In today’s briefing:
- KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
- Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches
- Fast Retailing: Earnings Preview
- Shenzhou Intl (2313 HK): Higher Visibility Into Restocking Cycle
- China Resources Beer Holdings (291.HK) Starts 2024 with a Bang!
- Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity
- RPSG Ventures: FMCG Business Is Scaling Up Well | BPO Business Is Recovering
- Abercrombie & Fitch Co: Initiation of Coverage – Its Enhanced Product Differentiation & Expansion Responsible For The Recent Growth? – Major Drivers
- Academy Sports and Outdoors Inc.: Initiation of Coverage – Why Are We Bullish On This Sports Products Giant? – Major Drivers
- NTV’s Change of Policy Is a Positive Effect Of TSE’s Request, But Its Seriousness Will Be Tested Now
KDDI Launches Tender To Buy Out Lawson (2651) – Still Far Too Cheap
- KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP).
- It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines.
- There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up.
Lawson (2651 JP): KDDI Corp (9433 JP) Tender Offer Launches
- Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share.
- The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range.
- Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms.
Fast Retailing: Earnings Preview
- While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
- Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
- Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.
Shenzhou Intl (2313 HK): Higher Visibility Into Restocking Cycle
- Shenzhou Intl Group Holdings (2313 HK) reported 2023 results yesterday. 2H23 continued to be weak, with sales down 6% yoy. Net profit grew 10% yoy in 2H23.
- Most importantly, the company sounded quite bullish on 2024 during the results briefing, which greatly improves the visibility in the order recovery thesis of the company.
- I continue to believe that Shenzhou is the best proxy for gaining exposure to the global sportswear sector, especially given the improved visibility now.
China Resources Beer Holdings (291.HK) Starts 2024 with a Bang!
- Full -year 2023 results and 2024 forecasts indicate business going to plan
- The Baijiu division, key to a rerating, grew sales 50% y/y in the first two months of the year
- The beer division continues to reap the benefits of its premiumisation strategy
Lotte Tour Development: A Major Asset Revaluation Resulting in More Than 8X Increase in Equity
- Lotte Tour Development announced that it will conduct a major asset revaluation which could positively impact its share price.
- The company’s assets will increase to 2.39 trillion won and equity will increase to 569.3 billion won (up more than 8x) at end of 1Q 2024 due to asset revaluation.
- As a result of the asset revaluation, the company’s balance sheet will improve significantly and this likely result in many investors taking another look at the company for potential investments.
RPSG Ventures: FMCG Business Is Scaling Up Well | BPO Business Is Recovering
- With around 3.4% QoQ CC revenue growth in Q3FY24, the BPO business, Firstsource Solutions (“Firstsource”), is recovering back to normal, after seeing cyclical dip over the past couple of years.
- The FMCG business is scaling up well. Q3FY24 revenues came in at INR 135cr, a growth of around 12% QoQ, led by festive season demand. YoY growth was 17%+.
- The Sports business reported muted revenues in Q3FY24 as currently the revenue stream is dominated by the IPL event which typically happens in the March to June period.
Abercrombie & Fitch Co: Initiation of Coverage – Its Enhanced Product Differentiation & Expansion Responsible For The Recent Growth? – Major Drivers
- Abercrombie & Fitch Co.
- emerged from 2023 with significant achievements, marking it as a defining year for the company.
- The brand witnessed a 15.8% increase in sales, reaching $4.28 billion, which not only represents its second highest annual sales level in history but also a testament to its robust growth strategy.
Academy Sports and Outdoors Inc.: Initiation of Coverage – Why Are We Bullish On This Sports Products Giant? – Major Drivers
- This is our first report on sports products major, Academy Sports and Outdoors.
- In the Q4 and 2023 fiscal year call of Academy Sports and Outdoors, the management reported impressive sales improvement during the quarter and significant progress in their long-term strategic objectives.
- Sales came in at $1.8 billion, which was a 2.8% increase in total and adjusted earnings per share increased by 8%.
NTV’s Change of Policy Is a Positive Effect Of TSE’s Request, But Its Seriousness Will Be Tested Now
- Although unavoidable under the provisions of Broadcasting Act, the fact that the right to receive dividends as interest-bearing securities was inhibited was problematic in terms of fairness with other shareholders.
- NTV Holdings, which has ignored this issue, changes its policy, which is a positive impact of “TSE’s request,” but NTV’s seriousness can be measured by whether it raises its ROE.
- If the intention is to leave cross-shareholdings intact and attract overseas investor purchases through some share repurchases, there would be little prospect of a serious increase in ROE.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
