In today’s briefing:
- Taste Gourmet: Growth <6x PE with 10% Div Yield and China Reopening Boost
- Meidong: Capital Raise, There’s Never a Right Time
- Backtracing Korea NPS Trades on Local Stocks Through KRX FAIR
- Bio-Degradable Food Container Startup Alterpacks Raises US$1M Funding
Taste Gourmet: Growth <6x PE with 10% Div Yield and China Reopening Boost
- Taste Gourmet Group (8371 HK) is an excellent play on China/HK reopening with a 5.7x/4.2x FY23/24 PE and 10+% dividend yield, with 25% of the mkt cap in net cash.
- Reopening of China and HK borders after Jan 8th will provide a boost to the revenue and margins. The company will also resume its expansions in China (3 restaurants).
- Channel checks suggest a solid Q3 2023, with the company expanding to 38 restaurants in HK (34 in Q2 2023), with a surge in revenue likely due to seasonality.
Meidong: Capital Raise, There’s Never a Right Time
- China MeiDong Auto (1268 HK) raised 800mn HKD in a top placement (px~15 HKD/share), resulting in a ~4% dilution, citing an opportunistic raise for M&A.
- While the company asserts there is a well-defined pipeline, it was not very specific on the size and scope of its targets which was not taken well by the market.
- We continue to like the company, trading at a 15x/9x PE FY22e/23e, with a 5.2%/8.8% dividend yield (assuming an 80% payout ratio), with the optionality of M&A potential.
Backtracing Korea NPS Trades on Local Stocks Through KRX FAIR
- Last year, NPS raised the weighting of defense, renewables, and reopening (entertainment and leisure) stocks. In contrast, NPS mainly reduced exposure to construction, banking, and semiconductors.
- In December, NPS is building a fairly aggressive long position in China Reopening. In addition, trading assumed to be portfolio rebalancing for the local chemical sector was detected.
- NPS’ stake in most major holdings exceeds 5%. This allows us to monitor NPS’ trading history almost in real time through KRX FAIR.
Bio-Degradable Food Container Startup Alterpacks Raises US$1M Funding
- Alterpacks, a Singapore-based provider of biodegradable food containers, has closed its US$1 million pre-seed funding round.
- The company provides new economic value to spent grains, a by-product of the food manufacturing process, after producing malted drinks, such as milo or beer.
Alterpacks is also creating bio-pellets to replace petroleum-based resins used in standard manufacturing machines today.
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