In today’s briefing:
- Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov
- Z Holdings (Neutral) – Quick Thoughts on the Read Across from Google, Meta, and CyberAgent
- Lowball Offer Fell Through
- Nagacorp: Contrary News Flow Is a Symptom of How Volatility Can Hide True Value
- STOXX Europe Quiddity Leaderboard Dec 22: Two Intra-Review Changes & Porsche Addition Likely In Nov
- PT Nippon Indosari Corpindo (ROTI IJ) – The Nation’s Baker
- Ex-Gojek VP’s Mobile Café Network Jago Nets US$2.2M Pre-Series A
Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov
- Back on the 5 August, Thomas Yau, Lifestyle International Holdings (1212 HK)‘s controlling shareholder, tabled a Scheme at HK$5/share, a 62.3% premium to last close.
- The Scheme Doc is now out with the Court Meeting on the 21st of November. The outcome of this transaction will pivot off the reassessed net asset value of HK$10.60/share.
- Trading at a gross spread of 9.6% using yesterday’s close, reflecting the perceived opportunistic nature of the Offer. Yet Hong Kong’s 2018 visitor glory days remain a long way off.
Z Holdings (Neutral) – Quick Thoughts on the Read Across from Google, Meta, and CyberAgent
- Internet advertising revenue growth has come in below expectations for Google, Meta and CyberAgent as ad budgets appear to be shrinking
- There is an indirect read-across to Z Holdings which has almost always posted slower ad growth although it has some insulation from volatility with eCommerce and LINE official accounts
- Sill, management targets for ad revenue growth of 5-10% look increasingly challenging which is an issue when Media generates c. 80% of profitability. We remain cautious
Lowball Offer Fell Through
- Borsa Italiana reported a take-up in bid for Tod’s of c. 48.91%. DeVa Finance and (concerted) LVMH would have controlled 86.95%, below the 90% minimum acceptance condition and pulled out.
- The offer price seemed cheap on any measure (the shares traded above it since the offer period kicked off). A 20% share price drop means it looks good value now.
- If the Della Valles merged Tod’s with Deva Finance, they would offer c. €37/share. Either way, it should pay off to set up a long position in the stock now.
Nagacorp: Contrary News Flow Is a Symptom of How Volatility Can Hide True Value
- Within days of each other, news reports both bullish and bearish for the shares of this sector leader have diluted visibility of a strong bull case intermediate term.
- Moody’s downgraded Nagacorp debt due to continuing concerns about China’s zero tolerance policy seeming to have no defined duration ahead. Lowered VIP also seen as bearish.
- Another report within two weeks showed evidence of continuing strong recovery of Nagaworld GGR in VIP, premium mass and mass. Context is needed on all coveage.
STOXX Europe Quiddity Leaderboard Dec 22: Two Intra-Review Changes & Porsche Addition Likely In Nov
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the December 2022 Rebalance.
- I expect at least two STOXX Europe 600 constituents involved in M&A deals to get deleted in November 2022. There could be more in December 2022.
- Porsche AG (P911 GR) is currently the highest ranked non-constituent and is leading the race to become an intra-review add in November 2022.
PT Nippon Indosari Corpindo (ROTI IJ) – The Nation’s Baker
- PT Nippon Indosari Corpindo (ROTI IJ) released a strong set of 3Q2022 results against all odds given the increased pressure from higher raw material prices and specifically wheat.
- Quarterly sales hit record levels with modern trade driving growth and the company improved margins despite surging raw material costs and saved on operational costs through reduced ad spend.
- Wheat prices are now -34% from peak levels which should be positive for ROTI’s margins and it continues to expand distribution and new products, driving growth. Valuations are attractive.
Ex-Gojek VP’s Mobile Café Network Jago Nets US$2.2M Pre-Series A
- Jago offers a hyperlocal approach to retail by serving neighbourhoods within a 1-2km radius to prepare and deliver fresh beverages within minutes quickly
- Jago, an Indonesia-based mobile café network, today announced the completion of a US$2.2 million pre-Series A round of financing
- The funds will be directed towards expanding to over 200 mobile cafés, covering 20 hyperlocal areas in Jakarta. The company will also strengthen its core team in operations and technology.
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