Consumer

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, the coming week will see Tryt Inc (9164 JP) and Genda Inc (9166 JP) listing, along with Fadu (440110 KS) bookbuild.
• For placements, Japan and India placements continue to flow, while there are no signs of any major Hong Kong activity.

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

In this Insight:

1. Nameson Holdings
2. Sunny Optical Technology Group
3. Genting Bhd
4. Shui On Land
5. Health And Happiness (H&H)

and more…

• Lookers disclosed that Cinch (largest shareholder with 19.52% stake) plans to vote against the scheme. The shares have dropped to halfway between the pre-offer price and Alpha Auto’s offer.
• The shares are pricing a 45% probability of deal completion. This sector has a track record of failed deals, so it is understandable that investors are spooked.
• Top Lookers shareholders are keen on selling and an offer from Lithia could well happen. At around 103p I’d be long, as I consider the risk reward is balanced. 

• We think the tailwinds of China’s consumption downgrade for PDD are overblown, while TEMU will be more of a drag than a support for bottom-line in quarters ahead.
• 2Q results to be announced next month will finally validate our thesis on the company’s earnings risk which we flagged back in last December.  
• The markets have been pricing in a sharp slowdown after a short-lived euphoria around its seemingly strong 1Q results, yet downside surprises could still catch investors off guard. Stay neutral.

• Market expectations for Yakult’s 1QFY24 earnings seem weak, with consensus looking light, and the share price currently lingering near the lower boundary of the minus 2x trend channel.
• Therefore, we believe that even a minor earnings beat next week could potentially drive Yakult Honsha (2267 JP)‘s share price back up to the ¥10,000 level.
• We anticipate that Yakult 1000 has the potential to drive that earnings beat, as it is projected to grow by as much as 65% YoY this quarter.

• China Resources Beer Holdings (291 HK) is a USD21bn red-chip company, and the largest beer company in China in terms of sales volume.
• The company is a perfect fit for the GARP (growth at a reasonable price) strategy, and visibility in earnings is also high for the next 3-5 years.
• Weak sentiment in H-share stocks and in overall China macro/consumption numbers provide a good entry opportunity for the stock.  

• Ace Hardware‘s June SSSG confirmed very strong growth momentum and the positive impact of its BOOM sale, with headline SSSG at +10.7% YoY, after a flat post-Lebaran performance in May.
• The company’s strategy of using influencers to promote the company has been a great success for its #Bisakejadian campaign, and BOOM sale with foot traffic continuing to improve at stores.
• Ace Hardware plans to step up its store expansion and ramp up new store formats to drive growth, with up to 15 new stores this year. Valuations are attractive.

• United Arrows (7606 JP) is a bellwether retailer for the premium fashion sector.
• Its slow initial recovery after the pandemic worried many but the last year saw a solid improvement, even if sales are still well below the peak.
• Following rationalisation, the fashion firm has now put in place plans to double sales to ¥250 billion in the next decade and we expect a return to 10% OPM.

• Foot Locker delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• The company remained optimistic about the back half of the year, with several key launches and brand collaborations planned.
• Despite challenges, Foot Locker continues to focus on its omni-connected retail experience, with plans to open new prototype stores next year.

• Capri Holdings delivered an all-around beat in the previous quarter as earnings per share and revenue both climbed by high single digits.
• All its houses saw an increase in revenue, with Versace, Jimmy Choo, and Michael Kors all experiencing double-digit growth.
• They kept growing footwear sales across all brands, with Versace, Michael Kors, and Jimmy Choo all seeing increases in the low double digits and Jimmy Choo in the high single digits for women’s footwear retail sales.

• Lennar managed to exceed analyst expectations in terms of revenue as well as earnings.
• The last quarter proved to be successful as the company maintained its focus on production, cash flow, and inventory management.
• Additionally, Lennar diligently managed its operating costs, keeping SG&A at significant lows while maintaining a sharp focus on cash flow and bottom-line results.

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.

• NagaCorp Ltd
• Sands China

• Vietnam-based financial education startup Stag announced that it had been selected to participate in the inaugural Entrepreneur-in-Residence (EIR) programme managed by Viet Capital Ventures (VCV) which also includes an investment in the startup.
• Alongside VCV, NH Securities Vietnam Co. Ltd. (NHSV) and Singapore-based Resolution Ventures also invest in a seed funding round for the company.
• This year, with the funding, Stag plans to continue enhancing financial education features while also launching new value-added products for retail and corporate users. It also plans to enhance KYC and security features and complete technology integrations with key strategic partners.

• Lalatech Holdings Co Ltd (LALA HK), a leading logistics transaction platform, has filed for an HKEx IPO to raise US$1 billion, according to press reports.  
• In Lalatech IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on market share pressure, KPIs declining growth, declining revenue visibility, maiden profitability built on a shaky foundation and barely positive underlying FCF. 

• Even if attendance increases somewhat since 92.1% of AGMs in 2022 had less than 100 attendees, the reluctance to hold an online voting AGM due to technical issues isn’t reasonable.
• With 84.8% of companies having Q&A sessions lasting less than 30 minutes, many companies want to end their Q&A sessions in as short a time as possible.
• Companies that want to keep Q&A sessions short tend to hold hybrid on-site and online sessions that can prioritize questions from on-site attendees and limit questions from online participants.

• Rookie International (1962144D CH) is looking to raise at least US$100m in its upcoming HK IPO. The deal will be run by Citic Securities and CMBI. 
• Rookie International is a fully-integrated operator of childrenswear brands in Greater China. It operates a portfolio of childrenswear brands, by designing, manufacturing and distributing branded products in Greater China. 
• It generates revenue primarily by selling licensed products which it has self-designed or curated under the brands (for which it has access to licenses) in Greater China. 

• NEU Battery Materials, a Singapore-based lithium-ion battery recycling startup, has secured US$3.7 million in an oversubscribed seed funding round led by SGInnovate.
• ComfortDelGro Ventures, Shift4Good, Paragon Ventures I, and other angel investors also joined.
• These funds will accelerate the deployment of NEU Battery Materials’s automated recycling line, which will lower operational manpower requirements.

• Lalatech Holdings Co Ltd (LALA HK), a leading logistics transaction platform, has filed for an HKEx IPO to raise US$1 billion, according to press reports.   
• Lalatech is the largest logistics transaction platform in the world by closed-loop freight gross transaction value in the first half of 2022, according to Frost & Sullivan. 
• The key elements of the bull case rest on solid growth, rising monetization rates, achieving maiden profitability, a shift to cash generation and a debt-free balance sheet.

• The ES50 Index is one of the most highly-tracked indices in mainland Europe and the annual index review takes place in September.
• As ES50 index changes generally involve large cap names, these Rebalance events have historically had significant volume and ADV impact.
• In this insight, we take a look the names leading the race to become ADDs/DELs for the upcoming index review in September 2023.

• EbixCash (EBIXC IN), a subsidiary of Ebix Inc (EBIX US) and India’s largest end-to-end financial exchange, is seeking to launch an Rs60 billion (US$730 million) in July. 
• In EbixCash IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on margin pressure due to rising operating costs, a related party being the largest customer, declining revenue visibility and deteriorating cash generation.

Genting Berhad’s subsidiary, Resorts World Las Vegas LLC (RWLV), is holding roadshows to market an issuance of USD 300 mn Reg-S/144A 7-year senior unsecured notes. The notes are rated BB+/BBB- by S&P and Fitch, respectively. The new notes will rank pari passu with the existing USD 1.35 bn of RWLVCA notes.

Proceeds from the notes issuance will be used to refinance a USD 300 mn subordinated shareholder loan from Genting Assets Inc. Hence, the transaction will be leverage neutral.

We see fair value for the proposed RWLVCA 2030 notes at c. 8.5%, as we expect the bonds to price in line with the existing curve. That said, there could be strong demand for the notes, given the small issuance size and dearth of issuance in the Asia crossover space so far this year.

• India-based fashion brand Freakins has bagged US$4 million in its seed round led by Matrix Partners India and Blume Ventures.
• Founded in 2021 by Shaan Shah and Puneet Sehgal, Freakins is a direct-to-consumer clothing brand that specializes in denim.
• The Gen Z-focused firm has built up a catalog of over 1,500 styles, which it says caters to different body types.

• Organto announced the launch of ORO, a brand focused on premium non-GMO fruits and vegetables.
• This morning, Organto Foods (OGO:TSXV) announced the introduction of its latest innovative brand offering, ORO.
• ORO focuses on premium non-GMO fruits and vegetables, complimenting the I AM Organic brand (organic fruits and vegetables) and =Awesome Fruits (mid-tier non-GMO fruits).

• We expect JD to report C2Q23 revenue in-line vs. cons., and non-IFRS net income 6% vs. consensus.
• Although we raised our GMV estimate, our 5% YoY revenue growth estimate is unchanged as we expect 3P take rate decline to partially offset GMV growth.
• We maintain SELL and TP but cut FY23 non-GAAP net margin to 3% due to the greater share of lower margin 1P revenue vs. our prior estimate.

• EbixCash (EBIXC IN), a subsidiary of Ebix Inc (EBIX US) and India’s largest end-to-end financial exchange, is seeking to launch an Rs60 billion (US$730 million) in July.   
• EbixCash’s Forex operations have emerged as a leader in India’s airport Forex business. Also, EbixCash’s inward remittance business in India is the clear market leader.
• The key elements of the bull case rest on fast-paced growth, growth runaway from the post-COVID recovery, declining contract assets, improving balance sheet, and declining leverage.

• We expect Shakey’s Pizza (PIZZA PM) to release its results for H1 2023 in the second week of August. The stock just went ex-dividend today (17th July 2023).
• We estimate Q1/H1 FY23 revenue to grow 36%/59% and profits to increase by 31%/71%, led by slight margin expansion for Q2 over Q1 as guided by the company. 
• Trading at 14.5x/11.1x PE with a growth profile of >20% CAGR over the next 4-5 years, given the Potato Corner expansion, Shakey’s Pizza could be an attractive investment opportunity. 

• The policy of extending retirement age to 65 is a measure to solve the immediate labor shortage, but it may lack the perspective of a mid-to-long-term human resource utilization strategy.
• Since most employees in their 60s are male employees, this may slow down the fading of the traditionally male-centric corporate culture. A more diverse workforce is required.
• Although seniors are still a promising market based on demographic composition, from the perspective of creating new value, it’s necessary to have more discussions about creating society that ensures diversity.

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

• Kaso, which bills itself as the largest B2B ordering platform for restaurants and suppliers in the Middle East, has raised US$10.5 million in a seed round to fuel its mission of disrupting the food supply chain.
• Founded in 2021, the Dubai-based firm currently has 5,000 partners in Saudi Arabia and the United Arab Emirates. Its platform streamlines the fulfillment process for restaurants and suppliers, enhancing efficiency and transparency as well as combating food waste.
• The company estimates that food waste in the Middle East and North Africa (MENA) region amounts to around 250 kilograms per capita per year.

• Sumber Alfaria Trijaya (AMRT IJ) booked some strong SSSG for June bringing its YTD number into line with its FY2023 projections after post Lebaran adjustment in May. 
• The company will embark on a more aggressive store rollout for this year with plans for 2,100 new stores, including 200 Alfamidi stores and 500 Lawson convenience stores. 
• Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) continues to grow its membership program under AlfaGift with 16.3m members, which helps to gather valuable data and grow sales. Valuations are attractive.  

• Whole Earth Brands, a sustainable sweetener firm, has seen a slowdown in growth, tightening margins, and rising debt since going public.
• Despite the odds, the company is countering these challenges with a strategy that includes cost reduction, improved distribution, and portfolio expansion.
• A recent buyout proposal from the company’s largest shareholder has added a new dimension to the company’s future. 

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, HK IPOs appear to be coming back to life with some deals managing to perform this week.
• For placements, Socionext (6526 JP) and Plus Alpha Consulting (4071 JP) were joined by LG Energy Solution (373220 KS) and Patanjali Foods (PATANJAL IN) in a relatively busy week.

• This is our first report on global beverage giant, Molson Coors Beverage Company. has exhibited commendable resilience this quarter, particularly with their premium light brands in the U.S.
• Their brands, Coors Light and Miller Lite, registered double-digit revenue growth, significantly aided by their first Super Bowl campaign in over three decades.
• We initiate coverage on the stock of Molson Coors Beverage Company with a ‘Hold’ rating.

• Nominating Committee’s main activity is the selection of individual director candidates, and the Nominating Committee tends to be less involved in issues related to top management appointments, including succession planning.
• Although most companies have a majority of independent directors as members of the nominating committee, the nominating committee may in fact be a body that approves top management’s proposals.
• Companies focus only on prime market listing criteria of “committee establishment and committee member composition” and overlook original intent. The problem is that it’s all about achieving the formal criteria.

• We expect the 2Q23 online music revenue growth to be 34.4% YoY, driven by more promotions to drive up users’ retentions;
• We anticipate the 2Q23 social entertainment growth rate to be (12.9%) YoY, due to intense competition and strengthened regulatory in live streaming. 
• We expect TME’s 2Q23’s rev./non-GAAP net income to be (1.8%)/ (3.9%) vs cons. We maintain SELL because of continuous pressure from Bytedance’s Soda Music, Wechat Video Account and Kuaishou.

• A combination of strong property values, sound balance sheet and expansion to second Philippine property will produce strong result in sequential quarters ahead.
• Macro factors in market blur expectations for investor interest at this point in other major players in the Entertainment Zone space.
• Regulators predict Philippine GGR wil reach US$10b by 2027, making it among the globe’s most attractive gaming investment targets.

• This morning (13 July), IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share.
• The Offer price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day. Evidently, there was news leakage.
• IMAX US holds  71.63% in IMAX China, therefore the blocking stake at the Schene Meeting is 2.837% of shares out. 

• Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
• It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
• Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.

• The promoters of Patanjali Foods aim to sell up to 9% of the company via an FPO. 
• The sale is being done so as to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
• We have looked at the background of the deal in our earlier note, in this note we talk about the recent update and run the deal through our ECM framework.

• IMAX China Holding (1970 HK) disclosed a scheme privatisation offer from IMAX Corp (IMAX US) at HK$10.00 per share, a 39.5% premium to the undisturbed price (HK$7.17 on 10 July).
• 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. 
• The offer price is final. While the offer price is light compared to peer multiples and historical share prices, the deal will likely succeed. 

• It will take a couple of years to see financial improvement but recent reforms suggest  criticism of Seven & I’s inability to change may be increasingly unfair.
• The latest in-group merger further demonstrates Seven & I’s desire to refocus on food and FMCG.It also suggests that Seven & I may double down on divestment from non-food retailing. 
• The share price may fluctuate but the outlook for domestic fundamentals are better than they have been for years.

• Another blow out quarter for Fast Retailing – beat and raise
• Fears (well, mine) of a miss in China were unfounded
• Still, Q3 results do nothing to change the view that this is one expensive stock

• Fast Retailing (9983 JP) announced its 3QFY23 results today, surpassing the consensus OP estimate by approximately 10%.
• Notably, there was strong revenue growth for Uniqlo, including in recently underperforming markets such as mainland China and South Korea.  
• Despite the strong set of results, it appears that Fast Retailing is overvalued as the stock is currently trading at a valuation of over 20.0x its medium-term FY27 OP target.

• Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
• Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
• In this note, we will undertake a peer comparison, share our earnings assumptions and discuss our thoughts on valuation.

• Fenbi Ltd (2469 HK) announced after market today a very strong positive profit alert for 1H2023, with adjusted net profit up not less than 182% yoy.  
• As a reminder, share price was heavily sold off in June due to pre-IPO shareholders selling, as well as weak market sentiment, niche sector, and new stock (under researched).
• Even with the recent bounce back in share price with heavy volume, Fenbi is still very undervalued.

• TSE, which receives listing fees from listed companies, has no choice but to take a negative attitude toward raising listing criteria that would reduce the number of listed companies.
• Behind many companies with stagnant P/Bs is the fact that managers lack stock price consciousness and companies with stock price stagnation for years eliminated and continue to be listing.
• In Japan, it is expected that industry restructuring, dissolution of parent-subsidiary listings, and going private will further increase through M&As, leading to a shakeout in the Japanese market.