In today’s briefing:
- Sanrio (8136 JP) – Kitty Behaving Badly
- HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- Lifestyle China (2136 HK): Thomas Yau Scheme Expected
- Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
- Quiddity Leaderboard F100/F250 Dec 24: Final Trading Day; Announcement Tomorrow!
- [Meituan (3690 HK, BUY, TP HK$165) TP Change]: C3Q24 Review: Buy or Leave?
- Selected European HoldCos and DLC: November’24 Report
- Abercrombie & Fitch Co.: Expansion of Global Brand Awareness & Localization Efforts Driving Our Bullishness! – Major Drivers
- Urban Outfitters Inc.: These Are The 7 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
- Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable
Sanrio (8136 JP) – Kitty Behaving Badly
- Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon. Next day it fell sharply.
- There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
- There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.
HSI, HSCEI, HSTECH, HSIII Index Rebalance: US$3.4bn of Flows Post Capping (Dec 2024)
- The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
- The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
- Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.
Lifestyle China (2136 HK): Thomas Yau Scheme Expected
- Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).
- Lifestyle Props’ listing was cancelled in 2023; and Thomas Yau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov.
- Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Yau holds 74.9%. No prizes for guessing what comes next.
Lifestyle China (2136 HK): Chairman/CEO to Launch Privatisation Offer?
- Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers.
- Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.
- We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).
Quiddity Leaderboard F100/F250 Dec 24: Final Trading Day; Announcement Tomorrow!
- In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the December 2024 index rebal event.
- The final rankings will be decided based on the full market cap at the close of trading today (3rd December 2024).
- Based on the current numbers, we see three for the F100 index and three or more other changes for the F250 index in December 2024.
[Meituan (3690 HK, BUY, TP HK$165) TP Change]: C3Q24 Review: Buy or Leave?
- Meituan reported C3Q24 revenue/non-IFRS operating profit 2%/12% above consensus, thanks to rising monetization and cost reduction. C4Q24 guidance, however, missed expectation due to low ASP mix and expansion;
- We see the following as positive catalysts: (1) consumption stimulus in 2025 that will likely include service coupons, (2) market share gains, (3) overseas expansion in Mid-East bearing quick fruits.
- We therefore opt to keep Meituan on our TOP BUY list and maintain TP at HK$165.
Selected European HoldCos and DLC: November’24 Report
- Discounts to NAV of covered holdcos mainly widened during November. Discounts to NAV: C.F.Alba, 49.8% (vs. 48.7% as of 29 November); GBL, 40.6% (vs. 40.9%); Heineken Holding, 14.4% (vs. 14%);
- Industrivärden C, 4.0% (vs. 2.4%); Investor B, 4.3% (vs. 2.8%); Porsche Automobile Holding, 29.8% (vs. 31.7%). Rio DLC spread tightened to 22.4% (vs. 22.5%).
- What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).
Abercrombie & Fitch Co.: Expansion of Global Brand Awareness & Localization Efforts Driving Our Bullishness! – Major Drivers
- Abercrombie & Fitch’s latest quarterly performance showed strong results, effectively capitalizing on consumer demand and strategic execution across multiple facets of their business.
- The company reported a record net sales figure of $1.2 billion for the third quarter, marking a 14% increase from the previous year, alongside a comparable sales rise of 16%.
- The operating income also witnessed a 30% growth year-over-year, driven by a 170 basis point improvement in operating margin to 14.8%.
Urban Outfitters Inc.: These Are The 7 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
- Urban Outfitters, Inc. reported a promising performance for Q3 of fiscal 2025, with total sales reaching a record $1.4 billion, a 6% rise compared to the previous year.
- This growth was primarily driven by strong performances from its Anthropologie and Free People brands, both of which posted mid-single-digit positive retail segment comps, which counterbalanced a high single-digit decline at Urban Outfitters.
- Nuuly, the company’s fashion rental business, also saw robust double-digit revenue growth, credited to a 51% rise in average active subscribers.
Mao Geping Cosmetics IPO – Low to Mid-End Looks Reasonable
- Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
- Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
- We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.
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