Consumer

• Following Jehoshaphat’s allegations that profits are inflated dramatically over a decade with manipulative accounting, Techtronic Industries (669 HK) has issued a rebuttal clarifying that the accusations are without any merit.
• TTI’s beyond comparison performance is due to world class brands such as Milwaukee, Ryobi and Hoover which have helped top line grow at 13% CAGR over the past 13 years.
• Nevertheless, we have assessed some of the company’s clarifications here which seemed too good to be true.

• JD’s revenue growth rate reached its historical low in 2022, but we believe it will recover in following two years.
• JD’s operating margin hit its historical high in 2022 and we believe the improvement will continue.
• We believe EPS will grow by more than 100% in 2022 and the stock has an upside of 42%.

• Yashili International Holdings (1230 HK) announced that the pre-condition is satisfied – around 10 months since the 6 May 2022 announcement of China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer. 
• Yashili has received an extension for the despatch of the scheme document to a date no later than 31 August. We think the scheme document is despatched by early April.
• The scheme risk is low. At the current price and for a late May payment, the gross and annualised spread is 2.6% and 12.2%, respectively.

• After giving up the IPO plan late last year, DPC Dash (1405 HK) has restarted its IPO with hopes of capitalising on China’s reopening boom.
• DPC Dash is not positioned to benefit from the ending of lockdowns. It also didn’t outperform Pizza Hut when dine-in demand was absent.
• Therefore, DPC Dash is likely going to remain a minor player in a segment dominated by Pizza Hut.

• What may appear duplicative asset segment in MGM actually spreads risk and improves overall margin of safety for both stocks.
• MGM China is a pure Macau play while MGM Resorts International is a strong bet on global reach of its gaming properties.
• Buying both is insurance against a possible recession downside because of the geographically and demographically diverse customer bases of both enities.

• The 25% stake sale/acquisition in Yashili International (1230 HK) was expected five business days after the Dumex China Disposal  – and that is what transpired. This satisfies the Scheme conditions. 
• After ten months, Danone (BN FP) offloaded its chilled dairy business, acquired Yashili’s Dumex China baby formula ops, and offloaded its 25% stake in Yashili to China Mengniu (2319 HK).
• Now Yashili minority shareholders will get their chance to vote for China Mengniu’s Scheme, potentially in early May. 

• Perfect Medical Health (1830 HK) released an operating update during market hours (see: Operations Update) that signaled China has turned around to almost normalized (pre-covid) revenues. 
• While Feb is very late in the financial year (March End FY), and data turning around now does not move the needle for FY23e, it bodes well for FY24e profits. 
• The stock trades at 14.7x/11.5x FY23e/24e PE(x) with a 7.2%/9.2% FY23e/FY24e dividend yield with net cash and LT investments at 14% of market cap), making this an exciting investment.

• 2022: Consolidated sales of €39bn (+16.7 percent); Adjusted EBIT of €2bn (+5.2 percent).    CEO: We succeeded in reaching sales and earning targets for the year, “a respectable result”
• 2023: Conti expects higher earnings supported by sustained market recovery
• Our TP remains €86. Given the strong performance since our initial note, the recovery in margins being better understood and €1bn in headwinds in 2023, we recommend taking profit here

• More companies have made progress in the last 6 months as more companies have made only human capital policies. Specific measures will probably not become visible until April or later.
• If companies are required to disclose their policies in a hasty manner, they may end up with a list of unrealistic measures in addition to policies that have no substance.
• Companies are expected to spend the next year disseminating their human capital policies internally and implementing specific human capital measures to strengthen their own competitiveness.

• Sea Ltd’s 4Q2022 results were nothing short of spectacular, with the company booking a net profit more than a year ahead of expectations, underlining management’s ability to thrive in adversity.
• The company cut costs and most notably A&P spend on e-commerce but it still managed to grow GMV and booked positive adjust EBITDA for all its core Asian markets.  
• Sea Ltd (SE US) now stands out well ahead of its peers on profitability and should trade at a premium but it will have to continue to execute.

• Sea Ltd (SE US) shares went up by 22% yesterday as the company’s top-line beat consensus by 13% and recorded its first-ever operating profit of $342.9m (consensus: -$344m).
• Main growth drivers such as GMV, orders, Gaming active users and Gross-Bookings indicate that growth could stall. Meanwhile, competition is heating up, sidelining the importance of cost discipline in e-commerce.
• Turning unprofitable yet-again could be a hard thing to swallow, even for those firmly believing in Shopee. Therefore, Sea could fall a lot more than the previous-bottom next-time it falls.

• JD Health’s dependence on direct sales business wouldn’t change. But the gross profit of prescription drugs is low. If JD Health increases its revenue proportion, overall gross margin would decline.
• The business supporting JD Health’s high growth in the future is more dependent on the second growth point, but we haven’t seen any new business with high certainty so far.
• The essence of JD Health’s business is “product sale e-commerce” rather than “a comprehensive online healthcare platform” at the current stage, which cannot support high valuation in our view.

• DPC Dash (1405 HK) aimed to raise around US$75m in its Hong Kong IPO in December. The company is now back with a revised PHIP which incorporates its FY22 performance.
• The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 562 stores across 13 cities, as of Nov 2022.
• In this note, we talk about the updates from its refiled PHIP.

• The March rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituent weights at 8%. This will lead to large flows.
• The largest inflows will be on Li Auto (2015 HK), Meituan (3690 HK), XPeng (9868 HK), JD.com (9618 HK), Alibaba (9988 HK), BYD (1211 HK) and Kuaishou Technology (1024 HK). 
• The largest outflows will be on Tencent (700 HK), HSBC Holdings (5 HK), Baidu (9888 HK), Xiaomi Corp (1810 HK), NetEase (9999 HK), CNOOC (883 HK) and SMIC (981 HK).

• Fresh after the courts rejected new share issuance, Kakao (035720 KS) has launched an Offer for S.M.Entertainment (041510 KS), less than a week after HYBE (352820 KS)‘s deal closed.
• Kakao, holding 4.9%, is seeking to lift its stake to ~40% via a tender offer at ₩150,000/share, a 25% premium to HYBE’s offer price. 
• The key question is – will HYBE counter? I would not be so sure. 

• Invocare Ltd (IVC AU) has received an unsolicited, preliminary, non-binding indicative offer from TPG Global to acquire the company at A$12.65/share in cash.
• TPG has also acquired 17.8% of the shares in Invocare Ltd (IVC AU) via a combination of stock and derivatives.
• With the company now in play, there could be competing offers. Already owning 17.8% of the company, TPG is now invested in ensuring they gain control.

• PE outfit TPG has taken a 17.8% stake in InvoCare Ltd (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding indicative Offer via a Scheme.
• The Indicative proposal is subject to the completion of satisfactory due diligence, and FIRB.
• InvoCare, which has struggled to generate consistent profits in recent years, is mulling the proposal. Pricing is around the Covid cliff. 

• Olam Group (OLG SP) has despatched the EGM circular to get shareholder approval for the next step in the restructuring exercise to unlock value – Olam Agri IPO.
• The Olam Agri IPO through a dual primary listing (SGX ST and Saudi Arabia) involves a primary (IPO shares are 20% of enlarged shares) and secondary (25% vendor sale) offering. 
• The EGM marks a key step in the strategy to unlock value. Our SoTP valuation is S$2.13 per share, which is a 28% upside to the last close price.

• On 24 February 2023, the Hang Seng Indices released their changes for the March rebalance. No changes in HSI, which was unexpected, and small changes elsewhere.
• Capping flows and the rule changes on treatment of Dual Primary Listed stocks are responsible for the interesting flows. Yesterday’s closing prices are used for final capping.
• Li Auto (2015 HK) and XPeng (9868 HK) are the interesting trades. Still. 

• After failing to take Calbee Inc (2229 JP) forward for 4+ years, CEO Mr. Shuji Ito is retiring at the end of the next quarter.
• He is being replaced by the current COO and the former EVP of Calbee’s Overseas business Mr. Makoto Ehara.
• From what he has done since he was appointed the COO and in the Overseas business, we are hopeful that he will turn Calbee’s fortunes around in the medium term.

• We expect NIO to see a share loss in 2023 due to 1) late delivery of its key models; 2) conservative channel expansion plan; 3) uncompetitive pricing. 
• We see headwinds for NIO’s 2023 GPM, including 1) ~10% discount on its legacy models in Q1; 2) weaker product mix toward low-price ET5 into Q3.
• 3) limited expansion of scale economy due to diminished momentum. ● DG to SELL for weak momentum and ongoing margin pressure into 3Q22.

• PT Nippon Indosari Corpindo (ROTI IJ) booked results well above market expectations despite pressure from wheat flour and packaging costs, with greater efficiencies and cost savings boosting operating margins.
• Modern trade continues to be the growth driver but general trade continues to grow plus the company’s new Sari Kue cake products showed a strong performance at the margin. 
• PT Nippon Indosari Corpindo (ROTI IJ) should see further positive growth in 2023, with the potential for improving margins as input costs subside. Valuations are significantly below historical levels.

• DXN Holdings (2080694D MK) is looking to raise up to US$200m in its upcoming Malaysia IPO.
• DXN Holdings (DXN) is a global health-oriented and wellness direct selling company.
• In this note, we will talk about the positive aspects of the deal.

• AFR reports that TPG Capital, through UBS, is seeking to acquire 14.4m or 10.00% of Invocare Ltd (IVC AU)‘s outstanding shares at A$12.65, a 41.3% premium to the undisturbed price.
• If the aftermarket raid is successful, TPG will follow the tried-and-test private equity playbook of securing a pre-bid stake before lobbing a non-binding offer at A$12.65 per share
• TPG has timed its move to take advantage of the post-results price slump. While not a knockout offer, it is a starting point for the Board to secure better terms.

• On 7 March, Kakao Corp (035720 KS) announced a tender offer of up to 35% of outstanding shares of SM Entertainment at 150,000 won per share.
• We believe that this will be a successful tender offer and the share price of SM Entertainment is likely to surge to near 150,000 won per share. 
• The minority shareholders of SM Entertainment are cheering on as its share price appreciation will be nearly 96% from end of 2022 to the tender offer price of 150,000 won. 

• Kakao and Kakao Entertainment each plan to purchase 4.167 million shares at ₩150,000 per share, totaling 8.33 million. This is a 14.5% premium to the last close.
• The tendering ending date is March 26th, Sunday, so the actual ending date is March 24th. Since Korea adopts the T+2 settlement system, stocks must be purchased by the 22nd.
• The price of SM may decline towards below the tender price relatively quickly as a large number of retail investors will likely bet on the prolonged proxy battle.

• Luckin Coffee reported its 4Q22 revenue, non-GAAP operating income, and non-GAAP net income (9.1%), (11.4%), (57.9%) lower than our estimate. 
• The store temporary close due to Covid impact is the main reason for revenue miss, and the higher income tax payment is the reason for the miss on NI.  
• We expect Luckin to catch up the store expansion schedule in 1Q23 at 730 new stores, and reach to 10,500 total stores by the end of 2023. 

• South Korea’s largest e-commerce company, Coupang (CPNG US) sank around 20% leading up to 4Q22 earnings. It dropped another 9% soon after the earnings report to around $14.0 per ADS.
• Meanwhile, the valuation remains expensive compared to regional peers as Coupang is trading at an 80% premium to the second most expensive e-commerce name in the region.
• If the share price breaks the trend line here, we think shares could go on to fall below the last year’s bottom of $8.98 per ADS.

Melco Resorts’ (MLCO) FY 2022 results were better than peers’, supported by strong earnings growth at its overseas assets (in the Philippines and Cyprus) amid a weak showing in Macau. In addition, management reported rosy earnings guidance for YTD 2023 (in line with those reported by peers).

Going forward, we forecast that the company’s revenue will reach 70-80% of the FY 2019 level, supported by a recovery in industry GGR to 50-60% of the 2019 level, as well as contributions from Studio City Phase 2 and City of Dreams Mediterranean from H2/23. This should allow MLCO to generate positive FCF and deleverage in FY 2023.

We move our recommendation to “Buy” on the MPEL curve from “Hold”.

• Diageo’s share price has been underperforming for far too long due to outside factors that have little to do with the business itself.
• The premium brand portfolio in combination with the well-executed acquisition strategy creates a unique opportunity.
• The company is well-positioned to retain and even improve its industry-leading margins.

• The demand for high-dividend stocks is due to the fact that financial assets are skewed toward the elderly and that the elderly have high demand for high-dividend stocks.
• The under-40s generation, which seeks growth rather than dividends, focus on U.S. equities. Even if the tax deferral allowance is expanded, they are likely to pass through Japanese equities.
• For asset building, investing in markets with higher returns is good idea. However, considering the market as source of risk money, Japanese equities and Tokyo market aren’t in good condition.

• The March 2023 Nikkei 225 Review was announced Friday. Discussion is in Nikkei 225 March 2023 Review – OLC, JAL, Renesas IN. 
• That means a Sep-2023 preview. ADDs: Lasertec (6920), Toshiba (6502), and Nitori (9843). DELETEs: Nippon Sheet Glass (5202), Mitsui E&S (7003), and Matsui Securities (8628).
• Zozo (3092) is a possible alternate add to Toshiba on a sector balance basis if Toshiba’s disposition changes in the interim.

• On 3 March, it was announced that a Korean court has ruled against SM Entertainment from issuing new shares and CB to Kakao Corp (035720 KS).
• HYBE’s tender offer period ended on 1 March. It is highly unlikely for HYBE to have successfully completed the tender offer reaching the entire 25% of outstanding shares.
• We maintain our position of a high probability of Kakao initiating its own tender offer of SM Entertainment shares in the coming weeks at about 140,000/150,000 won or more.

• Once again, the profit from Long Short basket trading has also been significant this time. The returns were quite juicy even if the period is shortened to From-February. 
• The critical question now is whether the juice remains until the effective date. From what I can see, there is still some juice left.
• This is because it is generally observed that the flow trading window for this event tends to continue beyond the effective date.

• Lowe’s Companies delivered a mixed set of results in the fourth quarter.
• Another notable category, Paint, saw strong pro-growth driven by its MVPs Pro Paint Rewards and Pro JobSIGHT delivery.
• Among other updates, Lowe’s collaborated with Klein Tools to give Klein Tools a strong presence in the electrical and tool departments of Lowe’s.

• Las Vegas Sands delivered a highly disappointing result as it failed to meet Wall Street expectations in terms of revenues as well as earnings.
• The track record in the non-gaming, scale, and diversity makes Las Vegas Sands uniquely position to cater to all the segments of the market.
• We provide the stock of Las Vegas Sands with a ‘Hold’ rating with a revision in the target price.

• Dollar Tree maintained its momentum in the fourth quarter and delivered an all-around beat.
• Operational income climbed 6.8% to $618.1 million, or 8% of total revenue, and the operating margin fell by 20 basis points.
• Inventory increased by 24.8%, owing mostly to unit growth from early spring 2023 merchandise receipts, Family Dollar combo expansion and new store unit growth, and cost growth from product inflation.

• After the close Wednesday, Culp reported a 3QFY23 GAAP EPS loss of $0.73 on sales of $52.5 million, both missing our estimates (loss of $0.49, sales of $57 million) and consensus (loss of $0.62 and $54.9 million).
• Adjusted for a restructuring charge, the EPS loss was $0.67.
• Culp continues to confront weak markets in both the Mattress Fabrics (CHF) and Upholstery Fabrics (CUF) segments.

• Oriental Land (4661), Renesas Electronics (6723) and Japan Airlines (9201) will replace Toyobo (3101), Nippon Light Metal (5703) and Toho Zinc (5707) in the Nikkei 225 (NKY INDEX). 
• Oriental Land (4661 JP) has been added at a post-split PAF of 1. This reduces the passive buying on the stock by around a third.
• Passive trackers need to buy between 2.2-6.7 days of ADV on the adds while selling between 5-12 days of ADV on the deletes. There’s a big funding trade too.

• Yashili International Holdings (1230 HK) has announced that the disposal of Dumex China to Danone SA (BN FP) has been completed.
• This satisfies the second of three SPAs announced last May, leaving the sale of Danone’s 25% stake in Yashili to China Mengniu Dairy Co (2319 HK) outstanding. 
• This stake sale should conclude next week, to be followed by the launch of the Scheme later this month, early next.

• Yashili International Holdings (1230 HK) announced that the Dumex China Disposal was completed. The completion will result in the satisfaction of the last pre-condition, likely within five business days.
• China Mengniu Dairy Co (2319 HK)’s offer is HK$1.20 per share. Due to the upcoming release of full-year results, the scheme document will be likely despatched by early April. 
• This is a done deal and timing is the key risk. At the current price and for a late-May payment, the gross and annualised spread is 2.6% and 11.3%, respectively.

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. China Jinmao Holdings
2. Lifestyle International Holdings
3. Geely Auto
4. First Pacific Co
5. Tata Motors Ltd

and more…

• TSE, as market operator, should focus on stimulating the market, not informally meddling in the management of listed companies on matters that are not explicitly stated in the listing criteria.
• Much of the reason ROE has not increased is that OP Margin has not increased. Despite gradual unwinding of cross-shareholdings, Total Asset Turnover slide and Financial Leverage remained unchanged.
• Increasing OP Margin is prerequisite for ROE to rise. It confirms that the root of the problem is the challenge of using cash for growth investments to create competitive products.

• 4Q22 revenue of $51.8 million above high end of guidance of $50.7 million. 
• Despite the challenging market conditions, AdTheorent was able to keep adjusted gross profit roughly flat at 65%, down less than 1%.
• The company (which has no debt) generated more cash, as a percentage of AGP, than in 2021.

• IPAR disclosing the sales benefit from the Lacoste license was the most notable item from the Company’s fourth quarter earnings call
• IPAR had previously reported preliminary Q4 sales results making it less of a surprise as to how well the business was doing. Consumer demand for fragrances has yet to wane
• In 2022 IPAR experienced growth from all regions and all its major brands. Montblanc, Jimmy Choo, Coach, and Guess grew by double-digits

• Domino’s gave a mixed performance in the last quarter as its revenues were below par after facing significant challenges in the U.S.
• The carryout business of the company continues to be its core strength.
• In light of the permitting as well as store construction supply challenges it faced, a deceleration in growth was expected.

• We believe the revenue growth rate would still be low at 8.5% YoY in 4Q22, even lower than 11.4% YoY in 3Q22.
• However, we believe the growth rate of total revenue will be 10% in 2022, 15% in 2023, and 18% in 2024.
• We believe the stock has an upside of 47% for year end 2023.

• IMM private equity fund launched a tender offer on Hanssem Co Ltd (009240 KS) and its share price surged by 19.7% to reach 53,700 won today.
• IMM is currently the largest shareholder in Hanssem with a 27.7% stake in the company. IMM’s stake in Hanssem will rise to about 36% if this tender offer is successful.
• Hanssem’s share price still 2.4% below the tender offer price of 55,000 won. In the coming days, we believe the share price will reach closer to the tender offer price.

• Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.
• This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.
• With a lasting pricing-power and a relatively inelastic demand than competitors, we think Yakult Honsha (2267 JP) and Nissin Foods Holdings (2897 JP) are in a great position to outperform competition. 

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
• Wynn Macau Ltd

• Booking reported a strong finish to 2022 as it delivered revenue and adjusted EBITDA above Wall Street expectations.
• Gross Booking increased as compared to the pre-pandemic time.
• Room night growth trends have strengthened in the quarter, with the improvements driven by the U.S. and Asia.

In our view, Japfa Comfeed’s FY 2022 results were decent, considering the difficult operating conditions following two years of COVID-19, the high-cost environment (owing to geopolitical tensions) as well as heightened inflation. Revenue growth was reasonable, while profitability was under pressure. Credit metrics deteriorated, but remained modest. Liquidity continues to be weak, due to material short-term debt.

We expect better FY 2023 results. We believe that operating conditions will improve, with the surge in soft commodity prices gradually being passed through to the end-consumer. We project: [1] steady revenue growth of c. 10%; [2] stable margins (with room for upside, considering FY 2022 was a weak year); [3] that leverage will at least remain stable, or improve slightly; [4] that (EBITDA-Capex)/Interest should deteriorate, due to the expected higher capex in FY 2023 for continued capacity expansion.

We do not foresee any rating pressure. Japfa is rated B+ (stable) and BB- (stable) by S&P and Fitch, respectively.

• Walmart finished the year on a high note with an all-around beat.
• The company increased global sales by $38 billion for the fiscal year of 2023.
• Walmart U.S. saw a more than $27 billion increase in sales.

• Keurig Dr Pepper delivered a decent set of results for the past quarter with its reported earnings being aligned with the analyst expectations while the revenue growth was above par.
• Home coffee volume growth sees a deceleration.
• We give Keurig Dr Pepper a ‘Hold’ rating with a revised target price.

• FY21 net profit declined -12% from a year ago, missing market expectations. The operating environment remains challenging, with softer 1H22 performance expected as cost pressures have risen sharply following the recent spike in raw material costs and added supply chain disruptions.
• Geely’s NEV sales penetration increased over the past year to ~6.3% of its total sales volume, which the firm remains constructive on over the medium term.
• Fair value is reduced to HKD17.50 as we lower our estimates to reflect industry headwinds that include the sharp increase in input costs and soft domestic demand conditions, which will weigh on its growth outlook

• Hyatt Hotels Corporation had a good quarter and delivered an all-around beat.
• The company generated positive free cash flows in 2022 primarily by optimizing capital allocation and investing in new growth platforms.
• We give Hyatt Hotels Corporation a ‘Hold’ rating with a revised target price.

• Miniso reported its C4Q22 revenue at RMB2,494mn, (2.6%)/1.1% vs. our estimate/consensus,  non-GAAP net income at RMB373mn, 27.8%/29.0% higher than our estimate/consensus; 
• We expect Miniso’s revenue to achieve 33% YoY in C2023, driven by 1) the store expansion in both domestic and overseas market, 2) domestic single store revenue recovered;
• We maintain the stock as BUY rating, and raise TP by US$2 to US$24, reflecting Miniso’s expansion of domestic store network in low tier cities

• Increasing numbers of companies with P/Bs below 1x suggest that they failed to deliver to investors plan that would have increased their corporate value, or that such plan didn’t materialize.
• While P/B has remained mostly in range, the increase in the number of companies with low P/Bs can be attributed to the widening gap in profitability among companies.
• If the difference in profitability depends on the development and execution of management strategies, it depends on the quality of management. The appointment of directors will be very important.

• In last week’s Compass (Feb. 22) we discussed our belief that a pullback has begun, and signs continue to point to more downside ahead on the broad market indexes
• There has been four failed attempts to reclaim $190 on the Russell 2000 (IWM) and $297 on the Nasdaq 100 (QQQ) over the last five trading days.
• These remain important lines in the sand moving forward. Attractive stocks: TPX, LZB, SNBR, ETD, HOFT, FLXS, KEX, SBLK, CMRE, DAC, EGLE, GNK, ASC, GSL, DSX, SB, NM, EURN, more

• Li Auto reported 4Q22 top line in line, and bottom line beating consensus and our estimate, thanks to recovered vehicle margin and improved SG&A efficiency. 
• We reiterate Li Auto as our top pick, because of 1) positive growth outlook in 2023 driven by intact model cycle (L9/L8/L7); 
• 2) margin upside in 2023 driven by expanded scale economy and sharing of auto parts among its product line-ups; and 3) less impacted by Tesla’s price war.

Borussia Dortmund’s Q223 results reflect the negative effects of the first time staging of the FIFA World Cup during the football season, offset by underlying improvements due to the absence of COVID-19-related restrictions. The company’s financial results are more dependent on H2 than in a typical year due to the changes in scheduling. However, the first team appears well placed in the Bundesliga and has made good progress in the Union of European Football Associations (UEFA) Champions League. Management has reiterated its FY23 guidance. The share price continues to look well supported by our asset backed sum-of-the-parts valuation, which has increased to €11.3/share (€10.5/share previously).

• The recently announced restructuring is unlikely to be the silver bullet that many investors are expecting.
• Kellogg is now faced with the challenge of improving gross margins.
• The high dividend yield is also not as attractive once we factor in the probability of future dividend growth, says Kellogg.

• Home Depot gave a decent performance this quarter though its growth in sales was below Wall Street expectations.
• Pro sales growth outpaced DIY.
• We give Home Depot a ‘Hold’ rating with a revised target price.

• TJX is off to a strong start to fiscal 2023 and delivered a better-than-anticipated top-line performance in the last quarter.
• The company’s better-than-expected US comp store sales increased, driven by an excellent performance at its Marmaxx division.
• Internationally, its TJX International and TJX Canada divisions’ performance was good.

• DoorDash delivered a mixed result with revenues above market expectations given its single-minded focus on building scale.
• U.S. convenience and grocery business rose 60% year on year in Q4, continually growing at significantly faster rates than restaurants.
• However, all the revenue growth came for a price as the company’s losses were significantly wider than Wall Street expectations.

• Astra International’s results reflected its exposure to commodities, especially coal, through heavy equipment and mining through United Tractors (UNTR IJ) but most divisions booked growth as the economy recovered.
• The company’s core auto and financing business made much more than half of its profits and also contributed to its growth with a slower performance from agri-business and construction.
• Astra International (ASII IJ) announced a generous 85%-dividend payout to reward investors for its coal exposure in 2022, implying a 10% dividend yield. Valuations remain significantly below historical averages.

• Varun Beverages Ltd (VBL IN) is engaged in manufacturing, selling, bottling and distribution of beverages of Pepsi brand.
• It operates mostly in India but also looks after, Sri Lanka, Nepal, Zambia, Morocco and Zimbabwe, as per franchisee agreement with PepsiCo India.
• Key forensic concerns include unusual accounting with respect to containers, trend in discounting, advances to a related entity, etc and some governance alarms. 

• We first check whether additional cost savings have been achieved in the center and whether there has been any deterioration in short-term liquidity due to the hasty pursuit of automation.
• Then, we check the soundness of new businesses such as quick commerce, which boasts delivery within 30 minutes but carries the risk of deteriorating short-term profitability.
• Lastly, we check how seriously Coupang’s real estate cost structure has deteriorated and assess the risk that this could lead to devaluation by potentially undermining Coupang’s growth premium.

• Following an accelerated bookbuild, Femsa’s interest in Heineken decreased to 5.1% and in Heineken Holding to 6.3%. Overall the economic participation in Heineken Group decreased from 14.76% to 8.13%.
• At current market prices, Heineken could afford buying half of the remaining holdings of FEMSA (both Heineken and Heineken Holding), and still be within 2.5x leverage target (2023e consensus estimates).
• The discount has been tightening since Q3 2022, so far to 16.3%, still above the 10.4% average of the last ten years, and rather large considering such a simple structure.

• The convenience store sector was one of the worst hit by a downturn in sales during the early pandemic, but all three major chains have implemented changes and improvements. 
• Results for the first three quarters of FY2022 show that the big companies are almost all trading above 2019 levels already.
• While top line growth at home will be increasingly hard to come by in a saturated sector, innovations will help boost same-store sales a little and profit a bit more.

• Sheng Siong reported a notable decline in same-store sales and operating profits (ex-one off income) for 6M/FY Dec2022 even as it marginally increased annual dividend payout to 70.5%.
• With Singapore’s 10-year Gov. bond yields at 3.34% (vs. sub1%, 3 years ago), dividend yield players like Sheng Siong (SSG SP) may not offer attractive risk-reward at current levels.
• Sheng Siong has traded at dividend yields ranging 3%-3.9% over past 3 years, mostly at a premium to Gov. bond yields. Given muted dividend growth potential, stock faces downside risk.

• L’Oréal is a high-quality company that will keep delivering in the years to come and keep outperforming the market.
• In the short-term, we see further growth drivers moving forward, such as the reopening of China, as well as a resumption of Chinese outbound travel. 
• In the longer-term, L’Oréal sees untapped market opportunities in many growth regions, such as Brazil, India, Indonesia, and Mexico; markets that are seeing new interest in Beauty.

• Trip.com reported a strong growth in booking volumes during CNY. Booking volumes remain strong in Feb 2023
• Outbound travel is likely to accelerate in 2H 2023
• Ending almost three-years of zero-Covid policy, China’s domestic and outbound travel enjoyed a long-awaited boom post China’s reopening and lifting of travel restrictions.

• Despite the rally in share price after trading resumption and a reasonable FY22 result, there are still several tough issues faced by China Yuhua Education (6169 HK). 
• Cash management, especially for offshore; no dividend payout in the near term; availability of CB refinancing and weakened margins are just some of the challenges. 
• Conversion to profit-basis for its schools and the operating outlook for new schools are also added issues that it needs to address. In our view, risks still outweigh return.

• Olympic Industries (OLYMPI BD) posted a strong set of financial results, and the current valuations are not overly demanding, making OLYMPI attractive.
• Square Textiles (SQTT BD) was impacted by a strong dollar and a weak demand environment. The current valuations reflect the worst-case scenario, which makes SQTT an attractive candidate to watch.
• Although Bashundhara Paper Mills (BPML BD) revenues have remained steady margins have been impacted. Therefore, it may be wise to wait for a better entry point before investing in BPML.