Daily Brief Consumer: Fast Retailing, The Pinkfong Company, Ford Motor Co, Melco Resorts & Entertainment, Darden Restaurants, Domino’s Pizza, WM Motor Technology Co Ltd, Golden Eagle Retail and more

• Fast Retailing (9983 JP)  has rallied 60% during the last three-months on better-than-expected Q3 performance and a relatively strong bounce in Topix exceeding the upper-end of the trend-channel by 3%.
• Although 20% below the all-time high, reached during the COVID pandemic, the Fast Retailing to Topix  ratio is currently near the pre-COVID peak and starting to show some resistance.
• We would look to short Fast Retailing  with expectations of weakness in overseas markets such as North America and Europe in addition to the already struggling Chinese market.

• The Pinkfong Company was valued at about 1 trillion won, according to local reports in early 2022. Samsung Publishing (068290 KS) owns a 16.8% stake in The Pink Fong company.
• For now, The Pinkfong Company does not have any near term plans for an IPO. However, it may try to complete its IPO sometime in 2023/2024.
• The Pinkfong Company’s sales increased by nearly 500% in the US to reach 24.9 billion in 2021, accounting for 30% of the company’s total sales in 2021.

• Ford performed well during the second quarter despite a difficult environment that included supply chain disruptions, numerous new economic challenges, and general uncertainty.
• It managed to surpass Wall Street expectations in terms of both, revenues as well as earnings.
• The Ford+ strategy, which is Ford’s best chance to add value since they scaled the Model T, is why they achieved these achievements.

Melco Resorts’ Q2/22 results were in line with our expectations. Positively, the company’s overseas assets (in the Philippines and Cyprus) reported strong revenue growth and positive EBITDA, which partly offset the very weak performance in Macau. In addition, the company’s liquidity is strongest among peers, with sufficient cash and availability under its credit facility to last 22 months in a zero-revenue scenario. We expect the company’s expansionary capex to be curtailed in 2023 (after the remaining USD 250 mn of capex for Studio City Phase 2). That said, we view negatively MLCO’s small share repurchases.

• Darden Restaurants delivered a decent quarterly result exceeding sales expectations and having fairly good earnings despite the highly inflationary environment.
• The 2022 fiscal has been good for the company despite the impact of the Omicron variant as its brands continue to strengthen their business models.
• While LongHorn and other business segments saw lower segment profit margins in the last quarter due to higher inflation levels and other investments made in those businesses since pre-COVID, Olive Garden and Fine Dining segments saw segment profit margin growth this quarter.

• Given the impact of inflationary headwinds, Domino’s has been working out ways to improve its consumer pricing architecture in the U.S.
• The management saw the average price rise close to 6% in the last quarter which helped the company surpass revenue expectations of Wall Street.
• In the new season of Stranger Things, they also introduced their Mind Ordering app, which offered a new ordering experience.

• WM Motor Technology Co Ltd (WMT CH) (WMM) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• WM Motor is a smart EV player in China. As of the latest practicable date, it had a total of four main EV models. 
• In this note, we talk about the positive aspects of the deal.

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.

• Golden Eagle Retail
• KWG Living Group