Consumer

• Since we are currently at a point of two months toward the KOSPI 200 rebalancing, we should start building up positions on stocks with a higher probability among the candidates.
• Six additions for position buildups: F&F (383220 KS), Meritz Fire (000060 KS), SD Biosensor (137310 KS), Iljin Hysolus (271940 KS), Hanil Cement (300720 KS), & K Car (381970 KS)
• Six deletions for position buildups: Nexen Tire (002350 KS), Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Sk Discovery (006120 KS), Bukwang Pharmaceutical (003000 KS), & Poongsan Corp (103140 KS)

• The Philippines’ largest full-service Pizza chain, Shakey’s Pizza Asia Ventures (PIZZA PM) is currently trading at PHP 7.60, 7.3% below its April 2022 follow-on offer price of PHP 8.20.
• With the ending of COVID restrictions, we expect the company’s financial performance to improve drastically over the next few quarters.
• This should alter the trajectory of Shakey’s to aggressively take back the share price towards the pre-COVID level.  

• It is my opinion that the pull-forward exhibited in this business stands to be a net positive, regardless of how the share price might behave in the interim.
• The last 24 months have brought in 43M new active buyers to the Etsy marketplace, as well as 2.6M new sellers for a grand total of 90.1M buyers (+9.2M YoY) and 5.3M sellers (+900K YoY)
• Etsy managed to surprise investors in Q4, putting up greater than anticipated revenue ($717M/+16%) for the period, as well as record GMS ($4.2B/+17%)

• By many standard measures, Melco Resorts & Entertainment shares appear to be either fully or overvalued even at its pandemic beaten down price of $US6.94.
• A discounted cash flow analysis revealed a negative -US($1.18) intrinsic value. But the calculation is based on assumed path of pandemic too difficult to predict accurately.
• The company had a pre-pandemic  Macau market share of over 16%. It is among the leaders in Manila’s entertainment zone, and expects its Cyprus property to open by Dec. 2022

• Berli Jucker (BJC TB) 4Q2021 results marked a turnaround in both its packaging business in glass and cans plus better performance from Big C as mobility improved during the quarter.
• The outlook for packaging looks positive and the Big C will open more outlets in 2022 plus renovating around 20 hypermarkets plus opening new formats this year.
• Berli Jucker (BJC TB) remains an interesting recovery play for Thailand and Vietnam, with the potential for more retail exposure there in the future. Valuations stack up versus peers.

• Nikon Corp (7731 JP) today announced a Very Large Buyback. This is the third buyback it has announced since spring 2019. The first was short. The next two big.
• The company also announced a new Medium-Term Management Plan for FY2022-2025 today in which they reiterated their existing Shareholder Return Policy of 40+% payout of stable dividends and opportunistic buybacks. 
• It’s a decent div, and the buyback is for 6-7% of shares out, but it could do better. The company is hugely cash- and securities holdings-rich. It should do better.

• Next Thursday, the rebalancing trading of the WISE Secondary Cell Index will occur. The current AUM is ₩0.24T, and the AUM has slightly increased in the last two weeks.
• Five names (2 Longs & 3 Shorts) are screened: Hana Tour Service, Lotte Tour Development, Asiana Airlines, Paradise Co Ltd, & Hanjin KAL Corp.
• All the short targets are available for short-selling. The Long targets have also not seen much volatility recently, so it looks fine to put them all in a Long/Short basket.

• JD dismissed employees in many businesses, such as Retail, International, and Jingxi.
• However, we believe the layoff only covers minor businesses and functions.
• We believe the stock still has a upside of 48%.

• Even though the results weren’t a blowout as we expected, today’s price performance suggests that Seven & I Holdings (3382 JP) has not disappointed the market.
• We think Seven & I could be playing safe by holding back Speedway synergies.
• After a short breather, share price momentum has shifted positive and we expect this to continue alongside upgrades to Speedway synergy estimates.

• The new four-year medium-term strategy that lays out a realistic route to greater profitability and growth.
• The stock has been trading below book value for years
• Buying back 10% of outstanding shares will give investors confidence 

• Dongwon Industries (006040 KS) plans to merge with Dongwon Enterprise, paving the way for the latter company to complete a back door public listing.
• We believe this merger between Dongwon Industries and Dongwon Enterprise will have a positive impact on Dongwon Industries.
• Once the merger is completed, there could be less pressure “to keep the share price of Dongwon Industries intentionally low” in order have more beneficial merger ratio with Dongwon Enteprise. 

• Same-store sales were 126.7% vs. March 2021 (112.8% for February), 70.2% vs. March 2020 (36.9% for February), and 58.9% vs. March 2019 (39.1% for February)
• The number of stores at the end of March was 615 (unchanged MoM). The number of directly owned stores was 384 (unchanged MoM).
• The company plans to open Torikizoku Hibiya Store in Yurakucho, Chiyoda-ku, Tokyo, on April 11.

• Beenos Inc (3328 JP) is a relatively small cross-border e-commerce and internet company from Japan with a consolidated GMV of ¥64.7bn last year.
• The company also runs an incubator platform to create new businesses and invest in start-ups mainly in emerging regions such as India and South-East Asia.
• Down below, we analyse the impact on Beenos’ valuation following GOTO’s impending IPO of which Beenos owns 0.5%.

• Honda and GM announced today that they would further expand their partnership on EV technologies.
• A new EV series will be produced for North America by 2027 and the two companies will collaborate on advanced battery technologies.
• This is an incremental positive for Honda and GM but the array of partnerships Honda is creating points to a lack of decisiveness on its part.

• The 2021 performance of JD Health (6618 HK) beat market expectation. The scale of annual active users, commodity SKU, warehouse, logistics, medical resources, etc. all had breakthroughs.
• The growth rate and gross margin of service revenue were higher than that of product revenue. So, the performance of service sector can better determine JD Health’s future outlook.
• The outlook of online healthcare service is uncertain.Whether successful or not, JD Health still has other businesses to support future development, and is therefore our top pick in this sector.

• Ohsho Food Service (9936, the company) disclosed monthly data for its directly-owned stores for March (on a preliminary basis)
• FY3/22 full-year sales for its directly-owned stores were 77.2bn yen on an all-store basis (104.9% vs. FY3/21), and 74.9bn yen on a same-store basis (103.1% vs. FY3/21)
• In March, the company opened one new store (one directly-owned store) and closed no store

• J-Front Retailing, a Japanese department store operator, will announce full-year results on April 11.
• We expect FY2/23 guidance to be more optimistic as Japan normalises post COVID. 
• Pent up demand for luxury goods to drive recovery of department stores. J-Front is still trading below book value.

• NIO Inc (9866 HK) passes the velocity test and could replace ASM Pacific Technology (522 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the June rebalance.
• Given the low trading volumes and the large assets tracking the Hang Seng Tech Index (HSTECH INDEX), passive trackers will need to buy around 10 days of ADV on NIO. 
• Passive trackers need to sell around 7 days of ADV on ASM Pacific Technology (522 HK). Given implementation is two months away, sell the stock on rallies. 

• We estimate that China accounts for almost 40% of Fast Retailing’s earnings. This growth engine is stalling
• The market has yet to discount these risks, despite warnings from H&M
• The stock is down 5% YTD, but trades at an 80% premium to global peers

• Tesla managed to the hit the low end of recently and substantially reduced market estimates for Q1 deliveries at 310,048.
• That was enough to top record record Q4 results—but not enough to hit ambitious market estimates for the year.
• Revenue quality improved on higher prices and mix, but profitability is less clear until we get sales results for March from China—where Tesla generates most all its profits.

• Hotel operator Shanghai Jin Jiang Capital Company Limited (2006 HK)‘s Composite Doc is out. The H-Class meeting on the 26 April, with expected payment on the 17 May.
• The IFA considers the Offer to be fair and reasonable. 
• This is done and trading tight at a gross/annualised spread of 1.6%/14%. 

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.

• Honghua Group
• Hopson Development
• Tata Motors ADR

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• Placements continued to flow in, at a slower pace than last week, with Malaysia and ANZ chipping in.
• While the HK IPO scene failed to produce anything noteworthy with its two listing, South Korea appears to be leading the charge, once again.

• There are two weeks to the start of the review period for the MSCI May SAIR. There are expected to be many changes to the stocks and their FIFs.
• There will be passive buying in JD.com Inc. (9618 HK) from Hang Seng trackers in June, while KT Corp (030200 KS) is a high probability MSCI inclusion in May.
• There were big inflows to the iShares MSCI Emerging Markets (EEM US) ETF and iShares Core MSCI Emerging Markets ETF (IEMG US) during the week.

• There are 33 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal. 
• A quiet week with no new deals discussed on Smartkarma.
• Key updates took place for: Razer (1337 HK), Uniti Group (UWL AU), Toyo Construction (1890 JP), Irongate (IAP AU), Crown (CWN AU), CIMIC (CIM AU), Jin Jiang Capital (2006 HK) 

• Shanghai Jin Jiang Capital Company Limited (2006 HK)‘s H Shareholders’ class meeting is scheduled for 26 April. The IFA considers the offer to be fair and reasonable. 
• The 10% blocking stake is 2.50% of outstanding shares (10.00% of H Shares). The two H Shareholders with blocking stakes will be supportive. There is no minimum acceptance condition.
• At last close and for a 17 May payment date, the gross and annualised spread to the total offer is 1.6% and 15.7%, respectively.

• Vipshop has underperformed, on a 12-month basis, due to a slowdown in active user growth, which has spilt over into slower revenue growth and contracting earnings.
• Material equity investments, accompanied by strategic cooperation agreements, by Tencent and JD.com in December 2017 catalysed significant user growth over the subsequent 3 years.
• The recent de-rating once again flags Vipshop as an attractive takeover target for its current strategic shareholders and broader eCommerce rivals, including nascent disruptors and live-streaming operators.

• Tabcorp Ltd (TAH AU) has registered the Demerger Booklet in relation to the proposed demerger of The Lottery Corporation.
• The demerger general meeting and Scheme Meeting will be held on the 12 May with a potential demerger date on the 1 June. 
• The independent expert estimates the lottery ops may be worth up to A$11.6bn and wagering A$2.7bn, against Tabcorp’s current market cap of A$11.6bn.

• If approved, Tabcorp Ltd (TAH AU) will spin-off the Lotteries and Keno business (The Lottery Corporation; TLC) from the Wagering & Media and Gaming Services business (new Tabcorp).
• Based on peer valuations, we see an upside of 11% from the last price. The Scheme Meeting is on 12 May and the Second Court Hearing on 20 May.
• TLC should remain in all major indices, while new Tabcorp Ltd (TAH AU) could be deleted from the S&P/ASX 50 Index and the MSCI Australia Index.

• Unsurprisingly, the independent expert (IE) considers Crown Resorts (CWN AU)‘s A$13.10 offer from Blackstone Group (BX US) to be fair and reasonable. We think that IE’s valuation approach is sound.  
• The key condition is approval from shareholders and gaming regulatory authorities. The scheme meeting is scheduled for 29 April. 
• We continue to think that offer is attractive. At the last close price and for the 12 May implementation date, the gross and annualised spread is 2.7% and 27.1%, respectively.

• Located near Hyderabad, Ahlada Engineers (AHLADA IN) manufactures and sells steel doors and windows in India. It also produces school furniture, drinking water systems and allied products across numerous industries.
• The facilities are spread across 3 manufacturing units in addition to one assembling unit and stock yard, with an area admeasuring 27,153 square yards on the outskirts of Hyderabad.
• Ahlada however suffers from some balance sheet and financial issues which are highlighted in our report.

• For the month of March, five new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$3bn.
• The average premium for the new deals announced (or first discussed) in March was ~31%.
• This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.

• V3 Brands Asia (V3 HK) is looking to raise about US$500m in its upcoming Hong Kong IPO. It was previously listed on the SGX between 2000-2016.
• V3 Brands Asia is a lifestyle and wellness firm, it is most known for its flagship massage chairs which are sold under the OSIM brand.
• In this note, we’ll talk about the not so positive aspects of the deal.

• Has the Russia/Ukraine Conflict’s Impact On Tire Retail Distribution and Manufacturing Been Priced In?
• Have The Impact of Higher Raw Materials Costs Already Been Factored Into Margin Expectations?
• Will Gasoline Prices Negatively Impact Miles Driven and Slow Replacement Cycles?

• We reiterate our BUY rating for M with a target price of Bt61.0 based on 25xPE’22E, Asia ex-Japan consumer staple sector.
• We expect M to report net profit of Bt393m in 1Q22 (+343%YoY, -2%QoQ) driven by a positive same-store-sales-growth (SSSG) in three main brands (MK, Yayoi, and Laem Charoen Seafood) 
• We forecast earnings to bounce back to Bt2.2bn in 2022 and continue to grow at 14%CAGR(2023-24) supported by 1) solid recovery in SSSG after resuming dine-in services together with restoring 

• Maintain BUY call with lower TP of MYR1.36 (-7%)
• Earnings and dividends in-line with our expectations
• Adex surged QoQ but home shopping slumped QoQ
• Cautiously optimistic of its future