Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

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.

Equity Bottom-Up

In this report on <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a>, we discuss (1) potential near term positive stock and sector news flow (2) Beyond's strategic tie-ups with <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp (MCD US)</a> and <a href="https://www.smartkarma.com/entities/yum-brands-inc" target="_blank" data-smartkarma-citation="entities:984:1" rel="noopener">Yum! Brands Inc (YUM US)</a> (3) company's 4Q2020 results and its near and long term operational outlook (4)  and our investment view on the stock.During the investor call held yesterday, Beyond's management reiterated their focus on investing for the long term both in terms of improving the product and in expanding capacity despite near term business weakness. Without giving operational details of their preferred supplier relation with Mcdonalds and Yum, Ethan Brown described the deals as 'enormous'; the impact on sales will be meaningful only from 2022.

In this report on Beyond Meat (BYND US), we discuss (1) potential near term positive stock and sector news flow (2) Beyond's strategic tie-ups with Mcdonald's Corp (MCD US) and Yum! Brands Inc (YUM US) (3) company's 4Q2020 results and its near and long term operational outlook (4)  and our investment view on the stock.During the investor call held yesterday, Beyond's management reiterated their focus on investing for the long term both in terms of improving the product and in expanding capacity despite near term business weakness. Without giving operational details of their preferred supplier relation with Mcdonalds and Yum, Ethan Brown described the deals as 'enormous'; the impact on sales will be meaningful only from 2022.

Beyond Meat: Season of News Flow Positives and Quarterly Negatives

In this note, we discuss how <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)'s</a> stock gets an unanticipated stroke of positive lift from a win-win with  <a href="https://www.smartkarma.com/entities/pepsico-inc" target="_blank" data-smartkarma-citation="entities:4967:1" rel="noopener">Pepsico Inc (PEP US)</a> to produce and market plant-based protein snacks and beverages. As consumer brands globally strive to align themselves with the "Better for You and Planet too" value that resonates strongly with younger customers, plant-based foods are clearly in focus. <a href="https://www.smartkarma.com/entities/beyond-meat-inc" target="_blank" data-smartkarma-citation="entities:28065:1" rel="noopener">Beyond Meat (BYND US)</a> with its widely recognized brand presence in plant-based protein is well-positioned to benefit from the rising demand for plant-based foods. We believe this deal could help Beyond accelerate growth in the retail segment, thus widen product reach and enhance product visibility. Although operational or financial details of the deal are not available yet, in the note below we look at what it could mean for either parties and surmise that it could be a win-win for both.

In this note, we discuss how Beyond Meat (BYND US)'s stock gets an unanticipated stroke of positive lift from a win-win with  Pepsico Inc (PEP US) to produce and market plant-based protein snacks and beverages. As consumer brands globally strive to align themselves with the "Better for You and Planet too" value that resonates strongly with younger customers, plant-based foods are clearly in focus. Beyond Meat (BYND US) with its widely recognized brand presence in plant-based protein is well-positioned to benefit from the rising demand for plant-based foods. We believe this deal could help Beyond accelerate growth in the retail segment, thus widen product reach and enhance product visibility. Although operational or financial details of the deal are not available yet, in the note below we look at what it could mean for either parties and surmise that it could be a win-win for both. 

Beyond Meat: A Win-Win Deal with PepsiCo to Sell Plant-Based Snacks, Drinks

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

<ul>
<li>Fujian-based Dali Foods operates multiple brands in the categories of food and beverage;</li>
<li>Since its foundation, the company has pursued a simple "copycat" strategy combined with an emphasis on lower-tier regions;</li>
<li>Despite a persistently high return on capital, we do not see a moat that is wide enough and difficult to cross in this rapidly-evolving and fiercely-competitive consumer goods market in China.</li>
</ul>


Fujian-based Dali Foods operates multiple brands in the categories of food and beverage;
Since its foundation, the company has pursued a simple "copycat" strategy combined with an emphasis on lower-tier regions;
Despite a persistently high return on capital, we do not see a moat that is wide enough and difficult to cross in this rapidly-evolving and fiercely-competitive consumer goods market in China.


Dali Foods: Low-Price Copycat With A Persistent High-Return Character But A Too Narrow Moat

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

A short while ago, S&amp;P Dow Jones Indices <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201116-1258362/1258362_tdec215addconsult.pdf" target="_blank" rel="noopener">announced</a> the inclusion of <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> in the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> effective after the close of trading on 18 December. The deletion will be announced later.S&amp;P DJI have also announced they will be conducting a <a href="https://www.spglobal.com/spdji/en/governance/consultations/sp500consultationonimplementationoftslaaddition11-16-20.pdf" target="_blank" rel="noopener">market consultation</a> on whether <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> should be added to the S&amp;P500 all at once or in two tranches to reduce the impact of the funding trade.From the numbers, the market should be able to absorb the buying on <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> and the selling on the other index constituents pretty easily. However, with Christmas just a week away from the implementation date and possibly lower liquidity, market participants may have different views and the trade could be split into two tranches.

A short while ago, S&amp;P Dow Jones Indices announced the inclusion of Tesla Motors (TSLA US) in the S&amp;P 500 (SPX INDEX) effective after the close of trading on 18 December. The deletion will be announced later.S&amp;P DJI have also announced they will be conducting a market consultation on whether Tesla Motors (TSLA US) should be added to the S&amp;P500 all at once or in two tranches to reduce the impact of the funding trade.From the numbers, the market should be able to absorb the buying on Tesla Motors (TSLA US) and the selling on the other index constituents pretty easily. However, with Christmas just a week away from the implementation date and possibly lower liquidity, market participants may have different views and the trade could be split into two tranches.

Tesla: S&P500 Inclusion (Finally) Secured

Thematic (Sector/Industry)

<ul>
<li>Record-breaking 2020 Singles-day Shopping Festival may produce some insights regarding brands winning Chinese consumers;</li>
<li>But most winning brands cannot derive an investable business in China, given the prevalent lack of persistently high ROIC.</li>
<li>We hand-pick four companies that are investable from TMall's Singles-day top brand list.</li>
</ul>


Record-breaking 2020 Singles-day Shopping Festival may produce some insights regarding brands winning Chinese consumers;
But most winning brands cannot derive an investable business in China, given the prevalent lack of persistently high ROIC.
We hand-pick four companies that are investable from TMall's Singles-day top brand list.


Quick Picks: Top Investable Brands From The 2020 Singles-Day Shopping Festival

United States

PepsiCo, Inc. operates worldwide beverage, snack and food businesses. The Company manufactures or uses contract manufacturers, markets and sells a variety of grain-based snacks, carbonated and non-carbonated beverages and foods in countries throughout the world.

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Pepsico Inc (PEP US)

Beyond Meat: Season of News Flow Positives and Quarterly Negatives

Expect positive stock and sector-related newsflow - details on strategic tie-ups and Oatly's big-ticket IPO - to keep the stock upbeat despite...

Devi Subhakesan

Beyond Meat: A Win-Win Deal with PepsiCo to Sell Plant-Based Snacks, Drinks

Discuss how Beyond Meat (BYND US) gets an unanticipated stroke of positive lift from a win-win deal with Pepsico to sell Plant-based snacks and...

Devi Subhakesan

Dali Foods: Low-Price Copycat With A Persistent High-Return Character But A Too Narrow Moat

We appreciate the differentiated strategy and the persistently high return on capital, but the moat appears too narrow for this rapidly-evolving...

Steven Chen

Tesla: S&P500 Inclusion (Finally) Secured

Tesla has been included in the S&P500 after 5 consecutive quarters of profitability. The passive buying on Tesla will be around US$54bn and the...

Brian Freitas

Quick Picks: Top Investable Brands From The 2020 Singles-Day Shopping Festival

Most winning brands cannot lead to an investable business in China, but here are our four hand-picked rare species that are investable from TMall's...

Steven Chen

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