Consumer

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight is Li Ning (2331 HK) and Meitu Inc (1357 HK).

• We visited the core of the Hindi Hinterland, the “City of Patna,” the capital and largest city of Bihar, the country’s third most populous state.
• While the trip paints an opportunistic and optimistic picture of Bihar, the situation of unemployment is something that still warrants attention.
• Focus companies: Aditya Vision (AVL IN) , Eicher Motors (EIM IN)  , Hero Motocorp (HMCL IN) and Fino Payments Bank Ltd (FINOPB IN). 

• Seven Eleven and Familymart have already sent panic through the offices of major advertising agencies by setting up their own retail media networks. 
• Now, Mitsubishi Shokuhin will do the same, using its trading company connections and  its existing ties to 10,000 clients at either end of the supply chain.
• To personalise ads, it is working with the data analysis of geolocation company Unerry. 

• Nike (NKE US) reported 2QFY24 results last week with a guidance cut, as the company cut FY24 full-year sales guidance to around +1%, compared to +mid-single-digit in the previous guidance. 
• Shenzhou Intl Group Holdings (2313 HK) saw its stock drop by 8% the following day, given that Nike is Shenzhou’s most important customer, making up 30% of Shenzhou’s sales. 
• Nike’s inventory is down another 14% yoy, and down high-single-digit compared to the previous quarter 1QFY24. 

• Not much progress has been made in the early disclosure of convocation notices. The key to even earlier disclosure of convocation notices is the moving up of earnings announcement dates.
• Overseas investors require that all materials in the notice of convocation be provided translated in English, and only 27.3% of prime market listed companies have responded.
• Few companies file their annual securities reports prior to AGMs. This can be taken as companies’ intention to provide as little detailed information as possible to shareholders prior to AGMs.

• In 2019, it became apparent Fujitsu Ltd (6702 JP) wanted to sell down its stakes in non-core businesses (Shinko Electric, Fujitsu General, and FDK), and move on to better things.
• In early January 2023, a Bloomberg article suggested a sale process. A 20 Jan 2023 article suggested Fujitsu General’s auction was imminent. I wrote a piece. It was not bullish.
• The stock rose a bit, then fell 40+% through last week. Now another article suggests some urgency at Fujitsu. That changes things.

• IJTT Co., Ltd. (7315 JP) has recommended Sparx Group (8739 JP)’s revised tender offer of JPY850, 4.7% premium to its previous JPY812 offer. The revised offer has been declared final.
• The Isuzu Motors (7202 JP) share repurchase price has risen 4.0% from JPY677 to JPY704. The tender closes on 15 January 2024. All other terms are unchanged.
• The shares are trading above the revised terms. A final offer and no competing bidder points to an unfavourable risk/reward profile – a 21% downside on a deal break. 

• The Korean Supreme Court’s ruling on the stock transfer lawsuit between Hahn & Company private equity fund and Namyang Dairy’s Chairman Hong Won-Sik is confirmed for 4 January 2024.
• The expectation of Hahn & Co winning this legal dispute has positively impacted the share price of Namyang Dairy Products.
• The higher probability scenario is for the Korean Supreme Court to rule in favor of Hahn & Co, agreeing with the decisions of the two lower courts in Korea.

• IJTT Co., Ltd. (7315 JP) was perhaps one of the lower-priced parent takeovers (Isuzu remains central to the bidder post-buyout) at 0.46x book. Today, the last day, it got bumped.
• The new price is ¥850/share vs ¥812/share. +4.7% and a whopping 0.48x book now. ¥850 is where the stock traded just before the announcement. It immediately jumped to ¥875/share.
• It appears Isuzu is not getting any more money out of this, but they should be OK. They are buying back in at 0.48x book. With leverage. 

• The almost viral popularity of Familymart’s line of basic clothing items continues to grow and shows the real potential for convenience stores to diversify and adapt. 
• Backed by Itochu, Familymart has expanded the product range and added new, limited edition items and brand collaborations, creating a success story that Seven Eleven may find hard to emulate.
• Lawson, however, is controlled by Mitsubishi Corp which happens to have a clothing production arm that was behind the early success of Uniqlo and Adastria.

• We compile a report card for dividend-yielding mid-caps that filter out on favorable characteristics of having net cash, decent ROEs, growth, etc. 
• It’s been a disappointing year in share price performance owing to the negativity surrounding China and soft business performance in some cases, but there have been some bright spots.
• We help provide a comprehensive list of our updates on some names and an outlook for 2024. It’s our last insight for 2023, so happy new year everyone!

• “Pent-Up demand”? No signs of it anywhere in outbound or domestic metrics
• Sluggish outbound demand, capacity trajectories continued to lag in November
• YTD share performance weak, mirrors disappointing recovery in travel activity

• 60% companies have established policies to promote human capital. Companies will be asked whether their goals are reasonable and whether their actual measures and progress toward those goals are sufficient.
• Since many companies have set a target of 14-15% for % female managerial positions around 2025, it makes us worry whether they can really achieve 30% target in 2030.
• Few companies have disclosed specific impact estimates under certain conditions. It’s expected that some proactive companies will push others to do the same regarding “Scope 3” in the future.

• The New and Better (5mos old) A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND and NORTHBOUND flows were both sells, respectively, but liquid Hs with H/A pairs OUT-perform As on average by 100+bp. Liquidation by overseas investors feels finished.
• STILL time to go long Hs vs As for the new year at 52wk wide discounts.

• Nike’s Q2 results lead to a 12% drop in its shares, affecting sector peers Onon, Skechers, and Asics with significant declines.
• Challenging trading conditions in China and Europe, coupled with a subdued digital traffic outlook from Nike, raise broader concerns for the sector.
• Asics stock declines 20% post-Nike’s fall, presenting an attractive buying opportunity with an estimated 20% upside, positioning Asics as a cost-effective play in the global performance running market.

• Fast entry is now permissible for KOSDAQ 150. Within 15 trading days post-listing, the average daily total market cap must rank among the top 30 ordinary stocks on KOSDAQ.
• KOSDAQ 150 will also allow newly established entities in corporate spin-offs, following KOSPI 200’s model. Inclusion is granted if the subsidiary ranks within KOSDAQ 150’s top 160 (80%).
• The ₩1.5T cutoff for KOSDAQ 150 fast entry suggests potential candidates nearing this threshold, like Oasis, Kurly (and maybe Kakao Entertainment).

• H1 FY24 (May-Oct 2023) was off to a sluggish start for the company, with a 4.7%/35% decline in revenue/adjusted NPAT. 
• The company cited soft demand, loss of business days due to inclement weather, one-offs in relocation or warehouses to efficient locations, and increased staff costs for poor profits.
• Post the correction, the stock trades at a trailing PE of 11x and dividend yield of 8%, but we will have to wait further out as business conditions are worse. 

• Many companies had the goal of IPOs as a means to save taxes rather than growth, but it’s good to seriously consider go private for the sake of their shareholders.
• This is due to companies’ awareness of listing costs, such as demands from overseas investors for improved governance and requests from TSE for “management with awareness of the stock price.”
• Another issue that needs to be examined is the loss of growth and profitability for companies that are delisted and then relisted.

• GoTo senior management hosted an analyst call last week to provide further details on both the reasons behind the Tokopedia sale and the potential synergies and benefits of the move. 
• After the deal completes, GoTo will cede all management control but will receive a revenue stream from core GTV, which excludes digital products and certain big-ticket items.
• Plumbing for this deal effectively de-risks its exposure to e-commerce given it is not required to inject any new capital but it does take away future optionality on Tokpedia’s growth.  

• CPNG will provide Farfetch with a bridge loan to save it from default. In exchange, CPNG acquires Farfetch business and its US$ 460mn+ net debt.
• For Farfetch to achieve profitability, CPNG will need to conduct major layoffs and cancel brand deals, but both are difficult to achieve, in our view.
• CPNG only found limited overseas success in Taiwan, and EU poses an even greater challenge. We cut TP to US$ 14.1 on increased debt and FCF burden.

• O Ta Precision Industry is a company based in Taiwan that mainly makes golf clubs for global golf equipment branded companies including Titleist, PXG, Mizuno, and Honma.
• O-Ta Precision’s dividend yield averaged 9.2% annually from 2019 to 2022. Its annual dividend payout averaged 68.5% in the same period.
• We like the company’s strong niche in the golf club OEM/ODM business with excellent list of customers with its its historically high dividend payout ratio and dividend yields. 

• In the latest wave of management changes, Eddie Wu, Jack Ma’s trusted associate has staged a comeback, securing pivotal roles.
• We believe this is not a mere coincidence. Jack Ma seems to be orchestrating moves from behind the scenes, with Eddie Wu strategically positioned to represent his influence.
• The Chinese government’s reaction to Jack Ma’s increased involvement may impact Alibaba Group Holding (9988 HK)‘s price performance in the short term.

• This is our 5th annual edition of the IPOs Pipeline Worldwide (Top 100 Companies) report.
• After weak global IPO markets in 2022 and 2023, the near term trend for global IPOs continues to remain lackluster.
• For those investors that closely monitor the global IPO opportunities, this is a good reference insight to check out the largest potential IPOs that could get completed next year.

• Gree Electric Appliances (000651 CH) announced a profit alert for FY22 yesterday.  Net profit is expected to increase 10.2% – 19.6% yoy for the whole year.
• The resilient result of Gree should alleviate concerns of the market that Midea is too correlated with China’s new home sales. 
• The stock is trading at 10x 2024E earnings compared to an average of 13x over the last 10 years, with earnings likely growing at a high-single-digit pace.

• Sumber Alfaria Trijaya has decided to pare back the velocity of the expansion of Lawson convenience stores as it consolidates its leading position and maximises efficiencies.
• 4Q2023 saw slower growth in November but December should be stronger, whilst its store expansion for 2023 reached 1,700 new stores, with plans for around 1,300 new stores in 2024.
• Sumber Alfaria Trijaya remains the best way to play the minimarket space in Indonesia. 4Q 2023 numbers should provide a positive catalyst given it is the seasonally high quarter. 

• Lots of financial analysts and other Calcbench users might be wishing they could sail away on a tropical cruise as we enter the holiday slow season, so perhaps it’s a good time to visit Carnival Corp. ($CCL) and the company’s latest financial performance. 
• Carnival filed its latest quarterly (and fiscal year-end) earnings release on Thursday, and top-line numbers looked pretty good for a company still recovering from the pandemic’s apocalyptic effects four years ago.
• Quarterly revenue jumped 40.6 percent from the year-ago period, to $5.4 billion; annual revenue soared 77.5 percent to $21.6 billion. 

• Regulatory Tangles:Promoters faced cricket betting allegations, SEBI penalties, debarment from financial markets and a litany of investigations. Legal and financial risks loom due to regulatory delays and unresolved litigations.
• Operational and Financial Hurdles:Excessive inventory, delayed payments, and opaque related-party transactions.Weaker margins, ROE, and underutilized manufacturing hint at broader governance frailty.
• Debt Dilemmas and Transparency Concerns: Heavy reliance on high-interest promoter loans. Governance lapses are reflected in financial metrics, raising questions about transparency and conflicts of interest.

• Local news reported an unnamed expert suggesting ByteDance might be buying Eleme for US$7bn, leading to share of Meituan to fall;
• While we believe (1) buying a food delivery business to complement Douyin’s in-store business makes some sense and…
• (2) ByteDance has been aggressive in pushing the boundary of its businesses, an entry into domestic food delivery is a daunting challenge that yields very little benefits for ByteDance;

• LIFULL runs the LIFULL Home’s real estate website. Compared to its main rival, whose strategy is focused mainly on the quantity of listings, LIFULL’s aim is to achieve greater quality, as measured by the percentage of inquiries that lead to sales for professional real estate clients.
• While others primarily charge a fixed fee for listings, LIFULL charges a combination of fixed fees and incentive fees based on the number of inquiries received for a listing.
• Compared to its main rival LIFULL tends to invest more heavily in software development and considerably less on advertising. 

• Amid demand by consumers for cost effective items, we expect that demand for discounted apparel will sustain into 2024…
• We expect high levels of apparel sales continued in December, as VIPS reported double-digit GMV growth for various types of winter related apparel items during 12/12…
• China’s cost-conscious spending environment favors VIPS, in our view. We maintain BUY and raise TP to US$ 18.1, implying 7x FY24 non-GAAP P/E.

• Google Search trends for Tokyo Disneyland and DisneySea in recent months point to potential vulnerabilities in Oriental Land’s FQ3 performance.
• Tokyo Disneyland’s rising ticket prices have narrowed the cost gap with Shanghai and Hong Kong Disneyland, potentially leading to a loss of customers to its counterparts.
• Should Oriental Land (4661 JP) shares fail to surpass its recent peak in January next year, we think shares could undergo a rather substantial correction.

• Kurabo announced a bigly buyback on Tuesday. At last price it is equivalent to 8+% of shares out. Most likely to target buybacks from cross-holders. 
• The company is not cash-rich, but it is financial asset and real estate-rich. And it trades at cheap multiples without even thinking about those assets (themselves worth the market cap).
• The TSE’s “PBR1 OR BUST” movement combined with starting low valuation, high payout, excess assets, mean this value trap has room to move. 

• The Cho brothers are currently sparring over control of Hankook & Company (000240 KS), and in turn, its 30.7% stake in Hankook Tire (161390 KS).
• After the honorary chairman of Hankook backed the younger son (& chairman of Hankook), PE-outfit MBK, aligned with the elder son, bumped its public tender Offer by 20% to ₩24,000/share.
• Hankook is currently trading 27.3% adrift of the revised terms. That pretty much sums up the situation. The public tender closes on December 25. However, December 23-25 are holidays.

• Credo Brands (Mufti) (CREDO IN) IPO opens as a full OFS worth INR 5.5 bn. 
• The company operates ‘Mufti’ which is one of the renowned brands in Indian Men Casual Fashion category. 
• CMBL faces several questions including employee pay vs KMP, accounting for unsold inventory, delay in important payments, conflict of interest with BoD/SMPs etc.

• China East Education (667 HK) is interesting as it is probably the only education company with no debt. Net cash amounted to Rmb2.1bn, or 42% of its market capitalisation. 
• Earnings have bottomed out and the marginal YoY decline in 1H23 is due to upfront costs for staff recruitment. Its vocational education focus also faces fewer regulatory risks.
• We consider it a potential privatisation candidate at 0.8x P/B. Its major shareholders owned 75% of the company, leaving a free float of less than HK$1.4bn.

• Soybean futures maintained above USc 1,300/bushel indicating continued strong support at the level.
• Large export sales announcements continued over the last week, through November, net Soybean sales from the US were higher than their 5Y average. December pace remains strong too.
• CONAB cut production forecast for Soybean in Brazil due to unfavorable weather over November. Weather has improved recently with rains expected in key agricultural region.

• Ricegrowers Limited, trading as SunRice (ASX:SGLLV), has released its H1 FY24 results, delivering RaaS adjusted EBITDA of $69m (+68%) and adjusted NPAT of $33.3m (+107%), both well above RaaS estimates of $57.6m and $25m respectively.
• Divisionally the key surprise was International, delivering adjusted EBITDA of $33m, 125% above the PCP and 57% above RaaS estimates on the back of increases scale and reach, price increases and lower freight costs.
• Operating cash flow was the strongest since H2 FY18 despite a high tax payment as working capital improved from lower receivables and inventory reductions. 

Games Workshop Group (GAW) has signed an agreement with Amazon Content Services, a subsidiary of Amazon.com, to prospectively develop GAW’s intellectual property (IP) into film and television content and to grant associated merchandising rights, initially focused on the Warhammer 40k universe. The partnership follows the announcement in December 2022 when management said an agreement had been reached in principle. Although the content will mainly be focused on GAW’s Warhammer 40k, Amazon has the option to develop other IP within GAW’s fantasy universe following the initial release. The first year has been set out as a period for creative discussions, after which the agreement will go ahead if both GAW and Amazon sign off on the creative guidelines.

• Tsuruha sees itself as another recent victim of activist fund pressure. 
• The No. 2 drugstore chain has grown successfully over the past decade and today has the widest store coverage of any chain in its sector.
• This summer Aeon supported activists’ demand for strategic change. Tsuruha thinks the only way it can keep its independence may be to take the company private – Aeon probably agrees.