Consumer

• Both the implied stub for Amorepacific Group (002790 KS) and the simple ratio (Group/Amorepacific Corp (090430 KS)) are around lifetime low levels. 
• Preceding my comments on Amorepacific 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%.

• JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
• A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
• Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2024 based on trading data as of end-October 2023.

• Honasa Consumer is looking to raise about US$200m in its upcoming India IPO.
• HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
• In our previous note, we looked at the company’s past performance. In this note, we talk about the RHP updates and valuations.

• MSCI China Funds are starting to engage with New Oriental Education & Technology after a big exodus in 2021 following China’s Tech Crackdown.
• Since the lows of 2022, New Oriental Education has been one of the key beneficiaries of active fund rotation.
• Previous holders such as HSBC, Mirae and BlackRock have bought back in after closing out in 2021, but there is still a long way to go to reach previous highs.

• Panasonic’s Q2 results showed flat consolidated sales of Y2,090 billion, with a 24% YoY increase in adjusted operating profit.
• FY3/24 outlook was revised down with sales and operating profit reductions across segments, notably in Lifestyle and Energy
• Our concerns include the company’s complex structure, low overall profitability, uncertainties about valuing IRA credits, and challenges stemming from economic conditions, leading to pessimism about Panasonic’s stock price

• The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• Last week the portfolio bounced back, erasing the previous week’s losses. Southbound continues to see net inflows and this week all H/A Pair sectors saw Hs outperform except Energy.
• High-Div SOEs continue to be weak. Banks, Pharma, Industrials, and Utilities spreads continue to be Very Volatile. Quiddity Favourite Great Wall Motor (2333 HK) up 7% after Q3 results Friday.

• Bukalapak (BUKA IJ) 3Q2023 results confirmed that it is on track to achieving EBITDA breakeven in 4Q2023, with strong revenue growth and a significant improvement in its contribution margin.
• The was a slight slowdown in marketplace revenue QoQ due to a high Lebaran base, mainly due to slower gaming. 4Q2023 should see a strong recovery and higher take rates. 
• Bukalapak looks to be pressing all the right buttons but more granularity on what is driving higher take rates would be well-received . Valuations look attractive relative to peers.

• September outbound tourism metrics plummeted, in some cases to levels seen in Q223
• Domestic air travel demand also fell vs August; normal seasonal patterns are dominating
• As recovery fizzles, travel shares languish, and we see few reasons for optimism, near-term

• Lalatech charges drivers more commissions but less membership fees to raise the general fees.
• Drivers went on strike to protest against the income squeeze, but they did not  achieve their target.
• We believe Lalatech is the dominator of the low-end truck-hiring market.

• JD is in fact competing with a broadcaster on Alibaba’s app, but not Alibaba itself.
• Trip.com’s domestic orders during National Holidays were double last year.
• New Oriental’s revenue increased strongly with new learning centers in 1Q24.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Vanke
• Gajah Tunggal
• Reliance Industries
• Xiaomi Corp
• Yankuang Energy Group

• Investors appear to be divided in  outlook  on Wynn. Some concern about post covid Las Vegas boom losing steam vs. exploding  Macau recovery beyond most early forecasts.
• Wynn’s Macau properties are particularly aimed at the all  important premium  mass segment which is already showing itself in dramatic casino win  games at  Wynn propeties.
• The company still  benefits from the  vision  of  founder Steve Wynn in the properties developed before his controversial resignation in 2018.

• Stellantis, a merger between France’s PSA with Fiat Chrysler Automobiles NV (FCAM BQ), is buying a 17% stake (14.53% fully diluted) in Zhejiang Leapmotor Technologie (9863 HK). 
• Leapmotor will issue 194mn H shares at HK$43.8/share, a 19% premium to last close, in a HK$8.51bn transaction. Stellantis will also hold a 51% stake in newly formed JV. 
• Stellantis is paying a chunky 3.64x market cap-trailing-revenue; but ~2.25x forward revs, which compares to the average for key peers of 1.9x.

• Shares of Tingyi Holding are oversold. It has high dividend yield and attractive valuations. Its core instant noodles and beverage businesses are turning around this year. 
• The consensus expects DPS of HKD 0.62 for Tingyi in 2023 which would suggest a dividend yield of 6.1%. Tingyi Holding’s dividend yield averaged 5% annually from 2018 to 2022.
• Tingyi’s “Master Kong” instant noodle is one of the best known brands in China. The company is also one of the largest producers and distributors of beverages in China. 

• Vinda International (3331 HK) announced 3Q23 results, with net profit up 37% yoy as margins started to recover. 
• Reported sales growth picked up speed, growing at 8% yoy (vs. 4% growth in 1H23), and 12% at constant exchange rates (vs. 10% growth in 1H23). 
• More importantly, gross margin recovered quarter-on-quarter from a 0.2ppt decline in 2Q23 to a 2.3ppt increase in 3Q23.

• Li Ning (2331 HK) is trading down 18% today due to a bad 3Q23 operational date. 
• Retail sales grew by only mid-single-digit yoy, while same-store-sales recorded a mid-single-digit decline yoy. 
• Given the operational update, FY23 earnings should be revised down, to likely flat or low-single-digit growth.

• Vinfast’s shares have fallen more than 80% since its IPO in August. Shares are currently trading at $4.93 per share compared to IPO open price of $22 per share.
• On 20th October, Vinfast announced that the company has entered into a standby equity subscription agreement of up to $1.0bn with Yorkville Advisors which has a term of 36 months.
• A majority of Vinfast’s EV sales in 9M2023 were to related parties or affiliates of its parent, raising serious concerns over the company’s ability to establish a market presence.  

• Cello World is looking to raise around US$240m in its upcoming India IPO.
• Cello World (CW) is an Indian consumer products company. The firm is a leading company in the consumerware market in India.
• In our previous note, we looked at the company’s past performance. In this note, we talk about valuations.

• FSN E-Commerce Ventures (Nykaa) (NYKAA IN) seems to be facing problems in its core BPC segment. 
• Our casual LinkedIn browsing led us to an interesting post on the company and its practices that warrant attention.
• We have previously highlighted issues with the way the company has managed its Fashion Business, an attack on the BPC business could compound issues further.

• Although we are bullish on the Porsche story, we note a few relevant elements of discussion that could pose threats/hurdles/explain share price overhang
• Conflict of interest: Oliver Blume is both CEO of Porsche and VW. Can you be Porsche’s CEO just part-time?
• Once upon a time, Porsche had a great story to tell. What’s the new story?

• Honasa Consumer (HC) is looking to raise about US$200m in its upcoming India IPO.
• HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
• In our previous note, we looked at the company’s past performance. In this note, we talk about the RHP updates and valuations.

• Cirrus Aircraft (0153126D US) is looking to raise up to US$300m in its upcoming HK IPO. 
• Cirrus Aircraft designs, develops, manufactures, and sells premium aircrafts. Its two aircraft product lines, the SR2X Series and the Vision Jet, are currently certified and validated in over 60 countries.
• CA has managed to grow its profitability steadily over the track record period. However, the firm is subjected to heightened regulatory risks as US and China tensions rise.

• There were only 14 new listing on the Main Board of the HKEX (388 HK) in the third quarter. Half of the listings were in the last week of September.
• Of those stocks, only Tuhu Car (9690 HK) and Keep (3650 HK) have a chance of being added to the HSCI in December and then into Southbound Stock Connect.
• Keep Inc (3650 HK) could be added to Stock Connect in early December while Tuhu Car (9690 HK) will have to wait till April for inclusion to the link.

• L’Occitane (973 HK) reported 2QFY24 operational update last night.  Sales grew 17% yoy on reported currency, and up 25% yoy on constant currency. 
• The bright spot of the release is the growth of Sol de Janeiro, the Brazilian-inspired premium body care brand, which grew 202% yoy in constant currency in the quarter.
• Sol de Janeiro has the highest EBIT margin among the 3 major brands of the company, at 24.6% in FY23, suggesting highly profitable growth.

• Cello World is looking to raise around US$240m in its upcoming India IPO.
• Cello World (CW) is an Indian consumer products company. The firm is a leading company in the consumerware market in India.
• In this note, we look at the company’s past performance.

• Despite conservative 2023 guidance last quarter, Japan Tobacco (2914 JP) is primed to exceed expectations in the 3rd quarter of 2023.
• Despite no new domestic price hikes, Japan Tobacco’s volume recovery post-hikes is expected to help sustain the revenue and profit growth momentum.
• New price increases in the Philippines and the UK, coupled with last year’s hikes spillover, are expected to boost Japan Tobacco’s earnings; and the yen’s depreciation amplifies these gains.

• Oriental Watch (398 HK) went ex-dividend on the 4th of October. The stock gapped down more than what it paid out and now trades at 6x trailing PE.  
• Cash at 1.1 bn HKD is greater than 50% of market capitalization, with a high trailing dividend yield of 16.2% and a rich history of paying chunky dividends. 
• We monitor the sales environment for HK/China, which shows a reasonably good pick-up in HK but lackluster for China.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Japfa Comfeed’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Strong”.

• GTX continued to showcase its ability to generate free cash flow even though the Euro weakened sequentially. Ahead of the results, we had reduced our estimates citing the stronger Dollar.
• GTX held an investor day following the quarterly results highlighting how the variable cost structure allows the Company to maintain profitability and generate free cash flow
• GTX has introduced several new turbochargers for the light vehicle, commercial, and industrial markets. GTX used the investor day to introduce the GT80

• Q3 revenues were strong, 4.7% ahead of consensus expectations, and EBIT margin was slightly below at 17% vs. consensus expectations of 17.8%.
• Key positives are strong revenue growth, EBITDA in Automotive and FCF generation.
• Post the cautious conference call in Q2, a weaker EBIT margin in Q3 was somewhat expected.

paragon expects extended summer breaks and anticipated year-end shutdowns of customer plants to restrict growth in H223. We have reduced our earnings expectations to reflect the disposal of the battery business and resulting lower growth trajectory, with FY23 and FY24 EPS estimates falling by 9% and 11% respectively. However, the debt reduction continues and the ownership issues have been resolved. Further news on the plan for the Eurobond redemption has yet to be communicated, but should improve the equity outlook and investor sentiment.

• Tesla’s Q3 10-Q reveals CFO Zach Kirkhorn was suddenly out because he was fired.
• The company also made Kirkhorn reveal any whistleblower efforts he pursued—and then declare Tesla broke no laws. Tesla threatened “legal action” if he talks to the press. 
• Is Tesla setting up its ex-CFO to take a fall?

• Shimano Q3 results show a 32% YoY net sales decline, led by a 38% drop in bike component sales, BUT both sales and profit beat expectations
• The company maintains cost control, sees improving gross margins, and reduces inventories, while cash flow and balance sheet remain strong
• With the upward revision in full-year guidance, we believe the market will look through the still challenging Q4 outlook and focus instead on 2024 normalization and relatively low valuation

• Pop Mart International Group L (9992 HK) announced at noon today a business update on 3Q23.
• Overall sales in 3Q23 grew 35-40% yoy, with domestic China sales up 25-30% yoy and international sales up 120-125% yoy. 
• Thesis intact, as the 3Q23 update showed that the international business continued to grow rapidly at 120-125% yoy growth.

• Equities not yet out of the woods, but as long as SPX is above 4165-4200, most signs point to this being a normal pullback within the ongoing bullish SPX trend.
• Similarly, the Nasdaq 100 (QQQ) is testing support at $350-$355 (the 4-month bull flag/falling wedge pattern). The Russell 2000 is also approaching 1+ year support at 1640.
• Breakdowns would be our cue to get defensive, as it would likely lead to precipitous declines. However, if supports hold, this is where risk/reward is skewed in favor of buyers.

• The current offer from Apollo of 65p/share undervalues the company. RTN ex-Leisure can achieve huge upside merely by executing the business plan. The shares have consistently traded above 65p.
• Activist investors are piling on the register and there is a strong possibility that shareholders push for an offer sweetening (c.75p). RTN is in play, another PE bidder could interlope. 
• The bid is below mid-2021 highs of around 140p. Although a 34% premium is optically good, a conservative SOTP valuation provides a fair value estimate of 78.7p/share (8.7x EV/24eEBITDA).

• MR DIY (MRDIY MK) remains a standout retailer in Malaysia with its commanding position in the home improvement space and beyond, playing into increased demand for value-for-money products.
• The slower growth last quarter came from a high base last year. 3Q2023 should see a strong rebound in growth providing a positive catalyst plus its store expansion is on-track.
• MR DIY‘s can finance its store expansion from internally generated cashflows and should start to see SSSG recover over the coming quarters. Valuations looking more reasonable as growth recovers.

• Ryohin Keikaku’s biggest weakness is its unwieldy and expensive supply chains, with hundreds of suppliers across its three main categories of household, apparel and food.
• The Muji operator just acquired a large team from one of its principle clothing supply partners, Mitsubishi, to finally streamline its supply chains and improve cost performance in clothing. 
• This should have a positive impact on its cost of goods, margins and inventory levels, allowing for quicker responses to trends at a lower price at home and overseas.

The Europe HY Trade Book for October 2023 includes current trade recommendations drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

• The Somewhat-Brand-Spanking New (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• We used to do it. We brought it back better, with lots of cool interactive tables, and charts, heat maps, and comparative data. And 50 Trade Recommendations.
• The last 10wks (since the start of the new Tracker and Portfolio 11 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%, -0.29%, -0.71%, -68%.

• During 2QFY24, Tokyo Disneyland and Tokyo DisneySea both saw a QoQ decline in Google search interest.
• This suggests to us that there might be an earnings miss when Oriental Land (4661 JP) reports its FQ2 results on October 30, 2023.
• Additionally, there are potential downside risks to both FY24 and medium-term consensus projections following a revised FY24 guidance announcement.

• With the review period nearly complete, we expect 7 changes to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December. Couple of changes are low probability though.
• The Materials sector could be the biggest gainer at the rebalance while nearly all deletions could come from the Consumer Discretionary sector.
• The impact on the potential inclusion ranges from 0.15-15 days of ADV while the impact on the potential deletions varies from 1.7-8.1 days of ADV.

• Apple fired five employees of China App Store for corruption.
• Yonghui follows Alibaba’s Freshippo outlets to open discounted stores this year.
• JD.com sued 44 companies and 3 persons for abusing JD’s trademark.

• This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
• The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
• We like the nifty interactive tables+charts (please play with them!) and we welcome feedback. This 5-day week saw HKD 3.9bn+ of net buying. That makes 13 weeks of net inflows.

• The recent pullback in the share price of Xinhua Winshare (811 HK) is overdone, and it is now on attractive 4.5x PER, 6.7% yield, and 0.46x P/B. 
• It has minimal exposure to economic slowdown and global geopolitical tension. There is solid revenue growth and margin expansion in 1H23, and demand is totally domestic and resilient.
• Net cash amounted to 109% of its share price and this has not yet included Rmb2.2bn of equity investment on hand. Still, it is expected to generate ROE of 12%.

• Porsche is one of the world’s most successful luxury automotive manufactures, specializing in high-performance sports cars, SUVs, and sports limousines
• The investment case revolves around Porsche’s continued sustainable structural growth, electrification, best-in-class technology, luxury nature, and sustainability capabilities
• The stock price is trading near its IPO price of September 2022, at a 25% discount to summer highs.

• This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
• The performance/spread/flow data on liquid names is presented for 5 days and 4 weeks and anything seen can be ranked in tables or selected/charted (names, sectors, outperformance, etc).
• Please play with nifty interactive tables+charts. We welcome feedback. This 5-day week saw RMB 24bn+ of net selling. Back to Bigly Selling!

• We examine the value proposition of Sitoy Group Holdings (1023 HK) trading at 4x PE with a 12.5 % dividend yield ( assuming a sustainable 50% payout ratio ).
• The company has 400 mn HKD net cash and real estate worth 690 mn HKD on its balance sheet. This compares favorably with its 840 mn HKD market cap. 
• The major drawback of investing in the company is its track record, which shows a steadily declining revenue trend and a fluctuating ROCE (currently 11%). 

• Dongfeng Motor Group Co. Ltd. will acquire automotive assets from its joint venture (JV) with Stellantis NV, as part of the carmaker’s strategy to consolidate its manufacturing resources amid weak car sales in China.
• Dongfeng Peugeot Citroën Automobile Co. Ltd. (DPCA) will sell assets including certain land use rights, buildings, and structures in Wuhan and Xiangyang in Hubei province to Dongfeng Motor in a 1.71 billion yuan ($234 million) deal, the latter said in a filing to the Hong Kong Stock Exchange Thursday.
• The assets have been used by DPCA mainly to produce its existing Peugeot, Citroën and Fukang models, the filing said, and the JV will continue making the cars under a 10-year leasing agreement.

• Topsports International Holdings (6110 HK) announced first half FY24 (fiscal year ending February) results last week, with net profit up 17% yoy.
• The company trades at a 7% dividend yield, backed by strong free cash flow.
• The stock is not only a yield play, but also a call option on the recovery of Nike and Adidas’ retail performance in China.

• 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 are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• We add the Philippine Stock Exchange (PSE PM) and Ginebra San Miguel (GSMI PM) to our list of names that we look at after our recent Philippines trip. 

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• J&T Global Express (1519 HK) launched its US$500m HK IPO earlier in the week, with more than half of the Offer Shares going to its pre-IPO shareholders.
• It was a busy week for placements as well, with Liontown Resources (LTR AU)‘s stealing the spotlight with its equity/debt raising, after Albemarle withdrew its acquisition bid. 

• I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deal was discussed on Smartkarma this week:Lithium Power International (LPI AU)‘s Scheme. Vinda International (3331 HK) and Shinko Electric Industries (6967 JP) are in the cross hairs. 
• Key updates took place for: Origin Energy (ORG AU), Liontown Resources (LTR AU), Golden Eagle Energy (SMMT IJ) and Kenedix REITs.