In today’s briefing:
- Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap
- Asian Dividend Gems: Tingyi Holding
- Vinda International (3331 HK): Business Recovering As Expected
Leapmotor (9863 HK): Stellantis’ Stake Doesn’t Come Cheap
- Stellantis, a merger between France’s PSA with Fiat Chrysler Automobiles NV (FCAM BQ), is buying a 17% stake (14.53% fully diluted) in Zhejiang Leapmotor Technologie (9863 HK).
- Leapmotor will issue 194mn H shares at HK$43.8/share, a 19% premium to last close, in a HK$8.51bn transaction. Stellantis will also hold a 51% stake in newly formed JV.
- Stellantis is paying a chunky 3.64x market cap-trailing-revenue; but ~2.25x forward revs, which compares to the average for key peers of 1.9x.
Asian Dividend Gems: Tingyi Holding
- Shares of Tingyi Holding are oversold. It has high dividend yield and attractive valuations. Its core instant noodles and beverage businesses are turning around this year.
- The consensus expects DPS of HKD 0.62 for Tingyi in 2023 which would suggest a dividend yield of 6.1%. Tingyi Holding’s dividend yield averaged 5% annually from 2018 to 2022.
- Tingyi’s “Master Kong” instant noodle is one of the best known brands in China. The company is also one of the largest producers and distributors of beverages in China.
Vinda International (3331 HK): Business Recovering As Expected
- Vinda International (3331 HK) announced 3Q23 results, with net profit up 37% yoy as margins started to recover.
- Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23).
- More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.
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