Daily Brief Consumer: Snow Peak Inc, PAL GROUP Holdings Co., Ltd., Etsy Inc, NIFTY Index, Dentsu Inc, Garrett Motion, PDD Holdings, Bassett Furniture Inds, Polaris Holdings and more

• The possibility/likelihood of a “¥50bn MBO” for Snow Peak Inc (7816 JP) was leaked in a Nikkei article last Friday. It went limit up two days in a row. 
• That TOB price is more than 70% off its three-year high. That will certainly disappoint some. Separately, the price seems a bit low given growth. 
• The family and friends own ~42% so if someone gets upset, or uppity, there could be a challenge. Just because an MBO exists doesn’t mean people have to tender in.

• Snow Peak Inc (7816 JP) has recommended a Bain Capital-sponsored MBO tender offer at JPY1,250 per share, a 58.0% premium to the undisturbed price (15 February). 
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 38.13% ownership ratio.
• Based on the irrevocables, the minimum acceptance condition requires a 52.8% minority acceptance rate. While not a knockout offer, the acceptance condition is achievable.  

• Pal Group’s founder retired last month after 50 years at the helm. 
• Since 2001, the fashion to variety store business has grown from ¥10 billion to a forecast ¥184 billion this year.
• There remains growth potential in the variety store chain, 3Coins, as well as a revival in the fashion side.

Key points

• ETSY’s end markets are expected to grow at a high single digit rate, allowing for 10% compound annual growth rate in Gross Merchandise Sales (GMS)
• ETSY’s international market, comprising 45% of revenue, is growing faster than its US market
• ETSY has room to increase its take rate slightly, with its current rate of 19.8% in line with industry standards, positioning the company for continued growth in e-commerce.

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.

• The NIFTY Index has been rising for 5 days in a row, this is the second week up (CC=+2), there is a good chance it will pullback soon.
• The index is going towards the Q3 resistance level at 22354, that would be a good area from where to start to prepare for a pullback.
• Going SHORT may not be worth it, the right trade is to wait for the pullback and go LONG again at better prices.

Dentsu’s FY23 net revenue was a touch above guidance at Q3, with a better-than-expected operating margin reflecting a good Q4 in Japan, further boosted by a short delay in an IT project pushed out to Q124. The results were accompanied by the news of a change in global CFO, with the role reverting to Yushin Soga, who held the role until January 2023. As anticipated, net revenue outside Japan declined, although there was some trading improvement in the US in Q4. A thorough business review is now in progress, with the next mid-term plan due early in H2. In the meantime, the balance sheet is strong, with leverage reduced to 0.6x EBITDA, and share buybacks will be resumed. We regard the rating as undemanding.

• GTX reported results affirming our investment thesis on how the business can generate substantial free cash flow with an outlook of little to no sales growth
• Ahead of the results, we had brought down our numbers on the expectation a flattish year could result in sales and adjusted EBITDA being more in line with 2023
• GTX issued a 2024 guidance suggesting we would be towards the lower end of their guidance range as new programs should hold sales closer to 2023 levels

• Ownership levels among Asia Ex-Japan funds hit record highs as funds continue to add exposure.
• 13% of the funds in our analysis opened new positions over the last 6-months, with average weights increasing by 0.57%
• New positions added by Invesco Asia Opportunities (4.3%), LO Funds High Conviction (3.6%) and Allianz Asian Equity (2.9%) over the period.

• We are initiating coverage of Bassett Furniture Industries, Inc., publicly traded under the ticker BSET.
• Bassett primarily operates in two segments: Retail and Wholesale.
• A third segment, Corporate & Other, accounts for corporate and unallocated expenses, as well as the operating results of Noa Home, a recent e-commerce acquisition.

• Hotel demand ahead of expectations – Q1-3 FY3/2024 results were driven by strong underlying demand for hotel operations.
• The domestic business was boosted by a robust market environment where visitor numbers for domestic and overseas customers exceeded pre-pandemic levels, helping drive Q3 FY3/2024 RevPAR by 43.5% YoY.
• Despite a high run rate versus company guidance for sales and exceeding recurring profit and net income, there has been no revision from the company, indicating a potential for an overshoot in our view. We believe inbound and domestic demand will be sustained.