In today’s briefing:
- Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
- INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
- Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 13)
- GMM Group Pre-IPO: Tuning into Thailand’s Digital Music Boom
- The Wendy’s Company: Menu Innovation & Diversification As A Critical Growth Lever! – Major Drivers
- Gentex Corporation: Expansion into Global Automotive Markets As A Critical Growth Lever! – Major Drivers
- AutoNation Inc.: Strategic Capital Allocation Driving Our Optimism! – Major Drivers
- Shakeys Pizza (PIZZA PM) Q3 2024 Concall: An Ok Result, Implied NPAT Guidance for Q4FY24 >60% YoY
- The Power of Propulsion: How BorgWarner Is Leading the Electric Vehicle Revolution! – Major Drivers
- Parent-Subsidiary Listings Are a Microcosm of Japanese Stocks: Change to Value-Creation Is Long Away
Seven & I Holdings (3382 JP): The Rumoured MBO Price Underscores the Trapped Value
- In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
- Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
- The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.
INDIA: Index Changes Due to the 45 New Additions to the F&O Segment
- The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
- There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
- There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes.
Technically Speaking, Breakouts and Breakdowns: HONG KONG (NOVEMBER 13)
- Although Hong Kong markets have slumped after Trump’s election, mainland China’s markets have gained. Southbound net buying of HK stocks hit a 2024 high on the day Trump won.
- Sands China (1928 HK) had a breakout from a double top as Macau recorded good Golden Week arrivals. Blue Moon Group Holdings (6993 HK) had a breakout after 3 years.
- CanSino Biologics (6185 HK) formed a breakout after a new vaccine was approved and it reported better results. Haidilao International Holding (6862 HK) share price advanced as it expands stores.
GMM Group Pre-IPO: Tuning into Thailand’s Digital Music Boom
- GMM Music (2465778D TB) is looking to raise at least US $100m in its upcoming Thai IPO.
- It is part of the largest, sprawling, public listed media conglomerate, GMM Grammy, and operates a pure play music business covering the entire value chain.
- In this note, we look at the firm’s past performance.
The Wendy’s Company: Menu Innovation & Diversification As A Critical Growth Lever! – Major Drivers
- The Wendy’s Company recently held its fiscal 2024 third quarter earnings call, which provided in-depth insights into the company’s performance and strategic initiatives.
- The CEO, Kirk Tanner, and CFO, Gunther Plosch, discussed various aspects of the business operations, highlighting key areas of growth as well as challenges faced during the quarter.
- During the third quarter, The Wendy’s Company reported a global system-wide sales growth of 1.8%, with a modest 0.2% growth in same-restaurant sales.
Gentex Corporation: Expansion into Global Automotive Markets As A Critical Growth Lever! – Major Drivers
- Gentex Corporation reported an increase in net sales to $608.5 million for the third quarter of 2024, up from $575.8 million in the same period last year.
- Despite a 5% decline in global light vehicle production, Gentex outperformed its primary markets by 12%.
- The company experienced a gross margin of 33.5%, slightly up from 33.2% in the third quarter of the previous year, due to higher revenue levels and purchasing cost reductions, albeit slightly offset by unfavorable product mixes.
AutoNation Inc.: Strategic Capital Allocation Driving Our Optimism! – Major Drivers
- AutoNation Inc.’s third-quarter fiscal 2024 earnings reflect a complex performance landscape, balancing several high points with notable operational challenges.
- The company operates in a volatile industry environment, navigating economic headwinds while implementing strategies to ensure steady growth and sustained profitability.
- AutoNation marked progress in new vehicle sales, showcasing a recovery in market share.
Shakeys Pizza (PIZZA PM) Q3 2024 Concall: An Ok Result, Implied NPAT Guidance for Q4FY24 >60% YoY
- Shakey’s Pizza (PIZZA PM) reported 3Q FY24 SWS sales/profits up 16%/-3% YoY but guided that FY24 revenues/profits would be up double-digit, implying that Q4FY24 profits >60% YoY at least.
- The company guided double-digit revenue/profit growth for FY25 as investments in Potato Corner bear fruit. The company guided growth by >450 stores for both FY24/FY25 (base 2141 outlets for FY23)
- The stock trades at 13x FY24 PE, and its double-digit growth in the foreseeable future makes it an exciting investment.
The Power of Propulsion: How BorgWarner Is Leading the Electric Vehicle Revolution! – Major Drivers
- BorgWarner’s third-quarter results for 2024 reveal a mixed performance, characterized by resilience in a challenging market environment, strategic advancements in both its foundational and electric product lines, and robust cost management measures.
- The company reported third-quarter organic sales exceeding $3.4 billion, a 5% year-over-year decrease, though slightly outperforming the market decline of 6%.
- This slight outperformance underscores the effectiveness of BorgWarner’s diversified, technology-focused portfolio which continues to secure business even in a down market.
Parent-Subsidiary Listings Are a Microcosm of Japanese Stocks: Change to Value-Creation Is Long Away
- Listed subsidiaries decrease but increase if equity method listed companies are included. Many companies haven’t fully exercised treatment of subsidiaries, selling only a little of their shares to below 50%.
- Many parent companies that own listed subsidiaries and equity-method listed companies have placed cash in subsidiaries or equity-method companies without increasing their own stock prices.
- Although companies have changed their mindset somewhat, they haven’t changed their management to effectively use cash to create value, which is the reason for the low valuations of Japanese stocks.
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