Update: 4 March

Shein Eyes London IPO Amid US Regulatory Hurdles

Chinese fast-fashion giant Shein is contemplating abandoning its US IPO plans due to potential regulatory roadblocks. This shift could see the company list its shares on the London Stock Exchange, marking a significant boost for the exchange, which has seen less IPO activity compared to its US counterpart.

Shein, renowned for its lightning-fast fashion model, experienced substantial growth during the pandemic. However, the company grapples with copyright infringement concerns, labor practices, and competition. While Shein initially targeted an $80-90 billion valuation, recent investor sentiment suggests a potential valuation of $40-45 billion for the IPO.

Sasol Ltd. (JSE: SOL)

Sasol, the South African chemicals and energy giant, reported a substantial decline in revenue and earnings for the first half of the 2024 financial year compared to the same period in 2023. This drop is attributed to a confluence of factors, including:

• Lower commodity prices: Chemical product prices across all regions witnessed a downward trend, impacting Sasol’s profitability.
• Disruptions from state-owned enterprises: Inefficiencies at Transnet, the logistics company, and Eskom, the power utility, hampered Sasol’s operations and added to the challenges.
• Macroeconomic headwinds: Weaker global economic growth, volatile market conditions, and rising inflation further compounded the negative impact.

These factors resulted in Sasol’s revenue falling to R136.3 billion, a 9% decrease from the previous year’s first half. Similarly, EBIT (earnings before interest and tax) dropped by 34% to R15.9 billion, and basic EPS (earnings per share) declined by 35% to R15.19. Additionally, the company recorded impairments of R5.8 billion, primarily due to a less optimistic long-term outlook for its refining and chemical production sectors.

Despite acknowledging the challenging environment, Sasol emphasized its commitment to operational improvements within South Africa. The company is likely to focus on internal efficiencies and cost-reduction measures to navigate the current economic climate and mitigate the impact of external factors.

Domino’s Pizza Inc (NYSE: DPZ)

Domino’s Pizza met analyst expectations with solid financial performance in 2023, reporting $4.5 billion in revenue and $14.66 in EPS. While analysts slightly revised their 2024 forecasts upwards, the adjustments were minor, suggesting expectations remain largely unchanged.

The overall analyst sentiment on Domino’s is positive, reflected in an 8.1% increase in the average price target to $471. This indicates confidence in the company’s future but doesn’t necessarily predict explosive growth. The diverse estimates ranging from $387 to $550 per share highlight different perspectives on potential outcomes.

However, compared to the broader industry, Domino’s growth trajectory appears less impressive. Analysts anticipate an annualized revenue growth of 7.3% for Domino’s, lagging behind the industry average of 9.5%.

In conclusion, while Domino’s appears to be navigating the near future with stability, its longer-term outlook might be less rosy due to expected slower growth compared to the industry. This information highlights the importance of considering both short-term performance and long-term forecasts, along with potential warning signs, when making informed investment decisions.

Sources: Moneyweb;  Daily Investor; YahooFinance

Piece written by Trive Sales Trader, Kealeboga Molefe

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