In today’s briefing:
- Taste Gourmet (8371 HK): Strong FY24, 6.7x PE, Cash ~23% of Mkt Cap and >8% Dividend Yield
- Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close
- Hengdeli Holdings (3389 HK)’s Pitiful Partial Offer
- Sa Sa Intl (178 HK): Every Coin Has Two Sides
- Hyundai Motor India: Can It Thrive Amidst a Rapidly Evolving Mobility Landscape?
- J&J Snack Foods Corp.: Initiation Of Coverage – Growth from Branded Products & 3 Other Major Drivers
- Adient plc: Initiation Of Coverage – What Is Its Business Strategy & How Is It Growing In China? – Major Drivers
- Kontoor Brands: Initiation Of Coverage – Are Its DTC & Tech Investments Yielding The Necessary Results? – Major Drivers
- Pvh Corp – VNCE: 1Q Review: Multiple Positives Coming to the Fore; Reiterate Buy, $3 PT
- Abercrombie & Fitch Co Cl A – AKA: Snapping the Store: Building Unique Brands; Retierate Buy, $25 PT
Taste Gourmet (8371 HK): Strong FY24, 6.7x PE, Cash ~23% of Mkt Cap and >8% Dividend Yield
- Taste Gourmet (8371 HK) reported revenues up 37% YoY and profits up 29% YoY (lower than our expectation of 39% profit growth) due to a slightly weaker-than-expected Q4.
- Dividends for H2 were 7.4 cents/share (overall FY24:12.9 cents), implying an 8.1% dividend yield. Net cash on the balance sheet was 143 mn HKD (23% of market cap).
- Trading at 6.7x PE FY24 (March end) and with an excellent execution track record, we believe that the company will be able to post more robust numbers in FY25.
Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close
- The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
- Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
- There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025.
Hengdeli Holdings (3389 HK)’s Pitiful Partial Offer
- After watch accessory play Hengdeli Holdings (3389 HK) was suspended on the 17th June pursuant to the Takeovers Code, I didn’t hold out high hopes of a knock-out Offer.
- And on cue, CEO Tony Cheung (16%), son of founder Zhang Yuping (holding 17%), has made a Partial Offer (for 15% of shares outstanding) at HK$0.16/share, towards gaining majority control.
- That’s a 18.5% premium to last close … and a 80% discount to NAV, and a 47% discount to Hengdeli’s net cash as at 31 December 2023.
Sa Sa Intl (178 HK): Every Coin Has Two Sides
- Despite missing market consensus, Sa Sa International Hldgs (178 HK)‘s FY24 result still have silver linings. Its resumption of dividends with a 70% payout ratio is welcoming.
- Tax credit in 2H23 has distorted comparison. At pre-tax level, 2H24 profit has gone up by 29.5%. Cost management is solid, generating a 0.9pp FY24 operating margin expansion.
- While overall 1Q25 sales have dropped, mainland China sales surged 83.9%. The macro environment should have bottomed and government efforts to attract tourists will pay off.
Hyundai Motor India: Can It Thrive Amidst a Rapidly Evolving Mobility Landscape?
- India’s passenger vehicle industry is shifting towards alternative fuels and facing intense competition, amidst changing customer preferences.
- Despite a growing vehicle market, Hyundai Motor India (HMIL) faces a tough battle to defend its market share given changing industry dynamics.
- With more competitors in the fray, including its parent group company Kia and EV leader BYD, Hyundai Motor India is in for a challenging ride.
J&J Snack Foods Corp.: Initiation Of Coverage – Growth from Branded Products & 3 Other Major Drivers
- The first quarter earnings of J&J Snack Foods Corporation (J&J) highlights several aspects of the company’s financial health and operational performance.
- The company’s Q1 2024 results were influenced by a challenging consumer environment, with many customers witnessing yearly declines in consumer traffic and consumption.
- To counteract these trends, J&J leveraged its popular brands to optimize sales opportunities, resulting in less than a 1% sales decline.
Adient plc: Initiation Of Coverage – What Is Its Business Strategy & How Is It Growing In China? – Major Drivers
- This is our first report on Adient, a global leader in automotive seating.
- The company has continued to focus on business performance, launch execution, and continuous improvement in FY 2024.
- Some highlights in the first fiscal quarter of 2024 include a total revenue of $3.7 billion, a slight decrease compared to the previous year’s first quarter, and an adjusted EBITDA totalling $216 million, reflecting an increase of 2%.
Kontoor Brands: Initiation Of Coverage – Are Its DTC & Tech Investments Yielding The Necessary Results? – Major Drivers
- This is our first report on apparel major, Kontoor Brands Inc. The company released its financial results for the fourth quarter and fiscal year 2023 in its recent earnings conference call.
- The company’s Vice President, President, Chief Executive Officer, Co-Chief Operating Officer, and Chief Financial Officer were on the call to provide insights on Kontoor’s business accomplishments and forecasts.
- One crucial undertaking announced in the conference call was Project Jeanius.
Pvh Corp – VNCE: 1Q Review: Multiple Positives Coming to the Fore; Reiterate Buy, $3 PT
- We are reiterating our Buy rating and $3 price target for Vince Holding Corp. after the company reported slightly better-than expected 1QFY24 (April) results and reiterated FY24 guidance.
- We believe, as the Vince operating model continues to normalize in FY24, it will become increasingly clear to investors the material positives at Vince, from a focus on full price selling, strong wholesale order book, continuing emphasis on higher overall returns and a strengthening balance sheet, which we believe will drive a higher valuation for VNCE, especially with momentum ramping even higher from a “normalized” 2HFY24.
- As such, we reiterate our Buy rating and $3 price target for VNCE.
Abercrombie & Fitch Co Cl A – AKA: Snapping the Store: Building Unique Brands; Retierate Buy, $25 PT
- We are reiterating our Buy rating, $25 price target and projections of a.k.a. Brands after touring the company’s Culture Kings store in Las Vegas and Princess Polly unit in Los Angeles.
- We believe both locations represent impressive retail units which will allow for continued growth (and high returns) going forward, as a.k.a. expands their retail footprint, with three new Princess Polly stores on track for a 2H24 opening.
- As such, we remain excited by the potential for the ongoing turn at the company, which we believe will be even further driven by continued retail expansion, and reiterate our Buy rating and $25 price target for AKA.
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