Daily Brief Consumer: L’Occitane, Alibaba Group Holding , China Beststudy Education Group, Royal Caribbean Cruises, Cocoa Futures, Porch Group Inc, Pointerra Ltd, Pool Corp, Primo Water and more

• Concurrent with its HK$34/share VGO, L’Occitane (973 HK)‘s disinterested shareholders may be entitled to a share scrip alternative. IF afforded, up to 5% of shares out can participate.
• The big unknown is whether you receive shares of the levered-up Bidco, at some as yet undetermined scrip ratio; or keep shares of L’Occitane as-is.
• To trigger the rollover option, 10% of disinterested shareholders need to express interest by the 15th May (a Hong Kong holiday btw). A deadline without details. 

• We believe revenue will grow by 6% YoY in 4Q24, but by 11% for FY2026 (roughly 2025 calendar year).
• We believe Alibaba has been actively raising its revenue growth, but this the effect cannot be seen in the short run.
• We conclude the stock has an upside of 46% and a price target of US$120.

• The HK$34/share offer price is final, which exceeds all-time high closing price of HK$33.60/share since IPO in 2010. EUR6 billion is equivalent to a PE of 52.17x, higher than peers.
• Deploying China’s sinking market is “a good story full of imagination”. However, it may fail to bring expected profits considering increasing competition/potential price war, leading to uncertain future performance growth.
• For minority shareholders, this privatization provides an attractive opportunity to monetise their investments at a premium over market price. We don’t think the current “technical bull market” to be lasting. 

• China after-school tutoring remains one of the most attractive and visible sectors in the next 2-3 years time frame. 
• Even though New Oriental Education & Techn (EDU US) had some hiccups in FY3Q24 results, they were mainly due to factors not related to the core after-school tutoring business.
• My sector top pick is China Beststudy Education Group (3978 HK), as valuation is lower and growth is higher, though it has a much smaller market cap..

• Royal Caribbean Group has made impressive strides in reshaping the business in the first quarter of 2024.
• The company described its Q1 2024 as robust and experiencing an upward trajectory in business operations, bolstered by the consumers’ demand for vacation experiences.
• The results of Q1 2024 were significantly better than anticipated, with the company’s brands being stronger than ever and demand for vacation experiences showing consistent acceleration.

• -30% // Cocoa Bubble Has Busted Just two weeks ago, the most-active contract hit a record of almost $12,000 a ton as the industry grappled with the fallout of severe supply shortages.
• “It’s important to underscore that the recent downturn in cocoa prices is primarily a result of trading maneuvers, not a realignment of market fundamentals,” analysts at Fitch Solutions’ BMI unit said in a note, adding they expect volatility to persist.
• Volatility spiked as bigger margin requirements spurred traders to close out positions, helping to drive aggregate open interest in cocoa futures to the lowest in more than a decade.

• Investment thesis for going long on Porch Group Senior Secured Convert in the mid 50s, with a 22.5% Yield to Maturity and potential for a 75% one-year return
• Option for higher risk tolerance investors to target the 2026 Notes in the 30s for more upside
• Capital structure and background information on Porch Group’s decline in the macro environment for housing, extreme weather-related losses, and involvement in a reinsurance fraud scandal with Vesttoo highlighted

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.

• Pureprofile Ltd (ASX:PPL) is a data analytics and consumer insights company underpinned by proprietary technology, servicing business decision makers in brands and media companies as well as market researchers.
• Pureprofile has reported a 6% increase in Q3 FY24 revenue to $10.9m and 49% decline in Q3 EBITDA to $0.5m.
• Q3 is seasonally the weakest quarter for PPL and EBITDA was affected, in part, by the change in executive remuneration policy to cash-based payments.

• Pool Corporation reported its latest Q1 earnings, posting $1.1 billion in net sales.
• Though a dip of 7% from the previous year, the figure is up 6% from the same period in 2021.
• The quarter’s performance marks the company’s fourth successive year of meeting or exceeding the $1 billion threshold in a comparatively slow seasonal quarter.

• Primo Water Corporation specializes in consumer drinking water products and services, focusing on the North American market
• Market leader in the water industry with strong growth potential and resilience in economic downturns
• Company undergoing operational improvements, attractive valuation, and compelling ESG story following the sale of its European business

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.