Daily Brief Consumer: Zeekr, S.M.Entertainment Co, Honasa Consumer, S&P 500, Accor SA, Stellantis NV, The Walt Disney Co, Yum! Brands Inc, Tata Motors Ltd, Tyson Foods Inc Cl A and more

• Zeekr, a premium EV brand by Geely, aims to raise around US$1bn (estimated) in its US listing in 1H2023. GS, BofA and MS are said to be running the deal.
• Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
• In this note, we take an early look at the IPO based on publicly avaiable information.

• Today (22 February), S.M.Entertainment Co (041510 KS) provided a detailed analysis of the strategic partnership with Kakao from shareholders and fans perspectives.
• The timing of this detailed strategic partnership announcement is a bit unusual since it comes BEFORE the actual tender offer announcement and potential capital injection into SM Entertainment by Kakao.
• Our call on this M&A remains consistent. In the last week of February/early March, Kakao could make a tender offer at prices of at least 140,000/150,000 won, in our view.

• Honasa Consumer (HC) is looking to raise about US$350m in its upcoming India IPO.
• HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
• In this note, we will talk about the not-so-positive aspects of the deal.

• Since January, our expectation for 2023 has been for 4165 (and 4165-4200) to cap upside on the S&P 500.
• We’ve been preaching caution with the indexes testing resistance, and we are now getting confirmation that suggests a pullback has officially begun
• SPX, QQQ, and IWM all demonstrating false breakouts, alongside bullish inflections in Treasury yields, high yield spreads, and the U.S. dollar. Defensives also display bullish RS reversals

In our European High Yield Investment Outlook, we first discuss our high-conviction trade recommendations. We then examine major geopolitical and macroeconomic drivers for the year, as well as commodity price trends. We also assess the interest rate exposure of companies in our coverage universe and elaborate on developments for European HY markets, including new issuances and defaults. Lastly, we cover sectoral developments and the key drivers for companies under our coverage.

Overall, we are cautiously optimistic for 2023, and believe selected names still offer interesting opportunities, albeit spreads have recovered strongly this year.  

• FY 2022 earnings were above expectations, execution remains strong. Upgrades coming
• FY 2023 outlook: double-digit margins, positive FCF; announcement of a share buyback program of €1.5bn + €4.2 ordinary dividend
• We remain bullish on Stellantis, our top OEM pick for 2023. Valuation very supportive. 

• Despite a challenging quarter, Walt Disney managed to deliver an all-around beat and expanded internationally.
• The sequential improvement was driven by lower SG&A costs and higher revenue at DTC.
• At Domestic Parks and Experiences, significant operating income and revenue growth in the quarter was achieved.

• Yum Brands delivered a decent growth in 2022 despite labor shortages and commodity inflation.
• It ended the year with an all-around beat in the last quarter and more than 55,000 restaurants operating globally.
• We give Yum Brands a ‘Hold’ rating with a revised target price.

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.

• Adani Transmission
• Tata Motors ADR

• Tyson Foods delivered a highly disappointing set of results for the last quarter.
• The drop in earnings was a result of weaker results in beef, pork, and chicken.
• Prepared foods revenues increased for the quarter, driven by pricing actions and volume growth.