In today’s briefing:
- Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power
- Taste Gourmet Q3 2024: Good Performance Cruise Into Q4 with Catalysts
- Barratt Redrow Plc, the Land Banker
- GTX: Preview of Hybrid Year
- Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings
Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power
- Inflation, having peaked at 4.3% in January 2023, has been on a downward trend throughout the year, with figures dropping to 2.8% in November and further to 2.6% by December.
- In this insight, we analyze the recent quarterly performance of Yakult Honsha (2267 JP), Nissin, and Seven & I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.
- While Nissin Foods Holdings (2897 JP) showcased excellent performance, Yakult and Seven & I Holdings (3382 JP) faced struggles in their recent quarters.
Taste Gourmet Q3 2024: Good Performance Cruise Into Q4 with Catalysts
- Taste Gourmet (8371 HK) reported revenue of 37% YoY Q3 2024, with profits up 37% YoY ( lower than our 50% YoY estimate). 9M FY23 revenue/profits were up 43%/43% YoY.
- We look forward to the mainboard listing. We believe the process will commence when FY24 results are out in June.
- The stock trades at 5.8x PE FY24e, with a potential dividend yield of 8.5% and cash around 26% of its market capitalization at 147.7 mn HKD.
Barratt Redrow Plc, the Land Banker
- The slowdown in the house market in the UK in the last 12 months has increased the likelihood of seeing more consolidation in the house-building sector.
- Redrow’s 24,565 plots have attracted a large buyer paying (with paper) a hefty premium to secure land. The land bank should cover house building production for just over four years.
- I believe the deal will ultimately succeed, although the CMA may take a closer look thus delaying the deal beyond H2 2024. Gross spread is 3.4%.
GTX: Preview of Hybrid Year
- In the weeks since our last update on GTX, there have been several quarterly reports suggesting a cooling in inventory purchases.
- We are reducing our 2024 estimates to better align expectations with the reality of how companies related to the auto industry have been reporting.
- In the year ahead, GTX should benefit from a higher Euro to US Dollar exchange rate and the auto industry depending less on electric vehicles and more on hybrid.
Increasing Pressure from Investors for Dissolution of Parent-Subsidiary (Inc. Affiliates) Listings
- There are 167 companies of 1,784 companies in Metrical Universe (12/2023) with major shareholders holding over 50% stake, and 605 companies with major shareholders holding between 20% and 50% stake.
- TSE has requests listed parent companies, listed subsidiaries, and affiliates to disclose the significance of parent-subsidiary (affiliates) listings. This will further increase pressure for the dissolution of parent-subsidiary (affiliates) listings.
- Hitachi’s transformation into value-creating company, which once spawned numerous listed subsidiaries, has been a success story since it began full-fledged “selection and concentration” process through the dissolution of parent-subsidiary listings.
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