Consumer

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

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

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

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

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

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

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

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

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

• China Resources Beverage (CRB HK) is offering 347.8m shares in its IPO at a price range of HK$13.5-14.5/share. With the overallotment option, the IPO could raise up to HK$5.8bn (US$474m).
• Cornerstone investors will take up nearly half the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
• Index inclusions will commence with the HSCI in March 2025 – that will also result in Stock Connect inclusion. The next index inclusion will take place in June.

• SOUTHBOUND was a net buyer the last five trading days (from before GW to 14 Oct). HUGE gross flows. Decent net flows. Very big in few names (BABA included).
• The Guotai Junnan/Haitong merger pushed H-share brokers hard, but SB wasn’t buying. They bought Alibaba Group Holding (9988 HK), Semiconductor Manufacturing International Corp (SMIC) (981 HK), Xiaomi Corp (1810 HK). 
• Things may settle down a little bit as the fiscal policy announcements are out of the way, but I expect the trend is still your friend (until it bends). 

• Anta top line outperformed competitors, both overseas and domestic brands, in China.
• We believe all margins will be stable and EPS will rise by 41% in 2024.
• However, we believe Anta is overvalued at the current price.

• On 14 October, FCP Capital sent a proposal to KT&G to purchase Korea Ginseng Corp for 1.9 trillion won. 
• Although KT&G stated that it has no intentions to sell Korea Ginseng Corp, this proposal highlights the ongoing pressure by FCP Capital to improve further value in KT&G.
• The 1.9 trillion won in proposed purchase price is higher than the 1.2 trillion won to 1.3 trillion won that KT&G revealed as the intrinsic value of Korea Ginseng Corp.

• A big “week” of 5 trading days from 30 Sep to 14 Oct, inclusive. Average AH premia dropped a lot. Liquid AH premia dropped less. Brokers are big winners.
• Average AH volatility is super high. Intracorrelation of spreads quite low. Lots of room to market-make wide spreads/high premia. High premia may continue to contract on speculation.
• Sharply differing onshore and offshore opinion regarding the nature and vibe of Chinese stimulus will lead to interesting dispersion. Identify the trend, then market make around it.

• Hyundai Motor India (HMIL) ‘s USD 3 billion+ IPO opens today, 15th October, at 10:00 am IST. The bidding will remain open until 4:30 pm IST on 17th October.
• Near-Term Outlook: Limited Short-Term Gain Potential. While Hyundai is likely to outperform Maruti Suzuki given the valuation discount, it may underperform the broader sector in the near term.
• Long-Term Opportunity: For investors with a longer-term horizon, Hyundai presents a relatively low-risk opportunity. Its established brand and world-class manufacturing facilities offer the potential for steady, long-term growth.

• Tri Pointe Homes delivered a robust performance in the second quarter of 2024, showcasing an adept response to current market conditions and strategic planning.
• The company reported a substantial increase in home deliveries, up by 45%, leading to significant revenue growth.
• Home sales revenue rose to $1.1 billion, marking a 38% upsurge from the previous year, primarily driven by increased community counts and optimized cycle times.

• Costco Wholesale Corporation’s fourth-quarter financial performance for fiscal year 2024 highlighted a neutral set of results that reflect both commendable operational successes and ongoing challenges.
• Comparing the results with the same period last year, Costco showed an increase in net income, with the figure reaching $2.354 billion, translating to $5.29 per diluted share.
• This is a notable rise from $2.16 billion, or $4.86 per diluted share, the year before, accounting for a 9% increase.

• SSE 50 and SSE 180, respectively, aim to represent the performance of the 50 and 180 largest and most liquid A-share stocks listed on the Shanghai Stock Exchange.
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the December 2024 index rebal event.
• While our SSE 50 expected ADDs/DELs list remains unchanged, there have been multiple changes to our SSE 180 expected ADDs/DELs list.

• Newell Brands recently disclosed its financial results for the second quarter of 2024, rendering a complex yet instructively mixed picture of its current status and future prospects.
• The company presented some laudable improvements but also faces significant challenges that could affect its growth trajectory and investment outlook.
• On the positive side, Newell Brands reported results that exceeded their initial expectations with core sales, gross margins, operating margins, and Earnings per Share (EPS) all performing at the high end or beyond their forecasts.

• By many metrics, Chinese airlines’ recent performance exceeds pre-Covid levels
• Medium-Term, ongoing int’l recovery and benign fuel prices can boost margins
• We believe the airlines could recoup weak relative performance vs Trip.com

• Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.3 billion at a valuation of US$19 billion.
• We previously discussed the IPO in Hyundai Motor India IPO: The Bull Case, Hyundai Motor India IPO: The Bear Case and Hyundai Motor India IPO: The Investment Case. 
• Our valuation analysis suggests that the IPO price range of Rs1,865-1,960 per share is attractive. Therefore, we would participate in the IPO.

• There’s gap in timelines for results between many companies that started to incorporate the cost of capital into their management and investors who are looking for results in investment performance.
• If this gap surfaces, investor expectations will be stripped away. Companies that determine that it will take a long time to achieve results can be expected to consider going private.
• For a company to seek access to institutional investors, it must first produce results. The race is on to achieve results within limited timeframes and faster than other companies.

• HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market—Attractive Yield & Rapid Expansion Outside China—Sep 2024 helped us screen out great names.
• Nameson Holdings (1982 HK), a knitwear supplier that trades at 4.5x PE, is net cash (considering investments) and has a 17% dividend yield, is one of them. 
• We find this name attractive, and the yield can be sustainable as it shifts its supply base from China to Vietnam. Hence, we initiate with a detailed write-up. 

• I tally 45 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals discussed this week: Rio Tinto (RIO AU)‘s tilt for Arcadium Lithium (LTM AU), and the Guotai Junan Securities (2611 HK)/Haitong Securities  (H) (6837 HK) merger.
• Key updates took place on: Seven & I Holdings (3382 JP), Pacific Smiles (PSQ AU), China Traditional Chinese Medicine (570 HK) and Korea Zinc (010130 KS).

• Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.3 billion at a valuation of US$19 billion. 
• We previously discussed the IPO in Hyundai Motor India IPO: The Bull Case and Hyundai Motor India IPO: The Bear Case. In this note, we examine RHP.
• The RHP shows that the positives (recovering lost market share, top-quartile operating and FCF margin profile) more than offset the negatives (bottom-quartile growth). 

• Elon has given up on his ambitious targets. Or he has never seriously pursued them.

• Tesla’s investor event “We, Robot” was nothing more than a theme park for adults who were there to indulge into an illusion for a night.

• Why would they conduct such a ridiculous event that suggests that they have nothing up their sleeves that can create tens of billions of dollars of AI revenue soon? 

• Business portfolio reforms are lagging and improving profitability, the driver of ROE, will take more time. Further Reducing policy shareholdings and cash on hand are needed to improve capital profitability.
• In days of cross-shareholdings, management tended to be less conscious of the goal of sustainable growth in shareholder interests because they need not listen to opinions of other minority shareholders.
• Cross-Shareholdings have decreased, and management is now required to be more conscious of capital profitability. ”TSE’s request” will hopefully prevent this change from going backwards.

• BellRing Brands recently reported its earnings for the third quarter of the fiscal year 2024.
• The company, which is known for its Premier Protein and Dymatize brands, showcased a mixture of strengths and areas poised for improvement.
• BellRing Brands has demonstrated robust growth, showing a notable increase in net sales and adjusted EBITDA, indicative of effective operational management and solid demand for its products.

• Bright Horizons Family Solutions, a renowned provider of child care, early education, and work-life servcies, recently reported a robust performance for the second quarter of 2024 in their latest earnings call.
• CEO, Stephen Kramer, highlighted substantial revenue growth in full service and back-up care segments and a nearly 40% increase in adjusted EPS, surpassing the company’s expectations due to improved operational efficiency across all three segments.
• In light of these results, the company has raised its full-year guidance for both revenue and EPS.

• Freshpet’s Q2 2024 results reflect a structured approach to growth, emphasizing disciplined execution to drive both revenue increase and profitability enhancements.
• The company posted a robust 28% year-over-year increase in net sales to $235.3 million, underpinned largely by volume expansion without reliance on price or mix adjustments.
• This performance marks Freshpet’s 24th consecutive quarter of net sales growth exceeding 25%, aligning well with its operational thresholds.

• Gibraltar Industries, a notable player in the industrial products sector, recently conducted its Second Quarter 2024 Financial Results Conference Call, presenting a mixed financial picture characterized by challenges and strategic responses across its varied segments.
• The corporation reported a slight decrease in adjusted net sales by 2%, primarily influenced by a slowdown in the residential and renewable energy sectors, partially offset by gains from strategic market participation.
• In the residential segment, Gibraltar experienced a 6.1% drop in sales due to slower market demand and unexpected channel destocking occurring late in the quarter.

• BSET posted an adjusted EPS loss of ($0.41) for 3QFY24, down $0.11 from the prior year and $0.08 below our estimate of ($0.33).
• While the quarter was affected by continued challenging industry conditions, including the weak housing market (housing is a traditional driver of residential furniture sales) and wary consumers (many of whom updated their homes during COVID), the earnings miss was also, in part, a consequence of a July hack of Bassett’s IT systems that forced the firm to sideline production for a week, costing the firm $1-2 million on the bottom line from lost sales and associated manufacturing inefficiencies.
• We estimate that this production shutdown cost Bassett $0.085 to $0.17 in EPS.

• Leggett & Platt’s Second Quarter 2024 earnings highlighted several key areas of performance and strategic initiatives, reflecting an environment of both challenges and transformation for the company under revised leadership with CEO Karl Glassman.
• The company is focusing heavily on restructuring, with significant emphasis on operational efficiencies and reduction of general and administrative costs.
• Key initiatives include consolidation of facilities and optimization of manufacturing processes particularly in their Bedding Products and Furniture, Flooring & Textile Products segments.

• LGI Homes, a player in the residential construction sector, delivered a robust performance in the second quarter of 2024, navigating challenges such as rising costs and affordability issues with strategic pricing and community development efforts, underscoring a delicate balancing act between growth and profitability pressures.
• The company sold 1,655 homes, marking a significant revenue of over $602 million with an improved average sales price of $364,000.
• This resulted in a substantial improvement in gross margins—up 300 basis points year-over year to 25%, reaching pre-pandemic levels, indicative of effective cost management and pricing strategies.

• H1 sales were GOOD. H1 earnings were BAD. New forecasts are UGLY. The CVS initiatives are RESPECTABLE, but US CVS market environment UNFORTUNATE. The creation of the new Holdco ENCOURAGING.
• The Couche-Tard Bid? That’s SEPARATE. Confidential. But three weeks after receiving the new proposal, it hasn’t been publicly rejected. So that’s a thing. 
• 7&i is progressing with its Standalone Plan, as it should, because ACT’s bid is more a show of faith for discussions. The York Holdings structure is INTERESTING.

• Seven & I released 1H24 earnings today as well as details on planned restructuring of its business. Results included some one-off items hitting operating profit as well as lower footfall.
• The bigger news was the plan to hive off the non-CVS retail operations into a new company, York Holdings, leaving a newly named 7-Eleven Corporation running CVS globally.
• Unusually, Seven also mentioned the possibility of new strategic partners investing in York, including even the “original founding families”, suggesting one way of holding on to control.

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

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 indices in the December 2024 index rebal event.
• We expect six ADDs/DELs for BSE 100 and six ADDs/DELs for BSE 200.
• Zomato is one of the six BSE 100 expected DELs but its fate will depend on when its expected F&O list inclusion takes place and the index provider’s discretionary choices.

• Shiyue Daotian (1892269D CH) was listed in Hong Kong on 12th Oct 2023 after raising US$105m close to the top end of its indicative IPO price range. 
• Shiyue Daotian is a pantry staple food company in China, providing consumers with pre-packaged premium rice, whole grain, bean, and dried food products.  
• The firm’s one-year lockup will expire on 12th Oct 2024.  In this note, we will talk about the lock-up dynamics and updates since our last note.

• Swiggy is planning to raise around US$1.25bn through its upcoming India IPO.
• Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
• In this note, we talk about the not-so-positive aspects of the deal.

• Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH)  is looking to raise $US200m in its upcoming Hong Kong IPO. 
• It is a leading and fast growing jewellery franchise in China offering a diverse range of products through offline and online sales channels.
• In this note, we look at the firm’s past performance.

• The earnings for Tempur Sealy in the second quarter of 2024 presents a mixed financial outlook, characterized by both positive achievements and challenging market conditions.
• The company reported a notable increase in net sales which approximate $1.2 billion, and adjusted EBITDA stood at $231 million, marking a year-over-year improvement of 6%.
• Adjusted earnings per share also saw growth, rising 9% to $0.63, alongside an improved leverage ratio.

• Mattel’s second quarter of 2024 presented a mixed set of results, reflecting both the challenges and strategic progress within the toy industry.
• In terms of financial performance, net sales slightly declined by 1% but were stable on a constant currency basis.
• This relatively flat sales trajectory indicates a degree of resilience amidst broader economic fluctuations, with the company managing to maintain its sales levels year-over-year.

• Planet Fitness has released its financial results for the second quarter, demonstrating solid growth figures, a testament to its strategic expansion and robust franchise model.
• The company marked this quarter with a few significant milestones and strategic shifts under the new CEO, Colleen Keating, who brings extensive experience in franchise businesses and real estate.
• One of the notable achievements this quarter was the growth in same-store sales by 4.2% and an increase in revenue by 5.1%.

• This AM, partway through the morning session, Bloomberg carried an article saying Alimentation Couche-Tard (ATD CN) had upped its bid for Seven & I Holdings (3382 JP) to US$18.19/share.
• The stock popped, then faded sharply. Near and after the close we got more headlines. Some of these preview tomorrow’s earnings report. Some preview the restructuring announcements.
• The Nikkei comment regarding an earnings shortfall vs Plan suggests weaker US convenience store sales and consumer footfall are to blame. Details will matter. But I’d buy dips.

• In response to media reports, Seven & I Holdings (3382 JP) confirmed receiving a revised non-binding proposal from Alimentation Couche-Tard (ATD CN). 
• The rumoured revised offer is US$18.19, a 22.4% premium to the initial US$14.86 offer. The revised terms are attractive vs precedent transactions and analyst price targets.
• The Board would cite regulatory concerns and the revised offer’s implied discount compared to peer multiples. At tomorrow’s results, the Board must present a credible alternative value generation path.

• There were only 13 new listings on the Main Board of the HKEX (388 HK) in the third quarter of the year.
• Of those stocks, we only see Midea Group (300 HK) having a chance of being added to the HSCI in December.
• Midea Group (300 HK) should be added to Southbound Stock Connect next week after the price stabilisation period has ended.

• Mercari is a Japanese e-commerce company known for operating the leading online used goods marketplace in Japan with over 23 million monthly active users and significant annual GMV.
• The company’s strong network effects moat and growth prospects in Japan’s second-hand goods market suggest substantial potential value, despite investor frustration with loss-making initiatives like Mercari US and its Fintech segment.
• Analysts believe that Mercari Japan alone is worth nearly double the company’s current market cap, highlighting potential for significant upside.

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.

• After 3 years of strong revenue and profits growth, Hyundai Motor India is likely to face a challenging year ahead based on the analysis of 1QFY2025 financials provided in RHP.
• Hyundai Motor India (1342Z IN)‘s  strong exports growth in FY2025 will not offset the weakness in domestic sales. This could result in low single-digit revenue growth for the year.
• Increased royalty costs starting in FY2025, coupled with impact of lower cash reserves after special dividend paid out to parent will likely compress profit margins compared to the previous year.

• Swiggy Limited is planning to raise around US$1.25bn through its upcoming India IPO.
• Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
• In this note, we talk about the positive aspects of the deal.

• Bukalapak (BUKA IJ) has seen a sharp share price rebound recently with speculation over a tie up with Temu, which appears ill-founded, with the only newsflow being a Director resigning.
• The company swung back into a slight negative adjusted EBITDA in 2Q2024, mainly due to the seasonal impact of Lebaran on its O2O business and increased competition in virtual products.
• Bukalapak remains a differentiated player in Indonesian e-commerce with a focus on serving MSMEs through its marketplace, with increasing take rates ahead. Dealing with excess cash is a potential catalyst. 

• Oisix is planning to double its sales by 2030 and looks set to reach this targets early through both organic expansion and M&A.
• The recent acquisition of several B2B and other companies will help sales grow 72% this year alone.
• But the longer-term consumer-facing business continues to look positive thanks to continued demand for convenience meal kits and home delivery of quality foods. Profit though remains anaemic.

• Sanathan Textiles (0907479D IN) plans to re-appear for its IPO. The company is into yarn manufacturing and has a presence in all three, Polyester, Cotton and Technical Textiles segments. 
• Revenue growth did light up in FY22, however topline growth has pretty much been stale since then. Moreover, margins have also been on a sliding trajectory.
• Key forensic takeaways include capitalising of expenses on the back of falling margins, acquisition of a non-operating subsidiary from promoters, secondary income sources driving profits, etc.

• Playtika Holding Corp. conducted its Q2 2024 earnings call outlining both advancements and some challenges faced during the quarter.
• With Robert Antokol, Co-Founder and CEO, and Craig Abrahams, CFO, leading the discussion, the company detailed various aspects of its operational and strategic performance which will be crucial for stakeholders evaluating Playtika’s investment potential.
• 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.

• Post-Close on the 5th business day of October every year, the TSE announces the Free Float Weight review for all stocks where the FY ends in the Jan-March quarter.
• Yesterday saw 210 decent changes to FFW (more up than down). There are still 400+ Phased Weight Reductions, 3 new adds (3663, 3993, 9341), and some share cancellation-based share-count reductions.
• It turns out there is a LOT to trade. I see ¥2trln one-way (¥2trln net to buy on 245 names, and ¥2trln to sell on the other nearly 1,900 names). 

• Hyundai Motor India (1342Z IN) is looking to list on the exchanges by selling up to INR 279bn (US$3.3bn) of stock at a valuation of up to INR 1,593bn (US$19bn).
• The anchor allocations will be completed early next week, and the stock is expected to start trading on 22 October.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances should take place in February and June next year.

• Hyundai Motor India (1342Z IN) has set an IPO price range of 1,865 to 1,960 rupees per share, aiming for a valuation as high as US$19 billion. 
• Hyundai Motor (005380 KS) is selling a 17.5% stake in Hyundai Motor India in this public offering. Hyundai Motor India IPO is scheduled to trade starting 22 October.
• Our updated base case valuation of Hyundai Motor India is market cap of US$19.7 billion based on P/E of 25.9x our estimated net profit of 64.1 billion INR. 

• KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
• In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in December 2024.
• We expect up to five ADDs and six DELs for the KOSPI 200 Index during this rebal event based on the latest available data. Small increase vs two weeks ago.

• Hyundai Motor India (1342Z IN) ’s IPO, launching next week, is expected to be priced between Rs1,865 and Rs1,960, valuing the company at USD 18-19 billion.
• At this valuation, Hyundai’s India unit will account for over 40% of its parent company’s market cap, potentially unlocking significant value for Hyundai Motor (005380 KS).
• Despite a weak growth in India’s passenger vehicle sales ytd, investor interest in the IPO is reportedly strong thanks to India’s booming equity market and robust fund inflows.

• China Resources Beverage (CRB HK), China’s largest purified drinking water company, is premarketing an HKEx to raise US$0.5-1 billion.
• We previously discussed the IPO in CR Beverage IPO: The Bull Case, CR Beverage IPO: The Bear Case and CR Beverage IPO: The Investment Case. 
• In this note, we present our forecasts and examine CR Beverage’s potential valuation range for the first time.

• Revenue increased by 9.4% YoY to JPY113.9bn, with growth in comparable store revenue and customer count.
• Operating profit rose by 10.7% YoY to JPY5.3bn, supported by higher gross profit and cost control measures.
• The company expanded its network by opening 10 drugstores and six in-store dispensing pharmacies, closing one store.

• Consumption of decaffeinated coffee is rising and outpacing the expansion of the overall coffee beverage category, yet still represents only about 15% and 12%, respectively, of total coffee consumption in the U.S. and Western Europe.
• This implies substantial growth prospects for Swiss Water, we believe, as sales of decaffeinated coffee continue to increase and as consumers’ demand for natural food & beverages and premium coffees continues to rise.
• We believe the company’s natural decaffeinated process is a key factor that could drive demand for Swiss Water decaffeinated coffee within the category and which has a positive tailwind from coffee consumption trends.

• American Express Global Business Travel (GBT) reported notable financial performance for the second quarter of 2024, illustrating a mix of strengths and areas for focus that investors should consider.
• The company demonstrated robust adjusted EBITDA growth, substantial margin expansion, and significant cash flow acceleration.
• Most notably, GBT achieved a 20% growth in adjusted EBITDA and margin expansion of 240 basis points year-over-year.

• Lithia Motors’ second quarter earnings revealed both promising advances and looming challenges as it navigates a rapidly evolving automotive market.
• President and CEO Bryan DeBoer detailed the company’s response to operational hurdles, notably a cyberattack on CDK, their dealer management system provider, which significantly impacted operations temporarily.
• Despite this, Lithia Motors reported a 14% year-over year increase in revenues, achieving $9.2 billion in the quarter, marking a strong financial performance amidst industry-wide challenges.

• Ubiquitous used car auction house USS Co Ltd (4732 JP) today announced MUFJ Bank’s Retirement Benefit Trust account would sell its 3.5% stake in an offering. 
• Given how much cash the company has and how little cross-holding there is, this seems a bit odd, but they are doing a buyback for half the offer.
• Small offer. Low ADV count. Well-liked by numerous foreign active holders. This should get taken easily.

• MDL Wholesale Limited is looking to raise about US$100m in its upcoming Hong Kong IPO.
• MDL is a leading food and FMCG distribution solution provider in China.
• In this note, we look at the firm’s past performance.

• Essilor’s investment underscores Nikon’s undervalued potential, spotlighting its advanced optical technologies as strategic growth drivers in emerging high-tech sectors like AR.
• Nikon’s established expertise in precision optics is highly adaptable for AR applications, positioning the company to capitalize on rising demand for wearable and immersive technology.
• Increased collaboration with EssilorLuxottica may enhance Nikon’s R&D capabilities, promising new innovations and potential revenue streams, which could strengthen Nikon’s profitability and share value long-term.

• The HK market is moving, and the share prices of high-yield companies are increasing. Despite the average YTD returns of 36%, stocks are trading at 5-18% dividend yields. 
• We await the November results of Pacific Textiles (1382 HK), which we will soon initiate coverage on.
• We note that Yue Yuen Industrial Holdings (551 HK) continues with its buybacks, having repurchased 3.2 million shares (0.2% of outstanding shares) since August 28th, 2024. 

• The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
• The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
• There are 154 adds and 80 deletes for the index with an estimated round-trip trade of US$300m.

• RaaS has published an update report on consumer finance group Cash Converters International (ASX:CCV) following the release of its FY24 results which saw 26% growth in revenue on the pcp and EBITDA growth of 21% in line with our forecasts.
• The gross loan book grew 6% to $288m, which we find impressive as the business transitions away from SACC products due to regulatory change.
• This was more than offset by growth in other products, domestically and internationally.

• This month, I had the privilege of attending an investment conference, where I engaged with many successful value investors and independent thinkers.
• During one conversation, an investor jokingly remarked that everyone seems to have shifted toward “quality growth investing,” while he and Mr. Robotti appear to be among the few who still favor cyclical stocks, such as Tidewater Inc.
• Although I don’t generally shy away from cyclical stocks, I recognize the immense challenge of navigating the capital cycle by investing in companies that seem on the brink of failure.

• Ola Electric (OLAELEC IN)‘s  aggressive price cuts on its S1 scooter aim to fend off competition and boost sales but risk alienating existing customers and damaging brand perception.
• Ola Electric’s mishandling of online criticism—capped by its CEO’s heated spat with a well-known comedian—has tarnished the brand’s image.
• With market share and stock prices dropping, concerns loom over how the company will fare after lock-up expiry in November/February and whether it will qualify for global index inclusion.

• Hyundai Motor (005385 KS) is looking to raise around US$3.3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
• HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
• In our previous notes, we have looked at the company’s past performance and provided our thoughts on valuations. In this note, we talk about index inclusion.

• Nomura Trust (the retirement benefit trust account for MUFG) is looking to raise US$132m via selling some shares in USS Co Ltd (4732 JP).
• While the deal appears somewhat well flagged, given that its part of the ongoing cross-shareholding unwind narrative in Japan, the timing of such a selldown isn’t always certain.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of high dividend yield stocks within emerging markets.
• The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
• There are 241 adds and 208 deletes for the index with an estimated round-trip trade of US$2.5bn. There are many stocks with over 2x ADV to trade.