Daily Brief Consumer: Fast Retailing, Alibaba Group Holding , China Dongxiang, Tesla , Guess? Inc, RELX PLC, Sacks Parente Golf, Greggs PLC and more

• At end-September, the Nikkei 225 semi-annual review imposed a “cap” on Fast Retailing (9983 JP) in the Average, applying a 0.9 coefficient to the Price Adjustment Factor.
• At its current weight, Fast Retailing will be capped again in March 2025. If the stock outperforms Nikkei 225 by another 3% before 31 January 2025, it could be double-capped.
• And an additional 16% would mean ¥1.1trln of sales in March. But like last time, this is a rubber band which stretches. Too far, and selling pressure is obvious.

• The review period for the December rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 30 September.
• We do not forecast any constituent changes for the index. Capping changes will lead to a one-way turnover of 2.15% and a round-trip trade of HK$6.1bn (US$785m).
• If any stocks have outsized moves on expectations of being added to or deleted from the index, there could be opportunities to enter trades.

• China Dongxiang (3818 HK) stands on a discount of 82.1% to NAV after factoring in the recent market rally, not limiting to its Alibaba Group Holding (9988 HK) holdings.
• Its listed equities may have gained Rmb314m, but the HK$41m market capitalisation growth has not reflected this. The gains on its unlisted investments have not been included yet.  
• CNDX is now more likely to have a positive swing in the bottom line in FY25. Its tiny sportswear business has also witnessed a sequential moderation in sales decline. 

• Tesla aims for 462,000 deliveries in Q3 2024, with analysts predicting actual numbers could reach 470,000 units. This increase highlights strong demand, particularly in China.
• Vehicle registrations in China rose nearly 20% QoQ, driven by the Model Y’s popularity. Despite expiring subsidies, Tesla expects Q3 deliveries to exceed its previous best quarter by 5%.
• Tesla’s stock is up only 4.85% year-to-date, significantly lagging the S&P 500’s 21% rise. Factors include declining EV demand, price cuts affecting margins, and increased competition.

• We are reiterating our Buy rating, $29 price target and projections for Guess?
• after visiting the newly opened Guess Jeans store and wholesale displays in the Milan metro area.
• Guess Jeans represents the company’s focus on a younger, more environmentally driven consumer who is looking for easy to wear, primarily denim driven basics.

• RELX has presented a robust financial performance for the first half of the year, accomplishing considerable growth across its various business segments.
• The highlight includes a 7% increase in underlying revenue and a 10% rise in underlying adjusted operating profit.
• The adjusted earnings per share also grew by 10% at constant currency, reflecting a persistent upward trend in the company’s profitability.

• Sacks Parente Golf (NASDAQ: SPGC) is an innovative, technology driven golf company with a growing portfolio of golf products, including putters, golf shafts, golf grips, and other golf-related accessories.
• The company went public in August 2023 raising $11.6 million in net proceeds.
• The company announced its entry into the golf shaft market in November 2023.

Greggs demonstrated continued strong sales growth in Q324, against a challenging Q323 comparative. The company continues to benefit from its multipronged growth strategy of increasing space, extended trading hours, new digital channels and menu development. Management is confident of meeting its full year expectations, helped by marginally lower cost inflation than previously expected.