In today’s briefing:
- Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
- Taste Gourmet (8371 HK): H1 FY25 Earnings Preview, 4.5x PE with 12% Yield
- DFI Exits Yonghui, MINISO Enters: Who Got The Short End Of The Stick?
- Asics (7936) | Q3 Preview; Revision of MTP
- Has the “Unit of Investment” Principle Spoiled the Companies?
- Rakuten Mart Launching This Month
- LE: European Tour: Creating a New Vision; Reiterate Buy, $20 PT
- Pre-IPO Eternal Beauty Holdings – The Perfume Business in China May Not Be as Good as Expected
Tohokushinsha (2329 JP) To 3D – “Not Today”; 3D May Go To The Mattresses
- 3D Investment Partners bought 5% of Tohokushinsha Film (2329 JP) by Mar-2023. A year later they had 17+%. 3D proposed changes. In July, 3D proposed a takeover, asking for DD.
- Tohokushinsha responded to the proposals, then offered due diligence to 3D based on terms set by a Special Committee. 3D did not want those strict DD terms.
- Yesterday, Tohokushinsha said “Fine.” The stock today fell 10% today. This is not a stalemate, but it means 3D may start to play harder.
Taste Gourmet (8371 HK): H1 FY25 Earnings Preview, 4.5x PE with 12% Yield
- Taste Gourmet (8371 HK) will report its H1 FY25 earnings in early November. The company isn’t reporting quarterly earnings because GEM board stocks are no longer required to do so.
- We expect revenue and profit growth of 22% %/20% YoY, as the average number of HK restaurants has increased from 45 to 54, and most have ramped up.
- Trading at 4.5x PE with a 12% dividend yield, 27% of the market cap in cash and a mainboard listing on the horizon there abundant catalysts for the future.
DFI Exits Yonghui, MINISO Enters: Who Got The Short End Of The Stick?
- Low-Cost retailer MINISO (9896 HK) has entered into SPAs to acquire a 29.4% stake in supermarket chain Yonghui (601933 CH) from DFI (DFI SP) and two units of JD.com (9618 HK).
- Upon the completion of this US$890mn transaction, which is subject to regulatory and shareholder approvals, MINISO would become Yonghui’s largest shareholder. And DFI would exit its entire stake.
- Ye Guofu, MINISO’s founder/chairman, views the transaction “With a brave heart, start a new world!”. Yonghui has been spilling red ink since FY21. Perhaps “brave soul” is more apt.
Asics (7936) | Q3 Preview; Revision of MTP
- Asics is seeing robust D2C sales growth, now 40% of total sales, driving gross margins to 55.5% (+4.5 pp YoY) in 1H24.
- High-Margin models and strong sales in Onitsuka Tiger and Sportsstyle categories support a forecasted 13% YoY sales increase in 2H24.
- Asics’ strategic transformation, focusing on structural reforms and emerging markets, to drive upgraded MTP though FY26.
Has the “Unit of Investment” Principle Spoiled the Companies?
- The reason companies object to a reduction in the investment unit is the cost of shareholder relations, not the cost paid to the trust bank.
- We should discuss whether it is better for the “unit of investment” principle to remain in place for the convenience of companies that want to pass company proposals smoothly.
- It will be interesting to see if there will be a discussion on going back to basics and allowing single share holders to exercise their voting rights.
Rakuten Mart Launching This Month
- Rakuten still gets a lot of flak for its mobile business but its core e-commerce operation continues to improve.
- Rakuten will launch Rakuten Mart this month, an online supermarket but with Rakuten Ichiba vendors too.
- Online food retailing is becoming a major source of competition with Amazon, Aeon and Seven & I all investing heavily but Rakuten is holding its own.
LE: European Tour: Creating a New Vision; Reiterate Buy, $20 PT
- We are reiterating our Buy rating, projections and $20 price target for Lands’ End after visiting the company’s European headquarters in Oakham, United Kingdom and meeting with management.
- We believe, with operations overwhelmingly focused on the United Kingdom and German consumer, there remains multiple growth opportunities, from new categories, expansion into Europe-only looks, lower discounting and continuing to upgrade the customer mix to more lifestyle and features, rather than pricing, driven.
- Further, with Europe taking the lead in terms of quicker buys and reacting/setting fashion trends, they will increasingly have a roll in setting the product pace for the United States operations.
Pre-IPO Eternal Beauty Holdings – The Perfume Business in China May Not Be as Good as Expected
- The essence of Eternal Beauty’s business model is to earn a “price difference” of the brand and product portfolios, but this business model is difficult to generate high profit margins.
- The situation and prospects of China’s perfume market are facing major changes. It‘s uncertain whether the perfume sales in the China market can maintain double-digit growth in the long term.
- Eternal Beauty’s financial performance would face challenges due to changes in consumer preferences, shifts in China’s domestic policies, international trade disputes, geopolitical conflicts, etc. Valuation could be lower than peers.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
