In today’s briefing:
- PDD (PDD US): Stock Plunged After Excellent 2Q24 Result – Your Time to Buy
- Hyundai Motor India IPO Valuation Analysis
- Technically Speaking, Breakouts and Breakdowns: HONG KONG (AUGUST 24)
- Nitori (9843.T) – Headwinds to Tailwinds -Cleaning House
- VRA: Snapping the Store: Shocking the System; Reiterate Buy, PT
- Minerva: Balancing an Interesting Credit Story with Acquisition Risks
- Minth (425): Battery Housing as New Growth Driver
PDD (PDD US): Stock Plunged After Excellent 2Q24 Result – Your Time to Buy
- The stock plunged today after the announcement of excellent performance for 2Q24.
- In 2Q24, revenue grew by 86% YoY and the operating margin improved 10 percentage points YoY.
- We believe investors should buy, as it is just a tactic from major stock sellers.
Hyundai Motor India IPO Valuation Analysis
- Our base case valuation of Hyundai Motor India is market cap of US$18.6 billion, based on P/E of 24.4x our estimated net profit of 64.1 billion INR in FY25.
- There have been some increasing concerns about Hyundai Motor India paying out higher royalty to its parent Hyundai Motor and dividend to shareholders, which could lower profit.
- According to a recent article by livemint, the expected valuation of Hyundai Motor India has fallen to about USD16 billion to USD20 billion.
Technically Speaking, Breakouts and Breakdowns: HONG KONG (AUGUST 24)
- Hong Kong’s unusual trading channel pattern may be coming to an end and short selling declines.
- Alibaba Group Holding (9988 HK) broke a falling triangle pattern and now trades above near term support levels. The company’s dual listing announcement and large buyback program are near-term positives.
- GDS Holdings (9698 HK) has broken out of its rounding bottom pattern with a positive earnings announcement. China Ruyi Holdings (136 HK) has broken out from its triangle pattern.
Nitori (9843.T) – Headwinds to Tailwinds -Cleaning House
- A Strong JPY beneficiary as the company imports >80% of its products
- Profits have been rising despite the weakness of the Japanese Yen
- Redesigning product portfolio to be profitable at much weaker yen levels
VRA: Snapping the Store: Shocking the System; Reiterate Buy, PT
- We are reiterating our Buy rating, $10 price target and projections as we review our mail line store visits for August.
- August represents the first monthly store tours where the main line stores have their full compliment of fixtures and products to represent the launch of their New Day (which was July 11th); further, unlike the outlet stores (which completed their New Day conversion on August 22nd), the change for the main line locations was a complete product reset, a true “shock to the system,” positioning Vera Bradley on a new course with a wider offering of fabrics, a materially easier to shop store, an emphasis on handbags, complete leather collections and even new logos.
- While we view these changes as longer term positives which position Vera Bradley for a new generation of shoppers, we do acknowledge that, like any shock, the near term impacts can be messy as the prior core shopper adjust and new shoppers slowly shift their views on Vera Bradley.
Minerva: Balancing an Interesting Credit Story with Acquisition Risks
- We are initiating coverage on Minerva with an Underperform recommendation.
- We are cautious about the credit impact of the Marfrig acquisition.
- We believe a better entry point into the name may emerge in the future based on our expectation of a weakening credit profile.
Minth (425): Battery Housing as New Growth Driver
- Minth Group Ltd (425 HK) revenue went up by 14% (almost 3x of China’s passenger vehicle market, which grew 5%) and net income by 20% on 1H 24
- It has developed environmentally friendly collision aluminum, with a carbon emission of less than 2.5 kg CO2 /Kg.AL while typically it produces 16 CO2/kg.AL
- Battery housing business contributed 21% instead of 18% of total revenue with OPM expanded from 18% to 20%.
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