Daily Brief Consumer: Honda Motor, Samson Holding, Hyundai Motor India , Kalyan Jewellers, Limoneira Co, Grocery Outlet Holding Corp, Corn Active Contract, Bloks Group, Toll Brothers and more

• At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&C insurers and others. 
• We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. 
• It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.

• Since the US$3.3 billion secondary placement announcement, Honda Motor (7267 JP)’s shares are down 5% from the undisturbed price of JPY1,791 per share (4 July).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Honda’s shares have followed the pattern of previous large placements.
• The offering will likely be priced on 17 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

• Samson Holding (531 HK) disclosed a Cayman scheme privatisation offer from Mr Samuel Kuo (Chairman) at HK$0.48 per share, a 77.8% and 50.0% premium to undisturbed and last close price, respectively. 
• The key condition will be approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). The offer price is final.
• The attractive takeover premium, lack of shareholders holding a blocking stake, and low AGM minority participation rate point to a done deal. However, this is a small cap illiquid stock.

• Hyundai Motor India (1342Z IN), a subsidiary of Hyundai Motor (005385 KS), aims to raise up to US$3.0 billion at a valuation of US$17 billion.
• In Hyundai Motor India IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on market share losses in the key SUV sub-segment, bottom-quartile revenue growth, higher royalty rates and dividends to Hyundai ahead of the IPO.

• Kalyan Jewellers (KALYANKJ IN) , a leading jeweller with a pan-India presence, is expected to deliver strong sales growth, and improving returns with its asset-light expansion plans.
• Indian weddings have transformed from simple rituals to elaborate celebrations requiring heavy spending on jewellery and specialty apparel, reflecting rising affluence and media influence.
• Wedding related jewellery demand constitutes 60% of India’s total gold jewellery demand and remains resilient regardless of price changes.

• Limoneira is an agribusiness with underutilized land and water assets, resulting in poor returns for shareholders
• Peter Nolan, a successful asset manager from Leonard Green, has joined the board along with Global Alpha, indicating a potential turnaround in capital allocation and strategy
• Nolan’s leadership is expected to unlock the potential of Limoneira’s assets, leading to significant returns for shareholders

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Grocery Outlet reported fiscal Q1 2024 results that reflected mixed performance, illustrating both operational challenges and promising growth prospects.
• During the quarter, the company recorded a 7.4% increase in sales, achieving $1.04 billion, spurred on by a 3.9% rise in comparable store sales and reinforced by robust transaction count growth of 7%.
• This reflects Grocery Outlet’s continued customer appeal and effective store expansion strategy, having opened six new stores during this period.

• Strong American harvest driving downward pressure on Wheat, likely to offset reductions in EU and Russia.
• Corn saw modest recovery, driven by muted ending stocks, below trade estimate, but the harvest is going to be the third largest ever.
• US soybean production remains muted, in line with the Acreage report, and led to moderate recovery in early trading on Friday, but bearish sentiment persists.

• The key for high growth in 2023/24Q1 lies in its assembly character toys with renowned IPs,which may not be sustainable or even collapse if Bloks fails to renew license agreements.
• The advantages of Bloks in development prospects, self-developed IPs, brand stickiness are not obvious. The latest valuation reached RMB7.2 billion, but the founder has already cashed out before IPO. 
• Hong Kong stock market has been “lukewarm” to toy companies. Except Pop Mart, valuation/share price of peers are quite weak.How to gain investor/market’s recognition for Bloks is a question mark.

• Our estimations for FY 2024 annual revenue range at around $10,827 million and for 2025 at around $12,090 million.
• The company’s annual revenue reached $9,995 million in 2023 compared to $10,276 million in 2022, posting a decrease of 2.73%.
• Toll Brothers gross profit for FY 2023 was $2,634 million increased by 5.95% com- pared to $2,486 million for the corresponding period of 2022.