In today’s briefing:
- To Tender Or Not – Gauging The Future of Sun Corp (6736)
- WeRide IPO – Stiff Competition and Bleak Sentiment. Premium Valuation Doesn’t Help
- WeRide IPO: High-Risk Venture Investment and Unproven Business Model
- BUY/SELL/HOLD: Hong Kong Stock Updates (August 12)
- GSMI PM/PLUS PM: Solid Growth in Q2 2024, >30% ROCE, Net Cash, >5% Div Yield
- Asics (7936) | Raceing Ahead—But Can They Keep Pace?
- SM Entertainment: Share Cancellation and the Launch of a New British Band – Dear Alice
- China Resources Beverage Pre-IPO – Thoughts on Valuation
- GoTo Gojek Tokopedia (GOTO IJ) – Product-Led Initiatives Driving Growth and Profitability
- Smaller PE Funds May Have Opportunities to Invest in MBOs of TSE Growth Market Companies
To Tender Or Not – Gauging The Future of Sun Corp (6736)
- The revised/final True Wind Tender Offer for up to 19% of Sun Corp (6736 JP) ends this week. With the “excitement” the last two weeks, the SunCorp/CLBT ratio is higher.
- The minimum threshold is relatively low. The Tender will most likely succeed with very high pro-ration.
- For those on the edge, I discuss possibilities on the back end. It will be less liquid, but that may not be bad.
WeRide IPO – Stiff Competition and Bleak Sentiment. Premium Valuation Doesn’t Help
- WeRide (WRD US) is looking to raise US$119m in its US IPO.
- WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
- We had looked at the firm’s past performance in our earlier notes. In this note, we discuss our thoughts on valuation.
WeRide IPO: High-Risk Venture Investment and Unproven Business Model
- WeRide, a pure-play autonomous driving company with operations in 7 countries, may raise up to $120M in upcoming IPO in the United States.
- WeRide is expected to IPO this week. The company’s amended prospectus puts the price range per ADS at $15.50 to $18.50, implying a market cap of ~$4.6B at the midpoint.
- The company has raised ~$1.4B in equity financing to date and was backed by Qiming Venture Partners and the venture capital fund of the Renault Nissan Mitsubishi Alliance, among others.
BUY/SELL/HOLD: Hong Kong Stock Updates (August 12)
- Bearish sentiment in Hong Kong declined during the carry trade sell off.
- Low Volatility, High Dividend and Value factors have continue to be profitable strategies in Hong Kong.
- Pop Mart International Group L (9992 HK) , Techtronic Industries (669 HK) and Giant Biogene (2367 HK) all reported solid operating and financial news leading to BUY recommendations.
GSMI PM/PLUS PM: Solid Growth in Q2 2024, >30% ROCE, Net Cash, >5% Div Yield
- Following our recent insight Shortlist of High Conviction Philippines Equity Ideas, two companies featured Ginebra San Miguel (GSMI PM), and DigiPlus Interactive (PLUS PM) reported stellar Q2FY24 earnings.
- DigiPlus Interactive (PLUS PM) trades at 7x PE FY24, with a 5.8% dividend yield, >40% ROCE, and tremendous scope for growth after its 300%/400% Revenue/PAT growth Q2.
- Ginebra San Miguel (GSMI PM) trades at 9x FY24 PE, a 5% dividend yield, 19% of the market cap in cash, and 35% ROCE with teen growth in CAGR revenue/profits.
Asics (7936) | Raceing Ahead—But Can They Keep Pace?
- Strong Q2 performance: Asics delivered impressive profit growth and margin improvement, exceeding expectations with operating profit surging 119% YoY to 25 billion yen.
- Market share gains: Asics continues outpacing Nike across key regions, with strong growth in Japan, Europe, China, and the US, driven by Sportstyle and Performance Running.
- Bullish outlook, limited upside: Recent guidance revision and current FX rates cap near-term gains; stock trades at 19x NTM EV/EBIT with 15% upside to fair value.
SM Entertainment: Share Cancellation and the Launch of a New British Band – Dear Alice
- In this insight, we discuss the recent share cancellation at S.M. Entertainment, valuations, and the launch of a new British boy band in August 2024.
- Dear Alice boy band will start its promotion with the broadcast of “Made in Korea: The K-Pop Experience” on BBC One and BBC iPlayer on 17 August.
- We are cautiously positive on Dear Alice band. Unlike most aspiring boy bands, Dear Alice has a HUGE advantage of launching the band on the BBC through a TV show.
China Resources Beverage Pre-IPO – Thoughts on Valuation
- China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In our earlier notes, we talked about the company’s past performance and undertook a peer comparison. In this note, we will look at valuations.
GoTo Gojek Tokopedia (GOTO IJ) – Product-Led Initiatives Driving Growth and Profitability
- GoTo (GOTO IJ)“‘s 2Q2024 reflected an ongoing focus on growth as the company invested in both its On Demand Services and its Fintech segments driven by its product-led initiatives.
- The company’s growth was driven by the mass market, subscription products, and premium offerings such as express deliveries, which helped to boost both frequency and retention on the platform.
- GoTo will continue to benefit from the service fee from Tokopedia, which can be used to drive its core ODS and Fintech businesses. The stock overhang is a temporary drag.
Smaller PE Funds May Have Opportunities to Invest in MBOs of TSE Growth Market Companies
- TSE growth market, which institutional investors distance themselves from due to its low liquidity, is a market where gamblers who focus on price movements gobble up one IPO after another.
- To convert users from gamblers to investors, companies with long-term growth potential should be listed. Raising the market capitalization criteria for Growth Market could improve the quality of IPOs.
- Meanwhile, in order to improve the quality of the TSE Growth Market, existing listed companies should consider going private through an MBO.
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