Consumer

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND inflow continues, albeit smaller. SOE Banks/Energy/Telecoms remain a big net buy. Percentage of volume is large. NORTHBOUND saw finance buying. Possible short-covering ahead of new short-selling restrictions/access.
• AH Premia were up small on average, down small on the liquid pairs. But HSI/HSCEI vs CSI300/500 performance spreads were higher. Third Plenum this week may drive “sentiment.”

• A group of shareholders aims to raise around US$1.3bn via selling around 11% of ASICS Corp (7936 JP).
• For the two large banks, this will be a cleanup of their cross-shareholding.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Thai Beverage (THBEV SP) majority-owned SABECO, a leading beer company in Vietnam, may face volume declines if the proposed beer tax hike is implemented.
• The tougher market outlook makes the earlier proposed BeerCo listing unlikely anytime soon.  
• With no meaningful stock catalyst, weak sector outlook and a stretched balance sheet, the stock could slip down after index inclusion related passive stock buying ends.

• Guangzhou Automobile sales volume of new energy vehicle decreased by 38% YoY in June and by 31% YoY in 1H24.
• BYD plans to invest US$1 billion to build a factory in Turkey.
• AliPay announced that foreigners’ consumption amount in China in 1H24 was eight times of last year.

• Zozo continues to post solid gains in sales but a slight dip in new customers has led some to suggest that the online fashion mall is reaching its peak. 
• Meanwhile, The Japanese fashion retail sector has seen improved performance from retail stores at the expense of e-commerce, with stores actually outperforming online last year.
• While further growth may be harder to achieve, Zozo has several strategies in place that should help it reach its target of ¥800 billion.

• Charles & Colvard operates in the lab-created diamond industry and plans to transition to lab-grown diamonds and direct distribution
• The company experienced a challenging second quarter but has a solid foundation and potential for improved financial performance in the future
• Despite current setbacks, Charles & Colvard could present a value investment opportunity for patient investors awaiting a turnaround

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion. 
• HMIL is India’s second largest passenger vehicle manufacturer, as measured by domestic passenger vehicle sales. It serves as Hyundai’s production and export hub for emerging markets.
• The bull case rests on a strong market position, premiumisation-led growth, top-quartile operating and FCF margin profile. 

• I-Scream Media is getting ready to complete its IPO on KOSDAQ exchange in August. The IPO price range is from 32,000 won to 40,200 won. 
• I-Scream Media is one of the the leading digital education platform companies in Korea. Its I-Scream S platform is used by more than 93% of elementary school classrooms in Korea.
• Post IPO, Sigong Tech will have a 23.7% stake in I-Scream Media. Sigong Tech’s stake in I-Scream media (at high end of IPO value) is 157% of its market cap.

• Gentex Corporation reported its financial results for the first quarter of 2024, revealing a mixed outlook tempered by challenges in the global auto industry yet bolstered by strategic advancements and product development.
• Net sales saw a 7% increase to $590.2 million compared to the same period last year, a performance that came notwithstanding a 3% drop in light vehicle production in the company’s primary markets.
• This discrepancy highlights Gentex’s ability to outperform the broader market, largely attributable to increased take rates of advanced features like Full Display Mirrors and growth in the auto-dimming mirror sector.

• Competition little work because the portfolio company had advantage over competitors in business. This distorted competitive environment may have prevented the beneficiaries from receiving the benefits they should have received.
• If the business was advanced by competitive advantage through the ownership of shares in the portfolio company, the beneficiaries may not have received the benefits that they should have received.
• The question is whether the life insurers are exercising their voting rights properly for the benefit of the beneficiaries in the shares of client companies they hold.

• Hilton Grand Vacations reported results for the first quarter of 2024 with several positive financial and operational highlights that reflect strengths in its strategy and company growth, along with some remaining challenges related to customer behavior and macroeconomic conditions.
• Starting with the positive elements, Hilton Grand Vacations exhibited robust adjusted EBITDA figures, although specific numbers were not provided, it was evident the company’s margins remained solid.
• Notably, reported contract sales for the quarter stood at $631 million, attributed partly to the recent Bluegreen acquisition which concluded in January.

• Frontdoor, Inc. has reported a promising first quarter of 2024, revealing solid financial performance and operational improvements despite external market challenges.
• The company recorded a 3% increase in revenue reaching $378 million.
• This growth was accompanied by a substantial increase in gross margin, which rose by 510 basis points to 51%, and a 33% rise in adjusted EBITDA, setting a new record for the first quarter at $71 million.

• Nexstar Media Group’s first quarter performance for 2024 displays a mixed outlook, with distinct strengths in certain areas counterbalanced by challenges in others.
• The company reported record first-quarter net revenue of $1.28 billion, driven largely by a robust increase in distribution revenue, which reached an all-time high of $761 million.
• This reflects ongoing strength in Nexstar’s ability to monetize its extensive broadcast and digital network.

• Daidoh Ltd (3205 JP) saw an activist “win” at its AGM, another activist bought, the stock popped. I wrote about it. 2hrs later, the Board set a new Div Policy.
• ¥100/Yr for 3 years in a row. That was 11% of then-current price. Big activist win for Strategic Capital which owned 25% and Murakami-san who had gone substantial 1wk earlier.
• Today post-close, Strategic Capital reported it sold everything on 5 July, the next day. WOW. That was half of Maximum Real World Float. Oops. Murakami-san sold too. 

• Today after the close, ASICS Corp (7936 JP) announced a very large secondary offering. It points out that as a global brand, it needs global-standard corporate governance. 
• As such, it says they’ve been discussing sales with crossholders. But we knew the cross-holders were going to sell. This offering is 85mm shares, ¥210bn at last. That’s big. 
• The stock has doubled year-to-date. Today they raised FY guidance BIGLY (+60% OP and NP). Now a huge offering. This seems like a “feed the ducks when they’re quacking” situation.

• ASICS Corp (7936 JP) has announced a secondary offering of up to 85.0 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY218 billion (US$1.4 billion).
• Asics’ goal with the secondary offering is to eliminate cross-shareholdings. Asics also announced a material upgrade to full-year forecasts to offset the impact of the offering.
• Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 23 and 26 July (likely 23 July).

• Kobe Bussan continues to hit new lows relative to the median Japanese retailer, as cheaper alternatives continue to rebound.
• Kobe was one of the greatest beneficiaries in Japan of the Pandemic, but it is stuck at 10% growth which is no longer unusual. 
• Kobe’s wholesale model makes it difficult to benefit from food price inflation like other food retailers. Kobe Bussan could drop another 50% before reaching fair value.

• Delfi Ltd (DELFI SP) is Asia’s largest confectioner, with circa 50% market share of chocolate in its largest market Indonesia, despite competition from global confectionary players over many years. 
• The company produces products that are engrained in local tastes but it also produces products in different categories that compete directly with foreign competitors with a local twist. 
• The negative headwinds from higher cocoa prices have started to stabilise and Delfi has deployed various strategies to offset the impact on packaging and ingredients. 

• The company’ share bucked China catering sector’s down trend and rallied 30% in last few weeks.
• Its 2Q operating data suggest that its store opening is well on track with healthy SSSG, underpinning strong margin expansion.
• We believe that market still underestimates its growth and earnings potential which could beat consensus by wide margin. Interim results to be announced in August will be key catalyst.

• ASICS is revising up its full year forecasts, now expecting sales to reach a record ¥660 billion , up 15.7% year-over-year. There is a strong currency tail wind. 
• Still “you gotta be in it to win it..”  ASICS is currently crushing it, while Nike flounders
• A large secondary offering will likely hit the share price in the short term; there are two key risks…but it could be a good opportunity to buy. 

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

• Choice Hotels International Inc. showed a largely positive outcome in its first quarter of 2024 financial results, demonstrating solid growth trajectories in various aspects of its business.
• The company reported an impressive 17% increase in adjusted EBITDA and a 14% increase in adjusted EPS on a year-over-year basis, achieving record levels for the first quarter.
• This growth was partly fueled by the successful integration of the Radisson Americas, which has substantially broadened the company’s scale and diversified its earnings streams through new non-RevPAR-related avenues.

• US markets suffered a bearish reversal on CPI data. Time look to elsewhere?
• China looks to be bottoming. Could the region begin to show relative strength?
• Emerging markets look particularly attractive especially if the dollar trades lower.

• Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
• Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact. 
• New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

• Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations. 
• Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19% 
• Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium

• ADF Foods (ADFL IN) is undergoing significant expansions, including brownfield projects in Nadiad and Nasik, and a greenfield project in Surat.
• These projects are expected to boost revenue significantly, enhance operational efficiency, and support the company’s growth plans.
• Company will almost double its revenue in 3 years and similarly PAT will also grow, which makes it attractive on valuation side as well. 

• Jollibee Foods (JFC PM) recently acquired Compose Coffee, the second-largest take-out chain in South Korea’s competitive value coffee retail segment.
• While the acquisition presents growth opportunities for Jollibee, the intense competition and inherent challenges of the value coffee retail segment warrant caution.
• With Jollibee’s Coffee & Tea business vertical now growing into a meaningful size, we recommend listing it separately to enhance visibility, accountability and unlock shareholder value.

• Saint Bella (SAINT HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by UBS and Citic Securities.
• Saint Bella (SB) is a comprehensive family care group in China, focusing on premium services and products that addresses demand from the lifestyle-minded younger generation. 
• It is the largest postpartum care and recovery group in terms of revenue from ultra-premium postpartum centers in 2023, according to F&S.

• On 5th July 2024, Taste Gourmet (8371 HK)  submitted an application to Hkex to transfer the listing of all its issued Shares from GEM to the Main Board. 
• The company’s case is strong as it meets all the criteria proposed by the exchange, but there is no assurance that it will obtain relevant approval from the exchange. 
• Trading at 6.4x/5.2x PE FY24/25e with 25% of the market cap in net cash and a trailing yield of 8.5%, we believe a mainboard listing would provide incremental visibility. 

• Within Consumer, we see Health & Personal Care as mostly defensive.
• While perfect conditions are hard to align, or remain, these days, we see mostly favorable conditions ahead for this segment, at least where it matters the most.
• Throughout the last years, consumers have faced a wide array of HPC options, some of them later phased out as companies started to focus on their core products amid rising costs.

• Sales increased by 7.4% YoY to JPY47.5bn, driven by store expansion and effective product and sales strategies.
• Operating profit decreased by 38.6% YoY to JPY880mn, impacted by rising labor and raw material costs.
• Net income attributable to owners of the parent fell by 33.5% YoY to JPY681mn, despite higher sales and price revisions.

• SPB plans to spin-off its home & personal care (HPC) business into a separate listed company (SpinCo). The parent will retain Global Pet Care and Home & Garden business units.
• The separation will allow SPB to allocate capital and resources more efficiently towards higher growth categories.  SPB (ex SpinCo) will be a higher-growth, higher margin business.
• HPC business (low-growth and low-margin) has been a drag on the overall valuation of SPB. The spin-off will unlock value as SPB (ex SpinCo) will command higher multiple post spin.

• Target aggressively markdown prices to clear excess inventory and maintain momentum in the business
• Despite challenges, Target navigated through the shifting consumer landscape and drove positive sales growth, albeit at a slower rate
• Target strategically adjusted inventory management and focused on growing categories to stay strong in the retail market

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Founder/CEO Mohamed Salleh Maricar (MSM) and his family have made a voluntary unconditional general Offer for the 14.94% in gold/jewellery retailer Second Chance Properties (SCE SP) (“SCP”) not held.
• The S$0.30/share cash Offer is a 39.5% premium to last close. The Offer price is final.
• The Offer is unconditional in all respects. This will trade tight. A delisting Offer is next on the cards.

• The Hong Kong Television Network (1137 HK) vote on the share buyback for a maximum of 100.0m or 11.25% of outstanding shares at HK$2.15 was comfortably passed at the EGM.
• The partial offer is designed to help the co-founders bypass the creeper rule and increase their grip on the shares. There is no minimum acceptance condition. 
• While the IFA opines the offer is fair and reasonable, it is unattractive. A 100% minority participation rate implies a minimum proration of 20.74%. The offer closes on 23 July.  

• Last month, apparel play Shinsung Tongsang (005390 KS) announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.
• Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting. 
• Shinsung’s share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?

• Energy Growth: Tesla’s energy storage business surged to 9.4 GWh in Q2, a 135% increase from Q1’s 4 GWh.
• China’s Impact: Shanghai Gigafactory shipments fell 24.2% YoY in June, delivering 71,007 units amid a Chinese price war.
• FSD & Robotaxi: Full Self-Driving price cut to $8,000 from $15,000; investors await Robotaxi Day on 8/8.

• Second Chance Properties (SCE SP) has disclosed a voluntary unconditional offer from Mohamed Salleh’s family at S$0.30 per share, a 39.5% premium to the undisturbed price (10 July).
• The offer document will be despatched by 31 July. The offeree circular will be despatched by 7 August at the earliest, implying the earliest close of 28 August.
• The offer price has been declared final and is attractive as it represents an all-time high. The offeror will likely achieve the 90% compulsory acquisition threshold.

• The Technical Advisory Committee (CAT) in an extraordinary meeting adds Puig Brands (PUIG SM) to the IBEX 35 index and removes Melia Hotels International Sa (MEL SM).
• Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.
• Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.

• Recent acreage report shows benign planting figures and solid ending stocks for Corn sending its prices lower. Wheat also declined on higher stocks, while Soybeans rebounded.
• Wheat faces headwinds & tailwinds. Fundamentals are dragged down by favorable weather in exporting countries & imminent US harvest; Strong US demand & weak EU forecast has supported prices.
• Soybeans appear well supported from an unlikely ally in Trump. Import Duty tit-for-tat could see China slapping duty on Soy imports.

• We are reiterating our Buy rating, $25 price target and projections for Vera Bradley as we look forward to 2H24.
• Not surprisingly, our focus is on the start of the New Day, which is the relaunch of the company’s main line stores to reflect management’s vision, scheduled for July 11th, and the associated shifts for the company’s outlet locations in August.
• We believe this shift, which will impact all pieces of the store (and online) shopping experience, represents a bold move by management to fundamentally change the Vera Bradley shopping experience, making it more relevant to a wider range of consumers, easier to shop and offering both the pattern driven and feature driven shoppers compelling choices.

• We are reiterating our Buy rating, $3 price target and projections for Vince as we look forward to 2H24.
• We believe, as the company finally enters a period of “apples to apples” comparisons, Vince will be able to fully demonstrate the material positives blooming in the business model, from strong fashion looks, lower discounting in the outlet and main line channels, gains from better sourcing and a continued emphasis on cost controls.
• Further, as 2H rolls forward as a positive, we believe the company will be able to, on a much more credible basis, focus investors on the potential material gains from increasing the overall penetration in men’s wear, adding more stores to the mix and expanding internationally, all of which should refocus investors on VNCE.

• Hurricane Beryl started out as a category 5 hurricane, made landfall on the Texas Coast early Monday (08/July) & weakened to a Tropical Depression.
• Beryl has weakened and likely not significantly impact corn and soybean prices in the long run. Storm led rains will likely have a bearish effect on prices.
• Beryl might bring much needed rain to Illinois, Indiana, and parts of Ohio, potentially providing favorable weather for corn and soybean growth in these areas.

• Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
• It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
• Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.

• The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
• Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.
• Fast Retailing (9983 JP)‘s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.

• Hyundai Motor India (HMIL) saw a market share loss in India Passenger Vehicles sales reported for June 2024 and 1QFY2025, impacted by intensified competition in the SUV segment.
• Mahindra & Mahindra, and Toyota Kirloskar India gained market share in 1QFY2025 led by upgraded model launches in the SUV segment, traditionally a strong category for HMIL.
• HMIL’s declining market share, if not reversed soon, could challenge optimistic growth projections and valuation multiples for its upcoming IPO.

• Back in May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a mediocre 20.8% premium to undisturbed.
• The thrust of the Offer was to lift co-founder Ricky Wong’s stake to 51.55% from 45.75%.  But that required independent shareholders approving a whitewash waiver not to make a MGO.
• I didn’t expect shareholder pushback. And there wasn’t. Tendering closes on the 23rd July. Keep an eye on CCASS movements. Shares gained 4.7% yesterday prior to the EGM outcome. Mmm.

• Mercari’s US operations, responsible for major losses, saw a workforce reduction by 45%, potentially preceding a market exit to improve overall margins.
• Fintech growth is strong, with Mercari issuing over 3 million credit cards, achieving a 67% YoY credit balance increase, despite current operational losses
• Mercari Hallo, an on-demand work platform, has rapidly gained users and business partners, positioning it to capitalize on Japan’s growing gig economy.

• We continue to play the hand we have been dealt; i.e., riding the trend higher on the SPX and Nasdaq 100, and being overweight large-cap growth
• Russell 1000 GrowthVs.Value ratio is breaking out from a 4-year base, suggesting growth’s outperformance is likely to continue in the months ahead. Growth outperforming during bull markets is no surprise.
• Latest bullish developments include the equal-weighted Nasdaq 100 (QQQE) breaking out from a 4-month base, while Discretionary (XLY) displays a 6-month base breakout and RS is reversing its YTD downtrend

• CarMax has reported its fiscal 2025 first quarter results, revealing a mixed financial scenario.
• This analysis aims to objectively evaluate the performance by weighing the key positives and negatives reflected in the data and future company outlook.
• Starting with the positives, CarMax noted several encouraging business trends, such as a stabilization in vehicle values and a decrease in average vehicle selling prices, which fell by approximately $700 per unit.

• We are reiterating our Buy rating.
• $0.25 price target and projections for Starco Brands as we look at key trends for 2H24 and beyond.
• We believe 2024, while somewhat frustrating from an investor standpoint (given the downward revenue guidance and pulling of EBITDA guidance after 1Q), will be seen as a positive over the longer term, as the company has made material steps forward for all of their brands, positioning Starco for significant top line growth and going forward, material operating leverage, which we believe will become increasingly self-evident in 2025 and beyond.

• We are reiterating our Buy rating, $17 price target and projections for Lands’ End as we look at key trends for 2HFY24 and beyond.
• We believe management’s focus on reducing discounting, material product newness and excitement, telling product “stories” focused on key differentiating features, and shifting the product mix to higher levels of licensing, has been a hit, and we believe FY24 will continue to demonstrate there remain material upgrades still to come, with the potential for further top andbottom line upside.
• Further, with international top line growth nearing, digital marketplaces remaining a plus and the full positive margin impact of licensing still on tap, we believe there remain further catalysts going forward.

• We are reiterating our Buy rating, $41 price target and projections after visiting franchised stores in Milan, Italy.
• With the company ramping up penetration with commercial partners and international franchisees, we believe it will be increasingly important for investors to understand and appreciate what we believe are the impressive economics of the franchised Build-A-Bear business.
• Our Milan visits reiterated both the ability to recreate the experiential aspect of the Build-A-Bear operating model with partners and what we believe can be the lucrative nature of the business.

• Despite the significant offering size, passive fund demand is unlikely to materialize due to non-strategic selling shareholders.
• Company’s number of shares and free float in the main global indices are forecasted to remain the same before and after the offering.
• Upcoming buybacks can lead to a decrease in float shares which can even cause passive fund supply at a subsequent quarterly review.

• On 21 June 2024, Canaan Co. announced a tender offer and taking private of Shinsung Tongsang. Tender offered shares are 31.664 million shares, representing 22.02% of outstanding shares.
• It could be difficult to complete this tender offer at 2,300 won, because there could be many investors that simply refuse to sell their shares at such low valuations.
• On the business side, the company has successfully captured higher market share and enjoyed higher profit margins especially for the Top Ten apparel brand, taking away market share from Uniqlo.

• Around a third of the way though the review period, there could be 4 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
• The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on the potential deletions varies from 2.5-16 days of ADV.
• The potential adds have outperformed the potential deletions over the last few months and there could be more to go with short selling banned.

• Johor Plantations Group (2368120D MK) raised around US$156m in its Malaysia IPO. The IPO consisted of both primary and secondary shares.
• Johor Plantations Group (JPG) is an upstream oil palm plantation firm operating predominantly in Johor, Malaysia.
• We have covered various aspects of the deal in our previous notes. In this note, we will talk about the demand and trading dynamics.

• On 8 July (ahead of 19 July PUSU deadline), Carlsberg and Britvic PLC agreed a 1,315p/share offer, 5% above the prior one (I mentioned that an improved offer could come >1,300p).
• The offer represents a 12.6x EV/fwd EBITDA, above the 10-y 10.6x average, which seems reasonable, although interestingly, there are no irrevocable undertakings from any of the top shareholders.
• The offer price is towards my bull case and Britvic’s shareholders are capturing a good part of the synergies. Spread is 3.98%/5.93% (gross/annualised, assuming settlement by 15 March). Long.

• Matahari Department Store (LPPF IJ) results reflected a positive impact from the timing of Lebaran although the like-for-like comparisons were slightly below management expectations., although SSSG remains very strong YoY. 
• Management highlighted that better inventory controls meant that inventory levels finished 1Q2024 at significantly lower levels versus last year, with effective cost controls resulting in better EBITDA and net margins. 
• The company will slow its new store build-out to focus on improving the productivity of existing stores, with refurbishment of six stores and improving merchandise mix driving growth. 

• Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH) is looking to raise US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC and China Securities.
• Zhou Liu Fu Jewellery (ZLFJ) is a jewelry company in China with a network of offline stores and online sales channels.
• According to F&S, the firm is ranked among the five largest brands in the Chinese jewelry market between 2017 to 2023 in terms of number of stores in China.

• The Walt Disney Company is a diversified worldwide entertainment company. The Company’s segments include Entertainment, Sports and Experiences.
• The Entertainment segment generally encompasses the Company’s non- sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distri- bution activities.
• Its line of business includes Linear Networks, Direct-to-Consumer, and Content Sales/Licensing. 

• “Life is like a cup of coffee, it is best made with love…” I’ve loosely followed Farmer Bros (FARM) for quite some time but a series of events triggered me to revisit the situation.
• Part of my New Year’s resolution was to go cold turkey on my addiction of the highly acidic blend of roasted Robusta and Liberica black coffee one would find all over Singapore, typically consumed sugarless and without milk for the true aficionados – their presence never going unnoticed as every sip leaves an unmistakable yellow taint on the crooked canvas assembled right behind those lips.
• This turkey survived for quite a bit until two weeks ago … I took a short trip to Shanghai to visit some buddies (will be flying to Bangkok in a week – drop me an email if you’d like to grab a drink) and in the spirit of “whatever happens on vacation, stays on vacation” decided to steal a couple cups of freshly brewed black coffee to tide through the day, especially after a number of late drunken nights.

• Valuation should not be the main factor when considering shorting DKNG
• Strong momentum in 2023 is waning, leading to focus on financials and valuation
• Competition intensifying and low margins in sports betting market may pose challenges for DKNG as investors shift focus to financial performance

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• EU, like the US, is considering lowering “de minimis” import threshold, soon
• Lowering import value thresholds or raising reporting requirements could make SHEIN/Temu/AliExpress goods more expensive, and fulfillment more onerous
• Threat of “de minimis” changes coming just as SHEIN reportedly seeks an IPO

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, we looked at the recently launced offerings of Timee Inc , Chenqi Technology Limited and Cirrus Aircraft.
• On the placement front, this week too was dominated by the cross-shareholding unwinds, this time in Honda Motor (7267 JP).

• With just over a third of the review period complete, there could be 12 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
• Even with 12 potential changes, there is sector balance with over half the changes in the Information Technology sector. Passive trading impact varies from 0.04-4.1x ADV.
• The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the year with a big move higher since mid-May.

• Since TSE’s request, more companies have used ROE or ROIC as KPIs in mid-term management plans, but even now, more companies only indicate targets for sales, operating profit, etc.
• Larger companies have been the first to raise ROE; the key will be for smaller companies, which have been slower to improve their ROE, to raise their ROE.
• Many companies have only just begun to reduce their policy shareholdings and strengthen shareholder returns, and are still in the process of addressing the core issue of increasing profit margins.

• BYD’s sales volume increased by 35% YoY in June and by 39% YoY in 2Q24.
• Tesla’s Model Y is on the state-owned corporation procurement catalogs.
• Microsoft plans to close its franchised store chain in China due to the weak demand for Surface.

• Corn and Wheat planted acreage are down 3% and 5% YoY, respectively. Meanwhile, Soybean total planted area is up by 5% YoY compared to 2023.
• Planted acreage and ending stocks drove prices down for wheat and corn. Soybeans bucked the trend as reported acreage fell short of WASDE estimates by 400k acres.
• A positive picture for 2024 planting season is visible, with the early benefits of warm temperatures and improved moisture levels setting the stage for strong yields.

• CARD is a UK microcap retailer with impressive qualities despite appearing unattractive at first glance
• The company has shown consistent growth and gains market share each year in a stagnant market
• With a strong balance sheet, high return on capital employed, and efficient CEO, CARD presents a compelling investment opportunity at a low valuation

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• 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.
• Just one new deal was discussed this week on Smartkarma: Sermsuk PCL (SSC TB)‘s Delisting Offer. There are also rumours of an Offer for Raffles Medical Group (RFMD SP).
• Key updates took place on: L’Occitane (973 HK), Shinko Electric Industries (6967 JP), MMA Offshore (MRM AU), and Hollysys Automation Technologies (HOLI US).

• Chow Tai Fook Jewellery’s shares are down 28.2% YTD, sharply underperforming the Hang Seng Index which is up 6% in the same period. We believe this divergence is excessive. 
• Chow Tai Fook’s dividend yield averaged 4.8% from FY20 to FY24. Its annual dividend payout averaged 107% in the same period.
• Chai Tai Fook is currently trading at attractive valuations. It is trading at P/E of 10.1x, EV/EBITDA of 7.5x, and P/B of 2.9x based on FY25 consensus earnings estimates. 

• Berli Jucker’s modern trade supply chain under Big C continues to benefit from the tourism recovery, with 25 dedicated tourism stores and another 35 secondary tourism stores. 
• Tourism stores carry a slightly different mix of SKUs versus regular stores, which generate higher margins. Big C continues to expand its store network and margins are moving upwards.
• Berli Jucker provides direct exposure to Big C but its other divisions including packaging and consumer supply chain provide exposure to both Thailand and Vietnam. Valuations are attractive versus history.

• It’s just a question of when, not if, the bubble bursts for Barito Renewables Energy (BREN IJ), which is up 1,200% since it October 2023 IPO. 
• A Reuters article suggests a ¥500bn secondary offering for Honda Motor (7267 JP). Honda has since said there is smoke. And we can assume there is fire.
• Loo Choon Yong, Raffles Medical Group (RFMD SP)‘s founder and major shareholder, continues to chip away at minorities, and now holds 54.944%,

• Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
• The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

• SHEIN’s fast-fashion apparel is set to hit India through Reliance Retail’s platforms, marking a major comeback after the 2020 ban.
• This partnership could be a win-win, tapping into India’s booming fashion demand and offering Shein access to the world’s largest youth market, ahead of its proposed IPO.
• With Shein’s affordable styles and Reliance’s extensive network, this alliance targets the youth market, challenging brands like Tata Group’s Trent Ltd (TRENT IN) owned Zudio.

• Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
• Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
• Future remains uncertain for Tesla and its investors. Tesla shares are pricing in the launch of a lower priced model and Tesla’s Robotaxi on 8/8.

• Sales rose JPY1.5bn YoY (+2.9% YoY) to JPY51.4bn, driven by higher sales in domestic and overseas apparel businesses.
• Operating profit decreased JPY306mn YoY (-5.7% YoY) to JPY5.1bn due to a decline in domestic profit and wider overseas losses.
• Full-year forecasts revised for recurring profit and net income attributable to owners of the parent, reflecting better-than-expected affiliate performance.

• If a company hasn’t improved its return such as ROE, it’s difficult to buy its shares until the plan is more certain that cash flow will expand in the future.
• Since cash flow margin must be raised to increase cash flow, the ultimate goal is to achieve sales growth while raising the profit margin on sales.
• Cutting costs alone isn’t enough; cash must be used for investments that will lead to future growth, so cash must be used for growth investments as well as stock repurchases.

• Signet Jewelers delivered a performance that aligns with its guidance amidst a challenging retail environmen characterized by macroeconomic pressures and heightened discount activities in the jewelry sector.
• The company reported $1.5 billion in sales and $58 million in adjusted operating income, which falls within the upper half of its guidance range.
• The quarter saw a sluggish start but improved significantly with late Valentine’s Day shopping and further momentum through March and April.

• Meritage Homes commenced the year with a remarkable first quarter in 2024, demonstrating both strong execution and a robust demand environment, yet facing challenges due to the unpredictability of interest rates and increased land and material costs.
• On the performance front, Meritage Homes reported substantial gains, with first-quarter sales orders hitting a record 3,991 homes, reflecting a 14% year-over-year increase.
• This noteworthy jump was primarily driven by healthy spring sales, an 8% cancellation rate, and robust demand across all regions, particularly from entry-level homebuyers who make up more than 90% of the order volume.

• J&J Snack Foods recently reported fiscal results for the second quarter of 2024 and showcased a promising outcome, marked by significant sales and profit growth.
• The company’s strategy and operational efficiencies appear to be paying off, with net sales reaching $357 million, an increase of 6.5% compared to the prior year.
• This results from a combination of higher volumes, new business performance, and continued robust sales in major segments like Foodservice and Retail.

• Under Armour, the prominent athletic performance brand, reported their Q4 2024 earnings.
• While the brand maintains a strong foundation and reputation amongst consumers, recent changes in leadership and the COVID 19 pandemic have presented challenges to the company’s operations, including increased competition and changes in consumer shopping behavior.
• The company expressed a commitment to improvement by prioritizing clarity and stability amid rapid executive team changes and industry shifts.

• We are reiterating our Buy rating and $22.50 price target and slightly back-end loading our 2024 projections after reviewing the July catalog and recent foreign exchange swings between the Mexican Peso and USD.
• July continued to demonstrate normalizing trends in the Betterware catalog, with SKU levels up YoY and discounting remaining down, as the division begins to compare against more normalized results from the prior year, as supply chains reset at more historic levels.
• That said, overall pricing power remains somewhat constrained, as YoY pricing dropped 8.4%, the sixth drop, and deepest decline, this year.