In today’s briefing:
- Oriental Watch: Addressing the Rolex Acquisition of Bucherer
- Astra International (ASII IJ) – Crossing EV Boundaries
- Tuhu Car Pre-IPO Peer Comp – While It Has Been Loss Making, GPM Expansion Has Been the Strongest
- Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way
- Luckin’s New Moutai-Laced Lattes Create a Stir in China’s Coffee Wars
- SJM Holdings Ltd: H1 Results Foretell Recovery Momentum for the Stock Beginning to Build
- Chewy: CFO Stepped Down, Weak 3Q Guidance, More Selling Pressure Is Likely
- Macy’s Inc.: The Gap Collaboration For The Launch of Sleepwear and Intimates Collections & Other Drivers
- Target Corporation: Adaptation in a Digital Retail Landscape! – Major Drivers
- The TJX Companies Inc.: Can This Retail Dynamo Outperform Its Retail Peers? – Major Drivers
Oriental Watch: Addressing the Rolex Acquisition of Bucherer
- Rolex acquisition of Bucherer signals the company’s intention to own retail distribution and gain access to what its competitors are doing, with the battleground currently being Europe.
- We believe it will take years for Rolex to digest this acquisition before foraying into other markets, but with a similar approach, potentially making Oriental Watch (398 HK) a target.
- Trading at 6.9x PE with 50% of the market cap in cash and a ~15% dividend yield, the company presents a great investment opportunity.
Astra International (ASII IJ) – Crossing EV Boundaries
- Astra International (ASII IJ) looks set to have another year of positive growth driven by strong performance from its Auto and 2W businesses and steady performance from United Tractors.
- The company’s move into the EV space has begun with 16 models hybrid or BEV models already launched, with 4W hybrid outperforming ICE given narrowing price differentials.
- Astra International (ASII IJ) continues to invest in core growth areas of the Indonesian economy, with a strong sustainability bent. Valuations are attractive versus history on 8.3x FY2024E PER.
Tuhu Car Pre-IPO Peer Comp – While It Has Been Loss Making, GPM Expansion Has Been the Strongest
- Tuhu Car (2007986D HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
- Tuhu is an integrated online and offline platform for automotive services in China.
- We have looked at the firm’s past performance and PHIP updates in earlier notes. In this note, we undertake a peer comparison.
Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way
- In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.
- There could be one ADD and one DELETE for HSTECH in December 2023 but I would treat them as low-conviction changes.
- At present, I see one-way flows for the December 2023 rebalance to be around US$250mn but as prices change, our index change and flow expectations will change too.
Luckin’s New Moutai-Laced Lattes Create a Stir in China’s Coffee Wars
- Luckin Coffee is creating a stir with an unusual offering to capture the attention of Chinese coffee drinkers: lattes with a nip of Kweichow Moutai’s baijiu.
- The coffee chain partnered with China’s luxury liquor maker Kweichow Moutai to launch an alcohol-infused coffee drink, the so-called “sauce-flavored latte,” referring to the popular savory notes of Moutai liquors.
- The tie-up between Luckin and Moutai, the maker of China’s national liquor baijiu, triggered a buying frenzy. Discussions about whether it is safe to drive after consuming the alcohol-infused drink topped China’s social media Monday with 430 million views.
SJM Holdings Ltd: H1 Results Foretell Recovery Momentum for the Stock Beginning to Build
- SJM has lagged other sector peers in price recovery since the end of the Beijing zero covid ban policy last Janaury 6th.
- The company last year underwent a significant reordering of its business model which is not yet reflected in its ongoing momentum towards regaining positive EBITDA.
- Trading volume indicates ongoing interest but stock in our view has not yet reflected the continuation of positive sales growth leading to EBIDA turning positive in forward quarters.
Chewy: CFO Stepped Down, Weak 3Q Guidance, More Selling Pressure Is Likely
- Chewy (CHWY US) reported a strong quarter but provided weak 3Q revenue guidance, pushing shares down over 10% on heavy volume during regular trading session.
- Chewy (CHWY US) shares massively underperformed in 2023, with shares down ~34% year-to-date vs a 16% gain on the S&P 500 index.
- In July, Chewy CFO Mario Marte stepped down after 8 years in the company. He sold ~$10M worth of Chewy shares in 2023.
Macy’s Inc.: The Gap Collaboration For The Launch of Sleepwear and Intimates Collections & Other Drivers
- Macy’s delivered a positive result and managed an all-around beat last quarter, with notable achievements in net sales, gross margin rate, and SG&A rate.
- These outcomes were primarily driven by better-than-expected sales, gross margin results, and SG&A.
- Macy’s demonstrated effective inventory management strategies, resulting in reduced inventories compared to previous periods.
Target Corporation: Adaptation in a Digital Retail Landscape! – Major Drivers
- Target Corporation delivered mixed results in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
- At the beginning of the quarter, Target started seeing softening sales trends.
- Comp trends softened in May and June and a meaningful recovery was seen in both comps and traffic in July.
The TJX Companies Inc.: Can This Retail Dynamo Outperform Its Retail Peers? – Major Drivers
- TJX delivered a positive result and managed an all-around beat in the last quarter.
- Marmaxx delivered high increases in both customer traffic and comp sales.
- The overall home sales improved significantly and returned to positive sales growth.
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