Consumer

• Metro Pacific Investments Co (MPI PM) has announced that the public float of the stock will drop to 2.78% following the Tender Offer.
• Metro Pacific Investments Co (MPI PM) shares are expected to be suspended from 26 September. That could see Bloomberry Resorts (BLOOM PM) added to the PCOMP INDEX on 25 September.
• There will be large passive inflows to Bloomberry Resorts (BLOOM PM) as well as flows from active managers that track the PCOMP INDEX.

• Through all the upheavals in discretionary product distribution in the last decade, Itochu Corp (8001 JP)’s Itochu Textile subsidiary has managed to maintain huge power in the channel.
• While the trading firm has traditionally focused on premium fashion brands, in the last few years it has invested heavily in the sports market, including its growing investment in Descente.
• The move is part of wider plans to take lead share in sports, footwear and department store brands.

• Midea Group Co Ltd A (000333 CH) announced on September 18 the approval for H-share listing for a total of not more than 10% of its outstanding shares (before overallotment).
• Reasons for the listing include the possible share incentive program for overseas employees and more exposure to foreign investors. 
• The H-share listing could be a safe bet given the current valuation profile, especially if the discount to A-share is larger than 10%. 

• From 200 properties, the Cambodian government now only allows 87 shrinking capacity but increasing footfall for existing properties like Nagaworld in Phnom Penh.
• Nagaworld enjoys a moat in metro Phnom Penh–this supply reduction expands its base.
• H1 performance strong, reduced national capacity will contribute to revenue gains from a wider geography for the largest single integrated luxury resort in Cambodia.

• Global Digital Niaga (BliBli) continues to stand out from peers given a differentiated omnichannel model plus a greater portion of 1P but 3P sales are growing driven by Tiket.com.
• TPV growth surpassed revenue growth in 1H2023 driven by Tiket.com but take rates and gross margins improved, as the company cut back on promotional spending and improved cost efficiencies. 
• BliBli booked organic growth with more users and a significant pick-up in the average order value, partially driven by Tiket.com. 

• While Yamazaki Baking (2212 JP)‘s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.
• From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.
• Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.

• The percentage of female managers is low, around 10%, so it will take time for internal executive directors to be nominated, and meanwhile companies will be dependent on outside directors.
• Finally, TSE has clearly stated specific numerical targets, so the path to achieving the targets is clear. Now the focus will shift to the content of female board  directors.
• Hiring talented people should be the biggest management challenge, but the appointment of foreign talent has been too slow compared to the globalization of the business.

• Indonesia-based Koltiva works with producers in 52 countries and boasts over 1 million producers and 6,800 businesses

• Indonesia-based sustainable farming and supply chain traceability startup Koltiva has raised an undisclosed “seven-figure” USD in a Series A financing round led by AC Ventures.

• Silverstrand Capital, Planet Rise, Development Finance Asia, Blue 7, The Meloy Fund, and an unnamed impact investor in Southeast Asia also joined.

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.

• First Pacific Co

• Maize plays a pivotal role in Indonesian agriculture, including as a prime source of animal feed. In 2022, the country’s maize production was estimated to reach 44 million tons.

• Agritech startup Kora is one of those few startups operating in this space.

• Kora aims to improve the quality and quantity of post-harvest maize.

• Midea Group Co Ltd A (000333 CH) could raise between HK$35-54bn (US$4.5-6.9bn) in its H-share listing depending on the H-shares discount and exercise of the overallotment option.
• The H-shares could get Fast Entry to some global indices depending on the number of shares that are allotted to cornerstone and/or strategic investors.
• The H-shares will be added to Southbound Stock Connect following the end of the price stabilisation period. Inclusion in the Hang Seng Composite Index will come later.

• Bob van Dijk, CEO of both Naspers (NPN SJ) and Prosus NV (PRX NA), has stepped down, effective 18 September. 
• Van Dijk was instrumental in the 2019 listing of Prosus and the creation (and subsequent unwinding) of the highly-criticised Prosus/Naspers cross-holding structure. 
• His departure should have minimal impact. Everything else basically stays the same. Continue to be long Prosus vs. NAV – that is, Prosus vs. Tencent (700 HK).

• The move from 80 index constituents to 100 could take most of next year (and possibly even the year after that) to manage turnover and add profitable companies.
• Foreign companies will be eligible for inclusion in the index from the December rebalance. That makes Samsonite (1910 HK) a high probability inclusion candidate.
• We highlight 8 potential inclusions to the index with passive trading impact varying from 1.6-4.3 days of ADV. There are large shorts on some of the stocks.

• Tata Motors DVR (TTMT/A IN) now trades at a 32.9% discount to Tata Motors Ltd (TTMT IN) and there is another 4.4% in the trade following the scheme of arrangement.
• Tata Motors DVR (TTMT/A IN) could be added to global indices in November and that will bring significant inflows to the stock.
• The pre-positioning and passive buying could lead to the DVR discount narrowing further and provide trading opportunities for the next few weeks.

• Global wheat trade is imbalanced with few exporters and many importers. This means a few nations’ trade policies affect supply during shortages as they restrict exports to prioritize domestic needs.
• El Niño generally causes wheat production to decline among key exporters as well as most importers. This increases the likelihood of shortages in the wheat export market.
• Currently diminished global wheat inventories increase the likelihood of supply shocks and price surges in global wheat markets.

We view H&H International as “Medium Risk” on the LARA scale. The company has a sound business profile, with stable branded products in the Baby Nutrition & Care (BNC) and Adult Nutrition & Care (ANC) markets. The acquisition of Zesty Paws in 2021 allowed H&H to expand into the Pet Nutrition & Care (PNC) market. The company’s strong distribution channels support cross-border and e-commerce sales strategies. That said, the positive factors are balanced by risks associated with penetration into new markets and products, along with the fragmented and competitive Chinese market.

We view positively H&H’s solid business fundamentals and strong market positions. We highlight the company’s sound liquidity profile and stable CFO. Negatively, the Zesty Paws acquisition affected H&H’s financial profile, weakening the leverage metrics. That said, PNC is part of the company’s sustainable growth plan. We expect H&H to work on deleveraging in the near term, in order to maintain a healthy credit profile.

Bondholders of the 2026 USD notes suffer from small degree of structural subordination, as the company’s PRC subsidiaries do not guarantee the notes, but certain PRC subsidiaries are likely to be guarantors for the term loan.

Our Credit Bias on H&H is “Stable”, given the company’s solid business fundamentals, strong market positions and moderate financial profile. ANC and PNC are expected to deliver better numbers going forward, while BNC should remain challenging. As a result, ANC and PNC will likely be H&H’s key growth segments, offsetting high competition in the BNC business. The company aims to expand into other business segments and markets outside China, in order to compensate for muted growth in the country.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”.

• Paramount Global managed to exceed analyst expectations in terms of revenue and earnings, demonstrating sustained focus on corporate spending containment and good momentum in its D2C sector.
• Affiliate and subscription revenue increased by a healthy 12% in Q2 and again showed how the combination of traditional and streaming led to net growth for the business.
• Paramount’s 47% increase in D2C subscription revenue was mostly attributable to Paramount+, where the company saw subscriber growth, increased ARPU, and lower churn rates.

• Lear Corporation managed to exceed analyst expectations in terms of revenue and earnings.
• With a 61% increase from the previous year, core operating earnings were the greatest in over two years.
• Adjusted earnings per share rose by 86% while operating cash flow for the quarter grew dramatically to $311 million.

• Sysco Corporation delivered mixed results in its recent quarter, with revenues falling short of analysts’ expectations but above-par earnings.
• Their U.S. food service business’s Q4 case volume increased significantly, enhancing their market share and solidifying their top spot in food service distribution.
• This partnership aims to devise customized strategies that will assist Sysco Corporation in mitigating its environmental impact by reducing its carbon emissions.

• Domino’s Pizza Inc. delivered a mixed result in the recent quarter, with revenues below market expectations, but it surpassed the analyst consensus regarding earnings.
• Despite challenges in the US delivery business, Domino’s achieved positive same-store sales growth in the US and international markets for the third consecutive quarter, driving improvements in operating income.
• However, Domino’s management remains optimistic about its ability to return to a more robust growth trajectory in 2024, supported by powerful new openings and more robust international same-store sales.

• The Poly Culture Group Corp H (3636 HK) H Shareholders’ class meeting is scheduled for 3 November. The IFA considers the HK$8.88 per H share offer fair and reasonable.
• The key condition is approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
• The offer’s 77.6% premium to the undisturbed price and shareholder structure helps the vote. At the current price and for the 23 November payment, the gross/annualised spread is 3.3%/19.2%.

• Back on the 23 June, SOE-backed Poly Group tabled an HK$8.88 bid per Poly Culture Group (3636 HK) H Share and RMB8.17386240 per Domestic Share. Terms were declared final.
• This Merger by Absorption Offer incorporates a Scheme-like vote. There is no tendering condition. The premium to last close is 77.6%; and a 112.5% premium to the five-day closing average.
• The Composite Doc is out. Independent H-shareholders get to vote on the transaction on the 3rd of November. Payment is expected on or before the 23 November. I’d get involved. 

• Costa Group Holdings (CGC AU)  has disclosed a revised non-binding indicative proposal from Paine Schwartz Partners at A$3.20 per share, 9.6% lower than the previous offer on a like-for-like basis. 
• The weak CY23 outlook impacted the debt that could be taken on to meet the IRR hurdles of the previous offer. The revised offer is the best and final offer.
• The Board faces a dilemma as the offer is light, but some shareholders will want the Board to accept as trading volatility making Costa more suited to the private market.

• Chinese automotive maintenance services platform Tuhu Car has announced the terms for its HKEx IPO. Tuhu plans to raise net proceeds of HK$1.0-1.1bn (US$132-161m) through the issuance of 40.62m shares.
• Tuhu Car (2007986D HK) ‘s franchised business model seems to have worked well, while its focus on high margin products/services have helped improve profitability.
• In this insight, we discuss our forecasts and valuation for the company, and our analysis suggests that Tuhu Car’s IPO is priced reasonably.

• Seven & I Holdings (3382 JP)‘s share price has remained below ¥6,600 since the end of its bull run in March 2023.
• Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
• Seven & I faces valuation risks, trading near peak multiples with diminishing growth prospects.

• If a company with P/B less than 1 conducts share buyback, its P/B will decrease; if a company with P/B greater than 1 conducts share buyback, its P/B will increase.
• A company with P/B below 1x can be a great value stock if it can demonstrate to investors that it will generate ample cash flow, in addition to repurchasing shares.
• Even if a company’s P/B is well above 1x, it is required to explain to investors whether there are any gaps in its cash flow growth scenario.

• Booking Holdings Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
• The 268 million hotel nights booked in the second quarter increased by 9% year over year, and the $39.7 billion in gross bookings, the largest quarterly total ever, surged by 15% year over year.
• The positive demand environment caused hotel nights and revenue bookings to surpass the company’s previous projections.

• Sai Silk Kalamandir (SSKL IN) is looking to raise about US$145m in its India IPO.
• Sai Silk Kalamandir (SSK) is one of the largest retailers of ethnic apparel in South India, particularly in sarees, according to Technopak.
• In this note, we look at the company’s past performance and provide our thoughts on valuations.

• ATH for the NIFTY Index (NIFTY INDEX),  Going ahead, we expect the momentum in the market to continue. 
• Healthcare and Information Technology remain interesting pockets to watch when it comes to iShares MSCI India ETF (INDA US). 
• Other names discussed include Bajaj Auto Ltd (BJAUT IN), Hindustan Unilever (HUVR IN), Bandhan Bank Ltd (BANDHAN IN) and Vedant Fashions (MANYAVAR IN).  

• Philip Morris International managed to surpass the revenue and the earnings expectations of Wall Street.
• This fantastic result supported high teens’ currency-neutral adjusted diluted EPS growth and double-digit organic top-line growth.
• Given these strong results, their team remains confident in a solid full-year result with exceptional revenue growth.

• Four years after Itochu got to 40.0% of votes in Descente (8114) in a hostile Tender Offer, Descente partner ANTA, which supported Itochu at the time started selling its stake.
• A few months later, Itochu started buying shares of Descente in the market. As of 7 Sep, Itochu had bought Descente shares 81 days straight (9.7% of ADV).
• This begs the question: Is Itochu ensuring they maintain voting control as ANTA sells? Or are they buying to lift their stake prior to another bid?

• There could be two changes for the SET50 INDEX with JMT Network Services (JMT TB) and I-TAIL (ITC TB) replacing Srisawad Power (SAWAD TB) and Ngern Tid Lor (TIDLOR TB). 
• With no further inclusions on the Market Surveillance Measure list, Delta Electronics Thai (DELTA TB) should be safe at the December rebalance.
• There are a couple of stocks that are close to passing/failing the liquidity tests and that could result in further changes to the index.

• Back on the 4 July, Paine Schwartz Partners (PSP) made an A$3.50/share NBIO for Costa Group (CGC AU) by way of a Scheme.  PSP held 14.84% at the time.
• The due diligence period came and went, or so it appeared, but Costa said it remained ongoing.  Rumours circulated that PSP had gone cold. 1H23 results were also delayed. 
• Costa has now announced this morning that PSP has returned with a $3.20/share Offer – best and final – reduced for any permitted dividend of up to A$0.04, if declared. 

• It was a busy Friday with a bunch of indices rebalancing at the close and big volumes trading on a lot of stocks.
• Brilliance China Automotive (1114 HK) had a good week with the stock rallying on Thursday and Friday on huge volumes amid expectations of upcoming passive buying.
• A quiet week for ETFs with mainland China ETFs seeing some outflows after the huge inflows over the last couple of months.

• This is the 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 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 and charts and welcome feedback. This week saw RMB 15bn+ of net selling. That’s six weeks in a row of respectably large outflows.

• STAR 50 Index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• In this insight, we take a look at our expectations for potential ADDs and DELs for the STAR 50 index during the December 2023 Rebalance event.
• I currently expect one ADD and one DEL for the STAR 50 index in December 2023.

• Millie’s Library (418470 KS) announced its IPO book building results. The IPO price has been determined at 23,000 won which is at the high end of the IPO price range.
• A total of 1,915 institutions participated in this IPO survey and the demand ratio of 619.2 to 1.
• Our valuation analysis suggests base case target price of 31,769 won per share, which is 38% higher than the the IPO price of 23,000 won.

• Since the inclusion in the Southbound Stock Connect 7 trading days ago, ZJLD Group (6979 HK)’s stock price is up 16%, suggesting strong interest from the southbound investors.
• ZJLD has one of the best channel inventory and distributor perception among all the sauce aroma baijiu brands currently.
• Expect further share price upside mainly from southbound buy, as the baijiu sector is one of the most followed sectors in A-share.     

• JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street.
• Service revenues grew, of which marketing and marketplace revenues were up.
• During the quarter, JD.com noticed strong user engagement trends, including higher purchase rates and ARPU on its app.

• The GPIF employs a “passive enhanced engagement” approach, which is linked to TOPIX and engages in engagement activities with the portfolio companies. This approach should be examined for any challenges.
• The challenge is whether GPIF’s extremely low management fees can engage in deep engagement with a large number of portfolio companies to reduce tracking error from TOPIX.
• GPIF cites its inability to invest in equities in-house and the huge AUM as reasons for its bias toward passive funds. If this is an obstacle, reform should be considered.

• Under Armour delivered a solid result and managed an all-around beat in the last quarter.
• Revenue decreased by 1% after considering the adverse effects of foreign exchange brought on by the strength of the US dollar.
• Direct-to-consumer revenue climbed 4% to $544 million, owing to strong results in the e-commerce and retail channels.

• Under Armour delivered a solid result and managed an all-around beat in the last quarter.
• Revenue decreased by 1% after considering the adverse effects of foreign exchange brought on by the strength of the US dollar.
• Direct-to-consumer revenue climbed 4% to $544 million, owing to strong results in the e-commerce and retail channels.

• Last week I wrote about NTT’s Partial Offer for Marketing Consultant Intage (4326) – (with a spurious hyphen at the end). 
• In the last couple of days, there have apparently been a few blocks printed on the tape. I have received questions about pricing and pro-ration. 
• So here I provide a set of 11 possible pro-ration cases, and suggest ways for traders and investors to think about the risks and possibilities.

• Toyota Group autoparts maker Aisin Seiki (7259 JP) today announced a new Medium-Term Plan. They plan to shift their business away from “entrusted” business, towards BEV, Brakes, and “Safe/Comfort Entry”
• They aim to grow revenues 25% from 2021 to 2025 and an additional 10-20% by 2030. 
• They also aim to improve investment and capital efficiency, and that’s where we can look at the interesting possibilities.

• Tuhu Car (2007986D HK) is looking to raise around US$160m in its Hong Kong IPO. Tuhu is an integrated online and offline platform for automotive services in China.
• In earlier notes, we had looked at the firm’s past performance, discussed our earnings assumptions and our thoughts on Tuhu’s valuation.
• In this note, we discuss valuations at the final price range.

• IMAX China Holding (1970 HK)‘s scheme document is out, with the court meeting scheduled for 10 October. The IFA considers IMAX Corp (IMAX US)‘s HK$10.00 offer fair and reasonable.
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• A recovering box office, early indications of an effort to rally retail NO votes and a high minority participation rate in AGMs pose a risk. The risk/reward profile is unfavourable. 

• Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, has launched its HKEx IPO at a price range of HK$28.00-31.00 per share.
• In TUHU Car IPO: The Investment Case, we highlighted the key elements of the investment case. In this note, we present our forecasts and discuss valuation.
• Our valuation analysis suggests that Tuhu is reasonably priced at the IPO price range. We would participate in the IPO. 

• Back on the 13 July, IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share. Terms have been declared final.
• The price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day, suggesting apparent news leakage.
• The Scheme Doc is out and independent shareholders get to vote on the transaction on the 10th October. This vote could – should – be close. Only for the brave.

• Aisin’s stock price rose by +8% today after the company held its MTP strategy briefing
• Aisin to restructure its business portfolio and focus on new growth areas for EV’s – eAxle, battery frames, and braking technologies
• Aisin aims to generate ¥400b from balance sheet reform – asset sales, inventory management and sale of cross-shareholding.

• Chinese automotive maintenance services platform Tuhu Car (2007986D HK) is planning to raise around US$160m in its upcoming HKEx IPO.
• The company’s franchised business model seems to have worked well, while its focus on high margin products/services have helped improve profitability.
• In this insight, we take a look at Tuhu Car’s business model, business segments and financials and we will discuss the company’s valuation in a follow-up insight.

• Ryohin Keikaku (7453 JP) experienced a 45% leap in its share price since its last earnings announcement, primarily fueled by a positive OP surprise of nearly ¥3.0bn.
• Our analysis indicates the potential for another big earnings beat in FQ4, primarily because the consensus remains conservative in its cost assumptions.
• Additionally, we anticipate that the company will provide FY24 OP guidance in the range of ¥45-50bn. This would constitute a significant upside surprise compared to the current FY24 consensus.

• Perfect Medical Health (1830 HK) will report its H1 2024 results in late November 2023. We expect slow China growth to result in revenue/profit growth of 10%/15% YoY. 
• The company will continue to open outlets in HK, and the plan is to open ten by the end of FY24 (3-4 at the end of H1FY24e).  
• The stock trades at 12.7x PE FY24e, with an 8.7% dividend yield and around 16% of the market capitalization in net cash and investments (~800 mn HKD). 

• On 14 August, Mellby Gård crossed the 30% threshold and announced a mandatory offer for all shares of Duni AB (DUNI SS) at SEK 98.6/share. The offer period started 12 September.
• The offer represents 0.41% premium to prior day to threshold crossing. Mellby Gård doesn’t seem interested in completing a takeover, rather being able to increase its stake after offer completion.
• The offer represents 0.41% premium, 6.8x EV/Fwd EBITDA, 11.1 Fwd P/E (vs. 5-year averages of 8.8x and 15.4x). Gross spread is 2.1%, I wouldn’t get involved above SEK 95.

• The review period for the December rebalance ends 31 October. We expect the changes to be announced 24 November with the implementation taking place after the close on 8 December.
• We expect the index committee to continue using a 6-month minimum listing history resulting in one change to the index.
• One way turnover is estimated at 1.6% resulting in a one-way trade of CNY 2,259m. The impact on the deletion will be much larger than that on the inclusion.

• The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. 
• We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
• Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. 

• While 4% of the number of companies mentioned in annual securities reports regarding P/B, half of companies have P/B of below 1x, which suggests managers still lack sense of urgency.
• Many companies that mention P/B in their annual securities reports rely on share repurchases, and their presentation of strategies to increase cash flow is weak.
• Clearly stating the cost of capital will lead to more appropriate ROE and ROIC targets and disclosure of specific measures to achieve them.

• Back on the 27 June, art and culture play Poly Culture Group Corp H (3636 HK) announced a pre-conditional privatisation at HK$8.88 per H-share.
• This Offer from SOE Poly Group is by way of a Merger by Absorption, incorporating a Scheme-like vote. There is no tendering condition.
• The pre-cons have now been fulfilled. The Composite Document, including the H Share Class meeting/EGM date and IFA opinion, is expected to be despatched on or before the 30 September. 

• With no stocks in inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in December.
• Capping changes will result in a one-way turnover of a touch below 1% and that will result in a round-trip trade of US$255m.
• The impact on the stocks is relatively small for now but that could increase till the end of November when the stocks will be capped.

• Foshan Haitian Flavouring & Food (603288 CH), the largest condiment player in China is facing structural weakening of moat from a changed operating environment post-COVID. 
• Both catering and home consumption segments are faced with structural growth pressures that are difficult to solve for the company. 
• Expect further earnings weakness and derating in valuation multiple in the near term. 

• Japan’s Universal Entertainment’s Okada Manila casino unit removes another obstacle to its long quest to transform into a NASDAQ traded IPO.
• Judge rules that Okada is free of any obligations to US Space 26 Capital Partners.
• UE’s goal to take the casino public, despite expectations that the Spac will appeal, is likely to move forward toward identifying a new partner.

• Dollar General Corporation’s results were a major disappointment as the company failed to meet Wall Street’s revenue and earnings expectations.
• Due to higher average borrowing amounts and interest rates, interest expense climbed to $84 million in Q2 from $43 million in Q2 of last year.
• Dollar General has experienced a significant drop in its stock value this year, sparking speculation about potential activist investors eyeing the company.

• Hormel Foods Corporation delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as the earnings expectations of Wall Street.
• Additionally, Hormel Foods recently introduced an LTO for the fall season: apple cider donut-flavored cashews, which the team anticipates will increase category volume and attention.
• Hormel Foods noticed a recovery across the turkey portfolio in its Retail segment and increased volume in important categories.

• Lululemon Athletica delivered an all-around beat in the previous quarter, exceeding the management’s projections for revenue and EPS.
• Comparable sales increased by 17% online and 9% in-store, and adjusted EPS rose by 22% over the same time last year.
• In July, Lululemon Athletica established its first site in Thailand, making it the 100th APAC facility overall.

• Chewy delivered a solid result and managed an all-around beat in the last quarter, producing mid-teens growth that exceeded expectations as well as strong profitability.
• The number of active customers was almost steady sequentially, but the net sales per active customer, or NSPAC, rose by 15% to $530.
• Net sales growth was boosted by active customer participation, highlighting the steadily growing strength of the Chewy ecosystem.

• Skincare/Cosmetics company I-NE (4933 JP) on 31 August (¥2947) announced it would move to TSE Prime on 19 September, and announced a Secondary Offering by CEO Onishi-san to get there.
• There was no greenshoe provided. The stock popped. Then drifted back to ¥3025 and the Offering priced today at ¥2,934/share. 
• 75% went to Asian/European (non-US) offshore investors, and the rest to onshore institutions, which is unusual. But now we look to the TOPIX inclusion.

• The pre-condition relating to Poly Culture Group Corp H (3636 HK)’s privatisation offer from Poly Group at HK$8.88 per H Share has been fulfilled. 
• The key condition is approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders rejection). No independent H Shareholder holds a blocking stake.
• The offer’s 77.6% premium to the undisturbed price and no minimum acceptance condition will help completion. At the last close and for 1 November completion, the gross/annualised spread is 7.1%/64.3%.

• The street’s expectations for Meituan’s bottom line have gone too pessimistic for 2023 while in the meantime too optimistic for 2024 and beyond.
• Besides the macro weakness, we see the company’s growth increasingly be constrained by the business model itself, resulting in only 14% CAGR for bottom line over 2023-25 by our calculation.
• We take investors’ indifference to Meituan’s strong bottom line growth for 2023 as a signal they are discounting the sharp deceleration kicking in from 2024. Stay neutral.

• Grizzly Research’s track record, especially with accusations against well-known Chinese ADRs like NIO (NIO US), ZTO Express Cayman (ZTO US), and Gaotu Techedu (GOTU US), hasn’t been successful lately.
• Despite past setbacks, the company has recently targeted another renowned Chinese ADR, PDD Holdings (PDD US).
• Grizzly Research alleges that Pinduoduo’s shopping app, “TEMU,” is a harmful malware/spyware secretly extracting user data.

We view Genting Berhad as “Low Risk” on the LARA scale. The company has a diversified business profile, having successfully expanded its gaming operations to six countries. In addition, it has minor businesses in plantations, oil & gas and power generation. Genting Berhad has a solid business position in Malaysia (where it is the sole casino licence holder) and Singapore (where it operates in a duopoly with Marina Bay Sands). Despite Genting Berhad’s expansion over the years, the company has maintained a prudent financial profile with moderately healthy leverage.

Genting Berhad’s USD notes are issued by its various subsidiaries. It is not an issuer and does not provide parental guarantees for any of the bonds. This means investors must assess the standalone credit profile of each individual issuer.

Our fundamental Credit Bias on Genting Berhad is “Stable”. We expect the company’s leverage to continue improving, supported by earnings recovery from the COVID-19 pandemic-induced downturn. Genting Berhad is reportedly among the frontrunners vying for a casino licence in New York (housed under Genting Malaysia), albeit the outcome is still uncertain at this point.

Controversies are “Immaterial” in our view. In 2019, a small group of Greenpeace activists briefly protested against Genting Plantations over forest fires in Indonesia, albeit the company denied the allegations. Some ESG-compliant funds may be prohibited from investing in Genting Berhad and its subsidiaries, due to the nature of its core businesses (casinos and oil palm plantations). That said, the group’s main gaming operations are in established and well-regulated markets (Malaysia, Singapore, the UK and Las Vegas). Overall, the ESG Impact on Credit is “Neutral”.

• We contacted drivers here in Shanghai and asked about their experience at Tuhu stores.
• Franchised stores are well positioned in the aftermarket and Tuhu is the largest store chain among them.
• However, Tuhu sets high standards for workshops, but average standards for mechanics.

• Las Vegas Sands (LVS US) is coming up “cheap” on my monitor as Macau’s gross gaming revenue touches a new post-Covid high. 
• Preceding my comments on LVS 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%.

• The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.
• Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.
• We believe the stock has an upside of 41% for yearend 2024.

• Instacart is targeting a valuation between US$8.6 billion to US$9.3 billion in its IPO. Instacart’s valuation has declined nearly 77% from its peak levels US$39 billion a few years ago.
• Established in 2012, Instacart is a leading players in North America of delivering online grocery goods to consumers’ homes.
• Instacart generated sales of US$2.6 billion (up 39.1% YoY), gross profit of US$1.8 billion (up 49.3% YoY), and operating profit of US$62 million (turned black YoY) in 2022.

• The Board of YSK has recommended that shareholders accept a TOB for the company’s shares
• Although a 35% premium to the undisturbed share price, the deal is not particularly generous to long-suffering shareholders
• Activist investor, Minami Aoyama, has been buying a significant stake in YSK. Will the deal go through?