Daily Brief Consumer: Hyundai Motor, Amer Sports , Orion Corp, Dongwon Industries, Shakey’s Pizza, Mohawk Industries, Tyson Foods Inc Cl A, Zegna, Flexsteel Inds, Betterware de Mexico Sab de CV and more

• K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
• Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
• These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise at least US$1 billion.
• We previously discussed the IPO in Amer Sports IPO: The Bull Case and Amer Sports IPO: The Bear Case.
• In this note, we present our forecasts and take the first look at Amer’s potential valuation range.

• On 15 January, Orion Corp announced that its subsidiary PAN Orion Corp will purchase a 25.7% stake in Legochem Biosciences for 549 billion won. 
• LegoChem Bio specializes in antibody-drug conjugate (ADC) technology. Legochem Bio signed a total of 13 technology transfer contracts amounting to 8.7 trillion won in the past 9 years. 
• Most investors in Orion Corp would rather have the company focus on its core confectionery/snack business, rather than expand into high risk/high reward biotech business.

• On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.
• We are positive on Dongwon Industries. This large amount of share cancellation will boost the company’s earnings per share and book value per share.
• The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.

• Consensus estimates for Shakey’s Pizza (PIZZA PM) for Q4 FY23 (expected April 15th) are too conservative, implying a degrowth in profitability. We believe there would be a comfortable beat there. 
• We expect incremental growth plans on Potato Corner to continue to be the aggressive one-store-per-day addition. 
• Despite the recent move, the stock trades at 14x/10x PE FY23e/24e, with management-guided future revenue growth at 20% CAGR for the next three years.

Key points (machine generated)

• Mohawk Industries has a stock price of $80 per share, and despite a decline in the global construction market, the company has a strong market position and is considered a medium+ quality business.
• The current valuation at 8 times EBIT is seen as an attractive entry point, with expectations for EBIT in 2024 already lowered but still indicating a promising earnings power of $10-14 net income per share in the medium term.
• Mohawk Industries is seen as a cheap investment opportunity with significant growth potential in the future, and previous VIC notes have highlighted its potential. Readers are recommended to review the analyses provided by dsteiner84, Value1929, and Glory_Warriors.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• Tyson denies any involvement in illegal activities and believes the allegations made against it are baseless.
• The company is committed to defending itself and operating in compliance with all laws and regulations.
• The investigation into alleged collusion and price-fixing in the chicken industry is ongoing and the outcome is uncertain.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• The author believes that luxury clothing brand Ermenegildo Zegna is a compelling short opportunity due to an overvaluation based on a one-time hype super cycle.
• The author predicts that Zegna will reach its peak in popularity as the fashion boom/bust trend plays out.
• Weak brand standing within the stealth wealth category, significant exposure to the Chinese market, and execution risks from the acquisition of Tom Ford International are cited as reasons for the potential downside.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.
• The company said 2QFY24 EPS will be $0.57 versus preannouncement consensus of $0.27.
• Sales are expected to hit $100 million in the quarter, ahead of the preannouncement consensus of $96 million.

• We are reiterating our Buy rating, projections and price target after reviewing the Betterware January 2024 catalog.
• Further, management flexed the catalog categories back to 8, from a peak of 10, with the Better Kids and Pets categories now incorporated in other sections, allowing for an easier overall catalog read.
• As such, we believe the Betterware division continues to recover and reiterate our Buy rating and $17 price target for BWMX.