In today’s briefing:
- Softbank Group – Didi Relief and ZME Pain Highlight Multiple Potential Outcomes
- Vinda Vs Hengan: Cut From A Different Cloth
- China Education Group (839 HK): Further Evidences for Underlying Health
- India Channel Insight #37 | Escorts & Mahindra & Mahindra (Tractors)
- Record Sales for Pal Group Driven by 300 Yen Chain
- Shockwave Medical Inc (SWAV US): An Emerging High-Quality Cardiovascular Devices Idea
Softbank Group – Didi Relief and ZME Pain Highlight Multiple Potential Outcomes
- Didi shares jumped 24% on reports regulatory relief was at hand. That is good news for Softbank although the halo effect boosting Alibaba had more of a valuation impact
- Less noticed but also relevant as a potential outcome is the de-listing of Zhangmen Education which fell 50% Monday and is down 97% for VF in total
- Softbank shares trade at a 43% discount to fair value and remain range-bound. Tech market sentiment remains the primary driver and we continue to be cautious
Vinda Vs Hengan: Cut From A Different Cloth
- Given their market leadership in China’s personal care industry, Hengan International Group (1044 HK) and Vinda International Holdings (3331 HK) arguably make a valid pair trade.
- Yet Hengan’s bottom line is dominated by its sanitary napkin products; whereas Vinda’s tissue segment has a similarly high contribution to its net profit.
- On various valuation metrics, both companies, relative to listed peers, and their historical trading numbers, appear inexpensive.
China Education Group (839 HK): Further Evidences for Underlying Health
- Despite the 21% spike in share price, we believe good student enrollment outlook and earnings prospects of China Education Group (839 HK) are still yet to be fully reflected.
- The 70.1% YoY surge in approved top-up degree program quotas in China and the guidance for substantial quota increase for bachelor’s degree and junior college programs are both exciting.
- Its comprehensive cooperation agreement with Bank of China Jiangxi Branch adds another peace of mind as this suggests support from the state and lowers regulatory risks, in our view.
India Channel Insight #37 | Escorts & Mahindra & Mahindra (Tractors)
- Consumer sentiment and demand environment is stable in Rural India.
- There is a bit of optimism and hope of breaching FY20 volumes in FY23, supported with some pricing action.
- Technical/Product issues are leading to a loss of market share for Escorts Ltd (ESC IN)
Record Sales for Pal Group Driven by 300 Yen Chain
- Not many retailers could boast sales growth of more than 50% last year, especially a retailer from the fashion sector.
- Pal Group’s 3Coins managed this thanks to the huge success of the discount fashion to home decor format.
- Its success is one more example of the growth in discount chains.
Shockwave Medical Inc (SWAV US): An Emerging High-Quality Cardiovascular Devices Idea
- Shockwave Medical Inc (SWAV US), with its differentiated local delivery of sonic pressure waves for the treatment of calcified plaque, seeks to establish a new standard of care through IVL.
- The company is advancing IVL system for multiple large addressable markets totaling over $8.5B. Shockwave’s revenue has five-year CAGR of 244%, with continued improvement in gross margins.
- Ongoing clinical programs to expand geographies and indications should further accelerate growth. Recently, the company obtained marketing approval in China and Japan.
Related tickers: Softbank Group (9984.T), Hengan International Group (1044.HK), China Education Group (0839.HK), Escorts Ltd (ESCO.NS), PAL GROUP Holdings Co., Ltd. (2726.T)
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