In today’s briefing:
- Where Does Melco’s Discount To NAV Go From Here?
- ATRenew (RERE US): Pre-Owned Satisfaction
- China Internet Weekly (5Dec2022): JD.com, Baidu, IQiyi, Alibaba Health, ZTO, Pinduoduo, KE
- KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern
- DPC Dash IPO: Dominos Getting Dominated
- Weilong Delicious Global IPO – Tepid Recent Performance Still Makes It Look Expensive
- Weilong Delicious IPO: Valuation Insights
- ATRenew: Round & Round It Goes
Where Does Melco’s Discount To NAV Go From Here?
- On the 26 November, Macau’s government renewed the concession periods of the city’s six incumbent gambling concessionaires for another 10 years.
- Genting Malaysia (GENM MK), a last-minute interloper, failed in its bid to secure a license. It scored lowest under the government’s bidding review. MGM China (2282 HK) topped the scoresheets.
- As with all incumbents, Melco International (200 HK) and Melco Resorts & Entertainment (MLCO US) eked out strong gains following the renewal. Melco’s current discount to NAV is currently 20%.
ATRenew (RERE US): Pre-Owned Satisfaction
- ATRenew (RERE US) operates the largest pre-owned consumer electronics transactions and services platform in China. It is listed in June 2021 at US$14 per ADS.
- The shares are down 63% YTD largely due to the tech market sell-off. Unlike most tech companies, ATRenew is starting to deliver growth with profits, cash generation and share buybacks.
- The valuation is undemanding compared to a peer group of pre-owned marketplaces and global online retail marketplaces. It will also appeal to investors with an ESG mandate.
China Internet Weekly (5Dec2022): JD.com, Baidu, IQiyi, Alibaba Health, ZTO, Pinduoduo, KE
- Richard Liu came back to manage JD.com after he resigned half a year ago.
- Alibaba Health revenue increased 23% YoY in 1H23, which benefited from hospitals being closed.
- Pinduoduo revenue increased by 65% YoY and operating profit increased 388% YoY in 3Q22.
KOSPI 200 Passive Flow Breakdown, Feat. NPS Size & Trade Window Pattern
- We should set the minimum level of the target size to estimate the flow impact on T-1 Effective at ₩15T from ETFs.
- We then need to pay attention to the recent trend that an additional flow from NPS appears post-Effective, with a significant portion on T+1~3.
- We should revise down our expected rate of return on our early-phase setup aiming at the preemptive trading (T-6W Effective) by NPS.
DPC Dash IPO: Dominos Getting Dominated
- DPC Dash (DPC HK) is the exclusive master franchisee of Domino’s Pizza (DPZ US) in mainland China, Hong Kong and Macau with around 546 stores as of 9M2022.
- The company has refiled for an IPO on the Hong Kong Stock Exchange after failing the first time to raise around US $100m in March 2022.
- Discounted pricing has failed to propel the Dominos brand to the top in many Asian markets where pizza is considered a luxury meal. DPC-Dash is experiencing the same in China.
Weilong Delicious Global IPO – Tepid Recent Performance Still Makes It Look Expensive
- Weilong Delicious Global (WDG HK) a spicy snack food company in China, aims to raise around US$140m in its Hong Kong IPO.
- According to F&S, WDG ranked first among spicy snack food enterprises in China, with a market share of 6.2%, and in the seasoned flour product and spicy vegetable snacks categories.
- We have covered various aspects of the deal in our previous notes, in this note, we will talk about the final valuations.
Weilong Delicious IPO: Valuation Insights
- Weilong Delicious Global (WDG HK), a leading spicy snack food company in China, has launched its IPO to raise up to US$141 million.
- We previously discussed the IPO in Weilong Delicious IPO: Remains in a Pickle, Weilong Delicious IPO: In a Pickle, Weilong Delicious IPO: Mixed Update, Weilong Delicious IPO Initiation: Tasty Bite.
- In this note, we present our forecasts and look at valuation. Weilong is unattractively valued at the IPO price range. We would pass on the IPO.
ATRenew: Round & Round It Goes
- JD.com Inc. (9618 HK)-backed ATRenew (RERE US), one of the pioneers of China’s circular economy, registered its first non-GAAP net profit in the 3Q22.
- The improvement pivoted off core business stability (consumer electronic devices recycling and sales) and an increasing revenue stream from its multi-category recycling business, including luxury goods.
- This is all positive. However ATR, like all US-listed China plays, faces the prospect of a potential delisting under the HFCAA just 16 months away.
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