Zhitong Finance and Economics learned that Daiwa issued a research report saying that the rating of L'Occitane (00973) was downgraded from "outperform" to "hold", reflecting that the upside is limited and worthless, and the target price was raised from HK$25 to HK$29. The company is by far the best performer of the Chinese consumer stocks covered by the bank**.
The bank believes that this time ** is mainly about the hope of privatization, and the new news is Blackstone (bx.).US) is considering a bid for the acquisition. L'Occitane's chairman, Reinoldgeiger, shelved the privatization proposal in September 2023, when the share price was similar to the current level. Although Daiwa does not rule out the possibility of privatization this time, it believes that the opportunity to realize attractive privatization in the short term is less than 50%, so it believes that it is prudent to make profits at this stage.
According to the report, Reinoldgeiger's previous privatization proposal set a floor price of $26 per share, and refuted claims that an offer of $35 per share was under discussion. Daiwa believes that the key reason for abandoning the acquisition is a limited acquisition premium. If a 20% premium is offered, which is usually to appease Hong Kong's minority shareholders, according to the bank's observations, the offer price would be at least $33 per share, surpassing L'Occitane's all-time high** and reducing the advantage of relisting in Europe or the US. Daiwa believes that $35 per share is still likely to be the highest real** (i.e., 26% upside) this time, but reminds investors that L'Occitane withdrew its privatization proposal in September 2023, immediately following 29% intraday. From a time perspective, the bank is confident that Reinoldgeiger will be patient when considering a deal.