In today’s briefing:
- Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT
- For Long-Term Investors, Seven & I Is the Better Bet
- Midea Group H Share Listing: AH Discount Views
- Sony’s (6758) Bold Move into Web3: What Is Soneium?
- Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal
- Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- China A50 ETF Rebalance: Two Adds, Two Deletes, as Expected
- Hyundai Motor India: Feeling the Heat as SUV Rivals Surge
- China Tourism Group (601888 CH | BUY | CNY): When Falling Knife Turns into Value Investing
- Is Dollar General in Trouble? New Outlook, ‘Financially Constrained’ Customers Spark Major Concerns!
Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT
- Today, the Nikkei Index Committee decided to delete Nippon Paper (3863) for low liquidity, and DIC (4631) for sector over-representation, and added Nomura Research Institute (4307) and Ryohin Keikaku (7453).
- The only auto-delete was Nippon Paper. The DIC delete was “discretionary.” But they could have done a third. Why did they not do a third change? I do not know.
- The whole shebang should be ¥350-375bn a side. At current price, Fast Retailing is set for another capping (selling) event in March 2025. And there is one shoo-in then too.
For Long-Term Investors, Seven & I Is the Better Bet
- The Couche-Tard “friendly bid” raises more questions than it answers: Is it real? What does CT really want? Can it afford it? Will the Japanese government let it through?
- We remain sceptical about a bid – if it happens – succeeding. Either way, Seven & Eleven Japan looks to be the much better retailer.
- It has been selling 25-40% more than competitors in the world’s toughest CVS market and looks set to extract more value in Japan/overseas than anyone else could so why sell?
Midea Group H Share Listing: AH Discount Views
- Midea Group Co Ltd A (000333 CH), the world’s biggest home appliances maker, is premarketing an H Share listing to raise US$3 billion.
- In Midea Group H Share Listing: Latest Updates Points to a Business in Rude Health, we noted that Midea is in good health, with strong growth, margins, and cash generation.
- In this note, we examine the likely discount that Midea will offer its H Shares compared to the A Shares.
Sony’s (6758) Bold Move into Web3: What Is Soneium?
- Sony launches Soneium, a blockchain platform developed with Startale Labs, as a Layer 2 Ethereum solution to enhance transaction speed and scalability.
- Soneium aims to bridge Web2 and Web3, leveraging Sony’s vast intellectual property in entertainment and technology for broad consumer adoption.
- Backed by Sony’s resources, Soneium focuses on user-friendly blockchain technology, offering financial and technical support through its Soneium Spark incubation program.
Hojeon: Activist Minority Investors Threaten to Sell Their Shares to a Competitor in a Block Deal
- A group of minority investors started to go activist on Hojeon (111110 KS), demanding that the company increase its treasury share buybacks/cancellations, dividends, and cut CEO’s salary.
- This coalition of minority investors has threatened to sell their shares to a competitor (Hansae) if the company does not abide by their demands.
- Hojeon has attractive valuations and are trading at low multiples. It had P/E of 5x, EV/EBITDA of 3.4x, and P/B of 0.5x in 2023.
Mar25 Nikkei 225 Rebal Predictions: Likely 2 IN, 2 OUT, Again; Minimal Surprise Factor
- The Sep24 Nikkei 225 Review Results are out, discussed in Sep24 Nikkei 225 Review Results: A Slightly Baffling 2 IN, 2 OUT.
- That lets us move to Mar25 Nikkei 225 Rebal predictions. For the moment, I see 2 IN and 2 OUT, again.
- And at the moment, another Fast Retailing capping exercise looks likely, for roughly US$3bn a side to trade.
China A50 ETF Rebalance: Two Adds, Two Deletes, as Expected
- The iShares A50 China (2823 HK) and CSOP China A50 (2822 HK) ETFs will rebalance their holdings at the close on 20 September.
- China National Nuclear Power (601985 CH) and Huaneng Lancang River Hydropow (600025) will replace China Tourism Group Duty Free (601888 CH) and Yihai Kerry Arawana (300999 CH) in the ETFs.
- Passive trackers are estimated to buy between 0.3-0.5 days of ADV in the adds and sell between 0.4-1.1 days of ADV in the deletes.
Hyundai Motor India: Feeling the Heat as SUV Rivals Surge
- Hyundai Motor India reported an 8% decline in monthly dispatch volumes ahead of India’s festive season, coinciding with a sharp increase in shipments by competitors in the SUV space.
- Mahindra & Mahindra (MM IN) , Toyota Kirloskar Motor ( Toyota Motor (7203 JP) JV), and Kia Corp (000270 KS) each posted high double-digit volume growth in August.
- Overall, India’s domestic Passenger Vehicle sales growth for the April-August period has slowed year-on-year after two years of strong post-COVID momentum.
China Tourism Group (601888 CH | BUY | CNY): When Falling Knife Turns into Value Investing
- China Tourism Group Duty Free Corp Ltd (601888 CH) (CTG) share price on downtrend due to negative sentiment, increased competition, and Chinese being more frugal in their consumption
- 2024 and 2025 consensus earnings declined by -2%/-17%, but CTG will deliver +16% YoY earnings growth in 2025. CTG remains a growths stock, a fact we think many investors forget!
- We revise our target price to CNY71.3 pegged to 18.5x FY25 PE (1.5 standard deviation below mean). We think the share price decline is overdone and ignores its strong fundamentals.
Is Dollar General in Trouble? New Outlook, ‘Financially Constrained’ Customers Spark Major Concerns!
- Dollar General’s shares have plummeted after the company slashed its sales and profit forecasts for the full year, highlighting the financial struggles of its lower-income customers.
- The retailer, which primarily serves rural areas, now expects fiscal 2024 same-store sales growth of 1.0% to 1.6%, down from its previous forecast of 2% to 2.7%.
- Earnings per share are projected to be between $5.50 and $6.20, significantly lower than the prior estimate of $6.80 to $7.55.
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