In today’s briefing:
- SM Entertainment Mgmt’s Response on Its Opposition to HYBE’s Tender Offer
- Rakuten: Bank IPO On the Cusp of Int Rate Cycle, Symphony & Energy to Reduce Scepticism on Mobile
- Hilton Worldwide Holdings Inc.: New Brand Addition & Other Drivers
- BorgWarner Inc.: Major Drivers
- Continental: Return of Automotive Positive Margins, Return of Investor Appetite
- Unilever PLC: Major Drivers
- KIA Corp (000270 KS): Response to LT Trend Channel Resistance (78500) Is Key to a Bullish Outlook
- Honda Motor Co.
- Honasa Consumer Pre-IPO – The Positives – New Age DTC Brand
- Kellogg Company: Major Drivers
SM Entertainment Mgmt’s Response on Its Opposition to HYBE’s Tender Offer
- In this insight, we discuss our thoughts on S.M.Entertainment Co (041510 KS) management’s official response on why it is opposing HYBE (352820 KS)’s tender offer offer.
- Currently, about 85% of SM’s employees oppose HYBE’s proposed acquisition of nearly 40% stake in SM Entertainment.
- In the last week of February/early March, Kakao Group could make an official tender offer at prices of at least 140,000/150,000 won, in our view.
Rakuten: Bank IPO On the Cusp of Int Rate Cycle, Symphony & Energy to Reduce Scepticism on Mobile
- Rakuten Inc (4755 JP)’s 4Q22 results were not all that great with operating loss exceeding consensus by ¥8.4bn mainly through fair value losses in minority investments.
- The domestic e-commerce and fintech businesses did reasonably well with 23.4% and 16.4% YoY OP growth while the mobile business managed to narrow its quarterly loss by ¥8.2bn.
- However, we think the main catalysts for shares to rise 12% following earnings are Rakuten Symphony, Rakuten Energy and a possibly attractive valuation for the Rakuten Bank IPO.
Hilton Worldwide Holdings Inc.: New Brand Addition & Other Drivers
- Hilton Worldwide Holdings delivered an all-around beat in its last result with strong free cash flows.
- It distributed over $1.7 billion to shareholders for the entire year due to strong profits and increased margins.
- We give Hilton Worldwide Holdings a ‘Hold’ rating with a revised target price.
BorgWarner Inc.: Major Drivers
- Despite the severe production unpredictability and inflationary pressures, BorgWarner performed strongly and delivered an all-around beat in the last quarter.
- BorgWarner declared its intention to cut its absolute Scope 3 emissions by at least 25% by 2031.
- The Scope 3 target was formally submitted to SBTi for certification together with their goal of achieving 85% absolute Scope 1 and Scope 2 emissions reductions by 2030.
Continental: Return of Automotive Positive Margins, Return of Investor Appetite
- Post the Powertrain spin-off, Conti’s automotive business is more robust and of higher quality, now more focused on rapidly growing areas such as autonomous mobility and safety and motion.
- The Tires division is resilient by nature and generates strong cash flow.
- The Company benefits from long-term structural trends. Valuation is supportive, with 25% upside from current levels
Unilever PLC: Major Drivers
- Unilever had a decent performance in 2022.
- It achieved underlying sales growth of 9.2% and a fair level of operating margin aligned with expectations despite the volatile period.
- Prestige Beauty delivered outstanding double-digit growth with a strong performance by Paula’s Choice.
KIA Corp (000270 KS): Response to LT Trend Channel Resistance (78500) Is Key to a Bullish Outlook
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
- The bullish response to the 50% Fibonacci retracement at 61750 in Q1 2023 has been impulsive.
- KIA Corp is set to challenge the top of the 2021/2023 parallel downtrend channel around 78500. A break above the channel will confirm aggressive topside targets (90000/100000).
Honda Motor Co.
- Honda managed to deliver an all-around beat but is operating in a challenging business environment.
- In Q3, Honda Motor’s production and unit sales of automobiles decreased due to the impact of the pandemic and semiconductor supply shortages.
- In these conditions, Honda made corporate-wide efforts to enhance its profitability structure and achieved an operating margin of 6.3%.
Honasa Consumer Pre-IPO – The Positives – New Age DTC Brand
- Honasa Consumer (HC) is looking to raise about US$350m in its upcoming India IPO.
- HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
- In this note, we will talk about the positive aspects of the deal.
Kellogg Company: Major Drivers
- Kellogg ended the year with an all-around beat and double-digit net sales growth in every region, supported by end-market success.
- The company continued to experience great growth in emerging countries, driven by its portfolio of noodles and other products in Africa.
- They reduced the profit impact of abnormally high input costs that increased during the year using efficiency and well-planned activities for managing sales growth.
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