Daily Brief Consumer: New Oriental Education & Techn, ITC Ltd, Meituan, The Walt Disney Co, Whirlpool Corp, Starbucks Corp, Wynn Macau Ltd, Intralot S.A.-Integrated Lot, Mondelez International, Sysco Corp and more

• Today, after Hong Kong market close, the Ministry of Education issued a new draft regulation on K12 tutoring. 
• I have written before on New Oriental Education & Techn (EDU US) and China Beststudy that there is now a equilibrium reached between all parties on tutoring in China. 
• The new draft regulation basically puts it into concrete policy, which should alleviate investor concern on the sector. 

• British American Tobacco (BATS LN) owns 29.03% of ITC Ltd (ITC IN) and could sell a portion of its stake. But BAT will hold at least 25% of the company.
• British American Tobacco (BATS LN) paring its stake could also lead to SUUTI gradually reducing its own holding in the company.
• Any stake sales would not result in buying from global passive trackers while there will be small buying from local index trackers. Increased float could pressure the stock.

• We expect Meituan continue under pressure in the medium term due to the intensified competition with Douyin, and Meituan’s low price defending strategy in both food delivery and IHT businesses.
• Our non-IFRS net profit is roughly in-line with consensus in 4Q23 but 20%/25% lower than consensus in 2024/25.
• We downgrade the stock to SELL rating and cut TP to HK$57/share.

• Imagine a racetrack with 10 horses. The first two horses (NFLX and DIS) are peeling away from everyone else; with NFLX still having a sizeable lead over DIS.
• But the stage is set for DIS to start accelerating faster than NFLX.
• This is how I would describe the US Media sector today, and Disney’s Q1 results released yesterday only serves to bolster that narrative.

• The Whirlpool Corporation released its fourth-quarter 2023 earnings and reported progressive achievements, including gaining over 1% market share in North America, reducing its net costs by $800M, and signing significant transactions with Arçelik.
• However, the Whirlpool Corporation did acknowledge areas where it didn’t meet expectations, specifically citing increased promotional pressure which negatively impacted EBIT margins, and a failure to reduce inventories quickly, weighing on the full cash flow.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Starbucks Corporation on its First Quarter Fiscal Year 2024 earnings call provided a detailed account of the firm’s financial performance and future projections, endorsing its growth strategy despite short-term challenges.
• Positively, the company managed to increase its Q1 total company revenue by 8% year-over-year to a record $9.4 billion.
• Further, the firm’s global comparable store sales witnessed a growth of 5% year-over-year, backed by a 5% comp growth in North America and a 10% comp growth in China.

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.

• Wynn Macau Ltd

Intralot Integrated Lottery Systems and Services (Intralot) is a leading developer and supplier of integrated gaming systems and services that cover the entire value chain of select gaming markets. Its core global markets are forecast to produce steady growth, which is likely to be further boosted by new revenue opportunities as adjacent markets regulate and/or open up. The industry enjoys high barriers to entry and the long-term nature of client relationships provides attractive financial dynamics such as high revenue visibility and levels of profitability. Management believes the company’s competitive advantages of superior technology and service will provide many opportunities to outpace market growth in the next few years, which will further drive profitability, cash generation and returns. We believe these are not reflected in the current valuation.

• Mondelez International closed out 2023 on a strong note, according to their fourth quarter and year end earnings call.
• Chairman and CEO Dirk Van de Put pointed to robust top-line growth, record profit dollar growth, strong free cash flow, and solid returns to shareholders as key indicators of this success.
• More specifically, their organic net revenue grew 14.7% or $4.6 billion from the prior year.

• Sysco’s performance for the quarter was strong, given their position as a market leader in a growth industry where size and scale matter.
• The company demonstrated this position by delivering double digit earnings per share growth, realized from volume growth, margin management, and expense control.
• Due to this positive momentum from H1, Sysco expects to expand in H2, maintaining their full year growth expectations for both sales and EPS, including an adjusted EPS growth of 7% at the midpoint of their guidance range.