In today’s briefing:
- Sanei Architecture Planning (3228) Finds Saviour from Mafia-Linked Former Boss and Majority Owner
- Amorepacific Group: SoTP Valuation and Meaning of Min-Jung Suh Taking One Year Leave of Absence
- NIFTY NEXT50 Index Rebalance: Five Changes; Big Impact; Cross Index Flow
- Chongqing Brewery (600132 CH) Limit Up 10% Today After Results Beat; Buy China Resources Beer
- JD Health 1H2023: Reports Operating Profits; Margin Upside Is Very Limited
- Shakey’s Pizza: Q2 2023 Stellar, Increasing Guidance to 30% YoY Top/Bottomline Growth
- Jindong (JD US): We Would Stay on the Sideline
- JD (9618 HK): 2Q23, Main Business Began to Recover, Buy
- [JD Health (6618 HK, BUY, TP HK$65) TP Change]: Benefit of Alternative Channel Starts to Show
- 2Q Follow-Up – Golf Digest Online (3319 JP)
Sanei Architecture Planning (3228) Finds Saviour from Mafia-Linked Former Boss and Majority Owner
- [cue Tom Hardy gif saying “That’s Bait”]. But yes, this story has a backstory to the Japanese underworld, and while the original sin may have been minor, it’s everything.
- The firm was raided, the CEO resigned, a govt authority “recommended” Sanei get rid of Mr Koike’s influence, banks got antsy, employee morale dropped. Sanei needed a saviour.
- Koike-San asked Open House (3288 JP) to buy his shares. They agreed to take over the company. It’s basically a done deal with a possible twist.
Amorepacific Group: SoTP Valuation and Meaning of Min-Jung Suh Taking One Year Leave of Absence
- About a week ago, it was announced that Chairman’s elder daughter Min-Jung Suh will take a long one year leave of absence.
- Chairman Suh is very dissatisfied with the company’s results in the past three years and wants to shake up the company to improve its operations, in our view.
- Our base case NAV valuation of Amorepacific Group (002790 KS) is 39,611 won, which is 29% higher than current price.
NIFTY NEXT50 Index Rebalance: Five Changes; Big Impact; Cross Index Flow
- NSE Indices has continued to use the current index methodology to come up with the 5 adds/deletes. The proposed methodology seems to be put on ice for reasons unknown.
- Punjab National Bank, Shriram Transport Finance, Trent, TVS Motor and Zydus Lifesciences will replace ACC, FSN E-Commerce Ventures, HDFC Asset Management, Indus Towers and Page Industries.
- The adds, deletes, capping and funding changes will result in one-way turnover of 13% and in a one-way trade of INR 20.77bn. The impact on the adds/deletes is big.
Chongqing Brewery (600132 CH) Limit Up 10% Today After Results Beat; Buy China Resources Beer
- Chongqing Brewery Co A (600132 CH) announced a impressive earnings beat last night, with net profit up 24% yoy in 2Q23. Stock is limit up (10%) today.
- The results confirm the premiumization thesis of the China beer sector is in tact.
- Buy China Resources Beer Holdings (291 HK); take advantage of the overall H-share market weakness and unfounded fear on deflation.
JD Health 1H2023: Reports Operating Profits; Margin Upside Is Very Limited
- JD Health reported 1H2023 results yesterday. 1H revenue increased 34.0% YoY to RMB27.1bn (vs consensus RMB27.5bn) and reported an OP of RMB943.9m (vs consensus RMB753.2m) vs RMB60.1m in 1H2022.
- Though the company made OPM of 5.7% in 1Q2023, 1H2023 OPM was 3.5% in line with our analysis that OPM in excess of 2-3% may not be possible in LT.
- There is very little upside for GPM to improve unless the company’s high-margin service business takes off at a higher rate which seems unrealistic to us.
Shakey’s Pizza: Q2 2023 Stellar, Increasing Guidance to 30% YoY Top/Bottomline Growth
- We attended the Shakey’s Pizza (PIZZA PM) conference call for H1 FY23. Management was upbeat and guided 30% top/bottom line growth for FY23 ( up from 20% in Q1 FY23)
- The company reported its highest-ever quarterly systemwide sales of 4.6 bn pesos ( up 29% YoY) due to network expansion, dine-in recovery, and, to a certain extent, price hikes.
- Trading at a 12.9x/9.9x FY23e/24e PE, the stock is cheap, and growth of 20% CAGR over the next 3-4 years is not being factored in.
Jindong (JD US): We Would Stay on the Sideline
- JD reported 2Q results that were slightly better than the street expected.
- But the set of results did little to alleviate our concerns about the structural challenges JD need to combat.
- We still don’t think JD represents a viable investment case due to its lack of growth catalysts (vs. PDD) and attractive valuation (vs. Alibaba). We would stay on the sideline.
JD (9618 HK): 2Q23, Main Business Began to Recover, Buy
- The main business line, home appliance began to grow by two digits.
- Logistics revenue continued to grow strongly by 51% YoY and can still break even.
- The operating profit rose to RMB7.3 bn in 2Q23 versus RMB3.8 bn in 2Q22.
[JD Health (6618 HK, BUY, TP HK$65) TP Change]: Benefit of Alternative Channel Starts to Show
- JDHealth (JDH) reported C1H23 top line, non-IFRS operating profit and IFRS net income 9.3%, 17% and 162% above our estimates.
- We believe that with years of tightening NDRL and the recent hardline anti-corruption campaign,
- More and more pharmaceuticals and patients are looking for alternative channels, which bodes well for JDH in the long run; We raise TP from HK$57 to HK$65 and reiterate BUY
2Q Follow-Up – Golf Digest Online (3319 JP)
- Post-merger integration (PMI) for SkyTrak business was largely completed during the 1H, and the GOLFTEC ANYWHERE initiative is now in full swing.
- GOLFTEC continues to steadily open new corporate centers.
- Following 1H unit sales of 5,000 units (new SkyTrak+ only launched at the end of May), the Company expects SkyTrak 2H unit sales of 10,000+ units.
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