In today’s briefing:
- Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
- 2025 High Conviction: Short NIO (NIO US/9866 HK)
- UK100 and UK250 Index Rebals: Some Interesting Trades
- Shiseido (4911) | Makeup for Lost Time: Shiseido’s Turnaround Strategy
- NextAge (3186): Here We Go Again?
- Vishal Mega Mart Pre-IPO – The Positives – One-Stop Shop
- Vishal Mega Mart Pre-IPO – The Negatives – No Online Presence, PE Overhang
- Workman Under Pressure
- Paris Miki Holdings (7455 JP): 1H FY03/25 report update
Seven & I Holdings (3382 JP): The MBO Is Starting to Shape Up
- On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion.
- The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
- The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer.
Nifty Next50 Index Rebalance Preview: Big Capping Flows in December; Methodology Change Coming?
- Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
- We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
- There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.
2025 High Conviction: Short NIO (NIO US/9866 HK)
- NIO (NIO US) is a Chinese premium electric vehicle manufacturer listed across three exchanges.
- NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in 2026 is likely to be broken.
- NIO’s valuation is stretched as it trades at a material premium to median Chinese EV peers’ EV/Sales and growth-adjusted EV/Sales multiples.
UK100 and UK250 Index Rebals: Some Interesting Trades
- Janaghan Jeyakumar, CFA had predicted a series of changes in UK100 (a.k.a. F100) and UK250 (aka F250) and all predicted changes came to pass. F250 saw one extra change.
- There will be one more ad hoc announcement today. We think the replacement for Tritax Eurobox (EBOX LN) will be Mobico Group (MCG LN).
- There were two ADDs in F250 which are VERY much worth looking at. Janaghan had addressed these in prior weeks as well. Those two names really stand out.
Shiseido (4911) | Makeup for Lost Time: Shiseido’s Turnaround Strategy
- Shiseido’s stock price has dropped 70% from its post-pandemic peak, presenting a buying opportunity amid ongoing industry challenges.
- The company’s two-year action plan aims to restore profitability through aggressive cost-cutting and restructuring measures.
- Successful execution could drive significant upside, while failure may attract acquisition interest due to Shiseido’s strong Asia-Pacific brand presence.
NextAge (3186): Here We Go Again?
- NextAge’s stock price dropped nearly 8% on December 5, when the Topix was up, with no apparent news on either the company’s website or any local media.
- The next day, the Nikkei reported that the Financial Services Agency had raided the company’s office after confirming that insurance schemes had been deployed to defraud customers.
- This sounds like an old story being leaked by rivals, so we called the company and confirmed: This is most likely old news.
Vishal Mega Mart Pre-IPO – The Positives – One-Stop Shop
- Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
- Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
- In this note, we talk about the positive aspects of the deal.
Vishal Mega Mart Pre-IPO – The Negatives – No Online Presence, PE Overhang
- Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
- Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
- In this note, we talk about the not-so-good aspects of the deal.
Workman Under Pressure
- Workman was a purveyor of durable gear for workers in jobs like construction but then had the brilliant idea to transpose that expertise to create activewear like Decathlon.
- This was working well but then it decided to take on the likes of Fast Retailing and Shimamura by moving into casual clothing.
- Since then, same-store sales growth has been negative in many months and profits have fallen. The outlook is increasingly poor.
Paris Miki Holdings (7455 JP): 1H FY03/25 report update
- Sales increased 3.6% YoY to JPY26.1bn, while operating profit decreased 25.3% YoY to JPY1.2bn.
- Japan segment sales rose 4.2% YoY to JPY23.2bn, driven by inbound demand and higher unit prices.
- SG&A expenses grew 4.1% YoY to JPY16.5bn, with a 0.4pp increase in the SG&A ratio to 63.3%.
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