In today’s briefing:
- CSI Liquor/ Alcoholic Drink Index Rebalance: Capping to Drive Larger Flows
- 7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- Meituan (3690 HK): Embracing the Slowdown
- Mr DIY Indonesia IPO – Has Aggressively Expanded Its Network
- MT/ Meituan (3690): 3Q24, Excellent Results, Still 46% Upside
- Quiddity SSE50/180 Dec 24 Results: All SSE 50 ADDs in the LONGs Basket; Positive Start; More to Come
- SHEIN and Temu: Higher Tariffs Under 2nd Trump Admin an Additional Threat Beyond “De Minimis” Reform
- P/B Reform: Effective Disclosure to Include that “going Private” Is an Option
- Bosideng (3998 HK): Good Results, yet There Are Concerns
- EQD | Asia December Vol Roadmap – The Big Exhale
CSI Liquor/ Alcoholic Drink Index Rebalance: Capping to Drive Larger Flows
- There is 1 add/ 2 deletions for the CSI Alcoholic Drink Index and no constituent changes for the CSI Liquor Index.
- The largest flows arise as a result of capping of constituents to 15% of the index weight. Impact on the stocks varies from 0.2-0.6 days of ADV.
- WeiLong Grape Wine outperformed the deletes in early October, but the deletes moved higher and closed the gap. The gap has started to open up again in the last week.
7 & I (3382) – York Holdings Sale Process, Timeline, Nuances
- The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
- I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
- This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness
Meituan (3690 HK): Embracing the Slowdown
- Meituan reported strong 3Q results last Friday which were largely expected by the market. Yet downbeat guidance seemed to have disappointed investors and dragged the stock during US trading session.
- We believe the stock’s significant re-rating since early 2024 has come to end as earnings growth starts normalizing after being boosted by less competition and narrowing losses from new initiatives.
- While the company has strengthened its moat and we expect steady growth ahead, we see near-term price volatility as markets digest the notable slowdown.
Mr DIY Indonesia IPO – Has Aggressively Expanded Its Network
- PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
- Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The firm is the largest home improvement retailer in Indonesia with a 25.2% market share as per 2023 sales
- In this note, we look at the firm’s past performance.
MT/ Meituan (3690): 3Q24, Excellent Results, Still 46% Upside
- Revenue grew by 22% YoY and operating margin improved 8 percentage points YoY in 3Q24.
- All Business lines grew strongly and all expense percentages of total revenue declined YoY in 3Q24.
- We believe the stock has an upside of 46% for the next twelve months.
Quiddity SSE50/180 Dec 24 Results: All SSE 50 ADDs in the LONGs Basket; Positive Start; More to Come
- The December 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 29th November 2024.
- There will be 4 changes for SSE 50 and 18 changes for SSE 180 during the December 2024 index rebal event.
- SSE 50 ADDs and DELs will see large index flows while the SSE 180 flow names have fairly insignificant flow expectations.
SHEIN and Temu: Higher Tariffs Under 2nd Trump Admin an Additional Threat Beyond “De Minimis” Reform
- US President-elect Trump has proposed new tariffs on China (and others) by January
- Higher tariffs on Chinese goods could make Chinese imports more expensive in the US
- For SHEIN & Temu, larger threat still comes from potential reform of de minimis rules
P/B Reform: Effective Disclosure to Include that “going Private” Is an Option
- Since there’s little confidence that merely disclosed share buybacks and medium-term management plans will increase corporate value in future, it’s natural that institutional investors’ evaluation of these plans is low.
- For companies that develop budgets and plans each January, the key is to incorporate into their budgets the use of cash that will ensure future growth in corporate value.
- For companies that lack the time to translate “mid-term management plan” into strategy to increase corporate value within two months, including “going private is an option” is an effective disclosure.
Bosideng (3998 HK): Good Results, yet There Are Concerns
- Bosideng International Holdings (3998 HK) has another solid 1H, with net profit surging 23% and DPS rose 20%. At 11.3x PER for FY25F, the valuation is not stretched.
- The gross margin for branded down apparel has hit the lowest 1H level since 1H FY22, however. Similarly, its OEM management gross margin has come down.
- Operating cash outflow rose to Rmb3.5bn, compared with Rmb585m a year ago, and inventory days leaped 29 days. Revenue and profit for ladieswear have plunged.
EQD | Asia December Vol Roadmap – The Big Exhale
- We introduce a new section this month showing implied vol vs average absolute December price movement. A good way to screen for straddle candidates for the month ahead.
- Implied vols came in hard in November with the US election and the FOMC in the rear-view mirror.
- Price performance across markets especially strong in the final week of the month with SP500, Nifty and SPASX200 postive on the month ~ 70% of the time.
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