Investment Research - Asia Consumer Sector, Investory

Devi Subhakesan

Investment Research - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

Health And Happiness (H&H) / Equity Bottom-Up

<ul>
<li>Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving <a href="https://www.smartkarma.com/entities/health-and-happiness-h-h-int" target="_blank" data-smartkarma-citation="entities:20582:1" rel="noopener">Health And Happiness (H&amp;H) (1112 HK)</a> stock south.</li>
<li>With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&amp;H as operating margins weakened.</li>
<li>Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.</li>
</ul>


Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&amp;H) (1112 HK) stock south.
With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&amp;H as operating margins weakened.
Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.


H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Yashili International Holdings / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/danone-sa" target="_blank" data-smartkarma-citation="entities:21403:1" rel="noopener">Danone SA (BN FP)</a> will sell to <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  </li>
<li>The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by &lt;10% of all disinterested shareholders.</li>
<li>The offer for <a href="https://www.smartkarma.com/entities/yashili-international-holdings-ltd" target="_blank" data-smartkarma-citation="entities:3397:1" rel="noopener">Yashili International Holdings (1230 HK)</a> is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).</li>
</ul>



Danone SA (BN FP) will sell to China Mengniu Dairy Co (2319 HK) its 25% Yashili stake for HK$1.20 per share. Post-completion, Mengniu will launch a privatisation offer at HK$1.20.  
The privatisation is subject to several pre-conditions, which carry low risk in our view. The key conditions are the headcount test and rejections by &lt;10% of all disinterested shareholders.
The offer for Yashili International Holdings (1230 HK) is attractive. At the last close, the gross spread to the offer is 30.4%. Buy up to HK$1.09 (implies an 85% deal probability).


Yashili’s HK$1.20 Privatisation Offer from Mengniu

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>FY 2021 was a difficult period for <a href="https://www.smartkarma.com/entities/health-and-happiness-h-h-int" target="_blank" data-smartkarma-citation="entities:20582:1" rel="noopener">Health And Happiness (H&amp;H) (1112 HK)</a> with the lower than usual sales growth and a big one-off expenses. </li>
<li>It is true that the D/E ratio has gone up to 161% but this is not the first time it happened. </li>
<li>FCF/Sales remain at low double-digit and cash/TA is also at low double-digit so it is far from going bust.</li>
</ul>


FY 2021 was a difficult period for Health And Happiness (H&amp;H) (1112 HK) with the lower than usual sales growth and a big one-off expenses. 
It is true that the D/E ratio has gone up to 161% but this is not the first time it happened. 
FCF/Sales remain at low double-digit and cash/TA is also at low double-digit so it is far from going bust.


Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p>Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.</p>In this Insight:<ol><li><a href='/entities/sunac-china-holdings-ltd' target='_blank' rel='noopener'>Sunac China Holdings</a></li><li><a href='/entities/kawasan-industri-jababeka-tbk-pt' target='_blank' rel='noopener'>Kawasan Industri Jababeka</a></li><li><a href='/entities/kwg-group-holdings-ltd' target='_blank' rel='noopener'>Kwg Property Holding</a></li><li><a href='/entities/tata-steel-ltd' target='_blank' rel='noopener'>Tata Steel Ltd</a></li><li><a href='/entities/china-jinmao-holdings-group' target='_blank' rel='noopener'>China Jinmao Holdings</a></li></ol>and more...

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.In this Insight:Sunac China HoldingsKawasan Industri JababekaKwg Property HoldingTata Steel LtdChina Jinmao Holdingsand more...

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

<ul>
<li>H&amp;H is faced with multiple challenges. Internally, the performance is under pressure, with stagnating revenue, decreasing profits, cash flow shortage and bankruptcy risk.It's difficult for H&amp;H to turn things around.</li>
<li>Externally, factors such as the declining birth rate, lower demand, fierce competition in the infant formulas market, rising costs due to inflation, and economic slowdown worsen the Company's prospects.</li>
<li>Based on our 2022 forecast (14% or lower adjusted EBITDA margin,1%-2% or flat revenue growth), we do not think H&amp;H is a good investment. We are conservative about its outlook.</li>
</ul>


H&amp;H is faced with multiple challenges. Internally, the performance is under pressure, with stagnating revenue, decreasing profits, cash flow shortage and bankruptcy risk.It's difficult for H&amp;H to turn things around.
Externally, factors such as the declining birth rate, lower demand, fierce competition in the infant formulas market, rising costs due to inflation, and economic slowdown worsen the Company's prospects.
Based on our 2022 forecast (14% or lower adjusted EBITDA margin,1%-2% or flat revenue growth), we do not think H&amp;H is a good investment. We are conservative about its outlook.


Health And Happiness (H&H) (1112.HK) - High Bankruptcy Risk Together with Gloomy Prospects

China

Health and Happiness H&H International Holdings Ltd provides health care supplements. The Company offers pediatric nutritional and baby care products. Health and Happiness H&H International Holdings serves nutrition and wellness industries worldwide.

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Health And Happiness (H&H) (1112 HK)

H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.

The stock has headed deep south on concerns over high leverage amidst rising interest rates. Investors seem to have overlooked H&H's strong cash...

Devi Subhakesan

Yashili’s HK$1.20 Privatisation Offer from Mengniu

Mengniu will launch a pre-conditional privatisation offer at HK$1.20. The risk around the pre-conditions is low. At the last close, the gross...

Arun George

H&H (1112): Difficult Period?

even with a 50% revenue decrease rate, the company will still have a profit although the net profit margin is noticeably much lower. Nevertheless,...

Henry Soediarko

Weekly Wrap - 06 May 2022

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and...

Lucror Analytics

Health And Happiness (H&H) (1112.HK) - High Bankruptcy Risk Together with Gloomy Prospects

H&H's profitability/outlook is under pressure. Due to lower birth rate/demand, fierce competition, rising costs in inflation and economic slowdown...

Xinyao (Criss) Wang

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