Consumer: LG Energy Solution, Netflix Inc, Sony Corp, Luckin Coffee, PT Metrodata Electronics, Hindustan Unilever, Bajaj Auto Ltd and more

• ESOP marginally undersubscribed, retail investors were allocated 25.8% of the IPO while institutions got 55%. Post IPO, LG Chem Ltd (051910 KS) owns 81.84% of LG Energy Solution (373220 KS). 
• Around 58% of the institutional allocation is subject to voluntary lockups. For Fast Entry, MSCI will use a FIF of 9%, while FTSE will use an investability weight of 4.16%.
• LG Energy Solution (373220 KS) needs to rally 84% by the close on 27 January to get FTSE Fast Entry. MSCI Standard and KOSPI200 index inclusions are a near certainty.

• Foreign institutions received 60% of the total institutional allocation. They only accounted for 0.58% of the orders applied. Many of these are large foreign institutions with long-term holding tendencies.
• The fact that they rarely make lockup pledges due to internal policies is in line with LG Energy’s need for an immediate float rate of 10% while having long-term investors.
• As a result, the nominal float rate is 8.85%. quite exquisite results as it is just enough to satisfy KOSPI 200’s 10% minimum float rate rule.

• Shockingly poor 1Q subscriber guidance implies 9M net adds for 2022, well below the ~25M level investors are accustomed to, implying saturation, competition, or both. (We think both)
• Operating Margin guidance cut blamed on FX, we think more likely the demand for heightened content spend due to competition.
• Netflix valuation always built on a long term DCF…very sensitive to downward revisions in subscribers and ARPU…we think Netflix settles around $400 until it can disprove bear thesis.

• A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. 
• Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. 
• Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.

• Following an improvement in the financial performance, The FT reported that Luckin Coffee (LKNCY US) is plotting to relist its shares in the US sometime this year.
• Although financials have improved, relisting seems a bit premature, especially since Luckin is still not a completely clean house.
• This relisting feels a bit like another attempt by the ex-chairman to deceive minority investors to get the best possible exit price.

• PT Metrodata Electronics (MTDL IJ) continues to be an increasingly interesting play on the growth in Indonesia’s digital economy and digitalisation, especially for banks and fintech.
• The company’s distribution business saw strong growth in 2021, offsetting the slower growth in Solutions & Consulting, which was impacted by project delays but will rebound in 2022.
• Management remains optimistic on the growth outlook for 2022, driven by strong momentum behind digitalisation and economic recovery driving ICT demand. Valuations are attractive given its exposure to growth segments.

The task (ahead) is a tough one – eye on mid-to-long-term while navigating multiple near-term challenges. Firstly, supply-side inflation of such scale amidst demand slowdown is a tough situation to be in – any price hikes (RM inflation-led) will have a visible impact on demand volume.

• Bajaj Auto (BAL) is the second largest motorcycle manufacturer and largest 3-W OEM domestically (FY21 market share at 18%, 50.6% respectively)
• Exports comprised ~52% of FY21 volumes; >125 cc motorcycles constituted ~28% of FY21 volumes with Pulsar 125 enjoying good success
• We value BAL at Rs 3,460 on SOTP basis (17x PE on FY23-24E average standalone EPS, stake in PMAG; previous target Rs 4,220)