In today’s briefing:
- 7&I (3382 JP) – Ito-San MBO Plan Includes 7-Eleven US IPO… Which LeadsTo A Modest Proposal
- Nissan Tokyo Sales Holdings (8291 JP) – Large Offering on Tiny Cap With Deep Value
- Quiddity Leaderboard NIFTY Mar 25: Inflows for Zomato and Jiofin in Dec 24 and Mar 25
- Freetech Intelligent Technology Ltd Pre-IPO Tearsheet
- Lucror Analytics – Morning Views Asia
- Parsing The Water Oasis (1161 HK) FY24 Profit Warning: Ex-One Offs Indicate Flat To Slight Growth
- Pre-IPO Mao Geping Cosmetics (PHIP Updates) – Some Points Worth the Attention
- VRA; 3Q Preview: Learning and Moving Forward; Reiterate Buy, $6 Price Target
- ADEA: AMZN License Announced
7&I (3382 JP) – Ito-San MBO Plan Includes 7-Eleven US IPO… Which LeadsTo A Modest Proposal
- A Bloomberg article late in the trading session today said the Seven & I Holdings (3382 JP) MBO proposal by Ito family scion Ito Junro includes a US assets IPO.
- The idea? IPO proceeds would help pay down MBO debt to Japanese banks. Seven & i would retain a stake. This is not dissimilar to Berkshire Hathaway buying a stake.
- But more directly, this leads us back to 7&I (3382) – What If… A Modest Proposal. Possible strategic mistake by Ito-san here. ACT should act on this.
Nissan Tokyo Sales Holdings (8291 JP) – Large Offering on Tiny Cap With Deep Value
- Nissan Tokyo Sales (8291 JP) is a network of 120 dealerships with revenue from sales and repairs of about US$1bn a year. Nissan owns 34%. P&C insurers own 21%.
- The P&C insurers will sell their 21%, to an offering and a ToSTNeT-3 buyback. Expect the net offering to be 10.5%, which is still 60+ days of ADV.
- But it has net cash, securities, more securities, and landholdings. It trades at <0.5x book and a very large part of book is finance-able. This looks like an MBO candidate.
Quiddity Leaderboard NIFTY Mar 25: Inflows for Zomato and Jiofin in Dec 24 and Mar 25
- NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
- In this insight, we take a look at the names leading the race to become ADDs/DELs for these indices in the March 2025 index rebal event.
- Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) could see index inflows during the December 2024 rebalance and March 2025 rebalance.
Freetech Intelligent Technology Ltd Pre-IPO Tearsheet
- Freetech Intelligent Systems (1901036D CH) is planning to raise about US$200m through its upcoming Hong Kong IPO. The lead bookrunners for the deal are CITIC Securities, CICC, Huatai International, HSBC.
- Freetech Intelligent Technology Ltd (FITL) is a provider of intelligent driving solutions, focusing on advanced driver assistance systems (ADAS) and autonomous driving systems (ADS) technologies.
- It ranks third among domestic suppliers of Level 2 and Level 2+/2++ intelligent driving solutions in China, with a 2023 market share of 14.6%, according to CIC.
Lucror Analytics – Morning Views Asia
- In today’s Morning Views publication we comment on developments of the following high yield issuers: Studio City, Yuexiu Property, Rakuten Group
- In the US, the October JOLTS job openings came in above estimates at 7.74 mn (7.52 mn e / 7.37 mn p).
- Long-end USTs fell yesterday, while the front end outperformed on expectations that a December rate cut remains on the table.
Parsing The Water Oasis (1161 HK) FY24 Profit Warning: Ex-One Offs Indicate Flat To Slight Growth
- Headline profit numbers for FY24 indicate a 38-40% decline from 110 mn HKD in FY23 to 65-69 mn HKD, including non-cash impairment/property revaluation losses amounting to 44.2 mn HKD.
- The implication is that core profits would have been 109-113 mn HKD for FY24; a slight earnings growth at the upper end is admirable in a weak HK demand environment.
- Based on core earnings, the stock trades at 6x PE, >67% of the market capitalization in cash, and a 10% dividend yield. The company will release earnings on December 16th.
Pre-IPO Mao Geping Cosmetics (PHIP Updates) – Some Points Worth the Attention
- Behind MAO GEPING’s high profitability, there are hidden risks. One is the potential quality issues from ODM/OEM model, and the other is excessive reliance on Mr. Mao Geping’s personal IP.
- Without strong R&D capabilities, high-end positioning isn’t firm.With increasing downward pressure in the industry, MAO GEPING would become passive in fierce competition and the industry trend of customers pursuing cost-effectiveness.
- MAO GEPING’s valuation could be lower than Giant Biogene due to concerns on future sustainable growth prospects and profitability, but higher than industry average due to the strong short-term financial performance.
VRA; 3Q Preview: Learning and Moving Forward; Reiterate Buy, $6 Price Target
- We are reiterating our Buy rating, $6 price target and projections for Vera Bradley with the company announcing 3QFY25 (October) results before the open on Wednesday.
- We believe 3Q, the first full quarter of operations after the relaunch of the Vera Bradley brand in both the main line and outlet stores, remained a key learning experience, as management, after dramatically shifting the entire main line store and materially changing the outlets, begins to calibrate feedback to maximize the shifts and begin to attract a wider customer base.
- While we remain cautious in our projections in the nearer term, we believe the shifts will help revive Vera Bradley and drive strong returns in the longer term.
ADEA: AMZN License Announced
- ADEA announced a licensing agreement with AMZN setting the path for greater free cash flow in 2025. ADEA has previously mentioned it was close to signing two major licensing agreements.
- We assume ADEA’s full year guidance includes catch-up revenue associated with the license since AMZN was never a licensee before.
- ADEA had already signed several video streaming licenses, but AMZN would serve as the largest to date. It gives the investment story a stronger foundation.
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