Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

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

<p><strong>In this insight, we discuss the investment view on <a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings Inc (9987 HK)</a> for the long and short term, based on analysis of its valuations, operational and financial outlook and Management commentary following the Q42020 results.</strong></p><p><a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings Inc (9987 HK)</a> has rewarded investors with an 18% return in the past 6 months, almost in line with the index, and a 16% return from its HK secondary (Sep. 2020) listing price. The steady stock performance was backed by a stable recovery in operations and financials; it reported an 11 % growth in Q4 revenues and robust growth in operating and net income compared to 2019. The contrast with market-favourite in the segment, <a href="https://www.smartkarma.com/entities/haidilao-international-holding-ltd" target="_blank" data-smartkarma-citation="entities:27044:1" rel="noopener">Haidilao (6862 HK)</a> is notably stark. In the same time period (past 6 months), Haidilao stock price had a rollercoaster ride - buoyed up by index inclusion; and now back to Sep 2020 levels, underperforming the index by a wide margin. </p>

In this insight, we discuss the investment view on Yum China Holdings Inc (9987 HK) for the long and short term, based on analysis of its valuations, operational and financial outlook and Management commentary following the Q42020 results.Yum China Holdings Inc (9987 HK) has rewarded investors with an 18% return in the past 6 months, almost in line with the index, and a 16% return from its HK secondary (Sep. 2020) listing price. The steady stock performance was backed by a stable recovery in operations and financials; it reported an 11 % growth in Q4 revenues and robust growth in operating and net income compared to 2019. The contrast with market-favourite in the segment, Haidilao (6862 HK) is notably stark. In the same time period (past 6 months), Haidilao stock price had a rollercoaster ride - buoyed up by index inclusion; and now back to Sep 2020 levels, underperforming the index by a wide margin. 

Yum China (9987 HK): Simple Fare Trumps the Special Treat (6862 HK). What Now?

<p><a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a> share price dropped nearly 7% on news reports that Impossible Foods would cut the prices of its patties by 20% at grocery stores in the US as they ramp up production. It had earlier announced a 30% price cut in the International markets - Canada, Singapore, and Hong Kong. In an unrelated event, Bloomberg <a href="https://www.bloomberg.com/news/articles/2021-02-01/mcdonald-s-quietly-rolls-out-mcplant-burger-in-test-markets?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link&amp;sref=SVEekGzB" target="_blank" rel="noopener">reported</a> that <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 begun selling the McPlant burger in Denmark and Sweden on a trial basis; the report added that McPlant, which McDonald’s reportedly co-developed with Beyond Meat is made from pea-based protein, according to McDonald’s <a href="https://www.mcdonalds.com/dk/da-dk/product/mcplant.html#collapseOne" target="_blank" rel="noopener">Danish</a> and Swedish websites. </p>
<p>Beyond Meat has not provided any details of its collaboration with <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> in Europe. However, we see this as a notable positive given it highlights (1) the expanding market demand for plant-based products and (2) <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)'s</a> competitive advantage over <a href="https://www.smartkarma.com/entities/impossible-foods-inc" target="_blank" data-smartkarma-citation="entities:28361:1" rel="noopener">Impossible Foods Inc</a> in international markets given its different input profile. In the note below we discuss our detailed view on these reported developments.</p>

Beyond Meat (BYND US) share price dropped nearly 7% on news reports that Impossible Foods would cut the prices of its patties by 20% at grocery stores in the US as they ramp up production. It had earlier announced a 30% price cut in the International markets - Canada, Singapore, and Hong Kong. In an unrelated event, Bloomberg reported that Mcdonald's Corp (MCD US) has begun selling the McPlant burger in Denmark and Sweden on a trial basis; the report added that McPlant, which McDonald’s reportedly co-developed with Beyond Meat is made from pea-based protein, according to McDonald’s Danish and Swedish websites. 
Beyond Meat has not provided any details of its collaboration with Mcdonald's Corp (MCD US) in Europe. However, we see this as a notable positive given it highlights (1) the expanding market demand for plant-based products and (2) Beyond Meat (BYND US)'s competitive advantage over Impossible Foods Inc in international markets given its different input profile. In the note below we discuss our detailed view on these reported developments.

Beyond Meat: McPlant Trial in Europe Is More Important than Impossible's Price Cut

<p>In this note, we discuss the operational and investment outlook going forward as the stock hits the lower end of historical trading range. <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a>'s share price has been sliding since its weak 3QFY20 results and is nearly 60% below its highs of October 2020; YoY, the stock is up 6%. We also look into its upcoming quarterly results and why the share price of the leading player in Plant-based protein has slipped even as customer interest and demand for alternative protein has been higher than ever. </p><p>Alternative Protein segment has gained significant traction over the last year as consumers increasingly sought out healthier eating options, including reducing consumption of animal products. However, established players like <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a> and <a href="https://www.smartkarma.com/entities/impossible-foods-inc" target="_blank" data-smartkarma-citation="entities:28361:1" rel="noopener">Impossible Foods Inc (1249597D US)</a>, that have meaningful exposure to Institutional sales were caught in a bind as pandemic-led restrictions hit regular operations of F&amp;B retail players. Efforts to pivot by repackaging and redirecting the products to retail at discounted prices wasn't good enough to make up for the shortfall leading to a weak third quarter. Going forward, expect sales growth to stabilise and normalise across segments.</p>

In this note, we discuss the operational and investment outlook going forward as the stock hits the lower end of historical trading range. Beyond Meat (BYND US)'s share price has been sliding since its weak 3QFY20 results and is nearly 60% below its highs of October 2020; YoY, the stock is up 6%. We also look into its upcoming quarterly results and why the share price of the leading player in Plant-based protein has slipped even as customer interest and demand for alternative protein has been higher than ever. Alternative Protein segment has gained significant traction over the last year as consumers increasingly sought out healthier eating options, including reducing consumption of animal products. However, established players like Beyond Meat (BYND US) and Impossible Foods Inc (1249597D US), that have meaningful exposure to Institutional sales were caught in a bind as pandemic-led restrictions hit regular operations of F&amp;B retail players. Efforts to pivot by repackaging and redirecting the products to retail at discounted prices wasn't good enough to make up for the shortfall leading to a weak third quarter. Going forward, expect sales growth to stabilise and normalise across segments.

Beyond Meat (BYND US): Beaten Down Stock in an Upbeat Segment. What, Now?

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.

Equity Capital Markets

RLX Technology Inc / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/rlx-technology-inc" target="_blank" data-smartkarma-citation="entities:31113:1" rel="noopener">RLX Technology Inc (RLX US)</a> aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. </p></div><div><p>RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.</p></div><div>
<p>Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.</p>
<p>However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings leaving one to wonder where these operations are housed and who exactly owns them.</p>
<p>In my earlier insight, <a href="https://www.smartkarma.com/insights/rlx-technology-pre-ipo-the-positives-fast-growth-low-penetration" target="_blank" rel="noopener">RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration</a>, I spoke about the positive aspects of the company. In this insight, I'll highlight some of the not so flattering aspects. </p>
</div>

RLX Technology Inc (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of closed-system e-vapor products in terms of retail sales value of 48% in 2019 and 62.6% over 9M20. RLX only sells its e-vapor products in China. As of Sep 2020, it had over 5,000 branded partner stores and sold its products in over 100,000 other retail outlets, covering over 250 cities in China.
Even though the company only started operations in 2018, it was already recording sales of around US$330m by 9M20. Margins too have been on an uptrend and operating cash flows have been robust. Moreover, the founding team and investor backing appear strong.
However, sales have mostly grown owing to rapid expansion of its distribution network. Furthermore, the brand also appears to have overseas operations but there has been no mention of that in the company’s filings leaving one to wonder where these operations are housed and who exactly owns them.
In my earlier insight, RLX Technology Pre-IPO - The Positives - Fast Growth, Low Penetration, I spoke about the positive aspects of the company. In this insight, I'll highlight some of the not so flattering aspects. 


RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Tata Consumer Products / Equity Bottom-Up

<p>Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private companies. The sub-sectors covered include payment providers, e-commerce retailers,  social media platforms and consumer companies.</p>
<ul>
<li>
<a href="https://www.smartkarma.com/entities/tata-consumer-products" target="_blank" data-smartkarma-citation="entities:258:1" rel="noopener">Tata Consumer Products (TGBL IN)</a> to explore <a href="https://www.smartkarma.com/entities/coffee-day-enterprises-ltd" target="_blank" data-smartkarma-citation="entities:26188:1" rel="noopener">Coffee Day Enterprises (CCD IN)</a> 's hot beverage vending machine business in India at a valuation of INR 20 billion.</li>
<li>After breaking ties with Chinese counterpart <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd-69366efb-cf6b-404d-a0e4-c6b9b2e128dc" target="_blank" data-smartkarma-citation="entities:17:1" rel="noopener">Tencent Holdings (ADR) (TCEHY US)</a> , PUBG Corp now looks to <a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> 's Reliance Jio platforms to bring PUBG back to India.</li>
<li>
<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> launches the 'Mi Store on Wheels' - a concept to increase product sales in the rural Indian market. Already at 72% of pre-pandemic levels of sales, this may just be the push they need for their return to normalcy.</li>
<li>
<a href="https://www.smartkarma.com/entities/walmart-inc" target="_blank" data-smartkarma-citation="entities:11134:1" rel="noopener">Walmart (WMT US)</a> owned Flipkart ties up with 1MG.COM to enter the e-pharmacy space in India and also expands its B2B offering, Flipkart wholesale to 11 new cities in India.</li>
</ul>

Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private companies. The sub-sectors covered include payment providers, e-commerce retailers,  social media platforms and consumer companies.


Tata Consumer Products (TGBL IN) to explore Coffee Day Enterprises (CCD IN) 's hot beverage vending machine business in India at a valuation of INR 20 billion.
After breaking ties with Chinese counterpart Tencent Holdings (ADR) (TCEHY US) , PUBG Corp now looks to Reliance Industries (RIL IN) 's Reliance Jio platforms to bring PUBG back to India.

Xiaomi Corp (1810 HK) launches the 'Mi Store on Wheels' - a concept to increase product sales in the rural Indian market. Already at 72% of pre-pandemic levels of sales, this may just be the push they need for their return to normalcy.

Walmart (WMT US) owned Flipkart ties up with 1MG.COM to enter the e-pharmacy space in India and also expands its B2B offering, Flipkart wholesale to 11 new cities in India.


India Internet & Consumer Weekly | Tata Consumer Products, PUBG, Xiaomi, Flipkart

United States

Las Vegas Sands Corp. owns and operates casino resorts and convention centers. The Company operates in the United States, Macau and Singapore. Las Vegas Sand Corp's casinos offer a wide range of gaming activities and entertainment as well as overnight accommodations, while its expo centers host a wide range of entertainment shows, expositions, and other activities.

Yum! Brands, Inc, owns and franchises quick-service restaurants worldwide.  The Company develops, operates, franchises and licenses a worldwide system of restaurants which prepare, package and sell a menu of food items.

Royal Caribbean Cruises Ltd. is a global cruise company operating a fleet of vessels in the cruise vacation industry. The Company operates through brands which primarily serve the contemporary, premium and deluxe segments of the cruise vacation industry, which also includes the budget and luxury segments.

Hyatt Hotels Corp. is a global hospitality company. The Company manages, franchises, owns, and develops branded hotels, resorts and residential and vacation ownership properties around the world.

Chipotle Mexican Grill, Inc. owns and operates quick serve Mexican restaurants. The Company manages restaurants throughout the United States.

Marriott International Inc. is a worldwide operator and franchisor of hotels. The Company franchises lodging facilities and vacation timesharing resorts under various brand names. Marriott also provides services to home and condominium owner associations for projects associated with several of its brands.

Wingstop Inc. owns and operates restaurants. The Company specializes in cooked-to-order, hand-sauced, and tossed chicken wings. Wingstop serves customers worldwide.

Domino's Pizza, Inc. operates a network of Company-owned and franchise Domino's Pizza stores, located throughout the United States and in other countries.  The Company also operates regional dough manufacturing and distribution centers in the contiguous United States and outside the United States.

Carnival Corporation owns and operates cruise ships offering cruises to all major vacation destinations including North America, the United Kingdom, Germany, Southern  Europe, South America and Asia/Pacific. The Company, through a subsidiary also owns and operates hotels and lodges.  Dually-listed company with CCL LN.

Hilton Worldwide Holdings Inc. operates as a holding company. The Company, through its subsidiaries, provides hospitality services. Hilton Worldwide Holdings owns and manages hotels, resorts, and time share properties worldwide.

Sands China Ltd. develops, owns, and operates integrated resorts, retail malls, and casinos. The Company also manages convention and exhibition halls in Macau.

Galaxy Entertainment Group Limited, through its subsidiary, operates casino, hotel and other entertainment facilities in Macau. The company also manufactures sells and distributes construction materials.

Aristocrat Leisure Limited manufactures and sells gaming machines in Australia and internationally.  The Company also supplies gaming systems, software, table gaming equipment and other gaming related products and services to casinos, clubs and hotels.

China Tourism Group Duty Free Corporation Limited engages in sales of duty free goods and tax goods. The Company sells tobacco, wine and spirits, perfume, cosmetics, fashion and accessories, watches, jewelry, food, luggage products,and other products. China Tourism Group Duty Free also engages in investment and development of tourism destination commercial complexes.

China Tourism Group Duty Free Corp Ltd (601888 CH)

ORIENTAL LAND CO., LTD. operates Tokyo Disney Resort.  The Company also operates restaurants within the complex and sells Disney merchandise.

Sodexo SA designs, manages and delivers comprehensive on-site service solutions for its clients.  The Company offers food, construction management, reception, technical maintenance and housekeeping services; maintains scanners and laboratory equipment; and operates river and harbor cruises and correctional facilities.  Sodexo also designs employee benefit and incentive programs.

InterContinental Hotels Group PLC owns and operates a portfolio of hotel businesses. The Company manages hotel loyalty and priority club rewards programs. InterContinental Hotels Group serves customers worldwide.

Evolution AB operates as a gaming company. The Company develops, produces, markets and licenses fully integrated B2B live casino solutions to online casino operators. Evolution serves customers worldwide.

Flutter Entertainment Public Limited Company provides mobile and online gambling services.

Starbucks Corporation retails, roasts, and provides its own brand of specialty coffee. The Company operates retail locations worldwide and sells whole bean coffees through its sales group, direct response business, supermarkets, and on the World Wide Web. Starbucks also produces and sells bottled coffee drinks and a line of ice creams.

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Starbucks Corp (SBUX US)

Yum China (9987 HK): Simple Fare Trumps the Special Treat (6862 HK). What Now?

Discuss Investment view on the stock - both long and short term - backed by analysis of valuations, operational/financial outlook and Management...

Devi Subhakesan

Beyond Meat: McPlant Trial in Europe Is More Important than Impossible's Price Cut

Beyond Meat enjoys a competitive advantage over Impossible Foods in International markets. Mcdonald's trial of McPlant in Europe is a significant...

Devi Subhakesan

Beyond Meat (BYND US): Beaten Down Stock in an Upbeat Segment. What, Now?

We discuss Investment outlook - Long and Short term - for Beyond Meat as it trades close to the lower end of the historical valuation range.

Devi Subhakesan

RLX Technology Pre-IPO - The Negatives - Limited Track Record, and Missing International Ops

RLX Technology (RLX US) aims to raise around US$1bn in its US listing. RLX is the largest branded e-vapor company in China with a market share of...

Sumeet Singh

India Internet & Consumer Weekly | Tata Consumer Products, PUBG, Xiaomi, Flipkart

Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private...

Pranav Bhavsar

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