Consumer

• NIO Inc (9866 HK) is expected to list on the HKEX (388 HK) tomorrow. Nearly 820m Class A shares are now held on the Hong Kong Share Register.
• We do not expect NIO Inc (9866 HK) to get Fast Entry to the HSCEI INDEX and HSTECH INDEX, though inclusion in the HSTECH could take place in June.
• NIO Inc (9866 HK) is not likely to get Fast Entry to the HSCI. The stock is not eligible for Southbound Stock Connect as a Secondary Listing.

• Great Wall Motor (2333 HK) could replace Hansoh Pharmaceutical (3692 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the June rebalance. The review period ends 31 March.
• Bilibili (9626 HK) is a close add while Sunac China Holdings (1918 HK) is a close delete. Stock prices moves over the next 3 weeks will decide on the changes.
• Passive HSCEI Index trackers will need to buy 1.74 days of ADV on Great Wall Motor (2333 HK) and sell over 3 days of ADV on Hansoh Pharmaceutical (3692 HK).

• As for additions, only Kakao Pay and Hyundai Heavy pass the screening. Both now satisfy the minimum listing period requirement and comfortably beat both full and float-adjusted market cap hurdles.
• Lotte Shopping and Meritz Financial Group are filtered among the deletion candidates. Both fail (or closely) to meet the lower buffer of the float-adjusted market cap, estimated at ₩0.91T.
• Hyundai Heavy’ passive impact is expected to be relatively greater than that of Kakao Pay. Lotte Shopping’s impact is estimated to be significantly greater than that of Meritz Financial Group.

• Japan Tobacco (2914 JP)’s share price fell 14% from the bottom end of the upward trend channel and underperformed Topix by 6% over the last 15 days.
• Even if Russia yields zero dollars, we think the impact on JT’s valuation could be around 20%.
• With demand for cigarettes expected to go up during these war times, we think the market reaction of this scale is unwarranted.

• Fabindia is a consumer lifestyle platform with a 62-year legacy focused on authentic, sustainable and Indian traditional lifestyle products. It is looking to raise around US$500m in its India IPO.
• Fabindia offers a diverse portfolio of lifestyle products to its customers across Apparel and Accessories, Home and Lifestyle, Personal Care and Organic Food categories. 
• In this note, we will talk about the positive aspects of the deal.

• February SSS 102.9% vs. 2021, 88.2% vs. 2019 (pre-pandemic)

• Monogatari Corporation (3097, the company) disclosed monthly data for February (on a preliminary basis)

• Same-store sales for the Yakiniku division were 103.6% vs. February 2021 (129.9% for January), 69.2% vs. February 2020, and 95.2% vs. February 2019

• OP successfully on track with company target despite large-scale promotions

• Segment earnings: Japan, US, and Taiwan entering full-scale recovery phase

• Large-scale collaboration with Detective Conan in March and April

• Upgrade to BUY on hotel and restaurant rebounds
• Prominent hotel recovery in Europe with risks
• Positive same-store sales, with no more lockdowns
• Key risks are Covid and rising food costs

• Fabindia is a consumer lifestyle platform with a 62-year legacy focused on authentic, sustainable and Indian traditional lifestyle products. It is looking to raise around US$500m in its India IPO.
• Fabindia offers a diverse portfolio of lifestyle products to its customers across Apparel and Accessories, Home and Lifestyle, Personal Care and Organic Food categories. 
• In this note, we talk about the not so positive aspects of the deal.

• U/G to BUY on expected aggressive expansion
• SSSG+12%, restaurant sales only 6% below FY19
• RevPar to double YoY in FY22E
• Key risks are Ukraine conflict and rising food costs

• Following the TSE restructure on 4 April, FTSE will include stocks that trade on the Prime Market and Standard Market as part of the eligible universe for index inclusion.
• We see 4 stocks meeting the requirements for inclusion in the FTSE All-World Index, and another 13 stocks meeting the requirements for inclusion in the FTSE All-Cap Index.
• There are stocks that have over 4 days of ADV to buy from passive trackers. Given the inclusions will take place in March 2023, its wait and watch for now.

• Nissin Foods (1475 HK)  is an HK and China play on the instant noodle that is a highly preferred necessity during the lockdown.
• Wheat is a major raw material for noodles and the Russian invasion of Ukraine has driven the wheat price higher. 
• So far, Nissin Food Co’s share price has held up and outperformed Hang Seng but Indofood CBP Sukses (ICBP IJ) could provide a reference. Short.

• Given significant presence in China, Shangri-La Asia (69 HK) is geared towards China’s more accommodative COVID policy. The good thing is that the share price has not yet reflected this. 
• Over the next 12-18 months, SLA will first benefit from tourism recovery outside of China, and then followed by powerful rebound in China’s inbound travelers, particularly the high-end business visitors.
• The resurgence in long-absented business visitors should bring in higher room yield and F&B revenue. It has minimal refinancing and liquidity risks and these make its near-trough 0/48x P/B unjustified. 

• February SSS: 99.1% vs. 2021, 95.8% vs. 2019 (pre-pandemic)

• Revolving sushi continues to enjoy competitive advantage even in a difficult environment

• Continuing store openings in Japan, the U.S., and Taiwan

• Varun will start contract manufacturing for Pepsi’s snack brand Kurkure Puffcorn and we believe it is a step in right direction.
• Depending on the Varun’s progress in Kurkure Puffcorn business, we expect Pepsi to offer more products and regions to Varun.
• As of now Varun will set up a plant in Uttar Pradesh for Rs200-250mn and will produce Kurkure Puffcorn.

• There are currently 43 – mostly firm – transactions currently being discussed and analysed on Smartkarma.
• Two new deals this week: Far Eastone Telecomm (4904 TT) merging with Asia Pacific Telecom (3682 TT); Zip Co Ltd (Z1P AU) merging with Sezzle Inc (SZL AU).
• Key updates took place for: Singapore Press Holdings (SPH SP), Virtus Health (VRT AU), Crown Resorts (CWN AU), Total Access Communication (DTAC TB) / True Corp (TRUE TB) 

• NIO announced that it would look to list in the HK by way of introduction with trading set to begin on 10th March 2022.
• Unlike a secondary or a dual primary listing, there will be no new capital raised and there will be no secondary shares sold either.
• In this note we take a quick look at the deal dynamics.

• Edvantage Group (382 HK), a play on higher education and vocation in China, now trades at 4.9x FY22e/3.8x FY23e. Concerns over the regulatory overhang are overdone, although they do exist.
• With a 30% payout ratio, the stock now trades at dividend yields of 6.1% FY22e/7.9% FY23e, assuming an EPS CAGR of 30% from FY21-23e. 
• The company continues to execute positively in its release in Q1 FY22 with a 62% increase in gross profits YoY, and it has low gearing at 21.7%  net debt/equity. 

• With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.
• Coupang (CPNG US)’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.
• With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.

• Farm Fresh Berhad (FF MY) is a leading vertically integrated dairy player in Malaysia. It has launched an IPO to raise $239 million.
• In Farm Fresh IPO Initiation: Bet the Farm, we stated that the IPO is worth a closer look on a fundamental basis. The offer period is from 28 February-10 March.  
• 30 cornerstone investors will take up c.80% of the institutional offering tranche. Our valuation analysis suggests that the IPO price is attractive. 

• RPSG Ventures reported strong Q3FY22 earnings, led by the BPO business where revenues grew 5% QoQ in INR terms and EBIT grew ~20% QoQ.
• The FMCG business however saw tepid performance with revenues declining to INR 95cr vs INR 100cr QoQ, due to temporary headwinds, however, the long-term prospects remain promising. 
• The sports business is in nascent stage currently but the newly acquired IPL Lucknow franchise holds good promise.

• Monthly data for February: Positive impression

• Ohsho Food Service (9936, the company) disclosed monthly data for its directly-owned stores for February (on a preliminary basis)

• The company maintained solid sales despite Omicron impact, which gives us a positive impression.

• Analyst meeting came out with a positive tone. we expect 2022-24E earnings to continue to grow at 19%CAGR supported by new products launch and market expansion in SEA, especially 
• Both product and market expansion will be key growth drivers in 2022.
• Cut 2022-24E forecast  to reflect the sluggish economy.  Announce annual DPS of Bt0.50 (XD on 5 May).

• Varun will start contract manufacturing for Pepsi’s snack brand Kurkure Puffcorn and we believe it is a step in right direction.
• Depending on the Varun’s progress in Kurkure Puffcorn business, we expect Pepsi to offer more products and regions to Varun.
• As of now Varun will set up a plant in Uttar Pradesh for Rs200-250mn and will produce Kurkure Puffcorn.

• The March rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
• The largest inflows will be on Alibaba Group (9988 HK), JD.com Inc. (9618 HK), Meituan (3690 HK), Nongfu Spring (9633 HK), Li Auto (2015 HK) and Lenovo (992 HK). 
• The largest outflows will be on HSBC Holdings (5 HK), Kuaishou Technology (1024 HK), China Construction Bank H (939 HK) and Tongcheng-Elong Holdings Ltd (780 HK).

• Big valuation and multiples despite on delivering its first care in 4Q21 (no revenues and burning free cash flow)
• Lofty delivery goals provided for 2022 and 2023….already disappointing investors
• Optimistic market share and ASP assumptions have been made by management

• This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  
• They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.
• These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.

• We believe revenue will grow by 23% YoY in 4Q21 and by 18% in 2022.
• We believe JD is the most promising direct-sales e-commerce company in China.
• However, short video apps have been taking advertising market share from e-commerce apps.

• The deal is fairly valued (already at acquisition premium, the stock has run up 2x in the last 6 months).
• Any valuation upside from this deal will be based on Crompton’s success on execution (growth with margin improvement).
• Crompton has announced the acquisition of Butterfly Gandhimathi Appliances (Butterfly) in order to extend its kitchen product line.

• Easy Trip Planners or EaseMyTrip.com (EMT) is the fastest growing and only profitable company in the online travel portal in India
• The company offers a comprehensive range of travel-related products and services
• Airline tickets accounted for 94.0% of revenues (pre-Covid levels) while hotels and other services contributed 5.4% and 0.6% of revenues, respectively

• Acquisition of Butterfly Gandhimathi Appliances Ltd.

SJM Holdings’ FY 2021 results remained weak, in a continuation from the soft H1 numbers. The company continued to report sizeable negative EBITDA in contrast to peers (which are all likely to report small positive EBITDA for the year). Moreover, operating cash burn has persisted in the two months YTD.

Liquidity is weak, given SJM’s low cash balance and lack of RCF availability. Moreover, the company would need to refinance its loans due February 2023. SJM’s delay in obtaining new long-term facilities is disappointing in our view, and reflects negatively on management’s execution. Still, we believe the company would not face issues seeking extensions or an eventual refinancing of its loan facilities, especially since the loans are secured against SJM’s assets.

• TVS Motor Company Ltd. (TVSL) is the 3rd largest two-wheeler company in India with an annual sale of more than 30 Lc units
• It manufactures the largest range of 2W including mopeds, scooters, commuter motorcycles, and racing-inspired bikes
• We recommend a BUY on the stock with a target price of Rs 720/share, implying an upside of 14% from the CMP.

• NIO Inc (NIO US) has applied to list in Hong Kong by way of Introduction. No new shares will be issued or sold in connection with the Secondary Listing.
• NIO Inc (9866 HK) will not get Fast Entry to the HSCEI INDEX and is unlikely to get Fast Entry to the Hang Seng Tech Index (HSTECH INDEX) either.
• NIO Inc (9866 HK) should be included in the HSTECH INDEX in June, while inclusion in the HSCEI INDEX in September will require the stock to trade higher.

• This is an agreement between one fish merchant Chuo Gyorui (8030 JP) and another fish merchant Nissui (1332 JP) to take over a third fish merchant, Hohsui Corp (1352 JP). 
• And the takeover PER and forecast PCFR are low. But there really is nothing fishy here. Hohsui has a lot of debt.
• This is a done deal and there is nothing anyone can do about it.

• Morinaga & Co is selling down a near-10% stake in Morinaga Milk in a ToSTNeT-3 buyback on 1 March. 
• Morinaga Milk will see an EPS and ROE uplift. Eventually, there are a lot more cross-holdings to buy back.
• Near-, medium-, and longer-term there are different flow patterns worth understanding if you have a position or are looking for one. If you want to sell lots, you can tomorrow.

• The Cuscaden Scheme Composite Document is out. Finally. No points for the own time own target completion to the own time own target restructuring.
• With the electronic despatch and an approximate timetable, last traded price gives 7.7% annualised agak agak. 
• At S$2.33, shareholders can lepak this to the close pretty easily. 

• Tesla’s is in a slump entirely of its own making—and totally predictable.
• Waves of recalls and lawsuits and government probes. Profitability has a serious asterisk. Market share is shrinking.
• January monthly sales were sad. Will February results look better?

• Globus Spirits (GBSL IN) , incorporated in 1993, is engaged in manufacturing, marketing and sale of industrial alcohol comprising rectified spirit, ENA and IMFL.
• Over the years, GSL has successfully got transformed from a grain-based bulk alcohol manufacturer to a 360° alcohol beverage segment player.
• The story of GSL has had some setbacks, however there are also positives in the form of margin boost, debt reduction and better efficiency.