In today’s briefing:
- 2023 High Conviction: Zomato – Home Delivering Laziness
- Alibaba – OP Beat Driven By Cost Cutting Masks Dissapointments Everywhere Else
- Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
- RPSG Ventures: FMCG Business Is Scaling Up; VC Business Is Germinating to the Next-Level
- Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
- Walmart Inc: The Walmart Creator Platform & Other Drivers
- Tapestry Inc: Major Drivers
- Ralph Lauren: Collaboration With Fortnite & Other Developments
- Tyson Foods: Major Drivers
2023 High Conviction: Zomato – Home Delivering Laziness
- Zomato is one of the largest food delivery platforms in India. It was listed in Jul 21 and after initially doubling, its shares are now trading below its IPO price.
- It has grown its food delivery GOV by 3.5x over FY19-22 and growth remains strong, while profitablity has been improving.
- Its recent venture into quick commerce should allow for better fleet utilisation and hence, better longer term growth and profitability.
Alibaba – OP Beat Driven By Cost Cutting Masks Dissapointments Everywhere Else
- Alibaba Group (9988 HK) bounced 7.8% yesterday following an OP beat of 24.4% through cost-controls but overall results were quite disappointing with revenue falling a touch below consensus at RMB 207.2bn.
- Alibaba’s cash cows are growing no more, Thus, the company is focusing on ways to improve its profitability.
- Meanwhile, the other growth avenues that Alibaba was proudly speaking of have pretty much disappeared with the company forced to cut down investments in these growing businesses.
Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote
- Lifestyle International Holdings (1212 HK)’s vote on Mr Lau’s offer of HK$5.00 per share is at 10 am on Monday, 21 November. The wide spread of 6.6% reflects vote risk.
- Key conditions include approval by at least 75% of independent shareholders (<10% of independent shareholders rejection). No shareholder holds a blocking stake.
- Ongoing weak Hong Kong retail sales and peers’ slightly de-rating should lower the vote risk. Headcount test not applicable. While light, we continue to expect the offer to succeed.
RPSG Ventures: FMCG Business Is Scaling Up; VC Business Is Germinating to the Next-Level
- Key highlight of RPSG Ventures’ (RPSGV) Q2FY23 results was the FMCG business which reported revenues of INR 125cr, suggesting an annualized run-rate of INR 500cr vs INR 430cr QoQ.
- RPSGV is doing all the right things to scale up its FMCG business. Its Sports venture also holds lot of promise.
- RPSGV’s Venture Capital (VC) Fund that focuses on investing in D2C startups made a lucrative exit in one of its investments which generated 7x MOIC in just 4 years.
Shanghai/Shenzhen Northbound Connect: Weekly Moves (18 November 2022)
- Inside is a recap of movements in the last week relating to the Hong Kong Stock Exchange -Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
- Overall, net inflow over the past week was ~US$5.7bn, split between Shanghai (+US$2.98bn) and Shenzhen (+US$2.8bn).
- The largest inflows were into Kweichow Moutai (600519 CH) and Midea Group (000333 CH). The largest outflows were in NARI Technology (600406 CH) and China Yangtze Power (600900 CH).
Walmart Inc: The Walmart Creator Platform & Other Drivers
- Walmart’s stock has climbed to a new high after the company delivered strong results and surpassed Wall Street expectations in terms of revenues as well as earnings.
- In Q3, strong sales were achieved in each of its segments and its U.S. comparable sales increased sequentially by 8.2% thanks to higher average ticket sizes and more transactions.
- Walmart International experienced strong constant currency sales growth of 13.3%, driven primarily by Flipkart and Walmex, while Sam’s Club USA posted double-digit comps growth of 10.3%, excluding fuel and tobacco, for the 11th consecutive quarter.
Tapestry Inc: Major Drivers
- Despite the challenging environment, Tapestry’s first quarter results were strong and the company’s performance exceeded market expectations in terms of revenues as well as earnings.
- This result highlights the company’s transformation into a customer-centric and data-driven organization, which have helped it effectively navigate the challenging climate.
- Their direct-to-consumer operations grew again in this quarter thanks to the strong management focus on building omnichannel experiences.
Ralph Lauren: Collaboration With Fortnite & Other Developments
- Ralph Lauren’s previous quarter results were strong and the company managed an all-around beat.
- Their top-line continued to increase in the previous quarter, with revenues rising 13% in constant currency and 5% on a reported basis.
- The success for this quarter was once again aided by good constant currency growth across all 3 regions.
Tyson Foods: Major Drivers
- Tyson Foods’ stock has been on a downward trajectory for a while and the recent results did not help the situation.
- Consumer demand for protein is largely stable in this difficult macroeconomic context with record-high inflation.
- Volume performance increased in the fourth quarter because of their investments in brands and merchandising, which raised portfolio market share.
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