Consumer

• Early this morning, rumors spread that Hyundai’s honorary chairman Chung Mong-koo was hospitalized and died, causing stock prices to surge, but Hyundai denied this news.
• Control of Hyundai hinges on increasing the stake in Mobis. Chung Eui-sun aims to keep Mobis’s stock low, but Chung Mong-koo’s health complicates timing and strategy.
• Mobis’s trading point depends on Chung Mong-koo’s health. Three scenarios: he’s healthy, critically ill, or deceased. Current rumors’ price impacts are unlikely to subside soon.

• Fancl Corp (4921 JP) recommended Kirin Holdings (2503 JP)’s tender offer of JPY2,690, a 42.7% premium to the undisturbed price. 
• The timing looks opportunistic as Fancl’s shares are down 20% YTD. The offer period is from 17 June to 29 July.
• While the offer is attractive vs peer multiples, it is light vs historical trading ranges. Securing the required acceptance rate could prove challenging as the offer price is light. 

• Kirin Holdings (2503 JP) bought a 33% stake from the founder and several others in August 2019. Five years later, they are coming back for the rest. 
• The price here is ¥2,690/share which is a 42.7% premium from yesterday’s close. Kirin paid 20+% more in 2019. Earnings fell, but they paid 37x NTM. This is 32x. 
• This is lightish… but…  this should get done. Activism would be difficult. There are enough shareholders who should be OK getting out. This should trade tight.

• Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
• Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
• In our previous note, we talked about the company’s historical performance. In this note, we undertake a peer comparison.

• Today, according to public news, Kirin Holdings will launch a tender offer for Fancl Corp (4921 JP) at a likely 30% premium. 
• The beauty industry is historically ripe with M&A deals.  It is not hard to see why, as the global beauty sector trades at a hefty valuation multiple. 
• In this insight, we brainstorm for potential buyers of Shiseido Company (4911 JP) and analyze the viability of such. 

• Dickson Concepts Intl (113 HK) reported earnings growth of 39% YoY, led mostly by an increase in interest income on the 9.6 HKD/share of net cash/investments on the balance sheet. 
• The company’s net current asset value (NCAV) expanded to 8.2 HKD/share (Vs. FY23: 7.6 HKD/share), and with the stock at 5.2 HKD/share, it trades at a 37% discount to NCAV. 
• The dividend was increased to 45 cents ( from FY23:35 cents/share), placing the stock at an attractive dividend yield of 8.6%.

• Revenue increased by 9.2% YoY to JPY5.8bn, driven by economic recovery and increased inbound demand.
• Operating profit decreased by 52.5% YoY to JPY567mn due to higher advertising and promotional expenses.
• Financial business revenue rose 14.9% YoY to JPY2.5bn, with a 29.4% YoY decrease in operating profit to JPY371mn.

• Chow Tai Fook Jewellery (1929 HK) reported a weaker-than-expected FY24 net profit. Despite having HK$2.2bn net cash, the lack of a special dividend is even more disappointing. 
• Surge in unrealised loss on gold loans and a YoY contraction in margin have contributed to the poor 2H24 result. Apr-May operating figures showed a deteriorated operating environment.
• Lacking a special dividend, CTF no longer looks attractive at the current level. Overoptimistic FY25 and FY26 consensus forecasts mean earnings downgrade pressure. 

• Webtoon Entertainment (WBTN US), a global storytelling platform, seeks to raise up to US$500 million through a Nasdaq IPO.
• Webtoon is the leading web-comic player in all its major geographies, including Korea, the US and Japan. Naver Corp (035420 KS) and LY (4689 JP) are the primary shareholders.
• The bull case rests on a large TAM, rising monthly active users, strong constant currency growth supported by monetisation initiatives, a shift to profitability, and cash generation.

• Travel and box office data in the past three-day Dragonboat Holiday showed worrying weakness despite sharp price cuts by hotel and airlines. 
• Removing travellers from Hong Kong, inbound travel was also quite bad; 
• E-Commerce sales backed by trade-in stimulus outperformed regular merchandises, indicating consumer confidence is still low. We believe the weak travel data boded ill for consumption throughout the year.

• Luckin launched lemonade drinks with raging success of 5.08 mn cups sold for the first week, ~10% of store sales. Market cheered to send the stock higher;  
• We view it with mixed feelings. While it is margin accretive and sales enhancing,  is not conducive to improving coffee penetration and cultivating consumers’ habit for drinking coffee;
• We see Luckin as increasingly one of, instead of the, street drink company, because lemonade is actually the top selling SKU of all milk tea vendors in China. 

• Back on the 22nd May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a 20.8% premium to undisturbed.
• Should the Offer complete, co-founder Ricky Wong’s stake, together with concert parties, increases to 51.55% (before exercising options), up from 45.75% currently. Optically, it’s a opportunistic share grab. 
• The Offer Doc is now out, with an EGM to vote on the whitewash waiver on the 9th July. 

• Companies with the ROE over 15% have higher market capitalization, foreign ownership, and Tobin’s Q, and naturally higher ROA, while the opposite tends to be true companies with low ROE.
• Groups with ROE above 15% have generally improved their corporate governance practices, but they still need to address their use of cash in order to further improve return on capital.
• It’s clear that companies with low ROE have the form of board practices but not the substance, and that they don’t have a clear policy for increasing return on capital.

• Revenue increased 10.8% YoY to JPY110.7bn, driven by an 8.0% YoY rise in comparable store sales and 35 new stores.
• Operating profit rose 61.8% YoY to JPY5.9bn, with OPM at 5.3%, GPM at 40.9%, and SG&A ratio down to 35.6%.
• KFC Holdings opened 51 new stores, remodeled 183 stores, and increased delivery service stores to 942, boosting system sales by 10.5% YoY.

• Revenue increased 10.8% YoY to JPY110.7bn, driven by an 8.0% YoY rise in comparable store sales and 35 new stores.
• Operating profit rose 61.8% YoY to JPY5.9bn, with OPM at 5.3%, GPM up 0.4pp to 40.9%, and SG&A ratio down 1.3pp.
• KFC Holdings opened 51 new stores, remodeled 183 stores, and increased delivery service stores to 942, boosting system sales by 10.5%.

• Revenue increased 10.8% YoY to JPY110.7bn, driven by an 8.0% YoY rise in comparable store sales and 35 new stores.
• Operating profit rose 61.8% YoY to JPY5.9bn, with OPM at 5.3%, GPM at 40.9%, and SG&A ratio down to 35.6%.
• KFC Holdings opened 51 new stores, remodeled 183 stores, and increased delivery service stores to 942, boosting system sales by 10.5% YoY.

• Revenue increased 10.8% YoY to JPY110.7bn, driven by an 8.0% YoY rise in comparable store sales and 35 new stores.
• Operating profit rose 61.8% YoY to JPY5.9bn, with OPM at 5.3%, GPM up 0.4pp to 40.9%, and SG&A ratio down 1.3pp.
• System sales grew 10.5% YoY, with customer count down 2.5% YoY and average spend per customer up 10.8% YoY.

• Mao Geping Cosmetics is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
• In this note, we look at the company’s past performance.

• Bally’s Corporation is undervalued despite insiders recognizing its potential
• Standard General made a buyout offer of $15/share, prompting Bally’s to form a special committee
• The author predicts that Standard General will increase their bid to take Bally’s private, highlighting it as a compelling investment opportunity.

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• Cal-Maine Foods (CALM) is a promising long-term investment with potential for around 50% upside
• Stock is currently undervalued due to low historical book multiples and high short interest
• Company has a cost advantage over peers and strong earnings potential, especially in the event of an avian flu outbreak

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

• Sacks Parente Golf (NASDAQ: SPGC) is an innovative, technology driven golf company with a growing portfolio of golf products, including putters, golf shafts, golf grips, and other golf-related accessories.
• The company went public in August 2023 raising $11.6 million in net proceeds.
• The company announced its entry into the golf shaft market in November 2023.

• Highly fragmented distribution market provides growth opportunities and market share gains
• Focus on serving high-end independent restaurants gives competitive advantage
• Commitment to improving efficiencies and achieving higher profit margins positions CHEF for significant upside potential

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

• We are reiterating our Buy rating, projections and $17 price target for Lands’ End after reviewing the June 2024 and June 2023 catalogs.
• We believe, with Lands’ End in the heart of the swim season, the company remains focused on key new items to drive earlier purchases by customer, with new shaping swimwear products, updates to classic items such as the Tugless Tank and Starfish pants, new fabrics (gauze and rayon) and increased emphasis on seasonal winners (linen).
• Further, the expansion into adjacent categories, such as dresses, after-swim looks and cover-ups, further expands the Lands’ End collection and creates a true swim-wear driven vacation lifestyle look.

• This is a quick idea possibly worth a punt from here – a hairball of sorts at this point but asymmetric to the upside.
• One thing that happens in special sits land is that yeah sometimes turd hits the fan – maybe a takeover falls through, a merger breaks etc.there will rampant selling, the stock chart will look like a cliff-off and a bloodbath ensues for a short period of time.
• Different investors operate with different mandates and sometimes for a certain kind, it’s just plain discipline – if you are there for the takeout and the takeout falls through, then the thesis is broken and you exit.

• We are reiterating our Buy rating and $10 price target, leaving our FY25 EPS projection unchanged and raising our FY26 EPS to $0.68 (from $0.65) after Vera Bradley announced lower than Street consensus 1Q results, but reiterated FY25 guidance and provided a compelling overview of the upcoming shifts from the Project Restoration launch in mid-July.
• As we have previously stated, the period before the launch of Project Restoration was going to be lumpy and 1Q results proved our thesis.
• That said, with the company remaining cash-rich, aggressively managing inventories and expenses and with the launch of Project Restoration less than a month away, we believe the investor reaction to 1Q results is, at best, short-sighted and offers a highly compelling entry point for VRA, as the company shifts to a growth mode with a new product assortment, new store look and compelling business model.

• Samsonite is similar to another HK-listed company that I have written extensively about, L’Occitane (973 HK), in that they are both western brands selling globally but somehow listed on HKSE.  
• The company announced a share buyback program this morning.  The company targets to repurchase up to USD200m, which is around 4.3% of the total shares outstanding.
• With the announcement of the share buyback plan, it offers an attractive entry point for the stock, as I like the fundamentals of the company and the valuation is cheap. 

• In response to media speculation, Bapcor Ltd (BAP AU) disclosed an indicative non-binding proposal from Bain Capital at A$5.40 per share, a 23.9% premium to the last close.
• The offer is opportunistically timed to take advantage of the share price collapse precipitating from the profit warning on 2 May. 
• The offer is unattractive. Several substantial shareholders and a high retail base suggest Bain needs to bump. Bain’s offer could also draw other suitors. 

• Fast Retailing is due to report Q3 results on 11 July. We update our views on the outlook for the stock heading into the announcement.
• Uniqlo Japan has already released monthly sales data for the March to May quarter. Performance in May was again strong, slightly surpassing our estimates
• We maintain our full year earnings estimates. The stock has declined by around 6% since Q2 results, but remains fully valued.

• One of the key themes this year that has worked well has been Korean food & beverage stocks that have significantly outperformed KOSPI. 
• Some of the best selling Korean foods (especially overseas) include Samyang Foods’ instant noodles, CJ Seafood’s seaweed products, and Wooyang’s frozen gimbab. 
• We prefer a basket approach to investing in Korean F&B stocks. A basket of top 10 F&B stocks in Korea has outperformed the market YTD and this outperformance could continue.

• Back in February 2022, automotive aftermarket parts provider Bapcor Ltd (BAP AU) was  reportedly subject to multiple buyout proposals. BGH Capital, Quadrant, and Pacific Equity Partners were touted.
• That all came to nought. Shares drifted sideways. Then down. Shares touched a four year low late last month.
• After the incoming CEO had a change of heart, and weaker FY24E guidance, Bain has now tabled a cheeky A$5.40/share indicative Offer. That won’t fly; but value is evidently emerging. 

• New Gonow Recreational Vehicles (NGRV HK) is looking to raise US$100m in its upcoming Hong Kong IPO. The bookrunner on the deal is Huatai International.
• New Gonow Recreational Vehicles (NGRV) is a recreational vehicle (RV) platform with an extensive presence in Australasia that designs, develops, manufactures and sells bespoke towable RVs.
• According to Frost & Sullivan (F&S), the firm held the second-largest market share in Australasia’s RV industry in terms of 2023 sales volume.

• The billion-dollar order that had initially seemed like a game-changer for Wardwizard Innovations turned out to be its downfall as it happens to be a Non Binding MoU. 
• While for an INR 300 crore revenue company billion dollar order was huge, hence stock price rose on the back of rosy picture.
• Promoter used the situation to dump the shares via stake sale as the news of order led to 20% rise in the stock price which eventually raises Corporate Governance Concerns

• SSI grew and expanded, but underwent restructuring after market downturn in 2015
• Share price has not fully reflected improved fundamentals post-restructuring
• Undervalued at P$3.8 per share, with fair value estimate of P$10 per share, offering 160% potential upside for investors

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

• Cuckoo Holdings is known for its high-quality rice cookers popular among Asians, particularly Koreans
• Stock price of the company has increased due to its success, with dividends rising from 800 to 1,100 per share
• South Korea’s “value-up” program may further boost the company’s growth and attract more investors as the importance of rice in Korean cuisine creates a strong market for its products

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

• The U.S. dollar has staged a false breakdown and is now on the cusp of a reversal.
• False breakdown on 10-yr yield at the critical 4.35% level. Simply put, higher yields tend to pressure the equity markets.
• IWM breaking to new RS lows, violating 7-month RS support. Quality related names continue to be leadership within the market, and Technology continues to dominate relative performance.

• Sun Corp (6736 JP) for years has been a play on its investment holding in Cellebrite DI (CLBT US), brought to market in a $2.4bn SPAC deal announced 30Aug2021.  
• The SPAC entity was an entity called TWC Tech Holdings II Corp (TWC = “True Wind Capital”). The next day, Cellebrite DI (CLBT US) was born, trading up to US$11.00+.
• Sun Corp (6736 JP)‘s value realisation path had begun. Today, a True Winds entity announced a Partial Tender Offer – unsolicited, unannounced previously – on Sun Corp, for 19.0%.

• True Wind has launched a hostile partial tender offer for Sun Corp (6736 JP) for a minimum (3.8m) and maximum (4.2m) shares at JPY4,400, 19.2% premium to the undisturbed price.
• The offer was prompted by frustration with the Board’s lack of urgency in closing the disparity between Sun Corp’s market cap and the value of its Cellebrite DI (CLBT US) stake.
• The Board has three options: do nothing (low probability), find a white knight bidder (high probability), or commit to selling/distributing its Cellebrite stake (medium probability).

For our next Corporate Webinar, we are glad to welcome Miniso Group Holding Limited’s Investor Relation Specialist, Ms. Allis-Yueling Chen. 

In the upcoming webinar, Allis will share a short company presentation after which, she will engage in a fireside chat with Smartkarma Insight Provider, Eric Wen. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Thursday, 20 June 2024, 16:00 SGT.

About Miniso Group Holding Limited

Miniso Group Holding Limited is a global value retailer offering a variety of trendy lifestyle products featuring IP design. Since Miniso Group opened its first store in China in 2013, they have successfully incubated two brands, “MINISO” and “TOP TOY”. The flagship brand “MINISO” is a globally recognized retail brand and have established a store network worldwide of 6,630 stores in more than 200 countries. The flagship brand “MINISO” offers a frequently-refreshed assortment of lifestyle products covering diverse consumer needs, and consumers are attracted to their products’ trendiness, creativeness, high quality and affordability.

• Guzman Y Gomez (GYG) now plans to raise US$221m, an increase from its earlier target of US$160m, in its Australian IPO.
• GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
• We have looked at the company’s performance in our past notes. In this note, we talk about valuations.

• While Marui’s credit card business now has in excess of ¥4 trillion in GTVs, its shopping buildings are also doing outperforming the mall sector.
• Sales for all 22 buildings rose 14.5% last year but as much as 24% at some buildings.
• This is the result of new tenants, more services and better marketing based on vast in-house data sources. This data-mining capability will get better and is unique to Marui.

• Tapestry is acquiring Capri, which owns Michael Kors, Versace, and Jimmy Choo
• FTC is scrutinizing the merger due to antitrust concerns in the affordable luxury market
• Capri’s deteriorating fundamentals may lead to a break price of $25 per share, with uncertain success of the acquisition

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

• The “30% female board member goal” appears to be more about matching numbers with results rather than discussing the positive impact of diversity on the board.
• Over the past year, corporate governance improved only modestly for all listed companies, but few that improved their corporate governance raised the percentages of female board members and independent directors.
• Given the strong influence between improvements in governance and return on capital and foreign ownership, it’s difficult for a company to transform itself without the reach of overseas investor engagement.

Key points

• AMA Group is positioned as the dominant player in the Australian vehicle repair industry
• The company offers opportunities for revenue and cost synergies similar to Boyd’s success in North America
• Mimval’s 2022 write-up on AMA reflects optimism for the company’s growth potential and ability to capitalize on opportunities in the market

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

• Meituan reported C1Q24 revenue 6.0%/6.2% higher our estimate/consensus, and adjusted net income 19%/29% higher than our estimate/consensus. The stock fell on lower takeout order and in-store revenue guidance for C2Q24;
• The stock has two uncertainties:(1)Strategic moves by Douyin and Eleme,(2)success of overseas expansion. There are no easy answers to these two questions but we believe the corner has been turned
• We maintain the stock as BUY rating and raise TP to HK$156/share to factor in the improvement in profitability.

• A new tool highlights which TSE companies have disclosed a policy/consideration; sometimes referred to as the “name and shame” list. In practice, more “name” than “shame”. 
• Jardine Cycle & Carriage (JCNC SP) is trading rich to its NAV. And the simple ratio (JCNC/Astra International (ASII IJ)) is the highest level outside the 2008 GFC. 
• This is a rubbish Offer for Asia Cement China (743 HK). Given how shareholders voted at last year’s AGM, expect this Scheme to be voted down. Avoid.

• Fonterra Shareholders Fund’s dividend yield was 14.2% in 2023. Its dividend yield averaged 8.7% in the past three years. 
• Fonterra Co-Operative Group, is a New Zealand based multinational dairy cooperative. Outside investors who are not allowed to hold shares in Fonterra Co-Operative Group can invest in Fonterra Shareholders Fund. 
• In May 2024, Fonterra announced that it plans to sell off its consumer products businesses and concentrate on business to business sales as a dairy ingredients supplier.

• The first quarter fiscal 2025 earnings by Best Buy Co., Inc. demonstrated some mixed results.
• On the positive side, it highlighted that the company had better-than-expected Q1 profitability through strong execution and preparation for future growth.
• The company has been driving improvements in its priorities and its operational metrics.

• The Gap Inc. reported strong first quarter results, exceeding expectations across key metrics, with market share gains and positive comparable sales across all brands.
• The company’s first quarter performance reflected continued focus on its financial and operational priorities.
• Comparable sales for the company grew by 3%, with positive comps for all brands.

• Guess?, Inc.’s Q1 fiscal 2025 showed a strong start to the year, with significant progress on operational, strategic, and financial objectives.
• The company reported results for the first quarter exceeding expectations in revenues, operating earnings, and per share results.
• Sales growth was recorded in each of their segments and gross margins expanded favorably impacting the bottom line.

• BurgerFi International is currently examining a strategic decision involving the possible sale of the company.
• This review comes in the wake of their reported financial outcomes for the first quarter of 2024.
• Analyzing the financial data and strategic initiatives articulated during the earnings discussion can provide insights into the potential advantages and challenges related to such an acquisition.

• In its recent earnings, Burlington Stores reported revenues and earnings growth for the first quarter of 2024.
• Total sales grew by 11% compared to the same quarter in the previous year, driven by new store openings and comparable store sales growth.
• The company opened 14 new stores during the quarter, expanding the total count to 1,021 stores.

• Hormel Foods Corporation, a multinational manufacturer of food and meat products, delivered solid performance in the first half of the year, with consecutive quarters of better-than-expected earnings, a major improvement in operating cash flows, and strength in the food services segment.
• The company has seen a recovery in its international business, achieved stability in overall volumes, and made progress on its strategic initiatives aimed at propelling long-term growth and shareholder returns.
• The corporation, best known for its SPAM, Hormel, and Black Label foods, is on track to meet its three-year improvement targets.

• Kohl’s Corporation announced its first-quarter 2024 earnings, delivering results that fell short of the company’s expectations.
• The company faced a difficult comparison with last year’s profits due to last year’s elevated clearance activity, which generated a significant drag on comparative sales in Q1.
• While clearance is generally a headwind for the business, the level going into 2023 was described as unique and unlikely to be repeated.

• Even with the 9% increase in share repurchases, the high level of cash on hand will likely be further built up, given the increase in cash flow.
• Companies that have increased their valuations over the past year have further increased their valuations by growing their traditionally high valuations and ROE and ROA.
• Cash allocation is a major challenge for all companies. Many companies have a payout ratio of 30%, and they have too much cash on hand relative to sales.

• The latest earnings of Ulta Beauty show that in Q1 2024, the company reported a 3.5% rise in net sales to $2.7 billion, and 1.6% growth in comp sales.
• Also, the diluted earnings per share were $6.47.
• However, amid a rapidly shifting marketplace, the company has adjusted its expectations for the rest of the year.

• Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
• It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
• Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.

• During the upcoming Dragon Boat Festival, both flight and railway traffic seems sluggish, indicating a cooled-down enthusiasm for long-distance trips due to budget constraints.
• Data points to booming short-distance travel with self-driving as the major means, helped by lower price;
• Benefiting from hotel booking and catering, Meituan is the biggest beneficiary of such consumption downgrade.

• Total revenue increased by 25% YoY and all business lines grew strongly.
• In 1Q24, the operating losses from new initiatives decreased by 45% YoY, but new initiatives revenue still grow.
• We conclude that the price target can be double of the market price.

• Water Oasis (1161 HK) reported profits down 30% YoY (ex-one-off profits down 9% YoY only), but commentary cited headwinds in the business due to muted HK economic sentiment.
• Anticipating these headwinds, the company cut its semi-annual dividend by 50% to only 3.5 cents (implying a 7% yield on the current share price) despite a massive cash buildup.
• Net cash at 396 mn HKD is now 58% of the market cap. Given the current economic backdrop, we see a conservative approach to dividend payment in the medium term. 

• Guzman Y Gomez plans to raise around US$160m in its Australian IPO.
• GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
• In this note, we look at the company’s prior performance and future prospects.

• After a strong 68% increase in share price in 2023, Saizeriya (7581 JP) has been trading range bound, and up 8% year-to-date in 2024. 
• Continued weakness in Japan on the profitability front in 1HFY24 offset continued strong performance in China.
• Japan’s operating profit is set to improve in the second half of the current fiscal year (ending August), and China’s strength will continue on the back of accelerating store openings. 

• On 5 June, Affinity Equity Partners (AEP) announced that it is seeking a delisting of Lock&Lock (115390 KS) shares through a comprehensive stock exchange. 
• It has been reported that the second tender offer failed. Only 1.5% of the outstanding shares participated in the second tender offer, falling short of the 9.5% participation required.
• Affinity plans to transfer the shares of Lock&Lock held by an overseas corporation to a domestic corporation (investment-in-kind) and then go through a comprehensive stock exchange procedure.

• With the review period complete, there are 3 stocks that are close to the deletion zone and could be removed from the index at the June rebalance.
• Even if there are no constituent changes, capping changes will lead to one-way turnover of 3.6% and a one-way trade of A$83m.
• There are 6 stocks with over A$5m to trade from passive trackers but the impact on the stocks is not very high.

• Guzman Y Gomez plans to raise around US$160m in its Australian IPO.
• GYG is a quick service restaurant business with more than 200 restaurants globally. It mainly focuses on fresh, made-to-order, Mexican-inspired food.
• In this note, we talk about the not-so-positive aspects of the deal.

• Lululemon was facing some really thorny questions from Mr. Market ever since 4Q’23 earnings. Today’s earnings should help calm some nerves.
• Here are my highlights from tonight’s call. Sales Growth by Region At first glance, one may find confirmation to plenty of concerns for LULU. US sales, which was ~61% of overall sales this quarter, grew by only 2%.
• Growth momentum in international markets, especially in China helped mask the weakness in the US.

• A high-ranking official from the local financial regulatory authority has confirmed to several local media outlets that the tax benefits for the value-up program will be unveiled this month.
• Corporate tax cuts and separate taxation on dividend income will be included. The short-term impact at the time of the announcement will likely be more significant for corporate tax cuts.
• Local market is focused on screening large companies within the KOSPI 200 that have substantial pre-tax profits in anticipation of the corporate tax cut momentum to be announced this month.

• Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
• Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content. 
• In this note, we talk about the positive aspects of the deal.

• A stabilizing property market matters more than other factors such as industry rivalry and shareholder return policies for the performance of leading China e-commerce players in our view.
• China’s worst property market downturn is probably behind us. This will gradually help restore consumer confidence and lift consumer propensity to spend, improving growth outlook for China e-commerce sector.
• We believe China e-commerce players will in general benefit from a stabilizing housing market. Alibaba remains the most attractive play in the space. 

• Companies in the 0% to 8% ROE group have low stock valuations and are in trouble because they are unable to step into value-creating management.
• Companies in this group, which includes many prime market listed companies, have done what is required by Corporate Governance Code, but could not take action to increase their ROE.
• The lack of significant differences in corporate governance practices for group with ROEs above 10% is due to foreign ownership not being significantly differentiated from other groups.

• Although Midea’s performance keeps growing, it is difficult for the home appliance industry to return to rapidly growing incremental market as it was during the robust development of real estate.
• As Midea’s To C business encounters growth bottleneck, To B business has become new performance driver and second growth curve, but several new businesses are facing challenges in 24Q1.
• For mature leading enterprises in home appliance industry, a valuation of 10-20x PE is reasonable, which means market value of RMB370-740 billion, assuming 2024 net profit would reach RMB37 billion.

• CP Axtra (CPAXT TB) is a merger upon a merger combining the Makro wholesale business and the Lotus hypermarket and supermarket businesses, along with a hybrid mall operation. 
• The combined entity continues to realise operational synergies in sourcing and logistics, with a strong B2B element. Omnichannel makes up more than 16% of sales and is growing rapidly.
• CP Axtra (CPAXT TB) provides an alternative retail exposure to its parent CP ALL (CPALL TB) with ongoing restructuring benefits still to be realised. Valuations look attractive relative to growth.  

• We are reiterating our Buy rating, $10 price target and projections for Vera Bradley with the company announcing 1QFY25 (April) results before the open on Wednesday.
• We believe, more than the 1Q results, which we expect to reflect the company’s desire to reduce inventory and start afresh, will be management commentary on their new relaunch of the Vera Bradley brand.
• We expect the “New Day,” which will launch on July 11th, to focus on core styles/categories, a new store look and expanding the appeal of Vera Bradley to a wider range of customers.

• Webtoon Entertainment (WBTN US) is looking to raise up to US$500m in its US IPO.
• Webtoon Entertainment is a global storytelling platform where a community of creators and users discover, create and share new content.
• In this note, we talk about the not-so-positive aspects of the deal.