Daily Brief Consumer: Asahi Group Holdings, Alibaba Group Holding , DXN Holdings, Volkswagen (Pref), Dentsu Inc, Wynn Macau Ltd and more

• Asahi Group Holdings (2502 JP) today announced a collection of 10 shareholders (mostly financial institutions) would sell a total of 33.48mm shares (6.6% of shares out) in Asahi Group. 
• This will become more of a thing going forward. Cross-holders “want” to unwind. And in many cases, the cross-held want to buy back stock (reduce E, raise ROE).
• This deal is “good” in that it clears out a lot of the bank cross-holders in one fell swoop. But there are more crossholders behind.

• A group of shareholders are looking to raise US$1.3bn (JPY197.8bn) by selling their respective stakes in Asahi Group Holdings (2502 JP) via an extended secondary follow-on.
• The deal would represent 23 days of Asahi’s three month ADV. Its latest extended large primary deal has done very well.
• While the deal isn’t particularly well flagged, it is an extended one allowing the market to price in the impact of the share sale. 

• Alibaba’s operating margin rose to 15% in 2Q24 versus 12% in 2Q23.
• Every expense as percentage of total revenue decreased and EBITDA of every business line increased.
• We believe the reorganization is going smoothly and the stock has an upside of 82%. Buy.

• Nine shareholders are looking to sell 33.48m shares of Asahi Group Holdings (2502 JP). That is US$1.28bn, 24x ADV and 6.6% of shares outstanding.
• Given the recent run up in the stock, there could be downside over the next couple of weeks ahead of the pricing date.
• There will be buying from global trackers but nothing from TOPIX trackers, so not a lot of stock will be mopped up. Passive buying before settlement could create a squeeze.

• Asahi Group Holdings (2502 JP) announced a pure secondary offering of 33.5 million or 6.61% of outstanding shares. At the last close, the placement was worth JPY194 billion (US$1.3 billion).
• Notwithstanding Asahi’s explanation, the selling shareholders’ motivation for exiting their shareholding is likely to capitalise on the strong share price performance – Asahi shares are up 45% YTD.
• Looking at recent large Japanese placements is instructive to understand the potential offer price. The pricing date will fall between 28 November and 1 December (likely 28 November).

• DXN Holdings (DXN MK) was listed on the Bursa Malaysia Exchange on 19th May 2023. Both promoters and Gano Global (KV Asia Capital), will come off lockup soon.
• DXN Holdings (DXN) is a global health-oriented and wellness direct selling company.
• Demand for the IPO was lukewarm and the shares had a turbulent debut. Aside from its weak momentum, liquidity on the stock is weak as well. 

• Since mid-October, spreads have generally widened across our European liquid universe of ordinary and preferred shares (8 have tightened, 10 widened, 1 at same level).
• Recommended trades long preferred / short ordinary shares: Media-for-Europe, Sixt, Volkswagen (still the most interesting situation), Grifols, Atlas Copco.
• Recommended trades long ordinary / short preferred shares: Fuchs, SSAB Svenska Stal.

Dentsu’s Q323 trading update describes demanding trading conditions with continuing spending constraint from customers in technology and finance, and ongoing delays to larger digital transformation projects. Full year organic revenue guidance is revised to -5% (from 0% to -2%), with an operating margin of 13.5%, depressed by one-off factors from 15.0%. The outlook is improving, albeit patchily, and initiatives to streamline the business and structure it more effectively to meet client needs should benefit the operating margin in FY24 and beyond.

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.

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