Daily Brief Consumer: Melco International Development, Playmates Toys, Page Industries, General Mills, Lkq Corp, Diageo PLC, paragon AG and more

• Melco Resorts & Entertainment (MLCO US) has entered into a share repurchase agreement with a wholly-owned entity of Melco International Development (200 HK) to repurchase (and cancel) 40.37mn shares for US$169.8mn.
• Melco’s effective holding will decline to 51.7% from 53.1% currently. This is the second parent/sub repurchase agreement in the last 7 months. 
• MLCO’s previously announced US$500mn share repurchase program remains unaffected by this privately negotiated transaction, with US$412mn still available for future repurchases under the program.

• Playmates Toys (869 HK) just published its FY22 results showing a decrease in revenues of 19% but a consistent dividend of 2c HKD
• More importantly, it shared more details about the TMNT upcoming movie launch
• Reiterate thesis that upon TMNT relaunch Playmates toys could be a major beneficiary

• The current slowdown in volume can be attributed to both the broader macroeconomic slowdown & the pausing of the inventory system during the COVID, which has resulted in some mismanagement.
• However, the slowdown is not due to a loss of market share, product quality, or adverse distributor policies, indicating a cyclical issue rather than a structural one.
• In case of a gradual recovery of the macroeconomic situation and appropriate measures taken by Page Industries (PAG IN) , volume growth may pick up in the future.

• General Mills delivered a decent result for the previous quarter, surpassing the market expectations with respect to revenues and earnings.
• In the recent scenario, North America is the first priority of General Mills and they are focused on growth in its core market.
• Despite the post-pandemic situation and hurdles, the company has witnessed a decent growth in cash flow and revenue.

• LKQ Corporation delivered a significantly below part result in the year’s final quarter.
• Revenue declined in the quarter as compared to the last year, driven by the divestiture of PGW and FX translation.
• Organic revenue of parts and services increased but the overall top-line was below analyst expectations.

• Diageo delivered an operating profit and organic top-line growth above the medium-term guidance of the company.
• Despite the challenging economic environment, organic net sales grew.
• The Super Premium Plus brands of Diageo grew organic net sales.

paragon has announced the result of the Eurobond tender offer at 60% of nominal, securing just under €1.7m nominal out of a potential €5m. The offer forms part of the ongoing debt reduction programme that will see the majority of the outstanding bond liabilities (both Swiss franc and euro) redeemed over the next few months (see our previous note). While the shares and bonds have been responding well to the management initiatives, these appear to pose a considerable potential opportunity for investors, assuming the operational growth strategy is successfully implemented.