In today’s briefing:
- MEGA M&A! 7&I (3382 JP) Gets Non-Binding Bid from Alimentation Couche-Tard (ATD CN)
- Seven & I Holdings (3382 JP): Couche-Tard “friendly” Proposal Likely to Go Nowhere
- China Consumption Weekly (19Aug2024): China Literature, BEKE, Alibaba, JD, JD Health, Tencent Music
- 99 Speed Mart IPO: The Bull Case
- Zomato Placement – Momentum Is Very Strong, past Ant Related Deals Have Been Mixed
- Grab Holdings (GRAB US) – Product-Led Sequential Growth Ahead
- Pan Pacific International Holdings (7532 JP): Full-year FY06/24 flash update
- China Resources Beer Holdings – Interim Results Show Progress but Macro Headwinds Remain
- Amidst Changes in Purpose of Policy Shareholdings, We Should Note Whether They Are Really Decreasing
- Duolingo Inc.: Expansion of Motion Design Capabilities by Acquiring Hobbes & Other Major Drivers
MEGA M&A! 7&I (3382 JP) Gets Non-Binding Bid from Alimentation Couche-Tard (ATD CN)
- Today, part-way through the day, the Nikkei ran an article saying that Alimentation Couche-Tard (ATD CN) had made a confidential non-binding proposal to buy Seven & I Holdings (3382 JP).
- 7&i shares obviously went up (limit up in a hurry, staying there, large size traded limit up at close).
- Now things get complicated. 7&i has said they received a non-binding proposal for all the shares. There will be a Special Committee of all Independent Directors. All stakeholders will matter.
Seven & I Holdings (3382 JP): Couche-Tard “friendly” Proposal Likely to Go Nowhere
- Seven & I Holdings (3382 JP) shares rose 22.7% as it confirmed media reports that it had received a confidential, non-binding preliminary proposal from Alimentation Couche-Tard (ATD CN).
- The interest is unsurprising due to the weak share price performance. Since ValueAct’s open letter on 25 January 2022, the shares are up 5.2% vs. the Nikkei 225 up 38.0%.
- Couche-Tard aims for a friendly offer, which is challenging as it requires support from the founder’s family and the Japanese government. Therefore, the probability of a binding proposal is low.
China Consumption Weekly (19Aug2024): China Literature, BEKE, Alibaba, JD, JD Health, Tencent Music
- China Literature’s revenue increased by 28% YoY in 1H24, because four novel copyrights for movies brought box office hits.
- KE revenue increased by 20% YoY in 2Q24 compared with a 19% YoY decrease in 1Q24, as government policies supported existing home transaction.
- Alibaba announced that it will recruit 1,000 fresh graduates for tech positions in 2025.
99 Speed Mart IPO: The Bull Case
- 99 Speed Mart Retail Holdings (99SPD MK), a leading groceries retailer in Malaysia, is seeking to raise US$530 million at RM1.65 per share.
- 99 Speed Mart is Malaysia’s largest mini-market player and leading grocery retailer, holding a market share of 40.1% and 11.6% in 2023, respectively.
- The bull case rests on a large TAM, rising market share, robust revenue growth underpinned by SSSG, a store expansion-driven growth strategy, profitability, cash generation, and modest leverage.
Zomato Placement – Momentum Is Very Strong, past Ant Related Deals Have Been Mixed
- AntFin is looking to raise around US$400m by selling around 2% of Zomato (ZOMATO IN).
- Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024, with the deals producing a mixed bag result.
- In this note, we talk about the deal dynamics and run the deal through our ECM framework.
Grab Holdings (GRAB US) – Product-Led Sequential Growth Ahead
- Grab Holdings booked record GMV, revenue, FCF, MTUs, and EBITDA in 2Q2024 and flagged an optimistic outlook for 2H2024, with positive adjusted FCF expected to remain positive for FY2024.
- The company continues to focus on its product-led and technology-driven initiatives to drive growth and profitability through mass-market and high-value products such as Grab Unlimited, advance bookings, and group bookings.
- Concerns over competition from TikTok look overblown, with Grab already active on social media. Management expects positive sequential growth for the next 2Qs and a stronger growth outlook in FY2025,
Pan Pacific International Holdings (7532 JP): Full-year FY06/24 flash update
- FY06/24 results: Sales JPY2,095.1bn (+8.2% YoY), operating profit JPY140.2bn (+33.2% YoY), net income JPY88.7bn (+34.1% YoY).
- FY06/25 forecast: Sales JPY2,220.0bn (+6.0% YoY), operating profit JPY150.0bn (+7.0% YoY), net income JPY86.5bn (-2.5% YoY).
- Store count end-June 2024: 742 total, 632 domestic, 110 overseas; 24 new stores in Japan, 12 overseas.
China Resources Beer Holdings – Interim Results Show Progress but Macro Headwinds Remain
- The company’s strategy of premiumisation continues to be executed to plan
- Despite the derating, investors will wait until seeing concrete signs of a turn in the Chinese consumer
- Continues to be a liquid proxy for Chinese consumption with no technology regulation risk
Amidst Changes in Purpose of Policy Shareholdings, We Should Note Whether They Are Really Decreasing
- The increase in foreign ownership and the decline in cross-shareholdings have encouraged management reform. In order for engagement to be effective, it is essential to further reduce cross shareholdings.
- Reasonable explanation of the reasons for such transfers as changes in the purpose of policy shareholding or contributions to retirement benefit trust must be provided in the annual securities report.
- Rising stock prices increase the value of policy shareholdings. To accelerate the reduction of policy shareholdings, numerical targets should be published, such as by setting milestones.
Duolingo Inc.: Expansion of Motion Design Capabilities by Acquiring Hobbes & Other Major Drivers
- Duolingo Inc., a leader in language learning platforms, demonstrated robust performance in its second quarter of 2024 financial results, showcasing a balanced mix of high growth, increased user engagement, and strategic milestones that solidifies its market position while highlighting areas for prudence looking ahead.
- The company reported a significant year-over-year growth in daily active users (DAUs) at 59% and revenues surged by 41%.
- This robust top-line growth is supported by key product expansions and user engagement strategies.
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