Daily Brief Consumer: TSE Tokyo Price Index TOPIX, Abercrombie & Fitch Co Cl A, Hilton Worldwide Holdings , Melco Resorts & Entertainment, Park Lawn , Tortilla Mexican Grill PLC, Yum China Holdings , China Resources Beverage and more

• Many companies have low liquidity since listing, with nearly half of companies having major shareholders with over 20% ownership. Raising listing criteria should considered to improve quality of the market.
• TSE seems to raise the listing criteria for Growth Market in 2025, when the transitional measures expire, but for Prime Market, TSE is likely to respond with a “request.”
• Although TSE’s “request” may be the catalyst for increasing MBOs and dissolution of parent-subsidiary listings, engagement with overseas investors over years to resolve management issues was foundation of this trend.

• We are reiterating our Buy rating, projections and price target for a.k.a. Brands with the company announcing 1Q24 (March) results after the close on Wednesday.
• We believe 1Q will be another period of rebuilding momentum and credibility, with the cleanup continuing at Culture Kings, Princess Polly adding new retail stores to the mix and rolling out new categories to become even more of a lifestyle brand and Petal & Pup leveraging new digital marketplace relationships and continued dress-driven expansion.
• Further, we believe management remains laser focused on reducing both inventory exposure and net debt.

• Hilton is a well-established franchisor of hotel brands with a history dating back to 1919
• While not offering high expected returns, Hilton is viewed as a solid business opportunity with the potential for steady growth in intrinsic value
• Through significant events like its IPO, acquisition of Promus, LBO by Blackstone, and spin-offs, Hilton has positioned itself as a stable and well-run option for investment portfolios in the global travel industry

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.

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.

• Indika Energy
• Melco Resorts and Entertainment (Philippines)
• PT Pertamina (Persero)

• PLC is a new addition to the VIC platform as a TSX-listed rollup company in the funeral homes and cemeteries industry with a majority of its revenue coming from the US
• The company has shifted its focus towards improving margins and operations, with plans to drive growth through M&A activities at reasonable multiples
• Consensus estimates have overlooked the potential for margin improvements and value creation from M&A, creating an opportunity for investors to capitalize on the company’s growth potential

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.

Notwithstanding its sector ‘sweet spot’ (a healthy, customisable product at a competitive price), Tortilla Mexican Grill (Tortilla) has taken the opportunity of a change in management to refine its strategy to address challenges since its successful IPO in 2021 as well as expedite growth. Significant benefit is expected from a new delivery structure to mitigate commission charges in an important part of the business (c 30% of sales), from enhanced marketing to tackle surprisingly low brand awareness and from an initial director of food to bolster menu development. With a new FY24 target of self-funded roll-out (down from 12 to eight), franchising will drive expansion as capital light and has been so successful to date. A near-doubling in H223 pre-IFRS 16 adjusted EBITDA, if from a low base, is testament to Tortilla’s recovering financials and initiatives already in place.

• Yum China Holdings (9987 HK)‘s 1Q24 earnings were weaker than the already lowered consensus expectations, as both sales and core operating profit only grew 1% yoy.
• Same-Store-Sales declined by 3% yoy, and restaurant margin declined by 2.7ppt yoy, mainly due to more discounts offered.
• China’s catering industry has changed compared to pre-COVID, where overall average selling price (ASP) is continually under pressure, and customers are increasing seeking value-for-money options.

• China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
• China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
• In this note, we talk about the not-so-positive aspects of the deal.