In today’s briefing:
- Zhuangyuan Pasture (1533 HK): Offer Now Unconditional
- Positive Signals; Growth Sectors Gaining Momentum; Buy Ideas Within Global Growth Sectors
- Shanghai/Shenzhen Southbound Connect: Weekly Moves (22 July 2022)
- Snap 2Q22: Why We Buy Meta
- Kia Corp: The Best Performing Stock Among Top 10 Market Cap Companies in KOSPI YTD
- CarMax Inc: Digital Platform Upside, Marketing & New Sponsorships, Other Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
- Carnival Corporation: Market Position, Resumption Update & Key Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
Zhuangyuan Pasture (1533 HK): Offer Now Unconditional
- On the 25 April, PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) announced a Conditional Cash Offer for all its H-shares at $10.89/share.
- This two-step voluntary cash offer incorporated a Scheme-like vote and a 90% tendering condition.
- Shareholders voted for the transaction on the 29 June. The tendering condition has now been satisfied. The last day of trading is on the 1 August.
Positive Signals; Growth Sectors Gaining Momentum; Buy Ideas Within Global Growth Sectors
- We are seeing some positive signals that suggest the lows for this bear market may have already been established, or at the very least, that downside is limited from here.
- Still, YTD downtrends remain intact on the global MSCI equity indexes, and we need to see reversals of their downtrends in order to get more constructive at the index level.
- Cyclical Growth Sectors continue to gain momentum and we are upgrading the MSCI ACWI Technology, Consumer Discretionary, and Communication Services Sectors from underweight to market weight. Add exposure.
Shanghai/Shenzhen Southbound Connect: Weekly Moves (22 July 2022)
- Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
- Overall, the net inflow over the past week was ~US$0.46bn, split (+US$0.36bn) for Shanghai and (+US$0.1bn) for Shenzhen.
- The largest inflows were into Tencent (700 HK) and BYD (1211 HK). The largest outflow was in Pop Mart International Group Limited (9992 HK) and Great Wall Motor (2333 HK).
Snap 2Q22: Why We Buy Meta
- Snap had yet another earnings related meltdown as management has lost all credibility in forecasting its business.
- Because co-founders Spiegel and Murphy have 99.5% voting shares, there is not an opportunity for an activist to fix the situation like Pinterest and Twitter.
- The issues plaguing Snap are likely not hurting META as much given a broader ad base, better ROI on its ads, and a mgmt team that has already guided down.
Kia Corp: The Best Performing Stock Among Top 10 Market Cap Companies in KOSPI YTD
- Amid a major decline in the Korean stock market (KOSPI down 19.6% YTD), one of the best outperformers has been Kia Corp (000270 KS) which is down only 2% YTD.
- Kia Corp is well poised to continue to outperform KOSPI in the next 6-12 months, mainly driven by its increasing market share for EVs globally and cheap EV/EBITDA valuation multiples.
- The company also reported outstanding 2Q 2022 results, which should boost near-term sentiment on the stock. Kia Corp plans to launch its flagship EV9 model (large sized SUV) in 2023.
CarMax Inc: Digital Platform Upside, Marketing & New Sponsorships, Other Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
- CarMax had a decent start to the 2023 fiscal and generated total sales of $9.3 billion in the first quarter, up 21% from the previous year’s period.
- Total unit sales in their retail division fell by 11% in the first quarter, and used unit comps dropped by 12.7% from the same period in 2017.
- The same broad macroeconomic factors that contributed to a market-wide decline in used car sales during the quarter drove CarMax’s performance.
Carnival Corporation: Market Position, Resumption Update & Key Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
- Carnival Corporation continued its recovery story from the pandemic and delivered a decent quarterly result by restarting 20 more ships, using 74% of its fleet’s capacity for guest cruise operations throughout the entire period.
- The company currently operates guest cruises with 91% of its fleet’s capacity which is a very positive sign.
- Regarding the ships in operation, occupancy for the second quarter was 69%, a significant improvement over the first quarter’s 54%.
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