In today’s briefing:
- If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
- Isetan Singapore (ISET SP): Isetan Mitsukoshi (3099 JP)’s 154% Premium Scheme Offer
- Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2024
- Isetan Singapore (ISET SP): Mitsukoshi’s BIGLY Premium Offer
- Tencent Music Entertainment Group: Initiation Of Coverage – Core Business Strategy
- Solving the Issue of Increasing Trading Liquidity in Japanese Stocks Is More Than Analyst Coverage..
- Polestar Automotive: Initiation Of Coverage – What Are The 3 Biggest Hindrances In Its Path For Profitable Growth? – Major Drivers
- Delta Djakarta (DLTA IJ) Q4 2023: Return to Growth, Prefer MLBI IJ as Market Leader
- Nordstrom Inc: Another Potential Takeover Attempt But What Is The Valuation Upside?
- Group 1 Automotive: Is The Favorable Shift Towards Hybrid Vehicles Truly Benefitting The Company?
If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
- A couple of years ago, Rakuten (4755 JP) – burning through cash to start its mobile business – announced it would its Bank and Securities units. Bank listed. Securities didn’t.
- Mizuho ended up buying 49% of Securities. Today, it was announced there would be discussions to put Bank, Securities, Card, and Insurance in a new listed Holdco.
- How this works will end up being complicated. More complicated than it should be. But the complexity would make this more of a win-win for everyone.
Isetan Singapore (ISET SP): Isetan Mitsukoshi (3099 JP)’s 154% Premium Scheme Offer
- Isetan Singapore (ISET SP) disclosed privatisation through a scheme of arrangement from Isetan Mitsukoshi Holdings Ltd (3099 JP) at S$7.20 per share, a 153.5% premium to the last close.
- The high takeover premium reflects the fair value of investment properties of S$300.4 million, i.e., S$7.28 per share, marginally above the offer price.
- The offer is attractive and 2.1% higher than the all-time high. The vote should comfortably get up. The scheme meeting is from early to mid-July.
Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2024
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2024.
- Although the discount on the preferred shares versus the common shares has been gradually narrowing in the past decade, this discount increased from end of 2021 to 1 April 2024.
- On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.
Isetan Singapore (ISET SP): Mitsukoshi’s BIGLY Premium Offer
- Isetan Mitsukoshi Holdings Ltd (3099 JP), the controlling shareholder of department store operator Isetan Singapore (ISET SP), is offering $7.20/share, by way of a Scheme.
- That’s a whopping 153.5% premium to last close. And a 178.9% premium to ISET’s NAV (as at 31 Dec 2023).
- Apart from Mitsukoshi’s 52.73% stake, no other shareholder has >5%. This is a done deal. But why the large premium?
Tencent Music Entertainment Group: Initiation Of Coverage – Core Business Strategy
- Tencent Music Entertainment Group (TME) posted robust results in its fourth quarter and full year 2023 earnings call.
- Increasing subscribers and expedited revenue growth were notable positives, taking the total number of subscribers to the 100 million milestone due to the company’s focus on content leadership, platform value, and offering a high-quality user experience.
- Yet, the company also faced some headwinds, particularly in the social entertainment business.
Solving the Issue of Increasing Trading Liquidity in Japanese Stocks Is More Than Analyst Coverage..
- Market structure is the main factor hindering trading liquidity. In addition to the cross-holdings that remain, ETFs held by the Bank of Japan cast a shadow over trading liquidity.
- Companies are key on this issue. In addition to accelerating to reducte cross-shareholdings, English-language disclosure of annual securities reports, which are in high demand by long-term investors, should be promoted.
- If long-term overseas investors get serious about investing in Japanese equities, the increase in trading liquidity in Japanese equities will be sustainable, and broker coverage will naturally expand.
Polestar Automotive: Initiation Of Coverage – What Are The 3 Biggest Hindrances In Its Path For Profitable Growth? – Major Drivers
- This is our first report on Polestar.
- The company saw their highest-ever delivery volume for the Q3 2023 period.
- The said period witnessed record deliveries of 13,976 vehicles, representing a growth of 51% compared to the same period in the previous year.
Delta Djakarta (DLTA IJ) Q4 2023: Return to Growth, Prefer MLBI IJ as Market Leader
- Delta Djakarta (DLTA IJ) came out with subpar FY23 results, with revenues/profits down 5%/13% YoY with a loss of marketshare to Multi Bintang Indonesia (MLBI IJ)
- Q4 2023 showed an improvement, with revenues/profits up 1.5%/4% YoY, breaking a sequence of three consecutive quarters of negative growth.
- Trading at 13x FY23 PE with 25% of the market cap in cash and 9-10% dividend yield, the stock is worth exploring, although we prefer Multi Bintang Indonesia (MLBI IJ)
Nordstrom Inc: Another Potential Takeover Attempt But What Is The Valuation Upside?
- This is our first report on Nordstrom, Inc., a company that has captured the market’s attention given the recent rumors of a takeover offer from the founding family.
- The company’s fourth quarter results delivered revenues of $4.3 billion and an earnings per share of $0.96, an improvement over the previous year.
- Importantly, 2023 results met or exceeded company guidance.
Group 1 Automotive: Is The Favorable Shift Towards Hybrid Vehicles Truly Benefitting The Company?
- Group 1 Automotive presented solid performance in the fourth quarter of 2023 through all lines of business, reaching a total revenue of $17.9 billion, marking the highest for the company and attaining a record of total gross profit exceeding $3 billion.
- Though the company reported $131.2 million in adjusted net income, it is clearly driven by the parts and service gross profit, which amounted to $1.2 billion.This is our first report on retail player, the Kohl’s Corporation.
- The company’s Fourth Quarter 2023 Earnings showed a mix of positives and negatives in terms of the company’s financial performance and future outlook.
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