Daily Brief Consumer: Takara Holdings, KT&G Corporation, Melco Resorts & Entertainment, Comcast Corp Class A, MGM China Holdings, Pointerra Ltd, Greggs PLC and more

• On an implied stub and simple ratio, Takara Holdings (2531 JP) is trading rich to 60.9%-held Takara Bio Inc (4974 JP).
• Preceding my comments on Takara are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• KT&G announced that it will buy back 3.47 million shares (2.5% of outstanding shares) and cancel them. This would be the first share cancellation for KT&G in 14 years. 
• If the company’s DPS is 5,200 won for 2023 fiscal year, this would represent dividend yield of 6.2% at current prices.
• Although we have a positive view on KT&G’s share buyback and cancellation of 3.47 million shares, the company could do much more to improve its shareholder returns to its shareholders. 

Melco Resorts (MLCO)’s H1/23 results were soft, mainly as its Macau properties underperformed in Q1. That said, the company regained some market share in Q2, as GGR from its Macau properties climbed 43% q-o-q. Q2/23 mass market GGR reached 84% of the Q2/19 level, albeit still marginally below the industry figure of 86%. We expect MLCO’s mass market GGR in Macau to continue improving going forward, supported by the opening of Studio City Phase 2.

In our view, the main credit concern is the company’s aggressive stance towards shareholder returns. This is evidenced by MLCO’s small share repurchases throughout the COVID-19 pandemic (between FY 2020 and FY 2022), despite its severely deteriorated balance sheet. Moreover, the company has a history of providing cash support to parent Melco International.

• Comcast Corporation delivered an all-around beat in the most recent quarterly result.
• Total revenue increased, driven by ongoing operating leverage at the company’s high-margin Connectivity & Platforms business as well as significant growth at studios and theme parks.
• Residential connectivity revenue increased with growth in domestic broadband, wireless revenue, and international connectivity.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Country Garden Holdings Co
• MGM China Holdings
• Vedanta Resources

Greggs’ H123 results showed continued strong revenue growth, indicating good progress across the majority of its multi-year initiatives to drive revenue growth. Profitability continued to be hampered by input cost inflation as well as investment in the cost base to drive the expected revenue growth. A more favourable outlook for underlying cost inflation in FY23 than previously should be welcomed. We have slightly increased our estimates to reflect the strong growth in H123 and higher interest rates on cash deposits.