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

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yum-china-holdings-inc-0533692c-6dae-4014-baa1-ed0b050638f2" target="_blank" data-smartkarma-citation="entities:29259:1" rel="noopener">Yum China Holdings (9987 HK)</a> posted robust year-over-year operating profit growth in 4Q2024 on the back of low single digit sales increase and operating efficiencies.</li>
<li>Despite significant sector headwinds, Yum China has managed to outperform peers and grow ahead of sector in 2024 by swiftly adapting  to shifting consumer preferences.</li>
<li>Yum China's value-for-money QSR model with mid-tier pricing amidst tough sector outlook implies limited margin upside, a likely single-digit sales growth outlook, and a modest dividend yield for 2025.</li>
</ul>



Yum China Holdings (9987 HK) posted robust year-over-year operating profit growth in 4Q2024 on the back of low single digit sales increase and operating efficiencies.
Despite significant sector headwinds, Yum China has managed to outperform peers and grow ahead of sector in 2024 by swiftly adapting  to shifting consumer preferences.
Yum China's value-for-money QSR model with mid-tier pricing amidst tough sector outlook implies limited margin upside, a likely single-digit sales growth outlook, and a modest dividend yield for 2025.


Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/guming-holdings-limited" target="_blank" data-smartkarma-citation="entities:40622:1" rel="noopener">Guming Holdings (GUM HK)</a> (Good me), a freshly-made tea store brand, has launched an HKEx IPO to raise up to US$202 million.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/guming-holdings-good-me-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:173217" rel="noopener">Guming Holdings (Good Me) IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/guming-holdings-good-me-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:173512" rel="noopener">Guming Holdings (Good Me) IPO: The Bear Case</a>.</li>
<li>There are five cornerstone investors. Our valuation analysis suggests that Guming is attractively valued at the IPO price range. Therefore, we would participate in the IPO.</li>
</ul>



Guming Holdings (GUM HK) (Good me), a freshly-made tea store brand, has launched an HKEx IPO to raise up to US$202 million.
We previously discussed the IPO in Guming Holdings (Good Me) IPO: The Bull Case and Guming Holdings (Good Me) IPO: The Bear Case.
There are five cornerstone investors. Our valuation analysis suggests that Guming is attractively valued at the IPO price range. Therefore, we would participate in the IPO.


Guming Holdings (1364 HK) IPO: Valuation Insights

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Sunny Optical Technology Group / Equity Bottom-Up

<ul>
<li>HK Alpha Portfolio returned -1.29% in December and outperformed the benchmark by 0.34%. The portfolio has outperformed Hong Kong indexes by 7.93% to 9.64% since its inception on 10/01/24.  </li>
<li> About 75% of the portfolio's excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy or Materials. </li>
<li>At month-end we sold <a href="https://www.smartkarma.com/entities/china-cinda-asset-management-co-ltd" target="_blank" data-smartkarma-citation="entities:372:1" rel="noopener">China Cinda Asset Management (1359 HK)</a> , <a href="https://www.smartkarma.com/entities/citic-ltd" target="_blank" data-smartkarma-citation="entities:20590:1" rel="noopener">Citic Ltd (267 HK)</a> , <a href="https://www.smartkarma.com/entities/china-galaxy-securities-co-h" target="_blank" data-smartkarma-citation="entities:165:1" rel="noopener">China Galaxy Securities (H) (6881 HK)</a> and <a href="https://www.smartkarma.com/entities/gds-holdings-ltd" target="_blank" data-smartkarma-citation="entities:32157:1" rel="noopener">GDS Holdings (9698 HK)</a> .  </li>
</ul>


HK Alpha Portfolio returned -1.29% in December and outperformed the benchmark by 0.34%. The portfolio has outperformed Hong Kong indexes by 7.93% to 9.64% since its inception on 10/01/24.  
 About 75% of the portfolio's excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy or Materials.  
At month-end we sold China Cinda Asset Management (1359 HK) , Citic Ltd (267 HK) , China Galaxy Securities (H) (6881 HK) and GDS Holdings (9698 HK) .  


Chief Executive Officer, Emmer Capital Partners Limited

Manishi Raychaudhuri

Chief Executive Officer

Emmer Capital Partners Limited

Emmer Capital Partners is an Asia Pacific focused financial advisory firm engaging in strategic financial asset allocation advice, bespoke thematic research and advising early-stage companies and connecting them to investors. Emmer Capital provides macro-economic and multi-asset investment strategy inputs to institutions, family offices, private wealth managers, private equity, and corporate boards directly and through independent research platforms. Emmer Capital also advises a wide range of startup companies on fund raising and business strategy. Emmer Capital's active engagement with the print and electronic media reaches a broad spectrum of investors across the globe.

Cross Asset Strategy

<ul>
<li>Asian equities are at record valuation discount to that of US. Slightly lower earnings growth and ROE forecasts for Asia don't justify the steep discounts, we believe.</li>
<li>However, EPS estimates are a concern. Asia's consensus EPS estimate for 2025 has declined 9% over past 10 months, dragged down by China and Korea. USA's has remained virtually flat.</li>
<li>Based on our themes of continued AI spending, China's consumption recovery and "unloved India", our top picks remain TSMC, Tencent, Yum China, HDFC Bank and SK Hynix.</li>
</ul>


Asian equities are at record valuation discount to that of US. Slightly lower earnings growth and ROE forecasts for Asia don't justify the steep discounts, we believe.
However, EPS estimates are a concern. Asia's consensus EPS estimate for 2025 has declined 9% over past 10 months, dragged down by China and Korea. USA's has remained virtually flat.
Based on our themes of continued AI spending, China's consumption recovery and "unloved India", our top picks remain TSMC, Tencent, Yum China, HDFC Bank and SK Hynix.


Asian Equities: US Exceptionalism Vs Asian Valuation Allure

Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.</li>
<li>In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.</li>
<li>We expect one change for the HSCEI index in March 2025 and capping flows of US$136mn one-way.</li>
</ul>


The HSCEI serves as a benchmark to reflect the overall performance of the top 50 "Mainland China" securities listed in Hong Kong.
In this insight, we take a look at the final rankings for the HSCEI potential ADDs and potential DELs for the index rebal event in March 2025.
We expect one change for the HSCEI index in March 2025 and capping flows of US$136mn one-way.


Quiddity Leaderboard HSCEI Mar 25: China Resources Power (836 HK) Could Replace Li Ning (2331 HK)

China

Yum China Holdings, Inc. operates chain restaurants. The Company offers pizza, entrees, pasta, rice dishes, appetizers, soups, vegetables, beverages, and desserts. Yum China Holding conducts its business worldwide.

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Yum China Holdings (9987 HK)

Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds

Cautious Consumers, Fierce Competition, and the Guochao Trend are Key hurdles on Yum China's path in 2025. Its Value positioning could be a double...

Devi Subhakesan

Guming Holdings (1364 HK) IPO: Valuation Insights

Our valuation analysis suggests that Guming is attractively valued at the IPO price range. Pricing is on 10 February, and the shares will be listed...

Arun George

HONG KONG ALPHA PORTFOLIO (January 2025)

Hong Kong Alpha portfolio lost 1.29% in January and outperformed its benchmark. We sold GDS, Citic, Cinda and China Galaxy Securities. We added...

David Mudd

Asian Equities: US Exceptionalism Vs Asian Valuation Allure

Asia's slightly lower EPS growth & ROE than US's don't justify the huge discount the former trades at. EPS est decline is a worry though. Our top...

Manishi Raychaudhuri

Quiddity Leaderboard HSCEI Mar 25: China Resources Power (836 HK) Could Replace Li Ning (2331 HK)

The 12-month reference period used for index selection rankings is now complete. We expect China Resources Power (836 HK) to replace Li Ning (2331...

Janaghan Jeyakumar, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Yum China (9987 HK): 2025 Outlook. Modest Growth and Margin Upside Amid Sector Headwinds

​Cautious Consumers, Fierce Competition, and the Guochao Trend are Key hurdles on Yum China's path in 2025. Its Value positioning could be a double...

Devi Subhakesan

Guming Holdings (1364 HK) IPO: Valuation Insights

Our valuation analysis suggests that Guming is attractively valued at the IPO price range. Pricing is on 10 February, and the shares will be listed...

Arun George

HONG KONG ALPHA PORTFOLIO (January 2025)

Hong Kong Alpha portfolio lost 1.29% in January and outperformed its benchmark. We sold GDS, Citic, Cinda and China Galaxy Securities. We added...

David Mudd

Asian Equities: US Exceptionalism Vs Asian Valuation Allure

​Asia's slightly lower EPS growth & ROE than US's don't justify the huge discount the former trades at. EPS est decline is a worry though. Our top...

Manishi Raychaudhuri

Quiddity Leaderboard HSCEI Mar 25: China Resources Power (836 HK) Could Replace Li Ning (2331 HK)

The 12-month reference period used for index selection rankings is now complete. We expect China Resources Power (836 HK) to replace Li Ning (2331...

Janaghan Jeyakumar, CFA

Cautious Consumers, Fierce Competition, and the Guochao Trend are Key hurdles on Yum China's path in 2025. Its Value positioning could be a double...

Asia's slightly lower EPS growth & ROE than US's don't justify the huge discount the former trades at. EPS est decline is a worry though. Our top...