In today’s briefing:
- L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
- Shimano (7309) | Profit Recovery Derailed
- Keepers Holdings (KEEPR PM): What to Expect from Q2 2023
- LQ45 Index Rebalance: Two Changes in a Few Days
- Melco Resorts: Upcoming Earnings Release Next Month Could Beat Due to Macau, Manila, Cyprus Upsides
- [Coupang Inc. (CPNG US, SELL, TP US$13.7) TP Change]: Taiwan Expansion Will Lower the Profit Margin
- Omnicom Group Inc.: Acquisition of Grabarz & Partner
- Nemak – ESG Report – Lucror Analytics
- Conagra Brands Inc.: Summer 2023 Product Launches & Other Drivers
- Oisix: Meal Kit Kaizen
L’Occitane (973 HK): Controlling Shareholder Mulling a Bid?
- L’Occitane (973 HK) is drawing takeover interest from Reinold Geiger, the Chairman and the largest shareholder, according to Bloomberg. Mr Geiger has been exploring financing options for the potential deal.
- The presence of a significant disinterested shareholder, Acatis KVG, necessitates an attractive takeover premium. Acatis KVG trimmed its stake in July 2021 at HK$30.01 per share.
- L’Occitane released a solid 1QFY2024 update today with constant currency growth of 24.5% YoY. Irrespective of a bid materialising, the valuation is undemanding compared to peer multiples.
Shimano (7309) | Profit Recovery Derailed
- Shimano reported a 40% drop in operating profit for 2Q and revised down full year guidance
- Bike sales continue to be weak (-19% YoY) in Q2 and 2H outlook is even worse
- We expect the share price to sell-off following the guidance cut. The inventory overhang could take a while to resolve
Keepers Holdings (KEEPR PM): What to Expect from Q2 2023
- The Keepers Holdings (KEEPR PM) declares its Q2 2023 in the second week of August. We expect a 15-20% revenue growth and a similar profit growth.
- The stock trades at 9.3x/7.9x FY23e/24e, with structural growth drivers arising from rising imported spirit consumption and a monopolistic position with a >70% marketshare by volume.
- With healthy profit growth and a sound balance sheet ( 15% of the market cap in cash), Keepers can pay 50% of profits resulting in a 4.2% FY23e yield.
LQ45 Index Rebalance: Two Changes in a Few Days
- Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
- There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ).
- There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.
Melco Resorts: Upcoming Earnings Release Next Month Could Beat Due to Macau, Manila, Cyprus Upsides
- From 2022 loss in period, MLCO earnings could come in anywhere between a profit of $0.06 to $0.70 indicative of recovery in Macau, Manila and opening of Cyprus.
- Revenue could come in above $1.2b. This is a forerunner of a solid recovery year.
- MLCO has a global vision beyond Asia that makes it attractive at its current price.
[Coupang Inc. (CPNG US, SELL, TP US$13.7) TP Change]: Taiwan Expansion Will Lower the Profit Margin
- We expect CPNG to report C2Q23 revenue and profit in-line and (31.6%) vs. cons., respectively. CPNG’s profit miss is largely due to rapid expansion in Taiwan…
- …which we estimate it will impact net profit by up to 40% this year. AliExpress continues its development in South Korea, Temu, is expected to put pressure on Coupang.
- We maintain SELL on Coupang and revise down this year’s EPS estimate by 16% and cut our TP to US$ 13.7 to reflect the changes on the profit side.
Omnicom Group Inc.: Acquisition of Grabarz & Partner
- Omnicom Group delivered a mixed set of results for the previous quarter, with revenues below analyst expectations but managed earnings beat.
- Organic growth for the quarter was impressive and the company’s liquidity is strong while its cash flow supports its principal cash uses, including dividends, purchases, and share repurchases.
- Omnicom made considerable headway on its AI strategy by incorporating generative AI into Omni, their market-leading technology platform, and forming important first-of-their-kind technological partnerships.
Nemak – ESG Report – Lucror Analytics
- Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
- We view Nemak’s ESG as “Adequate”, in line with the Environmental and Social scores. The company has “Strong” Governance. Controversies are “Immaterial” and Disclosure is “Strong”.
- Based in Mexico, Nemak is a global Tier 1 supplier to automotive OEMs. It specialises in aluminium components for powertrain, body and structure applications, as well as electric vehicle components.
Conagra Brands Inc.: Summer 2023 Product Launches & Other Drivers
- Conagra Brands delivered a mixed set of results in its most recent quarter, with revenues falling short of Wall Street expectations.
- As Conagra made significant headway on its cost-saving initiatives and consequently saw a significant rise in service standards, its supply chain kept becoming better.
- Conagra Brands further expanded its product line by introducing more than 50 new items across its frozen, grocery, and snacking divisions.
Oisix: Meal Kit Kaizen
- Oisix Ra Daichi is by far Japan’s largest online food retailer, driven by the popularity of its fresh food and meal kit subscription services.
- Despite some backend problems last year, the company expects its system of continual improvement and expansion of new lines of meal kits to bring strong growth in the medium term.
- The development of the online food market should help boost the company’s prospects. Operating margins have worsened considerably but the company hopes to match the previous peak this year.
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