In today’s briefing:
- Japan Tobacco/Vector Group: Possible Bump-Up?
- Weekly Deals Digest (25 Aug) – Seven & I, Iriso, Fancl, Alps Logistics, China TCM, Henlius, GA Pack
- NIFTY50 Index Rebalance: Trent, BEL to Replace Divi’s Lab, LTIMindtree
- Last Week in Event SPACE: Seven & I Holdings, Webjet, Hanwha Group, Swire Pac/Props, EOFlow
- Lowe’s Companies: A Dive Into Its Brand Strength & Market Position! – Major Drivers
- Tapestry Inc.: A Story Of Enhanced Brand Building & Consumer Engagement! – Major Drivers
- Tencent Music Entertainment Group: Innovation In Subscription & User Experience & Other Major Drivers
- Walmart Inc.: How Are They Dealing The Challenges of Sustaining e-Commerce Profitability Amid AI Integration! – Major Drivers
- Alibaba Group: A Blend of Growth
- Yamaha Motors Placement – A Relatively Small Cross-Shareholding Unwind
Japan Tobacco/Vector Group: Possible Bump-Up?
- JT plans to acquire 100% of Vector Group at $15.00/share, a 29.9% premium. The offer requires over 50% acceptance, with Board support and completion expected by late 2024, pending approvals.
- The shares go ex-dividend on August 30, with payment on September 12. Adjusted for the dividend, shares trade at a -0.4% gross spread. My fair value estimated is $15.92/share.
- Consensus sets a target price of $16/share. JT may consider raising its offer to this level (6.67%), especially if they see Vector as a strong long-term investment.
Weekly Deals Digest (25 Aug) – Seven & I, Iriso, Fancl, Alps Logistics, China TCM, Henlius, GA Pack
- A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
- ECM developments: WeRide (WRD US) delayed its Nasdaw IPO, 99 Speed Mart Retail Holdings (99SPD MK) launched a US$530 million IPO.
- Event-Driven developments: Seven & I Holdings (3382 JP), Iriso Electronics (6908 JP), Fancl Corp (4921 JP), China Traditional Chinese Medicine (570 HK), Shanghai Henlius Biotech (2696 HK), GA Pack.
NIFTY50 Index Rebalance: Trent, BEL to Replace Divi’s Lab, LTIMindtree
- Trent (TRENT IN) and Bharat Electronics (BHE IN) will replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) at the close on 27 September.
- Passive trackers will need to trade at least 5 days of ADV and over 11 days of delivery volume in the stocks.
- All the index changes are also changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) and there will be opposing flows (though much smaller in size) for the stocks.
Last Week in Event SPACE: Seven & I Holdings, Webjet, Hanwha Group, Swire Pac/Props, EOFlow
- Alimentation Couche-Tard has returned to the well with a NBIO for 7&I (3382 JP). This’ll be anathema to politicians who view 7&i as a local champion AND a lifeline entity.
- Global travel outfit Webjet Ltd (WEB AU) has announced the separation of its two key divisions. The sum of the part is greater than the whole? I’ll take that bet.
- The Kim family turn their focus to Hanwha Galleria (452260 KS) in the latest Partial Offer within the Hanwha Group complex.
Lowe’s Companies: A Dive Into Its Brand Strength & Market Position! – Major Drivers
- Lowe’s Companies’ second quarter 2024 earnings outlined a mixed performance amid challenging market conditions, reflecting both the strengths and weaknesses of its current business strategy.
- The company reported Q2 sales of $23.6 billion, with comparable sales down by 5.1%.
- This decline was attributed to a decrease in demand for Do-It-Yourself (DIY) projects, partially mitigated by solid performance in the Professional (Pro) segment and a growth in online sales.
Tapestry Inc.: A Story Of Enhanced Brand Building & Consumer Engagement! – Major Drivers
- Tapestry, Inc. reported its fourth quarter earnings where it demonstrated notable strengths internationally with a 6% growth led by significant contributions from various regions including Europe, Other Asia, and Japan.
- However, modest revenue declines in North America, coupled with more challenging conditions in Greater China, posed challenges in otherwise robust financial outcomes.
- Revenue in Greater China grew by 3% overall for the year but showcased declines in the latter half.
Tencent Music Entertainment Group: Innovation In Subscription & User Experience & Other Major Drivers
- Tencent Music Entertainment (TME) demonstrated a strong performance in the second quarter of 2024, anchored by significant growth in its online music services and a robust increase in adjusted net profit.
- The company reported a 28% year-over-year growth in online music services and a 26% increase in adjusted net profit, signaling robust operational health and profitability.
- The addition of over 10 million music subscribers in the first half of 2024, combined with an increase in average revenue per paying user (ARPPU), underscores the company’s effective market penetration and pricing strategy.
Walmart Inc.: How Are They Dealing The Challenges of Sustaining e-Commerce Profitability Amid AI Integration! – Major Drivers
- Walmart Inc. reported a solid financial performance in its fiscal year 2025 second quarter earnings, displaying robust sales growth and even stronger profit growth which surpassed expectations.
- The company’s leadership highlighted their dual focus on achieving short-term results and driving significant transformative changes aimed at positioning Walmart for future success.
- During the quarter, Walmart experienced broad-based strength across multiple divisions.
Alibaba Group: A Blend of Growth
- Alibaba Group’s June Quarter 2024 financial report showcases a blend of growth, challenges, and strategic advancements.
- The group reported steady growth in its core e-commerce businesses, Taobao and Tmall Group, with an increase in Gross Merchandise Volume (GMV) and order volumes.
- Particularly, the company’s focus on enhancing user experience and AI-driven strategies appears to be bearing fruit, assuring an upward trajectory in retaining and attracting customers, which is crucial in a competitive e-commerce landscape.
Yamaha Motors Placement – A Relatively Small Cross-Shareholding Unwind
- A group of shareholders aims to raise around US$330m via selling around 3.6% of Yamaha Motor (7272 JP).
- This will be another cross-shareholding unwind and hence, won’t be a huge surprise, although the stock hasn’t been doing particularly well lately.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
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