In today’s briefing:
- BUY/SELL/HOLD: Hong Kong Stock Updates (September 28)
- Weekly Consumer Tales: Pop Mart’s Unique Appeal-Miniso’s Yonghui Buy-China Stimulus-MTR’s Spicy IPO
- CR Beverage IPO: Less Diversification, Falling Growth Rates and Inferior Margins Compared to Peers
- Achieving the % of Female Board Members by Matching Numbers Doesn’t Achieve the Original Goal Either
- MercadoLibre: Entering the Global Stage
- Tencent Music (TME): All Cheerful Data in Music, To Grow in Q3 After 3 Flat Years
- ECM Weekly (30th Sep 2024) – Tokyo Metro, Rigaku, China Resources, K Bank, Mr DIY, Smartworks, IREDA
- Ricegrowers Ltd – Moving valuation to FY25f consensus
BUY/SELL/HOLD: Hong Kong Stock Updates (September 28)
- Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.
- Xtep International (1368 HK) had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading Tongcheng Travel Holdings (780 HK) on an improved outlook.
- Goldman Sachs upgraded their rating on Bilibili (9626 HK) , Bilibili (BILI US) to a BUY with improving user MAU/DAU measures and the success of its newly launched game.
Weekly Consumer Tales: Pop Mart’s Unique Appeal-Miniso’s Yonghui Buy-China Stimulus-MTR’s Spicy IPO
- Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
- Despite weak consumer spending in China, there are a few bright spots—an example is Pop Mart International Group (9992 HK)’s strong sales growth partly driven by the “red lipstick effect.”
- Miniso (MNSO US)’s stock plunged early last week but quickly recovered, reinforcing our view that its deal with Yonghui Superstores Co., (601933 CH) has some promise.
CR Beverage IPO: Less Diversification, Falling Growth Rates and Inferior Margins Compared to Peers
- The Chinese drinking water and beverage maker, China Resources Beverage (CRB HK) has filed for an IPO on the HKEx to raise around US$1.0bn.
- The company’s operations are heavily concentrated towards drinking water products where the market competition is intensifying leading into a price war.
- CR Beverage’s margins are inferior compared to peer Nongfu Spring (9633 HK) who has diversified into other beverage products from drinking water to grow its financials.
Achieving the % of Female Board Members by Matching Numbers Doesn’t Achieve the Original Goal Either
- Since it’s difficult for all prime market companies to achieve the 30% female board members by 2030, the goal may be achieved by including non-statutory executive officers in board members.
- Companies are stuck in matching numbers, and government is unwilling to address the fundamental issues. There’s risk that original objective of shifting to value-creating management through ensuring diversity is lost.
- Policy changes to create environment where women don’t have to leave workforce for childbirth, childcare, etc., and to change people’s mindsets are impossible without the leadership of a non-diverse legislature.
MercadoLibre: Entering the Global Stage
- MercadoLibre continues its climb, hitting new highs in both Average Weight (0.4%) and Funds Invested (23.42%).
- In the last six months, 4.2% of funds have added MercadoLibre to their portfolios, while key EM holdings HDFC Bank and AIA Group have seen declining ownership.
- 20 new positions have been opened over the last 6-months, with Goldman Sachs Global Impact Opportunities and Fidelity Special Situations among the fresh buyers, against only 6 closures.
Tencent Music (TME): All Cheerful Data in Music, To Grow in Q3 After 3 Flat Years
- The weak business, social entertainment, become insignificant in recent quarters.
- All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
- We set an upside of 20% and a price target of US$14.80 for the end of 2025.
ECM Weekly (30th Sep 2024) – Tokyo Metro, Rigaku, China Resources, K Bank, Mr DIY, Smartworks, IREDA
- Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
- On the IPO front, it hasn’t been this busy for a while, with deals live in Japan and Korea, and possible launches in Hong Kong and India as well.
- On the placements front, there were a few China ADR blocks and other placements across the region.
Ricegrowers Ltd – Moving valuation to FY25f consensus
- RaaS has published an update report on agri-FMCG group Ricegrowers, trading as SunRice (ASX:SGLLV), updating our Sum of The Parts (SoTP) valuation as we move from FY24 estimates/consensus data to FY25.
- In moving our consensus valuation year from FY24 to FY25, we look back on selected RaaS peer EPS growth trends over the past four years (FY23a-FY26f inclusive).
- Only four stocks including SGLLV [the others (ASX:TWE), (ASX:RIC) and (SB:EBRO)] have not or are not forecast to have a down year during this period.
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