Consumer

• Seven & I Holdings (3382 JP) should breeze through its rather unchallenging expectations when it releases its first-quarter results next week.
• The company has raised its previous guidance multiple times last year and we expect a similar pattern in the first half next year with 7-Eleven US continuing to exceed expectations.
• Thus, we would buy Seven & I Holdings leading up to earnings expecting a decent upside on rising guidance.

• New Medical Product Rule banned online direct sales of medical products.
• Koolearn’s stock price plunged after surging, as Tencent reduced its shareholdings.
• Alibaba dismissed employees in Freshippo and JD.com downsized its community group purchase.

• Glenn Bruce Cooke has acquired a 5.40% stake in Tassal (TGR AU) at an average price of A$3.58. The shares rose 3.1% to close at a 1-year high of A$3.97.
• Mr Cooke has shown previous interest in Tassal and its key competitor, Huon Aquaculture (HUO AU). Huon was ultimately acquired by JBS SA (JBSS3 BZ) in November 2021.
• Tassal is a better business than Huon due to more stable operations and higher margins. Benchmarking to the Huon transaction multiples implies a floor offer price of A$4.65 per share.  

• China has released a draft rule on 22nd June that would prevent third-party e-commerce platforms from selling drugs directly to consumers online.
• Alibaba Health as well as JD Health’s shares dropped 15% at the end of trade on 22nd June while Ping An Health’s shares lost about 5.7% of its value.
• This is the First of a series of reports where we analyse the impact of the above draft rule on leading digital-healthcare players in China. This report discusses JD Health.

• On June 1, the Nikkei Shimbun carried an article titled “Parent-subsidiary listing, investors cynical about ‘governance barrier'”. I would like to discuss the issues in the article.
• The dissolution of parent-subsidiary listings has accelerated, with approximately 20% of parent-subsidiary listings having been dissolved for 2 years. On the other hand, plans for new subsidiary listings are underway.
• Rakuten and Panasonic are telling the market that they are not very good at generating cash flow. Not coincidentally, the stock prices of these companies are suffering from underperformance.

• GDA recently announced Australian distribution agreements with Magners Irish Cider and more substantially with Molson Coors.
• Neither agreement impedes on GDA’s own manufacturing capacity or brings manufacturing risk.
• The addition of such ‘agency’ volumes fast-tracks scale under fully funded, earnings accretive, established brand deals

• OB Media’s growth is dictating EGG’s growth profile with OB contributing 62% of EBITDA growth in 1H22 and now makes up a third of group EBITDA, despite only 51% ownership.
• Notwithstanding an increase to its fixed cost base, OB Media further expanded EBITDA margin (to 77.3%) with the people-lite, digital business helping to mitigate the impact of wage inflation across the rest of the group.
• Importantly, the more mature business units all continue to perform well with Hotwire and BMF growing revenue 20%+ and 30% respectively

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• Newly built facility driving top line: In response to robust demand for its shrimp products from overseas markets (US – 87.6% and Japan – 12% of revenue in FY21), PMMP has expanded production facilities every 1-2 years, with the 8th plant (TMM4) coming on stream in Oct21, pushing up production capacity to 27,100 tons (+8% YoY).

• 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 and Chinese ADRs.
• ECM – Thai Life Insurance (TLI TB) is set to launch a US$1bn IPO; BeerCo and Sichuan Tianqi Lithium Industries, Inc (002466 CH) are premarketing US$0.8-1.0bn and US$1.0-1.5bn IPOs, respectively.
• Event-Driven developments at Giordano International (709 HK), Link Net (LINK IJ), Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger, Infomedia Ltd (IFM AU), Resapp Health (RAP AU).

• The exposure draft about online drug sales activities on third-party digital healthcare platforms would add uncertainties on JD Health’s business. We analyzed the potential impact and the logic behind.
• Keeping both self-run and third-party business is the optimal option because JD Health cannot afford losing either one. The exact impact will have to wait until policy details are released.
• As main revenue contributor, there are concerns on JD Pharmacy in terms of profitability and policy risks. Before second growth point emerges, expectation on long-term valuation expansion would be discounted.

• Subscription usage continues to rise in Japan and a new survey suggests just under 50% of teens and 20s plan to use a subscription service this year.
• Daimaru-Matsuzakaya’s luxury and designer brand rental business has been so successful that the company had to turn away new members for a while.
• The department store’s owner, J Front Retailing (3086 JP), sees subscriptions as a third pillar to its business in the future.

• The healthy FY22 result of Bosideng International Holdings (3998 HK) showed its ability to solidify leadership position and ride through higher costs with margin expansion. 
• Management expects double-digit profit growth for FY23 as it pursues targeted “2+13” expansion strategy and increase push for online sales. New spokespersons and flagship store will add to promotional impacts.
• Net cash of Rmb7.8bn and strong FCF generation ability can ensure high dividend payout (FY22: 80.2%) to sustain. Premium valuation over local apparel peers is well justified. 

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• A few IPOs are lined up in Thailand and South Korea, in addition a number of deals are gearing up for launch.
• There were no major placements last week. Although there are a few large lockup releases soon.

• Kino Indonesia (KINO IJ) continues to look like a lesser known consumer proxy despite its interesting portfolio of leading brands in beverages, personal care, food, and pharmacy. 
• The company is already seeing a strong rebound in the sales of beverages and personal care products, as mobility resumes in Indonesia. 
• Higher packaging, distribution, and input costs are putting some pressure on margins but this is being offset through selective price increases. The recent pull-back in share price provides an opportunity.

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, net inflow over the past week was ~US$1.3bn, split US$0.4bn for Shanghai and US$0.9bn for Shenzhen.
• The largest inflows were into XPeng (9868 HK) and HKEX (388 HK). The largest outflow was in Meituan (3690 HK) and Koolearn (1797 HK).

• Many indexes (ACWI-US,ACWX-US,etc.) are near support, and we could see a bear market bounce, but until these indexes reverse their downtrends and break above resistance levels, we cannot be bullish.
• On a positive note, we are starting to see signs that inflation is peaking, as commodity prices have pulled back substantially, and the Energy/Materials Sectors are under significant pressure.
• If inflation and commodity prices have indeed peaked, global equities are likely in the early stages of a bottoming process.

• Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion, according to press reports.
• In ThaiBev’s BeerCo IPO: Third Time’s the Charm?, we look at the latest developments and results. 
• The target raise by offering 20% of BeerCo’s issued shares points to a valuation of US$4.0-5.0 billion. Our first-look valuation analysis suggests a valuation range of US$5.0-5.2 billion. 

• Emperador Inc (EMP PM) passes the FTSE Median Liquidity test and the inclusion thresholds for full market cap and investable market cap and could be added in the FTSE GEIS.
• The inclusion should take place at the September SAIR and that would require passive funds to buy over 84m shares. That is over 35 days of ADV.
• A potential secondary listing in Singapore has moved the stock in the past and that could be another trigger for the stock to move higher.

• Sumber Alfaria Trijaya (AMRT IJ) was added to the LQ45 Index in January and the MSCI Indonesia Index in May. The pick-up in liquidity should result in FTSE inclusion.
• If added, passive FTSE trackers will need to buy 631m shares (US$78m; 5 days of ADV) of Sumber Alfaria Trijaya (AMRT IJ) at the close of trading on 16 September.
• Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) trades in line with the average of its peers on EV/EBITDA and forward PE, though it trades expensive as compared to the median.

• Oriental Watch (398 HK) profit alert for >350 mn HKD affirms our conviction on the increasing dividend (74 HKD cents for FY22, implying a 15.7% dividend yield). 
• Lockdowns in China (accounting for 67% of the revenue) cast doubt around how H1 2023 will shape up. 
• With cash > 50% of market capitalization, we remain positive on the company maintaining its high dividend payout for FY23 despite weakness in H1. 

• ACommerce Group (ACOM TB) is looking to raise about US$200m in its upcoming Thailand IPO. 
• ACommerce is an ecommerce enabler providing end-to-end and ala carte ecommerce solutions for brands in Southeast Asia (SEA). 
• In this note, we will discuss aCommerce’s updates since our last note.

• Pola Orbis Holdings (4927 JP) is expanding its Travel Retail presence in the region to capitalise on the surge in demand from the recovery of air travel.
• Inbound demand could also return to Japanese cosmetics through the reopening of Japan’s borders to tourists.
• The sector is yet to break out from the downtrend. Investors willing to get in early could do that with Pola Orbis with limited downside risk.

• LVS is now entirely a balance sheet play in that its cash position vs. run rate assures good liquidity through the lingering covid crisis.
• Maturities of its debt pose no problems for refis until ’24,’25–and even minimal then.
• Recurring sporadic covid outbreaks and Beijing policies impede GGR recovery. We are moving LVS from BUY to HOLD to reflect the value of its sustainability rather than growth.

• In this insight, we take a look at the potential index changes for the FTSE 100 Index and the FTSE 250 Index in the September 2022 Rebalance.
• In addition to the Regular Rebalance changes, Sanne Group PLC (SNN LN) could get deleted during the quarter, leaving room for one intra-quarterly ADD for FTSE 250. 
• There are more M&A events that could close in the next few months and trigger irregular index changes for both FTSE 100 and FTSE 250.

• WH Group has sharply outperformed both global peers and HK/China-listed peers since the last bullish insight pounded the table in mid-March 2022.
• Since then, the Pork/Feed ratio has been climbing in China and flat to down in the US, and pork prices in China are particularly robust recently. 
• WH Group (288 HK) remains cheap as chips. And despite gains, still Cheapest in Yonks relatively speaking. 

• Bangkok Life Assurance (BLA), JMT Network Services (JMT) and Jaymart (JMART) will replace Com7 (COM7), Ratch Group (RATCH) and Sri Trang Gloves (STGT) in the SET50 INDEX.
• Estimated one-way turnover is 2.1% and will result in a one-way trade of THB 1,914m. There is little funding flow on the other index stocks.
• The inclusion of Bangkok Life Assurance (BLA TB) is a minor surprise. The deletion of Com7 PCL (COM7 TB) is a much bigger surprise.

• Thai Beverage (THBEV SP)’s BeerCo is once again pre-marketing an SGX IPO to raise US$0.8-1.0 billion (vs US$2 billion previously), according to press reports. 
• In 1HFY2022, the group revenue returned to growth due to Vietnam. The easing of restrictions in Thailand should boost volumes in 2HFY2022.  
• Creditably despite rising raw material costs, the margins remained steady helped by forward buying contracts. However, the unwinding of the forward contracts will likely lead to margin pressures in FY2023.

For our next Corporate Webinar, we are glad to welcome Golden Agri Resources (GGR SP) Director, Investor Relations, Richard Fung. In the upcoming Webinar, Richard will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 5 July 2022, 17:00 SGT.

• DXN Holdings (2080694D MK) is looking to raise about US$300m in its upcoming Malaysia IPO. The deal will be run by Maybank, CIMB, CLSA and RHB.
• As a global health and wellness direct selling company, DXN’s portfolio consists of health and wellness consumer products such as fortified food and beverages, health and dietary supplements and more. 
• It has 291 stock keeping units (SKUs) of health and wellness consumer products manufactured in-house and distribution footprints in 50 countries as of the Latest Practicable Date (30 Apr 2022). 

• We update our earnings forecast for Torikizoku Holdings (3193, the company) and raise our target price to 2,500 yen. We reiterate our Hold rating.
• On June 10, the company announced 1-3Q FY7/22 sales of 13.260bn yen (-6.9% YoY), OP of -2.583bn yen (-2.588bn yen in 1-3Q FY7/21), and RP of 1.817bn yen (-2.027bn yen in 1- 3Q FY7/21)
• We raise our FY7/22 OP forecast from -3.544bn yen to -2.289bn yen (-4.663bn yen in FY7/21), and RP forecast from -575m yen to 2.104bn yen (-315m yen in FY7/21)

• In its analyst meet, APTY management reiterated its revenue target of USD5bn in FY26, implying a 15% CAGR over FY22-26E vs. a 9% CAGR over FY18-22.
• Management maintained the ROCE (pre-tax) target at 12-15% by FY26E (7% in FY22), led by better asset turnover and margins.
• In the near term, cost pressures due to an increase in prices of crude derivatives and a lag in the pass-through of commodity inflation are likely to impact margins.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.