In today’s briefing:
- Couche-Tard Bid for 7&I (3382) – FEFTA and Economic Security
- A Tender Offer to Purchase a 17.5% Stake in Hanwha Galleria by Kim Dong-Sun
- [XPeng Inc. (XPEV US, SELL, TP US$2) Earnings Review]: Delivery Goal for MONA M03 Is Unrealistic
- Ola Electric’s Path to Profitability: Volumes, Cells and PLI
- Shift Now to Defensives; Snap-Back Rally Testing Resistance $ACWI $SPX; Neutral Outlook Intact
- Choice Hotels International Inc. – Major Drivers
- Hilton Grand Vacations Inc.: Strengthening of Japanese Yen and Impact on Hawaiian Market & Other Major Drivers
- Under Armour Inc.: An Enhanced Retail Strategy and SKU Optimization To Catalyze Growth! – Major Drivers
- Golf Digest Online (3319 JP) – 2Q Follow-Up
- Capri Holdings Limited: Expansion of Direct-to-Consumer Channels and E-Commerce! – Major Drivers
Couche-Tard Bid for 7&I (3382) – FEFTA and Economic Security
- The largest potential inbound cross-border M&A in years – for a national champion no less – gets a lot of press coverage.
- This morning, a Nikkei article noted Alimentation Couche-Tard (ATD CN) was likely to need “prior approval” from Japanese regulatory authorities for its takeover “the Nikkei has learned.”
- It wasn’t difficult for the Nikkei to learn that. METI publishes a FEFTA List. 7&i has been on it for years as Type II Designated Business, requiring prior approval.
A Tender Offer to Purchase a 17.5% Stake in Hanwha Galleria by Kim Dong-Sun
- It was announced that a tender offer to purchase a 17.54% stake in Hanwha Galleria has been launched by Kim Dong-Sun (Vice President at Hanwha Galleria).
- Tender offer price is 1,600 won per share, which is 22.8% higher than the closing price on 22 August. Tender offer amount is 54.4 billion won.
- On 23 August, Hanwha Galleria’s share price is likely to rise close to the tender offer price as many investors believe the tender offer is likely to be successful.
[XPeng Inc. (XPEV US, SELL, TP US$2) Earnings Review]: Delivery Goal for MONA M03 Is Unrealistic
- XPeng (XPEV) reported C2Q24 top line, non-GAAP operating loss and GAAP net income in line, 5.4% worse and 7.5% better than our estimate.
- We raised our MONA forecast by 13% but still significantly below XPEV’s guidance. We believe management guidance is overly optimistic;
- We maintain a SELL rating on the stock and TP unchanged.
Ola Electric’s Path to Profitability: Volumes, Cells and PLI
- Investors seem concerned about poor visibility on Ola Electric’s profitability given its aggressive pricing strategy.
- Expect increasing production volumes and the resulting benefits of operating leverage to lead to operating profits, likely by next quarter.
- Integrating in-house manufactured Lithium-ion cells into its two-wheeler EVs from FY2026 and higher Government incentive pay out in FY2025 to drive profit margins further.
Shift Now to Defensives; Snap-Back Rally Testing Resistance $ACWI $SPX; Neutral Outlook Intact
- Snap-Back rallies have continued in the largest global equity markets (U.S., Japan, and Europe).
- Japan’s TOPIX is still below 2690-2700 and the EURO STOXX 50 is below 4884, and whether they roll over here or from marginally higher levels, lower highs remain likely.
- It all fits with our ongoing belief (since our July 25, 2024 Int’l Compass) that MSCI ACWI is going through a 1- to 4-month pullback/consolidation (we are one month in).
Choice Hotels International Inc. – Major Drivers
- Choice Hotels International has portrayed a strong growth trajectory in its latest quarterly result, evidenced by a significant increase in adjusted EBITDA and EPS.
- The company raised its full-year adjusted EPS guidance, reflecting confidence in its financial outlook and operational strategy.
- Central to its growth strategy is the expansion of its portfolio of revenue-intense hotels.
Hilton Grand Vacations Inc.: Strengthening of Japanese Yen and Impact on Hawaiian Market & Other Major Drivers
- Hilton Grand Vacations reported its second-quarter earnings for 2024, revealing mixed results that indicate both challenges and strategic advancements.
- The quarter’s financials showcased a slowdown in some areas, notably impacted by global economic pressures and internal execution hurdles, leading to the company adjusting its full year guidance downward.
- Despite these setbacks, the company’s strategic moves, such as the integration of acquisitions and a restructuring of its sales and marketing operations, suggest forward-thinking adjustments aimed at strengthening its market position.
Under Armour Inc.: An Enhanced Retail Strategy and SKU Optimization To Catalyze Growth! – Major Drivers
- Under Armour’s first quarter fiscal 2025 earnings reflected a blend of strategic advancement and lingering challenges.
- With Kevin Plank at the helm, the company appears focused on fortifying its branding, signifying a pivot towards a clearer segmentation of their market and a concerted effort to enhance product value rather than volume.
- Starting with the positive aspects, Under Armour has delineated a path to refine its identity as an athletic brand through its “Protect This House” strategy, aiming to invigorate its connection with athletes and consumers globally.
Golf Digest Online (3319 JP) – 2Q Follow-Up
- GDO announced 1H FY24/12 consolidated financial results at 15:00 on Thursday 8/8, and it held a results briefing at 16:00 via Zoom webinar, hosted by CEO Ishizaka, COO Yoshikawa and CFO Nakamura.
- Headline figures were net sales +10.2% YoY, EBITDA -26.9%, the operating loss expanding and profit attributable to owners of parent dropping into loss.
- While headline numbers on the surface appear to indicate an extremely challenging environment, it is worth noting that the trend for 2Q-only profit improved sequentially at all levels (see red circles in the table below), and management is confident that profit will return to profitability in the 2H as measures to improve GPM and control costs contribute going forward.
Capri Holdings Limited: Expansion of Direct-to-Consumer Channels and E-Commerce! – Major Drivers
- Capri Holdings Limited recently reported its earnings for the fourth quarter and full fiscal year of 2023.
- The company saw a revenue increase in high single digits and a mid-single digit rise in earnings per share on a 52- week constant currency basis.
- Despite not fully meeting initial expectations, there were significant areas of performance strength.
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