Daily Brief Consumer: HLB Inc, Giordano International, Sumber Alfaria Trijaya Tbk Pt, Wynn Macau Ltd, Faraday Future Intelligent Electric, Sappe Pcl and more

• This offering is a 100% stockholder allocation with forfeited shares going to the public. There will be 9.56M new shares at a capital increase of nearly 9%.
• We should note that the largest shareholder may again do the same trick. He may block-deal a 1% stake and use the proceeds to participate in this offering.
• A massive release volume and a 25% discount rate may cause a severe pricing distortion, leading to arb trading openings.

• Giordano International (709 HK)’s voluntary conditional from the Cheng Yu Tung family (24.57% of outstanding shares) at HK$1.88 per share is open with a first closing date of 5 September.
• Crucially, the offeror will not increase the offer price. In combination with an ongoing retail recovery, the low-ball offer has little chance of meeting the 50%+ minimum acceptance threshold.
• While the IFA says the offer is fair and reasonable, key directors will not accept the offer. A deal break implies, at most, another 10% downside to the last close.

• A recent conversation with Sumber Alfaria Trijaya (AMRT IJ) which operates Alfamart and AlfaMidi mini-markets in Indonesia further cemented a positive view on the outlook for the company.
• The company should easily surpass its target for 1,000 new stores this year, with increasing basket sizes and fee-based income and some new features such as BeanStop potentially improving returns. 
• Sumber Alfaria Trijaya remains a core retail holding with an increasing investor following after MSCI inclusion. Valuations remain attractive versus history and ROE at 25% is higher than pre-COVID levels.

Wynn Macau’s H1/22 earnings continued to underperform those of peers, with the trend persisting since Q4/21. This could be owing to stiffer competition from newer properties (e.g. MGM Cotai and SJM Holdings’ Grand Lisboa Palace), particularly in the premium mass segment.

We highlight that Wynn Macau has sufficient liquidity to sustain 15 months of operating cash burn in a zero-revenue scenario. This does not factor in the company’s USD 500 mn loan from its parent, which we assume would be used to meet the government’s requirement for all operators to raise share capital by MOP 5 bn.

Wynn Macau’s next debt maturity will be in October 2024, when the USD 600 mn WYNMAC 4.875 24 will come due. Given that the WYNMAC bonds are yielding 9-12%, we believe it could be very difficult for the company to issue new bonds for refinancing. Hence, Wynn Macau might face serious refinancing risk if the industry fails to recover meaningfully beyond 2023.

• Faraday Future (FF) released an 8-K today saying they raised $52m and could see as much as $600m after 90 days.
• The 90-day lead time is obviously based on whether FF can survive. The company originally said it needed $200m to make it through the Q4 launch of its first EV.
• FF said it only had $52m in cash as of August 9th versus $233m on April 30th. With new funding, FF has 7.4 weeks of money at current cash-burn rates.

• Excluding onetime items, SAPPE’s 2Q22 core profit came in at Bt179m (+41%YoY, +18%QoQ), all-time-high, above our expectation and BB consensus estimated. Impressive result supported by a record high
• MOGU MOGU drove 2Q22 earnings The 2Q22 net profit rose to all-time-high of Bt167m (+32%YoY, +9%QoQ) driven by a solid Mogu Mogu sales (the best-selling products in export markets).
• The 2Q22 revenue rose to all-time-high of Bt1.2bn (+39%YoY, +21%QoQ), thanks to continues growth in international markets especially from Asia (+85%YoY) and EU & America (+63%YoY) due to re-stocking products