In today’s briefing:
- Carlyle To Take KFC Japan (9873) Private at ¥6,500/Share – Big Win For All, a Model Transaction
- L’Occitane (973 HK): Who Owns What, And When
- KFC Holdings Japan (9873 JP): Carlyle Finger Lickin’ Tender Offer at JPY6,500
- Li Auto (LI US): 1Q24, A List of Bad News
- Star Entertainment (SGR AU): Hard Rock Rolls The Dice
- Mandarin Oriental: Don’t Lose Money
- Shakey’s Pizza (PIZZA PM) Q1 FY24 Concall: Margin Recovery in H2 FY24
- Wynn Resorts: Macau Operations
- Pre-IPO China Resources Beverage – Here Are the Concerns and the Risks Behind
- Crocs Inc.: Global Expansion and Revenue Growth through New Store Openings! – Major Drivers
Carlyle To Take KFC Japan (9873) Private at ¥6,500/Share – Big Win For All, a Model Transaction
- Carlyle has a deal to buy Kfc Holdings Japan (9873 JP). ¥6,500/share is a 78% premium to undisturbed as a professional holder sells in an auction to the highest bidder.
- That’s a great format for achieving a great price. And we got one. This should get done easily.
- Importantly, the Bidco is named Crispy KK. It is 100% owned by Juicy KK. Juicy KK itself is 100% owned by Crispy Holdings L.P. Someone had some fun.
L’Occitane (973 HK): Who Owns What, And When
- A fortnight ago, I sought access to L’Occitane (973 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under Chapter 571, s329 of the Securities and Futures Ordinance.
- This is the same register I discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM; and one also used by proxy solicitors.
- The register confirms what has been long rumoured about a certain shareholder activist. It is also informative for what isn’t present.
KFC Holdings Japan (9873 JP): Carlyle Finger Lickin’ Tender Offer at JPY6,500
- Kfc Holdings Japan (9873 JP) has recommended a tender offer from Carlyle Group / (CG US) at JPY6,500 per share, a 20.4% premium to the last close.
- 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 31.54% ownership ratio.
- Due to the Mitsubishi Corp (8058 JP) irrevocable, the minimum acceptance condition requires a 48.6% minority acceptance rate. The acceptance condition is achievable as the offer is a knockout bid.
Li Auto (LI US): 1Q24, A List of Bad News
- Operating profit turned negative in 1Q24 compared to 1Q23 due to the price war and the failure of new model.
- The company disappeared from the industry top-10 list of sales volume and revenue growth slowed down to zero in April.
- All cross-sectional comparisons suggest a Sell rating for the stock.
Star Entertainment (SGR AU): Hard Rock Rolls The Dice
- Troubled casino operator Star Entertainment (SGR AU) announced it had “received inbound interest” from several parties, including “Hard Rock Hotels & Resorts … a local partner of Hard Rock”.
- Star is in the doghouse, again, as the regulator conducts (another) review amid concerns Star did not do enough to remedy the problems identified in the first review.
- Facing “serious and systemic non-compliance” with anti-money laundering laws, Star faces the distinct possibility of losing is casino licence in Sydney; and potentially the one in Queensland.
Mandarin Oriental: Don’t Lose Money
Mandarin owns the One Causeway Bay precinct which is likely worth more than the company’s current Enterprise Value ($2.4b) having recieved an offer of $3.8b for the site in 2017.
For those unfamiliar, this site is being massively re-developed into retail and office- not a hotel as might be expected given the company.
Mandarin is transitioning to a capital light hotel management model by selling its owned hotels and maintaining management contracts with the purchasers.
Shakey’s Pizza (PIZZA PM) Q1 FY24 Concall: Margin Recovery in H2 FY24
- Shakey’s Pizza (PIZZA PM) reported Q1 FY24 systemwide sales up 15% YoY, but profits down by 15% YoY due to margin compression owing to higher opex costs.
- Management stuck to its mid-teens YoY revenue/profit growth guidance, citing that margin expansion will happen in the latter half of the year due to its visibility on costs.
- Trading at 13x FY24e PE, with a long runway for growth owing to the success in expanding Potato Corner, we believe the company can be a multi-bagger.
Wynn Resorts: Macau Operations
- The first quarter of 2024 marked a period of continued momentum for Wynn Resorts.
- The company’s earnings call transcript highlighted several significant developments, representing positive and negative factors that could be relevant for potential investors.
- Starting on the bright side, Wynn Resorts reported an all-time record property EBITDAR of $647 million during Q1 2024, owing to the company’s solid team delivering five-star service and unique experiences to their guests.
Pre-IPO China Resources Beverage – Here Are the Concerns and the Risks Behind
- Over 92% of CR Beverage’s revenue is from packaged drinking water products, but YoY growth this business is already below industry CAGR, raising concerns about whether future growth will stall.
- The revenue scale/profitability of CR Beverage are far inferior to Nongfu Spring. In terms of cost control, operational efficiency and the strength of supply chain, CR Beverage is lagging behind.
- For low-priced packaging water, the nationwide expansion is not a simple task, which will lead to significant cash outflow. Valuation of CR Beverage should be lower than that of peers.
Crocs Inc.: Global Expansion and Revenue Growth through New Store Openings! – Major Drivers
- Crocs, Inc. reported strong first quarter results that exceeded guidance both on revenue and net profit.
- Revenue rose by 7% compared to the prior year, driven by a 16% increase in Crocs brand sales.
- Adjusted gross margins improved 180 basis points to 56%, and adjusted earnings per share grew 16% to $3.02.
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