In today’s briefing:
- Dalton Investments Going Activist on Kolmar Holdings and NAV Valuation
- Instilling Expectations Was Positive, but Interest Quickly Shifting from Seriousness to Performance
- Pinduoduo (PDD): 4Q24, Not Slowdown, Still Advantage in Low Price Market, 70% Upside
- Geely Auto (175 HK): 2024 Result Accelerating, 50% Upside
- Corn at Cross Roads: Tariff, Weather Shocks, and the Battle for Global Corn Supply
- LE: 4Q Review: Business Model Shifts Gaining Momentum; Reiterate Buy, $20 PT
- Lifeway Foods Faces Potential Sale to Danone Amidst Board Overhaul and Family Feud Resolution by June 2025
Dalton Investments Going Activist on Kolmar Holdings and NAV Valuation
- In this insight, we discuss Dalton Investments which recently started to go activist on Kolmar Korea Holdings (024720 KS) and NAV valuation of this company.
- Our base case valuation of Kolmar Holdings is NAV of 475 billion won or NAV per share of 13,836 won, representing a 46% upside from current levels.
- Dalton Investments is likely to pressure Kolmar Holdings to increase share buyback and cancellations.
Instilling Expectations Was Positive, but Interest Quickly Shifting from Seriousness to Performance
- The reorganization of Panasonic Holdings was far from restructuring its business portfolio, as it brought highly profitable subsidiaries and affiliates into the parent company while leaving low-profit businesses alone.
- Although Panasonic’s disclosure was successful as IR in instilling “expectations” in investors by showing targets, a possibility cannot be denied that it’s temporary phenomenon that came at market turning point.
- Now, 3 years after “TSE’s request,” many investors are looking to improve profitability by restructuring their business portfolios, and will likely demand steady results year after year.
Pinduoduo (PDD): 4Q24, Not Slowdown, Still Advantage in Low Price Market, 70% Upside
- PDD’s total revenue grew by 24% YoY in 4Q24, with advertising up by 17% YoY and commission up by 33% YoY.
- The gross margin declined YoY, but we still believe PDD has advantage in the low price market.
- We conclude an upside of 71% and a price target of US$215 for the next twelve months.
Geely Auto (175 HK): 2024 Result Accelerating, 50% Upside
- Total revenue increased by 34% and total sales volume increased by 32%.
- The operating margin improved to 4% in 2024, compared to 2% in 2023.
- We conclude an upside of 51% and a price target of HK$28.00. Buy.
Corn at Cross Roads: Tariff, Weather Shocks, and the Battle for Global Corn Supply
- Corn rose 37% from its multi-year low in August until mid-Feb. Strong export demand for U.S. corn and adverse weather in South America supported a longer-term recovery.
- US Corn exports for the current MY have exceeded both the 5-year average & previous year. Export momentum has continued even as the dollar has strengthened sharply since October.
- 2024 drought in Brazil was the worst since 1950. No direct impact on crops but transportation was significantly disrupted. Key waterways/ports used for shipping were affected causing delays.
LE: 4Q Review: Business Model Shifts Gaining Momentum; Reiterate Buy, $20 PT
- We are reiterating our Buy rating and $20 price target for Lands’ End after the company reported slightly below consensus 4Q revenue and EBITDA and provided initial FY25 guidance which bracketed the Street, as the shift to higher levels of licensed product sales and lower discounting, strong results from digital marketplaces, international growth and B2B expansion poise Lands’ End to continue to drive higher overall margins and increasingly position the company as a leading lifestyle resource.
- With FY25 positioned, with new licensed products coming online, as another year of metamorphosis at the company, we remain excited over the continued upgrades and higher returns, and reiterate our Buy rating and $20 price target for LE.
Lifeway Foods Faces Potential Sale to Danone Amidst Board Overhaul and Family Feud Resolution by June 2025
- Danone offered to buy Lifeway at $25/share in September 2024, raised to $27/share in November 2024.
- Lifeway’s board rejected Danone’s offers, claiming $27/share undervalues the company; CEO Julie Smolyansky increased her compensation.
- Edward and Ludmila Smolyansky, with Danone, control 50% of Lifeway, aiming to replace the board and negotiate a sale.
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