Daily Brief Consumer: Fast Retailing, L’Occitane, Amer Sports , Ginebra San Miguel , Ultrajaya Milk, El Puerto de Liverpool SAB de, Global-e Online , WPP PLC, Connect, Lifevantage and more

• The review period for the Nikkei 225 (NKY INDEX) March rebalance ends yesterday. There could be three changes at the rebalance with sector balance in focus.
• Depending on the changes, passive trackers will need to buy between 1.3-19x ADV (7.1-24% of real float) on the inclusions and sell between 3.5-47x ADV on the deletions.
• Fast Retailing (9983 JP) avoids capping in March, passives will buy Nitori Holdings (9843 JP), and 25 stocks have over 0.5x ADV to sell as part of the funding trade.

• L’Occitane (973 HK) announced a strong 3QFY24 operational update last night.  Share price is up 7% today and up 36% since interim results announcement late November last year.
• Sol de Janeiro, the Brazilian-inspired premium body care brand, continued to shine in the quarter, growing 199% at reported sales and 214% at constant currency. 
• Recommend to take advantage of the current weak sentiment on such companies trading on the HK stock exchange but are actually not reliant on China in terms of business fundamentals.

• Amer Sports (AS US) raised around US$1.3bn in its US IPO, after pricing its IPO below its initial range, as per media reports.
• Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
• We have looked at the company’s performance and valuation in our past note. In this note, we talk about the trading dynamics.

• Ginebra San Miguel (GSMI PM) is a monopoly in the Philippines, with over 95% of the gin market. It has a 10 Revenue CAGR of 14%. 
• The company has experienced margin expansion due to premiumization and operating leverage on SG&A, the former of which is likely to continue in the future with new premium gin launches.
• There is value in the name trading at 7x PE, with >20% of the market cap in cash and a 7.3% dividend yield predicated on a 50% payout ratio. 

• Ultrajaya Milk (ULTJ IJ) is back to the boil in terms of sales growth for both its dairy and carton tea businesses, which both benefit from a nominalisation of mobility. 
• The company’s margins have improved in the dairy business as cost pressure has abated with falling powdered milk prices. Competition has picked up but the overall market is growing sufficiently. 
• Ultrajaya Milk will open a new distribution centre in 1Q2024, which should help to drive growth plus it looks to launch new product categories in 2024. Valuations are attractive.

Key points (machine generated)

• Liverpool is a major player in the financial services industry in Mexico and offers credit cards.
• The company has a strong presence in retail, real estate, and financial sectors, focusing on expanding its reach and providing a diverse range of products and services.
• Liverpool has incorporated e-commerce and implemented a new logistics platform to strengthen their supply chain and accommodate more clients, showcasing their dedication to innovation and customer satisfaction.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• This is our first report on e-commerce player, Global-e Online Ltd.
• The company delivered decent results for the third quarter of 2023, marked by significant growth in Gross Merchandise Value (GMV) by 35% and an Adjusted EBITDA increase by 76%.
• A key determinant of this success was their improved profitability margins and comprehensive cost control measures, alongside strategic advancements across their operations.

WPP’s capital markets day (CMD) focused on the combination of creativity and AI at scale and how these can be leveraged to boost clients’ businesses. Outline Q423 performance figures were given, along with updated forward guidance, including on restructuring costs and potential payback. We expect market expectations to be broadly unchanged. The overarching narrative of consolidation and simplification, common data platforms and standardised reporting, is coherent and supports the projected margin expansion. To be really convincing, though, top-line growth needs to exceed the 3% indicated, which depends on better performances in both Media and Creative. The rating remains undemanding.

Smiths News’ trading update highlights the resilience of its business model in a tough macroeconomic environment, with FY24 results expected to be in line with consensus. As a reminder, our 2024e PBT forecast stands flat at £33.4m despite an anticipated 6% y-o-y decline in revenue to £1.0bn, attributable to management’s tight control of the business and the ongoing annual efficiencies being delivered. Smiths has renewed several long-term publisher contracts in the past year, which could imply visibility over c 74% of annual revenues to 2029, with potential for expansion. This should further bolster the company’s cash-generative business model and underpin the sustainability of the business in the long term.

• 2QFY24 (December) ongoing EPS was $0.10 versus ($0.07) in 2QFY23 and ahead of our $0.04 estimate.
• Ongoing EBITDA was $3.1MM in the quarter, well above the $0.8MM in 2QFY23 and ahead of our $2.5MM estimate.
• EBITDA margins of 6.0% exceeded our 4.6% estimate.