Consumer

• The revised/final True Wind Tender Offer for up to 19% of Sun Corp (6736 JP) ends this week. With the “excitement” the last two weeks, the SunCorp/CLBT ratio is higher.
• The minimum threshold is relatively low. The Tender will most likely succeed with very high pro-ration. 
• For those on the edge, I discuss possibilities on the back end. It will be less liquid, but that may not be bad.

• WeRide (WRD US) is looking to raise US$119m in its US IPO.
• WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
• We had looked at the firm’s past performance in our earlier notes. In this note, we discuss our thoughts on valuation.

• WeRide, a pure-play autonomous driving company with operations in 7 countries, may raise up to $120M in upcoming IPO in the United States.
• WeRide is expected to IPO this week. The company’s amended prospectus puts the price range per ADS at $15.50 to $18.50, implying a market cap of ~$4.6B at the midpoint.
• The company has raised ~$1.4B in equity financing to date and was backed by Qiming Venture Partners and the venture capital fund of the Renault Nissan Mitsubishi Alliance, among others.

• Bearish sentiment in Hong Kong declined during the carry trade sell off.
• Low Volatility, High Dividend and Value factors have continue to be profitable strategies in Hong Kong.
• Pop Mart International Group L (9992 HK) , Techtronic Industries (669 HK) and Giant Biogene (2367 HK) all reported solid operating and financial news leading to BUY recommendations.

• Following our recent insight Shortlist of High Conviction Philippines Equity Ideas, two companies featured Ginebra San Miguel (GSMI PM), and DigiPlus Interactive (PLUS PM) reported stellar Q2FY24 earnings. 
• DigiPlus Interactive (PLUS PM) trades at 7x PE FY24, with a 5.8% dividend yield, >40% ROCE, and tremendous scope for growth after its 300%/400% Revenue/PAT growth Q2.
• Ginebra San Miguel (GSMI PM) trades at 9x FY24 PE, a 5% dividend yield, 19% of the market cap in cash, and 35% ROCE with teen growth in CAGR revenue/profits. 

• Strong Q2 performance: Asics delivered impressive profit growth and margin improvement, exceeding expectations with operating profit surging 119% YoY to 25 billion yen.
• Market share gains: Asics continues outpacing Nike across key regions, with strong growth in Japan, Europe, China, and the US, driven by Sportstyle and Performance Running.
• Bullish outlook, limited upside: Recent guidance revision and current FX rates cap near-term gains; stock trades at 19x NTM EV/EBIT with 15% upside to fair value.

• In this insight, we discuss the recent share cancellation at S.M. Entertainment, valuations, and the launch of a new British boy band in August 2024. 
• Dear Alice boy band will start its promotion with the broadcast of “Made in Korea: The K-Pop Experience” on BBC One and BBC iPlayer on 17 August.
• We are cautiously positive on Dear Alice band. Unlike most aspiring boy bands, Dear Alice has a HUGE advantage of launching the band on the BBC through a TV show.

• China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier notes, we talked about the company’s past performance and undertook a peer comparison. In this note, we will look at valuations.

• GoTo (GOTO IJ)“‘s 2Q2024 reflected an ongoing focus on growth as the company invested in both its On Demand Services and its Fintech segments driven by its product-led initiatives.
• The company’s growth was driven by the mass market, subscription products, and premium offerings such as express deliveries, which helped to boost both frequency and retention on the platform. 
• GoTo will continue to benefit from the service fee from Tokopedia, which can be used to drive its core ODS and Fintech businesses. The stock overhang is a temporary drag.

• TSE growth market, which institutional investors distance themselves from due to its low liquidity, is a market where gamblers who focus on price movements gobble up one IPO after another.
• To convert users from gamblers to investors, companies with long-term growth potential should be listed. Raising the market capitalization criteria for Growth Market could improve the quality of IPOs.
• Meanwhile, in order to improve the quality of the TSE Growth Market, existing listed companies should consider going private through an MBO.

• The epicenter of the Asian ETF selloff last week was Japan, recording an outflow of nearly $100B from equity funds taking the net flows back to breakeven for the YTD.
• Seazen (Formerly Future Land) (1030 HK) and Swire Properties (1972 HK) had positive announcements while New Oriental Education & Techn (9901 HK) and Yum China Holdings (9987 HK) announced earnings.
• China Unicom Hong Kong (762 HK) shares are under pressure as the telco sector goes through a price war in cloud services and investors take profits from high dividend names.

• Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 September.
• With no constituent changes in March and 1 add/1 delete in June, there could be more changes in September with Health Care stocks among the potential inclusions.
• Changes to the Hang Seng Industry Classification System (HSICS) will be implemented from the September rebalance and that will alter industry coverage.

• Monopoly was originally created as a critique of capitalism but became a massively successful business itself.
• Hasbro has grossed over $3 billion in revenue from the app version of Monopoly.
• Hasbro CEO, Chris Cox, will be discussing the development of Monopoly and other games on the podcast.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Delayed this week because of the long (Japanese holiday, which I took for myself) weekend, as were the SOUTHBOUND and NORTHBOUND monitors. 
• SOUTHBOUND inflow strong. Tencent strong inflows. Net buying every day for two weeks. NORTHBOUND outflows large. Record foreign investor outflows from China’s capital markets this year.
• As expected (with AH 20d Premia returns at multi-year highs last week), AH Premia fell slightly, with narrow premia falling more than wide premia. I’d expect more H-vs-A gains.

• BrainBees Solutions (FirstCry) raised around US$500m in its India IPO.
• FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

• WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
• In WeRide (WRD US) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on a volatile revenue profile, high customer concentration risk, widening losses that raise doubts on the path to profitability, elongated cash collection cycles and cash burn.

• We believe revenue will increase by 8% YoY in 1Q25, as most business lines have been growing.
• We believe the operating margin will be stable, as cost cut plans came to an end.
• We set an upside of 94% for March 2025, as we believe the stock is overly impacted.

• Ola Electric’s stock has surged since its Friday listing, despite a lukewarm IPO response. We look at a possible base-to-bullish case valuation range for Ola Electric’s stock price.
• With the e2W market up 96% YoY in July and Ola Electric’s sales soaring 114%, the momentum is strong. Likely catalyst on the horizon adds to investor optimism.
• Currently, on FY2026E EV/Revenue, Ola Electric trades on par with its closest Indian e2W peer.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 14.8bn of A-shares. It was a big net sell week in relatively low gross NORTHBOUND volume.
• HK large caps outperformed Mainland large caps generally. Tech (HSTECH vs Star50 and ChiNext) saw even better HK outperformance.

• We focus on two electronics retailers Electronics Mart India (EMIL IN) & Aditya Vision (AVL IN) in this Narrative & Numbers for FY24. 
• EMIL is a leading player in the consumer electronics industry in India, with a strong presence in South India. 
• AVL is a leading player in the consumer electronics industry in India, with a strong presence in Bihar, Jharkhand, and Uttar Pradesh.

• The plan is to select 20 large-cap companies from around 30 with value-up disclosures by late August, then gradually expand the index’s constituents.
• Investors seeking both dividends and value-up benefits must buy stocks individually, as ETFs lack tax advantages, potentially triggering fund shifts from dividend ETFs to value-up stocks.
• We can target stocks in dividend ETFs not making value-up disclosures, as they may face overhang risk during fund migration to the value-up index.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, the prior week witnessed a number of listings with divergent results.
• Given the market volatility, there was only one large placements in the prior week.

• AGUIL is a sports/casino operator spun out of Televisa, with potential for earnings growth through expansion of casinos and broadcast rights for Club America soccer team
• Current market cap of $320 million and low valuation of 9x current PE make AGUIL an attractive investment opportunity
• Recent purchases of stock by Emilio Azcarraga Jean from Televisa US ADR holders further support long-term upside potential for AGUIL

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.

• RaaS has published a flash comment on 3D spatial data solutions group Pointerra (ASX:3DP) after its announcement that it has been awarded US$0.8m in new contracts by existing US energy utility customer Florida Power & Light (FPL).
• The contracts will see Pointerra3D, the company’s AI-driven analytics platform, used to extract information and insights from 3D LiDAR and 2D imagery data.
• We view the contracts as a positive sign that the contract delays and deferrals experienced by Pointerra in FY24 in its dealings with the US energy utility sector are coming to an end.

• The positive impact of increased dividends must be discounted because seniors, who receive most dividends, are non-working generations and are more vulnerable to the negative impact of rising consumer prices.
• The high level of cash on hand should be used effectively for investments and shareholder returns. Looking at listed companies as a whole, both ROE and DOE are below FY2018.
• Although the too-low dividend payout of Japanese companies have been corrected, the fact that ROE is still low means that few companies are chosen as investment targets by global investors.

• The trade in Toyota Motor (7203 JP)‘s Tender offer Buyback is to understand what YOU can do in your particular position.
• Despite Swire Properties (1972 HK)‘s recent share buyback, Swire Pacific (A) (19 HK) is still preferable on a look-through P/B of 0.34x.
• Kirin bumps the Offer for Fancl (4921 JP). Given market gyration, it may represent enough of a switching opportunity to let those who still object in principle to re-allocate elsewhere. 

• Rs. 1,000 crores allocated for growth, with Rs. 350 crores deployed. 25,000 spindles added by May 2025.
• Shift towards value-added products, including knitting, weaving, and dyed fabrics, with plans to double revenue in 3-5 years.
• Despite expansion and potential opportunities, capacity constraints and global demand shifts temper expectations in the short term.

• On August 7th, Meituan’s on-demand order volume reached a historical high of 98mn on surging orders from street drinks. Meituan has connected to the backend systems of street drink vendors;
• Delivery order is a double-edged sword. It boosts volume at the expense of margin. Further, the ownership of the volume is questionable;
• With Pin-hao-fan, Meituan already atomized the small restaurants. Now Meituan is playing the same trick with street drinks. The result will be more dramatic to the benefit of Meituan.

• Toyota Motor Corporation has released its financial results for the fiscal year ended March 2024, providing a comprehensive overview that reflects both the company’s recent successes and its strategic investments towards future growth.
• In fiscal year 2024, Toyota reported robust financial performance with total vehicle sales reaching 9.443 million units, marking a 7.0% increase from the previous fiscal year.
• This growth was largely propelled by escalated sales outside Japan, counterbalancing the dip in domestic sales due to shipment suspensions from Daihatsu Motor Company and Toyota Industries Corporation.

• Booking Holdings, a prominent player in the global online travel market, reported its second quarter 2024 financial results, highlighting a performance that exceeded expectations in various key metrics including room nights, revenue, and adjusted EBITDA.
• Room nights booked during the quarter grew by 7% year-over-year, achieving a total of 287 million.
• Revenue and adjusted EBITDA both rose by 7% to $5.9 billion and $1.9 billion respectively, while adjusted earnings per share experienced an 11% increase.

• Consumer sectors in China are gaining more focus as the government lays out steps to increase domestic consumption.
• Hong Kong markets performed well relative to region during recent market turmoil.
• China Education Group (839 HK) and China Reinsurance (Group) (1508 HK) experienced breakouts and China Telecom (H) (728 HK) had a breakdown. Anhui Conch Cement (914 HK) is more positive.

• MercadoLibre’s financial performance in the second quarter of 2024 highlighted robust growth and profitability, demonstrating strong execution across its primary business segments: commerce and fintech.
• Notably, Marcos Galperin, the company’s CEO, reiterated MercadoLibre’s commitment to enhancing the financial and operational accessibility for numerous small and medium-sized enterprises across Latin America, a principle that has been foundational since the company’s inception 25 years ago.
• From a financial perspective, the revenue reached $5.1 billion, marking a significant year-over-year growth of over 40%.

• Etsy, during the company’s Second Quarter 2024 Earnings, reported a Gross Merchandise Sales (GMS) of $2.9 billion, reflecting a slight year-over-year decline of 2.1% on a consolidated basis.
• Despite the dip in GMS, revenue saw an uptick of 3%, totaling $648 million.
• Moreover, Etsy maintained a robust adjusted EBITDA margin of approximately 28%.

• Norwegian Cruise Line Holdings recently discussed its financial performance for the second quarter of 2024, and the results have been promising, outperforming the company’s expectations and leading to upward revisions in full-year guidance.
• President and CEO Harry Sommer along with CFO Mark Kempa provided an overview of the quarter’s milestones, emphasizing the company’s strategic balance between return on experience (ROX) and return on investment (ROI).
• The positive outcomes from the quarter were underpinned by robust demand and strong pricing dynamics, leading to record-breaking advanced ticket sales.

• In the second quarter of 2024, Bausch + Lomb demonstrated notable performance across its diverse business segments and geographic regions, sustaining a trajectory of robust growth.
• The company reported a significant year-over-year constant currency revenue growth of 20%, reflecting increases in both product volume and geographic expansion.
• Revenue growth was consistently robust across various segments, with Surgical, Vision Care, and Pharmaceuticals growing by 9%, 11%, and 61%, respectively.

• Ace Hardware Indonesia (ACES IJ) reported an impressive set of 1H2024 results with continuing momentum behind SSSG driven by promotional campaigns but margins remained stable at the same time.
• The company continues to open new format stores and renovate existing ones. It has also introduced new private label brands to drive growth and will introduce 15% new SKUs. 
• The company will be renamed PT Aspirasi Hidup Indonesia to reflect the separation from ACE US but we see the impact as minimal. Valuations remain attractive on 12.6x FY2025E PER.

• We believe Yum China remains the best long-term China catering play. 2Q24 results highlight the resiliency and agility of its business model and management to navigate tough environment.
• While cost optimization drove bottom-line beat, we share management’s view that it is not one-off exercise but will strengthen the company’s operation efficiency moat and market leadership.
• Macro concerns are well known and fully priced in in our view. Otherwise investors won’t have the opportunity to own the name for low double-digit P/E.

• Fila Holdings announced that its subsidiary Magnus Holdings plans to sell a 1.8% stake in Acushnet Holdings in a block deal sale worth about 98 billion won. 
• Our NAV valuation of Fila Holdings suggests an implied value per share of 49,192 won, representing 18.2% upside from current levels. Fila Holdings’ 51.9% stake in Acushnet Holdings.
• The block deal sale of Acushnet Holdings by Magnus Holdings is likely to have a positive impact on Fila Holdings as it could result in higher capital returns to shareholders.

• Uniqlo Co. Ltd.’s strategy of raising prices in the face of rising costs has taken a toll on the Japanese clothing retailer’s bottom line in China due to growing competition and thriftier consumers.
• The fast-fashion chain’s Greater China profit and revenue both fell in local currency terms during the March-May period, dragged down by poor performance on the Chinese mainland and in Hong Kong, according to earnings results released last month by its parent company, Fast Retailing Co. Ltd. The results did not provide specific earnings figures for the period.
• Fast Retailing attributed the poor performance to lackluster consumer appetite, unseasonal weather and an insufficient product lineup to satisfy local customer needs.

• Astra International (ASII IJ) saw a slight decline in its core earnings in 1H2024, which was an admirable performance given the weakness in the auto market and commodities divisions.
• Offsetting the weakness in autos, Astra saw strong performances from its financing businesses for 4W, 2W, heavy equipment, and consumer finance, which booked +8% YoY growth in 1H2024. 
• Astra remains a key proxy for the overall Indonesian economy, with the diversity of its earnings exposure underpinning its resilience. Valuations are attractive, supported by a 9% FY2024E dividend yield. 

• For first time in 30 years, the fund is back, matching the demand of companies that want to reduce cross-holdings immediately and companies that want more time to sell cross-holdings.
• If the voting rights of cross-shareholdings contributed to the fund are retained, corporate governance will remain an issue until the fund’s investment is terminated.
• In reviewing recently filed annual securities reports, we often see cases where cross-held shares in more closely related companies are contributed to retirement benefit trusts instead of being sold.

• Last El Niño was one of the strongest on record, and typically are followed by La Niña, but this transition has yet to occur. 
• Latest ONI Reading and trend shows possibility of La Niña developing in August-October, could coincide with winter. 
• Historically, adverse weather changes and high hurricane incidence are likely to spoil bearish bets against corn and lead to sustained price recovery.

• Sales increased to JPY23.6bn (+3.7% YoY), operating profit reached JPY348mn, recurring profit JPY309mn, and net loss JPY267mn.
• Biofuels segment sales dropped to JPY306mn (-66.0% YoY), with a segment loss of JPY251mn, reflecting the pilot plant’s closure.
• Revised FY12/24 forecast: sales JPY48.0bn (+3.3% YoY), adjusted EBITDA JPY3.8bn (-71.0% YoY), sales forecast lowered by JPY2.0bn.

• Sprouts Farmers Market’s second quarter 2024 results demonstrate both growth and resilience amidst varying market conditions.
• The company reported a significant increase in sales—up 12% year-over-year to $1.9 billion, propelled by a robust 6.7% growth in comparable store sales.
• Key drivers of this growth include increased e-commerce sales, which surged by 30%, and now constitute 14% of total sales, and the company’s strategic expansion through new stores.

• BorgWarner, a leading automotive supplier, presented its 2024 second-quarter earnings results and shared updates on operational strategies and future plans.
• During the earnings call, they discussed financial performance, business outlook, significant product awards, and strategic restructuring.
• For the second quarter of 2024, BorgWarner reported sales of approximately $3.6 billion, which was flat compared to the previous year but outperformed the industry’s modest production decline.

• Ola Electric managed to raise around US$734m in its India IPO.
• Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

• The Tata Motors Ltd (TTMT IN) / Tata Motors DVR (TTMT/A IN) scheme of arrangement has received shareholder approval and regulatory approvals and should be implemented in the short-term.
• There will be small buying from global passive trackers while there will be much bigger buying from NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers.
• In total, we estimate passive trackers will need to buy 25.2m shares (US$308m; 1.9x ADV) of Tata Motors Ltd (TTMT IN) with buying coming in at different times. 

• WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise between US$200 to US$300 million through a Nasdaq IPO.    
• WeRide is the most commercially successful L4 autonomous driving company globally, measured by commercialization revenue in 2021, 2022 and 2023.
• The bull case rests on a large TAM, strong product capabilities, near-term mass commercialization, articulation of a path to profitability, improving earnings quality and presence of blue-chip investors. 

• ADEA signed several renewals in the second quarter extending out terms with current licensees and showing to investors that there is value from the portfolio of more than 11,500 patents. 
• The deals ADEA signed in the quarter were not the headline grabbing nature, unlike those in prior quarters and those we expect the Company to sign in coming quarters. 
• ADEA generating annual free cash flow of approximately $150 million should become a bigger factor to valuing the equity as the debt balance becomes visually smaller to investors.

• PAR had previously issued its quarterly sales update making the second quarter results more of an update on how the business is shaping out for the remainder of the year. 
• IPAR used the Q2 earnings call to disclose its intention to enter the luxury fragrance market with its own brand in 2025. Owning a brand is not new for IPAR.
• The consumer continuing to purchase fragrances undisturbed should create the opportunity to grow sales in the second half of the year ahead of new launches scheduled for 2025.

• FY03/22 revenue decreased by JPY3.2bn, cost of revenue by JPY1.3bn, and SG&A expenses by JPY1.9bn due to new accounting standards.
• Q1 FY03/25 consolidated revenue grew 10.4% YoY, driven by increased customer count and optimized pricing, despite high raw material prices.
• The company had 308 stores at end-Q1 FY03/25, launched new brands, and expanded internationally with a store in Bangkok.

• Mondelez International delivered a solid performance in the second quarter of 2024, characterized by a fine balance between strategic pricing adjustments and robust underlying consumer demand, particularly in its key chocolate and biscuit segments.
• The financial highlights include a 2.5% growth in organic net revenue and a notable 11.3% adjusted gross profit dollar growth.
• This performance underpins the company’s ability to manage costs effectively and leverage pricing strategies to maintain profitability.

• We are reiterating our Buy rating and $25 price target for AKA and raising our 2024 and 2025 projections after the company registered impressive 2Q2H top line, Adjusted EBITDA and EPS upside, raised 2024 guidance and increased the store opening roster for Princess Polly in 2024 to five, adding new locations in Irvine and Santa Clara.
• a.k.a. Brands continues to leverage newness, fashion excitement and omnichannel expansion for their brands to capture stronger domestic market results.
• We believe, with increased 2024 Princess Polly store openings, a focus on increasing margins in Australia, and new (and deepening) digital marketplace relationships, our projections, even after material raises for 2024 and 2025, remain conservative and we reiterate our Buy rating and $25 price target for AKA.

• Sales increased to JPY40.4bn (+12.3% YoY), with operating profit at JPY4.9bn (+25.6% YoY) and recurring profit at JPY5.0bn (+24.1% YoY).
• In Japan, comparable store sales grew 4.8% YoY, with notable increases in bowling (10.3%), karaoke (10.1%), and SPO-CHA (8.9%).
• In the US, sales were JPY16.8bn (+24.7% YoY), with a segment profit of JPY2.0bn (+18.6% YoY), and amusement sales up 1.3% YoY.

• Examining Starbucks Corporation’s third quarter fiscal year 2024 earnings, a balanced perspective highlights both strengths and areas for improvement.
• The global coffee giant reported a mild revenue increase to $9.1 billion, marking a 1% year-over-year growth and a 6% sequential rise from the second quarter.
• However, global comparable store sales declined by 3%, influenced by a notable 14% decrease in China, despite a relatively steady performance in Japan and modest declines in North America.

• In its last update, Alibaba Group announced that the company was preparing for its primary listing in Hong Kong and the process was expected to complete by the end August.
• The Board meets on 14 August to approve results for the three months ending June. Could there be an announcement on the dual primary listing too?
• Mainland Chinese own between 3.5%-15.5% of companies that converted from Secondary to Dual-Primary in the last few years. Similar buying in Alibaba could take the stock higher from here. 

• Janaghan Jeyakumar, CFA who does the predictions for this index got 10/10 of his high conviction names, 8/10 of his medium conviction, and 50% of low conviction ADDs.
• This year, there are fewer caps but some big ones. Nearly ¥500bn of capping flow to sell. 
• I see just over $6.3bn in buying and selling to be done. A half dozen names with both high ADV impact to buy and decent size.

• Low Volatility and High Dividend yield stocks in Hong Kong outperformed the region during recent global market sell off.
• MGM China Holdings (2282 HK) is outperforming its peers with revenue now exceeding pre-COVID levels.
• Weibo (9898 HK) maintains a high cash flow and dividend yield in China’s tech sector.  Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK) benefits from China’s new large-scale maintenance cycle.

• The China equity markets have continued to trade lower with the CSI 300 Index outperforming other mainland indices as the National Team continues to pump money into ETFs tracking the index.
• We currently estimate selling of around US$1.39bn across 74 stocks listed on the mainland and in Hong Kong. There could be fewer deletions depending on the review date chosen.
• The potential deletes have dropped a lot since the start of the calendar year with big underperformance versus the HSCEI Index, CSI 300 Index and CSI Smallcap 500 Index.

• BrainBees Solutions (0172540D IN) that operates FirstCry, India’s leading Online Mom and Child vertical, has launched a USD500 mn IPO that closes on August 8th.
• The IPO pricing suggest a post-money equity valuation of around USD 2.8 billion and an EV/Revenue multiple in the range of 3.5X-3.7X.
• Brainbees operates in an attractive online vertical noted for its high frequency purchases and long term customer relationship. However it has not built significant competitive advantages versus leading horizontal platforms.

• MSC indices are due for rebalancing in the closing auction on Friday the 30th of August. Constituent changes will be announced after the close next week Monday.
• In this note we flag Mr Price Group Ltd (MRP SJ) & African Rainbow Minerals (ARI SJ) as possible additions to the MSC SA index.
• Since our last discount update on the 22nd of July, Prosus has underperformed Naspers. The discount has widened by 1.7 percentage points to 39.6%.

• Yum China Holdings (9987 HK) reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.
• Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.
• Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China’s revenue and profit growth potential.

• Wheat, Corn and Soy gained on Monday even as US indices and commodities tumbled over recession woes. 
• Weaker dollar supports stronger US exports of agri-commodities. Grains and oilseeds rise as dollar weakens.
• Technical indicators and fundamental outlook remains bearish for agri-commoties. IV remains subdued at multi-month lows. 

• We highlight several red flags  with regard to BrainBees Solutions (0172540D IN) operations, business strategy and governance for investors’ careful consideration.
• At the announced IPO price band of Rs440 – Rs465, Brainbees implied EV/Revenues (FY24) works out to 3.5X – 3.7X – a significant discount to India listed online retail verticals.
• Despite seemingly inexpensive relative valuations, we do not see a compelling reason to invest in the company, specially given the several red flags discussed below.

• GMV increased 21.4% YoY to JPY85.7bn, while revenue decreased 7.7% YoY to JPY20.4bn, and operating profit fell 46.6% YoY to JPY1.4bn.
• In Q3 FY09/24, GMV grew 21.4% YoY, with Global Commerce revenue up 21.3% YoY and Entertainment revenue up 6.8% YoY.
• The company recorded an extraordinary gain of JPY1.0bn from the Value Cycle segment share transfer, impacting FY09/24 results.

• In May when shares were trading near ¥3,500-3,600, Toyota announced a ¥1trln buyback. When shares fell, they announced a Tender Offer Buyback at a large discount (¥2,781/share). 
• Subsequently, the shares fell very sharply on Thursday 1 August, then again Friday and yesterday. That put shares WELL below the Tender Offer Price. That creates possible opportunity. 
• This insight discusses modalities (talk to your advisor for specific advice/info) who might do what and why. It sets parameters. But I think Toyota is cheap here.

• Kirin Holdings (2503 JP) has increased the Fancl Corp (4921 JP) tender offer price by 4.1% to JPY2,800 and extended the offer period to 28 August. The price is final.
• Kirin tried to get the required acceptances by refusing to bump and extending the offer period. However, these tactics failed, as the shares continued to trade above terms.
• The Board twice asked Kirin to raise its offer higher than JPY2,800, but eventually recommended the revised offer. Nevertheless, the bump should be sufficient for Kirin to succeed. 

• July saw only 114,000 new jobs versus a forecast of 180,000. Unemployment rose to 4.3%, the highest since October 2021. 
• The S&P 500 fell 1.8% and dropped below its 50-day moving average, tech and semiconductor sectors led significant market declines. 
• Implied volatility surged as the S&P 500 saw high put options activity. Analysts expect a potential market rebound later in August.

• Sapporo Holdings (2501 JP)‘s strategic position in the domestic market, coupled with untapped potential in international markets, makes the company an interesting prospect for the long-term.
• 3D Investment Partners’ July 2024 letter praising Sapporo’s intention to divest its real estate business has reignited investor interest in Sapporo as a play focusing on Japan’s investor activism.
• Therefore, Sapporo seems interesting both in the short term and long term, as we think shares could break out to a new high with trading volumes showing signs of improvement.

• Eternal Beauty Holdings Limited (EBHL12 HK) is looking to raise about US$200m in its upcoming Hong Kong IPO. The deal will be run by BNP Paribas, Citic, CMBI and DBS.
• Eternal Beauty is the largest brand management company of perfumes in the combined markets of Mainland China, Hong Kong and Macau, in terms of retail sales in 2023.
• The company has a diverse portfolio of iconic brands of not only perfumes, but also color cosmetics, skincare products, personal care products, eyewear and home fragrances under management.

• The cost is somewhat reduced for the user because of the higher weighting of more liquid stocks. Meanwhile, selling pressure is inevitable for less liquid companies whose weights are reduced.
• Even if the number of stocks decreases, 1,200 stocks isn’t small number. Also, even though the market capitalization of the components has increased, approximately 73 billion yen isn’t sufficiently liquid.
• With calls for increased engagement, the number of issues remains too large for domestic asset managers, where passive funds account for a high percentage of AUM.

• We maintain our Outperform recommendation on MercadoLibre with a preference for MELI 2.375% 2026 bonds. We remain optimistic about the company’s overall financial and business risks.
• Revenues increased by 41.5% (FX-neutral: 113%) to $5.1 billion in 2Q24. However, the EBIT margin contracted significantly by 440 bps to 14.3% from 18.7%.
• MELI ended the quarter with $976mn in net debt, down from $1.4 bn sequentially. Gross leverage remained relatively stable at 1.8x, and net leverage improved by 0.2x sequentially to 0.3x.  

• China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier note, we talked about the company’s past performance. In this note, we will undertake a peer comparison.

• We are slowly building out a high-conviction coverage of ideas for the mid and small-caps in the Philippines. 
• We set criteria for high ROCE, reasonable growth (10-15% YoY), strong balance sheets, and reasonable capital allocation (dividend yields), all ingredients for being multi-baggers. 
• We like Ginebra San Miguel (GSMI PM), The Keepers Holdings (KEEPR PM), DigiPlus Interactive (PLUS PM). We will also be exploring Centro Escolar University (CEU PM) 

• In FY03/24, revenue was JPY60.2bn (+10.5% YoY), operating profit was JPY2.2bn (operating loss of JPY607mn in FY03/23), recurring profit was JPY2.2bn (recurring loss of JPY669mn), and net income attributable to owners of the parent was JPY1.8bn (net loss of JPY1.5bn).
• Revenue and profits grew YoY.
• Contributing factors included the normalization of social and economic activities as the pandemic’s impact tapered off, the increase in customer count thanks to various marketing efforts, and various measures aimed at profitability improvement.

• Today, Itochu Corp (8001 JP) announced it would launch a Tender Offer when approvals were received, to buy out minorities in Descente Ltd (8114 JP) at ¥4,350/share.
• Itochu was buying at that price or higher, in the market, in October 2023. Earnings and book are up since then. Outlook for the Descente China Holdings affiliate? Great. 
• The valuation transparency is disappointing. Activists would have 3mos or so to push for more. But with friendly holders, they get very close to the minimum anyway.

• Descente Ltd (8114 JP) has recommended a pre-conditional tender offer from Itochu Corp (8001 JP) at JPY4,350, 16.6% premium to the undisturbed price. 
• The pre-condition is approval under the competition laws of Japan and China. The offer is anticipated to commence in early November. In January 2019, Itochu completed a hostile partial offer.
• While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the price is light. 

• Adani Enterprises (ADE IN) demerged its stake in its Food FMCG business of Adani Wilmar (AWLTD IN) to its shareholder.
• The demerger aims to comply with SEBI’s minimum public shareholding requirement, reducing promoter stake and enhancing public stake.
• This strategic move positions Adani Wilmar for focused growth, unlocking value for shareholders and reducing promoter selling pressure.

• In July, BYD’s deliveries increased by 31% YoY and Tesla’s deliveries in mainland China increased by 47% YoY.
• Alibaba Taobao will soften its “refund only” rule, but Alibaba Hellobike raised its usage price.
• New Oriental revenue increased by 32% YoY and TAL revenue increased by 50% YoY in the May quarter.

• Ola Electric (1700674D IN) plans to raise INR55bn through fresh issue of shares while existing shareholders will offer 84.9m shares at an indicative IPO price band of INR72-76 per share.
• We expect the company’s revenues to continue to expand and grow at much higher rates during the next few years compared to competitors in the Indian two-wheeler market.
• Our valuation analysis suggests that Ola Electric’s IPO is attractively priced compared to peers and we would suggest subscribing for the company’s IPO.

• China ETF flows were steady for the week, however Southbound Connect flows were negative for the first time since February.
• Prada S.P.A. (1913 HK)  shares standout in the luxury brand sector as Miu Miu sales surged.  WuXi AppTec (2359 HK) slightly beat estimates but still have BioSecure Act overhang.
• Property development firms Hang Lung Properties (101 HK) and Wharf Holdings (4 HK) were hurt by poor results, while New Oriental Education & Techn (9901 HK) saw earnings miss estimates.

• In an attempt to cover more companies, we shift gears from individual companies to sectoral analysis, focusing on alcoholic beverages in this insight.
• Companies in focus are United Spirits (UNSP IN), Radico Khaitan (RDCK IN) , Sula Vineyards (SULA IN) & United Breweries (UBBL IN). 
• UNSP remains the best among the pack in terms of earnings quality, and SULA occupies the other extreme. RDCK is chasing growth, and UBBL is facing challenges. 

• MDL Wholesale (WMHGCZ CH) is looking to raise about US$100m in its upcoming Hong Kong IPO. The deal will be run by UBS, CMS, CMBI, Deutsche Bank, BOCI, and China Galaxy.
• MDL Wholesale is a leading food and FMCG distribution solution provider in China, providing a broad range of customers and retailers with high-quality merchandise and convenient solutions
• Its solutions mainly include (i) food service and distribution, (ii) welfare and gifting, (iii) retailer distribution (comprising product sales to retailers and supply chain services) and (iv) merchandise wholesale. 

• Multi Bintang Indonesia (MLBI IJ) reported Q2 2024 revenues/profits of -4.4%/-5.4% YoY. Q2 FY24 was a significant improvement over Q1 FY24, when revenues were down 10.7% YoY.
• The company is controlling costs by keeping SG&A down by 100 bps to maintain EBITDA margins over 50%. Net cash is now at 8% of the market capitalization.
• We believe that the company will be able to pay 500/Rph of dividends in FY24, implying an 8.3% dividend yield. Trading at 12x PE, we find this idea compelling.

• Kalyan Jewellers (KALYANKJ IN) reported strong 1Q2025 sales and earnings growth, driven by robust same-store sales growth (SSSG) and new store additions.
• Titan Co Ltd (TTAN IN), the incumbent market leader, had a lacklustre performance for the quarter, highlighting Kalyan’s rapid growth.
• Expect Kalyan Jewellers (KALYANKJ IN) to outperform Titan Co Ltd (TTAN IN) , narrowing the steep relative valuation discount as it ramps up growth, improves performance metrics.

• Sumitomo Forestry (1911 JP) is a potential inclusion to a global index at the August rebalance. If added, passive trackers will need to buy over 6x ADV.
• Sumitomo Forestry (1911 JP) has traded lower on risk-off sentiment and further downside provides an entry point that could pay off if the stock is added to the index.
• Sumitomo Forestry (1911 JP) has outperformed its peers but trades at similar valuations to some stocks. A long/short trade could protect the downside.

• In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears. 
• We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
• The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026. 

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, the coming week will see see the listing of Akums Drugs while books will  be open for Ola Electric, BrainBees Solutions and Black Sesame Technologies.
• On the placement front, there were two large deals in Fortescue Metals (FMG AU) and Adani Transmission (ADANIT IN). 

• BrainBees Solutions (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, will launch an IPO to raise up to US$500 million.
• We previously discussed the IPO in Brainbees Solutions (FirstCry) IPO: The Bull Case, Brainbees Solutions (FirstCry) IPO: The Bear Case and Brainbees Solutions (FirstCry) IPO: The Investment Case.
• Our valuation analysis suggests that the IPO price range of Rs440-465 per share is attractive. Therefore, we would participate in the IPO.

• ADM’s Q2 results underperformed analyst expectations with both EPS and revenue missing analyst estimates.
• Operating profit declined for Ag Services & Oilseeds (ASO) and Nutrition, while Carbohydrate Solutions saw an uptick, driven by margin and volume expansion in Starches and Sweeteners.
• ADM expects weak Q3 for AS&O and Carbohydrate Solutions, with improvements expected in H2 2024. Nutrition is expected to perform strongly due to cost efficiency and volume expansion.

• Strong recovery in 1H2024 profit growth YoY was driven by margin improvements in the food and convenience segments.
• Double-Digit sales growth in the Ready-to-Eat (RTE) foods segment boosted margins, offsetting reduced cigarette volumes from last year’s tax increases in Hong Kong.
• While weak consumer confidence in North Asia impacted sales, good growth in the expanding Southeast Asia business provided a positive offset.

• Sustainable management should be considered in the sustainable expansion of corporate value, including shareholders’ interest, and non-financial information should provide direction based on information that isn’t feasible, including financial information.
• Starting with appointing people who are diverse in nationality and gender to the board of directors will lead to discussing management issues with diverse opinions.
• Significant differences exist between those companies that have improved their efforts to improve board practices and capital profitability and achieved results, and those that have only formally put board practices.

• After a warm-up week of swimming, rowing and archery, the Olympics now kicks into top gear with the athletics.
• Among the hottest of track and field gold medal prospects is Armand ‘Mondo’ Duplantis of Sweden.
• On Monday evening, the 24-year-old will contest the men’s pole vault final as the defending champion from Tokyo. 

• Ferrari N.V. (RACE US) reported another strong Q2 2024, with revenues up 16% and profits up 25% YoY. EBITDA margins expanded to 39% due to pricing/personalization(20%). 
• The company raised its guidance on revenue/EPS by 2.3%/5%, flagging Q3 would be weak as it transitions to its new ERP, but we believe the company is being conservative. 
• Trading at 48.7x FY24e, the stock seems a tad expensive, but it’s up 28% YTD because of upgrades, which we believe will continue. 

• North Dakota accounts for 51% of total US spring wheat production. The region’s projected 2024 crop yield 15% higher YoY at an average of 54.5 bushels per acre.
• Large old-crop corn inventories record yield of 183-185 bpa collectively dragging corn prices down.
• Wheat vols rebounded last week after falling the prior week. Prices face uncertainty as strong exports, lower production in EU & China provides support against massive US harvest.