Daily Brief Consumer: Li Ning, ITC Ltd, BYD, Centurion Corp, ASICS Corp, Minor International, Takashimaya, Round One Corp and more

• As the Hong Kong bourse languishes, recent Hong Kong privatisation include mainland Chinese firms such as Vinda International (3331 HK) and China Traditional Chinese Medicine (570 HK) . 
• Reportedly (Reuters) Li Ning (2331 HK) is now in the crosshairs.  Shares are up 7.8% as I type.
• Olympic champion Li Ning holds ~10.5% in his self-named company, which was recently in the news after acquiring a HK$2.2bn commercial building from Henderson Land (12 HK)  as its headquarters.

• In Feb 2024,  BAT’s management stated that they were reviewing their stake in ITC Ltd (ITC IN).  The news of a possible selldown by BAT was leaked again earlier today.
• BAT has owned its stake in ITC for over a century and remains its largest shareholder.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Reuters reported that due to the steep share price declines, Mr Li Ning is considering leading a consortium to privatise Li Ning (2331 HK). 
• The shares have been weighed down by concerns about channel inventory, steep retail discounts, and unauthorised distributor sales. To counter this, Li Ning aims to achieve RMB50bn sales by 2028.
• The probability of an offer is low as funding the scheme consideration could prove challenging. Nevertheless, the downside is low as Li Ning trades at an undemanding valuation. 

• According to public news today afternoon during trading hours, the founder and biggest shareholder of Li Ning (2331 HK), Mr. Li Ning, is mulling privatizing the public company. 
• Mr. Li Ning has shown the opposite intention over the last few years, with several major sell-down of stake.
• The company is trading at 16x 2024 PE, with visibility being quite low. 

• We believe revenue will grow by 44% in 2023 according to the sales volume and the price trend.
• We believe net profit will increase by 100%, higher than the company’s estimate.
• We conclude an upside of 54% and a price target of HK$304. Buy.

For our next Corporate Webinar, we are glad to welcome Centurion Corporation’s CEO, Mr Kong Chee Min. 

In the upcoming webinar, Chee Min will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh.

Angus will also be providing an industry overview, featuring landscape commentary and returns analysis. The Corporate Webinar will include a live Q&A session

In the spirit of giving back to our community, one of the attendees will also be awarded an Amazon Kindle as part of our exclusive lucky draw. 

The Corporate Webinar will be hosted on Thursday, 21 March 2024, 19:00 SGT.

About Centurion Corporation 

Centurion Corporation Limited (“Centurion” or the “Company” and together with its subsidiaries, the “Group”) owns, develops and manages quality, purpose-built workers accommodation assets in Singapore and Malaysia, and student accommodation assets in Australia, the United Kingdom (“UK”) and the United States (“US”). The Group owns and manages a strong portfolio of 34 operational accommodation assets totalling approximately 66,607 beds as of 30 September 2023. Centurion’s established portfolio of workers accommodation assets are managed under the “Westlite Accommodation” brand and comprises nine workers accommodation assets in Singapore as well as eight workers accommodation assets in Malaysia. The Group’s student accommodation assets are managed under the “Dwell” brand, with ten assets in the UK, five assets in US and two assets in Australia. With global reach and a clear growth strategy to actively enhance and manage its assets, identify strategic acquisitions and joint ventures, as well as develop customised accommodation management services, Centurion is well-positioned as a leading provider of quality, purpose-built accommodation.

• On’s quarterly results disappoint, triggering a 10% stock drop. Meanwhile, ASICS’ share price is up 43% YTD despite modest performance.
• ASICS shareholders advised to consider profit-taking as stock outpaces fundamentals, faces competition from resurging Nike and fast-growing On
• On’s ambitious growth projections threaten ASICS’ market position, with potential market share parity within three years

• This is a follow-up to our initial report on the APAC Luxury Industry where we were of the belief that small niches within the luxury sector could offer potential opportunities.
• Below, we analyse the recent trends in luxury travel on Minor International (MINT TB), Mandarin Oriental International (MAND SP) and Shiseido Company (4911 JP).
• While travel has rebounded to pre-pandemic levels, Shiseido’s Travel Retail struggles, yet Minor International and Mandarin Oriental are showing signs of improvement. 

• Takashimaya (8233 JP) was founded in 1831 and is the operator of one of the leading department store companies in Japan.
• Takashimaya began applying the Accounting Standard for Revenue Recognition from the beginning of FY02/23.
• Takashimaya Co., Ltd. announced revisions to its full-year earnings forecasts for FY02/24.

• Round One Corp (4680 JP) specializes in running amusement complex facilities in Japan, the US, and China.
• FY03/23 results: The company reported sales of JPY142.1bn, operating profit of JPY16.9bn, recurring profit of JPY16.7bn, and net income attributable to owners of the parent of JPY9.7bn.
• In November 2023, the company revised its full-year FY03/24 earnings forecast.