Consumer

• The reason why Sun Corp (6736 JP) has traditionally traded at a large discount to its potential outcome is the possibility of inefficient or delayed value realisation. 
• Materially ALL of the value of the company is in its holding in Cellebrite DI (CLBT US). True Wind Capital, the SPAC sponsor of CLBT, just bought 19% of SunCorp. 
• They bought that for the CLBT, or the value realisation thereof. And now with the slightly surprising Tender Offer result, the chances of a better outcome are now higher.

• Mixed June quarter results at first glance suggest corporate overhaul strategy is working, with clear evidence Taobao/Tmall is stabilizing in terms of market share and profitability.
• Better platform monetization and clear timetable for achieving break-even by non-e-commerce business segments mean double-digit earnings CAGR by FY26 in our view.
• We expect Alibaba’s upswing business cycle and moderating headwind of housing market slump are paving the way for the stock’s re-rating in the next 12-24 months. 

• Profitability of the business surprised on the upside, as the net profit margin of JD.com increased from 3% in 2Q23 to 5% in 2Q24.
• Share buyback accelerated in 2Q24, as the company bought USD2.1bn worth of stock in the quarter, up from USD1.2bn in 1Q24. 
• The stock is trading at 7x 2024 PE, with a yield of >10% through dividend and buyback.

• Ola Electric (OLAELEC IN)  launched its highly anticipated electric motorcycles, offering models from mass market to super premium.
• With entry-level e-bikes priced to compete directly with Hero Motocorp (HMCL IN)’s popular models, Ola could disrupt India’s high-volume, competitive motorcycle market.
• Ola’s ebike volumes could ramp up quickly if its performance meets expectations of the value conscious customer base in the mass-end of the market.

• Alibaba logistics arm CaiNiao’s revenue growth slowed in the June quarter
• Our main takeaway is that Chinese X-border eComm continues to slow
• We believe all of the large X-border eComm platforms may be affected

• Prataap Snacks Ltd (DIAMOND IN)‘s acquisition of Avadh Snacks and recent manufacturing expansions, including new facilities in Kolkata, Jammu, and Rajkot, align with its growth strategy.
• PSL reported an 8.7% revenue increase in Q1 FY25, despite facing raw material cost inflation and rising overheads. The company has streamlined distribution and cost management to sustain margins.
• PSL’s focus on expanding high-margin segments and leveraging cost efficiencies positions it as a resilient and cheapest player in the snack industry.

• Coupang’s recent quarter highlights a strong performance driven by strategic initiatives and operational improvements, alongside a promising outlook tempered by certain challenges that need to be addressed for sustained growth.
• The company’s revenue grew by 30% year-over-year in constant currency, showcasing impressive sales momentum.
• This growth was partly fueled by the acquisition of Farfetch, which played a key role in the company’s multifaceted growth strategy.

• Nike Inc has long been a dominant player in the global sportswear industry, renowned for its innovation and strong brand presence.
• However, recent challenges, including macroeconomic headwinds and market dynamics, have led to a downslide in its stock performance.
• Enter Pershing Square Capital Management, led by billionaire investor Bill Ackman, which recently disclosed a $229 million stake in Nike.

• Ola Electric (OLAELEC IN) is likely to get added at the March 2025 review following the lock-up expiry in November 2024 which increases the fcap way above the fcap threshold.
• Current fcap for February 2025 review is ~$1.2bn following the lock-up expiry in November 2024. Inclusion is based on whether fcap passes the prevailing fcap threshold.
• The lock-up expiry in February 2025, increases the probability of addition in May 2025 review if it fails inclusion in February. 

Dentsu’s H124 figures show sequential quarterly improvements, with the group posting organic growth of 0.2% in Q2. Encouragingly, this is in part ascribed to improved pitch win rates in all four reporting regions, underpinning growth projections through H224 and into FY25, despite the persistent difficult macroeconomic backdrop. The One dentsu initiative is driving collaborative efforts across group capabilities and geographies and we expect this to be at the heart of the new medium-term strategy, to be unveiled in H2. In the meantime, the Business transformation (BX) offering is proving effective in Japan and is now to be rolled out more widely. The shares continue to be valued well below peers and we would expect this discount to narrow with improving operational performance.

• The September KOSPI Size Index rebalancing could bring back the typical price impacts seen over the past decade, unlike the March rebalancing.
• The previous rebalancing had anomalies due to newly listed stocks in LARGE and a stronger downward trend in LARGE-to-MID transitions, disrupting the expected price impact.
• For September’s rebalancing, fewer distortions are expected compared to March. The NPS Mid to Small Cap fund, a key influence, shows no significant changes in benchmark or AUM.

• Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce.
• However, many expansion plans follow, including overseas market, physical stores, and fresh food wholesale.
• We set an upside of 51% and a price target of HK$115 for March 2025.

• Midea Group Co Ltd A (000333 CH) has got approval to list on the HKEX (388 HK) and reports are that the listing could be up to US$3bn.
• That issue size is around half of the maximum that the company can issue. But it would still need cornerstone investors and a nice discount on the H-shares.
• The stock will still get included in some indices even with the scaled down size, and inclusion in Southbound Stock Connect is a given.

• In this insight, we discuss how Warren Buffett’s recent investment in Ulta Beauty is likely to have a positive impact on CJ Corp’s valuation. 
• CJ Olive Young (largest shareholder is CJ Corp) is the dominant health & beauty cosmetics chain in Korea. CJ Olive Young has a similar business model to Ulta Beauty.
• Our NAV analysis suggests an implied market cap of 4.7 trillion won or implied price of 160,977 won per share for CJ Corp, representing a 38% upside from current levels.

• Porsche SE is trading at a 35.3% discount to NAV, vs. 32.4% long-term average, implying a 68% probability that Porsche SE will be liable for c. €6.5 billion legal claims.
• I think this is too harsh. Shares are trading at a Fwd P/E of 2.5x and a dividend yield of 7.8%, which I consider very attractive. 
• Porsche SE presents an attractive opportunity to gain exposure to Volkswagen and Porsche AG. Porsche SE is focusing on deleveraging which should drive a reduction in the discount.

• The Keepers Holdings (KEEPR PM) reported a stellar H1 2024, with revenue up 19% YoY and profits up 23% YoY, led by volume growth of 22% YoY.
• Gross margins were maintained at 28%, and operating margins were 20.6%. The company remained net cash (2.7 bn pesos) despite distributing two years worth of dividends in H1 2024
• Trading at 7.7x PE, a 6% dividend yield, and with the structural tailwinds of premiumization in alcohol, we love the name. 

• Volume handled increased by 20.2% YoY to JPY87.1bn, with operating revenue up 10.3% YoY to JPY18.5bn.
• Gross profit forecasts for Q3 FY09/24 are JPY1.2bn for July, JPY1.0bn for August, and JPY970mn for September.
• Operating profit for Q3 FY09/24 was JPY2.7bn, maintaining the same level as FY09/23 while executing growth investments.

• Murree Brewery is a prominent alcohol producer in Pakistan with a monopoly in the beer market.
• Established in 1860, it is the oldest enterprise in Pakistan and one of the first modern breweries in the region.
• The company derives half of its sales from alcohol products and the other half from non-alcoholic branded food and beverage items.

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.

• Sales increased 6.9% YoY, with Japan segment sales declining and growth in China, Singapore, and Lansinoh segments.
• Operating profit decreased 10.6% YoY, with increases in Singapore and Lansinoh segments but declines in Japan and China segments.
• Net income attributable to owners fell 21.7% YoY due to a suspicious transaction in China, resulting in a JPY392mn loss.

• Revenue increased by JPY4.2bn YoY, with chocoZAP membership revenue offsetting declines in the Lifestyle segment.
• Rizap-related businesses posted revenue of JPY11.9bn, driven by chocoZAP, and MRK Holdings saw increased revenue and profit.
• REXT Co., Ltd. recorded revenue of JPY10.3bn, with declines in the entertainment business but increases in the reuse business.

• Murakami’s entities, City Index Eleventh and City Index Third, reported a 5.05% position in Piolax Inc (5988 JP). The purchases were from 11 June to 6 August over 60 days.
• Murakami’s average buy-in price over the last 60 days was JPY2,286.61 per share, a 0.7% discount to the last close price.
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. The former is likely as Piolax is cash-rich with a P/B less than 1x.

• P N Gadgil Jewellers (1742652D IN) looking to raise up to US$132m in its upcoming India IPO.
• P N Gadgil Jewellers (PNGJ) is an Indian organized jewellery player. Its product offerings include traditional as well as modern and functional jewellery designs, in gold, diamond, silver and platinum.
• In this note, we look at the company’s historical performance.

• Floor & Decor Holdings, Inc. navigated the fiscal second quarter of 2024 with outcomes that reflected the broader economic challenges impacting the retail and real estate sectors.
• In the quarter under review, the company reported a dip in both total sales and comparable store sales which fell slightly short of expectations.
• This mirrored the continuing pressures from taut monetary policies adversely affecting housing market activities and discretionary spending on major projects.

• Midea Group Co Ltd A (000333 CH) one of the world’s largest home appliance producers, aims to raise up to US$3bn in its H-share listing.
• Midea Group is one of the world’s largest home appliance manufacturing companies with a presence in over 200 countries. Its A-shares have been listed since 2013.
• We have covered the company and deal background in our previous notes. In this note, we talk about the updates since then.

Melco Resorts’ (MLCO) Q2/24 results were soft, but in line with expectations. The company’s earnings improved sequentially in Q2, though the pace of its earnings recovery (relative to pre-pandemic levels) and debt reduction have continued to lag peers.

During H1/24, MLCO’s net gross debt was down by just 1% from FYE 2023. Hence, the company’s leverage remained weaker than peers, with Net Debt/LTM Adjusted Property EBITDA of 5.1x (vs. 3.9x for Wynn Macau, 2.5x for Sands China and an estimated 2.1x for MGM China).

Going forward, we expect MLCO to continue generating small positive FCF and deleverage gradually, with the extent of its FCF generation likely tempered by ongoing share repurchases.

• According to the management, the performance of 24H1 should be better than that of 21H1, but Fu Shou Yuan’s performance in 2024 full year may still fall short of expectations.
• In the future, the development strategy of Fu Shou Yuan would rely more on endogenous growth. Without aggressive M&A, long-term revenue growth rate could fall to single digit.
• Special dividends will continue in the future. However, one major risk for Fu Shou Yuan is policy risk. The bottom line is the demand for the funeral industry always exists.

• Full-year FY06/24 revenue increased 8.8% YoY to JPY24.8bn, driven by higher domestic revenue, despite a 1.1% YoY decline in operating profit.
• FY06/25 earnings forecast projects revenue of JPY25.7bn (+3.8% YoY) and operating profit of JPY1.9bn (-10.2% YoY), prioritizing salon expansion.
• The company opened 20 new salons and closed 30, resulting in a net decrease of 10 salons to 691.

• Starbucks, the global coffee giant, has taken a bold step by appointing Brian Niccol, the former CEO of Chipotle, as its new leader.
• This move follows the sudden departure of Laxman Narasimhan, whose tenure saw a significant drop in Starbucks’ share value, raising questions about the company’s future direction.
• Niccol, credited with turning around Chipotle after its foodborne illness crisis, brings a reputation for innovation and effective leadership.

• Revenue increased 20.5% YoY to JPY5.9bn due to demand recovery and business expansion into different industries.
• Operating loss widened to JPY175mn, with a recurring loss of JPY154mn and net loss of JPY186mn in 1H FY12/23.
• Gross profit margin decreased YoY, and continued investment in human resources impacted profitability in the Marketing DX business.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Samvardhana Motherson International Ltd
• SK Hynix
• Vedanta Resources

• The revised/final True Wind Tender Offer for up to 19% of Sun Corp (6736 JP) ends this week. With the “excitement” the last two weeks, the SunCorp/CLBT ratio is higher.
• The minimum threshold is relatively low. The Tender will most likely succeed with very high pro-ration. 
• For those on the edge, I discuss possibilities on the back end. It will be less liquid, but that may not be bad.

• WeRide (WRD US) is looking to raise US$119m in its US IPO.
• WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
• We had looked at the firm’s past performance in our earlier notes. In this note, we discuss our thoughts on valuation.

• WeRide, a pure-play autonomous driving company with operations in 7 countries, may raise up to $120M in upcoming IPO in the United States.
• WeRide is expected to IPO this week. The company’s amended prospectus puts the price range per ADS at $15.50 to $18.50, implying a market cap of ~$4.6B at the midpoint.
• The company has raised ~$1.4B in equity financing to date and was backed by Qiming Venture Partners and the venture capital fund of the Renault Nissan Mitsubishi Alliance, among others.

• Bearish sentiment in Hong Kong declined during the carry trade sell off.
• Low Volatility, High Dividend and Value factors have continue to be profitable strategies in Hong Kong.
• Pop Mart International Group L (9992 HK) , Techtronic Industries (669 HK) and Giant Biogene (2367 HK) all reported solid operating and financial news leading to BUY recommendations.

• Following our recent insight Shortlist of High Conviction Philippines Equity Ideas, two companies featured Ginebra San Miguel (GSMI PM), and DigiPlus Interactive (PLUS PM) reported stellar Q2FY24 earnings. 
• DigiPlus Interactive (PLUS PM) trades at 7x PE FY24, with a 5.8% dividend yield, >40% ROCE, and tremendous scope for growth after its 300%/400% Revenue/PAT growth Q2.
• Ginebra San Miguel (GSMI PM) trades at 9x FY24 PE, a 5% dividend yield, 19% of the market cap in cash, and 35% ROCE with teen growth in CAGR revenue/profits. 

• Strong Q2 performance: Asics delivered impressive profit growth and margin improvement, exceeding expectations with operating profit surging 119% YoY to 25 billion yen.
• Market share gains: Asics continues outpacing Nike across key regions, with strong growth in Japan, Europe, China, and the US, driven by Sportstyle and Performance Running.
• Bullish outlook, limited upside: Recent guidance revision and current FX rates cap near-term gains; stock trades at 19x NTM EV/EBIT with 15% upside to fair value.

• In this insight, we discuss the recent share cancellation at S.M. Entertainment, valuations, and the launch of a new British boy band in August 2024. 
• Dear Alice boy band will start its promotion with the broadcast of “Made in Korea: The K-Pop Experience” on BBC One and BBC iPlayer on 17 August.
• We are cautiously positive on Dear Alice band. Unlike most aspiring boy bands, Dear Alice has a HUGE advantage of launching the band on the BBC through a TV show.

• China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In our earlier notes, we talked about the company’s past performance and undertook a peer comparison. In this note, we will look at valuations.

• GoTo (GOTO IJ)“‘s 2Q2024 reflected an ongoing focus on growth as the company invested in both its On Demand Services and its Fintech segments driven by its product-led initiatives.
• The company’s growth was driven by the mass market, subscription products, and premium offerings such as express deliveries, which helped to boost both frequency and retention on the platform. 
• GoTo will continue to benefit from the service fee from Tokopedia, which can be used to drive its core ODS and Fintech businesses. The stock overhang is a temporary drag.

• TSE growth market, which institutional investors distance themselves from due to its low liquidity, is a market where gamblers who focus on price movements gobble up one IPO after another.
• To convert users from gamblers to investors, companies with long-term growth potential should be listed. Raising the market capitalization criteria for Growth Market could improve the quality of IPOs.
• Meanwhile, in order to improve the quality of the TSE Growth Market, existing listed companies should consider going private through an MBO.

• The epicenter of the Asian ETF selloff last week was Japan, recording an outflow of nearly $100B from equity funds taking the net flows back to breakeven for the YTD.
• Seazen (Formerly Future Land) (1030 HK) and Swire Properties (1972 HK) had positive announcements while New Oriental Education & Techn (9901 HK) and Yum China Holdings (9987 HK) announced earnings.
• China Unicom Hong Kong (762 HK) shares are under pressure as the telco sector goes through a price war in cloud services and investors take profits from high dividend names.

• Post market close on Friday, Hang Seng Indexes will announce the changes for the Hang Seng Index (HSI INDEX) that will be implemented at the close on 6 September.
• With no constituent changes in March and 1 add/1 delete in June, there could be more changes in September with Health Care stocks among the potential inclusions.
• Changes to the Hang Seng Industry Classification System (HSICS) will be implemented from the September rebalance and that will alter industry coverage.

• Monopoly was originally created as a critique of capitalism but became a massively successful business itself.
• Hasbro has grossed over $3 billion in revenue from the app version of Monopoly.
• Hasbro CEO, Chris Cox, will be discussing the development of Monopoly and other games on the podcast.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Delayed this week because of the long (Japanese holiday, which I took for myself) weekend, as were the SOUTHBOUND and NORTHBOUND monitors. 
• SOUTHBOUND inflow strong. Tencent strong inflows. Net buying every day for two weeks. NORTHBOUND outflows large. Record foreign investor outflows from China’s capital markets this year.
• As expected (with AH 20d Premia returns at multi-year highs last week), AH Premia fell slightly, with narrow premia falling more than wide premia. I’d expect more H-vs-A gains.

• BrainBees Solutions (FirstCry) raised around US$500m in its India IPO.
• FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

• WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
• In WeRide (WRD US) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on a volatile revenue profile, high customer concentration risk, widening losses that raise doubts on the path to profitability, elongated cash collection cycles and cash burn.

• We believe revenue will increase by 8% YoY in 1Q25, as most business lines have been growing.
• We believe the operating margin will be stable, as cost cut plans came to an end.
• We set an upside of 94% for March 2025, as we believe the stock is overly impacted.

• Ola Electric’s stock has surged since its Friday listing, despite a lukewarm IPO response. We look at a possible base-to-bullish case valuation range for Ola Electric’s stock price.
• With the e2W market up 96% YoY in July and Ola Electric’s sales soaring 114%, the momentum is strong. Likely catalyst on the horizon adds to investor optimism.
• Currently, on FY2026E EV/Revenue, Ola Electric trades on par with its closest Indian e2W peer.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 14.8bn of A-shares. It was a big net sell week in relatively low gross NORTHBOUND volume.
• HK large caps outperformed Mainland large caps generally. Tech (HSTECH vs Star50 and ChiNext) saw even better HK outperformance.

• We focus on two electronics retailers Electronics Mart India (EMIL IN) & Aditya Vision (AVL IN) in this Narrative & Numbers for FY24. 
• EMIL is a leading player in the consumer electronics industry in India, with a strong presence in South India. 
• AVL is a leading player in the consumer electronics industry in India, with a strong presence in Bihar, Jharkhand, and Uttar Pradesh.

• The plan is to select 20 large-cap companies from around 30 with value-up disclosures by late August, then gradually expand the index’s constituents.
• Investors seeking both dividends and value-up benefits must buy stocks individually, as ETFs lack tax advantages, potentially triggering fund shifts from dividend ETFs to value-up stocks.
• We can target stocks in dividend ETFs not making value-up disclosures, as they may face overhang risk during fund migration to the value-up index.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, the prior week witnessed a number of listings with divergent results.
• Given the market volatility, there was only one large placements in the prior week.

• AGUIL is a sports/casino operator spun out of Televisa, with potential for earnings growth through expansion of casinos and broadcast rights for Club America soccer team
• Current market cap of $320 million and low valuation of 9x current PE make AGUIL an attractive investment opportunity
• Recent purchases of stock by Emilio Azcarraga Jean from Televisa US ADR holders further support long-term upside potential for AGUIL

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.

• RaaS has published a flash comment on 3D spatial data solutions group Pointerra (ASX:3DP) after its announcement that it has been awarded US$0.8m in new contracts by existing US energy utility customer Florida Power & Light (FPL).
• The contracts will see Pointerra3D, the company’s AI-driven analytics platform, used to extract information and insights from 3D LiDAR and 2D imagery data.
• We view the contracts as a positive sign that the contract delays and deferrals experienced by Pointerra in FY24 in its dealings with the US energy utility sector are coming to an end.

• The positive impact of increased dividends must be discounted because seniors, who receive most dividends, are non-working generations and are more vulnerable to the negative impact of rising consumer prices.
• The high level of cash on hand should be used effectively for investments and shareholder returns. Looking at listed companies as a whole, both ROE and DOE are below FY2018.
• Although the too-low dividend payout of Japanese companies have been corrected, the fact that ROE is still low means that few companies are chosen as investment targets by global investors.

• The trade in Toyota Motor (7203 JP)‘s Tender offer Buyback is to understand what YOU can do in your particular position.
• Despite Swire Properties (1972 HK)‘s recent share buyback, Swire Pacific (A) (19 HK) is still preferable on a look-through P/B of 0.34x.
• Kirin bumps the Offer for Fancl (4921 JP). Given market gyration, it may represent enough of a switching opportunity to let those who still object in principle to re-allocate elsewhere. 

• Rs. 1,000 crores allocated for growth, with Rs. 350 crores deployed. 25,000 spindles added by May 2025.
• Shift towards value-added products, including knitting, weaving, and dyed fabrics, with plans to double revenue in 3-5 years.
• Despite expansion and potential opportunities, capacity constraints and global demand shifts temper expectations in the short term.

• On August 7th, Meituan’s on-demand order volume reached a historical high of 98mn on surging orders from street drinks. Meituan has connected to the backend systems of street drink vendors;
• Delivery order is a double-edged sword. It boosts volume at the expense of margin. Further, the ownership of the volume is questionable;
• With Pin-hao-fan, Meituan already atomized the small restaurants. Now Meituan is playing the same trick with street drinks. The result will be more dramatic to the benefit of Meituan.

• Toyota Motor Corporation has released its financial results for the fiscal year ended March 2024, providing a comprehensive overview that reflects both the company’s recent successes and its strategic investments towards future growth.
• In fiscal year 2024, Toyota reported robust financial performance with total vehicle sales reaching 9.443 million units, marking a 7.0% increase from the previous fiscal year.
• This growth was largely propelled by escalated sales outside Japan, counterbalancing the dip in domestic sales due to shipment suspensions from Daihatsu Motor Company and Toyota Industries Corporation.

• Booking Holdings, a prominent player in the global online travel market, reported its second quarter 2024 financial results, highlighting a performance that exceeded expectations in various key metrics including room nights, revenue, and adjusted EBITDA.
• Room nights booked during the quarter grew by 7% year-over-year, achieving a total of 287 million.
• Revenue and adjusted EBITDA both rose by 7% to $5.9 billion and $1.9 billion respectively, while adjusted earnings per share experienced an 11% increase.

• Consumer sectors in China are gaining more focus as the government lays out steps to increase domestic consumption.
• Hong Kong markets performed well relative to region during recent market turmoil.
• China Education Group (839 HK) and China Reinsurance (Group) (1508 HK) experienced breakouts and China Telecom (H) (728 HK) had a breakdown. Anhui Conch Cement (914 HK) is more positive.

• MercadoLibre’s financial performance in the second quarter of 2024 highlighted robust growth and profitability, demonstrating strong execution across its primary business segments: commerce and fintech.
• Notably, Marcos Galperin, the company’s CEO, reiterated MercadoLibre’s commitment to enhancing the financial and operational accessibility for numerous small and medium-sized enterprises across Latin America, a principle that has been foundational since the company’s inception 25 years ago.
• From a financial perspective, the revenue reached $5.1 billion, marking a significant year-over-year growth of over 40%.

• Etsy, during the company’s Second Quarter 2024 Earnings, reported a Gross Merchandise Sales (GMS) of $2.9 billion, reflecting a slight year-over-year decline of 2.1% on a consolidated basis.
• Despite the dip in GMS, revenue saw an uptick of 3%, totaling $648 million.
• Moreover, Etsy maintained a robust adjusted EBITDA margin of approximately 28%.

• Norwegian Cruise Line Holdings recently discussed its financial performance for the second quarter of 2024, and the results have been promising, outperforming the company’s expectations and leading to upward revisions in full-year guidance.
• President and CEO Harry Sommer along with CFO Mark Kempa provided an overview of the quarter’s milestones, emphasizing the company’s strategic balance between return on experience (ROX) and return on investment (ROI).
• The positive outcomes from the quarter were underpinned by robust demand and strong pricing dynamics, leading to record-breaking advanced ticket sales.

• In the second quarter of 2024, Bausch + Lomb demonstrated notable performance across its diverse business segments and geographic regions, sustaining a trajectory of robust growth.
• The company reported a significant year-over-year constant currency revenue growth of 20%, reflecting increases in both product volume and geographic expansion.
• Revenue growth was consistently robust across various segments, with Surgical, Vision Care, and Pharmaceuticals growing by 9%, 11%, and 61%, respectively.

• Ace Hardware Indonesia (ACES IJ) reported an impressive set of 1H2024 results with continuing momentum behind SSSG driven by promotional campaigns but margins remained stable at the same time.
• The company continues to open new format stores and renovate existing ones. It has also introduced new private label brands to drive growth and will introduce 15% new SKUs. 
• The company will be renamed PT Aspirasi Hidup Indonesia to reflect the separation from ACE US but we see the impact as minimal. Valuations remain attractive on 12.6x FY2025E PER.

• We believe Yum China remains the best long-term China catering play. 2Q24 results highlight the resiliency and agility of its business model and management to navigate tough environment.
• While cost optimization drove bottom-line beat, we share management’s view that it is not one-off exercise but will strengthen the company’s operation efficiency moat and market leadership.
• Macro concerns are well known and fully priced in in our view. Otherwise investors won’t have the opportunity to own the name for low double-digit P/E.

• Fila Holdings announced that its subsidiary Magnus Holdings plans to sell a 1.8% stake in Acushnet Holdings in a block deal sale worth about 98 billion won. 
• Our NAV valuation of Fila Holdings suggests an implied value per share of 49,192 won, representing 18.2% upside from current levels. Fila Holdings’ 51.9% stake in Acushnet Holdings.
• The block deal sale of Acushnet Holdings by Magnus Holdings is likely to have a positive impact on Fila Holdings as it could result in higher capital returns to shareholders.

• Uniqlo Co. Ltd.’s strategy of raising prices in the face of rising costs has taken a toll on the Japanese clothing retailer’s bottom line in China due to growing competition and thriftier consumers.
• The fast-fashion chain’s Greater China profit and revenue both fell in local currency terms during the March-May period, dragged down by poor performance on the Chinese mainland and in Hong Kong, according to earnings results released last month by its parent company, Fast Retailing Co. Ltd. The results did not provide specific earnings figures for the period.
• Fast Retailing attributed the poor performance to lackluster consumer appetite, unseasonal weather and an insufficient product lineup to satisfy local customer needs.

• Astra International (ASII IJ) saw a slight decline in its core earnings in 1H2024, which was an admirable performance given the weakness in the auto market and commodities divisions.
• Offsetting the weakness in autos, Astra saw strong performances from its financing businesses for 4W, 2W, heavy equipment, and consumer finance, which booked +8% YoY growth in 1H2024. 
• Astra remains a key proxy for the overall Indonesian economy, with the diversity of its earnings exposure underpinning its resilience. Valuations are attractive, supported by a 9% FY2024E dividend yield. 

• For first time in 30 years, the fund is back, matching the demand of companies that want to reduce cross-holdings immediately and companies that want more time to sell cross-holdings.
• If the voting rights of cross-shareholdings contributed to the fund are retained, corporate governance will remain an issue until the fund’s investment is terminated.
• In reviewing recently filed annual securities reports, we often see cases where cross-held shares in more closely related companies are contributed to retirement benefit trusts instead of being sold.

• Last El Niño was one of the strongest on record, and typically are followed by La Niña, but this transition has yet to occur. 
• Latest ONI Reading and trend shows possibility of La Niña developing in August-October, could coincide with winter. 
• Historically, adverse weather changes and high hurricane incidence are likely to spoil bearish bets against corn and lead to sustained price recovery.

• Sales increased to JPY23.6bn (+3.7% YoY), operating profit reached JPY348mn, recurring profit JPY309mn, and net loss JPY267mn.
• Biofuels segment sales dropped to JPY306mn (-66.0% YoY), with a segment loss of JPY251mn, reflecting the pilot plant’s closure.
• Revised FY12/24 forecast: sales JPY48.0bn (+3.3% YoY), adjusted EBITDA JPY3.8bn (-71.0% YoY), sales forecast lowered by JPY2.0bn.

• Sprouts Farmers Market’s second quarter 2024 results demonstrate both growth and resilience amidst varying market conditions.
• The company reported a significant increase in sales—up 12% year-over-year to $1.9 billion, propelled by a robust 6.7% growth in comparable store sales.
• Key drivers of this growth include increased e-commerce sales, which surged by 30%, and now constitute 14% of total sales, and the company’s strategic expansion through new stores.

• BorgWarner, a leading automotive supplier, presented its 2024 second-quarter earnings results and shared updates on operational strategies and future plans.
• During the earnings call, they discussed financial performance, business outlook, significant product awards, and strategic restructuring.
• For the second quarter of 2024, BorgWarner reported sales of approximately $3.6 billion, which was flat compared to the previous year but outperformed the industry’s modest production decline.

• Ola Electric managed to raise around US$734m in its India IPO.
• Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

• The Tata Motors Ltd (TTMT IN) / Tata Motors DVR (TTMT/A IN) scheme of arrangement has received shareholder approval and regulatory approvals and should be implemented in the short-term.
• There will be small buying from global passive trackers while there will be much bigger buying from NIFTY Index (NIFTY INDEX) and S&P BSE SENSEX Index (SENSEX INDEX) trackers.
• In total, we estimate passive trackers will need to buy 25.2m shares (US$308m; 1.9x ADV) of Tata Motors Ltd (TTMT IN) with buying coming in at different times. 

• WeRide (WRD US), a provider of autonomous driving products and services, seeks to raise between US$200 to US$300 million through a Nasdaq IPO.    
• WeRide is the most commercially successful L4 autonomous driving company globally, measured by commercialization revenue in 2021, 2022 and 2023.
• The bull case rests on a large TAM, strong product capabilities, near-term mass commercialization, articulation of a path to profitability, improving earnings quality and presence of blue-chip investors. 

• ADEA signed several renewals in the second quarter extending out terms with current licensees and showing to investors that there is value from the portfolio of more than 11,500 patents. 
• The deals ADEA signed in the quarter were not the headline grabbing nature, unlike those in prior quarters and those we expect the Company to sign in coming quarters. 
• ADEA generating annual free cash flow of approximately $150 million should become a bigger factor to valuing the equity as the debt balance becomes visually smaller to investors.

• PAR had previously issued its quarterly sales update making the second quarter results more of an update on how the business is shaping out for the remainder of the year. 
• IPAR used the Q2 earnings call to disclose its intention to enter the luxury fragrance market with its own brand in 2025. Owning a brand is not new for IPAR.
• The consumer continuing to purchase fragrances undisturbed should create the opportunity to grow sales in the second half of the year ahead of new launches scheduled for 2025.

• FY03/22 revenue decreased by JPY3.2bn, cost of revenue by JPY1.3bn, and SG&A expenses by JPY1.9bn due to new accounting standards.
• Q1 FY03/25 consolidated revenue grew 10.4% YoY, driven by increased customer count and optimized pricing, despite high raw material prices.
• The company had 308 stores at end-Q1 FY03/25, launched new brands, and expanded internationally with a store in Bangkok.

• Mondelez International delivered a solid performance in the second quarter of 2024, characterized by a fine balance between strategic pricing adjustments and robust underlying consumer demand, particularly in its key chocolate and biscuit segments.
• The financial highlights include a 2.5% growth in organic net revenue and a notable 11.3% adjusted gross profit dollar growth.
• This performance underpins the company’s ability to manage costs effectively and leverage pricing strategies to maintain profitability.

• We are reiterating our Buy rating and $25 price target for AKA and raising our 2024 and 2025 projections after the company registered impressive 2Q2H top line, Adjusted EBITDA and EPS upside, raised 2024 guidance and increased the store opening roster for Princess Polly in 2024 to five, adding new locations in Irvine and Santa Clara.
• a.k.a. Brands continues to leverage newness, fashion excitement and omnichannel expansion for their brands to capture stronger domestic market results.
• We believe, with increased 2024 Princess Polly store openings, a focus on increasing margins in Australia, and new (and deepening) digital marketplace relationships, our projections, even after material raises for 2024 and 2025, remain conservative and we reiterate our Buy rating and $25 price target for AKA.

• Sales increased to JPY40.4bn (+12.3% YoY), with operating profit at JPY4.9bn (+25.6% YoY) and recurring profit at JPY5.0bn (+24.1% YoY).
• In Japan, comparable store sales grew 4.8% YoY, with notable increases in bowling (10.3%), karaoke (10.1%), and SPO-CHA (8.9%).
• In the US, sales were JPY16.8bn (+24.7% YoY), with a segment profit of JPY2.0bn (+18.6% YoY), and amusement sales up 1.3% YoY.

• Examining Starbucks Corporation’s third quarter fiscal year 2024 earnings, a balanced perspective highlights both strengths and areas for improvement.
• The global coffee giant reported a mild revenue increase to $9.1 billion, marking a 1% year-over-year growth and a 6% sequential rise from the second quarter.
• However, global comparable store sales declined by 3%, influenced by a notable 14% decrease in China, despite a relatively steady performance in Japan and modest declines in North America.

• In its last update, Alibaba Group announced that the company was preparing for its primary listing in Hong Kong and the process was expected to complete by the end August.
• The Board meets on 14 August to approve results for the three months ending June. Could there be an announcement on the dual primary listing too?
• Mainland Chinese own between 3.5%-15.5% of companies that converted from Secondary to Dual-Primary in the last few years. Similar buying in Alibaba could take the stock higher from here. 

• Janaghan Jeyakumar, CFA who does the predictions for this index got 10/10 of his high conviction names, 8/10 of his medium conviction, and 50% of low conviction ADDs.
• This year, there are fewer caps but some big ones. Nearly ¥500bn of capping flow to sell. 
• I see just over $6.3bn in buying and selling to be done. A half dozen names with both high ADV impact to buy and decent size.

• Low Volatility and High Dividend yield stocks in Hong Kong outperformed the region during recent global market sell off.
• MGM China Holdings (2282 HK) is outperforming its peers with revenue now exceeding pre-COVID levels.
• Weibo (9898 HK) maintains a high cash flow and dividend yield in China’s tech sector.  Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK) benefits from China’s new large-scale maintenance cycle.

• The China equity markets have continued to trade lower with the CSI 300 Index outperforming other mainland indices as the National Team continues to pump money into ETFs tracking the index.
• We currently estimate selling of around US$1.39bn across 74 stocks listed on the mainland and in Hong Kong. There could be fewer deletions depending on the review date chosen.
• The potential deletes have dropped a lot since the start of the calendar year with big underperformance versus the HSCEI Index, CSI 300 Index and CSI Smallcap 500 Index.

• BrainBees Solutions (0172540D IN) that operates FirstCry, India’s leading Online Mom and Child vertical, has launched a USD500 mn IPO that closes on August 8th.
• The IPO pricing suggest a post-money equity valuation of around USD 2.8 billion and an EV/Revenue multiple in the range of 3.5X-3.7X.
• Brainbees operates in an attractive online vertical noted for its high frequency purchases and long term customer relationship. However it has not built significant competitive advantages versus leading horizontal platforms.

• MSC indices are due for rebalancing in the closing auction on Friday the 30th of August. Constituent changes will be announced after the close next week Monday.
• In this note we flag Mr Price Group Ltd (MRP SJ) & African Rainbow Minerals (ARI SJ) as possible additions to the MSC SA index.
• Since our last discount update on the 22nd of July, Prosus has underperformed Naspers. The discount has widened by 1.7 percentage points to 39.6%.

• Yum China Holdings (9987 HK) reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.
• Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.
• Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China’s revenue and profit growth potential.

• Wheat, Corn and Soy gained on Monday even as US indices and commodities tumbled over recession woes. 
• Weaker dollar supports stronger US exports of agri-commodities. Grains and oilseeds rise as dollar weakens.
• Technical indicators and fundamental outlook remains bearish for agri-commoties. IV remains subdued at multi-month lows. 

• We highlight several red flags  with regard to BrainBees Solutions (0172540D IN) operations, business strategy and governance for investors’ careful consideration.
• At the announced IPO price band of Rs440 – Rs465, Brainbees implied EV/Revenues (FY24) works out to 3.5X – 3.7X – a significant discount to India listed online retail verticals.
• Despite seemingly inexpensive relative valuations, we do not see a compelling reason to invest in the company, specially given the several red flags discussed below.

• GMV increased 21.4% YoY to JPY85.7bn, while revenue decreased 7.7% YoY to JPY20.4bn, and operating profit fell 46.6% YoY to JPY1.4bn.
• In Q3 FY09/24, GMV grew 21.4% YoY, with Global Commerce revenue up 21.3% YoY and Entertainment revenue up 6.8% YoY.
• The company recorded an extraordinary gain of JPY1.0bn from the Value Cycle segment share transfer, impacting FY09/24 results.