The Point for Asia Pacific

Research evidence excerpt

The Point for Asia Pacific

of sector leaders. We see limited downside from current levels and see long term

investors are likely to build positions in near term.

John Yung, CFA

YUM China Holdings INC (YUMC.N) - Investor skepticism on acquisition of PH

brand in China

Per our discussion with investors, the market's skepticism on YUMC's acquisition

of the PH brand in China appears to be worse than our initial view on the deal of

“slight disappointment” (see Citi's Jun 16 note YUM China - Citi's view on YUMC's

acquisition of PH brand in China). In addition to unideal timing, investors' key

concerns center around demanding transaction valuation, possible CB refinancing

of the deal and likely de-rating of the stock (due to possible valuation discount for

no ownership of KFC brand, increased operating risk, reduced financial resilience &

limited room of future margin improvement via operation). YUMC may need two to

three consecutive quarters of strong earnings beat to alleviate investors' concerns,

in our view.

Xiaopo Wei, CFA | Vincent Young

Bharat Electronics (BAJE.NS) - Recent Developments Incrementally Positive;

Reiterate a Top Pick

We see recent developments as incrementally positive for BEL's order-book

visibility: (1) press-reported (Reuters, 22nd June) potential export opportunity

around Akashteer, (2) continued brisk pace of base-order accretion in 1QFY27 so

far, and (3) a more supportive macro backdrop that should help ease street

concerns around working-capital intensity and procurement delays. In our view,

these developments strengthen the core BEL investment case of robust order

visibility, diversified execution drivers and improving comfort on NWC (we also flag

+ve readthrough from our recent defense field trip ). Importantly, the recent order