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 Capital Markets

Kalyan Jewellers / Equity Capital Markets

<p>In this report, we highlight few investment concerns that dents the appeal of <a href="https://www.smartkarma.com/entities/kalyan-jewellers" target="_blank" data-smartkarma-citation="entities:29714:1" rel="noopener">Kalyan Jewellers (KALYAN IN)</a> IPO, in our view, including Kalyan's highly competitive landscape that conspicuously fails to find a mention in its prospectus. We also argue why we disagree with the prospectus on the demand outlook for gold jewellery in India, going forward.</p><p><a href="https://www.smartkarma.com/entities/kalyan-jewellers" target="_blank" data-smartkarma-citation="entities:29714:1" rel="noopener">Kalyan Jewellers (KALYAN IN)</a>, a leading mass-market branded gold jewellery chain with presence across India and the Middle East, proposes to raise around USD250 mn at its upcoming IPO - Rs10 bn (USD150 mn) in fresh issue and Rs7.5 bn (USD 100 mn) in an offer for sale. Company's promoters will be offloading shares worth up to Rs2.5 bn, while Warburg Pincus owned Highdell Investment would sell up to Rs5 bn worth of shares.</p>

In this report, we highlight few investment concerns that dents the appeal of Kalyan Jewellers (KALYAN IN) IPO, in our view, including Kalyan's highly competitive landscape that conspicuously fails to find a mention in its prospectus. We also argue why we disagree with the prospectus on the demand outlook for gold jewellery in India, going forward.Kalyan Jewellers (KALYAN IN), a leading mass-market branded gold jewellery chain with presence across India and the Middle East, proposes to raise around USD250 mn at its upcoming IPO - Rs10 bn (USD150 mn) in fresh issue and Rs7.5 bn (USD 100 mn) in an offer for sale. Company's promoters will be offloading shares worth up to Rs2.5 bn, while Warburg Pincus owned Highdell Investment would sell up to Rs5 bn worth of shares.

Kalyan Jewellers (IPO): Lacks Lustre. Look Beyond the Prospectus

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.

<p>Kalyan Jewellers aims to raise around US$250m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993 and is backed by Warburg Pincus.</p><p>The company is one of the largest jewellery companies in India based on FY20 (year ending Mar 2020) revenue, as per the Technopak report. As of Jun 2020, it had 107 showrooms across 21 states and union territories in India. It also had 30 showrooms in the Middle East.</p><p>Earnings haven’t grown much over the past few years, as the company appears to have suffered from a strategic misstep. Furthermore, the recent COVID-19 induced lockdown wouldn’t have helped FY21 (period ending Mar 21) results either.</p><p>Having said that, the industry remains highly fragmented with ample scope remaining for organised players, like Kalyan, to gain market share.</p><p>In this note, I’ll talk about the company’s background and some of the above points.</p>

Kalyan Jewellers aims to raise around US$250m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993 and is backed by Warburg Pincus.The company is one of the largest jewellery companies in India based on FY20 (year ending Mar 2020) revenue, as per the Technopak report. As of Jun 2020, it had 107 showrooms across 21 states and union territories in India. It also had 30 showrooms in the Middle East.Earnings haven’t grown much over the past few years, as the company appears to have suffered from a strategic misstep. Furthermore, the recent COVID-19 induced lockdown wouldn’t have helped FY21 (period ending Mar 21) results either.Having said that, the industry remains highly fragmented with ample scope remaining for organised players, like Kalyan, to gain market share.In this note, I’ll talk about the company’s background and some of the above points.

Kalyan Jewellers Pre-IPO - Strategy Missteps Led to Earnings Flatlining

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.

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>PUBG Corporation struggles to make a come back in India. After breaking ties with <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> as their distribution partner in India - the company now looks at <a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> to be their godfather.</li>
<li>
<a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> pumps in another 7 billion INR into its payments platform Amazon Pay to give it the push it needs with the Indian festive season around the corner.</li>
<li>
<a href="https://www.smartkarma.com/entities/titan-co-ltd" target="_blank" data-smartkarma-citation="entities:12630:1" rel="noopener">Titan Co Ltd (TTAN IN)</a> shines on in its journey back to normalcy with a great performance this quarter.</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.

PUBG Corporation struggles to make a come back in India. After breaking ties with Tencent Holdings (700 HK) as their distribution partner in India - the company now looks at Bharti Airtel (BHARTI IN) to be their godfather.

Amazon.com Inc (AMZN US) pumps in another 7 billion INR into its payments platform Amazon Pay to give it the push it needs with the Indian festive season around the corner.

Titan Co Ltd (TTAN IN) shines on in its journey back to normalcy with a great performance this quarter.


India Internet & Consumer Weekly | Airtel, Amazon & Titan

Chow Tai Fook Jewellery / Equity Bottom-Up

<p>In this insight, we look at two prominent Asian jewellery retailers. <a href="https://www.smartkarma.com/entities/titan-co-ltd" target="_blank" data-smartkarma-citation="entities:12630:1" rel="noopener">Titan Co Ltd (TTAN IN)</a> a retailer based in India and <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK) </a>/ (CTF) based in Mainland China listed in HK.</p>
<p>There is no relative trade as TTAN and CTF have different index memberships, however, the comparison among the two gives insights on how these two industry leaders are tackling the COVID-19 crisis in their respective markets.</p>
<p>We also dwell on the financial numbers that explain why a valuation gap exists between Indian and the Chinese counterparts. </p>

In this insight, we look at two prominent Asian jewellery retailers. Titan Co Ltd (TTAN IN) a retailer based in India and Chow Tai Fook Jewellery (1929 HK) / (CTF) based in Mainland China listed in HK.
There is no relative trade as TTAN and CTF have different index memberships, however, the comparison among the two gives insights on how these two industry leaders are tackling the COVID-19 crisis in their respective markets.
We also dwell on the financial numbers that explain why a valuation gap exists between Indian and the Chinese counterparts. 

Asian Jewellery Retailers | Titan Vs Chow Tai Fook

<p>We interact with Watch Store Franchisees of <a href="https://www.smartkarma.com/entities/titan-co-ltd" target="_blank" data-smartkarma-citation="entities:12630:1" rel="noopener">Titan Co Ltd (TTAN IN)</a> to get some colour on their current strategy for survival and expected drop in sales post locked down. </p>
<div>Investors should expect the worst in Q1 or even Q2. For this year, we believe the focus should be on the Balance Sheet and not P&amp;L. </div>
<div></div>
<div>We remain bullish on TTAN and a sharp dip in Q1 earnings could be used as a potential entry point. Our primary assumption is that the broader economy will be partially allowed to function post 30th April. Malls and Stores could open from June 1st or even late June, anything beyond this period would put the current view at risk.</div>

We interact with Watch Store Franchisees of Titan Co Ltd (TTAN IN) to get some colour on their current strategy for survival and expected drop in sales post locked down. 
Investors should expect the worst in Q1 or even Q2. For this year, we believe the focus should be on the Balance Sheet and not P&amp;L. 

We remain bullish on TTAN and a sharp dip in Q1 earnings could be used as a potential entry point. Our primary assumption is that the broader economy will be partially allowed to function post 30th April. Malls and Stores could open from June 1st or even late June, anything beyond this period would put the current view at risk.

Titan (TTAN IN) | Interaction with Watch Store Franchisees

India

Titan Co. Ltd. manufactures and retails jewelry and watches. The Company also produces perfume for men and women.

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Titan Co Ltd (TTAN IN)

Kalyan Jewellers (IPO): Lacks Lustre. Look Beyond the Prospectus

Report discusses Investment concerns that conspicuously fail to find a mention in Kalyan Jewellers' prospectus. We also disagree with the...

Devi Subhakesan

Kalyan Jewellers Pre-IPO - Strategy Missteps Led to Earnings Flatlining

Kalyan Jewellers aims to raise around US$250m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993...

Sumeet Singh

India Internet & Consumer Weekly | Airtel, Amazon & Titan

This week we cover Airtel's attempt to reinforce its E-sports strategy with talks bring PUBG back, Amazon Pay gearing up for the festive season,...

Pranav Bhavsar

Asian Jewellery Retailers | Titan Vs Chow Tai Fook

In this insight, we look at two prominent Asian jewellery retailers. Titan Co Ltd (TTAN IN) a retailer based in India and Chow Tai Fook Jewellery...

Pranav Bhavsar

Titan (TTAN IN) | Interaction with Watch Store Franchisees

We interact with Watch Store Franchisees of Titan Co Ltd (TTAN IN) to get some colour on their current strategy for survival and expected drop in...

Pranav Bhavsar

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