In today’s briefing:
- Taste Gourmet: Great Reopening Play
- MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact
- Grab (GRAB US) – After the Storm
- StubWorld: Evergrande Trading “Cheap” But Still Uninvestable
- China Housing Ministry Flags Key Tasks for Next Year
Taste Gourmet: Great Reopening Play
- Taste Gourmet Group Ltd (8371 HK) represents a great opportunity to capture growth and value. With 8% net margins, the company outperformed its peers in a depressed environment.
- Trading at a 5.8x FY22 PE with 29% of the market capitalization in cash, the company has a significant margin of safety. Reopening could easily result in the stock doubling.
- The company paid 0.04 HKD/share of dividend for H1 2022, representing a 9% dividend yield annualized. With seasonally higher earnings, we believe dividends can be higher.
MCT SP + MAGIC SP = MPACT SP: Proposed Merger Details & BIG Index Impact
- Mapletree Commercial Trust (MCT SP) is looking to merge with Mapletree North Asia Commercial Trust (MAGIC SP) to create one of the top 10 Commercial REITs in Asia.
- MAGIC SP unitholders will receive a scheme consideration of S$1.1949/unit of MAGIC SP, and will have a scrip-only option and a cash and scrip option.
- The increase in index shares for Mapletree Commercial Trust (MCT SP) will result in large buying from passive FTSE EPRA Nareit Developed Asia, Straits Times Index and MSCI Singapore trackers.
Grab (GRAB US) – After the Storm
- Grab (GRAB US) has faced a perfect storm of headwinds since its IPO with Omicron, US tapering fears, and a general tech sell down all contributing to share price weakness
- The company continues to invest in broadening its product offering and recently acquired Jaya Grocer in Malaysia and a stake in mutual fund platform Bareksa in Indonesia.
- Grab (GRAB US) looks to be on the cusp of a recovery in its mobility business with increasing scope and value-added in both online groceries and digital financial services.
StubWorld: Evergrande Trading “Cheap” But Still Uninvestable
- Evergrande (3333 HK) resurfaces as “cheap” on my monitor versus Evergrande Auto (708 HK), but the equity is still best viewed from the sidelines.
- Preceding my comments on Evergrande, 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 Housing Ministry Flags Key Tasks for Next Year
- Wang Menghui, Minister of MOHURD, gave an interview with Xinhua News .
- As ministry did not release the report of their post-CEWC meeting, his words in the interview help set the tone for their work plans for next year.
- He reiterated that “houses are for living in, not speculation” and “refrain from using real estate as a short-term means for stimulating the economy”.
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