHIP updates and share our thoughts on valuation.
Victoria – ESG Report – Lucror Analytics
- Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
- We assess Victoria’s ESG as “Weak”, in line with its Environmental, Social and Governance scores. Controversies are “Material” and Disclosure is “Weak”.
- Victoria PLC designs, manufactures and distributes flooring products across the UK, Continental Europe and Australia.
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