Daily Brief Consumer: Honda Motor, Stella International, Fast Retailing, Tripadvisor Inc, TSE Tokyo Price Index TOPIX, Casino Guichard Perrachon Sa, Guess? Inc, Freshpet Inc, Lancaster Colony, Pointerra Ltd and more

• Today just before the close, Reuters came out with an article saying Japan’s four major insurers and some financial institutions would offer ¥500bn of shares in a secondary offering.
• That implies about 275-280mm shares (insurers hold ~195mm). In May, Honda announced a ¥300bn buyback with earnings, with nothing done so far. 
• The supply/demand dynamics here are key. There are a lot of moving parts over time. Honda is cheaper than it looks but there are moving parts there too.

• We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.
• We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.
• There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

• Domestic Uniqlo SSS (including e-commerce) were +14.9% in June. Positive
• Impressive +8.1% increase in customer traffic and +6.3% gain in per-customer spend
• I have a bearish view on Fast Retailing due to rich valuations (25x EV/EBIT). However, the share price may perform well in the run up to the Q3 report.

• Tripadvisor’s fourth quarter and full year 2023 financial results exceeded expectations with the company reporting revenue growth of 10% year-on-year amounting to $390 million in Q4.
• In the same period, the adjusted EBITDA was $84 million attributed to exceptional brand performance and marketing efficiencies.
• For the full year, the company reported a consolidated revenue growth of 20%, recording an all-time high of $1.8 billion, with adjusted EBITDA experiencing a 13% growth to $334 million.

• The problem with cross-shareholdings is not simply that they weigh heavily on ROE and ROA improvement, but also that they do not create tension in management.
• The degree of seriousness of the company’s efforts to reduce policy shareholdings is a measure of the improvement in return on capital. The level of seriousness must be monitored.
• The fact that there are inappropriate entries in the items required of prime market listed companies indicates that many companies are not suitable for prime market listed companies.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Casino Guichard-Perrachon’s ESG as “Adequate”, in line with its Environmental score, while the Social pillar is “Strong”. We assess Governance as “Weak” due to a lack of data following the company’s recent debt restructuring, which led to a change of control. Controversies are “Material”, while Disclosure is “Strong”. 

• We are reiterating our Buy rating, $37 price target and projections for Guess?
• after visiting stores in London.
• We believe the company has continued to raise their fashion game worldwide, increasing overall elevation levels and remaining focused on creating a global fashion powerhouse.

• Investment analysis and result summary for Freshpet’s first quarter of 2024 show a mixed yet optimistic outlook for the company’s financial and operational progress.
• The company reported a robust 34% increase in net sales amounting to $223.8 million, mainly driven by substantial volume growth of 31%.
• This positive development suggests a successful adaptation to significant pricing changes, highlighting effective management and resilient operational frameworks.

• Lancaster Colony Corporation recently reported its fiscal year 2024 third quarter results, highlighting a mixed performance with significant strategic adjustments.
• The company achieved record net sales and gross profit, with consolidated net sales increasing by 1.4% to $471.4 million and gross profit growing by 10.9% to $104.5 million.
• Notably, operating income saw a substantial rise of 19.5% to $35.1 million, reflecting robust underlying business performance despite some challenges.

• RaaS Research Group has published an update on cloud-based digital twin solution provider Pointerra (ASX:3DP) following the announcement it has been awarded a US$1.63m contract for a US Department of Energy programme to model a range of electric grid resilience investment scenarios by electric utilities.
• We see the contract as validation of Pointerra’s digital twin solution for managing large-scale physical inventory with the potential to provide the company with invaluable exposure to new and existing US clients in the US electric utility sector.
• We have not made any changes to our forecasts as a result of this announcement, although note that we have already factored in substantial revenue growth in FY25f.