Daily Brief Consumer: Denso Corp, Tongcheng Travel Holdings , Vietnam Dairy Products JSC, British American Tobacco , KT&G Corporation, TSE Tokyo Price Index TOPIX, RPSG Ventures Limited, Anexo Group , Wynn Macau Ltd and more

• Since the US$4.0 billion secondary placement announcement, Denso Corp (6902 JP)’s shares are down 4.3% from the undisturbed price of JPY2,298 per share (28 November).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Denso’s shares have followed the pattern of previous large placements.
• The offering will likely be priced on 13 December. Investors participating in previous large Japanese placements tend to secure positive returns.

• Tongcheng Travel Holdings (780 HK) is expected to replace GDS Holdings (9698 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the March review.
• Constituent changes and capping changes will result in a one-way turnover of 2.32% and that will result in a round-trip trade of US$628m.
• Short interest on Tongcheng Travel Holdings (780 HK) is near its lows while there has been some recent short covering in GDS Holdings (9698 HK). 

• CEO Group JSC (CEO VN) will be added to the MarketVector Vietnam Local Index at the close on 15 December.
• Estimated one-way turnover is 5.24% and that results in a one-way trade of US$30m. There are a couple of stocks with more than 1x ADV to buy from passives.
• The largest passive inflows will be in Vingroup Jsc (VIC VN), Vietnam Dairy Products JSC (VNM VN), CEO Group JSC (CEO VN) and Vinhomes (VHM VN). 

• JSE indices get rebalanced in the closing auction on Thursday.
• No constituent changes will be made to the ALSI, Top 40, Top 40 SWIX, FINI, FINDI or INDI. HAR will enter the RESI and AMS will fall out.
• Largest buys: BTI, MNP, BHG, APN.

• KT&G is a high conviction pick in 2024.We believe KT&G Corporation (033780 KS) is likely to announce cigarette price hikes in 2H 2024.
• Three major reasons include a) no cigarette price hikes in nearly 9 years, b) Korean legislative election will be in April 2024, and c) reduce government tax revenue shortfall.
• We believe that the Korean government could raise cigarette prices to about 7,000 won to 8,000 won per pack from current price of 4,500 won. 

• The contents of quarterly reports are the same as those of financial summaries. Therefore, it’s in order that the quarterly reports for 1Q /3Q be unified with the financial summaries.
• The major difference between quarterly securities reports and financial summaries is the significance of legal responsibility. By requiring partial review by auditors, TSE will ensure the reliability of financial summaries.
• Meanwhile, TSE must continue to enhance the ethics of company managers and require companies to eliminate malicious misreporting. Unification of quarterly reports would further increase the role of the TSE.

• RPSGV’s BPO business, Firstsource Solutions, is stabilizing and reported flattish QoQ revenue growth. EBIT margin has also bottomed out and is now at around 11%, an expansion of 300bp YoY.
• FMCG Business continues to maintain an annualized revenue run-rate of INR 400cr+. The Sports business generated revenues of INR 50cr+ vs INR 15cr YoY. 
• The FMCG and the Sports businesses hold tremendous scalability potential going forward. The IPL Lucknow franchise also owns a team named Durban in the South Africa T20 league.

• I wrote a brief write-up on why I liked Anexo (ANX) almost a year ago when the stock was trading at 84p.
• I had hoped that the VW payout would be 10-20 million GBP and turned out to be only about 7.2 million for 12,000 of their 16,000 VW clients.
• As of their H1 2023 report they had another 12,000 Mercedes emissions clients, and they believe the VW settlement has created a precedent and have several other car manufacturers lined up, so this could turn out to become a nice profit stream after all.

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.

• Wynn Macau Ltd