Consumer

• Budweiser Brewing APAC (1876 HK) has seen investors run for the hills over the last year. The halving of the stock price could mean deletion from passive portfolios.
• Other Hong Kong listed brewers, China Resources Beer Holdings (291 HK) and Tsingtao Brewery Co Ltd H (168 HK) have been beaten down too and have underperformed their Asian peers.
• The deletion from passive portfolios could provide a buying opportunity in Budweiser Brewing APAC (1876 HK) at the end of February (or earlier if the stock drops due to positioning).

• APR announced it will delay its IPO. Now, APR’s book building has been postponed to 2 to 8 February. The IPO price range remains the same.
• The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.
• Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers’ valuation range (200,000 won).

• The biggest risk for Amer Sports is its excessive leverage. It had net debt of $5.9 billion and equity of only $8.8 million at the end of 3Q 2023.
• Many investors are likely to emphasize the negatives more (especially the excessive leverage and inconsistent operating margins), rather than the positives such as China representing increasing percentage of total sales. 
• Amer Sports is trying to raise nearly $1 billion in this IPO which could value the company at about $10 billion. 

Key points (machine generated)

• GSMI is a leader in the Filipino spirits industry and is best known for its flagship brand Ginebra San Miguel, the largest gin brand in the world by sales volume.
• Local companies, including GSMI, Tanduay, and Emperador, dominate the spirits industry in the Philippines.
• Despite lacking global brand recognition, GSMI holds a strong position in the local market, although smaller players such as The Keepers Inc. importing foreign brands may pose competition in the long run.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Berli Jucker remains a core proxy for consumer recovery and increasing tourism numbers in Thailand, with earnings set to recover in 2024 driven by modern retail and packaging.
• Modern retail through Big C has resumed its expansion momentum across all formats with Big C Mini driving growth and supporting its omnichannel efforts, with rental income also recovering.
• The packaging business was impacted by the sluggish Vietnamese economy which impacted aluminium cans but new products and strong performance from glass should support growth in 2024. Valuations look depressed.

• (I didn’t want to send it out right away, because I wanted to proofread my post before sending it, and unfortunately DADA is already up 10% since writing 🙁 )
• Recently Dada Nexus (DADA) , a Chinese last mile delivery service and on demand retail platform reported that about 500mn RMB ($70mn US) of revenue and costs were overstated for the first 3 reported quarters of 2023.
• This news came right after 2 JD executives had taken over management of the company in December last year.

• While Singapore’s exports have lagged behind Taiwan and Korea in Nov-Dec 2023, they have showed signs of recovery after a year of steep drops.
• External factors also affect the prospects of the iEdge SG Advanced Manufacturing Index’s most traded stocks.
• Some of the most traded index stocks, such as Yangzijiang Shipbuilding, Dyna-Mac and Food Empire, have high P/B ratios compared to their historical averages, indicating strong market valuation.

• Duolingo, a leading language learning app inventor, recorded a spectacular Q3.
• The company’s revenue growth has caused it to revise earnings predictions upward, forecasting a 40% year-over-year growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on the Performance Food Group Company (PFG).
• The company delivered its fiscal first quarter 2024 earnings and in their earnings call, the company’s management highlighted the company’s strong financial results in the quarter, despite challenging macroeconomic dynamics.
• PFG’s top line performance slightly missed its guidance range, though its adjusted EBITDA surpassed the high end of the guidance range.

• This is our first report on Floor & Decor Holdings, a multi-channel specialty retailer of hard surface flooring and related accessories.
• The company posted its fiscal 2023 third quarter results.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
• We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
• That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

• Weiqiao Textile Co (2698 HK)’s offer pre-condition is satisfied. Prudence has increased its shareholding to 3.39% of the outstanding shares (9.79% of H Shares), marginally short of a blocking stake.  
• The HK$3.50 offer has been declared final, which rules out a bump. Therefore, Prudence’s strategy could be to play the gross spread or to block the deal.
• The Shandong Luoxin Pharmaceutical (8058 HK) precedent supports the gross spread play view. However, unlike the precedent, Prudence is marginally short of a blocking stake in Weiqiao Textile.  

• Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO. 
• MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
• In this note, we talk about the positive aspects of the deal.

• Emperador (EMI SP) currently fails the liquidity test and could be removed from the SPDR Straits Times Index ETF (STTF SP) in March.
• Frasers Centrepoint Trust (FCT SP) is currently the highest ranked non-constituent and could be added to the ETF. FCT has a 6% higher market cap compared to Olam (OLG SP).
• We estimate trackers will need to buy 5 days of ADV in Frasers Centrepoint Trust (FCT SP) and sell over 37 days of ADV in Emperador (EMI SP). 

• Back on the 4th December, Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation at HK$3.50 per H-share, a chunky 104.68% premium to last close and around a six-year high
• Pre-Conditions – regulatory approval from NDRC, MoC and SAFE – have now been fulfilled. The Composite Doc is expected to be dispatched on or before the 24 January. 
• This Offer is a Merger by Absorption incorporating a Scheme-like vote. There is no tendering condition. Prudence Investment Management, which has now built a 9.79% stake, will be supportive.

• Naspers (NPN SJ) has underperformed Prosus NV (PRX SJ) by 3.9% since the start of the year.
• This has widened Naspers’ discount to Prosus’ market value to 13.3% from 9.9%, a level last seen during July 2023.
• Opportunity to put on a pairs trade, long NPN short PRX as we believe the relative underperformance is overdone and a structural shift in the discount is underway.

• In 4Q23, we expect Luckin Coffee revenue to increase 93% YoY to RMB7.1bn, and expect GPM/OPM to decline (5.8)/(1.3) ppt YoY to 19.0%/8.2%, respectively.
• We cut 4Q23 operating income by 12%. In 2024, we raised our revenue estimate by 5% due to the speed up of new store opening schedule.
• Furthermore, as price competition eased, we expect Luckin to offer less low-priced drinks, thus driving up OPM in 2024.

• Negative China sentiment from where Perfect Medical Health (1830 HK) derives about 15-20% of its revenue is causing the company’s share price performance to remain lackluster. 
• Stock trades on a 10% dividend yield with 15% of the market capitalization in cash, despite the outlook for HK, where it derives >75% of its revenue, is slightly better.
• With a 10-year average ROE of the business >40% and a 10.8x PE for FY24e, this stock is a dividend gem worth exploring. 

• Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
• In this note, we talk about the not-so-positive aspects of the deal.

• Although there’s range in the cost of capital, a sense of level is shared among investors, so even if a company estimates lower, it will be found to be incorrect.
• The essential problem isn’t scrutiny of the cost of capital, but rather that many companies produce low returns. Investors are skeptical that companies produce returns above their cost of capital.
• If stock prices do not rise, investors will continue to demand that companies improve their management, attributing this to the negative gap between the cost of capital and return.

• K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
• Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
• These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise at least US$1 billion.
• We previously discussed the IPO in Amer Sports IPO: The Bull Case and Amer Sports IPO: The Bear Case.
• In this note, we present our forecasts and take the first look at Amer’s potential valuation range.

• On 15 January, Orion Corp announced that its subsidiary PAN Orion Corp will purchase a 25.7% stake in Legochem Biosciences for 549 billion won. 
• LegoChem Bio specializes in antibody-drug conjugate (ADC) technology. Legochem Bio signed a total of 13 technology transfer contracts amounting to 8.7 trillion won in the past 9 years. 
• Most investors in Orion Corp would rather have the company focus on its core confectionery/snack business, rather than expand into high risk/high reward biotech business.

• On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.
• We are positive on Dongwon Industries. This large amount of share cancellation will boost the company’s earnings per share and book value per share.
• The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.

• Consensus estimates for Shakey’s Pizza (PIZZA PM) for Q4 FY23 (expected April 15th) are too conservative, implying a degrowth in profitability. We believe there would be a comfortable beat there. 
• We expect incremental growth plans on Potato Corner to continue to be the aggressive one-store-per-day addition. 
• Despite the recent move, the stock trades at 14x/10x PE FY23e/24e, with management-guided future revenue growth at 20% CAGR for the next three years.

Key points (machine generated)

• Mohawk Industries has a stock price of $80 per share, and despite a decline in the global construction market, the company has a strong market position and is considered a medium+ quality business.
• The current valuation at 8 times EBIT is seen as an attractive entry point, with expectations for EBIT in 2024 already lowered but still indicating a promising earnings power of $10-14 net income per share in the medium term.
• Mohawk Industries is seen as a cheap investment opportunity with significant growth potential in the future, and previous VIC notes have highlighted its potential. Readers are recommended to review the analyses provided by dsteiner84, Value1929, and Glory_Warriors.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• Tyson denies any involvement in illegal activities and believes the allegations made against it are baseless.
• The company is committed to defending itself and operating in compliance with all laws and regulations.
• The investigation into alleged collusion and price-fixing in the chicken industry is ongoing and the outcome is uncertain.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• The author believes that luxury clothing brand Ermenegildo Zegna is a compelling short opportunity due to an overvaluation based on a one-time hype super cycle.
• The author predicts that Zegna will reach its peak in popularity as the fashion boom/bust trend plays out.
• Weak brand standing within the stealth wealth category, significant exposure to the Chinese market, and execution risks from the acquisition of Tom Ford International are cited as reasons for the potential downside.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.
• The company said 2QFY24 EPS will be $0.57 versus preannouncement consensus of $0.27.
• Sales are expected to hit $100 million in the quarter, ahead of the preannouncement consensus of $96 million.

• We are reiterating our Buy rating, projections and price target after reviewing the Betterware January 2024 catalog.
• Further, management flexed the catalog categories back to 8, from a peak of 10, with the Better Kids and Pets categories now incorporated in other sections, allowing for an easier overall catalog read.
• As such, we believe the Betterware division continues to recover and reiterate our Buy rating and $17 price target for BWMX.

• Avia Avian (AVIA IJ) is Indonesia’s largest paint manufacturer with a strong track record, selling a wide range of architectural solutions products, with a countrywide distribution network. 
• The company continues to add to its product portfolio by adding more affordable products to cater for consumers trading down due to inflationary pressures depressing disposable incomes. 
• Avia Avian continues to add to its distribution network and has introduced express delivery that allows retailers to take more products but less inventory. Valuations are attractive with supportive dividends.

• Alongside results broadly aligning with consensus expectations, Seven & I Holdings (3382 JP) announced yet another major acquisition.
• The company has agreed to acquire 204 convenience stores in the US for an acquisition price of $950m.
• It seems that through aggressive overseas expansion and share buybacks, Seven & I is aiming to retain its overseas investors and simultaneously ward off potential investor activism.

• We expect PDD to report the highest growth in topline for 4Q23 over last three years. In particular, we believe its bottom line will beat by wide margin.
• But easy days are gone for PDD’s domestic e-commerce business and high base will kick in from 1Q24, resulting in tough comps, notable deceleration and potentially short-term share price volatility.
• We see 20% upside to current PDD valuation by assigning 20xPE to our US$12 billion adjusted net profit estimate for 2024.

• We provide a list of four companies including Fila Holdings, Kolmar BNH, KG Mobility, and Hanwha Galleria where the insiders have been buying shares of their own companies. 
• These four stocks are up on average 5.6% in the past one month, outperforming KOSPI which is down 1.6% in the same period.
• Insiders at Fila Holdings are probably increasing their stakes to capitalize on the price discrepancy as Fila Holdings’ 51% stake in Acushnet is 39% more than its current market cap. 

• Amer Sports (AS US) plans to raise more than US$1bn in its US IPO. Proceeds will be used to pay down loans to Anta Sports Products (2020 HK) led consortium.
• Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
• In this note, we talk about the not-so-positive aspects of the deal.

• After forecasting record sales for this year, Asics now wants to become the leading performance running brand in Japan, Europe and the US by 2026.
• To achieve this, Asics has invested in buying up many of the leading race platforms around the world to harvest data and link its brand to serious running events.
• The sports firm could also see significant growth for the Onitsuka Tiger brand, particularly across Asia.

Key points (machine generated)

• Herbalife’s international business is seeing an increase in volume trends, which is expected to result in a return to top-line growth in the current quarter.
• Investors are mainly focused on the 20% of revenue generated from the US market, but there is significant growth potential in the other 80% of the company’s international operations.
• Despite the performance of the US market, Herbalife is projected to earn more than $3.00 per share this year and $4.00 per share next year.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• The deal does not require regulatory approvals from Israel, increasing the chances of successful completion.
• The Middle East situation is unlikely to have a significant impact on the deal, as NGMS’s assets and value proposition remain stable.
• The deal offers an attractive spread and potential for a low-risk profit opportunity.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Saizeriya (7581 JP) reported FY1Q24 results (September to November) last week.  Sales grew 22% yoy, and was 2% higher than company guidance.  Operating profit grew 104%.
• Operating profit for the Asia business, the key growth driver of the company, was Y3.3bn, up 56% yoy and above management guidance. 
• Overall thesis remains intact, as the Asia business performed slightly better than expectations. 

• 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 2.4bn of A-shares on decent average activity. 
• Renewables and Kweichow Moutai (600519 CH) were the big net sells on the week.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks: Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• We recently added Plover Bay Technologies (1523 HK) to our list of companies under coverage. We believe there are some excellent near-term catalysts in the name. 

• We consider the fundamentals of Amer Sports (AS US) attractive and are positive towards its business outlook. Profitability has surged with solid growth rates in revenue and margin.
• Amer’s investment case lies in its multi-brand portfolio, niche, functional, and professional products, margin expansion/profitability improvement, and China growth prospects.
• Since the proceeds will be used to repay shareholder loans, this will lower its interest burden and strengthen its financial position. Hence, the IPO should further boost its profitability.

Key points (machine generated)

• Steve Madden is considered a good investment opportunity due to its strong management team and attractive price.
• The shoe industry has faced challenges, but Steve Madden is seen to have minimal downside risk due to its solid balance sheet and reasonable valuation.
• Steve Madden’s focus on branded shoes also makes it an attractive acquisition target, and if it achieves estimated 2025 earnings of $3 per share, its stock price could potentially increase by 40%.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Parent Genting  Berhad Malaysia flagship properties doing well but many  of its global holdings spur questions about asset allocation strategy.
• Genting Singapore, its integrated resort property Sentosa presents a strong buy story not only because it is  undervalued here but because its prospects post covid  are strong.
• GB’s US footprint by  contrast poses questions  about the  hurdle rate of those huge investments to date given the intense competitive pressures in  mature gaming  markets.

• Parent-Subsidiary listings present several problems: the disadvantages to parent company’s shareholders that drain subsidiary’s profits, the distortion of market capitalization between subsidiary and parent company, and independence of subsidiary’s management.
• While it’s an improvement for TSE to ask companies to disclose their purpose and policy of listing subsidiaries and affiliates, it doesn’t ensure the complete independence of subsidiaries and affiliates.
• More than 30% of listed companies are listed subsidiaries or affiliates. Investors are forced to look for investment targets while worrying about management independence in 70% of the companies.

• When the announcement for an MBO for Benesse Holdings (9783 JP) was made in November, they suggested it would take 3 months for approvals to launch. SAMR announced approval Wednesday.
• Japan approval should be (or have been) easy. One might expect this deal to launch prior to “early February”. The stock is trading through terms…. but…
• A reminder that this stock is TOO CHEAP. Bad management means low expectations means a decent premium still ends up at too low a price vs management’s own forecasts.

Key points (machine generated)

• Diageo, a top-performing business, is currently presenting a buying opportunity due to near-term fear.
• The company’s low multiples on normalized earnings power suggest a conservative base case of a 90% increase over the next five years.
• As fear diminishes, there is potential for a front-loaded Internal Rate of Return (IRR), and a bull case that could see shares rise 2.3 times or more. Overall, Diageo offers excellent intrinsic value and a low-risk investment opportunity.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Since my previous insight on WH Group (288 HK) in October 2023, the stock is up 17%, massively outperforming the Hang Seng Index (HSI INDEX).
• The company is still trading at 6x forward PE, compared to an average forward PE of 11x since 2016. 
• With the US business recovering as well as its potential IPO, and a stable China business, the stock remains a buy with limited downside. 

• JD.com, Inc. managed to surpass the revenue and earnings expectations of Wall Street.
• The company broadened its free shipping reach in the third quarter by leveraging enhanced logistics capabilities.
• The company strategically reduced the minimum order value for free shipping services, granting JD Plus members unlimited free shipping for 1P products.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Sunny Optical Technology Group
2. Yuexiu Property
3. Vedanta Resources
4. Tata Motors Ltd
5. Adani Ports & Special Economic Zone

and more…

• In the ever-evolving landscape of e-commerce, Wayfair Inc. finds itself at a crossroads, grappling with a significant loss in active customers and an alarming 82% drop in its share price over the past three years.
• As the Boston-based home goods retailer searches for a lifeline, two Chinese e-commerce powerhouses, Shein and Temu, emerge as potential suitors, according to recent reports.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on consumer health behemoth, Kenvue Inc.
• The company delivered a strong result and managed an all-around beat in the last quarter, following a successful IPO.
• The Skin Health and Beauty segment demonstrated a recovery with organic growth of 3.4%, and Essential Health achieved 3.8% organic growth.

• We are reiterating our Buy rating, $40 price target and projections for Regis as we look forward to 2024.
• Further, we believe management’s current strategic review will, at least, extend current debt maturities and could, potentially, re-equitize and delever the balance sheets.
• Finally, we believe there remains the potential to begin to once again focus on growing the franchise base after another round of reducing low value franchises in 1H24.

• Booking Holdings Inc. exceeded Wall Street’s expectations in terms of revenue as well as earnings, marking a notable milestone.
• Their valued customers booked a significant 276 million room nights, reflecting a robust 15% year-over-year increase.
• Notably, the Q3 room night expansion of 24% from 2019 exceeded expectations, underscoring the company’s resilience and adaptability.

• In IJTT (7315 JP) – A Truly Offensive Takeover Price and Process To Buy Out Minorities at 0.46x Book I laid it out like it was. It needed a bump. 
• It got a bump (IJTT (7315 JP) – Truly Offensive Takeover Price Gets Bumped, Offensively) to ¥850/share. From 0.46x PBR it got bumped to 0.48x PBR. For a cash-rich company. 
• Taking out net cash and securities, paying off deferred tax assets and UPBOs the deal is at 0.41x operating asset book for minorities. Still offensive. Beyond negligent. 

• NEV sales volume grew by 47% YoY in December 2023 and 36% in 2023.
• BYD’s sale volume grew by 62%, higher than the industry average, 36%, in 2023.
• All NEV stocks plunged, but we still believe BYD has an upside of 61%.

• Fast Retailing (9983 JP) announced its 1QFY24 results today, surpassing the consensus OP estimate by approximately 7%.
• Notably, Uniqlo International demonstrated robust growth, even from regions (North America & Europe) that were anticipated to underperform in this quarter. 
• The domestic business OP also managed to top consensus expectations as they managed to improve the gross margin by 2.7% YoY.

• After de-SPACing last August, shares in VinFast (VFS US), the EV arm of Vietnamese conglomerate Vingroup Jsc (VIC VN), went orbital, as discussed in Vingroup: VinFast’s Valuation Makes No Sense
• VinFast cratered shortly thereafter. But still trades at a hefty ~25x P/S, well above industry peers.
• Last Friday VinFast announced it was replacing both its CEO and CFO. Not a great look five months after IPOing. Even less attractive is the incoming CEO is VinGroup’s founder.

• We had thought that Fast Retailing may just miss Q1 numbers due to the warm weather; it beat on strong November and 270bps improvement in gross margin. 
• Following the slightly better results, we maintain our sales forecast at 3.1 trillion yen, but revise our operating profit estimate from 439 billion yen to 455 billion yen.
• Overall, we do not think the market will be overly surprised by the results and we maintain our view that the stock is over priced.

• Ola Electric is a vertically integrated pure EV player in India with both technology and manufacturing capabilities for EVs and EV components (including battery packs, motors and vehicle frames).
• The company has filed for an IPO to raise US$600m through the sale of new shares making it the first ever EV company to go for an IPO in India.
• Though the company’s growth story has been impressive, the sales volume is largely dependent on government subsidies raising concerns over its future prospects.

• BYD (1211 HK) overtook Tesla Motors (TSLA US) as the largest EV maker by deliveries in December 2023.
• Tesla is suspending work at its Berlin factory temporarily due to the tension in the Red Sea, while BYD’s supply chain is all in China.
• BYD is trading at deep discount to Tesla on PEG, PER, and PBR.

• Matahari Department Store saw a slower performance in 3Q2023 but looks well set for a recovery in 4Q2023 and early 2024 with elections, Chinese New Year and Lebaran ahead.
• The company plans to increase its store count by six in 2024, with four new format Matahari Department Stores outlets and two new concept MU&KU stores.
• Matahari Department Store continues to rollout new private label brands including Suko and Anyday to target different demographics to stimulate additional demand. Valuations are attractive on a 4.9x forward PER.

• Amer Sports (AS US) plans to raise more than US$1bn in its US IPO. Proceeds will be used to pay down loans to Anta Sports Products (2020 HK) led consortium.
• Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
• In this note, we talk about the positive aspects of the deal.

• We had conversations with industry consultants and business executives from China’s catering sector to understand the impact of the country’s weak economy on consumer behavior and sector outlook for 2024.
• We expect moderate pricing competition, continued rise of social media in generating online food orders and key industry players’ increased focus on smaller-size store formats.
• While we are still cautious about the sector in general, we reiterate bullish view on DPC Dash, which we believe will outperform and has potential to double in two years. 

• Back in June 2017, Toray Industries (3402 JP) acquired a 28.03% stake in Pacific Textiles (1382 HK) (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.
• Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC. 
• Relatively inexpensive, high digit yield and M&A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for Weiqiao (2698 HK) and David Webb taking a 5% stake. 

• Regulatory risks back in the spotlight, dampening decent year for both counters.
• At the end of last year, China’s regulator released a proposal to introduce spending and time limits on gaming (22 Dec).
• Tencent was down 12% on the day, Naspers and Prosus followed suit with more aggressive selling, sending both stocks down 17% for the half day of trading. 

• Xtep International (1368 HK) announced an operational update for 4Q23, with retail sales growing more than 30% for the Xtep brand (off of a low base in 4Q22).
• The overall quality of the retail sales growth is low, as the growth was mainly driven by higher discount level (around 30% compared to 25-30% in the previous quarter). 
• I still prefer Anta over Xtep at this stage, as Xtep is more of a beta play if the consumer sentiment turns around in China. 

• US Soybean futures have tumbled 4% from their close in 2023 due to favourable weather in Brazil as well as fading demand outlook in US.
• Rainfall in Brazil has arrived in droves and remains strong this week but forecasts point to inconsistent rain next week.
• CONAB and USDA reports this week should be watched for potential downward revisions in Brazil’s production, following Safras e Mercado’s lead.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
• In Amer Sports 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 ball & racquet sports’ deteriorating performance, EBIT margin not materially improving under the consortium’s ownership, cash burn and high leverage.

• Wilmar International (WIL SP)‘s current implied stub and simple ratio (Wilmar/Yihai Kerry Arawana Holdings C (300999 CH)) are both at all-time highs. 
• Preceding my comments on Wilmar are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise US$2 billion.
• In 2019, a consortium of Anta Sports Products (2020 HK), FountainVest, Anamered Investments and Tencent (700 HK) acquired Amer at an EV of €5.5 billion.  
• The bull case rests on the rapid growth and gross margin improvement under the consortium’s ownership, along with technical apparel and outdoor performance’s improving revenue and margin profile. 

• The upcoming Chinese New Year travel rush is expected to see air passenger volume reach 80m, a 9.8% increase vs. 2019. Tongcheng Travel Holdings (780 HK) is a key beneficiary.
• In addition to air ticket booking, Tongcheng can gain from demand for related services and products. The focus on lower-tier cities will make it better satisfy their demand. 
• Its FY24F PER of 15.2x is lower than sector average of 16.4x, yet 3-year EPS CAGR of 30.7% is higher. Its underperformance against Trip.com (TCOM US) can be reversed.

• The business model of MIXUE is S2B2C. The expansive and highly efficient supply chain is the bedrock of MIXUE’s industry leading performance and scale, setting it apart from its peers.
• MIXUE has more flexibility to diversify its business to explore new growth points and is also more resilient to risks/industry changes, which determines sustainability and growth ceiling of future development.
• As competition for freshly-made tea drinks industry intensifies, capital has become “impatient”. As an industry leader, now is the best time for an IPO. MIXUE’s valuation could reach US$10 billion.

• It is an expected option for a parent company to make a profitable subsidiary wholly owned by the parent company, an environment that demands improved ROE.
• It is natural that the market would receive a stock offering by a large shareholder with more information than others as the stock price is higher than its fair value.
• It’s not unrelated to the fact that few shareholder proposals are approved and company proposals are rejected at AGMs, and that most domestic investment managers affiliates of major financial institutions.

• Guming Holdings (GUM HK) is looking to raise US$300m in its upcoming Hong Kong IPO. The bookrunners on the deal are Goldman Sachs, and UBS.
• Guming Holdings (Guming) is a maker of freshly-made beverages in China.
• As per CIC, its “Good me” brand is China’s largest mid-priced freshly-made tea store brand in terms of both GMV in 2023 and store count as of Dec 2023.

• FirstCry (0172540D IN) seeks to raise up to US$700m in its upcoming India IPO. The deal will be run by Kotak, Morgan Stanley, Bank of America, JM Financial and Avendus.
• 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 India, FirstCry sells Mothers’, Babies’ and Kids’ products through its online platform, company-owned modern stores, franchisee-owned modern stores and general trade retail distribution.