Daily Brief Consumer: Oriental Land, Prada S.P.A., Devro PLC, Lifestyle International Holdings, Tokyo Stock Exchange Tokyo Price Index Topix, Landsea Homes Corp and more

• As earnings recovered following the COVID drop, Oriental Land (4661 JP)’s FY+2 EV/OP returned to around 40-60x range, which in our opinion is too expensive, especially in current market conditions.
• The positivity surrounding the opening of Fantasy Springs got investors to pay huge multiples but Fantasy Springs is no longer looking enticing to investors.
• With a miss and a downgrade to FY23 guidance on the horizon, we are expecting OLC’s share-price to break the long-term trend to the downside in the next few months.

• Last evening, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
• For Southbound Stock Connect, eligible foreign companies primary-listed in Hong Kong will become eligible. That could mean 5 additions to Stock Connect.
• Additionally, Southbound access via Shanghai Stock Connect will be expanded to being it in alignment with Shenzhen Stock Connect. That could see 131 stocks added to Shanghai Stock Connect.

• Saria agreed to acquire Devro for 316.1p/share in cash, for an implied equity value of £540.8 million and an implied EV of £667 million. This represents 9.6x EV/Fwd EBITDA, 65% premium.
• The offer price seems fair: the multiple is close to Viscofan’s (market leader) and my fair value estimate is 305p (DCF based). A competing bid seems unlikely.
• After the shares went ex-dividend, gross spread is 2.7%, but the estimated annual return is 3.6% (assuming settlement by 30 September 2023), which means there should be better opportunities elsewhere.

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.

• China South City
• Kawasan Industri Jababeka
• Lifestyle International Holdings

• Both Kappa Kreate and ATOM are almost completely controlled by their parent company, ColoWide, and we cannot expect corporate governance practices that would actually be a relief to minority shareholders.
• With the parent company in full control, the subsidiary’s minority shareholders are likely to be aware that the interests of the parent take precedence over those of the minority shareholders.
• Parent company shareholders shouldn’t tolerate continuing to own subsidiaries that damage their interests. The problem isn’t a problem of the interests of the subsidiary’s shareholders, but of the parent’s shareholders.

• A perfect storm of inflation, aggressive monetary tightening, and recessionary fears in 2022 has rocked the Housing market.
• This is especially true for home builders like Landsea Homes, which went public through a SPAC last year.
• While not a household name, Landsea has firmly established itself as an affordable builder for first-time home buyers.