In today’s briefing:
- WH Group (288 HK)’s US/Mexican Spin-Off
- A Deeper Look into Mamaearth’s Inventory Saga: Unpacking the Red Flags and Forensic Insights
- 2025 High Conviction: Tencent Music Entertainment (TME) – Music as Promising Future
- Hong Kong Index Options Weekly – HSI and HSCEI
- Celsius Holdings Inc.: Expanding Distribution Partnerships For A Competitive Edge! – Major Drivers
- IBJ (6071 JP) – Raising the Quality of Earnings
- Airbnb Inc.: Expansion into New Markets As A Strategic Growth Enabler! – Major Drivers
- SSI Weekly: Galaxy Gaming Acquisition and Other Portfolio Updates
- Koito Mfgr － 2024 Update (7276 JP)
- Ginebra San Miguel (GSMI PM) Q3 2024: Solid Set of Numbers And Increasing Dividends
WH Group (288 HK)’s US/Mexican Spin-Off
- Back on 14 July 2024, WH Group (288 HK) (WHG) announced it had submitted a plan to spin-off its Smithfield US and Mexican ops on the NYSE or NASDAQ
- WHG the world’s largest pork producer, has now confirmed it will sell up to 20% of Smithfield’s shares on a fully diluted basis, in an initial public offering.
- WHG has also proposed an assured entitlement for existing shareholders by way of a distribution in specie of existing shares of Smithfield, or a cash alternative.
A Deeper Look into Mamaearth’s Inventory Saga: Unpacking the Red Flags and Forensic Insights
- Mamaearth’s journey to the stock market has been marred by allegations of channel stuffing, inventory mismanagement, and inconsistent communication from management.
- The company’s struggles in Q2 FY25 have raised concerns about their financial health and transparency.
- The forensic analysis is a deeper look into the allegations, redflags and bigger problems that require investor’s attention
2025 High Conviction: Tencent Music Entertainment (TME) – Music as Promising Future
- Our 2024 High Conviction, the stock of Meituan has risen by 87% in one year.
- We believe the market ignores TME because of its flat revenue.
- However, we expect TME will significantly benefit from its dominant position in the Chinese music market.
Hong Kong Index Options Weekly – HSI and HSCEI
- Vols have stabilized as market has moved away from peak short gamma levels just above the recent market highs.
- HSI Put positions appear to have been rolled down to the 19,000 strike.
- HSCEI saw significant put volume at the 6300 strike with ~15,000 contracts per day trading at that level.
Celsius Holdings Inc.: Expanding Distribution Partnerships For A Competitive Edge! – Major Drivers
- Celsius Holdings Inc.’s third-quarter 2024 earnings reveal a mixture of growth opportunities and challenges.
- The energy drink company has managed to maintain robust consumer demand and retail sales growth despite a dip in total revenue compared to the previous year.
- The company recorded a modest 7.1% increase in retail sales year-over-year for the quarter, with unit sales rising by 7.3%.
IBJ (6071 JP) – Raising the Quality of Earnings
- Positive results from core activities – Driven by sustained growth at the core matchmaking business, Q1-3 FY12/24 results were stronger than expected which was a positive surprise.
- The company has maintained FY12/24 guidance, but has telegraphed stronger OP expectations and has announced an FY DPS of ¥8 (+33.3% YoY), indicating a more progressive shareholder returns policy.
- With affiliate franchisee numbers on an uptrend and membership numbers continuing to rise at the Directly-Managed Lounge Business, we believe this demonstrates the company’s core business activities are growing, with improvement in the quality of earnings.
Airbnb Inc.: Expansion into New Markets As A Strategic Growth Enabler! – Major Drivers
- Airbnb, Inc. reported its financial results for the third quarter of 2024, showcasing a mixture of positives and negatives.
- The company experienced continued growth in Nights and Experiences Booked, with bookings reaching 123 million, and saw a 10% increase in revenue year-over-year to $3.7 billion.
- Net income stood at $1.4 billion, translating to a notable 37% net income margin.
SSI Weekly: Galaxy Gaming Acquisition and Other Portfolio Updates
- Galaxy Gaming is being acquired by Evolution AB for $3.20/share, with a 17% spread and minimal regulatory hurdles.
- OCI N.V. plans a $1bn capital return in H1 2025, equating to 40% of its market cap.
- Benson Hill’s buyout spread widened to 60% due to liquidity issues and ongoing buyout negotiations nearing completion.
Koito Mfgr － 2024 Update (7276 JP)
- Orbis Japan Equity Fund recently wrote about auto supplier Koito Manufacturing (7276 JP) in their second-quarter 2024 letter.
- So, who is Koito? It’s the world’s largest manufacturer of automotive lighting products, serving primarily Japanese customers such as Toyota, Nissan and Honda.
- What stood out in Orbis’s second-quarter letter is that Koito plans to return JPY 350 billion to shareholders in the next five years, more than half the current market cap. Rational capital allocation is rare in Japan, so this number caught my attention.
Ginebra San Miguel (GSMI PM) Q3 2024: Solid Set of Numbers And Increasing Dividends
- Ginebra San Miguel (GSMI PM) reported a solid Q3 FY24, with revenues/profits up 15%/25% YoY, led by 5% volume growth (10% YTD growth).
- Net cash and investments are now >15 bn pesos (21% of market capitalization). For Q4 2024, the company paid a dividend of 4 pesos/share (6.2% dividend yield).
- This is one of the cheapest liquor companies we know, trading at 10x FY24 PE/6.3 EV-EBITDA. It has a >33% ROCE and a great growth/dividend payment profile.
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