In today’s briefing:
- Rakuten Securities IPO: Promising Business with Valuation Caveats
- Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store
- Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out
- Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room
- TopBuild: Another Splendid GARP Opportunity
Rakuten Securities IPO: Promising Business with Valuation Caveats
- Yesterday, Rakuten Group (4755 JP) announced that its consolidated subsidiary, Rakuten Securities, has applied for a listing on the Tokyo Stock Exchange.
- Rakuten Securities has long-term growth potential through leveraging Rakuten’s ecosystem for steady securities account growth and exploring cross-selling opportunities for related services.
- While the business seems promising, there may be concerns regarding its valuation, given its previous high trailing PE of 43.0x.
Hyundai G.F. Holdings’ Stock Swap with Hyundai Green Food & Hyundai Dept Store
- Hyundai G.F. Holdings will conduct a tender offer to Hyundai Green Food and Hyundai Dept Store shareholders. The tendering period is August 11-September 1.
- The target volume is 10,125,700 (Hyundai Green Food) and 4,669,556 (Hyundai Dept Store), corresponding to 29.89% and 19.95% of the outstanding shares, respectively.
- We should approach this event trading with caution, taking into account the risk of an unhedged setup while monitoring the potential widening of the spread opening during the tendering period.
Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out
- Multi Bintang Indonesia (MLBI IJ) is Indonesia’s leading beer company, with a marketshare of 50% by volume. The company is 89% owned by Heineken.
- The company has maintained an average 5 Yr/10 Yr ROCE of over 72%/82% and paid out 80-100% of its profits as dividends. It is also net cash.
- The stock boasts a 6.5%-7% dividend yield and trades at 14-15x PE if profits normalize due to increased tourism in Indonesia, where we believe most of the demand is.
Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room
- China accounts for over half of the automaker’s global sales.
- There is also potential for Chinese brands to encroach on European markets.
- Tesla’s valuation could be impacted by protectionism and nationalism, with questions over how China will tolerate overseas competitors in its electric vehicle market.
TopBuild: Another Splendid GARP Opportunity
- The stock has surged by more than 60% since the turn of the year.
- The company’s acquisition strategy has resulted in significant market share and an ever-improving profit & loss statement.
- The stock’s PEG ratio of 0.26 speaks volumes.
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