Daily Brief Consumer: China Education Group, Hainan Meilan International Airport, Kakao Pay, Alibaba Group, giftee Inc, Tractor Supply Company, Honasa Consumer, Nike, Melco Resorts & Entertainment and more

• China Education Group (839 HK) is looking to raise up to US$209m in its top-up placement. 
• This will be the fourth placement by the group since its listing in 2017, we have earlier looked at the past three placements as well.
• In this note, we will look  at the deal dynamics and run the deal through our ECM framework.

• Meilan Airport is both a strategic asset and a key beneficiary in China’s blueprint for Hainan. The hub holds an indispensable yet underappreciated position in Hainan’s DFS market.
• While jump in depreciation and plunging passenger traffic in 2022 dealt heavy blow to the company, they also pave the way for a strong turnaround as re-opening revives travel demand.
• We expect the company’s net profit to reach RMB600 million in 2023 and further double to RMB1.2 billion by 2025, driving share price to double in three years.

• Kakao Pay is the only possibility to be included in the February MSCI IR. It comfortably beats both the full market cap and float market cap hurdles.
• It can be assumed that the full-fledged emergence of local institutional flows targeting MSCI inclusion contributed to some extent to Kakao Pay’s outperformance early this year.
• More extreme reverse flow trading could emerge. In other words, there is a possibility that the share price will turn into a sell-off even before the MSCI announcement.

• A state-owned company invested in Ant Group which was also founded by Jack Ma.
• We believe both the revenue growth rate and the operating margin will rise in following quarters.
• We believe the stock price still has significant upside even after the surge in past four trading days.

• The gift market has contracted in recent years as corporate and formal gift giving has declined, but companies and individuals are enthusiastic adopters of digital gifting thanks to the convenience. 
• Businesses, in particular, are using eGifts as marketing and promotion tools and Giftee is one of the biggest beneficiaries of this trend. 
• The convenience and low cost of these services suggests considerable potential for expansion going forward, even if the consumer online gift market will increasingly be owned by LINE.

• This is our first report on Tractor Supply Company, a major rural lifestyle retailer in the U.S. catering to recreational farmers and ranchers.
• It delivered a mixed quarter, missing out on the revenue expectations of analysts but managing an earnings beat.
• We initiate coverage on the stock of Tractor Supply Company with a ‘Hold’ rating.

• Honasa Consumer (1652951D IN) is looking to raise about US$350m in its upcoming India IPO. The deal will be run by Kotak, Citibank, JM Financial and JP Morgan.
• Honasa Consumer is the largest digital-first beauty and personal care (BPC) company in India in terms of revenue for FY22 (Year ended 31st Mar 2022) according to RedSeer. 
• Honasa Consumer’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments. 

• What better way to start the year than to make a fool of myself by predicting some trends for 2023?
• Forecasting or predicting anything is extremely difficult and the further out you go, the less accurate you can be.
• That’s even the case with weather with ~ 90% accuracy on 5-day forecasts and 50% on 10-day forecasts.

• This is our first report on Lennar Corporation, one of the largest homebuilders and home finance service providers in the U.S.
• The company delivered another all-around beat for the last quarter and year-end 2022, strengthening its positioning for changing market conditions.
• Both new and existing home market sales and sales prices are significantly down, and given commercial underwriting and lending restrictions, new rental properties are also being restricted.

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.

• Central China Securities
• Greentown China
• Melco Resorts & Entertainment
• Shui On Land
• Sunny Optical
• Tata Motors ADR
• Wynn Macau Ltd