Daily Brief Equity Bottom-Up: China Consumer Plays Listed In Japan and more

• Nippon Paint Holdings (4612 JP) is a branded decorative paint player.  China made up nearly 40% of the operating profit of the company. 
• Saizeriya (7581 JP) is a Japanese restaurant chain of fast casual Italian food, with currently the majority of operating profit and growth coming from China.
• Shiseido Company (4911 JP) is a Japanese beauty company that relies heavily on China.

• China’s key electric-vehicle (EV) makers set monthly delivery records in September as government subsidies and price cuts gave sales in the fiercely competitive industry a boost.
• BYD Co. Ltd. (002594.SZ +8.21%), the country’s top EV-maker, sold 419,426 vehicles in September, according to an exchange filing Tuesday.
• The figure, which consisted of 164,956 battery EVs and 252,647 plug-in hybrids, marked a 45.9% year-on-year increase and a new monthly sales record.

• Dhampur Bio Organics (DBOL IN): Integrated sugar manufacturer listed in 2022 post demerger from Dhampur Sugar Mills (DSM IN) 
• With change in Ethanol policy from Sep-24, Company will be significantly benefitted with its grain-based ethanol plant and higher sugar production with good monsoon. 
• Company is reducing its debt significantly to deleverage its balance sheet.

• An $271 million block trade of Pilbara minerals occurred, representing nearly 3% interest in the stock of the lithium miner
• The trade was part of a secondary share sale stemming from an equity collar transaction for China’s Ganfeng, which owns 5.7% of Pilbara
• Equity collars are a trading strategy using options to protect downside, with the block trade price at a 4% discount to the last close

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• APAC offshore wind market faces regional competition as Typhoon Krathon spurs AI models to compete for accurate forecasting.
• Ford Lio Ho revamps Kuga lineup in Taiwan’s SUV market post-Krathon, focusing on supply chain resilience amid labor strikes and geopolitical tensions.
• Hyundai Motor plans ambitious battery production strategy while DIGITIMES Research forecasts significant growth in global and Taiwan AI healthcare markets from 2023 to 2030.

• Sales, profits and the share price are bottoming out and good 1Q results make FY Mar-25 guidance look conservative.
• Demand for advanced packaging should drive recovery, with the operating margin regaining its previous peak in three or four years.
• Management’s long-term guidance implies a decline in the projected P/E ratio from 26x to 10X by FY Mar-28, but even 15x would make the shares an attractive investment.

• Donaldson Company has reported a record-breaking financial performance for the fiscal year 2024, achieving high sales, margins, and EPS.
• The company surpassed $3.5 billion in sales and reported an operating margin of 15.4%, delivering an adjusted EPS of $3.42 which reflects a 13% year-over-year growth.
• This robust performance was underpinned by strong cash conversion over 97%, and the return of $286 million to shareholders through dividends and buybacks.

• Despite the drastic bull turn in Chinese equity sending MNSO’s share 41% from its trough, we see MNSO’s investment in Yonghui Superstores as a risk venture.
• We believe the market has overestimated the scalability of the Pangdonglai rectification program for offline retail. 
• We downgrade the stock to SELL rating and cut TP to US$18/ADS

• Diodes Incorporated’s second quarter of fiscal year 2024 showcased performance exceeding prior expectations as demand began to recover, particularly noted in the computing market in Asia.
• The improvement in distributor inventory levels, marked by a sequential decrease in channel inventory weeks, was also a positive development.
• The company highlighted significant growth in point-of-sale (POS) across 3C markets (Computers, Communication, and Consumer Electronics), maintaining a steady revenue stream from automotive and industrial products which collectively accounted at 41% of total revenue.

• Ermenegildo Zegna Group recently provided an overview of its financial performance and strategic initiatives for the first half of the fiscal year 2024.
• Despite operating in a challenging global environment, particularly within the luxury sector, the company reported year-over-year revenue growth of 6%, supported by the consolidation of Tom Ford fashion and the ongoing strength of the Zegna brand.
• This growth translated into a gross profit of EUR 637 million and an adjusted EBIT of EUR 81 million.