Consumer

• In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a non-binding proposal from Junro Ito (founder’s son) and Ito-Kogyo. No terms were disclosed.
• Bloomberg suggests an MBO deal worth up to JPY9 trillion (US$58 billion), which implies an offer of JPY3,467.89, a 39.3% premium to the last close price.
• The “white knight” MBO undermines Alimentation Couche-Tard (ATD CN)’s offer and is a proxy for the restructuring plan’s value. Couche-Tard will likely walk if a binding MBO proposal emerges.

• The National Stock Exchange (NSEIN IN) has announced a list of 45 stocks that will be added to the Futures & Options (F&O) segment of the market from 29 November.
• There will be changes to the NIFTY Index, NSE Nifty Next 50 Index, S&P BSE SENSEX Index and the CNXIT Index over the next couple of rebalances.
• There are some interesting situations out there, including a change to the universe for the NSE Nifty Next 50 Index (NIFTYJR INDEX) that could lead to more changes. 

• Although Hong Kong markets have slumped after Trump’s election, mainland China’s markets have gained.  Southbound net buying of HK stocks hit a 2024 high on the day Trump won.
• Sands China (1928 HK) had a breakout from a double top as Macau recorded good Golden Week arrivals.  Blue Moon Group Holdings (6993 HK) had a breakout after 3 years.
• CanSino Biologics (6185 HK) formed a breakout after a new vaccine was approved and it reported better results.  Haidilao International Holding (6862 HK) share price advanced as it expands stores.

• GMM Music (2465778D TB) is looking to raise at least US $100m in its upcoming Thai IPO.
• It is part of the largest, sprawling, public listed media conglomerate, GMM Grammy, and  operates a pure play music business covering the entire value chain.
• In this note, we look at the firm’s past performance.

• The Wendy’s Company recently held its fiscal 2024 third quarter earnings call, which provided in-depth insights into the company’s performance and strategic initiatives.
• The CEO, Kirk Tanner, and CFO, Gunther Plosch, discussed various aspects of the business operations, highlighting key areas of growth as well as challenges faced during the quarter.
• During the third quarter, The Wendy’s Company reported a global system-wide sales growth of 1.8%, with a modest 0.2% growth in same-restaurant sales.

• Gentex Corporation reported an increase in net sales to $608.5 million for the third quarter of 2024, up from $575.8 million in the same period last year.
• Despite a 5% decline in global light vehicle production, Gentex outperformed its primary markets by 12%.
• The company experienced a gross margin of 33.5%, slightly up from 33.2% in the third quarter of the previous year, due to higher revenue levels and purchasing cost reductions, albeit slightly offset by unfavorable product mixes.

• AutoNation Inc.’s third-quarter fiscal 2024 earnings reflect a complex performance landscape, balancing several high points with notable operational challenges.
• The company operates in a volatile industry environment, navigating economic headwinds while implementing strategies to ensure steady growth and sustained profitability.
• AutoNation marked progress in new vehicle sales, showcasing a recovery in market share.

• Shakey’s Pizza (PIZZA PM) reported 3Q FY24 SWS sales/profits up 16%/-3% YoY but guided that FY24 revenues/profits would be up double-digit, implying that Q4FY24 profits >60% YoY at least.
• The company guided double-digit revenue/profit growth for FY25 as investments in Potato Corner bear fruit. The company guided growth by >450 stores for both FY24/FY25 (base 2141 outlets for FY23)
• The stock trades at 13x FY24 PE, and its double-digit growth in the foreseeable future makes it an exciting investment. 

• BorgWarner’s third-quarter results for 2024 reveal a mixed performance, characterized by resilience in a challenging market environment, strategic advancements in both its foundational and electric product lines, and robust cost management measures.
• The company reported third-quarter organic sales exceeding $3.4 billion, a 5% year-over-year decrease, though slightly outperforming the market decline of 6%.
• This slight outperformance underscores the effectiveness of BorgWarner’s diversified, technology-focused portfolio which continues to secure business even in a down market.

• Listed subsidiaries decrease but increase if equity method listed companies are included. Many companies haven’t fully exercised treatment of subsidiaries, selling only a little of their shares to below 50%.
• Many parent companies that own listed subsidiaries and equity-method listed companies have placed cash in subsidiaries or equity-method companies without increasing their own stock prices.
• Although companies have changed their mindset somewhat, they haven’t changed their management to effectively use cash to create value, which is the reason for the low valuations of Japanese stocks.

• Zomato (ZOMATO IN) ‘s proposed USD 1 billion fundraise highlights several potential risks for Quick Commerce players, including Swiggy (1255298D IN) .
• Beyond heightened competition, majority foreign-owned Quick Commerce businesses including Swiggy could face regulatory hurdles if classified as multi-brand retail, limiting their foreign ownership.
• Investors may fear about Swiggy’s regulatory risks and profitability struggles in this competitive landscape, which could dampen investor enthusiasm and IPO valuation.

• Multi Bintang Indonesia (MLBI IJ) experienced a massive inflection in its revenue with 21.9%/35% revenue/net profit growth as we approach the Q4 high season. 
• Earlier, parent Heineken NV (HEIA NA)  had flagged in its H1 2024 report that Indonesia was experiencing double-digit growth following excise duties implemented in January 2024.
• Trading at 11.5x FY24/net cash with >8% dividend yield and historical ROCEs averaging over 80%, we see a turning point in the share price now. 

• Goldwin has big plans for both The North Face in the Japanese and Korean markets and for its own brand globally.
• But there are worries about saturation for the former in Japan, slowing brand development, and lack of expertise in overseas markets to build its own brand.
• Goldwin has had an amazing run but can it build a global brand? If it can, it will feed into high levels of demand for Japan-tech sports brands.

• Unlike the transfer of personnel rights, which is resisted by management, equity compensation that can be used to retain talent is attractive to management and is likely to accelerate.
• If equity compensation plans are introduced for employees with a low ratio of female managers, the gap in compensation between men and women is expected to widen.
• The introduction of equity compensation for employees is anticipated to provide an opportunity for management “kaizen” tips to emerge from individual workplaces.

• We are reiterating our Buy rating, $30 price target and projections for JAKKS Pacific with the company announcing 3Q24 (September) results after the close on Wednesday.
• We remain confident in our inline projections for the quarter, and believe the company, with a strong, somewhat lower-risk Holiday movie lineup in 2024, the beginning of the ramp of the Authentic Brands and The Simpsons license expansions, and the potential upside for Dog Man and the company’s own Wild Manes line launch, is well positioned to drive top and bottom line upside into 2025.
• As such, we reiterate our Buy rating and $30 price target for JAKK.

• Total revenues of P$1.9bn were in line with our estimates and increased 6% YoY.
• Housing revenues (96% of total) were up 7% due to an 8% gain in the average selling price to P$1.2 million.
• This result partially offset the 1% contraction in the housing volume during the quarter.

• IPAR continues to demonstrate its ability to outperform with its brand portfolio of prestige fragrances. IPAR provided preliminary third quarter 2024 sales estimate of approximately $425 million. 
• We believe the growth IPAR is reporting for the third quarter was the result of greater demand than retailers stocking more for the holidays.   
• IPAR highlighted the growth in its top two brands, Jimmy Choo and Montblanc, as primary reasons for the sales in the quarter. Lacoste and Cavalli were an additional boost.  

• We are reiterating our Buy rating, $29 price target and projections for Guess?
• after visiting stores in Long Island and the Metro New York City area.
• We believe, with the Fall fashion season in full bloom, the company has continued to raise the stakes for elevation, escalating key categories such as sweaters, outerwear and activewear, while raising the stakes for denim and focusing even more attention on accessories as a key play for Holiday events/parties.

• China Resources Beverage (2460 HK) raised around US$750m in its Hong Kong IPO, after pricing at the top-end.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• We have looked at the company’s past performance and valuations in our previous notes. In this note, we will talk about the trading dynamics.

• China Resources Beverage (2460 HK) priced its IPO at HK$14.50 per share to raise the gross proceeds of US$649 million. The shares will start trading on 23 October.
• The IPO was discussed in CR Beverage IPO: The Bull Case, CR Beverage IPO: The Bear Case, CR Beverage IPO: The Investment Case, CR Beverage (2460 HK) IPO: Valuation Insights. 
• The market sentiment of the peers has remained unchanged since the IPO launch. CR Beverage is fairly valued at the IPO price.

• Laopu Gold (6181 HK) is expected to fail the fcap threshold at the December 2024 review due to low free float unless its price surges ~22% in the next week.
• The 6-month lock-up expiry will lift the fcap closely above the threshold significantly increasing the probability of inclusion at the March 2025 review.
• If the mcap qualifies for the small-cap segment, its inclusion is possible at the November 2024 review due to lower fcap requirements. 

• A lot has happened since we published our Disney thesis back in February.
• On the corporate front, Disney emerged victorious from its proxy battle with Nelson Peltz and managed to patch things up with Florida Governor Ron DeSantis.
• In media, Disney posted its first streaming profit—ahead of schedule—and secured the NBA’s coveted “A Package,” though it came with a hefty price tag.

• Hong Kong markets continue to outperform globally this year with short selling declining and mainland buying increasing.  These trends should accelerate going into next year.
• Sun Art Retail (6808 HK)resumed trading after announcing that the company is entertaining one or more potential acquisition plans for the company.  The company also announced strong 1H25 earnings.
• Shanghai Electric Group Company (2727 HK) announce a buyback plan for 10% of A and H shares outstanding.  The company also announced the acquisition of the China Fanuc robotics business.

• Netflix’s third-quarter performance for 2024 highlights several key developments that provide a nuanced view of its position in the competitive streaming market.
• On the financial front, Netflix delivered strong results, surpassing expectations on both earnings per share ($5.40 vs. $5.12 expected) and revenue ($9.83 billion vs. $9.77 billion expected), reflecting a 15% year-on-year growth.
• The company added 5.1 million new subscribers, slightly above Wall Street expectations, bringing its total membership to 282.7 million.

• We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear after visiting stores in Connecticut and Long Island.
• As expected, the decision to start the key Halloween period early was a material success, with multiple rollouts and newness and inventory flows ensuring key sales and the ability to satisfy shoppers for the season later.
• Further, driving key newness in Sanrio, and favorites such as Nightmare Before Xmas, and the launch of Bluey and Bingo assured a strong season.

• Recent decline in TUI’s stock seen as an attractive opportunity by analysts
• Stock’s sell-off attributed to two placements in July and concerns about Q2 earnings
• Analysts believe TUI’s available flight and hotel capacity will help in the short term, especially in its dynamic packaging business

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Our estimations for FY 2024 annual revenue range at around €89,979 million and for 2025 at around €91,778 million.
• The company’s annual revenue reached €88,649 million in 2023 compared to €86,984 million in 2022, posting an increase by 1.91%.
• Ahold Delhaize gross profit for FY 2023 was €23,769 million, increased by 2.03% compared to €23,295 million for the corresponding period of 2022.

• Dollar Tree plans to play a key role in its growth strategy moving forward
• Rick Dreiling’s leadership is expected to drive improvement and achieve ambitious targets for Fiscal 2026
• The company aims to narrow the profitability gap with competitors and position Family Dollar for success in the future

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The December rebalance for the HSIII Index only involves capping to limit stocks to 12% of the index weight. There will not be any constituent changes.
• Estimated one-way turnover at the rebalance is 4.4% resulting in a round-trip trade of HK$2.9bn (US$378m).
• The largest outflows are expected to be from Meituan (3690 HK) and JD.com (9618 HK) with inflows spread across the other index constituents.

• Hyundai Motor (005387 KS) raised around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
• HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we will talk about the trading dynamics.

• Hyundai Motor India   is expected to close flat or slightly positive today, as low retail participation and modest expectations for gains on listing day could limit selling pressure.
• Many retail investors skipped the IPO, influenced by ‘finfluencers’ who had largely advised against it based on misinterpreted valuation comparison with Maruti Suzuki India (MSIL IN) .
• Hyundai Motor India’s meaningful discount to Maruti Suzuki on operating profit based valuation multiples suggest room for outperformance in the medium term.

• Hyundai Motor (005380 KS) raised INR 279bn (US$3.3bn) by selling some of its stake in Hyundai Motor India (1342Z IN), valuing Hyundai India at INR 1,593bn (US$18.95bn).
• The anchor investor book was fully subscribed. The non-institutional and retail books were undersubscribed, so institutions got more stock. And that changes the free float estimates for one global index.
• Even with the higher float, Hyundai Motor India (1342Z IN) is unlikely to get Fast Entry to one global index later this month. Index inclusions should commence in February 2025.

• Hyundai Motor India (1342Z IN) shares start trading on 22 October. The IPO price is 1,960 INR. 
• Although there has been some solid interest on this IPO among many institutional investors, there have been a lower interest among retail investors. 
• There has also been relatively low grey market premium. If the share price reaches in the positive upper single digits, we expect many traders to sell into this short-term rally. 

• Delfi Ltd (DELFI SP) saw some impact from the weaker IDR and higher cocoa prices in 1H2024 but prospects for 2H2024 look more promising with less expected disruption.
• The company continues to roll out new distribution across modern trade independent and general trade as well as new variants for existing best-selling brands such as Silver Queen chocolate.
• The company remains confident that the cocoa price will decline from current levels although it may remain higher than historic levels. Valuations remain attractive. 

• Despite a share price correction this month, JD.com (9618 HK) remains firmly amid an earnings upgrade cycle driven by improved profitability expectations.
• Following significant share price volatility over the past 2 months, JD.com’s near-term momentum indicators currently display bullish signals.
• JD.com still trades at more than one standard deviation below its 5-year historic average forward PE ratio, and near the lowest level it has ever been.

• A year after human capital disclosure became mandatory, little progress was made, but few companies, even those in top 100 in market capitalization, have self-assessed their milestones and actual progress.
• While it was favored that companies with higher scores on human capital disclosure outperformed in stock price, it is reasonable to assume that multiple other factors had an impact. 
• Some companies formulated growth strategies by presenting clear cash/capital allocations and have actually achieved improved capital profitability. Human capital initiatives can be viewed as part of such autonomous “kaizen” activities.

• HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024  helped us screen out great names.
• JNBY Design Ltd (3306 HK), an apparel retailer trading at 9.2x FY24 with a ~10% yield and a long-term track record of >34% 10 Yr-average ROCEs, is one such name. 
• Even with modest single-digit growth guidance, we see a growing yield and a great cash buffer (20% of the market cap), and dividends are sustainable. 

• Nexstar Media Group’s second quarter of 2024 delivered robust overall performance as the company continued to showcase its ability to navigate challenging market dynamics effectively.
• As discussed during the recent earnings call, Nexstar achieved record total net revenue and distribution revenue, underscoring its strategic success in optimizing revenue streams amid continued industry shifts.
• Particularly noteworthy was the substantial growth in adjusted EBITDA and adjusted free cash flow, which highlights disciplined execution across operational facets.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Seven & I Holdings (3382 JP), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP),Canvest Environmental Protection Group (1381 HK), Arcadium Lithium (LTM AU). 
• Lowest spreads: Trancom Co Ltd (9058 JP), Fuji Soft Inc (9749 JP), Silverlake Axis (SILV SP), T Gaia Corp (3738 JP), Descente Ltd (8114 JP), Pasco Corp (9232 JP). 

• This past week, activist Murakami-san’s City Index Eleventh announced that the companies which jointly report now own 20.3%, which translates to 23.5% of voting rights. Average in-price?  ¥2,928/share.
• The 2030 Plan from April saw 8% ROE by 2030, 6% by 2026. They’ve since bought back 11% of shares out. Better, but 1/4 of market cap is net cash+securities.
• If one assumes they spend the net cash+securities to buy back stock 10% higher than here, pro-forma PBR is <0.6x. ROE would be 7+%. There’s room to run here, still. 

• On October 18, JD denies there is a run on JD Finance.
• Many male users claimed they boycott JD for the invitation of Miss Yang, a talk show celebrity.
• We believe the event will negatively impact JD and benefit Alibaba.

• The whole industry has entered a medium to low-speed growth stage, and the industry’s future growth rate will remain single-digit growth. So, CR Beverage’s future performance decline is inevitable.
• Due to serious homogenization/competition of packaged drinking water market, there’s not much room for innovation/iteration. CR Beverage’s sales-driven model is hard to bring “new story” to break through the dilemma. 
• CR Beverage is clearly inferior to Nongfu Spring. Its valuation should be lower than Nongfu Spring. We think reasonable valuation of CR Beverage is about US$4 billion (or lower).

• Alibaba is selling Sun Art, a listed supermarket subsidiary, as Sun Art’s revenue is shrinking.
• Alibaba gained 6 million new retailers on its Taobao Tmall platform year to date.
• In September Tesla’s sales volume increased by 66% YoY and all major Chinese NEV grew strongly.

• Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
• Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
• But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.

• Couche-Tard execs do the rounds in Tokyo, complaining about not being able to do the rounds. This sounds like they are trying to make themselves sound nice. For now
• First the low-balled VTOs for AIS (ADVANC TB) and Thaicom (THCOM TB). Then the Intouch (INTUCH TB)/Gulf Energy (GULF TB) amalgamation. Then, arguably, the next unorthodox development will take place.
• Investors buying SAMTY HOLDINGS (187A JP) in size may withhold shares, either they’ll try to become the fulcrum investor to get into the Bidco OR they will try for a bump.

• Puregold has built an enormous moat in the Philippines around its hypermarket, supermarket, and discount/membership stores, which is evident on its steady growth in sales and profits amid challenging  environment. 
• Puregold has attractive valuations. Puregold is trading at attractive valuations of 2.7x EV/EBITDA, P/E of 8.6x, and P/B of 0.9x, based on 2025 consensus earnings estimates.
• In the next several years, the Philippines is expected to move into the upper middle-income economy which should have a positive impact on the consumption-led categories including supermarkets and hypermarkets.

• Sales per outlet and gross margin per vehicle were supposed to rise in Q3. Instead, both went south, causing management to lower FY guidance about 50%. 
• Evidence from the 1st and 2nd quarters that indicated an immanent turnaround simply vanished in the 3rd quarter. 
• We lower our rating form “Massive Growth at Huge Discount” to “Decent Growth at Reasonable Price, No immanent catalyst.”

• Frontdoor, Inc. delivered a robust financial performance for the second quarter of 2024, with notable progress on strategic fronts, despite facing macroeconomic challenges and a tough real estate environment.
• The company reported a revenue increase of 4% reaching $542 million and observed a significant expansion in gross margin, up by 470 basis points to 56%.
• Adjusted EBITDA improved by 31% to $158 million, and free cash flow saw a substantial rise, more than doubling to $91 million.

• Gentex Corporation reported its financial results for the second quarter of 2024, revealing challenges in light vehicle production and sales.
• Net sales for the quarter were $572.9 million, a decrease from $583.5 million in the same period last year.
• The decline is attributed to a 3% drop in light vehicle production in North America, Europe, and Japan/Korea.

• Sonos, a key player in the audio technology sector, presented its third quarter fiscal 2024 results that signaled both promises and challenges.
• The call, led by Patrick Spence, CEO of Sonos, detailed the current predicaments mainly centered around the recent overhaul of their mobile application, alongside highlights of new product introductions and financial metrics.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Outside director compensation is increasing, but there is a considerable difference in compensation for outside directors between large and small companies and between small and medium-sized publicly traded companies.
• Every time a scandal occurs, there is a lack of shareholder-oriented management and a smattering of outside board members who turn a blind eye to the scandal.
• A compensation model that includes equity compensation should be created to maximize the power of outside directors, with “management from the perspective of shareholders” as a necessary condition.

• TI Fluid Systems (TIFS LN) is trading at 10% gross spread to ABC (Apollo)’s Proposal, which the Board of TIFS would be minded to recommend if made firm.
• Although TIFS has made notable strategic progress recently, and maintained margins despite tough conditions over the last years, the short-term car picture has gotten progressively worse.
• 200p implies 4.6x EV/NTM EBITDA versus global auto suppliers trading on a median of 4.4x and represents a good-value exit. I believe the deal will complete. Long.

• TEGNA Inc. reported their Q2 2024 financial results, reflecting a mix of challenges and opportunities which present a balanced view for potential investors.
• In this earnings review, a detailed assessment of the company’s performance and strategic initiatives provides insights into its emerging trends and operational focus.
• During the quarter, TEGNA noted a decline in total company revenue compared to the previous year, which primarily stemmed from decreases in subscriber counts and national advertising revenues.

• In a notable development, Dana Incorporated (NYSE:DAN) has recently emerged as a potential acquisition target, sparking rumors across Wall Street.
• The company’s stock rose by 0.5%, following reports of takeover interest as mentioned in a Betaville “uncooked” alert.
• The timing of this speculation coincides with a strong earnings performance for Q2 2024, where Dana posted $2.7 billion in sales and a solid $244 million in adjusted EBITDA.

• Kontoor Brands, in its Second Quarter 2024 Earnings Call, presented a mixed but slightly optimistic view of its current position and trajectory amidst diverse market challenges.
• The President, Chief Executive Officer and Chair of Kontoor Brands, Scott Baxter, emphasized strategic growth, brand developments, and consumer engagement that have contributed positively to the company’s performance.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• We are reiterating our Buy rating, $20 price target and projections for Lands’ End after reviewing the October catalog.
• We believe, with the onset of the crucial outerwear period, Lands’ End is well-prepared to highlight their increased focused on technology, new products and exciting fashion-driven items to increase the customer base, and register lower discounting levels and even higher overall returns.
• Further, we believe management has become increasingly nimble in flowing more wear now items and capturing further share of wallet.

• Levi Strauss & Company recently conducted their third quarter fiscal 2024 earnings call, unveiling results that presented a mixed picture with both strengths and areas for improvement.
• During the quarter, the company saw a net revenue increase of 2% in constant currency and 3% when adjusting for the exit from the Denizen business.
• This growth was primarily driven by a 5% increase in the Levi’s brand globally, marking its best quarterly growth in two years.

• McCormick & Company, Incorporated recently discussed its third-quarter financial results, reflecting an environment of both challenges and moderate successes.
• Despite a demanding global market, the company managed to align its performance with expectations due to strategic investments and effective management of resources.
• However, there were several fluctuations in different segments and regions that highlight the mixed nature of the current financial landscape for the company.

• Meritage Homes’ second quarter of 2024 financial statement depicted a mixed landscape of operational achievements and challenges.
• The company showcased robust financial results, achieving a notable boost in sales, gross margin expansion, and optimized operational efficiency, marking its continued focus on not just maintaining but also strategically expanding its market footprint targeted primarily towards the entry-level housing segment.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• CarMax Inc. recently reported its earnings for the second quarter of the fiscal year 2025.
• The company reported total sales of $7 billion, a slight 1% decline year-over-year, reflecting a drop in retail and wholesale prices, although this was partly offset by increased retail volume.
• Despite the tensions in the auto loan market affecting the industry, CarMax managed to post several positives.

• The Wendy’s Company reported a mixed second quarter earnings highlighted by continued global system-wide and same-restaurant sales growth, but faced challenges related to rising labor costs and operational increases which pressured margins and resulted in a downward adjustment of full-year sales growth expectations.
• In the second quarter, The Wendy’s Company showcased a 2.6% increase in global system-wide sales and a 0.8% rise in same-restaurant sales.
• The U.S. segment maintained its competitive position within the quick service restaurant (QSR) burger category, with a particularly strong performance in the breakfast and late-night dayparts which are pivotal growth avenues for the company.

• Alimentation Couche-Tard (ATD CN)‘s CEO, former CEO, CFO, and founder were in Tokyo today giving a press conference about their trip and designs on Seven & I Holdings (3382 JP). 
• There was some passive-aggressive behaviour. Their bid was better than 7&i’s plan. They said it was a high price. They said they wanted to meet management, the ITOs, the government. 
• None of that will win the hearts and minds of the Special Committee. 

• China Resources Beverage (2460 HK)  plans to raise  US$650m at the upper end of the indicative IPO price range at a market capitalisation and EV of HK$34bn and HK$27bn respectively.
• Though the company has a strong business model and fundamentals, the packaged drinking water market is intensely competitive creating a price war and dragging down growth rates.
• CR Beverage is less diversified and has inferior margins compared to Nongfu Spring (9633 HK) , hence priced at a deep discount to its peer, making the IPO pricing attractive.

• Intermestic (262A JP) raised around US$120m in its Japan IPO. 
• Intermestic is an eyewear manufacturer of eyeglasses and eyeglass accessories in Japan.
• We have looked at the company’s past performance in our previous notes. In this note, we talk about the trading dynamics.

• In FY02/24, revenue was JPY48.8bn (+27.8% YoY), operating profit was JPY4.6bn (+653.2% YoY), recurring profit was JPY4.8bn (+92.5% YoY), and net income was JPY3.2bn (+112.8% YoY).
• The company attributed YoY revenue growth to the following factors.
• First, customer count continued to grow after the March 2023 price hike.

• The number of days to disclose first- and third-quarter financial results was 37.0 days, roughly the same timing as the previous year, regardless of whether reviews were conducted or not.
• The larger market capitalization companies are more likely to conduct voluntary reviews, and the larger market capitalization companies are more positive about ensuring the reliability of their disclosure information.
• Despite a slight increase from the previous year, only a little more than 10% of all companies disclosed cash flow statements in the first and third quarters.

• We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico with the company reporting 3Q24 (September) results after the close on Thursday.
• Although we believe 3Q results, especially at the Betterware division, were impacted by foreign exchange (“FX”) issues, we believe the company has continued to make material progress, with all divisions registering YoY top line growth.
• Further, we believe management will reiterate 2024 annual guidance, as the company has been able to drive further expansion at JAFRA and we believe they have begun to respond to FX shifts by raising pricing at Betterware.

• Revenues of P$13.2bn were driven by growth across all segments.
• Consolidated sales growth of 3.8% YoY was driven by Consumer and Away from Home (1% and 2%, respectively, yet below our estimates), while Exports surprised to the upside with a 25% YoY increase, driven by FX headwinds and hard roll sales.
• Margins were mostly better than our cautious estimates, with EBITDA margin reaching 26.3%, still a YoY and QoQ contraction.

• Up to 9 stocks could be deleted from global passive portfolios in November. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
• There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
• The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.

• Some two weeks after it became apparent Alimentation Couche-Tard (ATD CN) had lobbied a bid in for Seven & I Holdings (3382 JP), Artisan Partners wrote a letter.  
• It was full of misguided analysis, ungrounded insinuation of a general nature without specifying where they would have a problem. It seemed to be complaint for the sake of complaint.
• Today another public letter. This time there are a couple of worthwhile suggestions, some accusations of fiduciary impropriety based on no evidence, and an implicit admission they should have sold?

• Yesterday WA Inc (7683 JP) announced that on the five year anniversary of its listing in 2019, the stock would move to TSE Prime on 1 November 2024
• They also announced a secondary offering of 2.86mm shares including greenshoe. That’s 15% of shares out but the offering will double total float. This is almost a re-IPO.
• This will lead to a TOPIX inclusion on 27 December which will be smaller than the offering. This will be all retail. 

• BYD’s deliveries growth accelerated to 36% YoY in Aug and 46% YoY Sep.
• The whole domestic NEV (New Energy vehicle) market has been accelerating for for the entire third quarter.
• We believe the EU and the US market are not concerns, as both domestic and other emerging markets are promising.

• It’s understandable that compensation is paid for managing a global business and achieving significant growth, but it’s also paid for bloated performance in yen terms due to the weak yen.
• Employee engagement is very important for value-added products and more money should be spent on human capital. Otherwise, higher profit margins are unlikely to be achieved.
• The election of directors at AGMs rarely results in rejection of the company’s proposal. Cross-shareholdings should be reduced so that managers whose “employment” is protected by cross-shareholdings don’t receive commensurate compensation.

• Since mid-September, share-price spreads have generally widened across our European liquid universe of ordinary and preferred shares (9 have tightened, 10 widened).
• Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols SA, Media-for-Europe, Volkswagen.
• Recommended trades long ordinary / short preferred shares: Carlsberg, Henkel, SSAB Svenska Stal.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Green Energy
• Anton Oilfield

• Most of Onward’s current customers are in their 40s and older but the purchase of casual clothing retailer, Wego, increases its exposure to people in their teens and 20s. 
• It will accelerate development of new omnichannel brands to match as part of plans to grow sales by 50% in the next six years and more than double operating profits.
• Onward itself has been transformed by a switch to omnichannel and after years of slashing stores and sales now looks set to become a growth business again.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We preview Taste Gourmet’s (8371 HK) earnings for H1 FY24, which will be declared in November. 

• In 1H FY02/25, sales rose JPY46.0bn (22.6%) YoY, driven by large store operations and retail unit sales.
• Operating profit increased JPY3.0bn (42.1%) YoY, with gross profit per retail unit rising to JPY440,000 (+60,000 YoY).
• Revised FY02/25 forecast projects sales of JPY500.0bn (+19.1% YoY), operating profit of JPY20.3bn (+26.0% YoY).

• Bossini International Holdings (592 HK), a casual apparel play, is currently suspended pursuant to the Takeovers Code. As is Viva Goods (933 HK), Bossini’s largest shareholder, with 62.91%.
• Former Olympic gymnast Li Ning holds 68.96% of Viva Goods. Viva Goods also holds a 10.37% stake in Li Ning (2331 HK).
• The double suspension is probably a pre-cursor to Viva Goods tabling a delisting Offer for Bossini. 

• China Resources Beverage (CRB HK)  is looking to raise up to US$650m in its Hong Kong IPO. 
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• China Resources Beverage (CRB HK), China’s largest purified drinking water company, has launched its HKEx IPO to raise up to US$650 million.
• We previously discussed the IPO in CR Beverage IPO: The Bull Case, CR Beverage IPO: The Bear Case and CR Beverage IPO: The Investment Case.
• Our valuation analysis suggests that CR Beverage is attractively valued at the IPO price range. Therefore, we would participate in the IPO.

• Today, Takashimaya (8233 JP) reported Q2 earnings, a dividend hike, upward revisions to the FY26 MTMP, and a decent-sized buyback to raise leverage levels and ROE.
• The company is yen-sensitive both in overseas retail and domestic department stores on inbound traffic. One could imagine future issues. 
• The register looks like it is quite open. It is not. That is worth considering now and in future.

• Just as they did before, Japanese convenience stores are taking a US idea and making it Japanese, in this case retail media, which looks set to be huge in Japan.
• Seven & I believes it will be a ¥3 trillion business and Familymart, which is leading in this new profit machine, expects ¥5 billion in media income in 3 years.
• The options for highly personalised targeting and behavioural analysis will transform brand advertising and marketing – but even more the bottom line of convenience stores.

• In this Insight, we highlight industry and company-specific developments based on the annual reports of various companies related to the apparel industry.
• The industry has encountered challenges, primarily due to a slowdown in demand and rising inflation. Most companies are now hoping for a turnaround.
• Companies in Focus Aditya Birla Fashion and Retail Ltd (ABFRL IN), Arvind Fashions (ARVINDFA IN), Vedant Fashions (MANYAVAR IN), Go Fashion India (GOCOLORS IN) and Credo Brands Marketing (CREDO IN).  

• CR Beverage, a pioneer in China’s packaged drinking water industry with a forty years history, sets terms for upcoming IPO in Hong Kong.
• The IPO is expected to be between HK$13.50 and HK$14.50. At the midpoint of the range, CR Beverage would command a market value of ~HK$33B or ~$4.2B.
• I view IPO valuation as attractive vs. domestic peers as profitability and gross profit margins improved. UBS, BOCI, CITIC Securities and Bank of America are leading the offering.

• While the short-selling ban for the KOSPI 200 INDEX will remain in place until the first months of 2025, that does not prevent the index from pulling back.
• Pullbacks, in this context, are an opportunity to buy, in the hope the index will rise higher from its current position.
• Our models right now are showing a short-term WEEKLY OVERBOUGHT scenario coming in the next 2 weeks. Keep reading for more details.

• We are updating our 4QFY24 and revenue and adjusted EPS estimates for BSET following the company’s earnings release and investor call (see 1 for our summary of the quarter).
• As noted, industry conditions for residential furniture remain challenging, with the housing market (still) stuck and consumer spending on furniture and furnishings subdued after the COVID pull-through, when many people renovated their homes.
• Near term, we expect demand to remain subdued, even as easier comps and some return to normal demand dynamics gain traction over the next several quarters.