Daily Brief Consumer: Soybean Active Contract, Costa Group Holdings, Pendragon PLC, Vinfast, Cencosud SA, 888 holdings and more

• Soybean ranks as the most traded crop globally. It comprises 10% of the total value of global agriculture trade.
• The Americas comprise >80% of total global production. China mops up ~60% of global imports and is primarily used to feed massive livestock.
• Soybean is more prone to shocks from geopolitical disruptions. Weather also impacts Beans. El Niño favours Soybean yields.

• Costa Group Holdings (CGC AU) has entered a scheme implementation deed with Paine Schwartz Partners (PSP) led consortium at A$3.20 per share. 
• The key conditions are regulatory and shareholder approval. China SAMR regulatory approval poses a risk, primarily related to timing. Costa anticipates completion in 1Q24.
• The headcount test related to the retail vote remains a risk. The risk/reward is unfavourable as the deal break downside (10%+) outweighs the offer’s upside (3.6% at last close).  

• My comparables derived valuation of Pendragon PLC (PDG LN) is 32p/share, above the value of Lithia’s “package” and spot-on Hedin’s unsolicited & preliminary revised offer (well above its initial lowball offer).
• The market seems skeptical about the future prospects of Pinewood. Putting it on a 13.3x multiple, the value of the business would still be c. 11p/share, hardly a game-changer.
• The revised Hedin’s offer is 17% above Lithia’s, with no execution risk (Hedin backing off again seems less likely), and probably enough to win Board’s recommendation. Gross spread, 5.6%. Long.

• Vinfast (VFS US) reported 2Q2023 results yesterday. Revenues saw significant increase driven by strong YoY growth in EV sales volume which reached 9,535 units during the quarter.
• More than 50% of EV volume during 1H2023 were to a related company while US volume was less than 200 units raising serious concerns over demand for Vinfast’s EVs.
• It seems unlikely for Vinfast to meet its 50K EV target for 2023 and our revised forecast suggests there is further downside despite shares dropping more than 50% vs IPO.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Cencosud’s ESG as “Adequate”, in line with its “Adequate” Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

Our H1/23 Assessment and Outlook report is a review of the performance of companies under our coverage in the stated period. Following a brief discussion of macro trends as well as monetary policy and input cost developments, we assess how these companies performed compared to our analysts’ expectations, and examine credit stats trends. We provide overviews of sector developments, as well as summaries of all the companies’ earnings. This includes classifying all the names into either picks or pans, to provide an overview of which companies we are comfortable of investing in a portfolio context. We highlight that both our picks and pans can be names for which we have “Hold” recommendations.