Daily Brief Equity Bottom-Up: The Beat Ideas: Globus Spirits- Maize and more

• In Q4FY24, Globus Spirits (GBSL IN) changed its raw material from rice to maize to improve the margin and stability in margins.
• Globus Spirits (GBSL IN) increased its capacity in Q4 recently 120KLPD, 60 each in Jharkhand and West Bengal.
• Recently, the government also removed the ban on using FCI grain and sugarcane for Ethanol production.

• The conglomerate sector continues to show momentum in Hong Kong while the materials and energy sectors lag
• Weibo (9898 HK)Weibo Corp (WB US) was rated a BUY as valuations and potential catalysts from parent Alibaba Group Holding (9988 HK) could support a higher stock price.
• China East Education (667 HK) was upgraded to BUY with higher higher price target due to profit increase. Dongfang Electric (1072 HK) was initiated with a BUY with strong upside.

• Uniqlo’s European arm is on a roll, with more stores, higher sales and a loyal fan base. 35% of customers were under 29 last year up from 16% in 2019.
• Uniqlo is also doing better at home but it needs the boost from newer markets given concerns over growth in China.
• And it is far too early to know whether GU’s formal launch in the US will pay off but so far so good.

• Over the past week we visited parts of Kazakhstan, the 9th largest country in the world.
• Long a favorite of the oil and uranium industry the country is now attracting more metals and mining exploration activity.
• Arras Minerals (ARK V EQUITY) has assembled the 4th largest exploration package and is looking for elephant sized gold/copper deposits. Success at any of its projects could catapult shares higher.

• Nike recently announced a significant leadership change, with CEO John Donahoe stepping down and longtime company veteran Elliott Hill set to take over.
• This transition comes amid a broader restructuring effort at Nike, aimed at addressing the company’s evolving business challenges.
• Donahoe, who led the company through several years of strategic shifts, including the prioritization of direct-to-consumer sales, had faced increasing pressure due to flat revenue growth and lower-than-expected guidance for fiscal 2025.

• The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.
• Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn’t require too much capital, which means the Company would have greater motivation to distribute dividends.
• The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.

• August parcel volume growth moderated, but easing price pressure matters more
• In July & August, Chinese X-border parcel volume growth re-accelerated
• We believe easing price pressure should lead to express margin expansion

• Chart Industries, Inc. reported its 2024 second quarter results, showcasing robust financial performance, marked by several all-time highs across various metrics.
• The company, renowned for its industrial and energy equipment, posted record earnings in sales, operating income, and EBITDA margins, among others, signifying superior operational execution and strategic growth initiatives.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• In 2Q24, KE’s revenue grew by 20% YoY despite the weak property market.
• We believe property developers and personal landlords need KE more than the prosperous time.
• We believe the stock has an upside of 148% for the end of 2025. Buy.

Interim results, for the six months to 31 July (H125), will be published on 8 October. Ahead of that, S&U has alerted the market that based on the H1 performance, full year PBT is unlikely to meet the previous market consensus expectations. We believe this to be primarily a timing issue, reflecting the continuing impact of the temporary FCA restrictions on collections activity in the motor finance business. Once regulatory clarity has been established, we expect a significant recovery. Meanwhile, as previously reported, the property lending division continues to perform strongly. We have reduced our FY25 PBT estimate by 7% to £27m and will review our FY26 forecasts with the interim results.