In today’s briefing:
- [Miniso Group (MNSO US）]: Strong Offline Traffic Bodes Well for C1Q23 Growth
- PT Surya Citra Media (SCMA IJ) – Primed for Reset in 2023
- Step One Clothing Ltd – Underwear Under Valued
- [Nayuki Holding (2150 HK) Target Price Change]: Business Model Change Has Risky Consequence
- Step One Holdings Ltd – Underwear Under Valued
- Changing Japanese Companies Is Not TSE Request but Inflation that Changes Mindset of All Managers
[Miniso Group (MNSO US）]: Strong Offline Traffic Bodes Well for C1Q23 Growth
- We expect Miniso to report C1Q23 revenue, operating profit, and net income 3.6%, 18.3% and 16.7% higher than consensus.
- We think the strong foot traffic to offline stores post CNY bodes well for Miniso’s domestic store sales in 2023;
- We maintain the Buy rating, and raise TP by US$1 to US$25 to factor in the sales recovery from higher foot traffic and ARPU.
PT Surya Citra Media (SCMA IJ) – Primed for Reset in 2023
- PT Surya Citra Media Tbk (SCMA IJ) had an exciting 2022, with a ramp-up in new audience share-winning original content along with the boost from the Word Cup rights.
- Both SCTV and IVM gained significant audience share in 2022, and Vidio led the charge on OTT driven by killer content, finishing the year with 5m paying subscribers.
- Profitability was hit by a sharp rise in production costs and investment in Vidio but we expect significant improvement in 2023. Valuations are attractive with SCMA on 12x FY2023E PER.
Step One Clothing Ltd – Underwear Under Valued
- Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear, with a core colour range supplemented by regular limited-edition releases, all with FSC (Forest Stewardship Council) certification throughout the supply chain.
- The company has operations in Australia (67% of sales), UK, (30% of sales) and the US (3% of sales). A H1 FY23 sales decline of 5.7% was better than our industry average estimate of-19% cycling lockdown, while lower sales and marketing spend saw EBITDA in-line with the pcp at $7.6m, the highest of any industry peer.
- H2 FY23 should see similar trends and deliver EBITDA well above consensus.
[Nayuki Holding (2150 HK) Target Price Change]: Business Model Change Has Risky Consequence
- Nayuki reported C2H22 top line 0.9% below our estimate but 18% below consensus，due to deteriorating cost ratios;
- Company chose to drastically expand store count by ~600 in 2023. Our concern is that Nayuki stores now are drastically different from its past.
- The company is abandoning its premium teahouse position, which begets unknown consequences in our opinion; We keep the TP unchanged at HK 3.1 and maintain SELL.
Step One Holdings Ltd – Underwear Under Valued
- Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear.,
- A H1 FY23 sales decline of 5.7% was better than our industry average estimate of -19%, while EBITDA was in-line with the pcp, the highest of any industry peer.
- On our estimates this superior business model currently trades at a PER of 1.0x ex-cash. Inventory is the key risk, currently representing ~two years’ sales, but is low fashion risk.leared.
Changing Japanese Companies Is Not TSE Request but Inflation that Changes Mindset of All Managers
- For Japanese companies that take time to take action while watching their surroundings, it’s skeptical of the expectation that individual managers will initiate measures in response to a “TSE request.
- The shift from deflation to inflation won’t only affect company’s profit structure and balance-sheet, but will also force Japanese companies to change as it resets the mindset of all managers.
- Since there’s little economic rationale for holding cash under inflation, all companies, rather than individual management decisions, will be forced to use cash for investment in growth and shareholder returns.
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