Consumer

• Since the announcement of the US$840 million secondary offering, Sanrio (8136 JP)’s shares have been down 3.9% from the undisturbed price of JPY5,160 per share (26 November).
• It is instructive to look at recent large Japanese placements to understand the potential trading pattern. So far, Sanrio’s shares have followed the pattern of previous large placements.
• The offering will likely be priced on 10 December. The average large Japanese placement tends to generate positive returns.

• Mainland share market volumes continue to be better than HK and SOUTHBOUND volumes, but SB volumes rebounded, tech saw limited net buying, BABA was bought but other major tech sold.
• The first leg of China’s retaliatory acts against US trade measures appeared with export bans on gallium, germanium, antimony, graphite products, etc. These will not be lifted soon.
• China is also retaliating against the Phils, Vietnam, Taiwan and changing tack in Europe. The next couple of years threatens to be “interesting times.

• Lancaster Colony Corporation reported its fiscal year 2025 first-quarter results, showing modest growth with some challenges.
• Consolidated net sales increased by 1.1% to a record $467 million, while gross profit rose by 1.9% to $111 million.
• A key highlight was the record gross profit, marking positive operational efficiency, although the operating income decreased slightly due to higher selling, general, and administrative (SG&A) expenses.

• With the TSE shortly declaring the conclusion of discussions regarding parent-subsidiary listings, more parent-subsidiary listings (including listed affiliates) are likely to continue to appear going forward.
• “TSE’s Request” states a restructuring of business portfolio, but leaves out the issue of restructuring the parent company’s business portfolio and shifting to a management approach that increases corporate value.
• The parent-subsidiary listings (including listed affiliates) that continue to be created will continue to provide investment opportunities for investors, including activist investors.

• After Lifestyle China (2136 HK) was suspended pursuant to then Takeovers Code, the takeaway was that Thomas Lau with 74.91% of shares out would table a Scheme.
• Which is exactly what unfolded. What was not expected was a stingy 21.7% premium to last close. 
• The Offer Price has not been declared final. Lifestyle China is trading at 0.11x P/B. This Offer deserves a bump. Otherwise minorities should vote this down.

• Lifestyle China (2136 HK) disclosed a Cayman scheme privatisation offer from Mr Thomas Lau at HK$0.913 per share, a 21.7% premium to the last close price of HK$0.75. 
• The offer is unattractive compared to precedent transactions, peer multiples, and historical trading ranges. It has not been declared final. 
• While no shareholder holds a blocking stake, the high AGM minority participation rates and emerging retail opposition suggest a high chance of a deal break. Therefore, a bump is probable.

• While the overall market continues to hit All-time High almost every other day, Lulu has been battling the skeptics for much of this year.
• There is still a long way to go, but with the stock now up almost 50% over the last three months, Mr. Market has likely started acknowledging that the bear narratives perhaps went a bit too far.
• Glancing through the numbers for 3Q’24 may seem eerily similar to 2Q’24, but management’s tone was much more upbeat in tonight.

• Today, Rakuten (4755 JP) announced a new shareholder benefit (株主優待) program today, to reward shareholders as of end-December 2024. The stated goal? To “thank shareholders”… 
• …And provide more people with the opportunity to try out the benefits of Rakuten Mobile, with 1yr free of a 30GB/mo mobile plan. There are conditions, but it’s juicy.
• Last year’s 3mo plan was given with one day of notice. This year’s larger full-year govt gets 3+wks. They are juicing the sub numbers for 2025.

• Reportedly, Ito Junro’s MBO for Seven & I (3382 JP) includes a US assets IPO to help pay down MBO debt to Japanese banks.  Possible strategic mistake by Ito-san here.
• Starwood/Warburg Pincus’ firm Offer for ESR Group (1821 HK) secures support from 30.79% of the register.
• We may be wrong on Sanrio (8136 JP) by a big factor but the multiple and the concentration risk of momentum factor means you are in an illiquid stock.

• Five Below recently announced its third quarter results for fiscal year 2024, reflecting a blend of positive strides and ongoing challenges.
• The company reported a 15% increase in sales, reaching $844 million, slightly surpassing its guidance with a comparable sales growth of 0.6%.
• Adjusted earnings per share stood at $0.42, an improvement over the previous year.

• Hormel Foods Corporation recently held its fourth quarter earnings call, delivering a mix of positive developments and some areas of concern.
• The company’s financial performance in fiscal 2024 reflected its strategic shift and operational initiatives, which helped manage a challenging macroeconomic environment and exhibited the resilience of its portfolio and team.
• From a positive perspective, Hormel Foods reported a year of solid execution of its strategic initiatives, which included introducing innovative products across its portfolio, expanding its market presence, and reinvesting in its well-established brands like Hormel Black Label, Jennie-O, SPAM, and Applegate.

• Investors reviewing PVH Corp’s recent performance might note several key aspects from the second quarter of 2024.
• On the positive side, PVH has managed to align its revenue with guidance while exceeding profitability and earnings per share expectations.
• A notable achievement was expanding EBIT margins, partly due to improving gross margins by 250 basis points and enhancing inventory productivity, with a 12% year-over-year reduction in inventory.

• With consumption of decaffeinated coffee rising at a faster pace than that of the overall coffee beverage category, we expect substantial growth opportunities for Swiss Water.
• In our view, SWP’s natural decaffeination process is a key factor that helps drive demand for its coffee, particularly given the positive tailwind from coffee consumption trends.
• We note, however, that rising coffee futures prices potentially signal that coffee prices will rise.

• Bausch + Lomb’s third-quarter 2024 financial results reflect a period of significant growth and strategic execution across its key business segments.
• The company reported a total revenue of $1.196 billion, marking a 19% constant currency growth, with a 10% organic increase.
• This performance is attributed to the company’s focus on operational excellence, sales, and innovation, supported by the rollout of new products and enhancement of existing ones.

• Vizio is at risk of a potential merger termination with Walmart due to anti-trust concerns
• Stock trades at a small discount to the deal price, indicating concerns about deal approval
• Potential upside for shorting Vizio stock is 30%, with downside limited to 2% equivalent to deal price.

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.

• BYD’ deliveries continued to grow strongly by 68% in November.
• BYD required its suppliers to reduce prices by 10% for 2025.
• We believe BYD will continue the price war in 2025.

• Home improvements player PT Daya Intiguna Yasa (Mr DIY Indonesia) completed the book building for its IPO this week for its Jakarta listing where it seeks to raise US$296m. 
• Mr DIY  has seen a rapid rollout of outlets with over 900 stores across Indonesia and SSSG over the last two years of 30%-40% and the company is already profitable. 
• Mr DIY  has a 25% market share of the home improvements segment focusing on the mass market with affordable products. Prefer Aspirasi Hidup Indonesia as a proxy for this space.

• This has been a difficult year for the global IPO market including in Korea. In this insight, we review our IPO research in 2024.
• Using the criteria that the Aequitas Research uses (see below), the accuracy rate of our calls on the IPOs this year was 86%. 
• There some sizeable IPOs that are expected to be completed in Korea in 2025 including LG CNS, Sono International, K Bank, and Bithumb.

• On Wednesday, after the close, the JSE released index changes scheduled for the December rebalance (Friday, 20 Dec).
• OUT will enter the Top 40, with NPH falling out. AMS will enter the RESI 10 and EXX will fall out.
• Naspers and Prosus released 1H results on Monday. The discounts have narrowed through the last 3 trading days, Naspers and Prosus are up 6% and 3.1%, respectively.

• Tesla has shortened its supplier payment cycle to about 90 days in 2024, continuing to outpace rivals in financial efficiency and supplier relations.
• Tesla’s Shanghai factory, where 95% of parts are sourced locally, reflects the company’s deep integration with China’s supply chain.
• The move highlights Tesla’s unique approach to balancing cost-cutting and supplier support in an industry under strain from intense competition, price wars and shifting dynamics between automakers and parts providers.

• We are initiating coverage of Herbalife Ltd. The company has differentiated itself in its ability to successfully change with the times and capitalize on the shifting market dynamics in a period when many have not.
• Herbalife’s independent distributors’ daily methods of operations (DMOs) have evolved, including the creation of a footprint of Nutrition Clubs that offer daily consumption options to customers, which gives the company’s products a sizable worldwide brick-and-mortar infrastructure in towns and neighborhoods where consumers live and work.

• Following the 2016 US Federal Trade Commission (FTC) consent order, Herbalife changed its compensation plan in the US so that distributor commissions were predominantly based on the demonstration of a sale to an end consumer, thereby eliminating the pyramiding risks associated with almost all multi-level marketing (MLM) business models.

• We are reiterating our Buy rating, raising our price target to $58 (from $41) and increasing our FY25 projections after Build-a-Bear reported a highly impressive 3Q, remained conservative in their guidance, continued to aggressively return capital to shareholders and raised expectations for franchised and commercial store unit expansion.
• We believe Build-A-Bear management continues to leverage their experiential offerings to drive global growth and position the company to capture even more upside via new products and categories.
• Given our further confidence in the potential for margin and revenue expansion, we believe BBW is more than worthy of a premium multiple, and are raising our price target to $58 (from $41), or 8.6X our new FY25 EBITDA projection.

• LifeVantage’s new MindBody GLP-1 System for weight loss is built upon the science that the company is predicated on, nutrigenomics and activating the body’s natural processes.
• The products, which have been in development for well over a year, activate the L-cells in the body that are responsible for the production of the GLP-1 hormone.
• In July, LifeVantage received results from in vitro testing it had done that were encouraging. 

• On 4 December, Bloomberg reported that the Seven & I Holdings (3382 JP) MBO is set to include plans for a US Assets IPO to raise more than JPY1 trillion. 
• The MBO faces two immediate challenges: securing financing and the Board’s approval. The US Assets IPO would help alleviate both these issues.
• The potential market cap of US Assets is around US$24 billion, or 53% of 7&i’s market cap. The US Assets IPO should also encourage Couche-Tard to persist with its offer. 

• Following the introduction of 45 stocks in the F&O segment from 29 November, there will be big capping changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in December.
• We estimate one-way turnover of 21.9% leading to a one-way trade of INR 75bn (US$881m). There are 25 stocks with over 1x ADV to trade.
• There could be changes to the index methodology announced in the next few months and that could result in the deletion of a couple of constituents in March.

• NIO (NIO US) is a Chinese premium electric vehicle manufacturer listed across three exchanges. 
• NIO will likely struggle to reignite its growth with its three-brand strategy in a fiercely competitive market. Its promise to reach breakeven in 2026 is likely to be broken.  
• NIO’s valuation is stretched as it trades at a material premium to median Chinese EV peers’ EV/Sales and growth-adjusted EV/Sales multiples. 

• Janaghan Jeyakumar, CFA had predicted a series of changes in UK100 (a.k.a. F100) and UK250 (aka F250) and all predicted changes came to pass. F250 saw one extra change.
• There will be one more ad hoc announcement today. We think the replacement for Tritax Eurobox (EBOX LN) will be Mobico Group (MCG LN). 
• There were two ADDs in F250 which are VERY much worth looking at. Janaghan had addressed these in prior weeks as well. Those two names really stand out.

• Shiseido’s stock price has dropped 70% from its post-pandemic peak, presenting a buying opportunity amid ongoing industry challenges.
• The company’s two-year action plan aims to restore profitability through aggressive cost-cutting and restructuring measures.
• Successful execution could drive significant upside, while failure may attract acquisition interest due to Shiseido’s strong Asia-Pacific brand presence.

• NextAge’s stock price dropped nearly 8% on December 5, when the Topix was up, with no apparent news on either the company’s website or any local media.
• The next day, the Nikkei reported that the Financial Services Agency had raided the company’s office after confirming that insurance schemes had been deployed to defraud customers. 
• This sounds like an old story being leaked by rivals, so we called the company and confirmed: This is most likely old news. 

• Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
• Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
• In this note, we talk about the positive aspects of the deal.

• Vishal Mega Mart is planning to raise around US$950m through its upcoming IPO in India.
• Vishal Mega Mart Limited (VMM), is a one-stop retail destination. As per the company it targets middle and lower-middle income consumers across India
• In this note, we talk about the not-so-good aspects of the deal.

• Workman was a purveyor of durable gear for workers in jobs like construction but then had the brilliant idea to transpose that expertise to create activewear like Decathlon.
• This was working well but then it decided to take on the likes of Fast Retailing and Shimamura by moving into casual clothing.
• Since then, same-store sales growth has been negative in many months and profits have fallen. The outlook is increasingly poor.

• Sales increased 3.6% YoY to JPY26.1bn, while operating profit decreased 25.3% YoY to JPY1.2bn.
• Japan segment sales rose 4.2% YoY to JPY23.2bn, driven by inbound demand and higher unit prices.
• SG&A expenses grew 4.1% YoY to JPY16.5bn, with a 0.4pp increase in the SG&A ratio to 63.3%.

• A Bloomberg article late in the trading session today said the Seven & I Holdings (3382 JP) MBO proposal by Ito family scion Ito Junro includes a US assets IPO.
• The idea? IPO proceeds would help pay down MBO debt to Japanese banks. Seven & i would retain a stake. This is not dissimilar to Berkshire Hathaway buying a stake.
• But more directly, this leads us back to 7&I (3382) – What If…  A Modest Proposal. Possible strategic mistake by Ito-san here. ACT should act on this.

• Nissan Tokyo Sales (8291 JP) is a network of 120 dealerships with revenue from sales and repairs of about US$1bn a year. Nissan owns 34%. P&C insurers own 21%.
• The P&C insurers will sell their 21%, to an offering and a ToSTNeT-3 buyback. Expect the net offering to be 10.5%, which is still 60+ days of ADV.
• But it has net cash, securities, more securities, and landholdings. It trades at <0.5x book and a very large part of book is finance-able. This looks like an MBO candidate.

• NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
• In this insight, we take a look at the names leading the race to become ADDs/DELs for these indices in the March 2025 index rebal event.
• Zomato (ZOMATO IN) and Jio Financial Services (JIOFIN IN) could see index inflows during the December 2024 rebalance and March 2025 rebalance.

• Freetech Intelligent Systems (1901036D CH)  is planning to raise about US$200m through its upcoming Hong Kong IPO. The lead bookrunners for the deal are CITIC Securities, CICC, Huatai International, HSBC.
• Freetech Intelligent Technology Ltd (FITL) is a provider of intelligent driving solutions, focusing on advanced driver assistance systems (ADAS) and autonomous driving systems (ADS) technologies.
• It ranks third among domestic suppliers of Level 2 and Level 2+/2++ intelligent driving solutions in China, with a 2023 market share of 14.6%, according to CIC.

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Studio City, Yuexiu Property, Rakuten Group
• In the US, the October JOLTS job openings came in above estimates at 7.74 mn (7.52 mn e / 7.37 mn p).
• Long-end USTs fell yesterday, while the front end outperformed on expectations that a December rate cut remains on the table.

• Headline profit numbers for FY24 indicate a 38-40% decline from 110 mn HKD in FY23 to 65-69 mn HKD, including non-cash impairment/property revaluation losses amounting to 44.2 mn HKD. 
• The implication is that core profits would have been 109-113 mn HKD for FY24; a slight earnings growth at the upper end is admirable in a weak HK demand environment.
• Based on core earnings, the stock trades at 6x PE, >67% of the market capitalization in cash, and a 10% dividend yield. The company will release earnings on December 16th.

• Behind MAO GEPING’s high profitability, there are hidden risks. One is the potential quality issues from ODM/OEM model, and the other is excessive reliance on Mr. Mao Geping’s personal IP.
• Without strong R&D capabilities, high-end positioning isn’t firm.With increasing downward pressure in the industry, MAO GEPING would become passive in fierce competition and the industry trend of customers pursuing cost-effectiveness.
• MAO GEPING’s valuation could be lower than Giant Biogene due to concerns on future sustainable growth prospects and profitability, but higher than industry average due to the strong short-term financial performance.  

• We are reiterating our Buy rating, $6 price target and projections for Vera Bradley with the company announcing 3QFY25 (October) results before the open on Wednesday.
• We believe 3Q, the first full quarter of operations after the relaunch of the Vera Bradley brand in both the main line and outlet stores, remained a key learning experience, as management, after dramatically shifting the entire main line store and materially changing the outlets, begins to calibrate feedback to maximize the shifts and begin to attract a wider customer base.
• While we remain cautious in our projections in the nearer term, we believe the shifts will help revive Vera Bradley and drive strong returns in the longer term.

• ADEA announced a licensing agreement with AMZN setting the path for greater free cash flow in 2025. ADEA has previously mentioned it was close to signing two major licensing agreements.   
• We assume ADEA’s full year guidance includes catch-up revenue associated with the license since AMZN was never a licensee before.   
• ADEA had already signed several video streaming licenses, but AMZN would serve as the largest to date. It gives the investment story a stronger foundation.

• Sanrio (8136 JP) announced a deal last week which I discussed in Sanrio (8136 JP) Large Secondary Offering – Don’t Say Hello Kitty! Too Soon.  Next day it fell sharply. 
• There was shorting involved, and since then the stock has rallied 18% to clear the undisturbed price which itself was an all-time high, up 5% in the previous two days.
• There is some LO buying, some HF covering, but a LOT of day-traders. In five days the stock has traded 903% of its Maximum Real World Float. That’s a lot.

• The December rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
• The round-trip trade across all stocks across the four indices is estimated at HK$26.14bn (US$3.4bn).
• Alibaba, Tencent, Midea Group, Kuaishou Technology, NIO, HSBC Holdings and New Oriental Education & Techn are the largest buys. Meituan, Xiaomi, JD.com, AIA Group and NetEase are the largest sells.

• Respectively in 2013 and 2016, Lifestyle International Holdings (1212 HK) spun-off and separately listed Lifestyle Properties Development (2183 HK) and PRC-department store play Lifestyle China (2136 HK).
• Lifestyle Props’ listing was cancelled in 2023; and Thomas Yau privatized Lifestyle International late-2023: see Lifestyle (1212 HK): Timing Is Everything As Shareholders Go To Vote on 21 Nov.
• Lifestyle China is now suspended pursuant to then Takeovers Code. Thomas Yau holds 74.9%. No prizes for guessing what comes next. 

• Lifestyle China (2136 HK) is on a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers. 
• Mr Thomas Lau (Chairman and CEO) is likely following up on the privatisation of Lifestyle International Holdings (1212 HK) with the privatisation of Lifestyle China.  
• We use three methods to triangulate the likely offer price, suggesting a range of HK$1.00-1.45 per share, with an average of HK$1.23 (a 63.3% premium to the last close).

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the December 2024 index rebal event.
• The final rankings will be decided based on the full market cap at the close of trading today (3rd December 2024).
• Based on the current numbers, we see three for the F100 index and three or more other changes for the F250 index in December 2024.

• Meituan reported C3Q24 revenue/non-IFRS operating profit 2%/12% above consensus, thanks to rising monetization and cost reduction. C4Q24 guidance, however, missed expectation due to low ASP mix and expansion;
• We see the following as positive catalysts: (1) consumption stimulus in 2025 that will likely include service coupons, (2) market share gains, (3) overseas expansion in Mid-East bearing quick fruits.
• We therefore opt to keep Meituan on our TOP BUY list and maintain TP at HK$165.

• Discounts to NAV of covered holdcos mainly widened during November. Discounts to NAV: C.F.Alba, 49.8% (vs. 48.7% as of 29 November); GBL, 40.6% (vs. 40.9%); Heineken Holding, 14.4% (vs. 14%); 
• Industrivärden C, 4.0% (vs. 2.4%); Investor B, 4.3% (vs. 2.8%); Porsche Automobile Holding, 29.8% (vs. 31.7%). Rio DLC spread tightened to 22.4% (vs. 22.5%).
• What seems interesting (unchanged views): Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

• Abercrombie & Fitch’s latest quarterly performance showed strong results, effectively capitalizing on consumer demand and strategic execution across multiple facets of their business.
• The company reported a record net sales figure of $1.2 billion for the third quarter, marking a 14% increase from the previous year, alongside a comparable sales rise of 16%.
• The operating income also witnessed a 30% growth year-over-year, driven by a 170 basis point improvement in operating margin to 14.8%.

• Urban Outfitters, Inc. reported a promising performance for Q3 of fiscal 2025, with total sales reaching a record $1.4 billion, a 6% rise compared to the previous year.
• This growth was primarily driven by strong performances from its Anthropologie and Free People brands, both of which posted mid-single-digit positive retail segment comps, which counterbalanced a high single-digit decline at Urban Outfitters.
• Nuuly, the company’s fashion rental business, also saw robust double-digit revenue growth, credited to a 51% rise in average active subscribers.

• Mao Geping Cosmetics is looking to raise up to US$270m in its upcoming Hong Kong IPO.
• Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• Starbucks’ CEO of China denied the rumor that Starbucks will sell its Chinese businesses.
• Chow Tai Fook closed 239 stores from March to September.
• SAIC and Volkswagen will extend their joint venture to 2040.

• PAGD’s Special Dividend announcement made investors “unhappy”. PAGD’s operation after IPO is a big failure, which is why there were large amounts of funds left that were not used.
• Being a “vassal” of Ping An Group won’t bring high valuation due to limited growth potential. There’s still room for stock price/valuation to decline. Investors need not rush to buy.
• The Special Dividend will be approved. Ping An’s idea is to increase shareholding ratio by distributing dividends, which can also lower PAGD’s stock price, providing opportunity for a low-price privatization.

• PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
• Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The entity is the Indonesian entity under the Mr DIY group’s list of subsidiaries.
• In this note, we will undertake a peer comparison and discuss our thoughts on valuation.

• The HK market is moving, and the share prices of high-yield companies are increasing. Despite the average YTD returns of 38%, stocks are trading at 5-15% dividend yields.
• We update investors with results from Nameson Holdings (1982 HK) H1 FY25: 16-17% Dividend Yield Intact and Pacific Textiles (1382 HK), which guided down earnings due to interruptions in Vietnam.
• We also flag Yue Yuen Industrial Holdings (551 HK) results, buybacks, and some updates from our conference call with Nameson Holdings (1982 HK) management. 

• We are reiterating our Buy rating, $20 price target and projections for Lands’ End with the company announcing 3QFY24 (October) results before the open on Thursday.
• We believe, with a continued emphasis on reducing discounting, rolling out new products and features to create compelling product (and category) stories and expansion on the licensing and digital marketplace arenas, Lands’ End has continued to shift the overall story to driving higher returns and creating the ability to achieve higher overall revenue.
• Further, with a deepening international focus and material emerging opportunities in the Outfitters uniform and embroidery business, we believe Lands’ End continues to rapidly improve their overall business model, and we reiterate our Buy rating and $20 price target for LE.

• We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear Workshop with the company announcing 3QFY24 (October) results before the open on Thursday.
• We believe, with a very strong Halloween season, the launch of commercial and franchised stores beginning to drive operating momentum, new products and a solid start to the Holiday season, management will be upbeat on current and future trends, and we believe Street expectations for 3Q and FY24 (and our price target) could prove conservative.
• As such, we are reiterating our Buy rating and $41 price target for BBW.

• Information provided is for informational purposes only, not investment advice
• Author may hold long positions in mentioned securities, subject to change
• Author is a trader, not obligated to inform readers of transactions, seek expert advice before making investment decisions

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.

• There is 1 add/ 2 deletions for the CSI Alcoholic Drink Index and no constituent changes for the CSI Liquor Index.
• The largest flows arise as a result of capping of constituents to 15% of the index weight. Impact on the stocks varies from 0.2-0.6 days of ADV.
• WeiLong Grape Wine outperformed the deletes in early October, but the deletes moved higher and closed the gap. The gap has started to open up again in the last week.

• The sale process of Seven & I Holdings (3382 JP) “unit” York Holdings, with 31 sub-units, has started. 7+ bidders bid in Round 1. Due dili follows then Round 2.
• I expect SST+support ops get sold, and the specialty stores get carved out. I expect the deal to get decided by end-Feb 2025. Noises about real estate enhancement are encouraging.
• This is still all to the good, so I include a Gratuitous Chart Showing 7&i’s Up-And-To-The-Rightness

• Meituan reported strong 3Q results last Friday which were largely expected by the market. Yet downbeat guidance seemed to have disappointed investors and dragged the stock during US trading session.
• We believe the stock’s significant re-rating since early 2024 has come to end as earnings growth starts normalizing after being boosted by less competition and narrowing losses from new initiatives.
• While the company has strengthened its moat and we expect steady growth ahead, we see near-term price volatility as markets digest the notable slowdown.

• PT Daya Intiguna Yasa Tbk (Mr DIY Indonesia) (2517930D IJ) is looking to raise US$296m from its Indonesia IPO.
• Mr DIY Indonesia (MRDIYI) is a home improvement retailer. The firm is the largest home improvement retailer in Indonesia with a 25.2% market share as per 2023 sales
• In this note, we look at the firm’s past performance.

• Revenue grew by 22% YoY and operating margin improved 8 percentage points YoY in 3Q24.
• All Business lines grew strongly and all expense percentages of total revenue declined YoY in 3Q24.
• We believe the stock has an upside of 46% for the next twelve months.

• The December 2024 index review results for the SSE 50 and SSE 180 indices were announced after market close on Friday 29th November 2024.
• There will be 4 changes for SSE 50 and 18 changes for SSE 180 during the December 2024 index rebal event.
• SSE 50 ADDs and DELs will see large index flows while the SSE 180 flow names have fairly insignificant flow expectations.

• US President-elect Trump has proposed new tariffs on China (and others) by January
• Higher tariffs on Chinese goods could make Chinese imports more expensive in the US
• For SHEIN & Temu, larger threat still comes from potential reform of de minimis rules

• Since there’s little confidence that merely disclosed share buybacks and medium-term management plans will increase corporate value in future, it’s natural that institutional investors’ evaluation of these plans is low.
• For companies that develop budgets and plans each January, the key is to incorporate into their budgets the use of cash that will ensure future growth in corporate value.
• For companies that lack the time to translate “mid-term management plan” into strategy to increase corporate value within two months, including “going private is an option” is an effective disclosure.

• Bosideng International Holdings (3998 HK) has another solid 1H, with net profit surging 23% and DPS rose 20%. At 11.3x PER for FY25F, the valuation is not stretched.
• The gross margin for branded down apparel has hit the lowest 1H level since 1H FY22, however. Similarly, its OEM management gross margin has come down.
• Operating cash outflow rose to Rmb3.5bn, compared with Rmb585m a year ago, and inventory days leaped 29 days. Revenue and profit for ladieswear have plunged.   

• We introduce a new section this month showing implied vol vs average absolute December price movement. A good way to screen for straddle candidates for the month ahead.
• Implied vols came in hard in November with the US election and the FOMC in the rear-view mirror.
• Price performance across markets especially strong in the final week of the month with SP500, Nifty and SPASX200 postive on the month ~ 70% of the time. 

• In this insight, we present the flows to buy and sell for each of the top 6 Hang Seng Index Family indices based on estimated tracking AUM.
• The indices: Hang Seng Index (HSI), HS Tech Index (HSTECH), HS China Enterprise Index (HSCEI), HS HK Biotech (HSHKBIO), HS Internet & Infotech (HSIII), and HS Healthcare Index (HSHCI).
• By Quiddity calculations based on prices of 29 November’s close, there is one-way flow across these six indices of HK$15,894,690,433.49 to trade on 6 December. Roughly speaking.

• The December rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading on 13 December.
• Cloud Village (9899 HK) is an add while Lufax Holding (LU US), Ping An Healthcare and Technology (1833 HK), ZX (9890 HK) and YSB (9885 HK) are deletes.
• The deletions of Ping An Healthcare (1833 HK), ZX (9890 HK) and YSB (9885 HK) were forecast and there will be positioning in the stocks. Lufax was a close delete.

• Astra Otoparts (AUTO IJ) looks set to see increasing contributions from its modern retail push, which will boost its trading business and should see margins improving over time.
• AUTO is pushing into both the EV component space and manufacturing public and residential EV charging equipment. It is also venturing into medical devices as local content becomes a requirement.
• AUTO has outperformed the auto market since the pandemic and looks set to continue to do so through new growth segments. Valuations attractive on 5.5x forward PER and 8% yield.

• SOUTHBOUND gross trading activity dropped sharply again to the lowest in a few months but net SOUTHBOUND buying remains very strong, with big flows on tech.
• Most of the top names were tech names – both in gross and net buys. Only 1 tech name in top five net sells.
• Last week I said I expect HK-listed tech to continue getting bought. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US. Continue.

• As Hong Kong market continues to consolidate, the consumer discretionary sector is leading in momentum and strength while the energy and materials sectors lag.
• Trip.com Group (9961 HK) , Trip.com (TCOM US) received BUY ratings after a strong 3Q24 announcement on revenue and earnings.  China’s tourist numbers are projected to reach Pre-COVID levels soon.
• Yum China Holdings (9987 HK) , Yum China Holdings (YUMC US) received BUY ratings after initial success from its small store/franchising strategy.  The company is actively returning capital to shareholders.

• There are 5 changes for the SSE50 Index (SSE50 INDEX) and 18 changes for the SSE180 Index that will be implemented at the close on 13 December.
• Seres Group (601127 CH) is an add to both indices, plus the CSI 300 Index, and passive trackers will need to buy over US$900m of the stock.
• The adds have outperformed the deletes with a lot of the outperformance coming in the last couple of months. Trim positions in the expected adds/deletes and build positions in surprises.

• Interparfums Inc.’s third quarter financial results for 2024 highlight several key aspects of their performance, including strengths and challenges in a fluctuating global market.
• On the positive side, the company reported its best third quarter in history, driven by robust sales across all major markets.
• North America, Western Europe, and Asia Pacific all saw double-digit sales growth, with North America up 12%, Western Europe 25%, and Asia Pacific 15%.

• I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Three new deals this week: NBIOs for SG Fleet (SGF AU) and AVJennings Ltd (AVJ AU); and Shandong Hi-Speed New Energy  (1250 HK)‘s MGO. Fosun Tourism (1992 HK) also suspended.
• Key updates/news took place on: Hotel Property Investments (HPI AU), Capitol Health (CAJ AU), Shanghai Henlius Biotech (2696 HK), Seven & I Holdings (3382 JP) and SAMTY HOLDINGS (187A JP).

• Tencent Music Entertainment Group (Tencent Music) delivered a solid performance for the third quarter of 2024.
• The company demonstrated a balanced strategy that resulted in revenue growth and increased subscriber numbers, emphasizing its broad content ecosystem’s growing influence and user value proposition.
• Tencent Music reported significant growth in its online music services, with a 20% year-over-year increase in revenue, contributing to a 29% enhancement in adjusted net profit.

• On November 29 (PUSU deadline), TI Fluid Systems agreed to a £1.04 billion ($1.32 billion) takeover by ABC Technologies, 4.4x EV/NTM EBITDA vs. comparables at 4.6x, 6.7x Fwd P/E.
• Investors have flocked to this deal, as regulatory clearances do not seem particularly demanding.
• Spread is 3.7%/11.98% (gross/annualised, assuming settlement by 30 March 2025). Taking 135.8p break, the implied probability of deal completion is 88.5%. Long.

• In this insight, we present our top investment ideas in the Apparel & Fashion retail sector, analyzing recent earnings results and key insights from company earnings calls.
• Names discussed include Page Industries (PAG IN), Vedant Fashions (MANYAVAR IN), Aditya Birla Fashion and Retail Ltd (ABFRL IN), Arvind Fashions (ARVINDFA IN) and Go Fashion India (GOCOLORS IN). 
• We have a bearish stance on all names except Page Industries (PAG IN).  

• Investment thesis recommends shorting Shake Shack due to declining traffic, comp growth, and new unit productivity
• Stock price has surged despite challenges, trading at over 100x earnings
• Uncertain outlook with activist investor no longer involved and unique smashburger being commoditized, raising doubts about sustainability of growth.

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.

• Revenue increased by 8.3% YoY, with the EC business rising 7.0% and the Financial business 10.0%.
• Operating profit rose 89.9% YoY, driven by reduced advertising expenses and a decline in SG&A expenses.
• Financial business segment profit increased 48.9% YoY, with external payments handled growing 13.0% YoY to JPY20.1bn.

Focusrite’s (TUNE’s) FY24 results highlight the negative effects of the most challenging year the CEO has faced. While the company’s main operating market has been difficult, management has continued to invest in development and release new products, which have enabled TUNE to outperform and gain share across all markets in FY24, and should enable it to thrive when conditions improve. With signs of stabilisation in its most important segment, TUNE’s valuation looks attractive.

• Grupo Bimbo’s claim is based on the acquisition of Canada Bread Company from Maple Leaf Foods (MFI CN, not covered).
• Bimbo is seeking over CAD$2bn for alleged fraudulent practices, as Canada Bread has been impacted since 2017 due to a price-fixing investigation within the commercial bread industry by the Competition Bureau.
• Subsequently, Canada Bread paid a CAD$50mn fine in 2023.