Daily Brief Consumer: Toyota Industries, JD Health, Porsche Automobil Holding, Inner Mongolia Yili Industrial Group (A), Games Workshop Group PLC, General Mills and more

• Toyota Industries (6201 JP), one of the world’s leading forklift manufacturers, has admitted to fabricating the results of parts testing, forcing some forklift shipments to be halted.
• TICO has decided to suspend the shipping of three models of forklifts equipped with the suspect engines, which account for ~6% of total forklift sales (in terms of count). 
• Shares, quite rightly, have taken a hit. But this correction appears excessive.

• JD Health reported 2H2022 results. 2H revenue increased 55.5% YoY to RMB26.5bn (RMB24.2bn) while fall in GPM and an increase in fulfilment costs led to operating losses during the period.
• Product revenues (JD Pharmacy) continues to account for a majority of JD Health’s revenues that generate lower GPM compared to Marketplace and other revenues.
• JD Health’s share price has moved up over the last few months but further decline in GPM  could pull the share price down suggesting it could be a Good Short.

• Net debt of Porsche SE (HoldCo) amounted to €6,672 million, as a result from the debt financing of around €7.1 billion to purchase ordinary shares of Porsche AG (operating company).
• Porsche SE trades at a 49.2% discount to NAV, but maintaining the dividend involves maintaining the net debt position and its detrimental effect on value.
• The attractiveness of Porsche SE shares has been reduced as a result of the acquisition of the Porsche AG stake, still the discount is massive, even accounting for litigation risk.

• Yilli’s aggressive marketing in 2Q raised market concerns over intensifying competition
• An outright price war is unlikely as its closest competitor, Mengniu, is not willing to follow suit
• Margin remains under pressure on rising input cost
• Trimmed fair value to CNY22.5 (from CNY26.1)

Games Workshop Group’s (GAW’s) update highlights that Q323 trading to the end of February 2023 is in line with expectations. In addition, a further dividend of £1.20 per share has been declared, taking the year-to-date total to £4.15 per share, a very healthy current yield of 4.6%, well ahead of FY22’s £2.35 per share. Separately, this week the company announced that the tenth edition of Warhammer 40,000 will be released in the summer of 2023.

• General Mills continues to perform exceptionally well relative to the broader equity market.
• The ability to offset a record high input cost inflation highlights the importance of a strong brand portfolio in strategic areas.
• As volumes return to positive territory, profitability in the pet food segment remains an area of concern, according to the company.