In today’s briefing:
- FTSE Japan: Potential Inclusions Following TSE Restructure
- Nissin Food Co (1475): Wheat Price Increase Erodes Margin
- Shangri-La Asia (69 HK): Let’s Go, What Are You Waiting For?
- Kura Sushi (2695): February Same-Store Sales Flat YoY Due to Omicron
- Thanh Cong Textile Garment Investment JSC (TCM VN/ BUY)
- Entry in foods business: A DCF accretive move
FTSE Japan: Potential Inclusions Following TSE Restructure
- 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 Food Co (1475): Wheat Price Increase Erodes Margin
- 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.
Shangri-La Asia (69 HK): Let’s Go, What Are You Waiting For?
- 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.
Kura Sushi (2695): February Same-Store Sales Flat YoY Due to Omicron
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
Thanh Cong Textile Garment Investment JSC (TCM VN/ BUY)
Thanh Cong Textile Garment Investment JSC (HOSE: TCM)
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Entry in foods business: A DCF accretive move
- 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.
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.
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