Consumer: MR D.I.Y. Group, Tabcorp Ltd, JD.com Inc (ADR), Coupang, Subaru Corp, Nissan Motor, Bajaj Auto Ltd, Canoo Inc, Nikon Corp, American Equity Investment Life Holding and more

• For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
• Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
• As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US). 

• Tabcorp Ltd (TAH AU)’s demerger to create two standalone companies listed on the ASX, The Lottery Corporation and New Tabcorp, was approved today.
• Subject to the scheme approved by the Court, the Lottery Corporation will trade on a deferred settlement basis on 24 May and a normal settlement basis on 2 June.
• Peer derating due to the market sell-off results in a lower SoTP valuation of A$5.62 per share, which is still a 13% upside to the last close.

• JD is facing a severe logistics problem due to the lockdowns in many cities of China.
• We believe JD is trying to secure its revenue no matter how large the fulfillment expense is.
• We believe the stock has a downside of 22% for the year end 2022.

• Coupang (CPNG US)’s 1Q22 results were mixed with revenue 2.5% below consensus but an operating loss of $205.7m was $94.3m lower than consensus through a 3% gross margin improvement.
• The company’s comments on the gross margin outlook are a bit concerning and make us think that the improvement in Q1 was just a one-off.
• Coupang is fundamentally expensive on EV/GMV+Retail Sales. With selling pressure from Softbank and a significant downside to revenue estimates, we remain Short Coupang.

• Subaru 4QFY22 was relatively strong compared to previous quarters with revenue of ¥737bn (+4.4% vs. consensus) but material prices pushed OP down to ¥13.3bn (-48.6% vs. consensus). 
• The FY23 guidance was relatively weak at just ¥3,500bn in revenue (+4.5% vs. consensus) and OP guidance of ¥200bn (-1.0% vs. consensus). 
• However with the yen where it is we believe Subaru is on track for a return to double digit OPM and OP of ¥370-450bn.

• Nissan generated total revenue of ¥2,271bn (-12.0% vs. consensus) and OP of ¥56bn (+33.3% vs. consensus) in 4QFY22. 
• This enabled the company to hit ¥247bn in OP vs. our start of year projection of ¥250bn (when guidance was for breakeven). 
• Guidance looked superficially weak at ¥10trn in revenue (-0.4% vs. consensus) and ¥250bn in OP ¥250bn (-21.1% vs. consensus) but margin assumptions are silly and we expect ¥500bn in OP. 

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• EV Startup Canoo confirmed this week what most market participants had been anticipating for months.
• Management at Canoo warned investors that it might not have enough cash to ramp up operations and make it to the start of production.
• Canoo isn’t the only one who has issued a going concern warning over the last few months.

• The market has zoomed in on the flat operating profit growth forecast and the stock is 4% lower post results
• As long as the income statement is not bleeding red ink (and it isn’t) we are more focused on the balance sheet and shareholder returns
• Nikon’s stock price is now offering a total shareholder return of 8%, while trading below book value. 

• FPA Queens Road Small Cap Value Fund returned -3.3% in the first quarter of 2022.
• First quarter performance was negatively impacted by the Fund’s overweight position in the technology sector.
• The Fund’s overweight position in technology sector also negatively impacted the Fund’s first quarter performance.