Daily Brief Consumer: L’Occitane, Hotel Shilla, Invocare Ltd, Universal Entertainment, Coupang , Li Auto , 4imprint and more

• According to Bloomberg, L’Occitane (973 HK) is set to receive a HK$35 per share privatisation offer from Reinold Geiger, the Chairman and the largest shareholder.
• The rumoured price is attractive and represents an all-time high share price. Therefore, Acatis KVG, the shareholder with a blocking stake, would be supportive.
• The rumoured price implies multiples at a discount to peer multiples, which explains Mr Geiger’s ambitions for a possible European listing to secure higher valuation multiples. 

• In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days. 
• The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
• Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.

• In late 2018, there were reports that French beauty retailer L’Occitane (973 HK) had drawn interest from Advent International. That rumour came to naught. 
• Similarly, late last month, L’Occitane clarified media reports that it had not received any Offer or proposal. 
• After going into a trading halt this morning, reportedly (Reuters) Chairman Reinold Geiger has been discussing a possible offer of ~HK$35 for each L’Occitane share he doesn’t already own.

• After pitching a A$13/share NBIO on the 15 May, TPG has now inked a Scheme Implementation agreement with InvoCare (IVC AU) at A$12.70/share, inclusive of a A$0.60/share fully franked dividend. 
• This compares to PE-outfit TPG’s A$12.65/share NBIO on the 7 March – which Australia’s leading funeral services provider InvoCare promptly rejected.  
• A comparatively benign flu season, and an expected ~10% decline in 1H23 EBITDA, largely account for InvoCare’s change of heart.

• Invocare Ltd (IVC AU) has entered a SID with TPG at A$12.70 per share, a modest -2.3% discount to the previous non-binding offer of A$13.00 per share.
• The price cut was justified by a trading update which noted a challenging near-term macro-environment and softening in market volumes. The median peers’ share prices have also derated.
• The offer requires shareholder, FIRB and OIO approval. At the last close and for the end of November payment, the gross and annualised spread is 1.8% and 5.7%, respectively. 

• We have been covering UE for five years principally because we were bullish about its intentions to bring its Manila casino business public.
• Our focus has shifted. We see the casino IPO as inevitable but we like the stock now because it has performed well in its core Pachinko and media businesses post-covid. 
• If the Okada casino deal gest past current legal issues it would be a catalyst “bonus” to holders who come into the stock now, on a slight dip.

• CPNG reported C2Q23 top-line, adjusted EBITDA, and GAAP net profit in-line, 45%, and 102% vs. our estimate, and 2%, 27%, and 49% vs. consensus, respectively.
• Product commerce EBITDA margin rose 2ppts QoQ, which offset the 126% QoQ increase to developing offerings losses, which rose due to increased investment in its Taiwan business.
• Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.

• Li Auto reported solid 2Q23 results, with both top line beating cons/our est. by 5.3%/3.6% and GPM of 21.8% beating cons/our est. by 1.1/1.7ppt.
• We reiterate that capacity ramp-up is the key for Q3/Q4 delivery. Q3 sees a temporary capacity bottleneck albeit this is likely to be resolved in Q4.
• We expect the launch of MEGA BEV in 4Q23 to be the next catalyst. We reiterate Li Auto as our top pick and raise TP due to better-than-expected margin outlook.

4imprint’s interim results reflect the narrative at last week’s trading update, being strong underlying demand, an uptick in gross margin as the supply chain bottlenecks ease and strong returns on each dollar of marketing spend. Having upgraded following the update, we have now ‘tidied up’ our modelling for FY23 and FY24. With the buy-in of the legacy defined benefit pension and the accelerated recovery contributions, plus payment of the special dividend, we expect 4imprint to end FY23 with net cash of around $72m. This gives plenty of firepower to support continued growth, helped by a likely project in FY24 to extend the Oshkosh distribution centre. The group is clearly outperforming its market and building (profitable) share.