Consumer

• Asics reports Q1 results on 11 May – we expect a beat to consensus numbers 
• We are bullish on Asics for the long term market share opportunity in China and margin expansion driven by digital
• The rather amazing tie-up with STEPN for NFTs highlights potential new ways to monetise Asics brand value

• Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&H) (1112 HK) stock south.
• With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&H as operating margins weakened.
• Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.

• Aisin’s 4QFY22 was weak on margins with revenue of ¥1,049bn (+3.9% vs. consensus) and OP of ¥43bn (-33.4% vs. consensus). 
• Guidance had a similar tone with the company projecting ¥4,450bn in revenue (+2.4% vs. consensus) but OP of ¥190bn (-29.6% vs. consensus) which we think is too conservative. 
• While results were disappointing we expect volume growth to be the key catalyst next year and cheap valuations should support strong upside.

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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.

• Merger synergies such as integrated purchasing will result in higher gross margins. A more efficient cost structure and sales synergies will boost the bottom line 
• We expect consumption to normalize in Japan as people get used to “living with covid.”  Higher foot traffic will drive a resumption of high margin cosmetics 
• Inbound travel should be partially normalized this year and we believe the market will quickly price this in once borders reopen. We see 21% upside 

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.

• China Meidong Auto (1268 HK) trades at a 12x/9x PE FY22/23E with a 6.5% dividend yield at a 20 HKD/share price (assuming an 80% payout ratio).
• In buying China Meidong Auto (1268 HK), you get an industry leader in the dealership space with supreme execution (35% ROE/47% CAGR profit growth/best capital allocator).
• The integration of the Starchase Porsche Dealerships provides an upside potential, as the management, with their superior track record, can significantly improve the target’s operations.

• H&H is faced with multiple challenges. Internally, the performance is under pressure, with stagnating revenue, decreasing profits, cash flow shortage and bankruptcy risk.It’s difficult for H&H to turn things around.
• Externally, factors such as the declining birth rate, lower demand, fierce competition in the infant formulas market, rising costs due to inflation, and economic slowdown worsen the Company’s prospects.
• Based on our 2022 forecast (14% or lower adjusted EBITDA margin,1%-2% or flat revenue growth), we do not think H&H is a good investment. We are conservative about its outlook.

• Yamada Denki (9831 JP) reported earnings (Revs -7.6% (slight beat), OP -28.6% (slight miss), NP -2.4% (slight miss)), and slightly upbeat forecasts to Mar-2023 (Revs +4.6%, OP +12.5%, NP +2.9%) 
• They also announced an unchanged dividend at ¥18/share, and a VERY BIG BUYBACK. This is one of the largest, most aggressive, on-market buyback programs I have ever seen.
• Previous buybacks have been duds. Yamada Denki is not playing around this time. This time it will be a buy.

• Campus Activewear Ltd (1535013D IN) India IPO raised around US$184m. The IPO was a 100% secondary selldown.
• The overall subscription rate for Campus had led the likes of Zomato, PAYTM and PB Fintech, and was most similar to that of Polycab India.
• Campus’ growth outlook and vertically integrated model should warrant it to trade at a premium to Metro Brands, while at a discount to Relaxo, given the latter’s more diversified offering. 

• FY 2021 was a difficult period for Health And Happiness (H&H) (1112 HK) with the lower than usual sales growth and a big one-off expenses. 
• It is true that the D/E ratio has gone up to 161% but this is not the first time it happened. 
• FCF/Sales remain at low double-digit and cash/TA is also at low double-digit so it is far from going bust.

• Doordash’s multiple has come in from 14x to 4x, it is no longer a good standalone short, but its valuation discrepancy vs. Uber means it is a good paired short.
• Solid quarter overall, but commentary about pushing on investments remains openended, and with little quantification of unit economics, Dash remains uninvestable to us.
• We still prefer Uber to Dash on valuation and long term profitability.

• Tis diverse maker of land based gaming machines and publisher of social games platforms has sustained strong growth and built value at the same time over the years.
• The company’s core strategy involves a strong commitment to M&A that will continue to bring accretive EBITDA to its long range performance.
• A strong balance sheet suggests plenty of financial strength to fulfill its M&A goals.

• NFLX’s share price has since fallen by -68% YTD, resulting in their current valuation of 17x trailing PE. This was likely due to three recent changes from the status quo: 1) negative 1Q22 subscriber growth, 2) password sharing crackdown, and 3) their entry into an ad-supported business model.

• NFLX’s reporting of their Amortization of content assets reflects a true & fair view of their consumption patterns; and their outsized Commitments & Contingencies are all above board. No hanky panky going on here.

• We’ve actually seen this story before – Investors seem to have forgotten that NFLX actually experienced similar concerns during 2015, 2018 and 2019 – when their share price experienced drawdowns of -30%, -40% and -30% respectively.

• All-store sales of 6.649bn yen (107.7% vs. April 2021) were the record high for April. In-store dining sales were 118.4% vs. April 2021, and delivery sales were 111.8% vs. April 2021.
• In April, the company opened two new stores (two directly-owned stores) and closed one store (one franchised store)
• The company announced that it would raise the retail price of approximately 20% of all items on its grand menu by 20 to 30 yen excluding tax, effective May 14

• We upgrade to BUY rating from SELL rating and raise TP by +75% to Bt4.2 derived from DCF valuation (WACC=7% & Terminal growth= 2%) implying 10% discount to 23.1xPE’23. 
• We expect ERW to post net loss of Bt296m  against loss of Bt492m in 1Q21 and Bt246 in 4Q21 despite strong  revenue growth.
• Strong revenue growth is underpinned by the growth in domestic and international tourism due to the introduction of Test and go scheme and ‘Rao Tiew Duay Kan phase-4’ in 1Q22

• A Ground Rule change to the index universe will result in the deletion of PetroChina (601857 CH) and Gree Electric Appliances (000651 CH) from the FTSE China A50 Index (XIN9I).
• Potential inclusions at the June rebalance are Poly Real Estate Group Co., Ltd (600048 CH) and Anhui Conch Cement (600585 CH). China Citic Bank Corp (601998 CH) is close.
• Assuming three changes are implemented, one-way turnover at the rebalance is estimated at 3.05% and will result in a one-way trade of CNY 1,484m.

• CP Vietnam (CPV), an 82%-held unlisted subsidiary of CP FOODS (CPF TB) (CPF), has applied for a listing on the Ho Chi Minh Stock Exchange
• CPV, an integrated agro-industrial and food business play in Vietnam, generated Bt111.1bn of sales in FY21, accounting for 21.7% of CPF’s revenue.
• CPV forms part of Cp Pokphand (43 HK) which was privatised in January this year. 

• Although consensus looks a bit challenging, there could be a decent OP beat yet again in the third quarter.
• Meanwhile Pan Pacific International Holdings (7532 JP)’s valuation is still cheap and has decent potential for multiple expansion.
• Thus, there could be more upside to PPIH if the company dismisses whatever the remaining concerns over profitability through a reasonably strong third-quarter performance.

• We anticipate channel ONE average all day rating to climb back to top-5 tier channel by 2H22after fell down to no.7 in 1Q22.A recovery in rating will instantly benefit group 
• We expect the company to report 1Q22 net profit at Bt219m (+13%YoY +7%QoQ), the highest level in the past three quarter.
• NEE still hold strong position in the digital TV industry with high potential growth of contents distribution via online platforms, other businesses that started to contribute great portion of profit

• We reiterate our BUY rating for CRC with a target price of Bt43.0, based on DCF (WACC of 8.2% and TG of 2%), implying 35xPE’23E, close to Thai commerce sector.
• We expect CRC to report 1Q22 net profit at Bt1.2bn (+208%YoY, -48%QoQ).
• YoY growth will be supported by a recovery in sales from fashion business both Thailand and Italy, a solid demand recovery from tourism related parties, and government stimulus 

• Maintain BUY call with lower TP of MYR3.30 (-2%)
• Cut FY22E EPS but FY23E/FY24E EPS little changed
• RWG VIP market intact post borders reopening
• RWG mass market to get a boost from Singaporeans

• This model seeks companies facing dangerously high leverage coupled with negative or declining cash flows.  It considers interest expense, capex and short term maturities for additional input. 
• The companies may not be viable given cash flows and capital structures.  These shorts tend to have  higher betas  and can have strong down moves as the crisis is recognized. 
• This week we flag: Carvana, Life Time Group, Bed Bath & Beyond, Surgery Partners

• The share price of Yamaha Motors has sunk to a low of 1x book on concerns that the marine business has peaked 
• Recent results and commentary from Brunswick suggest that the market remains as buoyant as ever 
• We would be buying the stock ahead of earnings, expecting a similarly bullish outlook from Yamaha 

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• BRIT’s top line improved by 15.5% YoY in Q4FY22 but remained flattish QoQ. The company reported revenues of Rs 3,508 Cr, up 15.5% YoY, driven by mid-single digit volume growth of 4% on account of share gains from unorganized players
• Gross Margin (GPM) of 37.3% in Q4FY22 was lower than 136bps YoY owing to a sharp QoQ and YoY rise in prices of RMs like palm oil and crude that impacted prices of packing material and transport costs
• Retain HOLD with revised TP of Rs 3,650 (earlier Rs 3,700), valuing BRIT at 43x PE its FY24E EPS.

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• Alibaba Group (9988 HK)’s fourth-quarter results will be out soon and we predict another disappointing quarter with mid-single-digit revenue growth.
• The company’s FY23 revenue guidance could be significantly weaker than the current consensus estimate as rumoured layoffs and budget cuts are likely to affect Alibaba Group (BABA US)’s growth.
• With the share price near the upper end of the trend channel leading up to 4QFY22 earnings, we think it’s a good time to add to existing short positions.

• PT Nippon Indosari Corpindo (ROTI IJ) released an impressive set of 1Q2022 results with higher wheat prices being offset by price rises plus greater operational efficiencies.
• Modern trade saw an especially strong recovery in 1Q2022 but general trade also saw good growth and continues to hit record highs.
• PT Nippon Indosari Corpindo (ROTI IJ) management remains optimistic on the outlook for 2022, with guidance for +15% growth in sales together with improving margins. 

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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.

• Gajah Tunggal
• Times China

• The review period for the June rebalance of the KOSDAQ 150 Index ended on Friday. We see 14 potential changes to the index – most are high probability. 
• The impact of passive trading is higher on the deletions than on the additions. Short interest on the potential adds is zero/negligible and a lot larger on the potential deletions.
• Short interest on a couple of potential deletion exceeds the estimated passive selling, while there are others where short interest is three-quarters of the estimated passive selling.

• Carsome (CARSOME1 SP), Malaysia’s used-car eCommerce/technology unicorn, has reportedly submitted a confidential IPO filing for a dual listing on Nasdaq and Singapore Exchange.
• Carsome has a great ESG story to tell, but needs to be less humble about telling it because pre-IPO ESG messaging can impact IPO valuations, especially for transportation-related deals.
• The centerpiece of Carsome’s ESG story should be the important (but underappreciated) role of used car markets in decarbonising road transportation, a leading source of carbon emissions.

• China Education Group (839 HK) demonstrates resilience amid market concerns on policy uncertainties by posting a 40.5% growth in 1H22 reported net profit and 20.1% growth in adjusted net profit. 
• Higher education segment saw 44% profit growth and strengths will sustain into 2H22. Weaker secondary vocational and global education segments will witness a sharp recovery, based on latest application statistics.
• CEG has secured increase in tuition and quota in the coming school year, and this will boost FY23 outlook. It opts for an Rmb500m buyback, instead of paying interim dividend.

• PPI has begun roll out of new, specialty food stores designed to slot into a variety of shopping malls. 
• On the surface, these stores look like mini-Don Quijote stores, emphasising low prices and a dazzling density of product, but focused on sweets, liquor, cosmetics, or a combination.
• Expansion will help reach new customers, reduce the expense of opening new stores, and help with building scale for private brands.