Consumer

• S.M.Entertainment Co (041510 KS) is trading through the partial offer terms as HYBE (352820 KS) and Kakao Corp (035720 KS) jostle for control.
• The political noise around the Adani Group situation will continue to be significant. Part of India believes this is a hatchet job against PM Modi and the BJP.
• Star Entertainment Group (SGR AU) is an extraordinarily toxic company. But just how much negative news is already baked into the share price?

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Pertamina Geothermal is set to make its debut in the coming week.
• Placements picked up pace this week, with multiple deals across geographies.

• Toyota delivered strong set of results in the quarter despite the changing business environment especially given the company lagging behind in the global shift to EVs.
• The company’s focus on hybrid vehicles and its avoidance of shifting to EVs is hurting its market share immensely in many key markets.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Ford Motor delivered a disappointing result in the last quarter.
• The performance was below the expectation of the management as well as Wall Street and its industrial performance was not up to the mark.
• However, Ford’s balance sheet liquidity stays strong, and the ability of the company to generate free cash flow has improved.

• Hershey ended the year on a strong note despite macroeconomic uncertainty, continued supply chain disruptions, and inflation.
• Consolidated net sales, organic, constant currency net sales, and reported net income increased and the company managed an all-around beat.
• The growth in net sales was driven mainly by net price realization, with steady consumer demand behind increased capacity and higher advertising levels.

• Philip Morris ended 2022 on a positive note and delivered another all-around beat.
• The company’s volume increased significantly due to the ongoing IQOS development and steady cigarette volume.
• Over a third of the total Philip Morris and more than 50% in 70 markets had smoke-free net revenues for the entire year.

• Strong passenger traffic year-to-date indicates that full-year passenger throughput for 2023 will be on par with 2019.
• Concerns that China resuming outbound travel could turn domestic tourists away from Hainan are overblown, overlooking the huge pent-up leisure travel demand over last three years.
• We expect investors will focus on pace and sustainability of the recovery when company announces 2022 results. Being eligible for Stock Connect Program in 2023 will be a key catalyst. 

• Clorox delivered a solid set of results in the previous quarter with organic sales growth in 3 to 4 segments, double-digit earnings growth, and gross margin expansion, despite the challenges in the market due to an unstable global operating environment.
• The company delivered an all-around beat and continued to work on the enhancement of its brand equity.
• Clorox has been encountering different challenges in the macro environment for the past few quarters especially after the Covid-19 tailwinds have receded.

• Estee Lauder delivered a highly disappointing result despite surpassing Wall Street expectations in terms of revenues as well as earnings.
• With its business continuing to be pressured by external headwinds resulting from the pandemic, the organic net sales and the earnings per share decreased in the quarter for Estee Lauder.
• Estee Lauder should also benefit from the acquisition of Tom Ford in competing with L’Oréal.

• Shareholders have gently pressed. SARIA has upped by 4.4% (“increased and final”) its cash offer for casings manufacturer Devro to 320p+10p interim, which represents 10x EV/Fwd EBITDA and 17.1x Fwd P/E.
• The increased consideration puts the offer almost in line with market leader Viscofan’s multiples (10.2x EV/Fwd EBITDA). The initial offer was already generous, even more so now.
• The deal should complete. Spread (gross/annualised) is 1.06%/2.65%, assuming settlement by 14 July (settlement will happen the same day as the second permitted dividend payment).

• The number of shareholder proposals in June 2022 was 241, significant increase from 136 in June 2021. It’s expected that the number of shareholder proposals will increase again this year.
• The increase in the percentage of shareholder proposals recommended by voting advisors can be considered an increase in shareholder proposals that are quite reasonable from the shareholder’s point of view.
• The percentage of overseas investors in favor of shareholder proposals increased, while that of domestic institutional investors remained unchanged at 7%, the same as the previous year.

• Sirius XM had a mixed quarterly result.
• This was a challenging environment for the company as the auto sales were the lowest in 11 years in 2022.
• Sirius XM is trying to attract more consumers to its platform and continues holding the largest share of car music outside combined terrestrial radio.

• Starbucks delivered a disappointing set of results as it failed to meet Wall Street expectations in terms of revenues as well as earnings.
• The U.S. company-operated stores Starbucks have a decent revenue in the quarter, and so did North America overall.
• In the quarter, it launched its first Starbucks reward named Reward Together partnership with Delta Airlines.

• Ito En Ltd (2593 JP) is a slightly strange stock in the grand scheme of things.
• It is expensive for its growth, and the shareholder register is such that it is subject to the whims and vagaries of forces over which investors may have no control.
• This time, it is MSCI. Stock prices go up, stocks go in the indices. Stock prices fall, they come out. It’s coming out this month. So who buys?

• Adways Inc (2489 JP) is an ad agency, ad platform, marketing platform, and a variety of sub-platforms serving certain mobile, PC, marketing, and app development niches. 
• They released earnings last Friday, but today released other – follow-on information. 
• Included was a buyback – up to 5.7mm shares (13.57% of shares out) for up to ¥2bn (9% of mktcap) – over the next 5.5 months. Seems big. Look closer.

• ZJLD Group (ZJLD HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO
• ZJLD is a Chinese liquor company primarily producing baijiu. As per F&S, the firm was the fourth largest privately-owned baijiu company in terms of FY21 sales.
• In this note, we will talk about the positive aspects of the deal.

• JD’s post-CNY recovery is slower than expected, based on our checks. We suggest JD would face an unfavourable external environment going forward due to: 1) the comeback of offline commerce; 
• 2) PDD’s growing penetration in high-tier cities and brand products; 3) Meituan Instashopping offers faster delivery than JD.
• We cut JD’s FY23 revenue YoY growth forecast from 13% to 11%. Our top and bottom line estimates for FY23 are (3%) and (5%) below cons. Downgrade to SELL

• ZJLD Group (ZJLD HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO.
• ZJLD is a Chinese liquor company primarily producing baijiu. As per F&S, the firm was the fourth largest privately-owned baijiu company in terms of FY21 sales.
• In this note, we will talk about the not-so-positive aspects of the deal.

• The Keepers Holdings (KEEPR PM) will announce its FY22 results in the second week of April 2023. Good results(>50% YoY profit)/high dividend payout(50%) have been catalysts for the share price.
• We believe Q1 2023 business momentum will also be good, rendering the growth story intact. The company also made a very small acquisition of “Island Mixers” from Diageo Philippines. 
• Despite the move recently, the stock trades at 9.4x/7.3x FY22/23e with 8-9% of the market cap in cash. With an attractive dividend yield of 5.3% for FY23. 

• We were too early to turn bearish on Asics. Recent stock price performance has been strong
• Although rising inventories have yet to impact on margins, they are a potential red flag
• The stock is not cheap at 29x PE. The long-term financial model suggests limited upside from here

• We expect NIO to report 4Q22 top line of RMB 16.7bn and GPM of 13.2%, missing consensus by (4%)/(0.8ppt), primarily due to COVID-related supply-chain issues and lower ASP. 
• We cut TP to US$ 13, due to weak momentum and the ongoing margin pressure in 1H23. We maintain BUY, as 1) intact model cycle starting from 2H23;
• 2) the upcoming ET5 station wagon in 2H23 and the mass-market/low-end brands in 2024 will expand its scale economy, which in turn will justify the sustainability of its business model.

• NHTSA has recalled all Teslas with FSDBeta, more than 362,000 cars. 
• This comes just before Tesla releases substantial upgrades to Autopilot including the return of radar. 
• Which means NO legacy Teslas really are FSD hardware ready, despite what CEO Elon Musk has claimed for years when selling the option for thousands of dollars

• We expect Miniso to report C4Q22 top line, non-GAAP operating profit and GAAP net income 1.7%, (1.5%) and in-line vs. consensus. Our C1Q23 top line is 3.7% vs. the consensus; 
• MNSO’s sustained growth driver to be bringing Made-In-China merchandises to the mall economies around the world; We re-evaluate the stock and maintain the Buy rating, with TP at US$22.
• The downward revisions of EPADS：1) slower offline resumption pace from Covid impact in 2022, 2) rescheduled oversea expansion paces, compared to our previous update on Nov. 23rd, 2021.

• MatsukiyoCocokara (3088 JP) has run up quite well in the past year, rising strongly and outperforming Peers significantly. It has been the avatar of Inbound Rebound hopes and dreams.
• Over that time, forward EPS expectations have also improved, but not as much as price. MatsukiyoCocokara used to be cheap to peers on forward PER. Now it is not.
• 28 Feb sees an MSCI inclusion trade to swing 7% of shares from active to passive. Understanding where those come from is key.

• We met with the management of Oriental Watch (398 HK).  HK demand continues to be sluggish, while China sales were resilient with single-digit SSSG growth. 
• The company will continue with its conservative policy of not expanding as Rolex/Patek restrict watch supply. It will only foray into boutique expansions if KPIs on return/brands etc., are met.
• With its generous >100% payout ratio, the stock trades at a 15% dividend yield based on our estimated 6.9x FY23 PE, with >50% of its market capitalization in net cash.

• It has been reported that Kakao has hired local brokerage firms to discuss the details of another tender offer of SM Entertainment shares (at more than 130,000 won).
• We believe that this has been the key reason why SM Entertainment’s shares rose an additional 5% on 15 February.
• We believe that eventually Kakao Group will win the M&A fight for SM Entertainment and shares of SM could rise further in the coming weeks. 

• Japan Tobacco (2914 JP)’s 4Q22 results were stronger than anticipated yet again with revenue and OP surpassing consensus by 4.3% and 35.2% respectively through selling price increments.
• 2023 guidance looks a bit disappointing, with the company guiding adjusted OP at ¥667bn in 2023 compared to ¥729bn in the previous year, expecting an unfavourable foreign exchange movement.
• But the highlight these days was the proposal by the activist investor LIM Advisors to dispose JT’s share ownership in Torii Pharmaceutical (4551 JP).

• Last week, Japanese dairy play Morinaga Milk Industry Co (2264 JP) acquired a soy-based food company in the US and a baby formula distribution company in Vietnam
• These acquisitions are in keeping with Moringa’s medium-term business plan (to Mar-2025) to achieve an overseas sale ratio of 13%, compared to 8.7% last year.
• 3Q23 results were also announced with 9M23 sales and operating profit of ¥405.2bn and ¥20.5bn, a change of +16.8% and -7.2% yoy.

• In its earnings update, troubled Aussie casino operator Star Entertainment (SGR AU) said revenue was down 1% on pre-COVID levels, and expects FY23 EBITDA of $330mn-$360mn vs A$525mn in FY19.
• But the big news was the possible $400mn to $1.6bn non-cash impairment charge in relation to disciplinary fines from regulators and new casino duties. 
• Shares tanked and are currently trading around a lifetime low. One for the brave or one to ignore?

• Star Entertainment Group (SGR AU) scored an own goal by failing to provide an update on the balance sheet in the update on 13 February. The results are next week.   
• There is a whirlwind of uncertainty surrounding potential fines and Star is in desperate need to recapitalise its balance sheet to avoid breaching covenants. 
• Our leverage scenarios suggest an equity raise of A$250-500 million is required. Despite the share price fall, we would steer clear until the details of its equity raise are disclosed.

• SOCAR (403550 KS) was listed on 22nd Aug 2022, where it raised US$78m in its Korea IPO. Its six-month lockup will expire on 21st Feb 2023. 
• SoCar is a Korean car sharing business which aims to become an all-in-one mobility solutions provider beyond car sharing, with approximately 78% domestic market share in the car sharing space.
• Coming up for six-month lockup expiry are the firm’s pre-IPO investors, but the bulk of the shares unlocked will come from its strategic investors.

• Since the revised Corporate Governance Code in 2021 requires TCFD disclosure for prime market listed companies, TCFD disclosure is expected to expand to all prime listed market companies going forward.
• Most companies do not have a roadmap for meeting their emissions targets, and there is a need to look carefully at whether their numerical targets and timelines are reasonable.
• Until now, companies that preceded TCFD disclosures have mainly disclosed information in integrated reports. However, attention will focus on how these information will be disclosed in the Annual Securities Report.

• Pharrell Williams named new menswear creative director for Louis Vuitton
• Price increases in Europe (+4%-6%), and in China (+20%) at Louis Vuitton
• Small incremental positive to our recent investment case on LVMH, long-term winner

• In a move to counter Lee Soo-man’s influence, S.M.Entertainment Co (041510 KS) intends to issue new shares (9.05% on a fully diluted basis) to Kakao Corp (035720 KS).
• Lee, with 18.4% in SM, responded by selling 14.8% to SM’s rival HYBE (352820 KS). HYBE concurrently announced a tender offer for an additional 25%, at ₩120,000/share, a 22% premium.
• Kakao and SM are less than impressed. But these developments are a power grab for the pioneer of K-pop.

• A trade idea involving Kirin Holdings (2503 JP) from a Holdco perspective, which we suggested last year outperformed Topix by more than 30% in the first 9 months of 2022.
• Since November 2022, Kirin has underperformed Topix by 18% (driven by input cost inflation) to push the Holdco discount yet again to an attractive level.
• The price hike announcement yesterday could change the cost inflation narrative and help Kirin to keep on unwinding the Holdco discount.

• Shimano’s Q4 results were on track, but management is guiding for a GFC-level slump in 2023
• Management cites macro concerns, but these are well-known, discounted, and already recovering…probably
• Shimano’s stock price is trading at 23x bearish guidance versus its historical average of 25x. 

• Q4 results largely met our expectations with modest improvements QoQ for mobile operating losses and decent growth for eCommerce and fintech
• A meaningful rebound for the mobile segment is more likely to fall in H2 as cost reductions take time to kick in 
• Results for eCommerce and fintech were more encouraging but less relevant as long as the mobile segment struggles.  We remain at Neutral

• We have been bullish on Nagacorp for over three years. We long expected it to recover from covid damage on a pace propelled by rapidly easing travel bans.
• Annual results show dramatic increases in GGR across almost all customer segments.
• We see a return to double digit sales growth sustainable through the end of 1H this year.

• Following conversion, the Benettons became the top Dufry’s shareholders (27.5%). There’ll be a mandatory offer for the minorities. The conversion ratio is 0.1583 DUFN/AGL with a cash alternative of €6.33.
• A +1.1% share swap spread vs. +3.3% cash alternative spread means an all-share deal is most likely (with a 67% dilution to Dufry’s shareholders). Still, minorities could refuse to tender.
• The deal is not expensive. It resembles a debt for equity swap, with Autogrill’s balance sheet rescuing Dufry’s (rated B+) and the Benettons happily paying a nil control premium.

• This is a special one-time report on Manchester United, the third most valuable football club in the world.
• This has sparked a bidding war, with Sheikh Tamim bin Hamad al-Thani, the Emir of Qatar, reportedly emerging as a top candidate to purchase the club from the Glazers.
• In this one-time report, we will analyze the different revenue streams and assess the potential value of Manchester United in light of the ongoing bidding war, considering the current market conditions, and the club’s financial performance.

Dentsu reported record full-year headline results in FY22, which were bolstered by a final quarter in which the company delivered organic net revenue growth of 3.5%. Good progress continues to be made in Customer Transformation and Technology (CT&T), which grew 17.5% y-o-y and constituted 32% of revenues in the year. Management forecasts 4% organic revenue growth for FY23, reflecting the tougher macroeconomic environment. Guidance on the underlying operating margin in FY23 is for a retrenchment to 17.5% as investment is made to drive CT&T and support the One dentsu initiative. This is set to rebound to 18.0% in FY24 as the benefits start to flow through. Year-end net cash of ¥71.3bn and an appetite for leverage of 1.0–1.5x provides ample resource for both capex and M&A. Our FY23 estimates are under review.

• Altria delivered mixed set of results for the last quarter.
• Although there was significant regulatory uncertainty, volumes decreased by an estimated 1% year over year.
• Volumes of old tobacco increased by an estimated 1.5%, largely due to the ongoing use of all nicotine pouches.

• REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO.
• REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. 
• In this note, we will talk about the not-so-positive aspects of the deal.

• Yashili International Holdings (1230 HK) latest monthly update notes that Dumex Key Condition 2 is satisfied paving the way towards completing the Dumex China Disposal. 
• The completion of the remaining pre-condition, the 25% Yashili acquisition, depends on the completion of the Dumex China Disposal, which now looks imminent.
• We think the pre-condition will be satisfied by the end of February and the scheme document will be despatched by early April. At the last close, the spread is 6.2%.

• Earnings for Q3 2023 came in at 17.5 mn HKD up 5% YoY, about 15% below our expectations due to closure costs incurred on some restaurants in November. 
• The company added four restaurants in December 2022 which should result in strong revenue growth in January 2023. We expect monthly revenue to surpass HKD 80 mn. 
• Post the recent rally, the stock trades at 8.2x/5.2x FY23e/24e, with a 7.3%/11.5% FY23e/24e dividend yield assuming a 60% payout. We see this as an extremely cheap HK recovery play. 

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• Stocks mentioned include Koolearn (1797 HK), China Gas Holdings (384 HK), MOG Holdings (1942 HK), Hua Yin International Holdings (989 HK), China Environmental Technology (646 HK).

• Shiseido Company (4911 JP)’s share price is down more than 4% today following a mixed 4Q22 with revenue missing consensus by 2.1% but OP beating by 31.7%.
• A lot of optimism was baked in the medium-term plan, but 2023 OP guidance (¥60.0bn) was ¥17.5bn below consensus expectations.
• Nevertheless, we think this shouldn’t worry investors too much as Shiseido has outperformed initial guidance by an average of ¥17.0bn over the past 3 years.

• We expect Li Auto to report 4Q22 top line of RMB 17.5bn, in line with consensus, and recovered GPM of 21.8%, vs 12.7% in Q3.
• We reiterate Li Auto as our top pick, because of 1) positive growth outlook in 2023 driven by strong model cycle (L9/L8/L7);
• 2) margin upside in 2023 driven by improved product mix, sharing of auto parts among its product line up, and expanded scale economy; 3) less impacted by Tesla’s price war.

• Footwear sales plummeted during Covid, except for sports and hiking shoes, with a deleterious impact on all the big three retailers. 
• While ABC Mart has recovered, Chiyoda and G-Foot continue to struggle, leaving the market wide open. 
• Disruption is coming in the form of Workman but others might also see the opportunity.

• Manchester United saw takeover rumors and options activity. The bids have started arriving for this soccer club.
• The club has an easy 80%, but where is the top for bids? Click here for all the latest Manchester United transfer news.
• Click here to read Manchester United’s transfer news for the latest transfer news.

• Over a dozen companies focused on building out Electric Vehicles have gone public through a SPAC merger in the past two years, albeit with mixed results.
• Legendary Motorcycle Maker Harley Davidson shocked the public markets in 2021 when it announced that it was spinning off its EV segment LiveWire through a $1.8 billion SPAC merger.
• The move came as the legacy bike maker has faced a period of slowing sales, losing market share to competitors, and failing to reach younger first-time riders.

• Regarding the three most in-demand documents, only 30-50% of companies with over 30% foreign ownership disclose them in English. The mismatch between overseas investors’ demand and companies’ disclosure continues.
• If TSE requires faster timing of disclosure in English, companies may limit the materials they disclose in English due to increased burden. Disclosing necessary materials is more important than timing.
• In order to encourage companies to disclose in English in their annual securities reports, the Corporate Governance Code should clearly state the disclosure in English in the annual securities report.

• Coca-Cola delivered nearly 36% total return in a matter of only two and a half years.
• There are a number of positive signs leading to a high probability of a dividend increase during 2023, according to the company’s full-year 2022 results.
• Coca-Cola (NYSE:KO) has been one of the best-performing large-cap consumer staple companies in recent years.

• MSCI will add Kakao Pay (377300 KS) to the MSCI Korea Index at the February QCIR. There are 7 trading days to implementation on 28 February.
• Local institutions and foreign investors have been sellers in the last couple of weeks and retail investors have been buying to mop up the selling.
• Cumulative excess volume indicates a fair amount of pre-positioning and we’d look to sell ahead of the passive MSCI buying.

• We believe that there is a very high probability of a successful tender offer of 25% stake in SM Entertainment by HYBE. 
• There is a 4.6% gap between the tender offer price and current price. There is a strong probability of this gap being closed in the next several weeks. 
• There could also be an on-going interest by Kakao to try to take over the controlling interest in SM Entertainment but HYBE is not likely to give up control easily.

• Koolearn’s successful transformation into a live-streaming e-commerce business showcased outstanding entrepreneurship and leadership of its founder Michael Yu, whom we highly respect.
• That said, we expect its growth to decelerate materially after hitting RMB18 billion GMV by 2024. We value Koolearn at RMB36 billion (20% downside), drawing reference to VIPShop growth trajectory.
• While high-frequency data on live-streaming business will drive near-term stock price (and potentially to the upside), its current valuation doesn’t pay off for long -term investors in our view.

• We observed that businesses at Sa Sa International Hldgs (178 HK) have picked up during the Chinese New Year, but a significant overall significant recovery is still lacked.
• The full relaxation of mainland-HK border control has brought about a 110% surge in mainland arrival between 6 Feb and 11 Feb. This suggests that momentum is clearly building up. 
• Sa Sa has embarked on strategies like re-opening important stores, selectively increase store counts and re-adjusting staff arrangement and opening hours to capture the opportunities.

• Lululemon Athletica Inc.’s calendar year margin compression is due to variable costs that will probably adjust lower this year.
• Many analysts mistake’monetized costs’ such as excess amortization for cash costs.
• Lululemon Athletica Inc. (NASDAQ:LULU) stock has surged by nearly 2000% since its initial public offering in 2007.

• Church & Dwight delivered a strong set of results in the last quarter, with revenue growth of around 0.4% that was beyond Wall Street expectations.
• Its international business delivered 3.2% organic growth, driven by impressive performance across international subsidiaries.
• On the other hand, TROJAN condoms returned to share growth, while OXICLEAN stain removers and ARM & HAMMER baking soda achieved double-digit consumption growth.

• McDonald’s delivered an all-around beat in its last result as it continued advancing its brand’s top-line momentum and global reach.
• For the fourth quarter, comparable sales increased by double digits, and they kept gaining market share in most key markets.
• In addition, McDonald’s Monopoly made a triumphant comeback to the Canadian market during the fourth quarter, enhancing the experience by employing their app.

• Sysco delivered a mixed set of results for the last quarter and it was able to surpass the analyst consensus estimate in terms of revenues as result of double-digit sales growth.
• However, despite a decent earnings growth year-over-year and strong volume growth as well as market share gains, the company missed out on meeting earnings expectations.
• Sysco continues to advance its growth strategy with progress in its digital tools, merchandising initiatives, and supply chain investments in sales.

• The Nikkei article addresses high-dividend investing as short-term strategy, while “Quality Income” is in demand by long-term investors seeking stable long-term performance. Both strategies have different investor segments and needs.
• Many Japanese companies have basic policy of “stable dividends,” but it is easier for shareholders seeking to increase shareholder interests to understand a dividend policy based on clear cash allocations.
• Given that Metrical’s analysis also found no correlation between changes in market capitalization and dividend policy scores, linking dividends and stock price is a difficult problem.

• Bill Ackman’s analysis was good, but his timing was poor. Netflix subscriptions recover, but margins fall.
• The outlook for Netflix under a new leadership model is good, according to Ackman.
• Netflix stock bottomed as expected, but it was down for the first time since Ackman took over.

• The long, twisted trail of Universal Entertainment’s Okada Manila casino spinoff faces yet another legal obstacle announced last week.
• The extension of Universal’s/ 26 Capital Spac deal for one year could see the debut of the IPO during an increasingly higher growth industry revenue recovery arc.
• 26 Capital valuation of Okada at US$2.5 bill with a $10 per share offer price could run up quickly as market momentum turns positive sentiment higher.

• Record high quarterly margins at Disney’s parks and experiences would not be the silver bullet to high shareholder returns.
• Higher future margins are already priced in and with that upside appears limited, even if management executes on its current strategy.
• Disney’s business model is shaken by yet another restructuring, according to the company.

paragon appears to be progressively de-risking its investment proposition. The agreed sale of Semvox crystallises an enterprise value (EV) that highlights the depressed market cap due to the debt burden. The accelerated redemption of the entire Swiss franc (CHF) bond issue and half the Eurobond reduces debt metrics to typical industrial levels, and we expect improving cash flows to facilitate final redemption in 2027. The result is an apparently anomalous rating for paragon compared to its estimated cash valuations and peers. Assuming the disposal completes and the bonds are redeemed as anticipated, the crushed equity value of recent years should finally be relieved.

• Hyundai Dept Store Co (069960 KS), Hyundai Greenfood (005440 KS) and Oci Co Ltd (010060 KS) will spin-off divisions and list them prior to the next rebalance in June.
• The equity spin-offs will result in passive flows prior to the trading suspension as well as on relisting of the stocks post the spin-off.
• We expect one change to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) in April as one stock will be deleted due to low market cap following the spin-off.

• Hesai Group (HSAI US) (HSAI) raised around US$190m in its US IPO.
• HSAI is a manufacturer of three-dimensional light detection and ranging (Lidar) solutions. It has shipped over 103,000 Lidar units from 2017 to the end of 2022.
• We have looked at the company’s past performance and valuations. In this note, we will talk about the trading updates.

• Playmates Toys (869 HK) has been listed since 2008 and makes TMNT toys. It has traded as high as 4 HKD/share on the back of successful TMNT movie launches
• Paramount is set to launch a highly anticipated Seth Rogen-produced, TMNT movie in August 2023. In 2013/2014 the stock went up 8x on the last successful TMNT movie launch
• Playmates Toys trades at negative enterprise value, hence giving a large margin of safety option to bet on the success of a TMNT revival

• On 10 February (prior to market open), Seoul Economic Daily reported that HYBE will conduct a tender offer of SM Entertainment shares taking over the controlling ownership of the company.
• HYBE agreed to acquire a 14.8% stake from SM Entertainment’s founder Lee Soo-Man at 120,000 won per share, which represents a 21.8% premium to the closing price on 9 February.
• HYBE is also conducting a tender offer to minority shareholders and it plans to acquire up to 25% additional shares at 120,000 won per share, representing 717 billion won.

• Almost killed by Covid and debt burden, funeral company Dignity agreed to a 550p offer (15.5x EV/Fwd EBITDA). Shifting demographics, Baby Boomers and capex investments should provide clients and growth.
• Unlike other takeout transactions, all shareholders may elect to partly reinvest in the bidding consortium: either unlisted non-voting Valderrama D shares or listed Castelnau (with Dignity making c.50% of NAV).
• My base-case DCF fair value estimate is 531p, 3.5% downside vs. offer price, which seems fair. I set my TP at 550p. Spread gross/annualised is 1.1%/3.2%.

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• Bullish price action and LT momentum failure in Oct/Nov 2023 could be compared to holding a fully inflated balloon under water. Eventually it must rise. 
• January 2023 delivered that spike and a recent correction and multi-day test of key support has delivered an impulsive positive price response today. Target an 8.5% tactical upswing towards 63.90.

• The cinema industry has been suffering from COVID-19 restrictions, in particular social distancing measures that have kept cinema operating rates low.
• Now that the release pipeline looks strong again, cinemas will be on a path to recovery. I doubt that the global box office will reach the 2019 level this year, but it will get closer to that number.
• Cinema operators worth mentioning include North America’s Cinemark, Cineplex and Marcus Corporation, China’s IMAX China and Thailand’s Major Cineplex.

• LVMH’s sales’ growth is supported by a rebound in China, resumption of Chinese outbound travel, resilient US demand and higher marketing investments in 2H22 which should bear fruit this year.
• The Company holds leading market positions in each of its brands, as it benefits from substantial financial backing to invest and innovate.
• The Company has a high-quality management with decades of experience!

• There seems to be consensus on the end of the transitional measures in 3 years. Even if this issue is finally settled, the issue of prime market quality will remain.
• There’s no better solution to raise stock price than for companies to develop their own strategies and expand corporate value. TSE should promote metabolism and improve quality of the market.
• If the quality of corporate governance is an issue, it is necessary to encourage change in boards that are dominated by male internal executive directors and lack diversity.

• Pan Pacific International Holdings (7532 JP)’s 2QFY23 was a touch above consensus with revenue at ¥504.8bn (consensus: ¥497.6bn) and OP at ¥33.6bn (consensus: ¥30.3bn).
• With consensus cautious about personal brands potential, earnings have beaten consensus in each of the past five quarters.
• Having already proven the personal brands earnings potential, we think it is unwarranted for consensus to discount PPIH’s personal brands growth.