Consumer

• Giordano International (709 HK) has announced 1H22 net profit of HK$97mn compared to  HK$60mn in 1H21.
• Of interest is the declaration of an interim dividend of HK$0.085/share.
• The ex-dividend date is the 20 September. Whether you get the dividend plus the Offer Price depends when the Offer closes (or is extended), and/or whether the Offer turns Unconditional.

• Taste Gourmet Group (8371 HK) reported substantial Q1 2023 numbers, with profits coming in at 16 mn HKD up 42 YoY(%) (-65 YoY(%) netting out the subsidies).
• Despite losing 21 days in April, this is a solid result as cash levels burgeoned to 95 mn HKD from 65 mn HKD (Mar FY22). 
• The stock is cheap, trading at 5.1x FY23 PE and a 11.7% dividend yield ( at a 60% payout ratio), making this extremely attractive to own.

• Giordano International (709 HK)’s 1H22 net profit of HK$97 million was within the HK$91-101 million positive profit range. The IFA noted that interims do not change its advice.
• The Board surprisingly declared an interim dividend of HK$0.085 per share. As the ex-div falls after the final closing date, shareholders who accept the offer will not receive the dividend. 
• The incrementally positive outlook and dividend highlight Giordano’s value. The results have pushed our deal break/intrinsic value to align with the VGO price. 

• Like other premium fashion brands and retailers, United Arrows (7606 JP) has faced unprecedented challenges since lockdown began in March 2020. 
• Sales are still 25% below 2019 levels but the select shop retailer is optimistic about the future, despite the fact that profitability has been in decline since long before Covid.
• Weaknesses remain however, including an ageing customer base and to some extent, an ageing brand.

• Deliveroo’s recent share buyback and exit from Netherlands are not enough to offset people in the UK and Ireland trying to go back to their previous way of lives.
• On 10 August, Deliveroo (ROO LN) announced a share buyback program worth £75 million ($90.6 million) share buyback program, which represents 4.6% of its current market cap. 
• Cost of living increases and millions of European consumers eating out at restaurants rather than ordering food are causing further negative impact on Deliveroo’s business. 

• Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
• Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.
• Today we are flagging Bed Bath, Blink Charging, Natera, Asana.

• Beauty Farm Medical and Health Industry (BFM HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO. 
• Beauty Farm Medical and Health Industry (BFMHI) is China’s largest provider of daily facial and body care services in terms of revenue in 2021, according to Frost & Sullivan. 
• While BFMHI has stable profitability margins and is even in a net cash position, we do not see anything to shout out loud about given its mediocre growth. 

• Bain Capital Private Equity launched a deal for Net Marketing (6175 JP) at a 63% premium. 
• That should be enough to get it done on its own, despite coming below the IPO price of 5yrs ago. 
• In any case, Shareholder Structure makes this a completely done deal.

• Many consumers bought household freezers after the lift of lockdown.
• Strict rules on physical stores drive consumers to online e-commerce platform.
• Total express parcels increased by 8% YoY in China in July.

• After takeover interest started in March, quirky & ailing Ted Baker has agreed on a 110p/share cash offer from Reebok-owner ABG, (a low) 18% premium, £211 mn implied equity value, £332 mn implied EV.
• Consideration represents 5.6x EV/Fwd EBITDA, vs. 6.4x median of comparables. Although in the midst of a turnaround plan (with execution risk) and unhelpful macro environment, Ted Baker keeps brand equity.
• Irrevocables represent 50.7%. Gross spread is 1.27%, with estimated annual return of 3.99% (assuming scheme is approved and settlement by mid-December). Long.

• Despite unfavorable business environment such as global inflation, Orion was able to generate excellent progress in sales and profit growth in countries including China, Vietnam, and Russia in 2Q 2022.
• Orion had sales of 263.2 billion won (up 19.6% YoY) and operating profit of 35.7 billion won (up 170.3% YoY) in China. 
• Due to a combination of attractive valuations and improving fundamentals along with restrictions of snacks imports from Taiwan to China, we continue to believe Orion’s shares could outperform the market.

• The emergence of new technological innovations has changed many aspects of the day-to-day life of consumers.
• While these kinds of toothbrushes have been in the market for many years, with Oral-B (Procter & Gamble) and Philips, dominating the market, consumer adoption has been limited given the premium pricing of these electric toothbrushes.
• It is a recently listed oral care company that is making highly advanced and sophisticated electric toothbrushes with sonic technology and making them available to the average American consumer at very reasonable prices.

• Yashili International Holdings (1230 HK) independent shareholders unanimously approved the proposed transactions at the 16 August EGM, a crucial step for China Mengniu Dairy Co (2319 HK)’s HK$1.20 offer.
• The remaining pre-condition is the completion of the 25% Yashili acquisition. The completion conditions suggest that this pre-condition is low risk and will likely be completed soon.
• The value test is only applicable to the scheme. At last close and for a November completion, the gross and annualised spread to the offer is 8.1% and 29.6%, respectively.

• CTG Duty Free Group has filed for a HKEx listing and plans to raise net proceeds of US$1.98bn at the midpoint of the IPO price range of HK$143.5-165.5 per share.
• The company’s indicative IPO price range is at a 27-37% discount to the company’s last close of RMB194.75 per share.
• In this insight, we discuss our key concerns on CTG’s financials and our thoughts on the company’s valuation.

• Hyundai Mobis said it was considering a split but had not yet made a decision. This kind of response is generally seen as an ACKNOWLEDGMENT.
• The eventual goal should be to liquidate the Chung family’s Mobis stake via spin-off/merger and swap it with Kia Motors’ Mobis stake. It implies that this will be a spin-off.
• This aspect serves as an opportunity to use today’s Mobis price drop as a swing trading entry point. I would consider building a Long/Short setup with HMC at this point.

• Tasmanian salmon producer Tassal (TGR AU) and Canadian aquaculture play Cooke have entered into a Scheme at A$5.23/share. 
• The revised Offer is Cooke’s fourth bid since late May, having initially pitched A$4.67/share. Cooke has been gradually building its stake and now holds 10.5%, up from 5.4% initially.  
• This Offer is done and dusted. Tassal’s board unanimously recommends shareholders vote in favour of the Scheme.

• Tassal (TGR AU) entered a scheme implementation deed with Cooke at A$5.23 per share, a 48.6% premium to the undisturbed price of A$3.52.
• The offer price is an all-time share price high. The scheme is not subject to due diligence or a financing condition. Cooke also noted that it had received FIRB approval.
• This is a done deal. At last close and for year-end payment, the gross and annualised spread to the offer is 1.8% and 4.6%, respectively.

• We continue to believe that the bear market lows have already been established.
• It remains to be seen whether the indexes will experience a meaningful pullback first, or whether we are already experiencing the initial leg of a new bull market.
• Thus far, market indexes have ignored overbought conditions, which is historically a sign of strength during the initial leg of new bull markets.

• Kroger Co. continued to navigate the challenging operating environment characterized by continued supply chain headwinds, including higher diesel fuel costs and inflationary cost pressures.
• The highlight of the last quarter was its launch of the Boost membership on grocery and fuel delivery.
• We provide the stock of Kroger Company with a ‘Hold’ rating with a revision in the target price.

• Altria is facing a difficult macroeconomic climate since the start of 2022 which was responsible for a weaker tobacco performance.
• The company failed to meet Wall Street expectations in terms revenues despite the robust performance of Marlboro.
• The smokeable products division did generate excellent operating company income growth, while their moist smokeless tobacco brands kept boosting profitability resulting in the company delivering an earnings beat.

• Maintain BUY recommendation for CENTEL with a target price of Bt49.0.The company’s 2Q22 net profit came out above our expectation at Bt22m in 2Q22, compared with Bt44m loss in 1Q22.
• Impressive performance for hospitality business.Hotel revenue hit nine quarter high at Bt1.4bn thanks to impressive performance for Thai hotels as RevPar for Bangkok and Upcountry hotels jumped sixfold and fourfold 
• Food hit 10 quarter high at Bt2.9bn (+26%YoY+11%QoQ) on the back of strong SSSG at 19% compared with 0% and 10% in 2Q21 and 1Q22 respectively.

• Faraday Future (FF) saw a Q2 net loss of $142m & cash fell by 56% QoQ to $121m. As of Aug-9th, cash sunk another 59% to $52m.
• FF’s recently lined up financing provides $52m, but comes in stages through late October, which could hinder its Q4 new flagship EV launch.
• Risk statements regarding the launch of its new EV raise concerns about supplier relationships and marketing capabilities even if its first EV is launched in Q4. 

• This offering is a 100% stockholder allocation with forfeited shares going to the public. There will be 9.56M new shares at a capital increase of nearly 9%.
• We should note that the largest shareholder may again do the same trick. He may block-deal a 1% stake and use the proceeds to participate in this offering.
• A massive release volume and a 25% discount rate may cause a severe pricing distortion, leading to arb trading openings.

• Giordano International (709 HK)’s voluntary conditional from the Cheng Yu Tung family (24.57% of outstanding shares) at HK$1.88 per share is open with a first closing date of 5 September.
• Crucially, the offeror will not increase the offer price. In combination with an ongoing retail recovery, the low-ball offer has little chance of meeting the 50%+ minimum acceptance threshold.
• While the IFA says the offer is fair and reasonable, key directors will not accept the offer. A deal break implies, at most, another 10% downside to the last close.

• A recent conversation with Sumber Alfaria Trijaya (AMRT IJ) which operates Alfamart and AlfaMidi mini-markets in Indonesia further cemented a positive view on the outlook for the company.
• The company should easily surpass its target for 1,000 new stores this year, with increasing basket sizes and fee-based income and some new features such as BeanStop potentially improving returns. 
• Sumber Alfaria Trijaya remains a core retail holding with an increasing investor following after MSCI inclusion. Valuations remain attractive versus history and ROE at 25% is higher than pre-COVID levels.

Wynn Macau’s H1/22 earnings continued to underperform those of peers, with the trend persisting since Q4/21. This could be owing to stiffer competition from newer properties (e.g. MGM Cotai and SJM Holdings’ Grand Lisboa Palace), particularly in the premium mass segment.

We highlight that Wynn Macau has sufficient liquidity to sustain 15 months of operating cash burn in a zero-revenue scenario. This does not factor in the company’s USD 500 mn loan from its parent, which we assume would be used to meet the government’s requirement for all operators to raise share capital by MOP 5 bn.

Wynn Macau’s next debt maturity will be in October 2024, when the USD 600 mn WYNMAC 4.875 24 will come due. Given that the WYNMAC bonds are yielding 9-12%, we believe it could be very difficult for the company to issue new bonds for refinancing. Hence, Wynn Macau might face serious refinancing risk if the industry fails to recover meaningfully beyond 2023.

• Faraday Future (FF) released an 8-K today saying they raised $52m and could see as much as $600m after 90 days.
• The 90-day lead time is obviously based on whether FF can survive. The company originally said it needed $200m to make it through the Q4 launch of its first EV.
• FF said it only had $52m in cash as of August 9th versus $233m on April 30th. With new funding, FF has 7.4 weeks of money at current cash-burn rates.

• Excluding onetime items, SAPPE’s 2Q22 core profit came in at Bt179m (+41%YoY, +18%QoQ), all-time-high, above our expectation and BB consensus estimated. Impressive result supported by a record high
• MOGU MOGU drove 2Q22 earnings The 2Q22 net profit rose to all-time-high of Bt167m (+32%YoY, +9%QoQ) driven by a solid Mogu Mogu sales (the best-selling products in export markets).
• The 2Q22 revenue rose to all-time-high of Bt1.2bn (+39%YoY, +21%QoQ), thanks to continues growth in international markets especially from Asia (+85%YoY) and EU & America (+63%YoY) due to re-stocking products 

• CTG Duty Free (1880 HK) is looking to sell up to 118.176m shares to raise up to US$2.5bn. Pricing at HK$143.5-165.5/share is a 38.6%-29.2% discount to CTG Duty Free (601888).
• Between 32-37% of the total offer size is being taken by 9 cornerstone investors and they are locked in for 6 months from listing date (expected 25 August).
• CTG Duty Free (1880 HK) could be added to MSCI China in November, FTSE All-World and FTSE China 50 in March. Southbound Stock Connect could come online on 19 September.

• On the 23 June, the Cheng family made an underwhelming voluntary conditional Offer of $1.88/share for Giordano International (709 HK). 
• The Offer is conditional on the family getting to more than 50% via tendering, and the Cheng’s (and concert parties) control 24.57%.  
• The Composite Document is now out with a first close on the 5 September.  The Offer Price has now been declared final. That’s a surprise.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
• Highest spreads are 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Resapp Health (RAP AU), Infomedia Ltd (IFM AU), Lifestyle International Holdings (1212 HK).
• Lowest gross spreads are Dongzheng Automotive Finance (2718 HK), Excelpoint Technology (EXLP SP), MyDeal.com.au Ltd (MYD AU), Cocoaland Holdings (COLA MK), Giordano International (709 HK), China VAST.

• The management of The Keepers Holdings, Inc. (KEEPR PM) highlighted bullish trends from their call for H1 2022 for on-premise and travel retail that bode well for H2 2022.
• We believe the company is on the cusp of backward integration by acquiring its supplier, Bodegas William and Humbert (in Spain). We believe this is an exciting future catalyst.
• The stock trades at 6x PE FY22e (ex-cash) with seven bn+ pesos of cash on the balance sheet representing 37% of market capitalization. We see significant upside ahead.

• On 12 August, it was reported in numerous local media that Hyundai Mobis (012330 KS) plans to spin off its auto parts and module business units into two separate entities. 
• Hyundai Mobis has not formally announced these spin offs although local media mentioned that these spin off plans have recently been finalized. 
• These spin-offs by Hyundai Mobis also are likely to be preludes to the Hyundai Mobis/Hyundai Motor Group reorganization. We remain positive on Hyundai Mobis. 

• At the indicated price range, or 24.8-28.6x PER for FY22F and 16.7-19.2x for FY23F, the H-share IPO of China Tourism Group Duty Free Corp (601888 CH) is not attractive enough. 
• 2Q22 net profit is worse than it appears. Recent Sanya lockdown has wiped off half of the summer peak season which may even negatively affect demand during Golden Week.
• Consensus forecasts are too optimistic and there may be another 15% downside. Given current macroenvironment, market volatility and earnings uncertainty, risk outweighs return even at the low-end of price range.

• Express parcels increased by 8% YoY in China in July.
• TikTok was still the top non-game app in the world in July.
• Meituan raised its prices of bike sharing on August 10.

• The stock price has rallied 40% since our last note. We are happy to take profit here, hence we label this insight as Bearish 
• The results and full year guidance hike were positive but largely currency assisted  
• We expect that a focus on China and Direct will drive margin expansion in the medium term

• 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, China Tourism launched its US$2.5bn IPO. 
• There were no major placements this week and it likely to remain that way in the near future owing to it being earnings season.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – China Tourism Group Duty Free Corp Ltd (601888 CH) has launched an H Share listing to raise US$1.9-2.2 billion.
• Event-Driven developments at EVOC Intelligent Technology Company Limited H (2308 HK), Lifestyle International Holdings (1212 HK), OZ Minerals Ltd (OZL AU), MACA Ltd (MLD AU), Excelpoint Technology (EXLP SP), MyDeal.    

• China Tourism Group Duty Free Corporation Limited (CDF) aims to raise around US$2.5bn in its H-share listing in Hong Kong.
• As per Frost & Sullivan, CDF had 92.3% market share by retail revenue in China duty-free merchandise sales in 2020.
• In this note, we talk about the deal pricing and run the deal through our ECM framework.

• China Tourism Group Duty Free Corp Ltd (601888 CH) has launched its H Share listing at HK$143.50-165.50 per share. Pricing is on 18 August and listing on 25 August.
• In CTG Duty Free H Share Listing: Another False Dawn?, we noted that on a fundamental view, we would prefer to remain on the sidelines.
• Our valuation analysis suggests that the A Shares are trading close to fair value and the H Share valuation is unattractive compared to peers. We would pass on the listing.

• The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
• However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
• With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.

• This is now the third Int’l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
• Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
• Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.

• Keurig Dr Pepper continues to battle inflationary challenges with price actions but its brand strength has been its biggest asset in the current environment.
• With the higher prices, the company was able to surpass Wall Street expectations in terms of both, revenues as well as earnings.
• Keurig Dr Pepper is on track to achieve 1 million linked households in the coming years thanks to its ongoing smart technology development, which is opening up new platforms like smart car delivery for pods.

• Monster Beverages continues to witness a rise in the demand for its energy drinks and this helped the company surpass Wall Street expectations in terms of revenues.
• In the quarter, Monster experienced a significant rise in the cost of sales that resulted in a material reduction in gross profit.
• Among major updates, Monster Beverage has recently released its foremost malt beverage, alcoholic flavored under the Monster brand.

• Clorox Co has navigated via challenging operating conditions and it failed to meet Wall Street expectations in terms of revenues.
• As a part of the company’s IGNITE strategy, it has announced a streamlined operating model for creating a faster, simpler company.
• One of the best ways to expand margins for Clorox has been its direct-to-consumer strategy which is gradually paying off.

• China Tourism Group Duty Free Corporation Limited (CDF) is gearing up to launch Hong Kong’s largest listing so far this year, with a reported deal size of around US$2-3bn.
• Prior to the deal launch, we’ve had a quick look at the A/H premium, subscription and past performance of some of the earlier A/H listings.
• Overall, most of the recent A/H listings haven’t done much over the first month.

• Betagro Group (1737144D TB) is looking to raise about US$600m in its upcoming Thailand IPO. 
• Betagro is an integrated agro-industrial and food business in Thailand. The firm’s products cover all stages of the food value chain including upstream, midstream and downstream.
• Margins have fluctuated and operating/net margins are razor thin. Over a longer term period, track record hasn’t been the greatest as well.

• Phu Nhuan Jewelry Jsc (PNJ VN) is the number one jewelry company in Vietnam. 
• The company is benefiting from several key catalysts including reduced social distancing measures resulting in higher store visits and sales, hedge against rising inflation, and pent up demand for jewelry. 
• The combination of higher expected earnings this year along with stable recent prices have resulted in more attractive valuations for the company.

• Tokyo Base rebounded in 2021 thanks to strong support at home and overseas for its Japan-made designs. 
• The fashion retailer plans to add new concepts as well as expand more quickly overseas.
• The Japanese fashion sector has taken a beating in the market but over the medium term there will be recovery for the better retailers, particularly those with potential overseas.

• Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$300m in its upcoming Hong Kong IPO. 
• Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
• CHJF had grown at an impressive rate even in the face of COVID-19. In this note, we will undertake a peer comparison of CHJF with its listed peers.

• China Tourism Group Duty Free Corp Ltd (601888 CH)/CTGDF, the largest travel retail operator in the world, aims to launch an H Share listing to raise US$2-3 billion on Friday.
• CTGDF is a play on the normalization of domestic travel. However, the H Share listing timing is not ideal as a vital summer travel market, Sanya, is under renewed lockdown. 
• The recovery timing has again shifted, with expectations of a 4Q recovery, but 2022 consensus expectations look slightly optimistic. We prefer to remain on the sidelines.

• The Keepers Holdings, Inc. (KEEPR PM) reported solid growth in its Q2 2022 results, with 30% revenue growth YoY(%) and 44% profit growth ahead of our expectations. 
• The stock trades at 4.5x PE ex-cash (with ~50% of the market capitalization in cash), making it a cheap discretionary consumption plays in the Philippines with good execution.
• Further catalysts include the potential for making an accretive acquisition. More to follow once the company has its investor call on Friday the 12th of August 2022. 

• Kirin Holdings (2503 JP)’s 2Q22 normalized OP of ¥46.2bn from ¥500.3bn revenue was slightly above the consensus OP of ¥45.9bn from ¥500.8bn revenue.
• Kirin raised its 2022 revenue and normalized OP guidance by ¥40.0bn and ¥6.0bn respectively, due to the progress of profit improvement measures mainly in Coke-Northeast and Kyowa Kirin in 1H22.
• Meanwhile, Kirin is due ¥22.4bn from MEHL for the Myanmar JV. Even though this is not the fair value, receiving at least something is a bonus in our opinion.

• 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 also flag those companies where shares have been pledged, both recently and ongoing.

• Mobile losses narrowed sequentially as expected but not by much as the company missed consensus and Redex expectations for profitability
• Rakuten also reported a 220K net subscriber loss in the quarter as point-chasing free users churned off when zero-yen tiers were cancelled but worringly, network coverage/capacity was also a factor
• If there is a silver lining, fintech businesses Rakuten Bank and Securities posted solid results and remain on pace to IPO but negative mobile sentiment is unlikely to change

• Emperador (EMI SP) currently is just outside the inclusion zone for the FTSE Straits Times Index (STI) (STI INDEX) and a small price bump is needed for index inclusion.
• If Emperador (EMI SP) is added to the index, Comfortdelgro Corp (CD SP) could be deleted as the lowest ranked index constituent.
• Emperador (EMP PM) is a high probability inclusion to the FTSE All-World Index at the September SAIR and the stock could move higher over the next couple of weeks.

• Betagro Group (1737144D TB) is looking to raise about US$600m in its upcoming Thailand IPO.
• Betagro is an integrated agro-industrial and food business in Thailand. The firm’s products cover all stages of the food value chain including upstream, midstream and downstream.
• Betagro operates a vertically integrated model with its own production and processing capabilities. Furthermore, it utilizes a range of distribution channels for both domestic and international sales.

• Denso started the fiscal year with an overly optimistic view of Toyota production – it is now too bearish 
• Chip shortages and supply disruptions are starting to ease, making it easier for automakers to meet end demand 
• We are bullish on the stock as we believe that Denso’s earnings will beat lowered guidance and valuations are at the bottom of the range 

• Shakey’s Pizza (PIZZA PM) reported a strong SWS of 77% YoY in H1 and 121% YoY in Q2 2022. Excluding Potato Corner (PC), recovery tracked >90% of 2019 levels. 
• The management guided that ex-PC recovery was over 100% in May and July, and numbers will improve with a resurgence in people at work, resulting in an upside to SWS.
• We see margin upside as dine-in numbers are set to increase in H2 and the company beds down its PC acquisition; the stock trades at 16x/10x FY22/FY23e.

• We discuss the potential inclusions and exclusions in the next MSCI Korea Index rebalance announcement (12 August) that are being highlighted by the locals. 
• The potential inclusion candidates in the MSCI Korea Index emphasized by the locals in August 2022 include LG Energy Solution and Kakao Pay; potential exclusion candidate include SK Telecom. 
• The overall assessment of the MSCI Korea Index rebalance in August is rather mixed. There are two potential inclusions (LG Energy Solution and Kakao Pay) and one exclusion (SK Telecom). 

• SOCAR announced its IPO book building results. The IPO price has been determined at 28,000 won (18% lower than the low end of the IPO range).
• Our base case target price for SOCAR is 27,176 won, which is 3% lower than the IPO price of 28,000 won. 
• We remain Negative on this IPO due to lack of upside. There were 348 companies involved in the IPO survey with the final demand ratio of 56 to 1.

• Discounts to NAV of covered holdcos haven’t shown a clear trend during July/beginning of August. Investors have favored Swedish hodlcos, disliked GBL’s results and avoided the Heineken/Heineken Holdings trade.
• Discounts to NAV: Alba, 42.8%; GBL, 34.5%; Heineken Holdings to 21.5%; Industrivärden C, 7.8%; Investor B, 14.3%; Porsche Automobile Holding to 29.4%. Rio Tinto DLC tightened to 16.2%.
• Spreads tend to widen in bear markets but short term recoveries provide opportunities on tightening discounts. If anything, recommended trades are: Industrivärden C vs. listed assets, Porsche, Rio Tinto (DLC).

• SOCAR’s institutional subscription rate was 56.97 to 1. It is highly unusual for an institutional competition rate to be this low among IPOs worth more than ₩1T.
• SOCAR eventually set the price at ₩28,000 and reduced the offering volume from 4.55M to 3.64M, resulting in deal size of ₩100B at an implied market cap of ₩970B.
• Since Lotte Rental’s buying flow may be triggered earlier than expected, we may need to consider a swing trade if the price enters an oversold territory after listing.