Daily Brief Consumer: Melco Resorts & Entertainment, Cisarua Mountain Dairy, Invocare Ltd, Seria Co Ltd and more

• Melco shares have been hammered worse than peers during covid having fallen as low as a range ~US$4. Other factors contributed to downside, since eliminated.
• 1Q23 earnings release shows strong recovery arc in progress both in Macau and Manila.
• With two markets firing and a third ready to open we see an attractive entry point here.

• Cisarua Mountain Dairy booked a solid +25% YoY growth in sales in 1Q2023, with a flat performance from dairy from a high base but very strong consumer foods growth. 
• Powdered milk prices and packaging costs have started to decline which will help to boost margins as the year progresses since Cisarua Mountain Dairy bought forward last year.
• Cisarua Mountain Dairy is an increasingly interesting consumer proxy catering to Indonesia’s middle classes but increasingly focusing on the less affluent mass market as it grows distribution in general trade.

• On the 7 March, PE outfit TPG took a 17.8% stake in InvoCare (IVC AU), Australia’s leading funeral services provider, and also pitched a A$12.65/share non-binding Offer via a Scheme.
• The Indicative proposal was subject to the completion of due diligence. InvoCare rejected the proposal on the 27 March. On the 24 April, TPG withdrew its NBIO.
• TPG has returned with a revised A$13/share, inclusive of a A$0.60/share fully franked dividend. If the proposal becomes a binding transaction, InvoCare’s Board intends to unanimously recommend it.

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.

• Melco Resorts & Entertainment
• Sands China

• The 100 Yen shop model looked in danger when inflation began to bite and labour costs surged but the sector continues to expand
• Their fixed price model meant there was little leeway to offset higher costs through higher prices but a survey shows 90% of respondents visited a Daiso store recently.
• While Daiso has adapted quickly and looks to have a bright future, Seria Co Ltd (2782 JP) refuses to adapt and has seen profits plummet.