In today’s briefing:
- Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand
- Tata Motors (TTMT IN): Index Impact of DVR Cancellation
- WeRide (WRD US) IPO: The Bull Case
- ADEA: Streaming Loading
- IPAR: New Line Additive to Growth
- United Arrows (7606 JP): Q1 FY03/25 flash update
- Mondelez International: Strategic Brand Partnerships & Diversification Catalyzing Growth! – Major Drivers
- Abercrombie & Fitch Co Cl A – AKA; 2Q Review: Showing the Way to Upside; Reiterate Buy, $25 PT
- Round One Corp (4680 JP): Q1 FY03/25 flash update
- Starbucks Corporation: Expanded Digital Offerings & Rewards Program Growth & Other Major Drivers
Ola Electric IPO Trading – Decent Anchor, Tepid Overall Demand
- Ola Electric managed to raise around US$734m in its India IPO.
- Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
- In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.
Tata Motors (TTMT IN): Index Impact of DVR Cancellation
- The Tata Motors Ltd (TTMT IN) / Tata Motors DVR (TTMT/A IN) scheme of arrangement has received shareholder approval and regulatory approvals and should be implemented in the short-term.
- There will be small buying from global passive trackers while there will be much bigger buying from NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers.
- In total, we estimate passive trackers will need to buy 25.2m shares (US$308m; 1.9x ADV) of Tata Motors Ltd (TTMT IN) with buying coming in at different times.
WeRide (WRD US) IPO: The Bull Case
- WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise between US$200 to US$300 million through a Nasdaq IPO.
- WeRide is the most commercially successful L4 autonomous driving company globally, measured by commercialization revenue in 2021, 2022 and 2023.
- The bull case rests on a large TAM, strong product capabilities, near-term mass commercialization, articulation of a path to profitability, improving earnings quality and presence of blue-chip investors.
ADEA: Streaming Loading
- ADEA signed several renewals in the second quarter extending out terms with current licensees and showing to investors that there is value from the portfolio of more than 11,500 patents.
- The deals ADEA signed in the quarter were not the headline grabbing nature, unlike those in prior quarters and those we expect the Company to sign in coming quarters.
- ADEA generating annual free cash flow of approximately $150 million should become a bigger factor to valuing the equity as the debt balance becomes visually smaller to investors.
IPAR: New Line Additive to Growth
- PAR had previously issued its quarterly sales update making the second quarter results more of an update on how the business is shaping out for the remainder of the year.
- IPAR used the Q2 earnings call to disclose its intention to enter the luxury fragrance market with its own brand in 2025. Owning a brand is not new for IPAR.
- The consumer continuing to purchase fragrances undisturbed should create the opportunity to grow sales in the second half of the year ahead of new launches scheduled for 2025.
United Arrows (7606 JP): Q1 FY03/25 flash update
- FY03/22 revenue decreased by JPY3.2bn, cost of revenue by JPY1.3bn, and SG&A expenses by JPY1.9bn due to new accounting standards.
- Q1 FY03/25 consolidated revenue grew 10.4% YoY, driven by increased customer count and optimized pricing, despite high raw material prices.
- The company had 308 stores at end-Q1 FY03/25, launched new brands, and expanded internationally with a store in Bangkok.
Mondelez International: Strategic Brand Partnerships & Diversification Catalyzing Growth! – Major Drivers
- Mondelez International delivered a solid performance in the second quarter of 2024, characterized by a fine balance between strategic pricing adjustments and robust underlying consumer demand, particularly in its key chocolate and biscuit segments.
- The financial highlights include a 2.5% growth in organic net revenue and a notable 11.3% adjusted gross profit dollar growth.
- This performance underpins the company’s ability to manage costs effectively and leverage pricing strategies to maintain profitability.
Abercrombie & Fitch Co Cl A – AKA; 2Q Review: Showing the Way to Upside; Reiterate Buy, $25 PT
- We are reiterating our Buy rating and $25 price target for AKA and raising our 2024 and 2025 projections after the company registered impressive 2Q2H top line, Adjusted EBITDA and EPS upside, raised 2024 guidance and increased the store opening roster for Princess Polly in 2024 to five, adding new locations in Irvine and Santa Clara.
- a.k.a. Brands continues to leverage newness, fashion excitement and omnichannel expansion for their brands to capture stronger domestic market results.
- We believe, with increased 2024 Princess Polly store openings, a focus on increasing margins in Australia, and new (and deepening) digital marketplace relationships, our projections, even after material raises for 2024 and 2025, remain conservative and we reiterate our Buy rating and $25 price target for AKA.
Round One Corp (4680 JP): Q1 FY03/25 flash update
- Sales increased to JPY40.4bn (+12.3% YoY), with operating profit at JPY4.9bn (+25.6% YoY) and recurring profit at JPY5.0bn (+24.1% YoY).
- In Japan, comparable store sales grew 4.8% YoY, with notable increases in bowling (10.3%), karaoke (10.1%), and SPO-CHA (8.9%).
- In the US, sales were JPY16.8bn (+24.7% YoY), with a segment profit of JPY2.0bn (+18.6% YoY), and amusement sales up 1.3% YoY.
Starbucks Corporation: Expanded Digital Offerings & Rewards Program Growth & Other Major Drivers
- Examining Starbucks Corporation’s third quarter fiscal year 2024 earnings, a balanced perspective highlights both strengths and areas for improvement.
- The global coffee giant reported a mild revenue increase to $9.1 billion, marking a 1% year-over-year growth and a 6% sequential rise from the second quarter.
- However, global comparable store sales declined by 3%, influenced by a notable 14% decrease in China, despite a relatively steady performance in Japan and modest declines in North America.
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