Daily Brief Consumer: United Malt Group Ltd, Trial Holdings, Rakuten, Yum China Holdings, Inc, Guangzhou Automobile Group, Trip.com, Mission Marketing Group Plc/Th and more

• United Malt Group Ltd (UMG AU) has granted privately-held Fench rival Malteries Soufflet due diligence on an exclusive basis after receiving an indicative Offer by way of a Scheme.
• Malteries Soufflet’s non-binding proposal for the Graincorp Ltd A (GNC AU)-spin-off of $5.00/share is a 45.3% premium to undisturbed.
• The Offer will be subject to FIRB approval. Malteries Soufflet and United Malt are the second and fourth-largest maltsters in the world.

• Trial Holdings (5882 JP) is looking to raise up to US$393m in its Japan IPO.
• TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
• In this note, we talk about implied valuations in the IPO price range

• Loyalty points offer a significant incentive for consumers when deciding where to buy and many surveys confirm that points are a key factor in selection of online store.  
• With inflation biting, the big loyalty programmes are promoting points as a way to save on future purchases.
• Rakuten is by far the largest provider (10 pts above anyone else) and is enjoying strong growth – which could help adoption of its mobile store.

• Chinese restaurant sector could see 15% YoY revenue growth in Q1 2023, as Total Retail Sales of Meals in China rose 16.4% YoY during Jan-Feb 2023.
• Yum China Holdings Inc (9987 HK)‘s 1Q23 OP may reach a record high of $350m, and annual profitability is expected to double as restaurant footfall recovers.
• We suggest buying Yum China for potential multiple expansion due to rapid profitability growth.

• The company declared bonus shares of 40% during the annual results announcement in Mar, with shareholders issued 4 shares for every 10 shares by way of conversion of capital reserve.
• The stock went ex-dividend on 1 June 2018.
• Primarily as a result, we have adjusted our target price for the stock to HKD11.3 (from HKD16.3).

• Chinese outbound and domestic air traffic activity improved sharply Y/Y in the January-February LNY travel period, but activity remains far below pre-Covid levels
• Given constrained outbound air capacity, we’re surprised to see relatively low (65-66%) passenger load factors reported by the leading Chinese airlines during LNY
• If planes don’t begin to fill up with Chinese tourists soon, we believe some investors may become disappointed in the pace of China’s travel recovery 

The MISSION Group’s FY22 results are in line with the year-end trading update at the operating income level and a little ahead at the headline PBT and EPS level. Organic revenue growth of 6% was boosted to +10% by acquisition, with a headline operating margin of 10.9%, a shade behind the prior year figure of 11.1% reflecting well-documented cost pressures. The group has been extending its offering through acquisition and organic growth, with a particular focus on data, digital and social media. Management aspires to reach £100m of operating income by FY25, with margin improvements as it reaps the benefits of scale. FY23 has reportedly started well, with further new client wins. The shares continue to trade at a substantial discount to peers, which we regard as overstated.