Daily Brief Consumer: Rakuten, ASICS Corp, Poya International, Byc Co Ltd, Telenet Group Holding NV, Tencent Music, Renault SA, Health And Happiness (H&H), Accor SA, Leapmotor and more

• Rakuten Bank (EBANKZ JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 21 April.
• News reports indicate a raise of US$800mn (JPY 106.8bn) at the mid-point of the IPO range, valuing the company at JPY 305bn (US$2.3bn). 
• The stock should be added to the TPX INDEX at the close on 30 May where trackers will need to buy over 14% of the stock issued in the IPO.

• Good news from Nike’s Q3 report, which bodes well for Asics March quarter
• Why was Nike’s stock down? Margins were down 330bps on inventory mark downs
• Running is recession proof according to the footwear makers themselves

• Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. 
• Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.
• The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. 

• Byc Co Ltd (001460 KS) is the 20th company in our Korea Small Cap Gems series.
• Estimated value of BYC’s real estate is more than 2 trillion won, which is much higher than its current market cap of 302 billion won. 
• A large local fund called Truston has been going activist on BYC for more than a year. Plus, BYC’s Chairman Han is being sued by his mum for inheritance recovery. 

• Liberty intends to launch an offer to acquire the minorities in its subsidiary Telenet, taking advantage of the drop in the share price over the last two years.
• Liberty offers €22/share in cash, cum dividend, 5.9x EV/Fwd EBITDA, a minimum 95% threshold and no MAC with respect to BEL-20 index and shares of Telenet peers prior results announcement.
• My fair value estimate (DCF based) is €16.2, i.e. 26% downside to the intended offer price. Spread is 5.2%/15.6% (gross/annualised). Cautious long.

• Tencent Music (TME US) reported 4Q2022 results yesterday. Revenue decreased 2.4% YoY to RMB7.4bn (vs consensus RMB7.3bn) while reported operating profit more than doubled to RMB1.4bn (vs consensus RMB1.3bn).
• Online music revenues grew 24% YoY while social entertainment business continues to see decline in paying users and ARPU. Margin improvements were driven by spending cuts.
• Social Entertainment is losing its importance and the segment continues to remain under pressure due to competition from other platforms.

• Renault finished 2022 with a record high year, a testimony of the “Renaulution” phase successfully being completed
• The Company enters its strategy’s second phase: “Renovation”; the aim is to now grow with a focus on high quality vehicles
• Equity story: sales, margins, earnings, and free cash flow improvement. 2022 was a turning point, the start of a new dynamic, a new mindset and enthusiasm for Renault

H&H International has released reasonable FY 2022 results, despite the challenging macro economy and operating conditions during the year. Revenue rose more than 10% y-o-y to c. CNY 12.8 bn, mainly due to the full-year inclusion of Zesty Paws in the US. The gross profit margin contracted 2.5 ppts to 60.3%. Debt/EBITDA remained elevated at 5.7x as at FYE 2022. Liquidity is sound, with a cash balance of over CNY 2 bn and short-term debt of only CNY 1 bn.

The company aims to reduce net leverage to below 2.0x within three years. In our view, this plan is aggressive albeit attainable.

The Europe HY Trade Book for March 2023 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

• Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO, after pricing at the low-end. The stock was listed on 29th Sep 2022, its six-month lockup will expire soon.
• LM is a smart EV company based in China, founded in 2015.
• In this note, we will talk about the lock-up dynamics and updates since our last note.