In today’s briefing:
- StubWorld: Wilmar’s All-Time High Implied Stub As Yihai Kerry Touches New Lows
- Amer Sports IPO: The Bull Case
- Tongcheng Travel (780 HK): We Are Back
- Pre-IPO MIXUE Group – The Snow King Opens up a Lot More Room for Imagination than Expected
- Interesting that the Buy Parent Company + Sell Subsidiary Trade Does Not Work
- Guming Holdings (Goodme) Pre-IPO Tearsheet
- Brainbees Solutions (FirstCry) Pre-IPO Tearsheet
StubWorld: Wilmar’s All-Time High Implied Stub As Yihai Kerry Touches New Lows
- Wilmar International (WIL SP)‘s current implied stub and simple ratio (Wilmar/Yihai Kerry Arawana Holdings C (300999 CH)) are both at all-time highs.
- Preceding my comments on Wilmar are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Amer Sports IPO: The Bull Case
- Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
- In 2019, a consortium of Anta Sports Products (2020 HK), FountainVest, Anamered Investments and Tencent (700 HK) acquired Amer at an EV of €5.5 billion.
- The bull case rests on the rapid growth and gross margin improvement under the consortium’s ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile.
Tongcheng Travel (780 HK): We Are Back
- The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. Tongcheng Travel Holdings (780 HK) is a key beneficiary.
- In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand.
- Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against Trip.com (TCOM US) can be reversed.
Pre-IPO MIXUE Group – The Snow King Opens up a Lot More Room for Imagination than Expected
- The business model of MIXUE is S2B2C. The expansive and highly efficient supply chain is the bedrock of MIXUE’s industry leading performance and scale, setting it apart from its peers.
- MIXUE has more flexibility to diversify its business to explore new growth points and is also more resilient to risks/industry changes, which determines sustainability and growth ceiling of future development.
- As competition for freshly-made tea drinks industry intensifies, capital has become “impatient”. As an industry leader, now is the best time for an IPO. MIXUE’s valuation could reach US$10 billion.
Interesting that the Buy Parent Company + Sell Subsidiary Trade Does Not Work
- It is an expected option for a parent company to make a profitable subsidiary wholly owned by the parent company, an environment that demands improved ROE.
- It is natural that the market would receive a stock offering by a large shareholder with more information than others as the stock price is higher than its fair value.
- It’s not unrelated to the fact that few shareholder proposals are approved and company proposals are rejected at AGMs, and that most domestic investment managers affiliates of major financial institutions.
Guming Holdings (Goodme) Pre-IPO Tearsheet
- Guming Holdings (GUM HK) is looking to raise US$300m in its upcoming Hong Kong IPO. The bookrunners on the deal are Goldman Sachs, and UBS.
- Guming Holdings (Guming) is a maker of freshly-made beverages in China.
- As per CIC, its “Good me” brand is China’s largest mid-priced freshly-made tea store brand in terms of both GMV in 2023 and store count as of Dec 2023.
Brainbees Solutions (FirstCry) Pre-IPO Tearsheet
- FirstCry (0172540D IN) seeks to raise up to US$700m in its upcoming India IPO. The deal will be run by Kotak, Morgan Stanley, Bank of America, JM Financial and Avendus.
- FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
- In India, FirstCry sells Mothers’, Babies’ and Kids’ products through its online platform, company-owned modern stores, franchisee-owned modern stores and general trade retail distribution.
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