Category

Consumer

Daily Brief Consumer: Pola Orbis Holdings, ASICS Corp, Tesla Motors, Betagro Group, Kakao Pay, K Car, Tokyo Stock Exchange Tokyo Price Index Topix, Zegna, Cubic City Service Apartment Group and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Japanese Cosmetics: Trading Around Q3 Earnings
  • Asics (7936) | Nike Air Pockets
  • Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess
  • Betagro IPO: The Bull Case
  • Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake
  • Noteworthy Lockup Releases for the Next Two Months in Korea
  • Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional
  • Breaking SPAC Convention
  • Cubic City Service Apartment Group Pre-IPO Tearsheet

Japanese Cosmetics: Trading Around Q3 Earnings

By Oshadhi Kumarasiri

  • The latest rally in Japanese cosmetics, driven by improving domestic market conditions has strangely avoided two of the big names in the market, Shiseido Company (4911 JP) & Pola Orbis.
  • Although both of these names seem to offer big upside potential, we think Pola Orbis Holdings (4927 JP) has a significantly better risk-reward profile in the short term.
  • We would also be inclined to hedge the market risk using Kose Corp (4922 JP) on the short side as the name has the biggest downside potential.

Asics (7936) | Nike Air Pockets

By Mark Chadwick

  • NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).  
  • ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
  • ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now

Tesla Q3 Deliveries Trail Even Sharply Reduced Market Consensus—And It’s Own Best Guess

By Vicki Bryan

  • Q3 deliveries were an impressive 343,830, a bit better vs my cautious 331,104 est;
  • But results trailed plunging market projections & Tesla’s own guidance by 20,000-50,000; 
  • Even worse, the shortfall meant sales trailed production by record 22,100.

Betagro IPO: The Bull Case

By Arun George

  • Betagro Group (1737144D TB), Thailand’s leading integrated food company, is seeking to raise US$554 million through a SET IPO, according to press reports
  • Betagro plans to offer 500 million shares or 25% of the total issued shares after IPO. This will be Thailand’s second-largest listing this year after Thai Life Insurance (TLI TB)
  • The key elements of the bull case rest on top quartile growth rates, a well-functioning core business, rising profitability, cash generation and declining leverage.

Kakao Pay Placement Lockup Expiry – Alipay Is Soon Going to Be Free to Shed Its US$1.6bn Stake

By Sumeet Singh

  • In early Jun 2022, Alipay raised around US$386m via selling 3.3% of outstanding shares of Kakao Pay (377300 KS). That was the first selldown by Alipay  (Alibaba (ADR) (BABA US)).  
  • Despite pricing the shares at an enticing 11.8% discount to last close, the stock failed to hold the deal price and hasn’t looked back since.
  • In this note, we will talk about the previous deal and the upcoming lockup expiry.

Noteworthy Lockup Releases for the Next Two Months in Korea

By Sanghyun Park

  • K Car’s major shareholder is Hahn & Company, which has already fully recovered the initial investment. So, there is an actual probability that it will make an aggressive exit.
  • SingEel’s 3-month IPO institutional and VCs will be released, 6.18% of SO. All of them are in a profit zone, there is a possibility that an aggressive overhang will occur.
  • Kakao’s 47% holdings in Kakao Pay will be released. The possibility of lowering the stake seems quite low. Nevertheless, we must consider the risk that this will affect market sentiment.

Move to Company with Statutory Committees Is Shortcut to Make the Compensation Committee Functional

By Aki Matsumoto

  • With the revision of Corporate Governance Code in 2021 and its listing criteria on prime market, the groundwork has been laid to some degree to facilitate functioning of compensation committee.
  • Meanwhile, there are not many companies with voluntary nominating and compensation committees that disclose the authority of their nominating and compensation committees in their annual securities reports.
  • Many companies, even large companies, do not even have a compensation policy in place, indicating that individual director compensation is a much lower priority to consider.

Breaking SPAC Convention

By subSPAC

  • Over the last two years, SPACs have emerged as an alternative to the traditional IPO process, especially for those who’ve found it challenging to raise money from the public markets in the past.
  • In fact, SPACs have been a great investment vehicle for Space Launch firms, Electric Vehicle Upstarts and even Quantum Computing firms.
  • It is surprising then that Italian Luxury Fashion House Zegna, which has a rich 110-year heritage, has decided to take the SPAC route to make its debut in the US markets rather than list in Europe or in Asia like most of its peers.

Cubic City Service Apartment Group Pre-IPO Tearsheet

By Ethan Aw

  • Cubic City Service Apartment Group (CCSAG HK) is looking to raise about US$500m in its upcoming Hong Kong IPO. The deal will be run by Morgan Stanley and CCB International. 
  • Cubic City Service Apartment Group (CCSAG) is a rental apartment services platform, which pioneered the centralized rental apartment model in China, according to the company. 
  • It provides rental apartments in centrally managed buildings with modern facilities. As of 30 Jun 2022 (1Q23), the company operates 76,190 apartments nationwide across 394 locations in 26 cities. 

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Daily Brief Consumer: Leapmotor, Tassal and more

By | Consumer, Daily Briefs

In today’s briefing:

  • HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)
  • Tassal (TGR AU): 3rd November Shareholder Vote On Cooke Offer

HSCI Index Rebalance and Stock Connect: Potential Changes in December & March (There’s a Lot!)

By Brian Freitas

  • We see three new listings as potential inclusions to the HSCI in December. One is already in Stock Connect, one will be added to Stock Connect while one will not.
  • Given the large market moves, there will be many changes to the HSCI in March 2023. Quite a few stocks could remain in the HSCI but drop out of Connect.
  • Some of the potential deletions/ Stock Connect drops have large Southbound holdings and some of these positions could be pared back over the next few months.

Tassal (TGR AU): 3rd November Shareholder Vote On Cooke Offer

By David Blennerhassett

  • Tassal (TGR AU) has convened a Scheme Meeting on the 3 November for shareholders to vote on the proposal from Cooke Inc at A$5.23/share.
  • The vote, for all intent and purposes, appears a formality. The Independent Expert considers the Offer to be fair and reasonable with a fair range of A$4.65-A$5.35/share. 
  • Trading at a gross/annualised spread of 1.2%/8.8%, assuming late-November completion. 

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Daily Brief Consumer: Tassal, Easy Trip Planners, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Tassal Scheme Meeting on 3 November
  • Easy Trip Planners: Unattractive Inspite of High Profitability
  • What Initiatives Are Being Taken by Companies that Have Increased Valuations?

Tassal Scheme Meeting on 3 November

By Arun George

  • Tassal (TGR AU)‘s scheme meeting is scheduled for 3 November. The IE considers the A$5.23 per share offer fair and reasonable.
  • The key condition is approval from shareholders – headcount test and approval by at least 75% of the votes cast on the scheme resolution. Cooke has received FIRB approval.
  • We continue to think that offer is attractive. At the last close price and for the 21 November implementation date, the gross and annualised spread is 1.2% and 8.8%, respectively.

Easy Trip Planners: Unattractive Inspite of High Profitability

By Nitin Mangal

  • Easy Trip Planners (EASEMYTR IN) has had a good run on its bourses and is probably one of the very few new-age companies which is profitable. 
  • However, the overall narrative does not look attractive to us when we deep dive into the forensics, including the cost drivers and balance sheet risks to the company.
  • Perplexing business model, customer concentration and high valuations make it unattractive inspite of high profitability.

What Initiatives Are Being Taken by Companies that Have Increased Valuations?

By Aki Matsumoto

  • Changes in Tobin’s q were closely related to increases in foreign ownership. Companies with increases in Tobin’s q reduced cash equivalents and total assets, suggesting they used assets more effectively.
  • No significant correlation was shown between Tobin’s q and board practices, but companies with large increases in Tobin’s q improved in % independent directors and the independence of compensation committees.
  • Companies with increases in Tobin’s q showed superior values in Key Actions: change in growth policy score, dividend policy score, cash holdings score, frequency of share retirements, AGM/IR disclosure scores.

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Daily Brief Consumer: Craftsman Automation, Unilever PLC and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Craftsman Automation Ltd: Forensic Review
  • Supply-Chain Deforestation Laws as a New and Growing Source of Transition Risk

Craftsman Automation Ltd: Forensic Review

By Nitin Mangal

  • Craftsman Automation (CRAFTSMA IN) is engaged in the business of manufacturing engineering components, sub-assemblies, products and rendering of contract manufacturing services to various industries
  • Key forensic takeaways include working capital troubles, alongside inflation woes deteriorating gross margins etc. There is grey area noticed in accounting treatment pertaining to JV as well.
  • Focus should also be on the aluminum segment, which is going through a tough phase regarding operating leverage and low margins.

Supply-Chain Deforestation Laws as a New and Growing Source of Transition Risk

By Kyle Rudden

  • Recent and pending supply-chain deforestation regulations represent a new and ever-growing source of transition risks – financially-material risks with far-reaching ramifications.
  • Significant developments regarding the European Union’s pending forest-risk commodity laws (e.g., inclusion of natural rubber, addition of banks to its purview) inspired this Insight.
  • This Insight briefly summarises EU and U.K. deforestation regulations, then analyses potential risks and implications for issuers involved in related forest-risk commodity supply chains.

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Daily Brief Consumer: Leapmotor, Lawson Inc, Oyo, LG Energy Solution, Selamat Sempurna, Netflix Inc, Borgwarner Inc and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Leapmotor IPO – Weak Demand but Concentrated Allocation
  • Leapmotor IPO: Trading Debut
  • Lawson Confirms Seijo Ishii IPO
  • Oravel Stays (Oyo) Pre-IPO – Addendum Updates – Don’t Let the +ve EBITDA Mask Its Underlying Issues
  • TIGER (FnGuide) Top 10 ETF Rebalancing: Noteworthy Changes Emerging
  • Leapmotor IPO: Thoughts on First Day Trading
  • Selamat Sempurna (SMSM IJ) – Filter Me Please
  • Ad-Based Streaming: Are We Sure This Is Netflix’s Panacea (Or Disney?)
  • BorgWarner Inc: The Rhombus Energy Acquisition & Other Drivers

Leapmotor IPO – Weak Demand but Concentrated Allocation

By Sumeet Singh

  • Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO. LM is a smart EV company based in China, founded in 2015.
  • As of end Jun 22, it had delivered a total of 104,829 cars with most of its sales coming from its mini units, T03.
  • In this note, we will talk about the demand for the deal and other trading dynamics.

Leapmotor IPO: Trading Debut

By Arun George

  • Leapmotor (9863 HK) priced its H Share at HK$48.00 per share to raise net proceeds of HK$6,057.4 million (US$772 million). The H Share will start trading tomorrow.
  • The H Shares of peers posted no first-day gains and are currently below the listing prices. Market sentiment on peers has remained weak since the release of the prospectus.
  • Leapmotor, at best, should trade in line with median peer multiples. Leapmotor is fairly valued at the IPO price. We continue to remain on the sidelines.

Lawson Confirms Seijo Ishii IPO

By Michael Causton

  • Lawson Inc (2651 JP) has confirmed it will list its upscale supermarket subsidiary, Seijo Ishii early next year.
  • Seijo leads in premium supermarket retailing and is growing as fast as the wealth market does, with plenty of room left to expand.
  • Seijo Ishii is now building its own production and import capabilities to increase originality and could begin to challenge even some of their larger rivals.

Oravel Stays (Oyo) Pre-IPO – Addendum Updates – Don’t Let the +ve EBITDA Mask Its Underlying Issues

By Clarence Chu

  • Oyo (1698548D IN) is looking to raise around US$700m in its upcoming India IPO. The IPO will consist of both a primary and secondary portion.
  • Oyo runs a digital platform that serves as a hotel and home aggregator between patrons, which include owners and lessors, and customers, such as travelers and guests booking for accommodation.
  • Since our last notes, Oravel Stays (Oyo) had filed its addendum, containing both its full-year performance for FY22, and its most recent 1Q23 performance (period ending Jun 2022).

TIGER (FnGuide) Top 10 ETF Rebalancing: Noteworthy Changes Emerging

By Sanghyun Park

  • There was a substantial increase in the AUM even in the current market condition. More funds must have sought blue chip stocks as relatively safe assets in this volatile market.
  • Celltrion and LG Energy Solution will likely replace KB Financial and Shinhan Financial. On the other hand, POSCO is out of the race even with a +5%p float rate change.
  • LG Energy also has an up-weight event of the KOSPI 200. Since these passive flow events have an interval of only one day, we expect a fairly concentrated passive impact.

Leapmotor IPO: Thoughts on First Day Trading

By Shifara Samsudeen, ACMA, CGMA

  • Leapmotor (9863 HK) has priced its IPO at HK$48 per share, at the lower end of the indicative IPO price range of HK$48-62 per share. 
  • At the above price, the company raised net proceeds of approx. HK$6,057.4m at a market capitalisation of HK$54.9bn and a post-money EV of HK$45.9bn.
  • The HK offering was undersubscribed while the international offering was initially oversubscribed by 2.33x and the unsubscribed portion of the HK offering was later reallocated to international offering.

Selamat Sempurna (SMSM IJ) – Filter Me Please

By Angus Mackintosh

  • Selamat Sempurna (SMSM IJ) is one of the most interesting industrial companies in Indonesia but also the largest filter manufacturer in South-East Asia for heavy equipment and autos. 
  • The company mainly produces filters for the replacement market under its Sakura brand, with Indonesia being the major growth driver along with the US but it exports to 120 countries. 
  • The company has an almost second-to-none track record for growth in both profits and dividends, with current valuations looking attractive. 

Ad-Based Streaming: Are We Sure This Is Netflix’s Panacea (Or Disney?)

By Aaron Gabin

  • Netflix has had a slew of upgrades recently on bullish estimates for its coming advertising supported tier…with the upgrades buying into Netflix’s exorbitant CPM demands.
  • We think advertising supported is revenue accretive for the US and Canada, but question how this works out internationally.
  • Disney is far better positioned for AVOD. It has a developed ad infrastructure, owns all its content, and has better brands to sell advertising against.

BorgWarner Inc: The Rhombus Energy Acquisition & Other Drivers

By Baptista Research

  • BorgWarner’s second quarter performance was strong and it delivered an all-around beat despite a slight decline in global output.
  • The company outperformed in North America and Europe and had sales of nearly $3.8 billion, an increase of around 7%.
  • The first line of the company’s heavy-duty electric trucks, which is anticipated to be announced in 2024, will use this battery system.

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Daily Brief Consumer: US Dollar Index, Rakuten Inc, Swedish Match AB, Mitra Adiperkasa, Tokyo Stock Exchange Tokyo Price Index Topix, Vipshop Holdings, iShares Micro-Cap ETF, Tesla Motors, Omnicom Group and more

By | Consumer, Daily Briefs

In today’s briefing:

  • GMO Q2 2022 Quarterly Letter
  • Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum
  • STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race
  • Mitra Adiperkasa (MAPI IJ) – Universally Retail
  • Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code
  • Vipshop: Rebound in Chinese Apparel Sales Should Trump Conservative Management Guidance
  • Summers Value Partners Q2 2022 Investor Letter
  • Tesla’s Q3 Ests Are Fading On Weaker China Sales—Again
  • Omnicom Group Inc: Catering To The Gaming Market & Other Developments

GMO Q2 2022 Quarterly Letter

By Fund Newsletters

  • Equity investors in countries with overvalued currencies have two ways to lose and those with undervalued currencies have two ways to win.
  • Today’s strong USD looks, in the end, to be our currency and our problem.
  • Keep an eye out for dangerously destructive economic policies, but don’t use that as an excuse to avoid the asset class entirely.
  • The yen and euro are at their cheapest levels in decades and hedging emerging market equities would be an expensive proposition even if the currencies weren’t generally cheap versus the USD.

Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum

By Oshadhi Kumarasiri

  • Rakuten’s Mobile losses have held back its share price over the last few years, but it is finally starting to show some improvements with costs shrinking sequentially in 2QFY22.
  • However, most investors seem to have overlooked this QoQ drop thinking that it is driven by the impact of seasonality.
  • With the loss of subscribers in the previous quarter seeming temporary, we are expecting revenue growth through ARPU expansion to more than offset Rakuten Inc (4755 JP) Mobile’s cost growth.

STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the December 2022 Rebalance.
  • There could be five M&A-related intra-review deletions between now and the end of the year.
  • There could be more index changes in the December 2022 Rebalance too. 

Mitra Adiperkasa (MAPI IJ) – Universally Retail

By Angus Mackintosh

  • Mitra Adiperkasa (MAPI IJ) has proved itself with flying colours during the pandemic and continues to do so as mobility resumes, with offline sales recovering but digital remaining firm. 
  • The company continues to build out its newer brands such as Boots, Footlocker, Sketchers,  DigiMAP, and Lego, with 161 store openings in 1H2022 and more to come in 2H2022.
  • Mitra Adiperkasa is starting to ramp up its regional presence in Vietnam and the Philippines especially, which represents a future growth driver. Valuations are attractive despite the recent run up. 

Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code

By Aki Matsumoto

  • Only 12.1% of prime market listed companies have a majority of independent outside directors who can at least ensure the independence of the board of directors.
  • On the nominating/compensation committees, 1/3 of companies are chaired by an inside director. Few committees have clear policies for selecting directors/CEO, and aren involved in determining compensation of individual directors.
  • More companies are complying with regard to sustainability. However, it is necessary to analyze whether the target is an acceptable time frame and whether the target value is too low.

Vipshop: Rebound in Chinese Apparel Sales Should Trump Conservative Management Guidance

By Wium Malan, CFA

  • Following a contraction in Chinese apparel sales since 3Q21, and similar negative GMV and product revenue growth for Vipshop, we have witnessed a recovery to growth since June.
  • Current sell-side forecasts are, however, still for a -10.8%y/y contraction in product revenue for Vipshop in 3Q22f, followed by a -4.4% contraction in 4Q22f which seems overly pessimistic.
  • Given the conservative nature of near-term top-line growth expectation, and management guidance, the probability for positive earnings surprise seems high.

Summers Value Partners Q2 2022 Investor Letter

By Fund Newsletters

  • Summers Value Partners is a boutique value manager that uses a focused, long-term approach to investing in areas of the market where most managers are unwilling or unable to participate.
  • The Summers Value Fund LP (“the Fund”) returned -25.9% net in the first half of 2022.
  • The majority of our decline took place in the first quarter as we were too slow to react to the Fed’s decision to increase interest rates and shrink its balance sheet to cool the over-heated economy.
  • The next stage of the bear market will most likely involve lower corporate earnings due to a more challenging businessclimate and reducedaccess to capital.

Tesla’s Q3 Ests Are Fading On Weaker China Sales—Again

By Vicki Bryan

  • Market consensus on Q3 deliveries has been dropping toward my ~330,000 estimate on weaker China sales, as we saw in Q2. 
  • This time they can’t blame Covid-shutdowns—Tesla’s production is wide open.
  • Instead it looks like softer demand despite lower prices—signalling potentially more pressure ahead.

Omnicom Group Inc: Catering To The Gaming Market & Other Developments

By Baptista Research

  • Omnicom’s performance in the second quarter was good as the company delivered an all-around beat.
  • The company kept its attention on improving its current skills throughout the quarter to fulfill the demands of its clients and potential customers.
  • In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

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Daily Brief Consumer: Alibaba Group, Pphe Hotel, Tata Motors Ltd, Interpublic Group Of Companies, Vf Corp, Webuy and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Alibaba (9988 HK): A Visit to ‘Freshippo Outlets’, a Discount Grocery Store of Freshippo
  • FTSE UK Quiddity Leaderboard Dec 22: Several High-Impact Intra-Review Changes Could Happen in 4Q22
  • Tata Motors – Tear Sheet – Lucror Analytics
  • Interpublic Group: Major Drivers
  • VF Corporation: Business Strategy & Other Drivers
  • Community Group Buying in Southeast Asia

Alibaba (9988 HK): A Visit to ‘Freshippo Outlets’, a Discount Grocery Store of Freshippo

By Ming Lu

  • We visited a store of Freshippo Outlets in Shanghai in workhour.
  • We believe the store is popular and accumulating more customers.
  • However, the digitalized services bring some difficulties to old customers.

FTSE UK Quiddity Leaderboard Dec 22: Several High-Impact Intra-Review Changes Could Happen in 4Q22

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for FTSE 100 and FTSE 250 in the run up to the December 2022 Rebalance.
  • There are multiple FTSE 100 and FTSE 250 members involved in M&A situations and there could be many intra-review changes during 4Q 2022.
  • Most interestingly, the names leading the race to become intra-review ADDs seem to have decent volume impact.

Tata Motors – Tear Sheet – Lucror Analytics

By Trung Nguyen

We view Tata Motors as “Medium Risk” on the LARA scale. The company has weathered the impact of the COVID-19 pandemic better than expected. Compared to other major automotive players, Tata Motors is small in terms of scale and product offerings. Meanwhile, the global market is becoming increasingly consolidated. The large capex required for the company to catch up in terms of electric and petrol vehicle development (in the latter case due to diesel falling out of favour) will likely restrict its ability to generate FCF and deleverage. 

That said, Jaguar Land Rover (JLR) has a respectable position in the premium (luxury) auto market and highly differentiated product offerings (superior off-road capability), while Tata Motors India boasts a strong position in the domestic commercial vehicle market. We also note positively Tata Group’s reputation and the likelihood of extraordinary support from parent Tata Sons.

Our fundamental Credit Bias on Tata Motors is “Negative”. This is due to JLR’s weak sales and production, in turn owing to the ongoing semiconductor shortage.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”. The auto industry is exposed to environmental risks in general, with stringent regulations pushing the industry towards zero-emissions vehicles and away from others (e.g. diesel). The industry is also exposed to fines related to the disclosure of emissions or manipulation of test results to attain certain emissions standards.

That said, Tata Motors has navigated the challenging operating environment very well in the wake of Volkswagen’s emissions scandal. The company has not been penalised by regulators.


Interpublic Group: Major Drivers

By Baptista Research

  • Interpublic Group reported another strong quarter surpassing Wall Street expectations in terms of both, revenues as well as earnings.
  • Organic net revenue growth of the company has been consistent growth and has been seen in the company’s U.S. and other international markets.
  • Interpublic Group remains a highly client-centric organization, and its culture and major involvement with its clients involve custom solutions.

VF Corporation: Business Strategy & Other Drivers

By Baptista Research

  • VF Corporation gave a mixed performance in their last quarter with growth in its big four brands as well as a healthy top-line performance beyond expectations.
  • The growth in the quarter was driven by the footwear of men led by seasonal executions, trekkers, and lifestyle hikes.
  • We provide the stock of VF Corp with a ‘Hold’ rating and a revision in the target price.

Community Group Buying in Southeast Asia

By Chalawan

  • Community group buying is a type of B2C e-commerce where purchases are instigated or influenced not by individual buyers alone, but by reseller agents or a group of fellow consumers

  • Community group buying is a 3-5bn USD market in Southeast Asia today; future outlook depends on how well current players will be able to continue to innovate

  • In its most basic form, Community group buying is innovating by introducing agents of resellers who can take on the tasks performed by traditional distributors or retailers


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Daily Brief Consumer: Shandong Fengxiang, Alibaba Group, Fast Retailing and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Merger Arb Mondays (26 Sep) – Fengxiang, Lifestyle, EVOC, DTAC/True, VNET, 111, Ramsay, Genex
  • Alibaba: Accelerating Retail Sales, and a Depressed Comp Base, Bode Well for Near-Term Earnings
  • Fast Retailing (9983) | Elevated Multiple and Guidance Risk
  • China Internet Weekly (26Sep2022): S.F., STO, YTO, Yunda, JD Logistics, Alibaba, Baidu, Trip.com


Alibaba: Accelerating Retail Sales, and a Depressed Comp Base, Bode Well for Near-Term Earnings

By Wium Malan, CFA

  • In line with previously reported trends in Chinese retail sales growth, the large Chinese eCommerce operators reported a decline (or contraction) in GMV growth in 2Q2022.
  • Following a contraction between March and May this year, China’s retail sales growth has returned to growth since June, which continued in July and accelerated in August.
  • Alibaba’s next reported quarter’s annualised growth will be on an extremely depressed base.

Fast Retailing (9983) | Elevated Multiple and Guidance Risk

By Mark Chadwick

  • Fast Retailing’s share price has risen 24% year-to-date, outperforming the index and global peers
  • The share price has been driven by multiple expansion, which we believe is now at risk of reversing
  • With an uncertain economic backdrop, we believe management may issue conservative guidance for the next fiscal year. We turn Bearish.

China Internet Weekly (26Sep2022): S.F., STO, YTO, Yunda, JD Logistics, Alibaba, Baidu, Trip.com

By Ming Lu

  • Revenues of major express parcel companies grew rapidly in August.
  • JD logistics will provide logistics service to live streaming retailers on Douyin.
  • In 2Q22, revenue of Trip.com decreased by 32% YoY and operating profit turned negative.

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Daily Brief Consumer: S.M.Entertainment Co and more

By | Consumer, Daily Briefs

In today’s briefing:

  • A Discussion with Align Partners’ CEO on SM Entertainment

A Discussion with Align Partners’ CEO on SM Entertainment

By Douglas Kim

  • This past week, I had a discussion with Changhwan Lee, the founder and CEO of Align Partners which is currently an activist investor on S.M.Entertainment Co (041510 KS).
  • This insight provides the details of why Align Partners is going activist on SM Entertainment. 
  • Through more successful proxy fights such as SM Entertainment, there could be greater value that could be unlocked from many listed companies in Korea with poor corporate governance. 

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Daily Brief Consumer: Leapmotor, Astra International, Porsche Automobil Holding Se, Marriott International, Sonos Inc and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support
  • Astra International (ASII IJ) – Autos and Commodities Driving Growth
  • Porsche AG: IPO Set for Success
  • Marriott Hotels: Detailed Credit Analysis & Financial Strength Evaluation Report
  • Marriott Hotels: Business Strategy
  • Sonos Inc.: Initiation of Coverage – Sonos Voice Control & Other Key Product Drivers

Leapmotor (9863 HK) IPO – Stock Connect & Index Flows Could Provide Some Support

By Brian Freitas

  • Leapmotor (9863 HK) is looking to raise between US$800m-US$1.03bn by selling 130.82m shares at a price range of HK$48-62/share. Between 30-39% of the shares will be taken by cornerstone investors.
  • The continued slide in its closest peers could put pressure on the stock post listing, though there could be some passive buying in December.
  • Leapmotor (9863 HK) could be added to the HSCI and Hang Seng Tech Index (HSTECH INDEX) in December. Stock Connect could come online in December too.

Astra International (ASII IJ) – Autos and Commodities Driving Growth

By Angus Mackintosh

  • Astra International just held its public expose at which the company reiterated the strong performance in 1H2022 driven by automotive, finance, heavy equipment and commodity-related businesses. 
  • The momentum will continue into 2H2022 and car sales continue to show strong growth, with the tailwind of higher commodity prices and increased mobility.
  • Astra International remains one of our top picks in Indonesia for the ongoing recovery in an environment where commodity prices remain high. Valuations are attractive versus history. 

Porsche AG: IPO Set for Success

By Jesus Rodriguez Aguilar

  • Volkswagen sets the price range for the Porsche AG IPO between €76.50 and €82.50. The books are covered several times. Porsche AG will begin trading on September 29.
  • Through a holding chain, the Pïech and Porsche families will control 25% of the votes of Porsche AG directly and 39.975% indirectly (total of 64.975%), with just a 24.275% economic interest.
  • The IPO looks set for success, with possible DAX inclusion, and pricing likely towards the top-end. This should favour Volkswagen’s re-rating and tighten the discount to NAV of Porsche SE.

Marriott Hotels: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Marriot Hotels has its fair share of underlying risks as it continues its path to recovery after the pandemic.
  • Cross-border travel has seen a good recovery which is benefitting the company.
  • We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.

Marriott Hotels: Business Strategy

By Baptista Research

  • Marriot Hotels continues its path to recovery and delivered a solid result driven by strong demand for its brand all over the world.
  • RevPAR in every region all over the world has almost recovered to the pre-pandemic levels and helped the company deliver an all-around beat.
  • Overall, we provide the stock of Marriot Hotels a ‘Hold’ rating with a revision in the target price.

Sonos Inc.: Initiation of Coverage – Sonos Voice Control & Other Key Product Drivers

By Baptista Research

  • This is our first report on Sonos, the multi-room audio products major.
  • The macroeconomic environment has grown significantly more hostile for Sonos off late after it enjoyed a decent phase during the pandemic.
  • Despite the uncertain environment, Sonos has a strong brand identity, a dependable and devoted premium client, and a sizable and expanding market opportunity.

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