Daily Brief Consumer: Asahi Group Holdings, Lvmh Moet Hennessy Louis Vuitton, Trip.com, Drive Lah Ventures Holding , China Education Group, Vitesco Technologies Group, Arcs Co Ltd, Britvic PLC and more

• Since the US$1.3 billion secondary placement announcement, Asahi Group Holdings (2502 JP)’s shares are down -6.2% from the undisturbed price of JPY5,804 per share (16 November).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Asahi’s shares have followed the pattern of previous large placements. 
• The offering will likely be priced on 28 November. Investors participating in previous large Japanese placements tend to secure positive returns.

• In this insight, we provide the income statement comparisons of the eight largest global luxury brand Korea operations including Louis Vuitton Korea, Prada Korea, Ralph Lauren Korea, and Moncler Korea.
• In 2022, Korea spent $16.8 billion in luxury goods, representing per capita consumption of $325 per person, surpassing the United States ($280 per person) and China ($55 per person). 
• Luxury brand spending in Korea is often a leading indicator of global luxury brand spending. Luxury brand spending in Korea has been weak this year and this continued in 3Q23.

• In October, the sluggish recovery in outbound tourism demand continued
• Outbound capacity growth also timid; but domestic recovery is mostly complete
• As growth stock, Trip.com’s disappointed; maybe it can attract value investors?

• Drive Lah ComfortDelGro seems to be increasing its involvement in the automotive startup space this year.
• The Singapore-based taxi firm backed mobility-focused impact fund Shift4Good in January and battery recycling startup Neu Battery Materials in July.
• Most recently, ComfortDelGro invested US$2 million in Drive Lah.

• China Education Group (839 HK) appears to be facing the headwinds from higher USD interest rate and reduction in capitalised interest. The intangible write-off is another drag on FY23.
• Newly registered students increased 17.8% for FY24. With better average fees, this will help the topline. Our concerns are high finance and operating costs will erode revenue growth.
• Consensus is overly aggressive and there are risks of downgrade. Earnings may re-accelerate in the future, but weaker 1H FY24F keeps us on the sideline in the short term. 

• On 27 November, Schaeffler (SHA GR) increased the cash consideration for Vitesco Technologies Group (VTSC GR) by 3.3% to €94.00/share, an implied equity value of €3,762 million, implied EV of €3,416 million.
• Although this may not include a takeover premium, and optically the multiple seems low at 3.4x EV/Fwd NTM EBITDA, I update my TP to €94. 
• A higher counteroffer or another sweetening seems unlikely. I believe it should not be difficult for Schaeffler to achieve 75% acceptances, thus the deal will likely go through.

• Amazon Netsuper is competing head to head with Rakuten’s online food platform in an online food sector that has grown 80% in four years. 
• Last month Amazon confirmed that Arcs, one of the largest supermarkets in Japan and the biggest in northern Japan, will join Life, Valor and Seijo Ishii in using its system.
• Arcs’ online supermarket was already growing strongly but the tie-up with Amazon will take it to the next level, helping to compete with Aeon and Rakuten.

Britvic reported robust FY23 results despite the weaker consumer environment, reflecting the resilience of its brand portfolio. Price/mix offset limited volume declines resulting in revenue growth of 6.6%, despite unfavourable summer weather and tougher comparators. Inflationary pressures were mitigated through pricing actions and cost discipline, as adjusted EBIT grew 6% at a margin of 12.5%. Investment in its existing brand portfolio and the recent addition of two bolt-on acquisitions in high growth categories underpins management’s confidence heading into FY24.