Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Thematic (Sector/Industry)

<ul>
<li>Despite a strong surge in sales in the Sept. quarter, most Indian consumer companies reported weak profit growth given negative impact of inflation, currency and interest rates.</li>
<li>Inflationary pressures from higher raw material costs, rise in fuel costs and higher wages have affected volume growth as companies attempted to effect price hikes to mitigate margin impact.</li>
<li>Leading FMCG companies have temporarily cut back on marketing spend during the quarter to offset the impact of cost pressures on operating margins.</li>
</ul>


Despite a strong surge in sales in the Sept. quarter, most Indian consumer companies reported weak profit growth given negative impact of inflation, currency and interest rates.
Inflationary pressures from higher raw material costs, rise in fuel costs and higher wages have affected volume growth as companies attempted to effect price hikes to mitigate margin impact.
Leading FMCG companies have temporarily cut back on marketing spend during the quarter to offset the impact of cost pressures on operating margins.


Inflation Bites: India Consumer Sector - Rising Revenues, Dipping Margins in Sept. Quarter

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>DABUR’s result in Q2FY23was broadly in line withour estimates. ConsolidatedRevenueat Rs 2,986Cr grew 6.0% YoY (Our estimates: Rs 2,976 Cr),driven by7% YoY growth in India standalone biz (LY Growth of 11.5%; 3-year CAGR of 12%) and an underlying Volume decline of 1% in the India FMCG business.</li><li>International Business recorded 12.3% CC growth with strong performance seenacross geographies (led by strong growths in Turkey (86%), Nepal (25%) and Egypt (23%)).</li><li>Consolidated Revenue for the quarter reported a 3-year CAGR of 10.5%.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

DABUR’s result in Q2FY23was broadly in line withour estimates. ConsolidatedRevenueat Rs 2,986Cr grew 6.0% YoY (Our estimates: Rs 2,976 Cr),driven by7% YoY growth in India standalone biz (LY Growth of 11.5%; 3-year CAGR of 12%) and an underlying Volume decline of 1% in the India FMCG business.International Business recorded 12.3% CC growth with strong performance seenacross geographies (led by strong growths in Turkey (86%), Nepal (25%) and Egypt (23%)).Consolidated Revenue for the quarter reported a 3-year CAGR of 10.5%.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Dabur India - In-Line with Estimates; Acquires Badshah Masala

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

HDFC securities is the best online trading platform for stocks, IPOs, mutual fund in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>Dabur: Dabur delivered an in-line performance with revenue growth of 6% YoY (11% on three-year CAGR)</li><li>Domestic revenue/volume grew 7/1% YoY, with three-year CAGR at 12/9% vs HUL’s 11/3% and Nestle’s 13/8%</li><li>Dabur is sustaining its volume outperformance among peers</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Dabur: Dabur delivered an in-line performance with revenue growth of 6% YoY (11% on three-year CAGR)Domestic revenue/volume grew 7/1% YoY, with three-year CAGR at 12/9% vs HUL’s 11/3% and Nestle’s 13/8%Dabur is sustaining its volume outperformance among peersContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Dabur, Crompton Consumer

<ul><li>Volume weakness to continue, revenue to grow by 15/10% on YoY/three-year CAGR (weak ex-ITC): Our FMCG coverage universe is expected to deliver growth of 10/15% on YoY/three-year CAGR in revenue in Q2FY23 (vs 12/7% in Q2FY22 and 24/11% in Q1FY23)</li><li>ITC’s strong reported growth will drive the aggregate growth for Q2FY23, ex-ITC we expect overall weakness in volume</li><li>Demand trends in our FMCG universe for Q2FY23 will be similar to the trends seen in the previous two quarters where demand was impacted by the retail inflation (particular in rural).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Volume weakness to continue, revenue to grow by 15/10% on YoY/three-year CAGR (weak ex-ITC): Our FMCG coverage universe is expected to deliver growth of 10/15% on YoY/three-year CAGR in revenue in Q2FY23 (vs 12/7% in Q2FY22 and 24/11% in Q1FY23)ITC’s strong reported growth will drive the aggregate growth for Q2FY23, ex-ITC we expect overall weakness in volumeDemand trends in our FMCG universe for Q2FY23 will be similar to the trends seen in the previous two quarters where demand was impacted by the retail inflation (particular in rural).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

FMCG & Alco Bev (Q2FY23 Results Preview): Growth and margin to remain under pressure

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

S&P BSE SENSEX Index / Technical Analysis

<ul>
<li>We continue to see global equities as being in pullback mode, with the MSCI ACWI index (ACWI-US) already testing important support in the $86-87 range, highlighted last week.</li>
<li>A bounce here would be ideal for the bullish case, but we could easily see a test of the YTD lows near $81.50 if $86 fails to hold.</li>
<li>Japan's TOPIX/Nikkei225/TOPIX Small remain bullish, as does India's SENSEX -- add exposure. Seeing some failed breakouts in Europe, notably the EURO STOXX 50 and STOXX Europe 600; a concerning development.</li>
</ul>


We continue to see global equities as being in pullback mode, with the MSCI ACWI index (ACWI-US) already testing important support in the $86-87 range, highlighted last week.
A bounce here would be ideal for the bullish case, but we could easily see a test of the YTD lows near $81.50 if $86 fails to hold.
Japan's TOPIX/Nikkei225/TOPIX Small remain bullish, as does India's SENSEX -- add exposure. Seeing some failed breakouts in Europe, notably the EURO STOXX 50 and STOXX Europe 600; a concerning development.


Pullback Continues; Japan & India Remain Attractive

India

Dabur India Ltd. manufactures soaps, detergents, hair oils, tooth powders, antacids and processed foods. The Company sells its products worldwide.

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Dabur India Ltd (DABUR IN)

Inflation Bites: India Consumer Sector - Rising Revenues, Dipping Margins in Sept. Quarter

Cost pressures could continue to impact volume and margins for most India consumer stocks. Impact of Inflation, currency and interest rates are key...

Devi Subhakesan

Dabur India - In-Line with Estimates; Acquires Badshah Masala

International Business recorded 12.3% CC growth with strong performance seenacross geographies (led by strong growths in Turkey (86%), Nepal (25%)...

Axis Direct

HSIE Results Daily: Dabur, Crompton Consumer

Dabur: Dabur delivered an in-line performance with revenue growth of 6% YoY (11% on three-year CAGR) Domestic revenue/volume grew 7/1% YoY, with...

HDFC Securities

FMCG & Alco Bev (Q2FY23 Results Preview): Growth and margin to remain under pressure

Demand trends in our FMCG universe for Q2FY23 will be similar to the trends seen in the previous two quarters where demand was impacted by the...

HDFC Securities

Pullback Continues; Japan & India Remain Attractive

Stick with Japan & India. $ACWI bounce at $86 would be ideal for the bullish case (i.e., establishing a higher low), but we could easily see a test...

Vermilion Research

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