In today’s briefing:
- Midea Group H Share Listing (300 HK): Valuation Insights
- 7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Midea A/H Listing – Bigger Deal, Better Pricing
- Midea Group: Quick Overview of HK Offer, Post-Issue Valuations. Attractive.
- Seven & I Says Not Enough to Alimentation Couche-Tard, Warns of US FTC Barriers
- SENSEX Index Rebalance Preview: Trent Could Replace Bajaj Finserv; BUT F&O Adds Could Change That
- The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 7)
- P N Gadgil Jewellers IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation
- Nongfu Spring (9633 HK): Trading At Below 20x Forward PE With 15% NP 3-Year CAGR
- Some More Thoughts on Dollar General
Midea Group H Share Listing (300 HK): Valuation Insights
- Midea Group Co Ltd A (000333 CH) has launched its H Share listing at HK$52.00-54.80 per share. Pricing will be on 13 September, and the listing on 17 September.
- We previously discussed the listing in Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health and Midea Group H Share Listing: AH Discount Views.
- Our valuation analysis suggests that the H Share listing range is attractive. We would participate in the listing.
7&I Rejects ACT’s Bid As Too Low, Not Worth Discussing, ACT Whines, 7&I Taps The Sign
- Late last week, the Nikkei reported Seven & I Holdings (3382 JP) would send a letter to Couche-Tard saying they reviewed ACT’s Proposal and deemed it “inadequate.” Indeed it was.
- 7&i then published the Board’s letter, saying 7&i remained open to discussions but ACT’s Offer “grossly undervalued” 7&i’s intrinsic value and lacked in other areas. ACT responded with a “letter.”
- But ACT’s “letter” was a press release aimed not at 7&i but the public. 7&i released a terse response today. ACT is the suitor. It needs to act like it.
Midea A/H Listing – Bigger Deal, Better Pricing
- Midea Group Co Ltd A (000333 CH) aims to raise up to US$3.5bn in its H-share listing, the deal is somewhat larger than what was being spoken about earlier.
- Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
- We have covered the deal background in our previous notes. In this note, we talk about valuations.
Midea Group: Quick Overview of HK Offer, Post-Issue Valuations. Attractive.
- Midea Group Co Ltd A (000333 CH) is offering 492.1 million shares in Hong Kong, priced between HKD52 and HKD54.8 per share.The valuation looks attractive.
- Nearly one-third of the Hong Kong share offering has already been subscribed by cornerstone investors.
- Midea’s strong market share in home appliances, consistent revenue growth, margin expansion, and appealing return ratios make a compelling investment case.
Seven & I Says Not Enough to Alimentation Couche-Tard, Warns of US FTC Barriers
- Last Friday, Seven & I Holdings (3382 JP) issued a response to Alimentation Couche-Tard (ATD CN)’s non-binding acquisition proposal.
- At $14.86 per share, Seven & I’s special committee stated that the offer significantly undervalues the company.
- The response also highlighted that the proposal fails to address the numerous and substantial regulatory challenges the transaction would encounter from U.S. competition authorities.
SENSEX Index Rebalance Preview: Trent Could Replace Bajaj Finserv; BUT F&O Adds Could Change That
- As things stand, Trent Ltd (TRENT IN) could replace Bajaj Finserv (BJFIN IN) in the S&P BSE SENSEX Index (SENSEX INDEX) at the close on 20 December.
- Addition to the F&O list could see Zomato (ZOMATO IN) added to the index instead. That could then result in two changes to the S&P BSE SENSEX Index in December.
- Trent Ltd (TRENT IN) is also an inclusion to the NIFTY Index (NIFTY INDEX) later this month and the pool of shares available for active investors is getting smaller.
The Heat Is On: News Flow and Sentiment in CHINA / HONG KONG (September 7)
- ETF flows showed subdued activity during the week although the Southbound Connect platform had a minor outflow.
- Great Wall Motor (2333 HK) and China Feihe (6186 HK) both had positive news sentiment helping their share prices rally on better earnings announcements.
- New World Development (17 HK) announced a major asset impairment write-down sending its stock to historic lows. China Tourism Group Duty Free (1880 HK) disappointed on 2Q24 sales and profits.
P N Gadgil Jewellers IPO – RHP Updates & Quick Thoughts on Peer Comp and Valuation
- P N Gadgil Jewellers (1742652D IN) is looking to raise up to US$132m in its India IPO.
- P N Gadgil Jewellers (PNGJ) is an Indian organized jewellery player. Its product offerings include traditional as well as modern and functional jewellery designs, in gold, diamond, silver and platinum.
- Previously, we talked about the company’s historical performance. In this note, we provide a summary of its RHP updates and share our quick thoughts on peer comparison and valuation.
Nongfu Spring (9633 HK): Trading At Below 20x Forward PE With 15% NP 3-Year CAGR
- Nongfu Spring (9633 HK)‘s valuation has come down to a much more reasonable 20x forward PE with expected net profit CAGR of 15% for the next 3 years.
- The derating is largely due to the negative media portrayal of the company’s Nongfu brand since February 2024, resulting in a -18% decline in its water business in 1H24.
- Unsweetend tea business on the other hand has continued to shine, growing 59% yoy in sales in 1H24, while operating profit of the segment surged 63% yoy.
Some More Thoughts on Dollar General
After Dollar General’s (DG) disastrous earnings couple of weeks ago, I was quite concerned about their prospects in the near-term.
However, a week later after digesting through Dollar Tree (DLTR) as well as DG management’s explanation in the Goldman Sachs Retailing Conference, I have updated some of my thoughts about DG…in the positive direction.
Nonetheless, I have decided to abide by my decision not to inject more capital to DG, but to increase my notional exposure to DG via long-dated call options.
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