In today’s briefing:
- Sankyo (6417) – Second Go-Round for a BIG Buyback
- DPC Dash (1405 HK): Recipe for Multibagger
- Sichuan Baicha Baidao Pre-IPO – The Positives – Riding on Franchise Store Expansion
- Ace Hardware Indonesia (ACES IJ) – Renaissance in Motion
- Just Another Counter-Trend Rally, or Something More? DXY and Treasury Yields Breaking Key Supports
- Sumber Alfaria Trijaya (AMRT IJ) – Running Ahead of the Pack
Sankyo (6417) – Second Go-Round for a BIG Buyback
- Back in late September, Sankyo Co Ltd (6417 JP) announced a 10mm share buyback along with a new dividend policy. Only 4.22mm shares showed up to sell.
- The largest holder – Exec Chair Busujima-san – sold 2.22mm shares under his own name and his company’s name. Hikari Tsushin, which had been selling in the market, didn’t participate.
- Now Sankyo has launched another 10mm share ToSTNeT-3 buyback tomorrow (8 Nov) AM at ¥6,099/share. They may not complete. But they may continue buying later. They have oodles of cash.
DPC Dash (1405 HK): Recipe for Multibagger
- We believe the company is well positioned in China’s rapidly growing pizza market thanks to its strong brand and superior store economics.
- Despite stock rally post 1H23 results, market still underestimates its earnings for both near and long term. We expect RMB250 million net profit for 2024 versus break-even by consensus.
- History suggests DPC Dash has recipe for attractive stock return driven by its highly visible growth that can shield it from macro situations, which is desperately needed by China investors.
Sichuan Baicha Baidao Pre-IPO – The Positives – Riding on Franchise Store Expansion
- Sichuan Baicha Baidao Industrial (SBBI) is looking to raise up to US$300m in its upcoming HK IPO.
- SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.6%.
- In this note, we talk about the positive aspects of the deal.
Ace Hardware Indonesia (ACES IJ) – Renaissance in Motion
- Ace Hardware Indonesia (ACES IJ) booked an impressive set of 3Q2023 results after registering a strong improvement in SSSG over the last few months as well as increasing store count.
- The company has booked particularly strong performance outside Java, where spending power has proved to be strong, with the company’s digital promotions boosting sales significantly and complementing offline sales.
- Ace Hardware Indonesia (ACES IJ) has regained its lustre with a more coherent set of initiatives to drive future growth from promotions to new store formats. Valuations remain reasonable.
Just Another Counter-Trend Rally, or Something More? DXY and Treasury Yields Breaking Key Supports
- We believe there is significant evidence that the broad equity market has bottomed, and a year-end rally has begun. This report elaborates on this main point
- Last week (10/31/23) we discussed how the $SPX and $QQQ did not display decisive breakdowns, and that a break above 4165-4200 and $350-$355, respectively, would be bullish, that’s what happened
- Additionally, we discussed how risk/reward favored buyers with the $IWM testing 1.5-year support at $162-$163, a logical spot for small-caps to bounce, especially when we considering persistent bullish breadth divergences.
Sumber Alfaria Trijaya (AMRT IJ) – Running Ahead of the Pack
- Sumber Alfaria Trijaya (AMRT IJ) came through a slower 3Q2023 with much stronger growth than peers, with SSSG and rapid store expansion driving growth, and margins improving concurrently.
- The company added more than 1,300 new stores for 9M2023 and looks set to add a record 1,800 by year-end, with new Alfamidi and Lawson stores driving growth.
- AMRT will see an even stronger seasonally higher 4Q2023, with SSSG likely to pick up boosted by supplier rebates and news store contributions. FY2024 looks set to be equally strong.
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