Consumer: Sumber Alfaria Trijaya Tbk Pt, Tsi Holdings, Melco International Development, Alibaba Group, DiDi Global, BYD, Siam Global House, Adidas AG, ITC Ltd, Eastside Distilling and more

• The review period for the MSCI May 2022 SAIR started yesterday. As of the close on 15 April, we see 45 potential adds and 65 potential deletions for Asia.
• At a country level, the most changes are in China, while the largest net change is expected in Japan (16 deletions) and China (10 deletions). Indonesia could have five inclusions.
• The largest potential inclusions are Powerchip Semiconductor Manufacturing Corp, Tata Elxsi Ltd, Orient Overseas International, Pop Mart International Group Limited, Eva Airways, Jindal Steel & Power and China Airlines.

• TSI Holdings has long had a lot of cash and securities but a dearth of income. It’s still that way.
• Earnings were pretty good, but forecasts disappointing. The MTP is much more aggressive. 
• The company has an EV/Revenue of 0.03x and EV/EBITDA of 0.5x. THEN it has a lot more interesting stuff hidden away. This could double or more in two years.

• Both Melco International Development (200 HK) and Melco Resorts & Entertainment (MLCO US) have underperformed peers. But Melco is unjustifiably “outperforming” MLCO.
• Preceding my comments on Melco, are the current setup/unwind tables for Asia-Pacific Holdcos. 
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Over the last year, we have highlighted some extremely damaging risks to Alibaba Group (9988 HK)’s cloud business.
• The exit of senior leadership, right before the data migration deadline and the cybersecurity deal reassessment, arouse suspicion.
• We suspect Alibaba could be using this “leadership reshuffle” to hide the reality of the Cloud business from investors.

• Didi on Monday announced that it will hold an EGM of shareholders on 23rd May for a vote on the voluntary delisting of the company’s ADS’ from the NYSE.
• The company has mentioned that it will not apply for listing it shares on any other stock exchange before the completion of delisting.
• Didi also has reported its 4Q2021 results and we take a look at the company’s recent results in this insight.

• BYD (1211 HK) is the most vertically integrated with its own chip manufacturing facility (BYD Semiconductor) and battery production unlike the rest of the Chinese auto OEMs.
• The lockdown may not last that long as the Chinese authority is reportedly seeking to create a white list to resolve the supply chain issue.
• It announced that Q1 22 net profit will range between RMB 650 to 950 million, an increase between 174% to 300% YoY which will make its forward PE cheaper. 

• We reiterate BUY rating for GLOBAL with a target price of Bt25.0 based on 35xPE’22E, close to the average of the Thailand home-improvement subsector.
• We expect GLOBAL to report 1Q22 net profit at Bt967m (flat YoY, +30%QoQ).
• QoQ growth will be supported by high season quarter with a solid SSSG at+7.5%YoY in 1Q22 together with economic recovery as shown by Farm income Index was at Bt215 (+9%YoY)

• Oakmark International Fund returned -8.7% for the quarter ended March 31, 2022.
• The fund’s research process is based on a disciplined quantitative and qualitative screening process, says Oakmark.
• The firm says it believes businesses must offer significant profit potential and be run by managers who think and act as owners.

• ITC Limited (ITC) has a diversified presence in FMCG, Hotels, Packaging, Paperboards, Agri Business, and Information Technology.
• The FMCG segment includes Cigarettes and Others which include branded packaged foods businesses, education and stationery products, personal care products, safety matches and agarbattis, and apparel.
• We recommend a BUY on the stock with a target price of Rs 295/share, implying an upside of 10% from the CMP.

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• Eastside Distilling looks like an attractive short at the current price given its uneconomical business model, negative growth, and current liquidity/solvency crisis
• There are very identifiable catalysts over the next 6 months that can push the company into bankruptcy
• There might also technical factors that adds selling pressure to the stock, further juicing the risk/reward