Daily Brief Consumer: JD.com Inc., Hanssem Co Ltd, Yakult Honsha, Wynn Macau Ltd, Booking Holdings, Japfa Comfeed Indonesia, Walmart, Keurig Dr Pepper Inc, Geely Auto, Hyatt Hotels Corp Cl A and more

• We believe the revenue growth rate would still be low at 8.5% YoY in 4Q22, even lower than 11.4% YoY in 3Q22.
• However, we believe the growth rate of total revenue will be 10% in 2022, 15% in 2023, and 18% in 2024.
• We believe the stock has an upside of 47% for year end 2023.

• IMM private equity fund launched a tender offer on Hanssem Co Ltd (009240 KS) and its share price surged by 19.7% to reach 53,700 won today.
• IMM is currently the largest shareholder in Hanssem with a 27.7% stake in the company. IMM’s stake in Hanssem will rise to about 36% if this tender offer is successful.
• Hanssem’s share price still 2.4% below the tender offer price of 55,000 won. In the coming days, we believe the share price will reach closer to the tender offer price.

• Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.
• This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.
• With a lasting pricing-power and a relatively inelastic demand than competitors, we think Yakult Honsha (2267 JP) and Nissin Foods Holdings (2897 JP) are in a great position to outperform competition. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• NagaCorp Ltd
• Wynn Macau Ltd

• Booking reported a strong finish to 2022 as it delivered revenue and adjusted EBITDA above Wall Street expectations.
• Gross Booking increased as compared to the pre-pandemic time.
• Room night growth trends have strengthened in the quarter, with the improvements driven by the U.S. and Asia.

In our view, Japfa Comfeed’s FY 2022 results were decent, considering the difficult operating conditions following two years of COVID-19, the high-cost environment (owing to geopolitical tensions) as well as heightened inflation. Revenue growth was reasonable, while profitability was under pressure. Credit metrics deteriorated, but remained modest. Liquidity continues to be weak, due to material short-term debt.

We expect better FY 2023 results. We believe that operating conditions will improve, with the surge in soft commodity prices gradually being passed through to the end-consumer. We project: [1] steady revenue growth of c. 10%; [2] stable margins (with room for upside, considering FY 2022 was a weak year); [3] that leverage will at least remain stable, or improve slightly; [4] that (EBITDA-Capex)/Interest should deteriorate, due to the expected higher capex in FY 2023 for continued capacity expansion.

We do not foresee any rating pressure. Japfa is rated B+ (stable) and BB- (stable) by S&P and Fitch, respectively.

• Walmart finished the year on a high note with an all-around beat.
• The company increased global sales by $38 billion for the fiscal year of 2023.
• Walmart U.S. saw a more than $27 billion increase in sales.

• Keurig Dr Pepper delivered a decent set of results for the past quarter with its reported earnings being aligned with the analyst expectations while the revenue growth was above par.
• Home coffee volume growth sees a deceleration.
• We give Keurig Dr Pepper a ‘Hold’ rating with a revised target price.

• FY21 net profit declined -12% from a year ago, missing market expectations. The operating environment remains challenging, with softer 1H22 performance expected as cost pressures have risen sharply following the recent spike in raw material costs and added supply chain disruptions.
• Geely’s NEV sales penetration increased over the past year to ~6.3% of its total sales volume, which the firm remains constructive on over the medium term.
• Fair value is reduced to HKD17.50 as we lower our estimates to reflect industry headwinds that include the sharp increase in input costs and soft domestic demand conditions, which will weigh on its growth outlook

• Hyatt Hotels Corporation had a good quarter and delivered an all-around beat.
• The company generated positive free cash flows in 2022 primarily by optimizing capital allocation and investing in new growth platforms.
• We give Hyatt Hotels Corporation a ‘Hold’ rating with a revised target price.