Daily Brief Equity Bottom-Up: Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power and more

• Inflation, having peaked at 4.3% in January 2023, has been on a downward trend throughout the year, with figures dropping to 2.8% in November and further to 2.6% by December.
• In this insight, we analyze the recent quarterly performance of Yakult Honsha (2267 JP), Nissin, and Seven & I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.
• While Nissin Foods Holdings (2897 JP) showcased excellent performance, Yakult and Seven & I Holdings (3382 JP) faced struggles in their recent quarters.

• Taste Gourmet (8371 HK) reported revenue of 37% YoY Q3 2024, with profits up 37% YoY (  lower than our 50% YoY estimate). 9M FY23 revenue/profits were up 43%/43% YoY. 
• We look forward to the mainboard listing. We believe the process will commence when FY24 results are out in June. 
• The stock trades at 5.8x PE FY24e, with a potential dividend yield of 8.5% and cash around 26% of its market capitalization at 147.7 mn HKD.

• New York Community Bancorp (NYCB) saw its shares plunge nearly 40% after missing on earnings per share, cutting dividends, and increasing reserves for bad loans. The bank specifically cited issues with commercial real estate and multifamily loans.
• There is a debate over whether NYCB’s troubles are idiosyncratic or indicative of broader issues in the banking sector. Similar debates have occurred with other troubled banks in recent years.
• The real estate market, particularly in multifamily housing, has been a topic of concern. A previous episode of the podcast featured a New York landlord who stated that the golden age of being a landlord was over and talked about potential downsides in the market. Additionally, factors such as rising interest rates and affordability crises in New York City contribute to the challenges in the market.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• Regional Container Line is the largest container shipping company in Thailand. It has attractive valuations, strong balance sheet, and has a major tailwind of higher global shipping freight rates. 
• RCL’s dividend yield averaged 9.6% from 2019 to 2022. The biggest factor driving higher shipping freight rates in 2024 has been the Suez crisis resulting from Houthi drone attacks. 
• We used Smartkarma’s Smart Score Screener system to find Regional Container Line (RCL TB).

• Cathay Pacific’s strong end to 2023 has been well flagged but we think expectations are too low for 2024.
• ANA, JAL and Korean Air have each seen unit pax revenue momentum accelerate into calendar 4Q23 which bodes well for 2024 prospects, particularly as manpower challenges slow capacity restoration.
• Our 2024 EBITDAR is 5% ahead of consensus while we are 11% ahead at the net income level.

• Copa’s 2023 EBITDAR of $1,117m was achieved while growing unit revenues, while capacity expanded 13% with a 17% unit fuel cost tailwind. Not an easy feat.
• In 2024, we expect only 5% EBITDAR growth on 10% capacity growth as unit revenues decline (following the emergence of this theme in 2H23) and EBITDAR-level unit costs grow.
• We model Copa’s EBITDAR/ASM premium to 2019 down to a still-impressive 35% in 2024 but new route selection and efficiency will need to be strong to sustain these economics.

Key points (machine generated)

• STMicroelectronics, originally named SGS Microelettronica, was founded in 1977. Carlo Bozotti started working at the company and eventually became its CEO.
• Bozotti implemented a restructuring plan during his tenure to enhance financial performance and concentrate on core businesses.
• Under Bozotti’s leadership, STMicroelectronics made strategic acquisitions and divestments to solidify its position in the semiconductor market. The company is now renowned for its analog and power semiconductor products.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We are initiating coverage of Net Lease Office Products (NLOP) with a Buy Rating and $60 target.
• NLOP is trading at a fraction of its book value as the Company gets lumped into the negative investor sentiment towards office buildings.
• NLOP was created and spun out of W. P. Carey (WPC) to oversee the liquidation of 59 office properties.

• The rig contract in EG has been terminated by Trident Energy (the operator) on safety concerns with the Blow Out Preventers not working properly.
• We understand that there are suitable rig(s) available that are being considered as potential alternatives.
• The three well drilling campaign (followed by the drilling of the high impact Akeng Deep prospect) could restart during 2Q24 (subject to an alternative rig being secured).

• Solid execution, high earnings visibility – Q1-3 FY3/2024 results demonstrated a continuation of positive developments in 1) sustained growth in maintenance and repair services, and 2) stronger than expected demand for modernization services.
• We believe JES is providing in-demand high-quality services driven by secular growth as building owners convert to reputable independent providers for cost management, and structural demand driving modernization of aging elevators.
• The company is on track to increase service capacity with the new JES Innovation Center Kansai (JIK) due to commence operations in April 2024.