In today’s briefing:
- Another Skyworth (751 HK) Partial Buyback
- Water Oasis: 5.2x FY23 PE with >15% Div Yield and 25% of the Mkt Cap in Cash
- MR D.I.Y. Group (MRDIY MK) – Unique in Malaysia
- Hotel Shilla: A Key Beneficiary of End of Zero COVID Policy in China & End of Mask Mandate in Korea
- Keeper’s 50% Payout Ratio Makes The Yield Better and The Investment Exciting
- Yodobashi to Become Top 10 Retailer in Sogo Seibu Deal with Fortress
- More Profit for Donki as It Expands Private Label, Even Freezers
Another Skyworth (751 HK) Partial Buyback
- Skyworth Group Limited (751 HK) has announced another partial buyback – this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.
- On 17 June 2020, Skyworth announced a partial buyback – 12.83% of shares out or 392.8mn shares, at HK$2.80/share, a 32.1% premium to last close.
- Upon successfully completing this partial offer, Stephen Wong & concert parties would hold >50%, prior to the excise of any outstanding options.
Water Oasis: 5.2x FY23 PE with >15% Div Yield and 25% of the Mkt Cap in Cash
- FY22 results for Water Oasis (1161 HK) were very encouraging, with significant HoH improvement from 26 mn HKD to 70 mn HKD (excluding a 33 mn HKD one-off).
- With only 5 out of 6 operational months for H2 FY22, we see a significant improvement in H1 FY23 if HK should remain operational for all six months.
- With the reinstatement of dividends as financial conditions improve, the stock trades at 5.2x FY23 PE with a >15% dividend yield conservatively and 25% of the market cap in cash.
MR D.I.Y. Group (MRDIY MK) – Unique in Malaysia
- MR D.I.Y. Group (MRDIY MK) has continued to perform as coming out of the pandemic, offsetting inflationary pressures with selected price increases helping to stabilise margins.
- 4Q2022 should be strong with an upward normalisation of inventories, with a target for 180 new stores in 2022 and a further 180 stores in FY2023, fuelling future sales growth.
- MR D.I.Y. has a unique market position and strong brand in Malaysia, and Brunei and generates much higher ROEs than its regional peers hence justifying a premium valuation.
Hotel Shilla: A Key Beneficiary of End of Zero COVID Policy in China & End of Mask Mandate in Korea
- Hotel Shilla is a key beneficiary of the end of the zero COVID policy in China and the end of the mask mandate in Korea.
- In the past several weeks, there has been a major shift on the highly stringent zero COVID policies in China which should have a positive impact on Hotel Shilla.
- In the next several quarters, we believe that there is a good chance that the company’s results exceed the consensus expectations, driven by millions of tourists from China to Korea.
Keeper’s 50% Payout Ratio Makes The Yield Better and The Investment Exciting
- The Keepers Holdings (KEEPR PM) set a new precedent of paying out 50% of its earnings. If sustained, the yield for FY22e/FY23e will be 6.6%/8.4%.
- The move has made The Keepers Holdings (KEEPR PM) a growth/dividend yield stock with mid-teens profit growth and a forward yield >6% (~10% cash as % of mkt cap).
- The catalyst for the company will arise from its strong Q4 2022 earnings. The management has already indicated the growth trajectory is similar to the prior quarters.
Yodobashi to Become Top 10 Retailer in Sogo Seibu Deal with Fortress
- Although there are some points to iron out, Fortress Investment is in the final stages of negotiation to purchase Sogo Seibu from Seven & I, with Yodobashi Camera as partner.
- This is an exciting move for Yodobashi as it should be an excellent choice to leverage Sogo Seibu’s better locations and create more competition for rivals like Bic Camera.
- Even so, some stores will no longer have a future under their existing banners and the acquisition will mark the final demise of a 170 year old brand and company.
More Profit for Donki as It Expands Private Label, Even Freezers
- Pan Pacific International Holdings (7532 JP)’ Don Quijote stores rebounded strongly from Covid, despite the lack of inbound tourists, reflecting the hard work done to update stores and merchandise.
- This innovation continues and Don Quijote stores recently even began offering several new private brand cosmetics ranges and new electronics, including a new small footprint freezer.
- The company expects 15% of domestic sales from private brands alone but rising to 25% in the near term, with significant upside for operating profits.
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