Daily Brief Consumer: Oriental Land, Yashili International Holdings, Wynn Macau Ltd, Tokyo Stock Exchange Tokyo Price Index Topix, AdTheorent, Inter Parfums, Domino’s Pizza and more

• Oriental Land (4661), Renesas Electronics (6723) and Japan Airlines (9201) will replace Toyobo (3101), Nippon Light Metal (5703) and Toho Zinc (5707) in the Nikkei 225 (NKY INDEX). 
• Oriental Land (4661 JP) has been added at a post-split PAF of 1. This reduces the passive buying on the stock by around a third.
• Passive trackers need to buy between 2.2-6.7 days of ADV on the adds while selling between 5-12 days of ADV on the deletes. There’s a big funding trade too.

• Yashili International Holdings (1230 HK) has announced that the disposal of Dumex China to Danone SA (BN FP) has been completed.
• This satisfies the second of three SPAs announced last May, leaving the sale of Danone’s 25% stake in Yashili to China Mengniu Dairy Co (2319 HK) outstanding. 
• This stake sale should conclude next week, to be followed by the launch of the Scheme later this month, early next.

• Yashili International Holdings (1230 HK) announced that the Dumex China Disposal was completed. The completion will result in the satisfaction of the last pre-condition, likely within five business days.
• China Mengniu Dairy Co (2319 HK)’s offer is HK$1.20 per share. Due to the upcoming release of full-year results, the scheme document will be likely despatched by early April. 
• This is a done deal and timing is the key risk. At the current price and for a late-May payment, the gross and annualised spread is 2.6% and 11.3%, respectively.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. China Jinmao Holdings
2. Lifestyle International Holdings
3. Geely Auto
4. First Pacific Co
5. Tata Motors Ltd

and more…

• TSE, as market operator, should focus on stimulating the market, not informally meddling in the management of listed companies on matters that are not explicitly stated in the listing criteria.
• Much of the reason ROE has not increased is that OP Margin has not increased. Despite gradual unwinding of cross-shareholdings, Total Asset Turnover slide and Financial Leverage remained unchanged.
• Increasing OP Margin is prerequisite for ROE to rise. It confirms that the root of the problem is the challenge of using cash for growth investments to create competitive products.

• 4Q22 revenue of $51.8 million above high end of guidance of $50.7 million. 
• Despite the challenging market conditions, AdTheorent was able to keep adjusted gross profit roughly flat at 65%, down less than 1%.
• The company (which has no debt) generated more cash, as a percentage of AGP, than in 2021.

• IPAR disclosing the sales benefit from the Lacoste license was the most notable item from the Company’s fourth quarter earnings call
• IPAR had previously reported preliminary Q4 sales results making it less of a surprise as to how well the business was doing. Consumer demand for fragrances has yet to wane
• In 2022 IPAR experienced growth from all regions and all its major brands. Montblanc, Jimmy Choo, Coach, and Guess grew by double-digits

• Domino’s gave a mixed performance in the last quarter as its revenues were below par after facing significant challenges in the U.S.
• The carryout business of the company continues to be its core strength.
• In light of the permitting as well as store construction supply challenges it faced, a deceleration in growth was expected.