Consumer

• SOUTHBOUND was again a net buyer for HK$18.6bn on strong two-way volumes. The top three net buys of the week were SOE banks. Some may be Central Huijin.
• Some of this may be driven by the dividend w/h tax cancellation on H divs and by significant H-share discounts, but high-div CNOOC was the biggest net sell.
• No end to the inflows, and HK valuations are not at a place where they would hamper continued flows. Alibaba making HK a Primary will spur more inflows over time.

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND’s buy streak continued this past week; every day was net positive. NORTHBOUND was net positive too. It is not clear how much is National Team buying. Much may be.
• AH Premia rebounded off multi-year lows, on average, this past week as Hang Seng and other HK indices fell sharply and A-shares did not fall as much. 

• 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: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK), China Traditional Chinese Medicine (570 HK). 
• Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Mimasu Semiconductor Industry (8155 JP), Boral Ltd (BLD AU).

• Although it’s possible to move AGM forward given the timing of financial reporting, 70% of companies will hold their AGM during the 3 days of the last week of June.
• As long as the concentration of AGM dates continues, the start of electronic provision of AGM documents should at least be accelerated to allow time to review the agenda.
• Only slightly less than 30% of prime market listed companies provide English translations of all convocation notices, including business reports and financial statements.

• In 1Q24, Revenues of Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY.
• KE’s revenue decreased by 20% YoY in 1Q24 due to the weak property market.
• Bilibili’s value added services revenue grew by 17% YoY and advertising revenue grew by 31% YoY.

• Warby Parker disrupted the eyewear industry in 2010 with affordable prices and innovative styles, known for their commitment to social impact
• The company has faced challenges with slowing growth and increased competition, leading to concerns about its uniqueness and disrupter status
• Critics believe that Warby Parker’s focus on technology and business model changes indicate a potential decline, making it a target for short selling.

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.

• Alibaba Group’s March Quarter and Full Fiscal Year 2024 results show that major segments such as the Taobao and Tmall Group, Alibaba International Digital Commerce, and core public cloud offerings are experiencing growth.
• The Taobao and Tmall Group achieved double-digit year-over year growth, while Alibaba International Digital Commerce revenue increased by 45%.
• Moreover, AI related revenue increased triple digit year-over-year, demonstrating the potential of AI technology in fueling the company’s growth.

• Best World International (BEST SP) has disclosed a revised exit offer which has been declared final. The S$2.56 offer is a modest 2.4% premium to the previous S$2.50 offer. 
• The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
• The revised offer remains underwhelming. However, the headcount test risk is lowering as retail seems resigned to accepting it. At the last close, the gross spread was 2.4%. 

• Grape King Bio has one of the most remarkable consistency in profit margins among all Asian F&B companies. Its net margins ranged from 13% to 15% in the past decade.
• The company’s dividend yield increased from 3.8% in 2021 to 4.1% in 2022, and 4.4% in 2023. Its annual dividend payout averaged 69.6% from 2019 to 2023. 
• Established in 1969, Grape King Bio is one of the leading health food, drink, and supplement products manufacturers in Taiwan.

• Sony Group Corporation recently reported its FY 2023 results and offered insights into its FY 2024 forecast as well as its fifth mid-range plan.
• The corporation experienced a record high in consolidated sales at JPY 13,020.8 billion while consolidated operating income was JPY 1,208.8 billion.
• Net income stood at JPY 970.6 billion, and consolidated adjusted EBITDA was JPY 1,880 billion.

• Honda Motor’s earnings of FY ’24 reveals that the mobility company has been posting a historic high operating profit of JPY 1,381.9 billion, with an operating profit margin of 6.8%.
• Underpinning this growth has been the company’s core strategy of focusing on environmental sustainability and safety, which is resonating well with the consumers.
• For FY ’25, Honda has set a higher target for operating profit at JPY 1.42 billion, aiming to achieve an operating profit margin of 7%, a year ahead of their original plan.

• In the first quarter of 2024, The Home Depot’s total sales amounted to $36.4 billion, marking a decrease of 2.3% from the same period last year.
• The company’s comp sales declined by 2.8% and US stores also reported negative comps of 3.2%.
• The diluted earnings per share were noted to be $3.63 for the first quarter, a dip from $3.82 during the first quarter of the previous year.

• Companies that increased Tobin’sQ have further increased Tobin’sQ due to continued growth in ROE and ROA. They have room to further improve return on capital by reducing cash on hand.
• Companies with lower Tobin’s Q may include small-cap stocks that are increasingly undervalued because they have relatively high ROE and ROA but are not covered by overseas investors.
• Over the past year, few companies raised their valuations based solely on expectations of P/B bottoming-out without improving profitability, and IR activities alone have had limited effect in boosting valuations.

• US Foods, one of the largest foodservice distributors in the United States, delivered its first quarter 2024 earnings, demonstrating adequate progress in executing its long-term strategy, despite adverse weather conditions and labor disruptions.
• Despite these challenges, they still managed to achieve 4.2% total case growth, with independent case volume growing by 4.6%.
• The company’s quarterly success gave them the confidence to maintain their full-year guidance.

• Tapestry Inc. reported its third quarter earnings results, outpacing expectations primarily due to disciplined brand building and operational excellence.
• CEO, Joanne Crevoiserat, highlighted that total revenue was aligned with the prior year on a constant currency basis, reflecting the initial end of their guidance range.
• The fashion house witnessed a 2% sales decline in Greater China, although it remained confident about long-term prospects and continued investment in the region.

• In Q1 2024, Skechers hit a new quarterly sales record of $2.25 billion, a gain of 12.5% or $250 million, compared to the previous year.
• Also, diluted earnings per share registered a record of $1.33.
• These results were fuelled by growth in both direct-to-consumer and wholesale sectors on a global scale.

• PDD reported C1Q24 top-line, non-GAAP EBIT, and non-GAAP net income 1.3%, 67.0%, and 80.0% vs. our estimate, and 13.9%, 82.0%, and 94.7% vs. consensus, respectively;
• Temu unit economics improvement drove the 1Q beat. Per order outlay on marketing and fulfilment declined 20-25% qoq, we estimate;
• PDD continues to effectively squeeze merchants for its benefit,while also benefiting from weak consumer sentiment in China and overseas. We maintain BUY,and raise TP to US$172, implying 12.3x CY24 PE.

• Hyatt revealed in its Q1 Earnings that the year has started vigourously for them, displaying growth in multiple dimensions and expanding fees. The occupancy and RevPAR trends they have been observing are strong, driven by noteworthy demands across all customer segments. An increase of 5.5% in system-wide RevPAR was seen in Q1 on the back of robust leisure travel trends. While there is expectation of a subdued year-over-year growth rate, the rates are noticeably above pre pandemic levels. They also observed healthy business transient revenue indicating resumption in business travel. Furthermore, Hyatt’s loyalty program saw a growth of 22% over the past year, reaching a total of approximately 46 million members. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Duolingo Inc. recently released its Q1 2024 shareholder letter, announcing positive financial results while outlining future initiatives. The company achieved revenue and bookings growth of 45% and 41% respectively and saw active daily users grow by 54% YoY, signaling the effectiveness of their product-driven flywheel. The strategy of offering efficient language tutoring, driving user growth, and converting users to subscribers has proven to be beneficial for the platform. Duolingo also announced record profitability for the quarter. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• The New York Times Company (NYT) reported a strong beginning to the year in its Q1 2024 earnings. The company’s strategy – aiming to become the essential subscription for people seeking to understand and engage with the world – is performing well, contributing to its sustained growth in a dynamic media environment. Among key drivers of this growth are the company’s diverse products serving various consumer needs and its deeply engaged subscriber base. Additionally, the high level of subscriber engagement observed reinforces NYT’s belief in its ability to grow the digital-only Average Revenue Per User (ARPU), anticipated to rise on a yearly basis, given multiple pricing and monetization levers. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Performance Food Group (PFG) reported its fiscal third quarter (Q3) 2024 financial results which revealed the impact of the challenging operating environment amid inclement weather and an inflationary landscape. Despite these adverse conditions, PFG’s Foodservice segment maintained a steady performance, while the Convenience division continued to report difficult top-line trends. In the Foodservice segment, PFG saw rebounding performance, especially in February and March with enhanced independent case growth and reliable chain performance. Stable market share was improved upon, with the company reporting more gains in Q3 than in Q2.
• However, this performance faced headwinds in terms of inflation and deflation with commodities such as cheese affecting overall inflation. For the fiscal fourth quarter (FQ4), a low deflation rate is expected, allowing for better gross and adjusted EBITDA margins. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

The increase of 22% in booked total transaction value (TTV) both in H124 and for this summer, driven by successful expansion into premium and long haul and backed by its pioneering perks, confirm On the Beach’s (OTB’s) progress in addressing a market it estimates to be 5x more valuable than its core Value (3*) business (now just 25% of bookings) as well as more dynamic. Another ‘very big deal’ for OTB is its new ‘transformational’ partnership with Ryanair, its most significant low-cost carrier, ensuring free and fair access to seat supply and marking a more positive relationship, given outstanding litigation on historical refunds. With improved operational leverage yielding a near doubling of adjusted EBITDA in its seasonally quieter H124, OTB expects to meet FY24 market forecasts thanks to similar H2 dynamics, bolstered by B2B restructuring.

• In the Q1 2024 earnings of Ingredion Incorporated, the company exceeded its expectations against a strong comparison with last year’s record first quarter performance. Despite the impacts of extreme cold weather on shipments in the U.S. and the sale of its South Korea business, Ingredion reported net sales volumes improving sequentially. Although consolidated net sales and operating income were lower year-over-year, operating income for Q1 2024 was the second highest in the company’s history, continuing the upward trend from previous years. Over the last five years, Ingredion has delivered 5% net sales growth and an adjusted operating income compounded annual growth rate of 7%.
• 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Instacart kicked off the fiscal year 2024 with positive financial results, as announced during its first-quarter earnings call. Being the largest online grocery marketplace in North America, the company has delivered substantial access to 98% of families through delivery and pickup from over 1,500 retail banners. This represents an unprecedented 85% of U.S. grocery sales, indicating a solid growth trajectory and the company’s dominance in the sector. The partnership established between Instacart and Uber has amplified the company’s reach, adding hundreds of thousands of restaurants to its platform overnight. This has created a comprehensive blend of grocery and restaurant options for Instacart customers, raising the bar and value for its Instacart+ membership. Moreover, the platform now caters to more food needs of consumers, driving sales and growth for retail and brand partners. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Sun Art Retail (6808 HK)‘s FY24 (fiscal year ending March) numbers were overall unimpressive, with sales down 13% yoy and net loss increasing to RMB1.6bn.
• The new CEO’s strategy is to refocus on SSSG of offline traffic and restore price competitiveness.  April and May SSSG improved. 
• The stock is up 20% since my initial insight on the name in March, and I believe more upside remains.

• In a tough macro environment with travel as perhaps the only bright spot in consumption
• However, equally compelling is the demand negatives of overseas travel as a somewhat luxurious consumption item and tough competition at home;
• Given the stock’s valuation, we maintain the rating as SELL but raise TP to US$45/ADS, implying 2025 PE of 15x.

• Toyota Motor Corporation recently concluded its fiscal year ended March 2024 with notable financial results and established expectations for the upcoming fiscal year.
• The company’s actual operating income reached a record JPY 5.35 trillion, significantly bolstered by support and cooperation from various stakeholders, including employees, suppliers, and dealers.
• This substantial figure reflects the company’s commitment to region and product-based management over many years.

• The major K-Pop stocks had the biggest up day so far this year on 23 May, driven by potential easing of Korean cultural contents restrictions by the Chinese government. 
• In the past nine years, there has been a ban on Korean singers’ performances in China.
• Among the major K-Pop stocks, we continue to have a Positive View on S.M.Entertainment Co (041510 KS) but bearish on HYBE (352820 KS) and YG Entertainment (122870 KS).

• Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.  
• ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
• In this note, we provide a summary of its refiling updates, undertake a quick peer comparison and share our initial thoughts on valuation.

• While communication with investors is an important tool, “TSE’s request” should be the starting point for solving management issues, as it gave managers the opportunity to think about strategy themselves.
• Since many Japanese companies have management issues, it is not surprising that more activist investors believe that investment opportunities can be created by encouraging companies to solve these issues.
• Even if a company can convince activist investors through shareholder relations, it will only buy time, and investors/shareholders are looking to increase corporate value by solving problems.

• Marriott Vacations Worldwide (VAC) reported positive results on February 21st, 2024, indicating a potential turnaround for the company.
• Despite a challenging year in 2023, VAC’s issues were temporary and offer an opportunity to invest in a growing business with a 10%+ free cash flow yield.
• VAC is a leisure-focused timeshare business with a strong presence in the vacation ownership market, owning upscale resort brands and deriving 35% of adjusted EBITDA from recurring sources.

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.

• Short-selling opportunity in American whiskey prices, with MGPI as a target
• Stock price of company declined 15% after reporting, but author sees larger downward trend
• Changing market dynamics provide significant upside potential for short position, timed well to capitalize on industry changes.

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.

• CIEL Limited (SEMDEX: CIEL) is a Mauritius listed diversified industrial company.
• In this update we focus on CIEL’s Finance Cluster which in 1H24 accounted for 35.9% of Group (Grp) FCF, 25.8% of Grp EBITDA and 15.5% of Grp revenues.
• CIEL has a diversified international growth portfolio of 25 companies across 6 ‘clusters’ – Textile, Properties, Healthcare, Hotels & Resorts, Agro and Finance.

• We are reiterating our Buy rating, $41 price target and projections with Build-A-Bear Workshop announcing 1QFY24 (April) results before the open on Thursday. We believe the company remains one of the key winners in the specialty retailing space, with strong returns, low inventory and compelling economics, which will become even more apparent as Build-A-Bear expands the higher-margin commercial and franchising segments, opens key tourist driven locations and continues to repurchase BBW shares. As such, and with BBW trading at 8.1X our FY25 EPS, we view the risk/reward as impressive, and we reiterate our Buy rating and $41 price target,

• Three weeks after instantiation of Phase 1, the ASX200 vs LiquidBasket is +1.8% if you traded the basket VWAP the next day. vs LessLiquid it is +8.5%. 
• Equal weight all names in the two is +3.1%. Trade VWAP over two days it is +0.7%, +7.6%, and +2.7%. So far things are OK. 
• Next week one would add another basket, then in the last week of June, one would cover and reverse the trade and hold on for 30-40 trading days or so.

• Hong Kong Television Network (1137 HK) has launched a share buyback to acquire a maximum of 100.0m shares (11.25% of shares) at HK$2.15, a 20.8% premium to the undisturbed price.
• The offer is conditional on approval by the requisite majority of shareholders and the approval of the whitewash waiver. There is no minimum acceptance condition, and the offer price is final.
• The offer is unattractive and is an inefficient use of cash to increase the co-founders’ grip on the shares. Nevertheless, the EGM vote is likely to get up.   

• Total revenue rose by 131% in 1Q24 with advertising up by 56% YoY and commission up by 327% YoY.
• In 1Q24, both the operating profit and the operating margin reached record highs.
• The historical price / sales ratios suggests a significant upside. Buy.

• Fancl Corp (4921 JP)‘s share price has declined 18% year-to-date, greatly under-performing the Nikkei 225 (NKY INDEX) which was up 17% year-to-date. 
• The company recently announced FY24 results (fiscal year ending March).  Sales grew 7% yoy and operating profit grew 60% yoy in FY24. 
• I believe the stock price is attractive at 23x 2024 PE with 15% expected earnings CAGR for the next 3 years.

• LI Auto’s decision to push out its BEV launch to 2025 is a delay of multi-faces at a time when China’s EV market is chaotically.
• We keep rating @BUY because LI still possesses the SUV niche, enjoys a healthy margin and have ample cash. 
• We cut TP from US$40 to US$25 and maintain BUY.

• Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) should replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
• Jio Financial Services (JIOFIN IN) and Zomato (ZOMATO IN) meet the free float market cap requirements but are not part of the F&O segment.
• Passive NIFTY Index (NIFTY INDEX) trackers will need to trade at least 3.8 days of ADV and 9 days of delivery volume on the index changes.

• Recommendation to buy SPLS 10.75% Senior Unsecured Notes due Apr-27 in the 78c area
• Company is a B2B distributor of office supplies and professional categories in the US, with no retail stores
• Potential for 45% total return if refinanced at par one year before maturity, with current yield of 13.8%

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.

• We are reiterating our Buy rating, $37 price target and projections after visiting Guess?
• stores in the New York City Metro area and Long Island.
• We believe the company continued to drive strong momentum in May, with Mother’s Day solid and the company’s focus on key fashion items, such as cargo pants, shorts, handbags, watches and active wear a plus.

Britvic’s interim results showcased a positive first half of FY24, with strong revenue growth across core brands and geographies. This was underpinned by a robust increase in volumes, reflecting product innovation and growth across its strategic pillars. Positive price/mix helped enable a 70bp improvement in margins. The enhanced profitability permitted a 16% increase in the interim dividend. Britvic continues to make strategic progress against the growth pillars of family favourite brands, Brazil and new growth areas. Management remains confident in the outlook, particularly with several key consumer activation events upcoming in the critical summer trading period. The company announced its third share buyback programme of up to £75m over the next 12 months.

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.

• SJM Holdings
• Softbank Group
• Yankuang Energy Group

• NPS’s May net selling of ₩700B likely stems from retrieving outsourced management funds to allocate to the newly selected three value-up outsider managers.
• These value-up managers will start investing in Q3. NPS’s May net selling matches their allocations. We should design a setup targeting the likely inflow into value-up targets starting early July.
• In particular, we should watch non-financial value-up stocks like Kia Corp and Hyundai Motor, which had more significant May price impacts likely due to NPS outflow.

• Prosus (PRX NA)‘s discount to NAV and implied stub widened after Fabricio Bloisi’s CEO appointment late last week. But the sell-down of Tencent (700 HK) to buy-back Prosus will  continue. 
• Preceding my comments on Naspers (NPN SJ)/Prosus/Tencent are the current setup/unwind tables for Asia-Pacific Holdcos
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• In 1Q24, Trip’s revenue grew strongly by 29% YoY with all business booming.
• China and Trip achieved a lot overseas travelers in March and the Labor Day Holidays.
• However, the stock price has risen 37% in the past three months.

• VBL has a history of commanding high growth through acquisitions, product portfolio and geographical expansions and operating leverage
• Varun is now focusing on interesting geographies and products which will aid its next level of growth
• There could be more than bigger success stories like Sting for Varun Beverages if it can repeat history

• Online shopping platform play Hong Kong Television Network (1137 HK) (better known as HKTV) has announced a buy-back of 11.25% of shares out, at $2.15/share, a 20.8% premium to undisturbed.
• If successful, the Offer elevates co-founder Ricky Wong’s stake, together with concert parties, to 51.55% (before exercising options), up from 45.75% currently. 
• HKTV has been in the news lately for all the wrong reasons: claims of non-payments to suppliers; and delaying its 2026 target after a 79% decline in FY23’s net profit.

• Since shareholder proposals related to “TSE requests” are unlikely to be passed at the AGM, many companies are likely to have capital profitability improvement plans that merely indicate effort targets.
• The outperformance of TOPIX by the company that announced the medium-term management plan can be attributed to the short-term outperformance of the company that announced the share repurchase.
• Investors don’t trust the contents of “mid-term management plan” because they are focusing on more reliable shareholder return rather than betting on improving operating margins over the uncertain three-year horizon.

• Dutch Bros has experienced growth during the COVID-19 pandemic but faces challenges in a more competitive market
• Despite improved financial metrics, the company is expected to see weakness in comparable sales and new store economics
• Investors are optimistic about Dutch Bros’ growth potential but there are concerns about its ability to sustain profitability and achieve long-term growth targets amid market challenges.

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.

• Until recently, Onward Holdings looked set for a gradual decline into insignificance like its main channel of regional department stores. 
• But Onward has instead become an exemplar of how to make omnichannel retailing work, with growing sales across both online and a burgeoning new store network.
• Like some other old apparel firms, Onward is showing that there is significant upside top and bottom line growth in premium apparel markets.

• We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear Workshop after visiting stores in Long Island and Connecticut.
• We believe, with exciting new “furry friends” for Summer, a strong start to the graduation season, new Mini Beans to drive incremental purchases and the start of potential summer movies, Build-A-Bear remains ideally positioned to leverage its experiential shopping model and continue to gain further market share.
• As such, and with BBW continuing to trade at 8.1X FY25 EPS and a 2.7% dividend yield, we believe the risk/reward remains compelling, and we reiterate our Buy rating and $41 price target.

• Kenvue appears to have had a strong start to 2024 despite facing some challenges.
• Positively, the company’s Q1 results came in ahead of expectations reflecting a robust portfolio and quality of its workforce.
• Leveraging value realization, investing in brands and notably, expanding gross margin by 290 basis points in Q1 to support brand activation were key achievements.

• Carlyle has a deal to buy Kfc Holdings Japan (9873 JP). ¥6,500/share is a 78% premium to undisturbed as a professional holder sells in an auction to the highest bidder.
• That’s a great format for achieving a great price. And we got one. This should get done easily.
• Importantly, the Bidco is named Crispy KK. It is 100% owned by Juicy KK. Juicy KK itself is 100% owned by Crispy Holdings L.P. Someone had some fun.

• A fortnight ago, I sought access to L’Occitane (973 HK)‘s lesser-known shareholder register, a byproduct of investigative disclosure reports under Chapter 571, s329 of the Securities and Futures Ordinance.
• This is the same register I discussed in Giordano (709 HK): A Closer Look At The Shareholder Register Ahead Of The SGM; and one also used by proxy solicitors. 
• The register confirms what has been long rumoured about a certain shareholder activist. It is also informative for what isn’t present. 

• Kfc Holdings Japan (9873 JP) has recommended a tender offer from Carlyle Group / (CG US) at JPY6,500 per share, a 20.4% premium to the last close. 
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 31.54% ownership ratio.
• Due to the Mitsubishi Corp (8058 JP) irrevocable, the minimum acceptance condition requires a 48.6% minority acceptance rate. The acceptance condition is achievable as the offer is a knockout bid. 

• Operating profit turned negative in 1Q24 compared to 1Q23 due to the price war and the failure of new model.
• The company disappeared from the industry top-10 list of sales volume and revenue growth slowed down to zero in April.
• All cross-sectional comparisons suggest a Sell rating for the stock.

• Troubled casino operator Star Entertainment (SGR AU) announced it had “received inbound interest” from several parties, including “Hard Rock Hotels & Resorts … a local partner of Hard Rock”.
• Star is in the doghouse, again,  as the regulator conducts (another) review amid concerns Star did not do enough to remedy the problems identified in the first review. 
• Facing “serious and systemic non-compliance” with anti-money laundering laws, Star faces the distinct possibility of losing is casino licence in Sydney; and potentially the one in Queensland.  

• Mandarin owns the One Causeway Bay precinct which is likely worth more than the company’s current Enterprise Value ($2.4b) having recieved an offer of $3.8b for the site in 2017.

• For those unfamiliar, this site is being massively re-developed into retail and office- not a hotel as might be expected given the company.

• Mandarin is transitioning to a capital light hotel management model by selling its owned hotels and maintaining management contracts with the purchasers.

• Shakey’s Pizza (PIZZA PM) reported Q1 FY24 systemwide sales up 15% YoY, but profits down by 15% YoY due to margin compression owing to higher opex costs.
• Management stuck to its mid-teens YoY revenue/profit growth guidance, citing that margin expansion will happen in the latter half of the year due to its visibility on costs.
• Trading at 13x FY24e PE, with a long runway for growth owing to the success in expanding Potato Corner, we believe the company can be a multi-bagger.

• The first quarter of 2024 marked a period of continued momentum for Wynn Resorts.
• The company’s earnings call transcript highlighted several significant developments, representing positive and negative factors that could be relevant for potential investors.
• Starting on the bright side, Wynn Resorts reported an all-time record property EBITDAR of $647 million during Q1 2024, owing to the company’s solid team delivering five-star service and unique experiences to their guests.

• Over 92% of CR Beverage’s revenue is from packaged drinking water products, but YoY growth this business is already below industry CAGR, raising concerns about whether future growth will stall.
• The revenue scale/profitability of CR Beverage are far inferior to Nongfu Spring. In terms of cost control, operational efficiency and the strength of supply chain, CR Beverage is lagging behind.
• For low-priced packaging water, the nationwide expansion is not a simple task, which will lead to significant cash outflow. Valuation of CR Beverage should be lower than that of peers. 

• Crocs, Inc. reported strong first quarter results that exceeded guidance both on revenue and net profit.
• Revenue rose by 7% compared to the prior year, driven by a 16% increase in Crocs brand sales.
• Adjusted gross margins improved 180 basis points to 56%, and adjusted earnings per share grew 16% to $3.02.

• 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: Yichang HEC Changjiang Pharma (1558 HK), Hollysys Automation Technologies (HOLI US), QV Equities Ltd (QVE AU), Ansarada Group Ltd (AND AU), Malaysia Airports Holdings (MAHB MK). 
• Lowest spreads: Chilled & Frozen Logistics Holdings (9099 JP), Mma Offshore (MRM AU), Great Eastern Holdings (GE SP), Mimasu Semiconductor Industry (8155 JP), Boral Ltd (BLD AU). 

• As expected, there are no constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June. However, there are float and capping changes.
• Estimated one-way turnover is 8% leading to a round-trip trade of HK$19.2bn (US$2.46bn). There is over 3x ADV to buy in Li Auto (2015 HK). 
• Short interest is quite elevated on a lot of stocks both in terms of days of ADV and in terms of free float.

• Lalatech Holdings, a technology based global logistics company, has updated its application for Hong Kong IPO and disclosed financial results for 2023.
• Lalatech Holdings is aiming to raise up to $1B and the company’s IPO looks imminent in the coming months as cash flow growth accelerated, while margins and profitability improved. 
• My fair valuation of Lalatech Holdings is close to $10B and investors should buy into upcoming IPO given the company’s substantial scale, massive network effects and operating efficiency.

• Excluding the special factor of companies applying transitional measures moving to standard, the pace of natural decrease of prime market listed companies is moderate.
• Companies with high foreign shareholdings and large market capitalization are already highly valued. Companies that are not have investment opportunities that are often at a discount due to liquidity.
• Nearly half of the companies are companies with large shareholders holding more than 20% equity; investment opportunities are expected to increase as companies go private through TOBs and MBOs.

• We are more bullish on PDD’s 1Q24 results on the back of better monetization of domestic e-commerce business and fast and quality growth of TEMU.
• We now expect 1Q24 adjusted earnings to almost double yoy to RMB20 billion, much higher than our previous estimate of 50% yoy growth and exceeding consensus by ~30%.
• Moreover, we believe earnings growth will be steady throughout 2024 instead of slowing down as we thought. 10x FY24 earnings against 80% yoy growth lead us to see 50%+ upside.

• Despite high growth in 2023, the accelerated growth of Giant Biogene has entered a turning point, and its performance has begun to slow down. Long-term growth momentum is highly uncertain. 
• Giant Biogene plans to prioritize the market entry of Class III medical device products.Due to increasing competition/challenges in marketing/promotion, it takes time to verify if the second growth curve works. 
• Reasonable valuation for Giant Biogene is P/E of 20-30x.If based on RMB1.8 billion 2024, market value is RMB36-54 billion. Short-term catalyst is the Online 618 Shopping Festival and 24H1 report.  

• Stellantis invested in Leapmotor and their joint venture will sell electric cars in Europe.
• Two vehicle producers, GAC and Li Auto, are dismissing employees.
• Tencent Music’s music revenue grew by 43% YoY in 1Q24.

• The Hershey Company reported optimistic market share trends in their Q1 2024 earnings.
• The firm has seen strong performances especially in seasonal sales and takeaway, with innovation being a significant growth driver.
• Its Reese’s Caramel product was quite popular among customers, with it not only being well received, but also helping drive strong merchandising especially around the Super Bowl season.

• The Walt Disney Company reported a strong performance in the first quarter of 2024.
• Disney’s CEO, Bob Iger, and the company’s CFO, Hugh Johnston, discussed their strategic focus on transitioning ESPN into a leading digital sports platform, developing streaming into a profit-generating business, reviving film studios, and enhancing growth in parks and experiences.
• 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.

• The Hang Seng Tech Index is more widely-followed than many think, and it is reasonably concentrated, so outperformance and underperformance by big names means capping and re-capping.
• This time, those flows are worth about 8% of the index in terms of one-way flows. Meituan, Xiaomi, JD.com, Tencent and Kuaishou Tech DOWN. Li Auto back up. 
• Those who have pre-positioned on the big buy have recently gotten hurt. There are some FAF changes which are less predictable and may be interesting.

• China momentum continues with KWEB breaking out above WEEKLY double-bottom base
• Stocks REPORTING this week that look technically sound include PDD BZ and EH
• In-Depth look at individual leaders in Tencent Holdings, Futu Holdings, and Sony Group

Dentsu’s Q1 results indicate a slow start to the year, with organic net revenue down by 3.7%. However, prospects are improving, buoyed by new business wins and weighted to H2, which leave full year expectations (and our forecasts) unchanged. The One dentsu initiative, bringing together skill sets in consulting, technology, media and creative, is supporting improved pitch win rates, and giving greater coherence and consistency to the group product and service offering. We expect this to be a central element of the new management medium-term strategy, set to be unveiled during H2. The rating remains at a substantial discount to global peers, which we anticipate will narrow as evidence of renewed growth builds.

• Naspers and Prosus have announced the appointment of Fabrício Bloisi as Group CEO, effective from 1 July 2024. Unlike his predecessor, Bloisi has an entrepreneurial background.
• Prosus and Naspers have sold off on the news. Prosus is down 1.7%, widening the discount by 80bps. Naspers is down 1.3%, widening the discount by 50bps.
• Since Bob van Dijk stepped down in September last year, both discounts have narrowed.

• JD.com (9618 HK) announced a set of in-line results for 1Q24.  Sales growth was 7% yoy, in-line with my 1Q24 preview.
• Operating profit margin for the core JD retail business declined by 0.5ppt yoy to 4.1%, which is also in-line with my preview. 
• The positive surprise was a big reduction in losses in the JD logistics business, which brought the overall non-GAAP net profit growth to 17% yoy for 1Q24. 

• Wheat prices are experiencing a significant resurgence due to extreme weather events and global supply-demand imbalances. Price is 22% higher over the past month. 
• May WASDE report indicates a positive outlook for global wheat production despite recent weather challenges, suggesting potential underestimations in global supply disruptions. 
• The anticipated shift to La Niña, coupled with historically low stocks-to-use ratios, threatens global wheat supply, heightening the potential for increased market volatility and price spikes.

• Expedia Group’s Q1 2024 performance reflected a primarily healthy market environment, but growth differed according to geographical area and product line.
• Notably, North America had the slowest growth compared to other major international markets.
• Additionally, despite meeting projections on revenue and EBITDA, Expedia experienced weaker gross bookings, with its Vrbo business producing slower recovery than anticipated.

• Few companies have disclosed their cost of capital, so TSE provided specific indicators for this purpose. On the other hand, allergies to cost of capital disclosure are persistent in companies.
• It is a concern that many companies still have more fixed remuneration than variable remuneration for compensation incentives, which are a mechanism for achieving capital profitability goals like ROE.
• Engagement with overseas investors can be effective, but there are challenges, such as the existence of passive funds and companies with small market capitalizations that are not eligible for investment.

• WOW is a cable and fiber overbuilder with a modern network but is facing financial struggles
• The company trades at a distressed valuation, making it an attractive investment opportunity for private equity firms
• Despite being undervalued compared to its industry peers, WOW’s assets have been acquired for higher valuations in the past, presenting a potentially lucrative opportunity for investors

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.

• Floor & Decor Holdings, Inc.’s First Quarter 2024 Earnings revealed several important financial developments.
• The company’s diluted earnings per share (EPS) for Fiscal 2024 came in at $0.46, surpassing expectations.
• Interestingly, this success was achieved despite the ongoing weak demand for hard surface flooring and can be attributed to the firm’s ability to strategically grow their gross margin rate and prudently control expenses.

• Phinia (PHIN) presents significant upside potential for investors in the vehicle parts sector
• PHIN focuses on aftermarket replacement, commercial vehicles, and off-highway markets
• Despite strong geographic diversity and solid financial performance, PHIN is undervalued compared to peers, indicating potential for stock price increase

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.

• Texas Roadhouse’s Q1 2024 earnings highlight a robust display of operational performance, driven by solid momentum across all segments and brands.
• With quarterly revenue surpassing $1.3 billion, a same-store sales growth of 8.4%, and continued commitment to guest experience and quality consistency, Texas Roadhouse has set a robust start for 2024.
• Despite a climate of economic uncertainties, the company posted record sales, margin dollars, and net income for the first quarter.

• Wayfair reported a marginal year-over-year decrease in revenue for Q1, around 2%, even as its customer base grew again, signifying the company’s continued momentum.
• Inventory levels are healthy and Wayfair noted the positive feedback from suppliers who are past the tough phase of facing elevated input costs and transportation prices in late 2022.
• Suppliers are substantially interested in partnering with Wayfair and featuring their products in promotional events and stores, among others.