In today’s briefing:
- Yashili (1230 HK): Scheme Doc Out. 23 June Court Meeting
- Yashili (1230 HK): Scheme Vote on 23 June
- Tesla’s Still Bloated Inventory Signals June Sales May Disappoint, Along With Q2 Market Estimates
- Tam Jai International: High-Quality Assets, Low-Quality Capital Allocation
- Alibaba Potential IPOs – Part 5 – An Early Look at Local Operations
- Perfect Medical: The Perfect Opportunity to Add
- Water Oasis: H1 FY23 Results, Moving in the Right Direction
- The Starting Point Is to Set “Sustainable Expansion of Corporate Value” As a Management Goal
- JumpStart Coffee Gets Fresh Funding, Targets Overseas Expansion
- Mondelez: When Strong Brands Are Properly Managed, Results Follow
Yashili (1230 HK): Scheme Doc Out. 23 June Court Meeting
- At long last, Yashili International Holdings (1230 HK) has dispatched the Scheme Document.
- The Court Meeting and EGM will be held on the 23 June. The IFA says the Offer is fair. At a ~160% premium to undisturbed, it certainly is.
- Assuming the transaction gets up, payment will occur on or before the 13 July.
Yashili (1230 HK): Scheme Vote on 23 June
- The Yashili International Holdings (1230 HK) scheme document is out with the court meeting scheduled for 23 June. The IFA considers the HK$1.20 per share offer to be fair and reasonable.
- Key conditions include approval by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The shareholder with a blocking stake should be supportive.
- This is a done deal. At the last close and for the 13 July payment, the gross and annualised spread is 1.7% and 15.3%, respectively.
Tesla’s Still Bloated Inventory Signals June Sales May Disappoint, Along With Q2 Market Estimates
- Tesla traditionally sells 50-60% of total quarterly sales in the last month—until now.
- Stubbornly high inventory levels signal that trend is at risk—along with ambitious market estimates for Q2
- June deliveries may track lower versus April+May and be down y/y. If so, Q2 deliveries may be little changed or even lower versus Q1 results.
Tam Jai International: High-Quality Assets, Low-Quality Capital Allocation
- We tend to shy away from the restaurant industry but decided to make an exception for Tam Jai;
- The brand has become a household name in Hong Kong and delivers attractive business economics for owners from its home market;
- However, we see multiple red/yellow flags when it comes to the management’s capital allocation, particularly relating to overseas expansion.
Alibaba Potential IPOs – Part 5 – An Early Look at Local Operations
- On 28th Mar 2023, Alibaba (ADR) (BABA US) announced that it would adopt a new organizational and governance structure, splitting into six major business groups and other investments.
- Alibaba also stated that each of the business groups would be set up as an independent entity with its own board and the groups will eventually seek to list.
- In our previous notes, we highlighted which divisions could list and looked at some of the divisions in more detail. In this note, we will talk about the local operations.
Perfect Medical: The Perfect Opportunity to Add
- Perfect Medical Health’s (1830 HK) share price correction seems overdone. News that COVID cases are expected to rise to over 65 million a week by June in China: the culprit.
- The stock presents an excellent opportunity to invest with a 8.9%/11.8% FY23e/24e dividend yield and 20% of the market capitalization in cash. Such excessive pessimism in this name is unwarranted.
- Catalysts for the stock would be the FY23 March-end results to be declared on June 28th, 2023.
Water Oasis: H1 FY23 Results, Moving in the Right Direction
- Water Oasis (1161 HK) H1 FY23 results were encouraging and a step in the positive direction as revenue/PAT improved by 27%/116% YoY ( although below our estimates by 10%/30%).
- The company paid a semi-annual dividend of 7 cents (9% annualized yield) for an 82% payout ratio. Net cash of 243 mn HKD represents 25% of market capitalization.
- The company has made several investments in new locations and spent heavily on advertising ( costs up 76% YoY); A positive inflection of trends will bear fruit in H2 2023.
The Starting Point Is to Set “Sustainable Expansion of Corporate Value” As a Management Goal
- The concern that companies are only striving to develop formal systems and not improving the substance of their corporate governance is shared by the Council of Experts.
- A solution to avoid formal system development would be to increase the independence of the board to a level that cannot be cleared by a little matching of numbers.
- For effective engagement, management must be aware of the goal of “sustainable growth and expansion of corporate value” in order to communicate in the same language.
JumpStart Coffee Gets Fresh Funding, Targets Overseas Expansion
- JumpStart Coffee, an Indonesian startup that makes smart coffee machines, has raised an undisclosed amount in a series B round led by Cool Japan Fund and Living Lab Ventures.
- Founded in 2018, JumpStart specializes in manufacturing vending machines that can serve over 20 types of coffee and non-coffee drinks.
- The startup said it has installed 2,000 machines in the Greater Jakarta Area, Bandung, and Surabaya.
Mondelez: When Strong Brands Are Properly Managed, Results Follow
- Mondelez is one of the best-performing large cap consumer staple businesses, while also being a relatively low risk stock.
- Mondelez remains fairly valued and with that is offering a multiple repricing opportunity, according to a recent investment thesis.
- The company is offering several repricing opportunities for investors.
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