In today’s briefing:
- StubWorld: Singtel Coming Up “Cheap” As Divestments Continue Apace
- China Internet Weekly (5Aug2022): Tencent, NetEase, S.F., Baidu, IQ
- Fast Retailing – Downside Risk Mounts as Xinjiang Cotton Controversy Takes Centre Stage Yet Again
- Los Andes Copper: The Copper M&A Wave Has Started + Chilean Population Rejects New Constitution
- Zydus Lifesciences Ltd (ZYDUSLIF IN): Q1FY23 Results Review- Showing Early Sign of Improvement in US
- Beneunder (蕉下) Pre-IPO: Popular Sun-Protection Brand, But in Competition with Apparel Producers
- Starbucks Corporation: CEO Change
- Walmart Inc: Acquisition of Volt & Other Key Drivers
- Skechers USA: Collaboration With Tokidoki & Other Drivers
- Zoom Video Communication: The Solvvy Acquisition & Other Drivers
StubWorld: Singtel Coming Up “Cheap” As Divestments Continue Apace
- S&P revises its outlook for Singtel (ST SP) following a series of divestments.
- Preceding my comments on Singtel are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
China Internet Weekly (5Aug2022): Tencent, NetEase, S.F., Baidu, IQ
- NetEase will start its first game studio in Europe after setting up two studios in the U.S.
- Tencent and Sony invested minor shareholding in a Japanese game developer.
- In 1H22, S.F. Holding’s revenue grew dramatically and its margins improved significantly.
Fast Retailing – Downside Risk Mounts as Xinjiang Cotton Controversy Takes Centre Stage Yet Again
- Last week, The UNHR Office published a carefully worded report saying that the actions of the Chinese Government in Xinjiang “may constitute international crimes, in particular, crimes against humanity”.
- Meanwhile, apparel brands in the US seem to be exploiting loopholes in the Uygur Forced Labour Prevention Act with Xinjiang’s clothing exports rising to a 2-year high in July 2022.
- With pressure mounting on US customs to increase oversight, Fast Retailing (9983 JP)’s newest growth pillar (the US) could be about to meet major setbacks in the near term.
Los Andes Copper: The Copper M&A Wave Has Started + Chilean Population Rejects New Constitution
- Over the last two months, the two largest commodity behemoths have been trying to acquire copper deposits on the cheap. Both have been rebuffed.
- Rio Tinto Ltd (RIO AU) has raised its original 34 CAD bid for Turquoise Hill Resources (TRQ CN) twice, but large minority shareholders have voiced opposition.
- BHP Group Ltd (BHP AU) has offered to buy OZ Minerals Ltd (OZL AU) but has equally been rebuffed by management. Let the copper M&A Wave begin!
Zydus Lifesciences Ltd (ZYDUSLIF IN): Q1FY23 Results Review- Showing Early Sign of Improvement in US
- Zydus Lifesciences Ltd (ZYDUSLIF IN) reported stable Q1FY23 results, with its U.S. business witnessing healthy rebound supported by volume share gain in base portfolio and new product launches.
- Excluding COVID-related products, generics portfolio, and divested products, India branded prescription business grew 9% y/y. India consumer wellness business rebounded with 18% y/y revenue growth.
- Zydus aims to grow across all our key businesses in FY23. Through cost control and improved efficiencies across the value chain, Zydus aspires to achieve 20%+ EBITDA margin for FY23.
Beneunder (蕉下) Pre-IPO: Popular Sun-Protection Brand, But in Competition with Apparel Producers
- Beneunder has large sales volume on Chinese e-commerce platforms and has a large physical store chain.
- However, outdoor brands and apparel brands compete with Beneunder and some brands’ prices are close to Beneunder.
- Beneunder has to keep physical stores and control online advertising budget.
Starbucks Corporation: CEO Change
- Starbucks has recently been in the news for its big CEO announcement with Laxman Narasimhan taking over the reins of the company from Howard Schultz.
- In this quarter, Starbucks continued to extend its coffee leadership, bringing and innovating further elements of premiumization and customization to the total coffee category, which includes plat-based, handcrafted, and cold coffee beverages.
- The demand for premium tailored cold coffee all over the world is enormous and this is bound to help the company.
Walmart Inc: Acquisition of Volt & Other Key Drivers
- Like most other retailers, Walmart faced the impact of food inflation which continued to increase in the quarter.
- Delivery and pickup in the quarter are quite strong, and growth has been improving on the website Walmart.com with the inclusion of the marketplace.
- We provide the stock of Walmart with a ‘Hold’ rating with a revision in the target price.
Skechers USA: Collaboration With Tokidoki & Other Drivers
- Skechers had a solid quarter and surpassed Wall Street expectations in terms of revenues with strong growth that was distributed geographically and is evident in both its Direct-to-consumer and wholesale segments in spite of Covid-19 headwinds in various markets.
- During the quarter, the wholesale business of the U.S. increased because of improvements in categories and genders, including accessory and apparel lines.
- In the quarter, Skechers opened 46 stores owned by the company, which included 15 large box shores in the US.
Zoom Video Communication: The Solvvy Acquisition & Other Drivers
- Zoom had a mixed result with below par revenues though it did manage to post an earnings beat.
- Though the online business had a low number of new subscriptions, renewals online improved which was a silver lining.
- The platform strategy of Zoom is performing quite well, with Zoom Phone and Zoom Rooms being the vital components.
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