In today’s briefing:
- Quiddity Leaderboard DAX/MDAX Mar 24: M&A Candidates Morphosys and Vitesco Could Face Index Flows
- Brainbees Solutions (FirstCry) IPO | Channel Feedback
- Sweet Honeys: A Profit Machine
- Investors Want to See a Shift in Management to Create Value, Not Just Meet Government Target Numbers
- JD.com and Elliot Interested in Unloved Currys
- Trial Holdings Pre-IPO – Updated Peer Comparison and Valuation
Quiddity Leaderboard DAX/MDAX Mar 24: M&A Candidates Morphosys and Vitesco Could Face Index Flows
- In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the March 2024 index rebal event.
- The official index changes for the March 2024 review could be announced after the close of 5th March 2024.
- I currently do not see any changes for the DAX index but there could be one change for the MDAX index.
Brainbees Solutions (FirstCry) IPO | Channel Feedback
- We visited FirstCry Franchisee stores in Ajmer (Rajasthan), and Hosur (Tamil Nadu).
- FirstCry has a high brand recall, limited competition, and healthy franchisee relations.
- The ability to leverage FirstCry and Baby Oye is a good margin lever.
Sweet Honeys: A Profit Machine
- Low cost apparel retailers have enjoyed a significant uptick in the past few years as consumers look to polarise their spending further between cheaper basics and luxury treats.
- But the real change is in improving profitability. One the biggest beneficiaries has been Honeys, a low cost womenswear retailer that has seen a revival in the past few years.
- Operating profit has tripled since 2018. Can it last? Work on creating its own low cost manufacturing base suggests it can.
Investors Want to See a Shift in Management to Create Value, Not Just Meet Government Target Numbers
- In 2023, % Woman Board Members increased progressively even in companies with lower corporate governance scores. Many companies are unanimous in their commitment to appointing women board members.
- Together with the fact that business challenges have not been solved by only having people who think alike, 90% of institutional investors said that information on women’s activities is important.
- Companies with over 25% women on their boards have superior values in profitability and stock valuation. Managers should implement the promotion of women in order to transition to value-creating management.
JD.com and Elliot Interested in Unloved Currys
- Both Elliot (62p/share prospective offer) and JD.com (9618 HK) are interested in Currys PLC (CURY LN) a battered (but with long history) UK retailer of electronics and appliances.
- Currys has been reshaping since 2008, without the market giving credit by the looks of the share price. This time might be different with focus on higher-margin services and credit.
- On a comparables EV/EBITDA basis, my fair value estimate is 76p/share (£861 million implied equity value), 23% above Elliot’s offer. The Board may be willing to engage around that figure.
Trial Holdings Pre-IPO – Updated Peer Comparison and Valuation
- Trial Holdings (5882 JP) (TH) is now looking to raise around US$234m in its Japan IPO, after having canceled its prior listing attempt last year.
- TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
- We have looked at the company’s past performance in our previous notes. In this note, we provide our updated thoughts on valuation.
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