Daily Brief Consumer: Anycolor, JD.com Inc., Yg Entertainment, Tokyo Stock Exchange Tokyo Price Index Topix, Evermos, Kellogg Co, Tata Motors Ltd, Viacom Inc Class B, Borgwarner Inc and more

• Anycolor (5032 JP) IPOed a year ago, rose several-fold, saw the underwriting broker offer a huge target price, then it fell. There was an offering. And then the murders began.*
• The offering in January, discussed here, created overhang, and the stock fell sharply in the next 6 weeks. Blowout earnings came in mid-March. Along with a TSE Prime transfer application.
• Now we have the Prime promotion on 8 June, which leads to a TOPIX inclusion on 28 July. 

• Despite a recovery in Chinese retail sales, JD.com’s revenue growth slow-down has accelerated, losing market share to disruptive online competitors amidst ramped-up pricing pressure.
• Margin progression remains on track as JD.com refocuses on its core operations, optimizing its product mix and sales channels to improve operating efficiency.
• JD.com trades on only a 4.1x Dec-23f PE multiple when excluding its net cash balance sheet and associates at book value.

• Despite the enormous demand for Black Pink concerts and the expected launch of the new girl-group band BabyMonster, we believe shares of Yg Entertainment (122870 KS) have overextended this year.
• Black Pink remains a fan-favorite group and their contribution to sales and profits are likely to peak this year. Valuations for YG Entertainment is also unattractive.
• Although BabyMonster is likely to become popular, the higher probability scenario is for them to fall below expectations. We do not believe BabyMonster could become the next Black Pink. 

• Although listed companies are required to consider the interests of minority shareholders, parent-subsidiary listings should inherently be avoided because it’s difficult to reconcile conflicting interests between parent and its subsidiary.
• This case questioned whether the FamilyMart directors considered the interests of minority shareholders. The fact that fiduciary duty is scarce in Japan could have been a factor behind this case.
• This lack of understanding may also be a factor preventing independent directors from fulfilling their functions, as some CEOs are seen to consider independent directors as advisors rather than managers.

• Indonesia-based social commerce platform Evermos today announced that it had raised US$39 million in its Series C funding round.
• It was led by the International Finance Corporation (IFC) — a member of the World Bank group — and IFC Emerging Asia Fund, LP, managed by IFC Asset Management Company, with the participation of returning partners such as Jungle Ventures, Shunwei Capital, UOB Venture Management, and Telkomsel Mitra Inovasi.
• This funding round also saw investment from new partners SWC Global, Endeavor Catalyst, and Uni-President Asset Holdings.

• Kellogg managed an all-around beat in the latest quarterly result, with a 14% organic net sales growth and better-than-expected profit margins.
• The company’s operating profit showed solid year-on-year growth for the fourth consecutive quarter, and its cash flow and balance sheet remained strong.
• Kellogg raised its guidance for organic net sales growth, adjusted operating profit growth, and adjusted earnings per share, reflecting the strong performance in Q1.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Tata Motors ADR

• It was a challenging Q1 for Paramount Global, with total revenue of $7.3 billion and the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street.
• Free cash flow in Q1 was a use of $554 million, aligned with expectations for negative free cash flow in 2023, but positive free cash flow is anticipated in the back half of the year.
• The company aims to improve earnings and free cash flow through franchise content, commercial execution, and operating efficiencies, targeting positive growth in 2024.

• It was a mixed first quarter for BorgWarner as the company reported double-digit organic growth and surpassed the revenue expectations of Wall Street but missed out meeting earnings expectations.
• The company’s free cash flow was impacted by planned capital spending to support the growth of its eProducts division, as well as working capital usage and annual incentive compensation payout.
• However, BorgWarner made significant progress during the quarter, securing multiple new eProducts awards and announcing capacity investments in this segment.