Daily Brief Consumer: PT Metrodata Electronics, Eastroc Beverage Group, Shimano Inc, MGM Resorts International, China Education Group, Faraday Future Intelligent Electric, Autogrill SpA, Nitori Holdings, Accor SA and more

PT Metrodata Electronics, Tbk (MTDL:IJ), publicly listed company on Indonesia Stock Exchange since 1990, is a Digital Solution Provider and Technology Innovator in Indonesia that leads and enables the digital economy hub. MTDL builds strategic alliances with world-class ICT companies. The Company has two main business units, including Distribution Business (providing World-Class ICT Hardware and Software) that handles distribution through Omnichannel to partnered dealers (both offline and online) and ICT solution companies, as well as runs an e-commerce business (e-catalogue for Government/B2G). Its Distribution network covers more than 150 cities in Indonesia and has more than 5,200 channel partners and more than 100 world-class IT products and service brands. The second business unit, Solution & Consulting Business, is a digital solution provider that provides a complete range of ICT solutions based on Metrodata’s 8 Pillars of Digital Solutions, which consist of Cloud Services, Big Data & Analytics, Hybrid IT Infrastructure, Security, Business Application, Digital Business Platform, Consulting & Advisory Services, and Managed Services to support digital business transformation, for Enterprise, Corporate, SME, and Public Sector segment.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• China started mulling an expansion of its Stock Connect relationships in late 2021 with plans to allow GDR issuance in Switzerland and eventually Germany.
• New GDR issuance rules came into effect in February and companies started planning to issue GDRs in Switzerland in March.
• The new SIX Listing Rules went into effect 25 July. Two companies priced GDRs on 22 July and two more yesterday. US$1.5bn so far. There are 6 more near-term.

• Shimano’s stock price has declined by 25% year to date on expectations that bike sales will soon start going downhill
• We model a GFC-style recession and find that Shimano’s valuation has already reflected the worst case scenario
• If we are heading for a collapse, then Ferrari N.V. (RACE US) should be acting more like Shimano. The valuation discount between the two is as wide as ever

• With a dominant presence on the Las Vegas strip as recovery revenue ballast, MGM is seeing recovery in its US regional properties, growth in digital and news flow from Asia.
• The company’s BetMGM sports betting partnership with UK giant Entain is thriving. It ambitions to buy out its partner, or its partner’s parent are clear.
• As Macau slowly reopens its long awaited recovery arc will be positive news flow in Q3 and Q4 for MGM due to its two property footprint there.

• China Education Group (839 HK) has retreated 23% from recent high with no regulatory and company news. Given its secured earnings growth outlook, we see an opportunity. 
• We believe drivers are higher enrollment and tuition, further capacity growth, good progress in overseas education and light capex. There are positive developments in these aspects recently. 
• CEG may return unused share buyback funds to shareholders via dividend, suggesting a potential resumption of payout. At just 5.7x PER for FY23F, its growth prospect is undervalued.

• Faraday Future (FF) announced that it has delayed the Q3 2022 launch of its first EV and is “continuing to engage” in fundraising talks. 
• FF says it needs $325m to last through the year or 47% of its market cap. A PIPE deal could be underway, albeit the 8-K filing was cautiously worded. 
• Depending on the agreement, it may pave the way for the recently deposed founder to place a crony on the Board, which could be negative for future funding. 

• Dufry and Autogrill agree an all-stock deal (0.158 DUFN SW x 1 AGL IM) to create a travel-related concession giant. The Benettons will become the largest shareholders (c.25%).
• The deal should bolster Dufry’s balance sheet and add scale, helpful in tenders. Shareholders of Autogrill seem to be the main beneficiaries of the deal.
• As per the terms, spread on all-share is 14% premium, while that on cash alternative is 0.2% premium. Only a recovery of Dufry’s share price would justify opening a position.

• Nitori attributed the missed profit guidance to foreign currency forward contract approach changes a few years ago, which resulted in missed foreign currency projections.
• Since Nitori changed its FX forward approach several years ago for a reason, it’s concerned about the impact on Nitori’s business if it were to return to its original approach.
• The approach of relying on the market views of Mr. Nitori is not sustainable. The biggest challenge, the Succession problem, adds to the risk of finding a market genius.

The Europe HY Trade Book for July 2022 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.