Consumer

• Viva China (8032 HK) trades at a large discount to its 10.6% holding in Li Ning (2331 HK). 
• Apart from its Li Ning exposure, Viva has a controlling stake in Bossini International Holdings (592 HK), a sports experience segment, and net cash.
• The current NAV discount of ~46% is unlikely to meaningfully narrow near term given management’s reluctance to pay out a large dividend or undertake a corporate restructuring. 

• Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$100m in its upcoming Hong Kong IPO. 
• Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
• While CHJF is already profitable, its long cash conversion cycle has been straining its balance sheet as the company tries to scale up.

• I visited a Clarks store in Putney, London today. I provide details of this store visit. 
• Clarks is well poised to stage a major turnaround in business, capitalizing on improving popularity of its core Wallabee shoes and expansion into other distribution channels such as Deichmann. 
• Clarks hired Jonathan Ram as its new CEO in April 2022. Previously, Ram headed up HanesBrands global activewear since 2018. He also worked 16 years at New Balance.

• 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 was ~US$1.9bn, split US$0.7bn for Shanghai and US$1.2bn for Shenzhen.
• The largest inflows were into CNOOC Ltd (883 HK)and Meituan (3690 HK). The largest outflow was in ICBC (H) (1398 HK).

• We update our earnings forecast for Monogatari Corporation (3097, the company) and fine-tune our target price to 8,900 yen
• Progress toward the company’s full-year guidance was 69% for sales, 41% for OP, and 86% for RP. RP includes subsidy income of 2.656bn yen.
• We lower our FY6/22 OP forecast from 5.012bn yen to 3.023bn yen (+18.3% YoY; OPM 4.1%; company guidance 4.798bn yen), but raise our RP forecast from 5.962bn yen to 6.240bn yen (+46.3% YoY; company guidance 5.500bn yen), assuming an upturn in subsidy income

• Motherson Sumi Wiring India (MSUMI), a JV between Sumitomo Wiring System (SWS) and Motherson Group, is a market leader in the Indian wiring harness industry with a market share of over 40%.
• MSUMI enjoys superior profitability led by improved efficiency and economies of scale, as reflected in the industry leading gross/EBITDA/ EBIT margins
• After the restructuring of Motherson Sumi Systems (MSS), MSUMI transformed into an India-based pure play wiring harness player with a focus on the domestic market

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• We discuss ways of finding alpha with the end of mandatory lock-up periods data from Korea Securities Depository (KSD) which comes out at the end of each month.
• Key companies that are highlighted in this monthly data have been typically underperforming the market much more than the market overall this year.
• Among these stocks, some of the big underperformers this year include Kakao Pay (377300 KS), HYBE (352820 KS), WYSIWYG Studios (299900 KS), and DearU (376300 KS).

• Maruti Suzuki India (MSIL IN) ‘s dealers are optimistic, expecting easing supply, new launches and the Maruti brand promise to drive back some of the lost market share. 
• Kia Motors Corp (000270 KS) is gaining when it comes to fighting with its big brother Hyundai Motor Co (005380 KS). 
• There is a set of customers that now prefers Indian brands giving a good tailwind for Tata Motors Ltd (TTMT IN) & Mahindra & Mahindra (MM IN). 

• Viva China Holdings is a deep value stock with several key catalysts. Viva China Holdings’10.36% stake in Li Ning (2331 HK) alone is worth 152% of its market cap.
• In addition, Viva China Holdings is making solid acquisitions in the global footwear/apparel sector such as Clarks, which is one of the most well known footwear brands in the U.K.
• A major ongoing risk factor is the recent major lockdowns in Shanghai and other cities in China, which is intent on pursing a zero COVID policy.

• When discussing Kakao Pay’s MSCI inclusion, the critical debating point SHOULD BE whether the MSCI will change Alipay’s classification from strategic to non-strategic in the wake of this block deal.
• Suppose the MSCI judges Alipay’s block sales as an investment recovery and anticipates further block sales. In that case, Alipay’s classification may change from strategic to non-strategic.
• The circumstantial probability that the MSCI will make such a decision is relatively high in light of recent examples. In this case, the inclusion will occur at this August QIR.

• The news that PT Surya Citra Media’s digital platform Vidio has raised an additional US$45m from Sinarmas, Grab (GRAB US), and Bali United should be seen as a positive.
• Vidio is Indonesia’s leading OTT platform with 61m subs and 2.5m paying subs forecast to grow to 4m by year-end with Champions League, World Cup, and Original Drama driving demand.
• PT Surya Citra Media looks cheap relative to its holding in Vidio, which is worth 71% of its market cap, and trading at a discount to 5-year average forward PER.

• Raccoon Holdings, Inc. (3031 JP) is currently maintaining the COVID growth momentum while all others in Japanese e-commerce are face a significant drop-off in demand conditions.
• If this outperformance continues, valuation multiples that look somewhat decent today could look cheap beyond any reasonable doubts in a few years.
• In addition, if Raccoon succeeds in bringing down advertising spending to the pre-COVID level, the share price could rise above the previous peak of ¥3,300.

• We had highlighted in our prior note that IPL Media Rights for next 5Y (2023-27) could fetch a value of over INR 40,000cr.
• The bidding concluded recently. Total value of IPL Media Rights came in at INR 48,390cr, well above the INR 40,000cr expectation and closer to our optimistic scenario of INR 50,000cr.
• RPSGV’s IPL team will receive INR 480cr+ per year from its share in media rights vs INR 300-350cr projected earlier. This improves IRR for RPSGV’s investment in IPL team substantially. 

• The Philippine gaming market is recovering fast from covid with the future of hs biggest casino property plagued by legal battles.
• Founder Kazuo Okada dismissed in 2017 by the Universal board over his alleged financial self dealing, is seen behind a May 31st strong arm takeover of the property.
• The Manila government thus far remains neutral but plans for a Spac IPO by Universal and a US based hedge fund is delayed, but is scheduled to debut by September.

• Indian Premiere League cricket auction has brought in $6.6B thus far, up 3x from the 2018-2022 package, though the per game increase is closer to 2.3x.
• Disney was smart to relinquish the digital rights, saving itself $3.6B in cash (~$2/share) rather than spending to drive worthless Hotstar+ subs (~$0.26/share).
• Google may open up YouTube advertising to 3rd party platforms to settle EU antitrust…a potential boon for The Trade Desk.

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.

• Country Garden Holdings Co
• JSW Steel Ltd
• China Datang Corp Renewable Power
• Wynn Macau Ltd

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.

• U/G to BUY from Hold
• Sales projected to hit record high in 2Q22
• Earnings to remain solid despite GPM pressure
• Promising 2H22E outlook

We upgrade SNNP to BUY from Hold after the share price corrected by 18% since 3 May when we deemed it to be fully valued. Sales momentum remains positive underpinned by greater mobility post-Covid and the successful launch of new products. Cost inflation and labour constraints may put pressure on GPM but solid top-line growth should buoy earnings growth. We believe the recent share price dip offers a buying opportunity, with 23% upside to our DCF-TP of THB18.80 (WACC 7.3% and G.3%).

• After hitting the bottom during the COVID crisis, the only direction left for MINISO Group Holdings (MNSO US) to move is up.
• Given the current valuations, Miniso could generate multi-bagger returns during favourable market conditions.
• In addition, Miniso could help investors generate sizable returns in the short-term on the short side with increased short exposure to Chinese E-commerce.

• Alipay’s sale of 5m shares in Kakao Pay (377300 KS) has caused the stock to slide below its IPO price. Foreign investors have sold while retail have bought last week.
• Alipay still holds 34.7% of Kakao Pay (377300 KS) and this will be an overhang on the stock for some time.
• Kakao Pay (377300 KS) will be added to the FTSE All-World Index at the close on Friday. MSCI inclusion will likely be at the May 2023 SAIR.

• Winia Aid (377460 KS)  announced its IPO book building results. The IPO price has been determined at 16,200 won, which is at the high end of the IPO price range.
• There were 1,225 institutions that were involved in the IPO survey and the demand ratio was 955 to 1. The IPO offering amount is 87 billion won.
• Our base case valuation of Winia Aid is 21,724 won per share, which is 34% higher than the IPO price.

• Micromobility Operator Bird Global has gone through a roller coaster ride over the past five years, having a prominent rise followed by a massive collapse recently.
• An influx of competitors, resurgence in the pandemic and seasonality combined with supply chain shortages and record inflation has dented the company’s stock.
• With a likelihood of a prolonged recession on the horizon, can Bird re-focus its priorities to stop the cash burn and turn its business around?

• Tesla announced 3-1 Stock Split in a down market plus a surprising board shakeup as Larry Ellison quietly exits. 
• Is this another red flag with Elon’s troubled funding for his messy Twitter buyout?
• If so, this could trigger a stampede to the exits for already wary investors in Elon’s now comically overpriced hostile buyout of Twitter

• LRT Capital is a fundamental investment hedge fund. We invest only in companies with durable competitive advantages, i.e. “moats.”.
• May’s results for the LRT Economic Moat Strategy were below expectations.
• The effectiveness of our hedging strategy has been limited due to the extremely strong performance of energy and commodity related stocks.
• The wealth of tomorrow will be in the hands of the net buyers of today.

• BUY for cheap valuation and high cash on hand
• Auto production forecast to grow 6.8% in 2022
• Strong recovery in FY22E, more growth in FY23E
• High growth potential

• There are 48 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals this week: Jardine Cycle & Carriage (JCNC SP) & Tunas Andolan’s indirect delisting proposal for Tunas Ridean (TURI IJ) & China Vast Industrial Urban (6166 HK)‘s pre-conditional Offer.
• Key updates took place for: Yancoal Australia (YAL AU), Hwa Hong Corp (HWAH SP), Mapletree North Asia Commercial Trust (MAGIC SP), and Lanzhou Zhuangyuan Pasture (1533 HK).

• The FMCG Business reported Q4FY22 revenues, in line with the recent annualized revenue run-rate of around INR 400cr.
• The relatively new Naturali brand was advertised prominently at the IPL and its products are becoming increasingly visible at department stores.
• A key monitorable for RPSGV’s sports business is the IPL Media Rights Auction that is scheduled to be held on Jun 12.

• Giordano International (709 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 8 June.  
• It is likely that the family of Cheng Yu Tung (the largest shareholder with a 24.4% stake) could either agree to sell into the offer or roll over its shares.
• The median trailing EV/EBITDA multiple of the precedent transactions is 5.1x, implying a privatisation price of at least HK$2.46 per share.

• Hyundai’s IONIQ 5 surpassed Tesla’s Model 3 within a year of its launch. Hyundai’s IONIQ 5 was the best selling EV in Korea in January to May 2022.
• Tesla EV sales in the first five months in Korea slipped to number three from its number one position in the same period last year. 
• Hyundai Motor is expected to introduce IONIQ 6 later this year. However, Elon Musk mentioned that Tesla will not launch any new models until 2023 at the earliest

• The Holdco trade involving Kirin Holdings (2503 JP), which we suggested last year has generated over 33% during the last 12 months against Topix’s 3.8% and Nikkei’s 2.6%.
• We expect additional gains from this Holdco trade mostly alongside improvements in the core-business EBITDA expectations.
• In addition, Kirin is looking outright positive with multiple catalysts assisting Kirin to turn around price performance.

• Into the final straight. Victora and NSW have signed off on Blackstone’s proposed acquisition of Crown Resorts (CWN AU).
• Gaming regulatory approval from Western Australia remains outstanding, but this is done. Crown’s conduct in WA was no better – or worse – than it was in Victoria and NSW.
• Trading super tight with potentially another month or so until payment.

• Haier Smart Home Co Ltd (6690 HK) sees mid-to-high single digit revenue growth for 5M22; and with many cities out of lockdown now, the re-acceleration trend is gathering pace. 
• China market experienced lesser cost pressure than overseas, with its gross margin expanded on a YoY basis. Cost containment measures should help to preserve flat YoY overseas margin.  
• Reliance on property market has reduced, with growth mainly comes from upgrade demand. Its high-end brand Casarte stays as a growth engine with 5M22 revenue recording double-digit increase. 

• Muji’s historically low valuations are no reason to get excited. We think normalisation is still several quarters out
• China growth was the key valuation driver, but Muji faces continued headwinds from sporadic lockdowns and weak foot traffic
• Rising costs are new problem for Muji in the domestic market. The company will remain behind the curve on price hikes, leading to weaker margins

• Same-store sales for company-owned stores were 141.7% vs. May 2021 (123.9% for April), 227.3% vs. May 2020 (743.9% for April), and 110.5% vs. May 2019 (102.7% for April).

• May sales were extremely strong, and the impression is positive.

• The company does not plan to revise prices for Yakiniku King. The company believes that it can control the cost of sales ratio by optimizing the menu mix, adjusting the portion volume per dish, improving the handling of ingredients, and enhancing the side menu

• The 2Q-2H22 outlook looks promising, thanks to solid oil sales volume growth owing to economic recovery from COVID grip and revamping tourism activities. The improving oil marketing margin 
• Recovering MM should drive 2Q22 earnings : We expect the 2Q22 earnings to improve QoQ on the back of better sales volume and marketing margin.
• The oil marketing margin should pick up to Bt1.7/liter in 2Q22(+3% QoQ)and remain at 1.7-to-1.8/Liter range in 2H22.From management guidance, the oil sales volume inched up 5% MoM and YoY

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• Giordano International (709 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook? 
• And just for some (possible) added excitement, David Webb holds 5.1%. 

• Ant Financial Services Group (6688 HK) is declaring a dividend at a time when regulators have forced the company to increase its capital base.
• Moreover, Ant’s financial performance doesn’t support a dividend payment of RMB 11.8bn in the short term.
• We think the sale of 5.0m Kakao Pay (377300 KS) shares today was forced upon Ant through the lack of usual funding sources at Alibaba Group (9988 HK)’s disposal.

• WM Motor Technology Co Ltd (WMT CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO. The deal will be run by Haitong International, CMBI and BOCI.
• WM Motor is a smart EV player in China. As of the latest practicable date, it had a total of four main EV models (with various versions of each model). 
• As per the CIC, it was the first EV automaker in China to have established its own manufacturing facilities from the outset. 

• After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares), representing 2.15% of total outstanding shares.
• The discount rate range is 185,250 won to 189,150 won, which are 3% to 5% discount from the closing price today (195,000 won). 
• We have a Positive view on Lotte Chilsung Beverage and we would take this deal. 

• The Scheme Booklet for Morrison/​Brookfield/CSC’s Offer for Uniti Group Ltd (UWL AU) has now been despatched. The Scheme Meeting will be held on the 15th July. 
• The Independent Expert considers the terms to be fair and reasonable with a fair value range between A$4.65-A$5.20 compared to the Offer price of $5.00/share.
• Trading tight to terms, as it has done since parties entered into the Scheme Implementation Deed. 

• Unsurprisingly, the independent expert (IE) considers the consortium’s offer of A$5.00 per share to be fair and reasonable. We think that IE’s valuation approach is sound.  
• The key condition is approval from Uniti Group Ltd (UWL AU) shareholders and regulatory authorities (FIRB). The scheme meeting is scheduled for 9:30 am on 15 July. 
• We continue to think that offer is attractive. At the last close price and for the 4 August implementation date, the gross and annualised spread is 0.8% and 5.1%, respectively.

• Tuhu Car (2007986D HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO.
• Tuhu is an integrated online and offline platform for automotive services in China.   
• The firm remains loss making with no signs of being profitable in the near/medium term given its aggressive growth strategy.

• Our base case valuation of Kakao Pay is market cap of 7.1 trillion won or 53,767 won per share, which represents an additional 40% downside risk from current levels.
• Our base case valuation is based on 5x EV/Sales multiple and applying this to the consensus estimated sales of 898 billion won in 2023. 
• The fact that the share price ended 15.6% lower (much bigger than block deal discount range of 8.5% to 11.8%) suggests a lower probability of an MSCI Korea index inclusion. 

• Intel warned that conditions outlined in 1Q22 have worsened, key to see what AMD says tomorrow.
• Netflix – Roku rumor doesn’t make much sense, we think its more likely Roku cut off insider selling because it is looking to acquire Starz.
• Netflix churn is rising among longtime customers – going to ad-supported Peacock and Paramount. We think another guide down is coming in 2Q22.

• Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
• The Diamond Hill Long-Short Fund’s returns were just about flat—slightly positive— in Q1.
• After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
• From current levels, equity market returns over the next five years are likely to be below historical averages.