Analyst

Steve

Equity Bottom-Up

Shiseido Company, Limited manufactures cosmetic and toiletry products. The Company offers an array of makeup and skin-care products, toiletries, beauty salon, pharmaceuticals, foodstuffs, and fine chemicals.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-paint-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7387:1" rel="noopener">Nippon Paint Holdings (4612 JP)</a> is a branded decorative paint player.  China made up nearly 40% of the operating profit of the company. </li>
<li>
<a href="https://www.smartkarma.com/entities/saizeriya-co-ltd" target="_blank" data-smartkarma-citation="entities:14362:1" rel="noopener">Saizeriya (7581 JP)</a> is a Japanese restaurant chain of fast casual Italian food, with currently the majority of operating profit and growth coming from China.</li>
<li>
<a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a> is a Japanese beauty company that relies heavily on China. </li>
</ul>



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. 


Sun Art Retail Group Ltd. operates hypermarkets.  The Company retails food and offers amenities such as restaurants, automated teller machines, pharmacies and dry cleaners.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sun-art-retail-group-ltd" target="_blank" data-smartkarma-citation="entities:401:1" rel="noopener">Sun Art Retail (6808 HK)</a>'s FY24 (fiscal year ending March) numbers were overall unimpressive, with sales down 13% yoy and net loss increasing to RMB1.6bn.</li>
<li>The new CEO's strategy is to refocus on SSSG of offline traffic and restore price competitiveness.  April and May SSSG improved.  </li>
<li>The stock is up 20% since my initial insight on the name in March, and I believe more upside remains.</li>
</ul>



Sun Art Retail (6808 HK)'s FY24 (fiscal year ending March) numbers were overall unimpressive, with sales down 13% yoy and net loss increasing to RMB1.6bn.
The new CEO's strategy is to refocus on SSSG of offline traffic and restore price competitiveness.  April and May SSSG improved.  
The stock is up 20% since my initial insight on the name in March, and I believe more upside remains.


Sun Art (6808 HK):  FY24 Unimpressive, But All Eyes On Potential Alibaba Sale

Nongfu Spring Co. Ltd. supplies soft drinks. The Company develops, produces, and sells bottled mineral water, fruit juice, sports drinks, and tea drinks. Nongfu Spring also offers barreled mineral water door-to-door services.

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<li>
<a href="https://www.smartkarma.com/entities/nongfu-spring-co-ltd" target="_blank" data-smartkarma-citation="entities:28955:1" rel="noopener">Nongfu Spring (9633 HK)</a>'s valuation has come down to a much more reasonable 20x forward PE with expected net profit CAGR of 15% for the next 3 years.</li>
<li>The derating is largely due to the negative media portrayal of the company's Nongfu brand since February 2024, resulting in a -18% decline in its water business in 1H24. </li>
<li>Unsweetend tea business on the other hand has continued to shine, growing 59% yoy in sales in 1H24, while operating profit of the segment surged 63% yoy. </li>
</ul>



Nongfu Spring (9633 HK)'s valuation has come down to a much more reasonable 20x forward PE with expected net profit CAGR of 15% for the next 3 years.
The derating is largely due to the negative media portrayal of the company's Nongfu brand since February 2024, resulting in a -18% decline in its water business in 1H24. 
Unsweetend tea business on the other hand has continued to shine, growing 59% yoy in sales in 1H24, while operating profit of the segment surged 63% yoy. 


Nongfu Spring (9633 HK):  Trading At Below 20x Forward PE With 15% NP 3-Year CAGR

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

<ul>
<li>Profitability of the business surprised on the upside, as the net profit margin of JD.com increased from 3% in 2Q23 to 5% in 2Q24.</li>
<li>Share buyback accelerated in 2Q24, as the company bought USD2.1bn worth of stock in the quarter, up from USD1.2bn in 1Q24. </li>
<li>The stock is trading at 7x 2024 PE, with a yield of &gt;10% through dividend and buyback.</li>
</ul>


Profitability of the business surprised on the upside, as the net profit margin of JD.com increased from 3% in 2Q23 to 5% in 2Q24.
Share buyback accelerated in 2Q24, as the company bought USD2.1bn worth of stock in the quarter, up from USD1.2bn in 1Q24. 
The stock is trading at 7x 2024 PE, with a yield of &gt;10% through dividend and buyback.


JD.com (JD US):  Strong Profitability And Upsized Share Buyback in 2Q24

NIPPON PAINT HOLDINGS CO., LTD. produces paints for automobiles, ships, and other industrial paints.  The Company also manufactures fine chemicals such as finishing agents and adhesives.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-paint-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7387:1" rel="noopener">Nippon Paint Holdings (4612 JP)</a>'s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.</li>
<li>Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).</li>
<li>China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company. </li>
</ul>



Nippon Paint Holdings (4612 JP)'s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.
Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).
China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company. 


Nippon Paint (4612 JP):  Stable Execution in 2Q24; Outlook Unchanged

Experience in both buy and sell-side in Asia.

Steve
Analyst

China Consumer Plays Listed In Japan

In this insight, we look at three Japan listed China consumer plays, which I have written before. They are Nippon Paint, Saizeriya, and Shiseido.

Steve

Sun Art (6808 HK): FY24 Unimpressive, But All Eyes On Potential Alibaba Sale

Note increased attention on the name given the Miniso-Yonghui deal. A few points here: 1) Miniso CEO was asked why pick Yonghui and not Sun Art,...

Steve

Nongfu Spring (9633 HK): Trading At Below 20x Forward PE With 15% NP 3-Year CAGR

Nongfu Spring's valuation has dropped to 20x forward PE due to negative media coverage of its water business, but its unsweetened tea segment is...

Steve

Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged

Nippon Paint saw steady growth in sales and profit in 2Q24, with China driving strong performance. Operating profit target for 2024 was maintained.

Steve

China Consumer Plays Listed In Japan

In this insight, we look at three Japan listed China consumer plays, which I have written before. They are Nippon Paint, Saizeriya, and Shiseido.

Steve

Sun Art (6808 HK): FY24 Unimpressive, But All Eyes On Potential Alibaba Sale

Note increased attention on the name given the Miniso-Yonghui deal. A few points here: 1) Miniso CEO was asked why pick Yonghui and not Sun Art,...

Steve

Nongfu Spring (9633 HK): Trading At Below 20x Forward PE With 15% NP 3-Year CAGR

​Nongfu Spring's valuation has dropped to 20x forward PE due to negative media coverage of its water business, but its unsweetened tea segment is...

Steve

JD.com (JD US): Strong Profitability And Upsized Share Buyback in 2Q24

Two pieces of news: 1) According to public news, Wal-Mart is looking to offload its entire stake (144.5m ADRs) in JD.com at USD24.85 - USD25.85....

Steve

Nippon Paint (4612 JP): Stable Execution in 2Q24; Outlook Unchanged

​Nippon Paint saw steady growth in sales and profit in 2Q24, with China driving strong performance. Operating profit target for 2024 was maintained.

Steve

Nongfu Spring's valuation has dropped to 20x forward PE due to negative media coverage of its water business, but its unsweetened tea segment is...

Nippon Paint saw steady growth in sales and profit in 2Q24, with China driving strong performance. Operating profit target for 2024 was maintained.