Consumer

Back on the 3 July, United Malt Group Ltd (UMG AU) and Malteries Soufflet entered into a binding agreement of A$5.00/share, by way of a Scheme.
The Scheme Booklet has now been lodged with ASIC. UMG shareholders vote on the transaction on the 12 October, with implementation on the 15 November.
The Offer remains subject to FIRB and other regulatory approvals. Malteries Soufflet and UMG are the second and fourth-largest maltsters in the world.

Quiddity Mainland Connect NORTHBOUND Flows (Week to 8Sep23) : BYD, ZTE, Zhongji Innolight, Amperex

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. We welcome feedback on how to make it more useful going forward.

TUHU Car IPO: The Investment Case

By Arun George

Tuhu Car (2007986D HK), a leading integrated online and offline platform for automotive service in China, is set to open books for its US$300 million IPO.
Among independent aftermarket (IAM) stores in China, Tuhu ranked first in terms of both number of stores as of 31 December 2022 and annual automotive service revenue in 2022.
The investment case rests on the return to growth, improving gross margin, a shift to profitability and a return to cash generation.

Taste Gourmet: Reaching an Inflection Point on Earnings Solid H1 FY24 Expected

By Sameer Taneja

With 46 restaurants in HK (up 35% YoY) and the end of dining restrictions, we estimate an inflection point in earnings for Q2 FY24 for Taste Gourmet (8371 HK)
We estimate revenues/earnings up 45%/40% YoY for Q2 2024 ( to be reported in November) and that the company declares a semi-annual dividend of around 5.5-6 cents (8% annualized).
With a solid base for H2 2024, the stock trades at 8.5x/5.9x PE FY23/24e and a 10% FY24e dividend yield with 23% of the market cap in cash.

Dollar Tree Inc.: Revolutionizing The Retail Landscape With Multi-Price Models! – Major Drivers

Dollar Tree delivered a solid result and managed an all-around beat in the last quarter.
For the quarter, Dollar Tree produced a combined increase in sales of 8.2% to $7.3 billion, 6.9% enterprise comp growth, and operating income of $287.8 million, resulting in earnings per share of $0.91.
In the Dollar Tree sector, with a slight offset from average ticket, their 7.8% comp was driven by 9.6% increased visitation.

Burlington Stores: Expanding Its Footprint Through The Acquisition of Former Bed Bath & Beyond Leases! – Major Drivers

Burlington Stores managed to exceed the revenue expectations and the earnings expectations of Wall Street.
Comparable store sales increased by 4%, while overall sales increased by 9%.
This was caused by a 130 basis point drop in freight costs and a 150 basis point increase in merchandise margin.

Ulta Beauty Inc.: The Powerhouses Behind Their Double-Digit Comp Growth! – Major Drivers

Ulta Beauty surpassed the revenue and earnings expectations of Wall Street.
For the quarter, all major categories produced comp growth.
The quarter saw double-digit growth in both prestige and mass skin care.

The Gap Inc.: A Bold Strategy To Strengthen Their Balance Sheet! – Major Drivers

The Gap, Inc. delivered a mixed result in the quarter, with revenues below expectations but surpassed the analyst consensus regarding earnings.
The company continued to enhance its cash flows and strengthen its balance sheet by reducing inventory by 29% year over year, generating over $300 million in free cash flow.
Second quarter sales were down in the mid- to high single digits, with net sales of $3.5 billion, down 8% from last year.

Brown-Forman Corporation: The New Distribution Business in Slovakia Could Be A Decent Revenue Contributor? – Major Drivers

The company reported net sales growth climbed by 3%, with organic net sales growth up by 2%.
Jack Daniel’s Tennessee Whiskey, Jack Daniel’s Tennessee Apple, and El Jimador all had continued increases in the quarter, which fueled organic net sales growth.
Jack Daniel’s Tennessee Apple increased organic net sales by more than half.

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Sep 10

Daily Brief Consumer: Williams Sonoma, Advance Auto Parts, ZOZO Inc, Nongfu Spring , Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Williams-Sonoma Inc.: 4 Surprising Takeaways From Their Recent Financial Performance – Financial Forecasts
Advance Auto Parts: Does It Have A Sustainable Competitive Advantage? – Major Drivers
Last Week in Event SPACE: Nikkei 225 Flow, Aquila Acquisition, Axiata, Intage, Liontown/Albemarle
Nongfu Spring (9633 HK): Within Striking Distance
After Selling the Property, There Appears to Be No Set Plan for How the Cash Will Be Used

Williams-Sonoma Inc.: 4 Surprising Takeaways From Their Recent Financial Performance – Financial Forecasts

Williams-Sonoma delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
Williams-Sonoma achieved these outcomes despite a more promotional environment and softer industry metrics by focusing on regular price selling, leveraging the company’s market advantages, enhancing customer service, and managing costs.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Advance Auto Parts: Does It Have A Sustainable Competitive Advantage? – Major Drivers

Advance Auto Parts delivered a mixed set of results for the previous quarter with revenues above the analyst consensus.
Their net sales increased during the quarter.
During Q2, Advance Auto Parts observed increase in DIY omnichannel and DIFM.

Last Week in Event SPACE: Nikkei 225 Flow, Aquila Acquisition, Axiata, Intage, Liontown/Albemarle

The Nikkei Index Team announced the changes to the Nikkei 225. That triggers flows of about ¥480bn a side, and some big, big changes.
As interest rates and inflation remain high, investors will (should) continue to prefer lower-risk investments over higher-risk growth companies such as de-SPACed Aquila Acquisition Corporation (7836 HK).
The Liontown Resources (LTR AU) / Albemarle Corp (ALB US) transaction looks done. However, Gina Rinehart may have other ideas.

Nongfu Spring (9633 HK): Within Striking Distance

Nongfu Spring (9633 HK) has been trading flat since April 2021, even though earnings have grown 36% yoy in 2021, 19% yoy in 2022, and 25% yoy in 1H23.
We believe a forward PE lower than 35x would be a great entry price for Nongfu (37x currently), with upside potential in earnings from explosive growth in unsweetened tea.
A business that has a long run-way for growth, strong management, strengthening moat, great cash flow, and on top of that counter-cyclical, deserves a premium valuation anywhere in the world.

After Selling the Property, There Appears to Be No Set Plan for How the Cash Will Be Used

The need to obtain investment capital for future business development or the presence of stakeholders with a strong desire to improve asset efficiency may be the catalyst for selling property.
Of course, cash should be used to return to shareholders, but the stock market expects more profit growth, so higher profit margins and ROE are required.
The data from Ministry of Finance indicates that cash still hasn’t been spent on investments. Cash appears to be currently being used reluctantly for investments that will generate future profits.

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Sep 09

Daily Brief Consumer: Japan Tobacco, Tuhu Car and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Japan Tobacco High Conviction Call: No Price Hikes This Year, But Profits Poised to Soar
Tuhu Car Pre-IPO – Thoughts on Valuation – Will Likely Need a Markdown from Its Latest Funding Round

Japan Tobacco High Conviction Call: No Price Hikes This Year, But Profits Poised to Soar

By Oshadhi Kumarasiri

Combustible tobacco is declining globally, but Japan Tobacco (2914 JP) is defying the odds by outperforming the industry significantly through capturing market share from competitors.
Also in Heated Tobacco, Japan Tobacco is slowly but steadily capturing market share from IQOS and other heated tobacco makers.
There will be no price hikes this year, but we think that there’s enough spillover from the price hikes in the past 3-4 years to maintain JT’s OP growth momentum.

Tuhu Car Pre-IPO – Thoughts on Valuation – Will Likely Need a Markdown from Its Latest Funding Round

By Clarence Chu

Tuhu Car (2007986D HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
Tuhu is an integrated online and offline platform for automotive services in China.
We have looked at the firm’s past performance and undertaken a peer comparison in earlier notes. In this note, we will discuss our earnings assumptions and thoughts on valuation.

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Sep 08

Daily Brief Consumer: Oriental Watch, Astra International, Tuhu Car, Tongcheng Travel Holdings , Luckin Coffee, SJM Holdings, Chewy , Macy’s Inc, Target Corp, Tjx Companies and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Oriental Watch: Addressing the Rolex Acquisition of Bucherer
Astra International (ASII IJ) – Crossing EV Boundaries
Tuhu Car Pre-IPO Peer Comp – While It Has Been Loss Making, GPM Expansion Has Been the Strongest
Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way
Luckin’s New Moutai-Laced Lattes Create a Stir in China’s Coffee Wars
SJM Holdings Ltd: H1 Results Foretell Recovery Momentum for the Stock Beginning to Build
Chewy: CFO Stepped Down, Weak 3Q Guidance, More Selling Pressure Is Likely
Macy’s Inc.: The Gap Collaboration For The Launch of Sleepwear and Intimates Collections & Other Drivers
Target Corporation: Adaptation in a Digital Retail Landscape! – Major Drivers
The TJX Companies Inc.: Can This Retail Dynamo Outperform Its Retail Peers? – Major Drivers

Oriental Watch: Addressing the Rolex Acquisition of Bucherer

By Sameer Taneja

Rolex acquisition of Bucherer signals the company’s intention to own retail distribution and gain access to what its competitors are doing, with the battleground currently being Europe.
We believe it will take years for Rolex to digest this acquisition before foraying into other markets, but with a similar approach, potentially making Oriental Watch (398 HK) a target.
Trading at 6.9x PE with 50% of the market cap in cash and a ~15% dividend yield, the company presents a great investment opportunity.

Astra International (ASII IJ) – Crossing EV Boundaries

By Angus Mackintosh

Astra International (ASII IJ) looks set to have another year of positive growth driven by strong performance from its Auto and 2W businesses and steady performance from United Tractors.
The company’s move into the EV space has begun with 16 models hybrid or BEV models already launched, with 4W hybrid outperforming ICE given narrowing price differentials.
Astra International (ASII IJ) continues to invest in core growth areas of the Indonesian economy, with a strong sustainability bent. Valuations are attractive versus history on 8.3x FY2024E PER.

Tuhu Car Pre-IPO Peer Comp – While It Has Been Loss Making, GPM Expansion Has Been the Strongest

By Clarence Chu

Tuhu Car (2007986D HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO.
Tuhu is an integrated online and offline platform for automotive services in China.
We have looked at the firm’s past performance and PHIP updates in earlier notes. In this note, we undertake a peer comparison.

Quiddity HSTECH Dec 23 Flow Expectations: One Low-Conviction Change, US$250mn One-Way

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the potential index changes and the resultant capping flows for the HSTECH Index in December 2023.
There could be one ADD and one DELETE for HSTECH in December 2023 but I would treat them as low-conviction changes.
At present, I see one-way flows for the December 2023 rebalance to be around US$250mn but as prices change, our index change and flow expectations will change too.

Luckin’s New Moutai-Laced Lattes Create a Stir in China’s Coffee Wars

By Caixin Global

Luckin Coffee is creating a stir with an unusual offering to capture the attention of Chinese coffee drinkers: lattes with a nip of Kweichow Moutai’s baijiu.
The coffee chain partnered with China’s luxury liquor maker Kweichow Moutai to launch an alcohol-infused coffee drink, the so-called “sauce-flavored latte,” referring to the popular savory notes of Moutai liquors.
The tie-up between Luckin and Moutai, the maker of China’s national liquor baijiu, triggered a buying frenzy. Discussions about whether it is safe to drive after consuming the alcohol-infused drink topped China’s social media Monday with 430 million views.

SJM Holdings Ltd: H1 Results Foretell Recovery Momentum for the Stock Beginning to Build

By Howard J Klein

SJM has lagged other sector peers in price recovery since the end of the Beijing zero covid ban policy last Janaury 6th.
The company last year underwent a significant reordering of its business model which is not yet reflected in its ongoing momentum towards regaining positive EBITDA.
Trading volume indicates ongoing interest but stock in our view has not yet reflected the continuation of positive sales growth leading to EBIDA turning positive in forward quarters.

Chewy: CFO Stepped Down, Weak 3Q Guidance, More Selling Pressure Is Likely

By Andrei Zakharov

Chewy (CHWY US) reported a strong quarter but provided weak 3Q revenue guidance, pushing shares down over 10% on heavy volume during regular trading session.
Chewy (CHWY US) shares massively underperformed in 2023, with shares down ~34% year-to-date vs a 16% gain on the S&P 500 index.
In July, Chewy CFO Mario Marte stepped down after 8 years in the company. He sold ~$10M worth of Chewy shares in 2023.

Macy’s Inc.: The Gap Collaboration For The Launch of Sleepwear and Intimates Collections & Other Drivers

Macy’s delivered a positive result and managed an all-around beat last quarter, with notable achievements in net sales, gross margin rate, and SG&A rate.
These outcomes were primarily driven by better-than-expected sales, gross margin results, and SG&A.
Macy’s demonstrated effective inventory management strategies, resulting in reduced inventories compared to previous periods.

Target Corporation: Adaptation in a Digital Retail Landscape! – Major Drivers

Target Corporation delivered mixed results in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
At the beginning of the quarter, Target started seeing softening sales trends.
Comp trends softened in May and June and a meaningful recovery was seen in both comps and traffic in July.

The TJX Companies Inc.: Can This Retail Dynamo Outperform Its Retail Peers? – Major Drivers

TJX delivered a positive result and managed an all-around beat in the last quarter.
Marmaxx delivered high increases in both customer traffic and comp sales.
The overall home sales improved significantly and returned to positive sales growth.

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Sep 07

Daily Brief Consumer: Intage Holdings, Budweiser Brewing APAC , NextEd Group, Luckin Coffee, Swatch Group and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

NTT’s Partial Offer for Marketing Consultant Intage (4326) –
Intage Holdings (4326 JP): NTT’s Partial Tender Offer
Budweiser APAC: Chinese Beer Makers Poised for a Breakout
NextEd Group (NXD): Whiplash! Market Reaction to Australia’s Visa Changes Highlights the Risk.
[Luckin Coffee (LKNCY US, BUY, TP US$44) TP Change]: Moutai Latte Is Not Just a Blockbuster
Swatch Group: Revival Of The Swiss Brand

NTT’s Partial Offer for Marketing Consultant Intage (4326) –

Today, NTT (Nippon Telegraph & Telephone) (9432 JP) announced a partial offer to buy a minimum of 40.0% and a maximum of 51.0% of Intage Holdings (4326 JP).
Six crossholders holding 20.98% between them have separately agreed to tender a total of 19.9%. That means a minimum 25.4% minority participation. With success, minimum pro-ration is 51.5%.
The dynamics of this deal and where synergies lie suggests people need to think really hard about where they underwrite future illiquid ownership.

Intage Holdings (4326 JP): NTT’s Partial Tender Offer

By Arun George

NTT (Nippon Telegraph & Telephone) (9432 JP) has announced a partial tender offer for Intage Holdings (4326 JP) to make it a consolidated subsidiary.
The offer is for a minimum of 15.4m shares (40.00% ownership ratio) and a maximum of 19.6m shares (51.00%) at JPY2,400 per share, a 26.4% premium to the undisturbed price.
Irrevocables represent a 19.90% ownership ratio. The minimum acceptance condition requires a 20% minority acceptance rate. The offer is attractive and represents an all-time high.

Budweiser APAC: Chinese Beer Makers Poised for a Breakout

By Oshadhi Kumarasiri

With shares trading near its all-time low since its listing on HKEX in 3Q19, we think it could be worthwhile taking another look at Budweiser Brewing APAC (1876 HK)’s valuation.
China’s beer industry and regional markets are expected to sustain growth momentum in Q3, driven by tourism’s impact on increased beer consumption.
We think it’s worth keeping an eye on Budweiser APAC, as we suspect that it could start to break out from the current downtrend in the near term.

NextEd Group (NXD): Whiplash! Market Reaction to Australia’s Visa Changes Highlights the Risk.

By Anik Siwach

Agile Response to Visa Changes: NextEd’s nimble approach to the end of the COVID-19 408 visa showcases adaptability in uncertain times.
Tech Sector Growth Potential: Expanding in the thriving tech field, NextEd taps into strong post-study work rights and sector support.
Regulatory Challenges: Navigating regulatory shifts, NextEd’s resilience shines amid uncertainty in the non-university education landscape.

[Luckin Coffee (LKNCY US, BUY, TP US$44) TP Change]: Moutai Latte Is Not Just a Blockbuster

By Shawn Yang

Luckin Coffee’s new blockbuster Moutai Latte achieved 5.42mn cup sold with RMB100mn GMV in first day.
We think Luckin Coffee had effectively achieved two goals through the new premium product: 1) de facto price lifting; 2) extend potential customer base and step into the monetization stage.
We raised our 2023 revenue and non-GAAP NI on Luckin by 1.6%/4.4%. We maintain the stock as BUY rating and raise TP by US$1 to US$44/ADS.

Swatch Group: Revival Of The Swiss Brand

By Alexis Dwek

Swatch Group enjoys a strong competitive position in the Swiss watch industry, with leading positions across all price segments
Swatch Group’s 17 watch brands and 2 multi-brand retail companies demonstrate an incredible creativity and savoir-faire
The stock is currently trading well below its 10-year historical P/E mean.

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Sep 06

Daily Brief Consumer: Golden Eagle Retail, L’Occitane, Whirlpool of India, Trip.com, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Golden Eagle (3308 HK): CCASS Movements Are Standard Fare
L’Occitane (973 HK): Underlying Fundamentals Intact
[Week 1] Namaste India 🙏 | Whirlpool Stock Performance Is Good, Earnings Are Not
Trip.com Q223 Quick Take: Revenue, EPS > Consensus | Guidance? Not Much | Still No Upside Surprises
Judicial Decisions Are Also Important to Clarify the Nature of the Diversity Issues

Golden Eagle (3308 HK): CCASS Movements Are Standard Fare

Back on the 28th May, PRC department store play Golden Eagle (3308 HK) announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close.
The Offeror is the Wang family, who together with concert parties, held 80.29%. 7.18% of the 19.71% held by the disinterested stakeholders have given irrevocables in favour of the Scheme.
Ahead of the Scheme Meeting on September 15th, a significant amount of shares have moved out of CCASS. This is not something to concern investors.

L’Occitane (973 HK): Underlying Fundamentals Intact

L’Occitane (973 HK) announced after market close yesterday that the controlling shareholder has terminated the potential general offer.
Shares trade at a significant discount to global cosmetics peers and its own historical trading range, while brands’ growth momentum remain intact.
Take advantage of any potential significant sell-down caused by the drop of the privatization attempt.

[Week 1] Namaste India 🙏 | Whirlpool Stock Performance Is Good, Earnings Are Not

By Pranav Bhavsar

Positive retail flows, HNI & AIF inflows, along with global market trends, suggest that the uptrend for the NIFTY Index (NIFTY INDEX) may continue.
Bullish stocks include Metro Brands (METROBRA IN) and Zydus Wellness (ZYWL IN), while the sentiment for Whirlpool of India (WHIRL IN) is Bearish.
Highlighted global stocks include Ebix (EBIX US) , Smith (A.O.) (AOS US) and Apple (AAPL US)

Trip.com Q223 Quick Take: Revenue, EPS > Consensus | Guidance? Not Much | Still No Upside Surprises

By Daniel Hellberg

Strong Q2 results out Tuesday morning beat consensus Revenue and core EPS estimates
But concerns remain about expense control and longevity of ongoing demand recovery
Great Q2 results, yes, but we think investors want more clarity about H2 demand

Judicial Decisions Are Also Important to Clarify the Nature of the Diversity Issues

A survey result supports that the fact that women temporarily leave the workplace due to childbirth or childcare is detrimental to their careers.
Since there’re issues that require solutions not only for companies but for society, judicial decisions will encourage companies to make female employees subject to the same conditions as male employees.
While more companies may take this ruling as an opportunity to consider conventional HR practices, since cases of employees going to court are rare, some companies may not act immediately.

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Sep 05

Daily Brief Consumer: Mercari , ZOZO Inc, Shiseido Company, Seven & I Holdings, Moncler SpA, Estee Lauder Companies Cl A, Ross Stores Inc, Tapestry Inc, Walmart and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT
March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split
Japanese Cosmetics Ready to Blossom with Asian Visitors
Bargain Sale at Sogo Seibu as Seven & I Finally Capitulates
Moncler (MONC IM): Not Just A Fashion Down Jacket Brand
The Estée Lauder Companies Inc.: Does It Still Have A Strong Competitive Positioning In The Prestige Beauty Market? – Key Drivers
Ross Stores Inc.: Continued Addition Of New Locations Boosting Growth! – Major Drivers
Tapestry Inc.: The $8.5 Billion Capri Holdings Acquisition Can Be A Real Game Changer! – Major Drivers
Walmart Inc.: The Flipkart Stake Augmentation Can Keep Driving E-Commerce Synergies! – Key Drivers

Nikkei 225 Index Rebalance: Mercari, Lasertec, Nitori IN; Nippon Glass, Mitsui E&S, Matsui Sec OUT

By Brian Freitas

Mercari (4385 JP), Lasertec (6920 JP) and Nitori (9843 JP) will replace Nippon Sheet Glass (5202 JP), Mitsui E&S (7003 JP) and Matsui Securities (8628 JP) in the Nikkei 225.
As expected, Nitori Holdings (9843 JP) will be added at half the planned PAF since the trading value is low compared to the expected index weight.
Passive trackers need to buy between 1-17 days of ADV on the adds while selling between 1.2-16.5 days of ADV on the deletes. There is a big funding trade too.

March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split

Now that the September 2023 Nikkei 225 Rebal is announced, we look at the March 2024 rebal and its possibilities.
Socionext (6526 JP) is the only automatic ADD, but it might not be. ZOZO Inc (3092 JP) and Ryohin Keikaku (7453 JP) would be sector balance ADDs.
Fast Retailing (9983 JP) could get capped if it outperforms Nikkei 225 by ~10%+ to 31Jan2024. And Nitori Holdings (9843 JP) will see an add of ~14 days of ADV.

Japanese Cosmetics Ready to Blossom with Asian Visitors

By Oshadhi Kumarasiri

Despite expected increased demand from returning Asian tourists, Japanese cosmetics companies have been hesitant to revise their 2H 2023 inbound demand projections.
We are long Kose Corp (4922 JP), Shiseido Company (4911 JP), and Pola Orbis Holdings (4927 JP), as consensus estimates look extra cautious and reasonable and appealing FY+2 valuation multiples.
We view the risk of Chinese consumers boycotting Japanese cosmetics due to Fukushima wastewater release as relatively low.

Bargain Sale at Sogo Seibu as Seven & I Finally Capitulates

By Michael Causton

Seven & I has finally sold Sogo Seibu to Fortress Investments.
It will be pleased to have offloaded a loss-making format it never really understood but at a cost – it will write off more than ¥90 billion in loans.
Fortress will immediately sell the land under Seibu Ikebukuro and some other assets to Yodobashi with suggestions of major redevelopment of both Ikebukuro and Shibuya.

Moncler (MONC IM): Not Just A Fashion Down Jacket Brand

Moncler SpA (MONC IM) is an outstanding compounder with clear market leading position in luxury outerwear.
Moat is increasing every year through relentless focus on brand building.
We believe that Moncler deserves a higher PE multiple than its current 22x forward expected earnings.

The Estée Lauder Companies Inc.: Does It Still Have A Strong Competitive Positioning In The Prestige Beauty Market? – Key Drivers

The Estée Lauder Companies Inc. delivered a mixed set of results in the quarter, with revenues above market expectations.
Estée Lauder produced a 4% rise in organic revenue, returning to growth for the quarter as predicted.
Despite challenges, Estée Lauder Companies grew in the EMEA and Asia Pacific markets, compensating for the decline in organic sales.

Ross Stores Inc.: Continued Addition Of New Locations Boosting Growth! – Major Drivers

Ross Stores Inc. delivered a positive result and managed an all-around beat last quarter, with a 5% increase in comparable store sales primarily attributed to heightened customer traffic.
Despite remaining cautious due to ongoing challenges in the economic landscape, Ross Stores raised its outlook for the second half of the year, indicating an upward trend in comparable store sales for the upcoming quarters.
This resilient approach and the company’s strategic planning position Ross Stores for continued growth and success in the retail industry.

Tapestry Inc.: The $8.5 Billion Capri Holdings Acquisition Can Be A Real Game Changer! – Major Drivers

Tapestry has been in the news for its $8.5 billion acquisition of Capri Holdings.
Meanwhile, we delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
Tapestry achieved remarkable and strategic progress, showcasing robust brand-building strategies, consumer-centric approaches, and effective execution, resulting in significant earnings per share.

Walmart Inc.: The Flipkart Stake Augmentation Can Keep Driving E-Commerce Synergies! – Key Drivers

Walmart delivered a strong result and managed an all-around beat last quarter.
The company continued gaining market share across various formats and markets, achieving positive growth in units sold and transaction counts.
In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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Sep 04

Daily Brief Consumer: Ferrari N.V., Great Wall Motor, SHEIN, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!
Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move
Why Is SHEIN Getting Into Bed with Forever 21? | Plus, More Legal and Political Challenges in US
Since It Is Unclear Whether Director Nomination Process Is Working, Voting Becomes More Important

Quiddity ES50 Sep 23 Rebal: Ferrari/Vonovia Change Confirmed + Another US$2bn+ Flow Surprise!

By Janaghan Jeyakumar, CFA

The September 2023 index changes for the ES50 index was confirmed after the close on Friday 1st September 2023.
There will be two ADDs and two DELETEs. One set of changes was well anticipated by us. The other set comes as a major surprise to us.
Collectively, the two ADDs could see ~US$2.4bn index flows and the two DELs could see ~US$2.9bn index flows, with US$500mm of reverse funding flows.

Quiddity A/H Premium Weekly (Sep 1): China Life, Wide Premia Industrials, Banks Starting To Move

The Brand-Spanking New (three weeks old) A-H Monitor has tables, charts, measures galore.
Last week was slightly disappointing but the Recommendations Outperformed the universe.
New stimulus measures are partly supply side, and a little bit demand side, but they’re not big enough yet to move the needle. Mainland ETF buying smells like National Team.

Why Is SHEIN Getting Into Bed with Forever 21? | Plus, More Legal and Political Challenges in US

By Daniel Hellberg

In this insight we analyze the drivers of a new relationship between SHEIN and Forever 21
We think SHEIN agreed to the deal in part to become more “mainstream” in the US
We also believe SHEIN takes seriously the legal and political risks it faces ahead of US IPO

Since It Is Unclear Whether Director Nomination Process Is Working, Voting Becomes More Important

While it’s commendable that increasing numbers of companies are publishing skill matrices, there is not enough verification that the skill items are useful in expanding the value of the company.
It is a prerequisite that the process of selecting skill items and the nominating committee that governs it are functioning and independent.
Even if a governance framework and tools such as the skills matrix are introduced, whether they actually function depends largely on the quality of management.

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Sep 03

Daily Brief Consumer: Costa Group Holdings, Mitsubishi Motors, ENM Holdings and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Energy One, Costa Group, DDH1, ENM, Penguin
JPX-Nikkei 400 Rebal 2024: End-Aug 2023
26 Sept Scheme Vote For ENM (128 HK)

(Mostly) Asia-Pac Weekly Risk Arb Wrap: Energy One, Costa Group, DDH1, ENM, Penguin

I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
Quiet week – only one new deal: STG’s Offer for Energy One Ltd (EOL AU).
Key updates took place for Costa Group Holdings (CGC AU), DDH1 (DDH AU), ENM Holdings (128 HK), and Penguin International (PBS SP).

JPX-Nikkei 400 Rebal 2024: End-Aug 2023

By Janaghan Jeyakumar, CFA

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-August 2023.

26 Sept Scheme Vote For ENM (128 HK)

By Shifara Samsudeen, ACMA, CGMA

Back on the 2 June, small-cap fashion wear retailer ENM Holdings (128 HK) received a delisting Offer from major shareholder, Chinachem, at HK$0.58/share, in cash.
The Scheme Doc is now out after thrice being delayed. The EGM/Court Meeting will be held on the 26 September with expected payment around the 14 November.
There’s a whiff of opportunism embedded in the Offer. But being loss-making and illiquid, I’d expect the vote to still get up.

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Sep 02

Daily Brief Consumer: Vinfast, ENM Holdings, China Mengniu Dairy Co, Culp Inc, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Vinfast: Stock Is in Free Fall; Still Expensive
ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September
Mengniu Dairy (2319 HK): Solid Value Play
Culp, Inc. – Revising Estimates to Reflect Continued Demand Weakness and Margin Improvement
Better than Zero? But Limitations of One Female Board Member to Influence Board Decision-Making

Vinfast: Stock Is in Free Fall; Still Expensive

Vietnamese automaker Vinfast (VFS US) made its public debut on 15th August via a SPAC deal which valued the company approx. US$23bn.
Shares opened US$22 per share and went up to $37.06 at the end of first-day. Share price hit a peak of $82.35, however, shares closed last at $34.71 per share.
Our forecasts and valuation for Vinfast suggest that the company’s shares are still overvalued even after falling more than 50% from its peak over the last few days.

ENM Holdings (128 HK): A Wide Spread with the Scheme Vote on 26 September

By Arun George

ENM Holdings (128 HK)‘s scheme document is out, with the vote scheduled for 26 September. The IFA considers Chime Corporation’s HK$0.58 per share offer fair and reasonable.
The spread of 7.4% reflects vote risk – cash required for the proposal is lower than the net cash, and the offer price is below the IFA’s SoTP valuation (HK$0.658).
Shareholder approval of the scheme is aided by no shareholder holding a blocking stake, a low AGM minority participation rate and no visible retail opposition to the offer.

Mengniu Dairy (2319 HK): Solid Value Play

China Mengniu Dairy Co (2319 HK) is a good pick for those seeking value in the China consumer sector.
The company currently trades at 15x 2024E PE, compared to over 20x forward PE in the last 5 years, as the industry growth stagnated.
We can still expect above 10% net profit growth over the next three years, with the company looking to return more cash to shareholders.

Culp, Inc. – Revising Estimates to Reflect Continued Demand Weakness and Margin Improvement

By Water Tower Research

Herein we revise our estimates for Culp, which reported 1QFY24 results and issued guidance in the face of continued weak demand juxtaposed against improving and better-than-expected margins.
Gross margin for CHF, Culp’s mattress fabrics segment, is recovering faster than expected (up ~700 bps in 1QFY24 versus 1QFY23).
For CUF, Culp’s upholstery fabrics segment, management grew 1QFY24 gross margin by 667 bps despite a significantly down Y/Y sales comparison (~ -17.4%).

Better than Zero? But Limitations of One Female Board Member to Influence Board Decision-Making