Category

Consumer

Oct 12
0

Daily Brief Consumer: Lock&Lock, NagaCorp Ltd, Taste Gourmet Group, J Front Retailing, Adastria Co Ltd, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Lock & Lock – Announces Dividends Worth 25% of Market Cap
  • Asia Casino Sector: We Are Raising Guidance on Nagacorp to Strong Buy and Overweight
  • Taste Gourmet: Buybacks And Recovery Into Q2 2023
  • J Front Retailing (3086) | Still in the Bargain Basement
  • Adastria Signs Forever 21, New Growth Through Licensing?
  • The Resolution of Human Rights Issues Should Not Be a Means to a Purpose

Lock & Lock – Announces Dividends Worth 25% of Market Cap

By Douglas Kim

  • After the market close today, Lock&Lock announced that it will pay out dividends per share of 1,653 won worth 83 billion won, representing 25% of the company’s market cap.
  • The shareholders date of record that could receive the dividends is as of 30 September 2022.
  • Although the high dividend payment should benefit the existing shareholders, we are not sure on the company’s ability to continue to maintain high dividend payout ratio.

Asia Casino Sector: We Are Raising Guidance on Nagacorp to Strong Buy and Overweight

By Howard J Klein

  • A recent dip in the shares against an accelerating revenue recovery trend signals a stronger buy signal not yet broadly recognized by the market.
  • Performance to date augers well for a considerable upside by 4Q22 to 1Q23.
  • Gains achieved in all customer segments: main floor mass, premium mass as well as VIP.

Taste Gourmet: Buybacks And Recovery Into Q2 2023

By Sameer Taneja

  • Taste Gourmet Group (8371 HK) is a play on the HK recovery with a promising outlook in the long-term at 5.7x/4.3x FY23/24e PE (10.5%/14.1% dividend yield assuming 60% payout).
  • The company recently initiated a buyback mandate on the 20th of September for (10% of outstanding shares) and has repurchased 2.2% of outstanding shares so far.
  • We believe the company will report strong earnings for its quarterly release on November 11th and payout a good dividend which will be a further catalyst for rerating.

J Front Retailing (3086) | Still in the Bargain Basement

By Mark Chadwick

  • J. Front is a key beneficiary of improving consumption post-pandemic and a return of inbound tourism.
  • Q2 sales rose 4.8% on the year. 2H sales guidance +2% YoY looks too conservative given full resumption of inbound tourism.
  • We believe the stock still represents good value at 0.9x book value.

Adastria Signs Forever 21, New Growth Through Licensing?

By Michael Causton

  • Adastria’s growth has been sporadic in recent years as it adjusts to maturity and saturation in core apparel markets.It has diversification projects but these will take time to develop.
  • It thinks it can find faster growth by franchising and licensing with already well-known brands, starting with Forever 21.
  • It also has a new business providing apparel collections to General Merchandise Retailers, starting with Izumi.

The Resolution of Human Rights Issues Should Not Be a Means to a Purpose

By Aki Matsumoto

  • If discussion doesn’t proceed from the starting point that respect for rights should be for the coexistence of humankind, not for the maintenance of corporate activities, it will get confused.
  • Although human rights were included in the 2021 revision of the Corporate Governance Code in the Principles of Sustainability, it is not thought to have been effective.
  • The repeated human rights violation scandals at companies and the fact that these companies have human rights policies in place infers that this is a deeply rooted problem in society.

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Oct 11
0

Daily Brief Consumer: Nissan Motor, Hisense Home Appliances Group Co., Ltd. H, Fast Retailing, Lotte Confectionery, Meihua Holdings Group Co A, K Car, SAMG Entertainment and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Renault & Nissan – Capital Manoeuvres In the Dark
  • Hisense (921 HK/000921 CH) Nonsense
  • Fast Retailing – FY23 Guidance Could Knock Some Sense into Market
  • KOSPI200 Index Rebalance Preview: Few Changes, Big Impact
  • SSE180 Index Rebalance Preview: Stock Connect & MSCI/FTSE Eligibility
  • K Car Lockup – Small Stock with a Big Lockup – Money Recouped, Any Price Is a Good Price to Sell
  • SAMG Entertainment IPO Preview

Renault & Nissan – Capital Manoeuvres In the Dark

By Travis Lundy

  • In April, a Bloomberg story said Renault SA (RNO FP) might sell shares in Nissan Motor (7201 JP) to support its investment in EVs. They might sell to Nissan, others.
  • Renault shares popped hard, this two months after CEO Luca de Meo had said Renault might split, investing in and listing its EV business separately.  But since then? Crickets.
  • Over the weekend, we have news talks are coming to a head. My feeling? The results won’t be pretty – a messy agreement which inspires nobody, but probably still works.

Hisense (921 HK/000921 CH) Nonsense

By David Blennerhassett

  • Back on the 21 October 2016, Hisense Home Appliances Group Co., Ltd. H (921 HK) announced it would invest  RMB1.7bn of “idle” funds into wealth management products, or ~HK$1.43/share.
  • Between 16 September 2022 and 8 October, Hisense announced it has invested HK$1.13bn of idle funds in wealth management products.
  • Hisense reckons the investment is “beneficial for enhancing efficiency of use of idle self-owned funds“. But if truly idle, they should be returned to shareholders.

Fast Retailing – FY23 Guidance Could Knock Some Sense into Market

By Oshadhi Kumarasiri

  • Although we are not expecting a major miss for Fast Retailing (9983 JP) in FQ4, we believe FY23 guidance could be disappointing to prompt a substantial correction in FY23 consensus.
  • China is continuously failing to live up to the company’s expectations and the only factors holding Uniqlo’s share price from breaking-down are the North America growth and the Yen depreciation.
  • Those too are now under threat, with a looming recession and Fed rate hikes failing to curb inflation.

KOSPI200 Index Rebalance Preview: Few Changes, Big Impact

By Brian Freitas

  • 90% of the way through the review period of the Kospi 200 Index December rebalance, we see two potential changes to the index. There is another potential inclusion failing liquidity.
  • This rebalance is expected to have the lowest turnover as compared to any of the Kospi 200 Index rebalances over the last few years. Partly lower markets, partly no IPOs.
  • That said, passive trackers are estimated to need to trade over 10 days of ADV on one of the potential adds and both potential deletes.

SSE180 Index Rebalance Preview: Stock Connect & MSCI/FTSE Eligibility

By Brian Freitas

  • Nearing the end of the review period, we expect there will be 18 changes to the SSE180 Index in December. The first-order impact on the stocks is not large.
  • Stocks that are not currently in Buy/Sell Stock Connect will be added to the list. That makes them eligible for inclusion in the MSCI and FTSE indices in February/March.
  • We see 6 of the potential/close adds being added to the MSCI China Index in February and 8 of the potential/close adds being added to the FTSE All-World/All-Cap in March.

K Car Lockup – Small Stock with a Big Lockup – Money Recouped, Any Price Is a Good Price to Sell

By Sumeet Singh

  • K Car completed its IPO in South Korea in Oct 21. It raised around US$300m after having downsized the offering and cut the asking price to below the IPO range. 
  • K Car is a used car marketplace and dealership operating in South Korea.
  • In this note, we will talk about the recent updates and the upcoming lockup expiry.

SAMG Entertainment IPO Preview

By Douglas Kim

  • SAMG Entertainment is getting ready for an IPO on the KOSDAQ market. SAMG Entertainment is a leading children animation and digital contents focused entertainment company targeting young children.
  • The IPO offering amount is from 37.8 billion won to 46.7 billion won. The book building for the institutional investors starts on 1 November.
  • The company operates 42 Youtube channels including 15 domestic channels and 27 overseas channels. The total number of subscribers for these 42 Youtube channels exceeds 39 million.

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Oct 10
0

Daily Brief Consumer: Varun Beverages Ltd, Tata Motors Ltd, Lifestyle International Holdings, System1 and more

By | Consumer, Daily Briefs

In today’s briefing:

  • MSCI India November SAIR: Potential Changes with Big Flow & Impact
  • SENSEX Index Rebalance Preview: Market Consultation on Derivative Linkage & Impact
  • Merger Arb Mondays (10 Oct) – Lifestyle, Yashili, Eagle Cement, O2Micro, DTAC/True, Nearmap, PTB
  • Advertisement Apocalypse

MSCI India November SAIR: Potential Changes with Big Flow & Impact

By Brian Freitas

  • We see 9 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR. There are a few stocks close to the cutoffs.
  • Inclusion in the index will require passive trackers to buy 7-14 days of ADV on the stocks. That increases to 18-55 days of delivery volume.
  • There appears to be significant pre-positioning on a lot of the potential adds and the shareholding pattern as of end September should provide a better picture.

SENSEX Index Rebalance Preview: Market Consultation on Derivative Linkage & Impact

By Brian Freitas

  • AIPL has commenced a market consultation on amending the index universe to only include stocks that are a part of the Futures & Options (F&O) segment of the market.
  • This is likely driven by a bunch of Adani-group companies that are at the cusp of index inclusion and are not a part of the F&O market.
  • Post implementation of the change, Tata Motors Ltd (TTMT IN) is a likely inclusion to the index in December, though that depends on Dr. Reddy’s Laboratories (DRRD IN) being deleted.

Merger Arb Mondays (10 Oct) – Lifestyle, Yashili, Eagle Cement, O2Micro, DTAC/True, Nearmap, PTB

By Arun George

Advertisement Apocalypse

By subSPAC

  • Direct to Consumer and E-commerce brands benefited massively from the demand during the pandemic but have struggled in recent months due to the recent slump in demand.
  • Furthermore, Privacy focused changes instituted by both Apple and Google have led to poor conversion rates and soaring customer acquisition costs whiles also lowering conversion rates.
  • System1, which went public through a SPAC, aims to solve all these issues by matching high-intent customers with advertisers at scales, effectively sidestepping the recent changes.

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Oct 09
0

Daily Brief Consumer: Toyota Motor, PT Metrodata Electronics, Country Style Cooking Restaurant Chain, Betagro, Zhongsheng Group, Kakao Pay and more

By | Consumer, Daily Briefs

In today’s briefing:

  • TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade
  • PT Metrodata Electronics (MTDL IJ) – Driving Digitalisation in Indonesia
  • Country Style Cooking Restaurant Chain Pre-IPO – The Negatives – Flagship Brand Still Struggling
  • Betagro Pre-IPO Peer Comparison – Margins Historically Weaker than Peers, but Playing Catch Up
  • Hong Kong CEO & Director Dealings: 7th Oct – Luk Fook, Zhongsheng Group, Kowloon Development
  • ECM Weekly (9th Oct 2022) – CALB, Socionext, Betagro, Country Style, I-Tail, Lionheart, Kakao Pay

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

By Brian Freitas

  • At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
  • Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
  • Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.

PT Metrodata Electronics (MTDL IJ) – Driving Digitalisation in Indonesia

By Angus Mackintosh

  • PT Metrodata Electronics booked a solid set of 1H2022 given that although revenues decline -11% its net profit grew +11.7% supported by its solutions and consulting business.
  • We expect a 2H2022 recovery given 2Q2022 was impacted by Lebaran and solutions & consulting continues to recover driven by banking, oil & gas, and telecoms sectors. 
  • This remains an interesting and unique play on the increasing digitalisation of the Indonesian corporate ecosystem. Valuations remain attractive on 9.5x FY2023E PER, with 2-year EPS CAGR of +over +25%.

Country Style Cooking Restaurant Chain Pre-IPO – The Negatives – Flagship Brand Still Struggling

By Ethan Aw

  • Country Style Cooking Restaurant Chain (1985552D HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
  • Country Style Cooking Restaurant Chain (CSCRC) is a Chinese quick service restaurant (QSR) chain situated in China. It operates two brands, namely: CSC and Rice Space, which are all self-operated. 
  • In this note, we talk about the not-so-positive aspects of the deal.

Betagro Pre-IPO Peer Comparison – Margins Historically Weaker than Peers, but Playing Catch Up

By Clarence Chu

  • Betagro (BTG TB) is looking to raise about US$460m in its Thailand IPO.  
  • Betagro is an integrated agro-industrial and food business in Thailand. 
  • Betagro identified three Thailand-listed companies which we included in our peer comparison exercise to determine how it has fared against its direct peers. 

Hong Kong CEO & Director Dealings: 7th Oct – Luk Fook, Zhongsheng Group, Kowloon Development

By David Blennerhassett

  • 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. However, such disclosures are by no means an absolute. 
  • These insights may also flag those companies where shares have been pledged. Stocks mentioned include Luk Fook Holdings Intl (590 HK), Zhongsheng Group (881 HK), and Kowloon Development (34 HK).

ECM Weekly (9th Oct 2022) – CALB, Socionext, Betagro, Country Style, I-Tail, Lionheart, Kakao Pay

By Sumeet Singh

  • 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, HK IPOs continued to struggle with CALB (3931 HK) joining Leapmotor (9863 HK) and Onewo (2602 HK) with its tepid performance.
  • Given the mid-week HK holiday and the ongoing golden week, there weren’t any large placements this week.

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Oct 08
0

Daily Brief Consumer: Hero Motocorp, Seven & I Holdings, Kweichow Moutai, Country Style Cooking Restaurant Chain and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Hero Motocorp (HMCL IN) | Brace for Disappointment
  • Seven & I – The US Is About to Hit the Brakes
  • Shanghai/​​​​​​​​​​​​​​​Shenzhen Northbound Connect: Weekly Moves (7 October 2022)
  • Country Style Cooking Restaurant Chain Pre-IPO – The Positives – A Second Attempt at Profitability

Hero Motocorp (HMCL IN) | Brace for Disappointment

By Pranav Bhavsar

  • Hero Motocorp (HMCL IN) has been outperforming the Nifty 50 over the last 6M
  • Our flash checks done in the south suggests the outperformance may not last long
  • Failure of a model, high competitive intensity, and changing preferences can again lead to high inventory levels leading to a possible correction in wholesales post-festive season. 

Seven & I – The US Is About to Hit the Brakes

By Oshadhi Kumarasiri

  • With OP up by 22% YoY to beat the consensus estimate by ¥2.0bn, Seven & I turned in a strong 2QFY23 along with a considerable upgrade to FY23 guidance.
  • However, the post-earnings price reaction seems to suggest that the market is a bit worried about the short-term performance of Seven & I Holdings (3382 JP)’s US convenience store business.
  • In addition, the struggling non-core businesses whose future remains undecided could also be weighing in on Seven & I’s price performance.

Shanghai/​​​​​​​​​​​​​​​Shenzhen Northbound Connect: Weekly Moves (7 October 2022)

By David Blennerhassett

Country Style Cooking Restaurant Chain Pre-IPO – The Positives – A Second Attempt at Profitability

By Ethan Aw

  • Country Style Cooking Restaurant Chain (1985552D HK) is looking to raise about US$200m in its upcoming Hong Kong IPO.
  • Country Style Cooking Restaurant Chain (CSCRC) is a Chinese quick service restaurant (QSR) chain situated in China. It operates two brands, namely: CSC and Rice Space, which are all self-operated. 
  • In this note, we talk about the positive aspects of the deal. 

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Oct 07
0

Daily Brief Consumer: Jardine Cycle & Carriage, Tunas Ridean, BYD Co Ltd, Seven & I Holdings, Betagro, Alibaba Group, Sands China Ltd, Shopback, Sundrug Co Ltd and more

By | Consumer, Daily Briefs

In today’s briefing:

  • JCNC Is Overstretched Vs. Astra
  • Tunas Ridean: Sell Or Tender, But Don’t Do Nothing
  • BYD Sales Hit Record High as China Steers Stimulus to Auto Market
  • Seven & I (3382) | U.S. Gas Margins Offset Rising Energy Costs at Home
  • Betagro IPO: Valuation Insights
  • Betagro Pre-IPO -Refiling Updates- Continued Their Upward Trajectory but Paid Itself Large Dividends
  • Alibaba, ICBC, Tencent, and Ping An
  • Sands China Ltd: The Best Value Entry Point in the Sector as EVisa Easing Begins
  • ShopBack Raises $80m from Temasek-Backed 65 Equity Partners
  • Buying Japanese Drug Store Names: Welcia (3141-JP) And Sundrug (9989-JP)

JCNC Is Overstretched Vs. Astra

By David Blennerhassett

  • Jardine Cycle & Carriage (JCNC SP) is currently trading at a ~9% discount to NAV, around the narrowest since the post-Covid nadir in April 2020.
  • JCNC’s recent results highlighted a marked improvement in its unlisted Vietnamese automotive ops. 
  • Weakness in the Indonesian rupiah has taken some of the shine off Astra International (ASII IJ)‘s strong sales growth. 

Tunas Ridean: Sell Or Tender, But Don’t Do Nothing

By David Blennerhassett

  • Indonesian auto dealership play Tunas Ridean (TURI IJ)‘s buyback – and subsequent delisting – has been extended to the 12 October. 
  • TURI shareholders who do not tender – or sell in the market – will be left holding listed scrip.
  • Currently trading a gross spread of ~3% to terms, net of the sales tax levy.

BYD Sales Hit Record High as China Steers Stimulus to Auto Market

By Caixin Global

  • China’s largest new-energy vehicle (NEV) manufacturer BYD Co. Ltd. reported record sales last month as China stepped up stimulus to shore up sluggish economic growth.
  • In September, Hong Kong- and Shenzhen-listed BYD sold 201,259 NEVs, a category that includes electric and hybrid vehicles.
  • The figure was up 183% year-on-year and marked the seventh consecutive month of growth.

Seven & I (3382) | U.S. Gas Margins Offset Rising Energy Costs at Home

By Mark Chadwick

  • 1H results, OP up +26% YoY, were good but in line with the recent Nikkei preview. 
  • The U.S. convenience store operation was the standout performer and the reason for the full year guidance raise
  • We remain bullish on the stock. It is just too cheap relative to global peers

Betagro IPO: Valuation Insights

By Arun George

  • Betagro (BTG TB), Thailand’s leading integrated food company, will open its books for its THB17.4 billion (US$462 million) from 10 to 25 October.
  • We previously discussed the IPO in Betagro IPO: The Bull Case and Betagro IPO: The Bear Case. 
  • Our valuation analysis suggests that Betagro is fully priced at the IPO price. Give the IPO a pass, awaiting a lower entry point.

Betagro Pre-IPO -Refiling Updates- Continued Their Upward Trajectory but Paid Itself Large Dividends

By Clarence Chu

  • Betagro (BTG TB) is looking to raise about US$460m in its Thailand IPO. 
  • Betagro is an integrated agro-industrial and food business in Thailand. Sales continued to stage an upward trajectory, and higher ASPs, combined with a changing sales mix led to expanding profitability.
  • However, the growth in sales hadn’t been uniform across all segments and the bounce in 1H22’s profitability seems to come off a low base as well. 

Alibaba, ICBC, Tencent, and Ping An

By Untying The Gordian Knot

  • The YTD performance of HSI -22%, HSI Tech Index -35%, HSI Properties -18.6%, and continued 23-25% short trading volume are set up for sharp rallies.
  • Investment banks and brokers forecast economic recovery for buying in Q4 2022 or 2023.
  • Overall volume continues to fall [something evident from HKEX share price as well].

Sands China Ltd: The Best Value Entry Point in the Sector as EVisa Easing Begins

By Howard J Klein

  • With five major China mainland markets expected to re-open by November, we see pent up demand sparking daily visitor footfall to Macau.
  • Golden Week total arrivals could reach an aggregate 170,000 despite Beijing’s warning travelers to stay home. 2019 Golden Week drew 665,000 visitors.
  • At HK$19.960 a share at writing, market sentiment does not yet appear to recognize the first meaningful easing in China travel bans since the 2020 lockdowns.

ShopBack Raises $80m from Temasek-Backed 65 Equity Partners

By Tech in Asia

  • ShopBack has entered into a subscription agreement to raise US$80 million in the second tranche of its series F round

  • The Singapore-based shopping and rewards platform’s latest backer is a Temasek-backed investment firm with US$3.3 billion in assets under management.

  • Founded by Henry Chan and Joel Leong in 2014, ShopBack allows users to get cashback from their online and offline transactions

Buying Japanese Drug Store Names: Welcia (3141-JP) And Sundrug (9989-JP)

By Joe Jasper

  • Japan has been a favorite country since late-March, and we have continued to see improvement ever since.
  • Vermilion’s international Group CS-35 Drug Stores, Japan displays bullish price and RS downtrend reversals, giving us added confidence that outperformance is likely to continue
  • The two stocks highlighted today display base breakouts over the last couple of days, making them timely buys. Buy: Welcia Holdings (3141-JP) and Sundrug (9989-JP)

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Oct 06
0

Daily Brief Consumer: Rakuten Inc, CanariaBio, I-Tail, Z Holdings, Ryohin Keikaku, Shidax Corp, Amorepacific Corp, Valora Holding AG and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Rakuten – Sale of Stake in Securities Business Eases Funding Pressure
  • KOSDAQ 150 Rebalancing: 7 Regular Changes + 2 Special Entries
  • I-Tail Corporation Pre-IPO – The Positives – For the Pampered Pets
  • Z Holdings / PayPay – A Focus on Margin Improvement as ZHD Moves to Consolidate
  • Ryohin Keikaku: A Beat Can Turn Around Price Performance
  • Shidax Outlook May Change – Better Governance Matters
  • A Senior Korean Govt Official Provides the Likely Time of the End of Indoor Mask Mandate
  • FEMSA/​Valora Holding: Offer Success and Squeeze-Out
  • I-Tail Corporation Pre-IPO – The Negatives – Non-Uniform Growth

Rakuten – Sale of Stake in Securities Business Eases Funding Pressure

By Kirk Boodry

  • Rakuten is reportedly selling a stake in its Securities unit for ¥80bn, which probably means a near-term IPO of that business is off the table
  • It may also give Rakuten greater flexibility on the timing of a Rakuten Bank IPO should pricing for that be problematic
  • In terms of surfacing the value of Rakuten’s fintech assets this is good news but it is mobile losses that have held the shares back. We remain at Neutral.

KOSDAQ 150 Rebalancing: 7 Regular Changes + 2 Special Entries

By Sanghyun Park

  • KOSDAQ 150’s December rebalancing will feature seven regular changes and two special entries.
  • Among the additions, we should focus on Dear U and ISC, which have a balanced level of liquidity and flow, rather than those theme stocks with high volatility.
  • As for Nature Holdings, Eoflow, and Nextin, I suggest a more aggressive entry point due to low trading volume. Then, I’d basket-trade the deletions on equal weight.

I-Tail Corporation Pre-IPO – The Positives – For the Pampered Pets

By Sumeet Singh

  • I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of Thai Union Group (TU TB). 
  • As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.
  • In this note, we talk about the positive aspects of the deal.

Z Holdings / PayPay – A Focus on Margin Improvement as ZHD Moves to Consolidate

By Kirk Boodry

  • The PayPay conversion is complete and management is focused on managing costs, which is reassuring for ZHD financial targets and for an eventual IPO
  • There was less said about the latter, however, whilst detail on the valuation gain that parent Softbank Corp needs to hit its own operating income target has not been confirmed
  • Our valuation of ¥500bn for PayPay looks more reasonable as 50-73% YTD declines in public comps have brought trading multiples in line (PayPay at 5x FY22e revenue versus 5-8x)

Ryohin Keikaku: A Beat Can Turn Around Price Performance

By Oshadhi Kumarasiri

  • Our analysis points to a significant earnings beat for Ryohin Keikaku, whose share price is down more than 50%-YTD and is currently hugging the bottom-end of the long-term trend channel.
  • With freight and logistics down more than 50% since June 2022, we are expecting Ryohin Keikaku (7453 JP)’s gross margin to return to around 49-50%.
  • In addition, the company’s monthly sales growth figures indicate that FQ4 revenue should be around ¥114.6bn compared to ¥105.8bn for consensus.

Shidax Outlook May Change – Better Governance Matters

By Travis Lundy

  • On 8 September, I went over the Oisix ra daichi (3182 JP) bid for the stake in Shidax Corp (4837 JP) held by Unison Capital. 
  • The founding Shida family had a deal whereby when the company raised capital years ago, the family had ROFR to buy or nominate a buyer of the Unison stake.
  • The problem? Shidax’ independent board said this was unfair to minorities. The back and forth has continued but there may now be hope for a better deal. 

A Senior Korean Govt Official Provides the Likely Time of the End of Indoor Mask Mandate

By Douglas Kim

  • In the past few days, a senior government Korean official announced that the indoor mask mandates will likely be lifted in March 2023.
  • Although this is not officially finalized, we believe that there is a very high probability of the Korean government finally ending the indoor mask mandate sometime in March 2023. 
  • The end of the indoor mask mandate is likely to have a positive impact on the Korean cosmetics companies. Nonetheless, we are still concerned about the relatively high valuation multiples.

FEMSA/​Valora Holding: Offer Success and Squeeze-Out

By Jesus Rodriguez Aguilar

  • The Additional Acceptance Period ended on 29 September. On 3 October, FEMSA announced the satisfaction of all conditions. On 5 October, FEMSA announced that its participation amounts to 96.87%.
  • Settlement will occur on 7 October. FEMSA intends to initiate a squeeze-out procedure and delist the Valora shares from trading on SIX Swiss Exchange.
  • The tender was good news for shareholders. My TP is CHF 252.2/share, therefore I believe the offer is fair and there was no counterbid. 

I-Tail Corporation Pre-IPO – The Negatives – Non-Uniform Growth

By Sumeet Singh

  • I-Tail Corporation, an original equipment manufacturer (OEM) in the wet pet food category, aims to list in Thailand in 4Q22. ITC is a subsidiary of Thai Union Group (TU TB). 
  • As per ITC, it was the number two pet food company in Asia and in the top ten pet food companies globally. ITC expertise lies in fish-based wet pet food.
  • In this note, we talk about the not-so-positive aspects of the deal.

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Oct 04
0

Daily Brief Consumer: Pola Orbis Holdings, ASICS Corp, Tesla Motors, Betagro Group, Kakao Pay, K Car, Tokyo Stock Exchange Tokyo Price Index Topix, Zegna, Cubic City Service Apartment Group and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Japanese Cosmetics: Trading Around Q3 Earnings
  • Asics (7936) | Nike Air Pockets
  • Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess
  • Betagro IPO: The Bull Case
  • Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
  • Noteworthy Lockup Releases for the Next Two Months in Korea
  • Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional
  • Breaking SPAC Convention
  • Cubic City Service Apartment Group Pre-IPO Tearsheet

Japanese Cosmetics: Trading Around Q3 Earnings

By Oshadhi Kumarasiri

  • The latest rally in Japanese cosmetics, driven by improving domestic market conditions has strangely avoided two of the big names in the market, Shiseido Company (4911 JP) & Pola Orbis.
  • Although both of these names seem to offer big upside potential, we think Pola Orbis Holdings (4927 JP) has a significantly better risk-reward profile in the short term.
  • We would also be inclined to hedge the market risk using Kose Corp (4922 JP) on the short side as the name has the biggest downside potential.

Asics (7936) | Nike Air Pockets

By Mark Chadwick

  • NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).  
  • ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
  • ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now

Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess

By Vicki Bryan

  • Q3 deliveries were an impressive 343,830, a bit better vs my cautious 331,104 est;
  • But results trailed plunging market projections & Tesla’s own guidance by 20,000-50,000; 
  • Even worse, the shortfall meant sales trailed production by record 22,100.

Betagro IPO: The Bull Case

By Arun George

  • Betagro Group (1737144D TB), Thailand’s leading integrated food company, is seeking to raise US$554 million through a SET IPO, according to press reports
  • Betagro plans to offer 500 million shares or 25% of the total issued shares after IPO. This will be Thailand’s second-largest listing this year after Thai Life Insurance (TLI TB). 
  • The key elements of the bull case rest on top quartile growth rates, a well-functioning core business, rising profitability, cash generation and declining leverage.

Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake

By Sumeet Singh

  • In early Jun 2022, Alipay raised around US$386m via selling 3.3% of outstanding shares of Kakao Pay (377300 KS). That was the first selldown by Alipay  (Alibaba (ADR) (BABA US)).  
  • Despite pricing the shares at an enticing 11.8% discount to last close, the stock failed to hold the deal price and hasn’t looked back since.
  • In this note, we will talk about the previous deal and the upcoming lockup expiry.

Noteworthy Lockup Releases for the Next Two Months in Korea

By Sanghyun Park

  • K Car’s major shareholder is Hahn & Company, which has already fully recovered the initial investment. So, there is an actual probability that it will make an aggressive exit.
  • SingEel’s 3-month IPO institutional and VCs will be released, 6.18% of SO. All of them are in a profit zone, there is a possibility that an aggressive overhang will occur.
  • Kakao’s 47% holdings in Kakao Pay will be released. The possibility of lowering the stake seems quite low. Nevertheless, we must consider the risk that this will affect market sentiment.

Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional

By Aki Matsumoto

  • With the revision of Corporate Governance Code in 2021 and its listing criteria on prime market, the groundwork has been laid to some degree to facilitate functioning of compensation committee.
  • Meanwhile, there are not many companies with voluntary nominating and compensation committees that disclose the authority of their nominating and compensation committees in their annual securities reports.
  • Many companies, even large companies, do not even have a compensation policy in place, indicating that individual director compensation is a much lower priority to consider.

Breaking SPAC Convention

By subSPAC

  • Over the last two years, SPACs have emerged as an alternative to the traditional IPO process, especially for those who’ve found it challenging to raise money from the public markets in the past.
  • In fact, SPACs have been a great investment vehicle for Space Launch firms, Electric Vehicle Upstarts and even Quantum Computing firms.
  • It is surprising then that Italian Luxury Fashion House Zegna, which has a rich 110-year heritage, has decided to take the SPAC route to make its debut in the US markets rather than list in Europe or in Asia like most of its peers.

Cubic City Service Apartment Group Pre-IPO Tearsheet

By Ethan Aw

  • Cubic City Service Apartment Group (CCSAG HK) is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Morgan Stanley and CCB International. 
  • Cubic City Service Apartment Group (CCSAG) is a rental apartment services platform, which pioneered the centralized rental apartment model in China, according to the company. 
  • It provides rental apartments in centrally managed buildings with modern facilities. As of 30 Jun 2022 (1Q23), the company operates 76,190 apartments nationwide across 394 locations in 26 cities. 

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Oct 03
0

Daily Brief Consumer: Leapmotor, Tassal and more

By | Consumer, Daily Briefs

In today’s briefing:

  • HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)
  • Tassal (TGR AU): 3rd November Shareholder Vote On Cooke Offer

HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)

By Brian Freitas

  • We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.
  • Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.
  • Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.

Tassal (TGR AU): 3rd November Shareholder Vote On Cooke Offer

By David Blennerhassett

  • Tassal (TGR AU) has convened a Scheme Meeting on the 3 November for shareholders to vote on the proposal from Cooke Inc at A$5.23/share.
  • The vote, for all intent and purposes, appears a formality. The Independent Expert considers the Offer to be fair and reasonable with a fair range of A$4.65-A$5.35/share. 
  • Trading at a gross/annualised spread of 1.2%/8.8%, assuming late-November completion. 

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Oct 02
0

Daily Brief Consumer: Tassal, Easy Trip Planners, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Tassal Scheme Meeting on 3 November
  • Easy Trip Planners: Unattractive Inspite of High Profitability
  • What Initiatives Are Being Taken by Companies that Have Increased Valuations?

Tassal Scheme Meeting on 3 November

By Arun George

  • Tassal (TGR AU)‘s scheme meeting is scheduled for 3 November. The IE considers the A$5.23 per share offer fair and reasonable.
  • The key condition is approval from shareholders – headcount test and approval by at least 75% of the votes cast on the scheme resolution. Cooke has received FIRB approval.
  • We continue to think that offer is attractive. At the last close price and for the 21 November implementation date, the gross and annualised spread is 1.2% and 8.8%, respectively.

Easy Trip Planners: Unattractive Inspite of High Profitability

By Nitin Mangal

  • Easy Trip Planners (EASEMYTR IN) has had a good run on its bourses and is probably one of the very few new-age companies which is profitable. 
  • However, the overall narrative does not look attractive to us when we deep dive into the forensics, including the cost drivers and balance sheet risks to the company.
  • Perplexing business model, customer concentration and high valuations make it unattractive inspite of high profitability.

What Initiatives Are Being Taken by Companies that Have Increased Valuations?

By Aki Matsumoto

  • Changes in Tobin’s q were closely related to increases in foreign ownership. Companies with increases in Tobin’s q reduced cash equivalents and total assets, suggesting they used assets more effectively.
  • No significant correlation was shown between Tobin’s q and board practices, but companies with large increases in Tobin’s q improved in % independent directors and the independence of compensation committees.
  • Companies with increases in Tobin’s q showed superior values in Key Actions: change in growth policy score, dividend policy score, cash holdings score, frequency of share retirements, AGM/IR disclosure scores.

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