In today’s briefing:
- The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
- Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
- Trial Holdings IPO: Trading Debut
- Xtep International (1368 HK): Valuation Too Cheap For A >10% Growth Stock
- PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY
- Carote Ltd Pre-IPO Tearsheet
- Maruti Suzuki India (MSIL IN): Market Leadership Position in UV Segment Bodes Well
- GoTo 4Q2023: Improved Profitability and a Plan to Buyback Shares to Rescue Falling Share Price
- MIXUE Pre-IPO – Initial Thoughts on Valuation
- Tempur Sealy International: What Is The Latest Update On The Mattress Firm Acquisition?
The Bigly March 2024 “Wednesday-Friday Trade” (Surprising Flows)
- Every year it’s the same trade. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
- But there may be ¥1.0-1.2trln+ to buy on one day into the close later this month, then ad hoc buys of ¥630bn and index sells of ~¥600bn 2 days later.
- Over the past ten years, the two day return on the March trade is great. This year the Nikkei funding trade makes things more complicated.
Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM
- Last month, a Cheng family vehicle with 24.06% of Giordano (709 HK), requisitioned an SGM to remove CEO Peter Lau, and install Colin Currie as CEO, plus three other NEDs/INEDs.
- That SGM will be held on the 3rd April. The director resolutions – both the removal and appointments – are “ordinary”, requiring a simple majority vote.
- The outcome will likely pivot off how the shareholders under Halcyon Securities will vote. So I dug a little deeper as to who these shareholders are, with some surprising results.
Trial Holdings IPO: Trading Debut
- Trial Holdings (5882 JP) priced its IPO at JPY1,700 per share to raise gross proceeds of US$256 million. The shares will start trading on 21 March.
- We previously discussed the IPO in Trial Holdings IPO: The Investment Case and Trial Holdings IPO: Valuation Thoughts.
- The peers have modestly re-rated since the prospectus was released on February 19. The IPO price remains attractive.
Xtep International (1368 HK): Valuation Too Cheap For A >10% Growth Stock
- Xtep International (1368 HK) announced in-line 2023 results, with net profit up 12% yoy and sales up 11% yoy. 2024 outlook was also satisfactory.
- The company paid out 50% of its earnings in dividend, which amounted to a 5% dividend yield at current share price of HKD5.04.
- The company is currently trading at 10x 2024 PE (assuming a conservative 10% net profit growth in 2024).
PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY
- Both advertising revenue and commission revenue grew dramatically in 4Q23.
- Chinese consumers are seeking low price goods, after the economy went weak.
- PDD’s overseas brand, TEMU, is expanding rapidly in the U.S.
Carote Ltd Pre-IPO Tearsheet
- Carote Ltd (CARO HK) is looking to raise around US$150m in its upcoming Hong Kong IPO. The bookrunners on the deal are BNP Paribas, and CMB International.
- Carote is a distributor of kitchenware products. Expanding its lineup of products, the firm aims to meet its customers’ varied kitchen scenarios and enhance their culinary experience.
- Initially engaged to provide original equipment manufacturing (OEM) overseas, the firm has since ventured into the online retail sector, introducing kitchenware products under its own brand name “CAROTE”.
Maruti Suzuki India (MSIL IN): Market Leadership Position in UV Segment Bodes Well
- In Q3FY24, Maruti Suzuki India (MSIL IN) reported revenue of INR 335Bn, a growth of 14.6% YoY on the back of higher realization and volume.
- EBITDA margin expanded 210bps YoY to 12.3% as higher volume, favorable commodity price played a role in tandem.
- The company is planning 2x increase in its annual production capacity to about 4Mn by 2030-31. Capacity expansion plans augur well for the company in medium to long term.
GoTo 4Q2023: Improved Profitability and a Plan to Buyback Shares to Rescue Falling Share Price
- GoTo Gojek Tokopedia Tbk PT (GOTO IJ) reported 4Q2023 results yesterday which shows that the company’s profitability has significantly improved.
- The improvement in profitability has come at the cost of growth which has continued to decline suggesting profits may not be sustained.
- GoTo announced that it has completed the Tokopedia partnership deal with TikTok and also a plan to buyback shares, subject to regulatory/shareholder approval.
MIXUE Pre-IPO – Initial Thoughts on Valuation
- Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
- MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
- In our earlier notes, we have looked at the past performance and undertaken a peer comparison. In this note, we provide our initial thoughts on valuation.
Tempur Sealy International: What Is The Latest Update On The Mattress Firm Acquisition?
- This is our first report on Tempur Sealy International Inc., a global bedding company.
- The company released its Q4 2023 earnings recently.
- The company emphasized its strong business model, highlighting significant cash flow and a robust balance sheet.
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