In today’s briefing:
- Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer
- EQD | Hang Seng Index (HSI) WEEKLY LONG: Support Levels and Probability
- [Li Auto (LI US, BUY, TP US$55) TP Change]: Witnessing Consolidation…Reiterate as Our Top Pick
- [Miniso Group (MNSO US, BUY, TP US$26) TP Change]: Shifting from Value- To Interest-Based Retailer
Yaizu Suisankagaku Industry (2812 JP): J-STAR’s JPY1,137 Tender Offer
- Yaizu Suisankagaku Industry (2812 JP)/YSK has recommended J-STAR’s tender offer of JPY1,137 per share, a 35.0% premium to the undisturbed price (4 August).
- The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
- YSK is cash rich, and the offer is below book value. The tender offer is a reasonable alternative in challenging trading conditions that have slashed operating margin targets.
EQD | Hang Seng Index (HSI) WEEKLY LONG: Support Levels and Probability
- The Hang Seng Index (HSI) closed down last week (CC=-1), briefly touching OVERSOLD territory, it may close higher this week.
- The HSI trend pattern currently identified with the Market Reversal Matrix (MRM) is quite bullish, on average.
- Support levels to go LONG are between 19367 (Q2/Median) and Q3 at 19021.
[Li Auto (LI US, BUY, TP US$55) TP Change]: Witnessing Consolidation…Reiterate as Our Top Pick
- We expect Li Auto to report 2Q23 top line and GPM 2.3%/in line vs. cons. We think Li Auto’s share gain in Q1/Q2 reflects market consolidation.
- Our channel check found its weekly order intake remains robust at ~10k. We expect the capacity ramp-up to lead to Q3 delivery of ~100k, 12% vs. cons.
- We reiterate Li Auto as our top pick, due to 1) strong model cycle (L9/L8/L7) and channel expansion; 2) margin upside. Li’s MEGA BEV could be the next catalyst.
[Miniso Group (MNSO US, BUY, TP US$26) TP Change]: Shifting from Value- To Interest-Based Retailer
- We expect MNSO to report C2Q23 revenue 4.6% higher than cons and non-GAAP NI in-line with cons. The beat is due to strong sales from larger ticket size &store expansion.
- We think the brand upgrade strategy had effectively drove up Miniso stores’ blended ASP, combined with mild recovery of foot traffic, leading to 46% YoY growth in China revenue.
- Besides, we anticipate 37% YoY growth in oversea revenue and 43% YoY growth in total revenue in C2Q23. We maintain Buy rating and raise TP by US$0.5 to US$26.
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