Consumer

• Astra International (ASII IJ) FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out Bank Permata (BNLI IJ). 
• The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support United Tractors’ performance.  
• Astra International (ASII IJ) remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.

• I would value Porsche on 18.9x €5.3 billion 22eEBIT, i.e. €100bn; Ferrari, which has moderately higher EBIT margins (25% vs. 16%), trades on 31.2x EV/22e EBIT (Capital IQ consensus).
• The current discount of VW prefs to ords is 23.2%. A Porsche IPO without major changes on VW share structure, would be positive for the preference shares. Long prefs/short ords.
• An IPO of Porsche would be beneficial for the Porsche SE shares and the current discount to NAV should tighten even more, in my view. Long 1 PAH3 GR/short 0.5136 VOW GR.

• In the past week, it was announced that Tving, a leading local OTT service provider in Korea, received 250 billion won in investment, valuing it at about 2 trillion won.
• Previous to this investment, Tving was last valued at 350 billion won in July 2021. In other words, Tving’s value surged by nearly 6x in the past seven months. 
• Our NAV per share of CJ ENM suggests a target price of 185,824 won, representing a 43% upside from current levels. 

• Market leader in the domestic fan industry with value market share of 27%.
• The company has enhanced focus on increasing market share in home appliances categories like (air coolers, water heater and kitchen appliances) Robust balance sheet with RoE & RoCE of 34% & 39% (three-year average),.
• .

• Targeting long-term growth by leveraging external funds and talents

• Selecting a financing scheme that is unlikely to weigh on the stock price

• Koshidaka HD’s capital raising scheme has a high minimum exercise/conversion price and a high base price (800 yen)

• Alibaba Group (9988 HK)’s 3QFY22 results was disappointing with the company’s revenue growing by 9.7% YoY, the slowest YoY growth since inception and missing the consensus revenue target by 1.3%.
• The situation appears far worse on the profitability side considering that OP (excluding impairment of goodwill) fell more than 34% YoY to RMB 32.2bn in 3QFY22.
• We feel there’s a lot more downside to Alibaba shares over the medium term as the company’s cash cows are starting to falter in these tough conditions.

• We interact with channels of Mahindra & Mahindra (MM IN) , Bajaj Electricals (BJE IN) & Havells India (HAVL IN) with an objective to understand sources of stress in rural India. 
• Price increases, lack of savings and irregular rural cash flows are taking a toll on Tractor Sales. 
• In durables, there are no signs of recovery, with lower prices being the only catalyst that would bring back volumes. 

• Barbeque Nation Hospitality (0823884D IN) is among the largest casual dining chains in the country, and its been a year since it got listed on the bourses. 
• In our earlier insight Barbeque Nation IPO: Not Grilling Fine , we had highlighted the business, financial and governance discomforts seen in the IPO document.
• A year later, these setbacks still continue to be visible in the balance sheet. In this insight, we try to update our insights regarding the company.

• Crown resorts displays a clear sell top zone near 13.00-50 that will induce a tactical rejection to short. On pullback we see a buying opportunity.
• Rising price wedge is ultimately bearish. RSI bear divergence warns of a weakening rise (not confirming new price highs on weaker bull momentum).
• Initial pullback support at 11. Higher conviction buy level at the 10 support where price and trend meet.

• 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.

• New order wins in EVs/hybrids; Focus on energy cost pass on to customers MACA’s weak performance in 4QCY21 was reflection of high RM/energy cost and operating deleverage in both geographies.
• It is negotiating with customers to pass on hyper inflation in energy prices.
• We cut our CY22E EPS estimates by 3.5% to account for margin pressures across both geographies and maintain CY23E EPS estimates.

• Butterfly Gandhimathi (BGAL) is one of the leading manufacturers of kitchen & electrical appliances in India and sells its products branded as ‘Butterfly’.
• The company is a market leader in India for SS LPG stoves & table top wet grinders and major supplier of mixer grinders & pressure cookers
• Over the last three years, BGAL has enhanced its focus on modern trade/online distribution channels to capture higher revenue growth

• Swiggy is a leading food delivery platform in India. It along with its listed rival, Zomato, control nearly the entire food delivery market in India.
• Swiggy last raised another $700m investment led by Invesco US with a valuation of $10.7bn in Jan 2022. 
• Recent media reports have indicated that the company could look to raise around US$800m via an IPO in early 2023

• Inclusions are FSN E-Commerce Ventures (NYKAA), Mindtree Ltd (MTCL), Paytm (PAYTM), SRF Ltd (SRF) and Zomato (ZOMATO), while Indian Oil Corp (IOCL IN) moves lower from the NIFTY Index.
• Deletions are Aurobindo Pharma (ARBP), Hindustan Petroleum (HPCL), Indraprastha Gas (IGL), Jindal Steel & Power (JSP) and Yes Bank (YES), while Apollo Hospitals (APHS) moves up to the NIFTY Index.
• Estimated one-way turnover on the NIFTY NEXT50 Index is 10.24%, the one-way trade is INR 8,486bn and there is over 1 day of ADV to trade on a few stocks.

• Lawson will begin offering made-on-demand meals direct from its convenience stores. 
• Suitable stores are being renovated to include in-store kitchens, with 100 planned for this time next year and 1,000 by 2025, with delivery handled by companies like Uber Eats.
• Most other chains offering made-to-order meals are small, so Lawson could well take a large share of this growing market.

• Marui Group (8252 JP) is increasingly ethereal, shifting further away from selling merchandise through tenants. 
• While seen as a shop building operator, Marui is still true to its service origins as a consumer finance business.
• Now even its shop buildings are increasingly devoted to non-stuff with the company aiming for 70% of tenancies to be selling things other than merchandise by 2025.

• Excluding extraordinary items, ERW’s 4Q21 normalized loss was at Bt371m, the eighth consecutive quarter loss, due to operations under EBIT breakeven.
• 4Q21 negative EBITDA declined to -Bt29m compared to -Bt30m in 4Q20 and -Bt243m in 3Q21 backed by recovering overall hotel operation.
• Lockdown easing and launching ‘Rao Tiew Duay Kan phase 3’ program during 4Q21 resulted in improving occupancy rate (ex. Hop INN segment) to 30%  up from 25% in 4Q20 

• Maintain BUY call and tweak TP to MYR3.37 (-1sen)
• FY21 losses narrower than expected
• 4Q21 core net profit the first since 4Q19
• Cautiously optimistic about FY22

• Automotive Axles (AAL), established in 1981, is largest independent manufacturer of rear axle drive assemblies in India (primarily for CVs, M&HCV)
• As of FY20, rear drive axles comprise ~60% of its topline with brakes share at ~20% and other parts comprising the rest
• Target Price and Valuation: We introduce FY24E. We now value the company at a revised target price of Rs 1730 i.e. 20x P/E on FY24E EPS (earlier TP Rs 1260).

• An excellent proxy to CPO price rally
• 4Q results: Another beat
• Anticipating 2% YoY FFB output growth in FY22E
• Raising CPO ASP and PATMI forecasts

FY21 core PATMI beat our/street estimates by 37%/35% due to record palm oil products ASP. SOP is now in net cash position, allowing it to raise DPS beyond the yearly 5-6sen. A final DPS for FY21 will be proposed before its AGM (in addition to 4sen interim DPS paid). SOP is poised to benefit from high spot prices in 2022 as it has minimal forward sales. Following our EPS upgrade, we raise TP to MYR5.88 after rolling forward valuation to FY23E (from FY22) on unchanged 13x PER, its 5Y mean.

• Maintain BUY call and tweak TP to MYR5.48 (+3sen)
• Losses wider than expected but DPS outperformed
• Earnings recovery will be gradual, in our view
• Cut FY22E/FY23E earnings by 30%/23%

• Maintaining TP of 1,600 yen and a Hold rating. We are updating our earnings forecast for Skylark Holdings (3197, the company)
• On February 14, the company announced full-year IFRS OP of 18.2bn yen (vs. -23.0bn yen loss in FY12/20)
• Our new forecast for FY12/22 is for sales of 311.9bn yen (+17.9% YoY; previous forecast 311.8bn yen) and OP of 8.8bn yen (-51.5% YoY; previous forecast 10.4bn yen)

• Sony had a busy 18th Feb as both the Uncharted movie and Horizon Forbidden West launched. 
• Uncharted has done reasonably well though not to the extent we believed likely while the Horizon franchise could be on the way to truly elite status. 
• We look for both releases to contribute to a strong 4Q along with Gran Turismo 7.

• The local street hears KRX has bumped it up to 14.68%. With the 1% rounding applied, it becomes 15%.
• It is extremely rare for a Fast Entry to come in with a float market cap of +₩10T. So, we will see significant weight adjustments for the other constituents.
• As we move towards the implementation date, we can consider basket-shorting those high-impact names for LG Energy’s long hedge.

• Rakuten Inc (4755 JP) is currently trading 20% below the bottom end of the long term trend channel.
• With consensus FY+2 EBITDA at ¥309.8bn, Rakuten’s current EV/EBITDA is at an all-time low of 1.7x compared to the historical median and peak of 9.0x and 16.1x respectively.
• Based on the consensus FY+2 EBITDA and EV trend, we feel the fair valuation of Rakuten could be somewhere around ¥3,000bn EV.

• We analyze Q3 FY22 Earnings for Bajaj Electricals (BJE IN) , Crompton Greaves Consumer Electricals (CROMPTON IN) , Havells India (HAVL IN) and Stove Kraft (0490943D IN) 
• Stress in rural is hurting BJE, CROMPTON is riding high on new products, Upcoming AC season is the key for HAVL. For Stove Kraft growth is falling off a cliff. 
• BJE and HAVL would be best placed to explore a potentially long and short respectively. 

• Last month, Welcia announced the acquisition of Kokumin, the 30th ranked drugstore that runs a well-respected chain stretching across the country. 
• As the newly formed Matsukiyo Cocokara group continues to struggle, another year of high growth means Welcia will be only just behind when FY2021 results come in.
• Overall growth in the drugstore sector remains strong and could even overtake convenience stores in the near future.

• Thanks to the huge supply chain capabilities of its parent Itochu Corp (8001 JP), FamilyMart Co Ltd (8028 JP) is moving into new categories of private label product.
• These are not the traditional staples of the convenience store but new types of more fashionable lifestyle products in clothing and cosmetics.
• Recent results show successful collaboration with Noin for cosmetics and with Hiromichi Ochiai from Facetasm for clothing basics, selling more than 1 million items each.

• Education Australia, the largest shareholder of IDP Education, last raised around US$858m (A$1.1bn) via selling 15% of IDP Education in Aug 2021.
• The lock-up from that deal is set to expire later this month, which will result in an additional 12.5% of the company’s shares, worth US$670m (A$927m) being unlocked. 
• In this note we will talk about the recent results and the upcoming lockup expiry.

• The Nikkei reported today that Toyota had already agreed to accept its unions wage hike demands and in full. 
• This is unusual given typically fair but tough negotiations and Toyota’s penchant for very strict cost control. 
• Although the news does not appear to be attracting any great attention we believe it is actually quite significant.

• We upgrade our recommendation for CBG from HOLD to BUY with a new target price of Bt115 (-9% from previous TP), derived from 35xPE’22E, the average of the Thai energy 
• We forecast 2022E earnings to recover to Bt3.3bn (+16%YoY) supported by (1) recovering sales in CLMV market, (2) Solid liquor’s distribution revenue growth, and (3) new product launches in Thailand.
• Expect earnings to bounce back to roughly Bt800m in 2Q22,while we believe gross profit margin had already bottomed in 4Q21and expecting it to recover in 1Q22,supported by higher sales contribution 

• A 1st interim DPS of 6sen was declared
• 2Q core PATMI came in above expectations
• 2Q: Downstream returned to the black vs last year
• Raising our FY22-24E CPO ASP and core PATMI

• Huitongda (9878 HK) had a subdued stock market debut with shares opening marginally above the IPO price.
• Its subdued first-day performance suggests that investors are no longer misled by artificially low valuation multiples of “1P” EC players.
• Based on EV/ (GMV + Retail Revenue), there’s a 38% downside to Huitongda’s valuation. However, it may be best to wait for signs of weakness before arranging a short position.

• FTSE announced the results of the March SAIR for the FTSE All-World/All-Cap indices on Friday. There are 337 changes (adds, deletes, migrations across AW/AC) across Asia-Pac.
• Nongfu Spring (9633 HK) will have the largest inflows and is a high probability inclusion to the FTSE China 50 index. Its inclusion in the HSI INDEX was announced Friday.
• FTSE will switch index membership from the US ADRs to the HK listings for ZTO Express, GDS Holdings, Baidu and Bilibili. This should result in larger CCASS holdings.

• Hang Seng announced the results of the March rebalance post market close Friday. Two adds for the HSI, one set of changes for HSCEI, three sets for HSTECH.
• An ad hoc rebalance was announced for the KOSDAQ150 following Osstem being designated an ‘Administrative Issue’. In IPO world, we have LIC in India and SBI Sumishin NetBank coming up.
• Friday was the review cutoff date for the March rebalance of the ASX200 Index. The ATO has provided Aventus with the tax ruling and that creates a timing issue.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• Life Insurance Corp of India (1248Z IN) and SBI Sumishin Net Bank (7163 JP) are set to keep everyone busy till March.
• On the placement front, Japanese accelerated selldowns continue their stellar record with Persol Holdings (2181 JP). 

• There are currently 43 – mostly firm – transactions currently being discussed and analysed on Smartkarma.
• One new deal this week: the unconditional Offer for Hock Seng Lee (HSL MK).
• Key updates took place for: Crown Resorts (CWN AU), Western Areas (WSA AU), Australian Pharmaceutical Industries (API AU), True/DTAC, and G J Steel PCL (GJS TB).

• I have introduced Monogatari Corporation (3097) before as a listed company that has been implementing advanced diversity initiatives. This article will update as I participated in the analyst meeting.
• The essence of D&I is to instill a culture of “it’s okay for everyone to be different,” so that each person is not afraid to voice his or her opinion.
• By having each person express their opinion, it creates a culture of discussion within the company.  President Kato says that there are three benefits to this.

• PNC Infratech: PNC Infratech (PNC) reported a muted quarter (owing to delay in execution of Jal Jeevan Mission (JJM) projects) with revenue/EBITDA/APAT of INR 15.2/2/1.1bn missing our estimates by 8/10/20%.
• Whilst FYTD22 order inflow was tepid at INR 27bn, PNC maintained its INR 80bn order inflow target for FY22. In the water segment (INR 41bn OB), PNC has INR 32bn OB under JJM (ex of INR 23.4bn of new JJM projects won Jan-22).
• .

• Tesla is already straining versus its record 2021 pace when MY was new, M3 was still growing, competition was still thin, regulator oversight was still lax & recalls were few. 
• CEO Elon Musk‘s vulgar “jokes” don’t help—nor does he care.
• The bills are finally coming due for Tesla—but Tesla’s workers and customers and other victims have borne the cost.

• The Hang Seng Index was meant to have 80 constituents by mid-2022 before moving to 100 members. At 66 constituents post the March review, we are not gonna make it.
• Nongfu Spring (9633 HK) and Lenovo (992 HK) will be added to the index. Nongfu’s inclusion was expected while Lenovo is a relative surprise.
• Nongfu Spring (9633 HK) will also be added to the FTSE AW Index at the March SAIR at the close on 18 March. The stock should move higher.

• Space segment revenue is growing despite Covid-19 headwinds for in-flight Wi-Fi and should continue into the next few years as new capacity is unlocked
• Investment in the media segment is likely to step up in Q4 on prootional spending for new Japan professional baseball and the Spoox streaming service
• The outlook is improving heading into 2022 as the company will lap accounting changes that made headline revenue look weaker. We’ve updated our forecasts and remain at Buy

The Europe HY Trade Book for February 2022 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

Expecting higher earnings in 2022F

• Following the pandemic lockdowns of 2020 and 2021, Heineken is now faced with rising commodity prices.
• Although 2022 will most likely be yet another challenging year, Heineken is expanding its presence in key large markets such as China, India and Brazil.
• At the same time, the company is better positioned than most of its peers to sustain its profitability through pricing measures, backed by its strong global brand portfolio.