Daily Brief Consumer: Brilliance China Automotive, Pinduoduo, Seven & I Holdings, Super Hi International Holding, Leapmotor, Golfzon County, Japfa Comfeed Indonesia, Inter Parfums, Nu Skin Enterprises Inc A and more

• We see 44 potential adds (including plenty of new listings) and 19 potential deletes (on market cap, liquidity and suspension) for the Hang Seng Composite Index in March.
• We expect 37 stocks to be added to Southbound Stock Connect following the rebalance while 37 stocks could be deleted from the trading link and become Sell-only. 
• There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

• We believe it was a wise move for PDD to launch the overseas online marketplace TEMU first off the U.S., because of its massive, lucrative and integrated retail markets.
• Still, the adventure lacks some of the recipe for successes PDD made during its early days, and the failure of Wish suggests pricing not come at the expense of quality.
• We expect TEMU to lose US$2bn in 2024 (1/3 of PDD’s FY22 earnings) and won’t generate meaningful profit probably until 2026, reinforcing our view on PDD’s near-term earnings risk.

• We would be closing our 2021 high-conviction long trade on Seven & I Holdings (3382 JP) before they release 3QFY23 results next week.
• Although we are not expecting the company to miss consensus estimates this time around, we are expecting significant downside risks to Seven & I’s US business throughout the year.
• Given that shares went nowhere after 12% revenue and 1% OP beats in the previous quarter is a good indication that the upside is limited.

• On 30 December, Super Hi International Holding (9658 HK) completed its separate listing in HK from Haidilao by the way of introduction. The trading has been highly volatile so far.
• Our base case valuation of Super Hi International is target price of HKD13.6 per share, which represents a 40% upside from current levels.
• The same store sales at Super Hi improved significantly in nearly all major regions in 1H 2022. 

• Sales has been weak since October, mainly due to price hike.
• Technology leadership may not be sustainable with limited R&D investments.
• EREV version may not be the right solution for the company’s long-term growth. 

• In this insight, we discuss our initial thoughts on the Golfzon County IPO which is likely in 1H 2023.
• As of September 2022, Golfzon County owned and operated 18 golf courses and 387 holes, the largest in Korea. 
• Golfzon Newdin owns a 43.2% in Golfzon County. We estimate Golfzon Newdin’s market cap to be 273 billion won or 6,369 won per share, representing a 44% upside. 

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.

• Anton Oilfield
• Japfa Comfeed Indonesia
• Sands China
• Times China

• IPAR has added Lacoste to its portfolio of fragrance licenses and should lead to incremental growth in 2024.
• Lacoste, like IPAR’s other major licenses, is a well-established brand that is likely to immediately contribute to sales and earnings growth when in 2024
• Heading into the holiday shopping season of 2022, fragrance was proving as a high demand category from consumers

• Despite re-openings in China, Nu Skin’s operations remain exposed to cyclical risks.
• The company’s net margins are poor, and earnings crash risk is a regular feature.
• The stock’s technical features imply that it could rebound in 2023, but it presents an isolated case with little substance in the broader context.