In today’s briefing:
- Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- The Challenge Is to Raise the Quality of Engagement. To Do So, Active Funds Need to Be Increased
- Cirrus Aircraft IPO – Fundamentally Sound but Parent Still Under Sanction
- Paradise: Expansion into High End Hotel Likely to Destroy Shareholder Value
- Sermsuk (SSC TB): THBEV’s Delisting Offer
- India Alcoholic Beverages: Growing in Pints And Quarts. IPO Adds a Valuation Kick
- Newell Brands: A Solid Strategic Business Unit Performance and Innovation Implementation Drives Our Optimism!! – Major Drivers
- Capri Holdings Limited: Why We Are Bullish Even If The Tapestry Acquisition Does Not Go Through! – Major Drivers
- The Simply Good Foods Company: Acquisition of OWYN to Strengthen RTD Protein Shake Market Position & Other Major Drivers
- Nomad Foods: These Are The 4 Pivotal Factors Driving Its Performance In 2024 & 2025!
Japan Cross-Shareholding – Summary Matrix – Over US$100bn of Selling in 118 Companies
- Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
- Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies.
- Of these, they have a combined stake of over US$1bn in 23 companies.
The Challenge Is to Raise the Quality of Engagement. To Do So, Active Funds Need to Be Increased
- The reason why investor engagement is effective is in the exercise of voting rights. Engagement is considered to have been effective around 2014, when foreign ownership exceeded 30%.
- Engagement is generally effective in the funds entrusted to GPIF, according to the results of the study. GPIF should raise fees to allow investment managers to engage in fruitful engagement.
- This tends to be a generic question for passive funds. If we expect engagement to be more effective in the future, we need to increase the number of active funds.
Cirrus Aircraft IPO – Fundamentally Sound but Parent Still Under Sanction
- Cirrus Aircraft (0153126D US) seeks to raise up to US$197m in its Hong Kong IPO.
- Cirrus Aircraft designs, develops, manufactures, and sells premium aircrafts. Its two aircraft product lines, the SR2X Series and the Vision Jet, are currently certified and validated in over 60 countries.
- In our previous notes, we talked about the company’s historical performance and PHIP updates. In this note, we undertake a quick peer comparison and share our thoughts on valuation.
Paradise: Expansion into High End Hotel Likely to Destroy Shareholder Value
- On 2 July, Paradise Co Ltd (034230 KS) announced that it will construct a new high end luxury hotel in Seoul spending about 500 billion won to 550 billion won.
- We believe that this construction of the new luxury hotel will have a negative impact on shares of Paradise.
- Rather than investing a large sum of money to build a new hotel, many investors would rather have preferred Paradise to increase share buybacks and dividends.
Sermsuk (SSC TB): THBEV’s Delisting Offer
- Thai Beverage (THBEV SP) is proposing to take 64.67%-held Sermsuk PCL (SSC TB) private by way of a voluntary Delisting Offer.
- The Offer price is THB 63/share, a 27.9% premium to last close.
- This Delisting Offer requires a Scheme-like shareholder vote. Payment may occur late 4Q24. This is an illiquid arb.
India Alcoholic Beverages: Growing in Pints And Quarts. IPO Adds a Valuation Kick
- Allied Blenders & Distillers‘ recent IPO spotlighted India’s alcoholic beverage sector, which bucks global trends with strong volume and value growth.
- India is the third largest alcoholic beverage market globally, and the second largest for spirits. It is projected to grow at a CAGR of more than 10% over the near-term.
- Incumbent players in this highly regulated sector can benefit from strong market moats and evolving growth opportunities if they can effectively navigate the highly regulated business environment.
Newell Brands: A Solid Strategic Business Unit Performance and Innovation Implementation Drives Our Optimism!! – Major Drivers
- Newell Brands displayed a strong performance in its first quarter of 2024, reflecting continued progress in its strategic turnaround efforts.
- The company reported improvements across multiple metrics, including gross margin, operational efficiency, and core sales despite a challenging external environment.
- Moreover, Newell Brands maintained its full-year outlook and highlighted ongoing focus on operational excellence and innovation.
Capri Holdings Limited: Why We Are Bullish Even If The Tapestry Acquisition Does Not Go Through! – Major Drivers
- Capri Holdings Limited recently reported its financial performance for the fourth quarter and full fiscal year of 2023.
- Despite facing numerous challenges, including an uncertain macroeconomic environment and specific difficulties in the Americas, the company managed to achieve high single-digit revenue growth and mid-single digit growth in earnings per share on a 52-week constant currency basis.
- However, these figures fell short of the company’s initial expectations.
The Simply Good Foods Company: Acquisition of OWYN to Strengthen RTD Protein Shake Market Position & Other Major Drivers
- The Simply Good Foods Company reported its fiscal third-quarter results for 2024, reflecting a combination of growth and investment strategies aimed at harnessing both immediate gains and longer-term opportunities.
- The company’s results were favorable, with a reported net sales increase of 3.1% to $334.8 million, driven primarily by Quest’s volume growth.
- Notably, retail takeaway across measured and unmeasured channels outpaced net sales growth, reaching approximately 5%.
Nomad Foods: These Are The 4 Pivotal Factors Driving Its Performance In 2024 & 2025!
- Nomad Foods, a prominent player in the frozen foods industry, experienced a mixed first quarter in 2024, balancing resilience in certain metrics with notable challenges typical of the consumer goods sector amidst a complex economic landscape.
- The company reported a slight net sales increase of 1.1% and organic sales growth of 0.3%, aided by favorable foreign exchange rates.
- Impressively, Nomad Foods has maintained positive organic sales growth for seven consecutive quarters.
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