Daily Brief Consumer: Ferrari N.V., iShares MSCI ACWI ETF, Taste Gourmet, Toyota Motor, Tokyo Stock Exchange Tokyo Price Index Topix, MGM China Holdings, Oriflame Investment Holding PLC, O’Reilly Automotive, AdTheorent and more

• In our prior insight Ferrari: Classic Fisher Company, Almost Perfect Score on The Fisher 15 Framework, we talked about Ferrari N.V. (RACE US) being a classic Fisher company.
• Q2 2023 (a quarter with 14% revenue growth/34% profit growth) showed the execution runway (order book/product mix) is tremendous, and over the long term, value can be created.
• In the short term, though, trading at 46x/40x FY23e/FY24e despite upping its guidance, there could be a case to queue up for a more favorable entry price. 

• Global equities are under some pressure after Fitch downgraded the United States’ credit rating to AA+ from AAA.
• We expect that this is a normal 3%-6% pullback to the 50-day MA or major $93 support level on the MSCI ACWI iShares MSCI ACWI ETF (ACWI US) .
• $TNX is below 4.1%-4.3% and DXY remains in an 8-month downtrend; as long as this remains true, we’d buy on a pullback to the 50-day MA and/or $93 on ACWI-US

• With that out of the way, let’s dive into Taste Gourmet, a catering group listed in the secondary market (or GEM board) of the Hong Kong Stock Exchange.
• Catering is usually a business with little moat, characterised by low barriers to entry. 
• While some brands are widely recognizable, humans generally want to devour something different each day, therefore it is an everyday struggle for restaurants to stand out among competition.

• Toyota Motor Corp., the world’s biggest car seller, has announced plans to consolidate its research and development (R&D) resources in China and ramp up its focus on electric vehicles (EVs), as it attempts to revive stalling sales in the highly competitive market.
• The Japanese automaker said on Monday it would change the name of its largest R&D facility in China from Toyota Motor Engineering & Manufacturing (China) Co. Ltd. to Intelligent ElectroMobility R&D Center by TOYOTA (China) Co. Ltd., and consolidate engineers from its three China ventures into the newly named facility based in Changshu, Jiangsu province.
• Among other plans, it would also strengthen local development of electrified vehicles (EVs) including battery, hybrid and plug-in hybrid models and accelerate the development of an electric powertrain with its two biggest suppliers, Denso Corp. and Aisin Corp., the company said.

• The percentage of stockholdings by individuals will continue rising. Their tendency to buy-on-decline will continue to serve as a cushion in times of falling stocks as well as voting behavior.
• Now that the BOJ’s ETF purchases have subsided, an increase in trust bank stock holdings is not expected. A limited increase in pension assets is also expected.
• The reduction in cross-shareholdings has reduced the shareholding ratio of corporations to 19.6%. Meanwhile, corporations repurchased total of 5,790.7 billion yen in FY2022, indicating that share repurchases have taken root.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Country Garden Holdings Co
2. Vedanta Resources
3. China Jinmao Holdings
4. Geely Auto
5. First Pacific Co

and more…

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Oriflame’s ESG as “Adequate”, in line with its “Adequate” Social and Governance scores. The company has a “Strong” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Strong”.
• Oriflame is a global beauty direct seller that markets its products through 3.1 mn members across 60 countries.

• O’Reilly Automotive managed to exceed the revenue as well as earnings expectations of Wall Street driven by strength in consumption and a robust increase of 16% in diluted earnings per share.
• Strength in the ticket count comps, particularly in the company’s professional business was a great contributor to the outperformance.
• We give O’Reilly Automotive a ‘Hold’ rating with a revised target price.

• 2Q23 revenue of $37.6 million was above consensus of $36.4 million.

• The challenging advertising market conditions have continued but EPS of $0.09 was significantly ahead of consensus of a loss of $0.01.

• The company (which has no debt) has more than $73 million in cash and reaffirmed its full-year guidance.