Equity Analyst, LightStream Research

Oshadhi Kumarasiri

An equity research analyst with over 7 years of experience in multiple sectors. Previously worked for one of the world's largest asset managers with about USD2.5trn in AUM, covering small and micro-cap companies in the consumer sphere across Europe and developed Asia. Also experienced in covering multiple industries including banking, insurance and asset management, retail, tech, telco and REIT.

Equity Analyst

GOME Retail: No More Going Concern Issues

GOME Retail: A Homecoming Gift From The Founder

JD.com Follows Pinduoduo to Inject $100m To Struggling Gome Retail

Gome's Gamble on Social Commerce Is Unlikely to Generate Sufficient Margins

Gome Retail: Comprehensive Transformation in Process, Too Early to Call Success/Failure

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

Earlier this month, struggling Chinese electrical appliance retailer, <a href="https://www.smartkarma.com/entities/gome-retail-holdings-ltd" target="_blank" data-smartkarma-citation="entities:170:1" rel="noopener">Gome Electrical Appliances (493 HK)</a> repurchased 5 million shares at a price range of HK$ 0.89-0.90 per share, 44-45% discount to the past five-year high share price attained following <a href="https://www.smartkarma.com/entities/jd-com-inc" target="_blank" data-smartkarma-citation="entities:29043:1" rel="noopener">JD.com (HK) (9618 HK)</a>’s and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>’s capital injection in 2Q20.Buybacks are not a regular part of shareholder returns of Gome Retail and they have only done share buybacks when the share price has declined 25% or more during a short time frame. Most of the times, Gome Retail's share buybacks managed to temporarily maintain the share price but have failed to make an impact on the medium-term direction. Moreover, the latest share buyback is immaterial/symbolic, and the company’s current financial difficulties prevent it from conducting a share buyback of a considerable size capable of making a significant impact to the share price.Gome Retail needs money urgently to finance debt falling due in the next 8 months and banks may be unwilling to lend more money to a struggling business with insufficient cash flows to service debt.However, Gome Retail is strategically important to both Pinduoduo and JD.com and the two e-commerce giants could be biding time till Gome Retail’s shares hit rock bottom before going to war against each other to acquire the struggling electrical appliance retailer.

Earlier this month, struggling Chinese electrical appliance retailer, Gome Electrical Appliances (493 HK) repurchased 5 million shares at a price range of HK$ 0.89-0.90 per share, 44-45% discount to the past five-year high share price attained following JD.com (HK) (9618 HK)’s and Pinduoduo (PDD US)’s capital injection in 2Q20.Buybacks are not a regular part of shareholder returns of Gome Retail and they have only done share buybacks when the share price has declined 25% or more during a short time frame. Most of the times, Gome Retail's share buybacks managed to temporarily maintain the share price but have failed to make an impact on the medium-term direction. Moreover, the latest share buyback is immaterial/symbolic, and the company’s current financial difficulties prevent it from conducting a share buyback of a considerable size capable of making a significant impact to the share price.Gome Retail needs money urgently to finance debt falling due in the next 8 months and banks may be unwilling to lend more money to a struggling business with insufficient cash flows to service debt.However, Gome Retail is strategically important to both Pinduoduo and JD.com and the two e-commerce giants could be biding time till Gome Retail’s shares hit rock bottom before going to war against each other to acquire the struggling electrical appliance retailer.

GOME Retail Holdings

Gome Retail: Easy Prey