In today’s briefing:
- Pinduoduo (PDD) Short Review: Third-Party Retailers “Bombarded” Direct Sales
- Trial IPO to Drive Tech Innovation Targeting Convenience Stores
- Seven & I: Earnings Peak and Valuation Multiples Nearing Breaking Point
- Manyo Factory IPO Preview
- Zomato (ZOMATO IN) | Houston, We Have A “Pincode” Problem
- New Unconditional Date
- Between Chilean Copper Woes & Brazilian Sugar Rush
- WDFC: Slippery Times for the Stock
- ChopValue Scores US$7.7M Funding to Recycle Chopsticks into Furniture, Home Elements
Pinduoduo (PDD) Short Review: Third-Party Retailers “Bombarded” Direct Sales
- PDD’s small retailers bought out products of direct sales and claimed full refund.
- The story happened to Alibaba more than ten years ago.
- It can be hard for PDD to enter the high quality market.
Trial IPO to Drive Tech Innovation Targeting Convenience Stores
- A lot has been said and written about Trial’s IPO but much of this relates to pass performance and comparing it to supermarkets.
- As the company’s latest Trial Go store in Fukuoka shows, Trial is a tech-based retailer and a true discounter, and discounting is where the growth is in Japanese FMCG.
- Trial thinks its technology can reduce costs significantly, improving margins while allowing it to roll out more small format stores to compete with convenience stores. It may be right.
Seven & I: Earnings Peak and Valuation Multiples Nearing Breaking Point
- Seven & I Holdings (3382 JP) was down as much as 5% on Friday on weak FQ4 earnings as the company’s revenue and OP missed consensus by 1.9% and 2.6% respectively.
- Earnings likely peaked in FQ3 as fuel retail margin and merchandise sales trend reversed in FQ4.
- Given the reversal of fuel retail margin and merchandise sales trend and the negative impact of the exchange rate, the risk rewards appear favourable for a short trade.
Manyo Factory IPO Preview
- Manyo Factory is well known for its functional skin care products made from naural ingredients. Its products have been enjoying excellent sales in Japan and Korea.
- Given the company’s superior sales growth and operating margins than its peers combined with the large IPO discount, there is likely to be a strong interest in Manyo Factory IPO.
- Unlike other major Korean cosmetic companies with poor sales and operating profit in the past three years, Manyo Factory experienced excellent growth of its sales and profits in this period.
Zomato (ZOMATO IN) | Houston, We Have A “Pincode” Problem
- Phonepe Pvt Ltd (1732974D IN) ‘s new app, “Pincode”, is based on the ONDC platform and offers hyperlocal e-commerce.
- ONDC-Enabled Pincode could disrupt Zomato (ZOMATO IN) food delivery and grocery businesses.
- Loyal restaurants may choose to offer discounts via ONDC, putting pressure on Zomato (ZOMATO IN) and Swiggy (1255298D IN) to compete bringing back cash burn and discounting.
New Unconditional Date
- On 6 April, Bidco and Dignity confirmed that the FCA Change in Control Condition had been satisfied on 5 April. The new Unconditional Date is 4 May 2023.
- Bidco has so far irrevocables and letters of intent in respect of 39.12%. The end of the life of Dignity as a listed company is nigh.
- Spread to cash offer is 3.6%/42% (gross/annualised, assuming settlement on 18 May). Long/tender to the cash offer. The Alternative Offers are either Valderrama D shares (unlisted) or Castelnau shares (illiquid).
Between Chilean Copper Woes & Brazilian Sugar Rush
- As the new season commences in April, Brazil is predicted to manufacture 40.3 million tonnes of sugar, marking the second highest yield ever recorded.
- This is primarily due to the favorable climate conditions and the sufficient capitalization of mills, allowing for the proper care of crops.
- As per a report by Job Economia, mills are likely to concentrate on sugar production, reducing ethanol production, since the cost of sugar futures is at its highest in over six years.
WDFC: Slippery Times for the Stock
- WDFC reported fiscal second quarter (February) results continuing to depict a soft demand environment. WDFC reported a decline in unit volume across all major geographies
- WDFC reported fiscal second quarter sales of $130.2 million compared to $124.9 million achieved in fiscal first quarter.
- The Company reduced its inventory level only to raise its accounts receivable by more than the decline in inventory and the increase in sales
ChopValue Scores US$7.7M Funding to Recycle Chopsticks into Furniture, Home Elements
- ChopValue, a Canadian startup designing and manufacturing products using an innovative, high-performance material engineered from recycled chopsticks, has closed a US$7.7 million funding round.
- Two unnamed high-profile technology entrepreneurs with expansion interests in Asia Pacific and Europe led the round.
- Several corporate VC funds and existing investors (VC funds in the climate-tech space and institutional investors such as EDC and BDC) also participated.
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