Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks. Hope all izz well.

Today we’re diving into -
- Shein’s hunt for more funding,
- Disney-Reliance deal troubles,
- And Airbus’s plans to prep more parts in India.

Our read time today is 4 minutes and 52 seconds - faster than Maxi magic steered the match out of Afghanistan’s hands… 🏏

Let's dive in. 👇

Market Vibe Check

Shein hunts for takers at a $90bn price tag. 🤔

TLDR -
- SHEIN is looking for a pre-IPO funding round at a $90b valuation.
- They were a no-name company just 5-7 short years back, and they’re now market leaders in logistics & supply chain.
- SHEIN tied up with Reliance to ship their Chinese maal all across India, which helps due to the nature of the government.

A few years back, no one had heard about SHEIN.

Today, they’re raising money at a $90 billion valuation.

If you aren’t familiar with SHEIN, they’re like the McDonald’s of fashion - cheap clothing that looks good but wears out fast. And by cheap, I mean really cheap.

Their lowest priced t-shirts start from 100-150 INR, which helps them undercut the market like no one else can and offer more of that instant gratification which the younger generation seem to be chasing.

Their business revolves around three simple steps -
- get Garment X made as quickly as possible
- move Garment X to customer as quickly as possible
- make Garment X's price tag as small as possible

Supersonic supply chains like this mean that you can ship new styles very quick, very often. Zara & H&M take almost 5 weeks to take a new design from paper to product. SHEIN takes 3 days!

They just entered a tie-up with Reliance to streamline shipping and logistics all over India, which is super important because SHEIN is a Chinese company, meaning that Indian regulators haven’t been taking to it kindly.

They were actually banned from operating in India until very recently, which is why it’s important to have friends in higher-up places who can put pressure on the right people.

SHEIN did $24 BILLION in sales last year with an eye-watering 7.5% profit margin, which is very hefty at the price point which they service.

Killer stuff. 🔪

Disney <> Reliance deal drags on over valuation jhanjhat. 💸

TLDR -
- Disney’s deal to sell their India biz to Reliance is facing some “headwinds”
- They think the company’s worth $10-11bn, Reliance wants to pay $7-7.5.
- Each day this drags on is a day of “value” eroded, since execs are more focused on dealmaking than growth.

Ever since Disney decided to ditch the Indian market and sell their insanely large Hotstar business to Ambani, it’s been a game of back-and-forth between the lawyers and bankers.

Disney thinks their India business is worth close to $10-11 billion.

But Reliance isn’t ready to pay more than $7-7.5 billion, which is why there’s a lot of ongoing tussle on the price tag which Ambani will be paying.

Plus, every day that this drags on is a day of more value lost for Disney, since they’re combatting with mass subscriber loss and plunging customer value.

Here’s a quick recap of all the issues on their head -
- They lost streaming rights to the IPL (and cricket = religion in India, so no cricket means no paisa)
- Over 15 million subs left their platform
- Their avg. revenue per user declined to an all-time low of just $0.59/month (compared to their global avg of $4.44/month)
- Group-wide revenues are expected to tank by $400 million this year.
- Profits are effectively gonna halve too.

Oh to be a fly on the wall in the boardroom…

Airbus cozies up with Indian manufacturers. ✈️

TLDR -
- Airbus just struck deals with Indian manufacturers Mahindra Aero, Aqeus, Dynamatic & Gardner.
- They have an order book of 900+ planes in India alone.
- Airbus wants to get into the post-sale servicing segment - super lucrative and adds up to multiple millions/year in additional revenue.

Airbus has long been the favorite supplier of planes to Indian airlines.

And as domestic air travel heats up, there’s gonna be much more demand, and many more rupees flowing into Airbus’s coffers.

Airbus is taking advantage of the “Make in India” subsidies and striking deals with trustworthy manufacturers, including Mahindra Aero, Aqeus, and a few more part makers which you haven’t heard of.

They currently have an order book of 900+ planes in India alone, and it helps to be closer to your customers.

Servicing is a BIG thing in the airline industry - almost 15-20% of costs incurred are solely due to the fact that you are legally required to check up your carrier planes after every flight.

The costs for these run anywhere from $700-2,000 for every hour spent in the air, and if you add this up over ‘000s of flights, it equals multiple millions in servicing contracts, all of which Airbus would like to be owning.

Habibi, come to Dubai Tilak Nagar...

In other news… ☕

Borouge-Borealis $30bn merger inches closer to finality (BBG)

UBS posts first loss since 2017 after their Credit Suisse deal (FT)

Reliance files for a $2.4bn bond sale (Mint)

Uber turns into a cashflow machine! (TC)

Dubai property loses it’s Russian luster (BBG)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day.

Lots of ❤️,

Team Cutting Chai