In today’s briefing:
- ZJLD Group IPO: The Bull Case
- Tesla Q1 Deliveries “Beat” Rapidly Falling Market Estimates But Miss Management Guidance
- Lalatech IPO Preview: Disrupting The Traditional Logistics Industry
- Shouldn’t Shareholders Raise Voice for a Company that Is Building up Cash While Its ROE Is Sluggish?
ZJLD Group IPO: The Bull Case
- ZJLD Group (ZJLD HK), a baijiu company in China, is pre-marketing an HKEx IPO to raise upto US$400 million, according to press reports.
- ZJLD is the fourth largest privately-owned baijiu company and ranked third among all baijiu companies with three or more aroma types, in terms of revenue in 2021.
- The key elements of the bull case rest on market share gains, competitive production capacity, premiumization, rising gross margin and inventory days in good shape vs peers.
Tesla Q1 Deliveries “Beat” Rapidly Falling Market Estimates But Miss Management Guidance
- Tesla managed the late hour surge it needed to “beat” rapidly falling market estimates
- But results were still shy of management’s target for more than 37% y/y growth (much less its abandoned goal for more than 50% growth y/y)
- Drastic measures to meet expectations likely came at the cost of already waning revenue quality and shrinking profit margins.
Lalatech IPO Preview: Disrupting The Traditional Logistics Industry
- Lalatech Holdings, one of the largest Asia-based providers of on-demand delivery platform, filed for Hong Kong IPO, with Goldman Sachs, BofA Securities and J.P. Morgan leading the offering.
- I like profitable growth at tremendous scale, hybrid monetization model and leadership position in Mainland China with a 40%+ share, well ahead of its major peers.
- Lalatech Holdings was backed by top-tier VC investors, including Hillhouse Capital Group, Sequoia Capital, Shunwei Capital, MindWorks Capital and Vitruvian Partners, among others.
Shouldn’t Shareholders Raise Voice for a Company that Is Building up Cash While Its ROE Is Sluggish?
- Even though OP Margin has been stagnant, NP Margin has improved due to the corporate tax rate cut, and the increased free cash flow has been less directed to investments.
- The fact that OP Margin didn’t rise much while personnel and R&D costs were curbed and there wasn’t much investment simply implies a lower gross margin in the core business.
- With ROE growth sluggish and cash accumulating, it’s reasonable that investors demand further shareholder returns. If asset turnover declines while OP Margin slows, there’s little reason to hold cross-held shares.
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