Daily Brief Equity Bottom-Up: Mercari (4385) | Activist to Add Urgency and more

• Q4 results were a mixed bag with GMV growth slowing to just 6%. However, costs came in better than expected, boosting margins
• Management surprise the market with bullish FY6/25 guidance. Expects GMV growth to accelerate to +10% and sees OP at a healthy 22-25 billion yen
• Activist investor Oasis has taken a stake in the company. There is an obvious restructuring angle in addition to significant upside from fintech expansion 

• This Insight is focued on Whirlpool of India (WHIRL IN) ; Crompton Greaves Consumer Electricals (CROMPTON IN) ; TTK Prestige (TTKPT IN) & Symphony Ltd (SYML IN). 
• As per ARs, the Indian durables industry is poised for significant growth due to increasing consumer demand, premiumization trends, and government support.
• SYML and WHIRL are the ones that warrant attention. Challenges faced by TTKPT are likely to continue.

• The gross margin improved 5 pp (percentage points) YoY and the operating margin improved 7 pp YoY in 2Q24.
• In 2Q24, total revenue grew by 12% YoY, with the main business up by 22% YoY.
• Three cross-sectional comparisons reach similar stock upsides about 100%. Buy.

• Regis’s McFilamy’s gold project faced setback due to cultural significance of land
• Federal Environment Minister Tanya Plibersek’s declaration halted project activities
• Project had already been approved under state and federal legislation, causing surprise and confusion

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• Stock valuations for China’s top beer players are near historical lows, but is a recovery on the horizon? Will it ever return to the heady valuations of 2019-2020?
• China Resources Beer Holdings (291 HK) and Budweiser Brewing APAC (1876 HK) have reported 1H2024 results showing a decline in sales volumes, attributed to several short term factors.
• We highlight long-term factors, including an aging population and shifting consumer habits, that could limit sustained growth in China’s alcoholic beverage market.

• Zydus Lifesciences Ltd (ZYDUSLIF IN) reported stellar performance in Q1FY25, with all key parameters improved sequentially and YoY. The company achieved highest ever operating profit and margin during the quarter.
• Sustained growth momentum across all the businesses along with enhanced profitability drove Q1FY25 performance. Execution success of differentiated pipeline in the U.S. and outperformance of India business were particularly noteworthy.
• Despite delivering 21% YoY revenue growth in Q1FY25, Zydus reiterated FY25 revenue growth guidance of high teens. The company expects EBITDA margin of 28.5–29.0% for FY25.

• Tongcheng Travel Holdings (780 HK) is still suffering from cost pressure, with adjusted net profit increased by 10.9% in 2Q24, despite a 48.1% revenue growth.
• Both GMV and MPU growth rates have slowed in 2Q24 when compared with 1Q24, and revenue may also decelerate in 2H24 given the higher base for comparison.
• The market will need some time to see if the moderating earnings trend will sustain, negatively affecting investor interests. Potential earnings downgrade is also a challenge.

• SDC closes Slovakia branch due to declining competitiveness in European market, experiencing challenges in the region.
• SSFC remains optimistic about growth in China’s auto market despite market slowdown, seeing potential for expansion.
• Global semiconductor industry strengthens in 2Q24, as per SEMI report, with Taiwanese IPC maker showcasing at Automation Expo 2024 in India.

• Market Volatility Signals Prolonged Consolidation: Recent market chaos suggests a period of consolidation, not immediate recovery—critical insight for strategizing in crypto markets.
• Global Liquidity Concerns Dominate Market Trends: The BoJ’s struggle with interest rates highlights how global liquidity influences both traditional and crypto markets, driving current trends.
• Spotting Market Anomalies is Crucial: Identifying anomalies in trading behavior can uncover opportunities or warn of potential risks, vital for informed decision-making in volatile times.

• Hong Kong’s watch and jewelry sales were weak in Q2 CY24 (-24% YoY) as dampened sentiment continues to plague overall retail sales across regional sectors. 
• However, Oriental Watch (398 HK), with its Rolex and Patek Phillipe portfolio, is expected to be more resilient than the rest of the watch industry. 
• The company is still a very good dividend play, trading at 7.6x FY25 PE, with 60% of the market cap in cash and a 13.5% dividend yield.