Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

Equity Capital Markets

Mrs Bectors Food Specialities / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/mrs-bectors-food-specialities" target="_blank" data-smartkarma-citation="entities:27872:1" rel="noopener">Mrs Bectors Food Specialities (814506Z IN)</a> is the latest entrant in the current Indian IPO frenzy season. The company wishes to offer fresh issue of equity shares worth INR 405.4 mn along with sale by existing investors (non-promoters) worth INR 5 bn. The price band has been set at INR 286-288 per share.</p>
<p>The company is engaged in manufacturing and selling of wide range of premium and mid-premium biscuits and premium bakery products under the brand name Mrs. Bector's Cremica and English Oven respectively across both domestic and international waters, but mainly concentrated in North India. The company also draws a significant chunk of revenue (16.8% in F20) by supplying bakery products such as buns to institutional clients (located in India) such as <a href="https://www.smartkarma.com/entities/burger-king-india" target="_blank" data-smartkarma-citation="entities:28445:1" rel="noopener">Burger King India (BKI IN)</a> , <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a>, <a href="https://www.smartkarma.com/entities/yum-brands-inc" target="_blank" data-smartkarma-citation="entities:984:1" rel="noopener">Yum! Brands Inc (YUM US)</a> . </p>
<p>In this insight, we do not focus deeply on the operational performance of the company but rather put an emphasis on the overall health of the balance sheet along with a deep focus on governance. While there are some balance sheet issues that need to be questioned, the company however poses itself a huge ESG risk in future due to all sort of problems that attack the overall governance.</p>

Mrs Bectors Food Specialities (814506Z IN) is the latest entrant in the current Indian IPO frenzy season. The company wishes to offer fresh issue of equity shares worth INR 405.4 mn along with sale by existing investors (non-promoters) worth INR 5 bn. The price band has been set at INR 286-288 per share.
The company is engaged in manufacturing and selling of wide range of premium and mid-premium biscuits and premium bakery products under the brand name Mrs. Bector's Cremica and English Oven respectively across both domestic and international waters, but mainly concentrated in North India. The company also draws a significant chunk of revenue (16.8% in F20) by supplying bakery products such as buns to institutional clients (located in India) such as Burger King India (BKI IN) , Mcdonald's Corp (MCD US), Yum! Brands Inc (YUM US) . 
In this insight, we do not focus deeply on the operational performance of the company but rather put an emphasis on the overall health of the balance sheet along with a deep focus on governance. While there are some balance sheet issues that need to be questioned, the company however poses itself a huge ESG risk in future due to all sort of problems that attack the overall governance.

Mrs. Bectors Food Specialities IPO- Not So Crunchy

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Restaurant Brands Asia / Equity Capital Markets

<div><p>Burger King India (BKI) raised around US$110m via a mix of selling primary and secondary shares in its India IPO. </p></div><div><p>BKI is the national master franchisee of the Burger King brand in India. As of Sep 2020, it operated 261 restaurants, including 8 sub-franchised restaurants, across 57 cities in India. </p></div><div><p>I’ve covered various aspects of the deal in my earlier notes:</p></div><div><ul style="list-style-type: disc;">
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/burger-king-india-pre-ipo-has-been-growing-fast-and-plans-to-grow-even-faster" target="_blank" rel="noopener">Burger King India Pre-IPO - Has been growing fast and plans to grow even faster</a></p></li>
<li dir="ltr"><p><a href="https://www.smartkarma.com/insights/burger-king-india-pre-ipo-peer-comparison-yields-interesting-nuggets-on-profitability-and-capex" target="_blank" rel="noopener">Burger King India Pre-IPO - Peer comparison yields interesting nuggets on profitability and capex</a></p></li>
</ul></div><ul><li><a href="https://www.smartkarma.com/insights/burger-king-india-ipo-can-still-grow-fast" target="_blank" rel="noopener">Burger King India IPO - Can Still Grow Fast</a></li></ul><div><p>In this note, I’ll talk about the updates for the deal and provide a table with implied valuations at different share price levels.</p></div>

Burger King India (BKI) raised around US$110m via a mix of selling primary and secondary shares in its India IPO. BKI is the national master franchisee of the Burger King brand in India. As of Sep 2020, it operated 261 restaurants, including 8 sub-franchised restaurants, across 57 cities in India. I’ve covered various aspects of the deal in my earlier notes:
Burger King India Pre-IPO - Has been growing fast and plans to grow even faster
Burger King India Pre-IPO - Peer comparison yields interesting nuggets on profitability and capex
Burger King India IPO - Can Still Grow FastIn this note, I’ll talk about the updates for the deal and provide a table with implied valuations at different share price levels.

Burger King India IPO Trading - Can Probably Double from IPO Price

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Haier, Tokyo Dome, Cowell, Infratil, Link Admin, Sapporo/Asahi, Mcdonald's

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

Equity Bottom-Up

Cafe De Coral Holdings / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/cafe-de-coral-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2568:1" rel="noopener">Cafe De Coral Holdings (341 HK)</a> business in Hong Kong and China are recovering nicely due to the calming down of the COVID-19 as well as the strategy change to focus on the delivery and take away markets. One of the key initiatives is to redesign the menu offering so that it is more suitable for the delivery and take away customers. However, empirical evidence tells that the company is yet to reach a popular status in one of the food delivery apps in Hong Kong which is quite worrying. </p>
<p>The recent dining restrictions do not seem to bother investors much at all therefore there is still an opportunity to <strong>short Cafe de Coral</strong> in the short run. </p>

Cafe De Coral Holdings (341 HK) business in Hong Kong and China are recovering nicely due to the calming down of the COVID-19 as well as the strategy change to focus on the delivery and take away markets. One of the key initiatives is to redesign the menu offering so that it is more suitable for the delivery and take away customers. However, empirical evidence tells that the company is yet to reach a popular status in one of the food delivery apps in Hong Kong which is quite worrying. 
The recent dining restrictions do not seem to bother investors much at all therefore there is still an opportunity to short Cafe de Coral in the short run. 

Cafe De Coral (341): Still Unfazed by the New Restriction

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

<p>The disposition of <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">McDonald's Corp (MCD US)</a>'s ownership in <a href="https://www.smartkarma.com/entities/mcdonald-s-holdings-co-japan" target="_blank" data-smartkarma-citation="entities:985:1" rel="noopener">McDonald's Holdings Co Japan (2702 JP)</a> has been a widely discussed topic in the past several years. However, in July 2020, <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a> confirmed in its 2020 FQ2 earnings call that they were planning to sell part of their stake. </p>
<div>
<blockquote>
<p>Consistent with enhancing financial flexibility and our franchising strategy, we're planning to divest a portion of our stake in McDonald's Japan. As a result of the strong performance of the McDonald's Japan business over the past few years and our confidence in the local management team, we believe it's the right time to gradually reduce our ownership stake in the market. This will take some time because of the low trading volume of McDonald's Japan shares. As a reminder, we currently own about 49% of the business, and we will retain at least 35% ownership. This decision provides us with additional financial flexibility to execute our capital allocation strategy while also demonstrating our commitment to our Japanese business.</p>
</blockquote>
<p>According to Capital IQ - and the last filing on the parent currently holds around 43.8% which means <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a> has sold around 6.1% of the planned total of ~14%. </p>
<p>To get to 35% from the current level, they would have to sell another ~11mn shares (~8.2% of total shares) and there is more than one way they could go about that. </p>
<p>That is where things get interesting. </p>
<p><em>More below the fold. </em></p>
</div>

The disposition of McDonald's Corp (MCD US)'s ownership in McDonald's Holdings Co Japan (2702 JP) has been a widely discussed topic in the past several years. However, in July 2020, Mcdonald's Corp (MCD US) confirmed in its 2020 FQ2 earnings call that they were planning to sell part of their stake. 


Consistent with enhancing financial flexibility and our franchising strategy, we're planning to divest a portion of our stake in McDonald's Japan. As a result of the strong performance of the McDonald's Japan business over the past few years and our confidence in the local management team, we believe it's the right time to gradually reduce our ownership stake in the market. This will take some time because of the low trading volume of McDonald's Japan shares. As a reminder, we currently own about 49% of the business, and we will retain at least 35% ownership. This decision provides us with additional financial flexibility to execute our capital allocation strategy while also demonstrating our commitment to our Japanese business.

According to Capital IQ - and the last filing on the parent currently holds around 43.8% which means Mcdonald's Corp (MCD US) has sold around 6.1% of the planned total of ~14%. 
To get to 35% from the current level, they would have to sell another ~11mn shares (~8.2% of total shares) and there is more than one way they could go about that. 
That is where things get interesting. 
More below the fold. 


2021 High Conviction: McDonald's Japan -  A TOPIX Inclusion BIG Bet

United States

McDonald's Corporation franchises and operates fast-food restaurants in the global restaurant industry. The Company's restaurants serve a variety of value-priced menu products in countries around the world.

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Mcdonald's Corp (MCD US)

Mrs. Bectors Food Specialities IPO- Not So Crunchy

While there are some balance sheet issues that need to be questioned, the company however poses itself a huge ESG risk in future due to all sort of...

Nitin Mangal

Burger King India IPO Trading - Can Probably Double from IPO Price

Burger King India (BKI) raised around US$110m in its India IPO. BKI is the national master franchisee of the Burger King brand in India.

Sumeet Singh

Last Week in Event SPACE: Haier, Tokyo Dome, Cowell, Infratil, Link Admin, Sapporo/Asahi, Mcdonald's

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Cafe De Coral (341): Still Unfazed by the New Restriction

The recent dining restrictions do not seem to bother investors much at all therefore there is still an opportunity to short Cafe de Coral in the...

Henry Soediarko

2021 High Conviction: McDonald's Japan - A TOPIX Inclusion BIG Bet

Parent McDonald's Corp announced in July it would sell down its stake in McDonald's Japan from 49% to 35+%. It has sold about 40% of that so far....

Janaghan Jeyakumar, CFA

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