Daily Brief Equity Bottom-Up: China Consumption Weekly: East Buy and more

• East Buy’s stock price plunged after a conflict broke out between the top broadcaster and the management team.
• NIO will launch another brand for low price products, following BYD’s low price and Li Auto’s price reduction.
• Tencent will move its unimportant assets to China Literature again.

• Newcastle coal prices have normalized from the highs of USD 450/ton (in September 2022) to current levels of USD 145/ton (a 68% correction from the peak). 
• From profits of 100 mn USD/month, we are now down to 90-100 mn USD/quarter. Despite this, the stock trades at 4.5x PE with a 15% dividend yield. 
• An added buffer of 850 mn USD of net cash represents 50% of the market capitalization. 

• The Indian Market (~$4 trillion) has now overtaken Hong Kong as the 4th most-valued stock market after the US, China, and Japan. 
• We recently concluded an exploratory trip to Patna, the capital, and also the largest city of the state of Bihar, Summarized thoughts on companies focused in this insight. 
• Multiple stocks covered in the Insight. The future of Easy Trip Planners (EASEMYTR IN), especially if it’s banking on franchisee expansion, could go the other way around.

In its update for the August to December period, S&U posted good growth in its net receivables balances in both Advantage and Aspen. Advantage reported a drop in live collections to 91% (H123: 94%), but bad debts and voluntary terminations remain below budget. Aspen continues to experience good volume with transactions improving in the quarter, while repayments remain above budget. Additionally, group borrowings reached £209m as S&U continues to fund its growth initiatives. Management announced that following a review by the Financial Conduct Authority (FCA), it has appointed a Skilled Person to help further align Advantage Finance’s processes with the FCA’s standards including the new Consumer Duty requirements.

• Gaining sufficient scale to get out of the shadow of the Big 3 online malls in Japan is providing tough for Jade Group (3558 JP)’s Locondo.
• The number of active users on Locondo has fallen in recent quarters, causing concern for merchants and investors alike. 
• Jade Group, is hoping that sales of major brands like Reebok will attract more users while also bringing higher levels of growth.

• As we begin lapping easy comps, our momentum index looks “less bad”
• Red Sea re-routes, interest rate moves, fuel all helped lift shares recently
• We think lots of bad news has been priced into shares at current levels

In H124, Custodian Property Income REIT (CREI) continued to benefit from robust occupier demand, underpinning earnings and dividends. Rents continued to grow and occupancy increased, with further near-term progress in sight, reflected in our increased EPRA earnings forecast. Asset management is also supporting capital values, although overall, following market trends, these continue to drift and NAV is modestly lower.

• 2022 was an exceptional year for Stora Enso. The Company drove financial performance to an all-time high, strengthened its BS and delivered on strategic initiatives
• Ince then, the market environment has deteriorated further and has shaken the Company’s fundamentals. To that end, Stora is embarking on a restructuration program.
• The Company’s own actions will improve competitiveness. The self-help improvements focus on profitability turnaround and capital release.

• After inputting data from the Culp 2QFY24 Form 10Q filing, FY24 estimates are unchanged. We moderated FY25 and FY26 revenue and profit expectations.
• This note incorporates that filing and introduces our reformatted earnings model. We hope the revised model and reformatting will be easier to read and understand.
• As is our custom, our working excel models are available to our readers on request. 

• Standard Lithium (SLI) is advancing lithium extraction projects in Southern Arkansas and East Texas, which could position the company as a major domestic lithium supplier.
• A definitive feasibility study (DFS) or the company’s Phase 1A Project indicates a pre- tax NPV of US$772 million and a pre-tax IRR of 29.5%.
• A preliminary feasibility study (PFS) for the company’s South West Arkansas Project indicates a pre-tax NPV of US$4.5 billion and a pre-tax IRR of 41.3%.