Daily Brief Consumer: Seven & I Holdings, Zomato, LG Electronics India, Fast Retailing, Oriental Watch, REPT BATTERO Energy, Vishal Mega Mart, Pou Sheng International, TSE Tokyo Price Index TOPIX, Global Traffic Network and more

• Recent reports suggest an MBO if firming up, with partial sale of US to ACT and even the Japan CVS business so a big value solution for all concerned.
• Not so fast: an ACT purchase of 7-11 US looks more likely to be blocked given yesterday’s ruling on the merger of grocery giants Kroger and Albertsons.
• The valuation of the Japan business may need a correction too if the last six months of poor numbers continue – given this is because of price perception, they may.

• There are 19 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 30 December. All names are exactly in line with our forecast.
• Estimated one-way turnover is 64.9% resulting in a one-way trade of INR 72.7bn (US$857m). There are 18 stocks with over 1x ADV to trade.
• The adds have continued to outperform the deletes even after the end of the review period. There could be further upside heading into year-end and implementation of the changes.

• LG Electronics India (123D IN) is looking to list on the exchanges by selling 101.8m shares at a valuation of around US$12-13bn and raising around US$1.8bn in its IPO.
• The draft RHP was filed on 6 December, so the IPO could complete in the first quarter of 2025.
• The stock will not get Fast Entry to global indices. Inclusion at regular rebalances could commence in June/September next year depending on when the stock lists.

• Inditex’s rare quarterly miss on sales and profit, driven by currency fluctuations, may heighten sensitivity around Fast Retailing’s upcoming Q1 results
• For Fast, the risk would be a top-line miss given high valuation multiples and elevated expectations
• Over the past several quarters, Fast’s superior top line growth has supported higher valuation multiples. We expect 9% revenue growth in Q1

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We provide updates on results for our HK-listed universe and highlights from our recent management visits to Hong Kong. 

• REPT BATTERO Energy raised around US$270m in its Hong Kong IPO in Dec 2023. Its pre-IPO investors holding around US$1.2bn worth of shares will be released from their lockup soon.
• REPT is a lithium-ion battery manufacturer in China, focusing on R&D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs.
• In this note, we will talk about the lockup dynamics and possible placement.

• Vishal Mega Mart (1620871D IN) IPO worth INR 80 bn is about to open this week. The IPO constitutes entirely of OFS. 
• The company is one of the top 3 offline first retailers, the most diversified retailers and caters to middle income and lower income group, largely in Tier 2 locations. 
• As far as forensics are concerned, one must pay attention to exorbitantly high attrition levels, rising related party transactions, few puzzling line items noticed in books, etc.

• Pou Sheng, the second-largest sporting goods retailer in China, is facing challenges like declining sales
• The company is trading at an undervalued price with a negative EV but remains profitable
• Despite concerns about China’s geopolitical situation and low cash returns, Pou Sheng offers a high dividend yield and has a strong balance sheet with significant net tangible asset value, indicating potential for upside if sales performance improves.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• One year has passed since the disclosure of sustainability information in annual securities reports, and the FSA is considering restructuring its disclosure guidelines to support sustainability disclosure by listed companies.
• Sustainability information in annual securities reports is shifting from “what should be stated” to “what content should be stated,” and the volume of information is increasing accordingly.
• Valuable information is that investors can understand what initiatives the company has implemented to address the challenges, the goals and timelines it has set, and whether its progress is justified.

• RaaS is initiating coverage of media group GTN (ASX:GTN) with a base peer EV/EBITDA-derived valuation of $0.81/share, representing potential capital upside of 40% from the current share price, although we suggest premiums of 10% and 20% to the peer average are justified based on GTN’s superior metrics.
• • GTN has seen improved adjusted EBITDA across FY23 (+13.5%) and FY24 (+15%) but the utilisation rate of advertising spots is still below pre-pandemic levels.
• We believe further improvements in utilisation together with some stock-specific cost reductions will drive EBITDA 31% higher in FY25, placing the group on very attractive multiples relative to peers.