In today’s briefing:
- Samvardhana Motherson QIP – Well Flagged US$780m QIP in a Decent Name
- Tube Investments of India (TIINDIA IN) | On-Ground Update on EV Foray
- Can Investors Tolerate the Current Pace of Capital Profitability Improvement?
- Liquid Universe of European Ordinary and Preferred Shares: September‘24 Report
- Signet Jewelers: Striking A Balance Between Merchandise and Pricing! – Major Drivers
- The Kroger Co.: An Insight Into Its Competitive Positioning
- RH (Restoration Hardware): Brand Image Transcendence & Other Major Drivers
- CLS Holdings USA, Inc. – CLSH: Strong Cost Controls Help Offset Revenue Decline in FY24
- Pvh Corp – VNCE: 2Q Review: Driving Upside, Remaining Conservative; Reiterate Buy, $3 PT
- BBW: Snapping the Store: Halloween Rules (Already!); Reiterate Buy, $41 PT
Samvardhana Motherson QIP – Well Flagged US$780m QIP in a Decent Name
- Samvardhana Motherson International Ltd (MOTHERSO IN) is looking to raise up to US$780m in its QIP. Together with the offering is a US$270m compulsory convertible debenture (CCD) offering.
- The deal is very well flagged, having gone through rounds of board/shareholder approvals. The QIP has also been covered by domestic media reports.
- In this note, we run the deal through our ECM framework and comment on deal dynamics.
Tube Investments of India (TIINDIA IN) | On-Ground Update on EV Foray
- Tube Investments of India (TIINDIA IN) is focused on clean mobility solutions through its subsidiary, TI Clean Mobility Private Limited.
- The subsidiary’s Montra Electric 3-wheelers have quickly gained market share in southern India, targeting the last-mile mobility segment.
- TI’s management is keenly focused on the EV segment, with upcoming launches of e-rickshaws and a new Cargo Version poised to drive substantial growth in the near future.
Can Investors Tolerate the Current Pace of Capital Profitability Improvement?
- Few Japanese stocks that have advantages in profitability has led to the fact that investors who invest long-term in quality stocks have few Japanese stocks to choose from globally.
- It’s the profit margin on sales that has had the greatest impact on changes in ROE. Companies must now get their core competencies once again to regain competitiveness and profitability.
- Even if business selection and investment in promising businesses were to be implemented, it would be several years before they bear fruit. For many investors, this pace seems unacceptable.
Liquid Universe of European Ordinary and Preferred Shares: September‘24 Report
- Since mid-August, share-price spreads have generally widened across our European liquid universe of ordinary and preferred shares (13 have tightened, 4 widened, 2 remained at same level).
- Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols SA, Media-for-Europe, Sixt.
- Recommended trades long ordinary / short preferred shares: Carlsberg, Henkel, SSAB Svenska Stal.
Signet Jewelers: Striking A Balance Between Merchandise and Pricing! – Major Drivers
- Signet Jewelers has reported its financial results for the second quarter of fiscal 2025, highlighting several critical strategic successes and challenges.
- The company’s CEO, Gina Drosos, emphasized the continued momentum in same-store sales, which improved over 5 points from the first quarter, driven notably by robust Fashion sales.
- The merchandise margin and the average transaction value (ATV) also saw growth, reflecting the positive reception of Signet’s merchandise strategies even amidst an intensely dynamic industry landscape.
The Kroger Co.: An Insight Into Its Competitive Positioning
- The Kroger Co. showcased a mixed performance in the second quarter of 2024.
- The company continues its progression towards a strategic operating model which balances customer-centricity with internal efficiencies, maintaining a competitive edge, particularly with its own brands offerings.
- Revenue enhancements through enhanced digital sales channels and personalized promotions were notable.
RH (Restoration Hardware): Brand Image Transcendence & Other Major Drivers
- RH, previously Restoration Hardware, exhibited positive stride in its financial and operational endeavors during the second quarter of fiscal 2024, as outlined in its latest earnings call.
- The results were mostly favorable with noteworthy highlights such as a 7% increase in demand and 3.6% growth in revenues amounting to $830 million compared to the previous year.
- This growth was propelled by strategic expansions and product transformations, notable investments during an economically challenging phase, and detailed preparation for projected housing market rebound.
CLS Holdings USA, Inc. – CLSH: Strong Cost Controls Help Offset Revenue Decline in FY24
- CLS Holdings is a vertically integrated cannabis company with core operations in Nevada.
- The company owns and operates Oasis cannabis dispensary, one of the leading stores in Las Vegas.
- CLS also has a state-of-the art extraction and manufacturing facility in Nevada and a suite of top-performing brands.
Pvh Corp – VNCE: 2Q Review: Driving Upside, Remaining Conservative; Reiterate Buy, $3 PT
- We are reiterating our Buy rating and $3 price target for VNCE, slightly reducing our FY24 top line, but increasing our bottom line projections after the company reported solid 2Q results, driven by stronger than expected wholesale revenue.
- With the company now fully anniversarying the ABG Vince relationship, and the drive to materially reduce clearance and discount levels at their own stores completed, we believe 2HFY24 will begin to visibly demonstrate the power of the Vince brand to drive returns and position the company for further material top and bottom line expansion in FY25 from new store openings, further expansion in men’s, international growth and continued wholesale door and segment expansion which, when further fueled by ABG Vince category expansion, debt reduction and share repurchases, positions the company for material upside.
- As such, we reiterate our Buy rating and $3 price target for VNCE.
BBW: Snapping the Store: Halloween Rules (Already!); Reiterate Buy, $41 PT
- We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear Workshop after visiting stores in Long Island and Connecticut.
- We believe the company’s decision to materially move up the Halloween offerings (from August 29th last year to August 6th in 2024) has driven customer excitement and material incremental revenue, as the company has added new characters, multiple drops and the ability to leverage the first Halloween for both Mini Beans and Skoosherz, with more exciting items (including the return of Nightmare before Xmas “furry friends”) on their way.
- As such, we expect momentum to remain strong throughout the season and then almost immediately pivot into the Xmas holiday items.
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