Consumer

• Since my previous insight on China Tourism Group Duty Free (1880 HK) in October 2023, the stock has declined 33%, and year-to-date, the stock has declined 13%.
• The company faces headwinds from continued overall weakness in Hainan duty free sales and potentially increased competition in Hainan.
• The company already announced preliminary 1Q24 results, with sales down 9% yoy and net profit flat.  The company is trading at 18x 2024 earnings.

• Vinfast (VFS US) released 1Q2023 results, with its revenues increasing three-fold YoY but falling QoQ due to the seasonal impact of Lunar New Year on both EVs and EV motorbikes.
• The company saw a significant pick up in its sales to the US and continued to increase its dealer network which should drive future sales along with new models.
• More than half of Vinfast sales were to related parties, which is an overhang in terms of the sustainability of its business models, whilst valuations remain above peers.

• In the Q3 2024 earnings, NIKE, Inc. outlined how it is driving growth despite not performing to its potential.
• The company is focusing on four key areas: a sharpened focus on sport, continuous product innovation, bolder and more distinctive brand marketing, and collaboration with wholesale partners to expand the marketplace.
• A significant measure of progress is the alignment of the organization to focus on the consumer and sport.

• A pullback in global equities is underway following steep uptrend violations on MSCI ACWI (ACWI-US) and EURO STOXX 50. Both are 4-5% off their highs; further downside may be limited.
• Several 5%-10% pullbacks are to be expected in any given year, particularly after the historic 5-month rallies, so we view this as healthy and normal within the ongoing bull market.
• ACWI-US is currently testing important support at $105; if this area were to break, next major supports are $102 and $99; this is where we would be buying.

• The problem lies in the fact that even with a 10% increase in net profit, ROE only grew by 0.5%. This is due to having too much cash on hand.
• TSE has provided an opportunity for companies to develop measures to increase their corporate value. However, not many companies can derive concrete ways to effectively use cash.
• Since many companies are expected to take time to find concrete solution to this problem, an increasing number of companies are expected to go private once they have done so.

• ADEA announced it has licensed its intellectual property to Austrian service provider Magenta Telekom in what could be of bigger significance than what ADEA’s stock price portrays
• The license is the first for ADEA with a European service provider. This is also the first major customer win ADEA has announced since becoming a standalone IP company
• The size of the deal with Magenta is most likely small, but our focus is on what it could mean for ADEA. Magenta is owned by T-Mobile parent Deutsche Telekom.

• During the latest earnings, W.K. Kellogg Co demonstrated its strategic plans for the future and reported strong financial results for the fourth quarter and fiscal year 2023.
• The CEO, Gary Pilnick, emphasized the company’s commitment to delivering on its promises and its focus on execution and engaging its team.
• The company achieved net sales at the high end of their guidance range and EBITDA margin above their guidance range indicating effective business planning.

• We are reiterating our Buy rating, projections and $22.50 price target for Betterware de Mexico with the company announcing 1Q24 (March) results after the close on Thursday.
• We believe, with momentum returning at the Betterware division, JAFRA remaining on a new product and marketing focus, the United States market becoming a larger emphasis and BWMX continuing to offer a compelling (and secure) dividend yield of 8.5%, BWMX remains well positioned to reward investors on multiple levels, and we reiterate our Buy rating and $22.50 price target.

• We are initiating coverage of a.k.a. Brands Holding Corp.
• (“a.k.a. Brands” or the “company”), a leading owner of primarily online apparel-based brands focused on Generation Z and Millennial consumers, with a Buy rating and $14.00 price target, or 10.9X our 2025 EBITDA projection of $20.2 million.
• The company’s brands include: 1) Princess Polly, focusing on 15 to 25 year-old women; 2) Petal & Pup, which offers feminine styles for 25 to 34 year-old women; 3) Culture Kings, a street wear destination; and 4) mnml, a high-quality street wear designer focused on bottoms.

• Perfect Medical Health (1830 HK), post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&investments representing 24% of the market cap.
• HK is experiencing a dip in consumer sentiment, and the company isn’t immune to it, but flat sales/profitability, a 24% net margin, and >40% ROE provide great margin of safety.
• The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.

• Inageya Co Ltd (8182 JP) announced a share exchange offer by United Super Markets (3222 JP) at 1.46 USMH shares per Inageya share.
• The share exchange aligns with Aeon Co Ltd (8267 JP)’s well-flagged intention of making Inageya a wholly-owned subsidiary of USMH.
• Aeon’s 50%+ shareholding in Inageya and USMH facilitates the two EGM votes. The deal metrics are broadly fair for both sets of shareholders. 

• KWEB giving an attractive entry point here, as it begins to outperform the domestic FDN.
• Toyota>Honda and look for that relationship to continue going forward.
• JD>BABA, a new dynamic divergence between the two, and my opinion is JD will be the leader in 2024 and beyond.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Jinmao Holdings
• JSW Steel Ltd
• Sands China
• Yuexiu Property

• The full-year 2023 earnings of ADT revealed notable developments and financial figures in its operation highlights.
• The company has seen a solid performance, with investments for its future and a shift towards its core security and smart home business as primary focuses.
• The plan to exit its residential solar business promises simplicity and concentration on expanding its consumer oriented model.

• Under Armour Inc.’s Q3 2024 earnings revealed a challenging retail environment and uneven consumer behavior across markets.
• Despite the difficulties, the company achieved Q3 results aligned with November projections, better-than-expected earnings, and has made substantial progress in boosting global demand and simplifying consumer interactions.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Global-e Online Ltd.
• announced its fourth quarter and full year 2023 financial results and we would term the outcome as largely optimistic, yet grounded in the challenging macroeconomic conditions of the past year.
• The company concluded 2023 strongly, with the fourth quarter being its most successful to date.

• IPAR has started 2024 with what could be described as relaunching of the Lacoste fragrance line after IPAR encountered under investment by the previous licensee
• There is increased investor concern consumer appetite for fragrances could wane even though so far there has been little sign of it
• Specific to Lacoste, we expect greater excitement when IPAR releases its first fragrance for the brand later this year

• On 17 April, Affinity Equity Partners offered a tender offer of a 30% stake in Lock & Lock at 8,750 won per share.
• The tender offer period is from 18 April to 14 May.  The number of shares that are included in this tender offer is 13.14 million shares (30.33% of outstanding shares).  
• Lock & Lock’s share price could trade higher close to the tender offer price of 8,750 won as the date as the end of the tender offer period approaches.

• Since “profitability of capital” like ROE or ROIC cannot create value in mid-to-long-term without improvement, the fact that ROE has stalled is a cause for concern for future stock prices.
• The slow growth in Net Profit Margin and the sluggish improvement in Asset Turnover and Financial Leverage indicate that it is still holding too much cash, cross-held shares, etc. 
• Nearly half of all listed companies are companies with major shareholders of 20% or more, which is an obstacle to improving corporate governance.

• We expect Miniso’s revenue for C1Q/2Q24 to be 1.0%/2.7% higher than consensus due to adequate inventory and strong sales of the Chiikawa series. 
• We believe Miniso has found a new competency in quickly turning around IP sales through economies of scale in supply chain and store network.
• We maintain the stock as BUY and raise our TP by US$3 to US$34/ADS.

• The core of Belle’s transformation is to inject “digitalization” into existing massive store assets, with strategy of “omnichannel+multi brands”. Belle also devotes significant resources to online channels and online-to-offline integration.
• Benefiting from the DTC retail model, Belle increases the probability of success when launching products. Licensing/acquisition are important ways to empower new brands and promote growth. Belle’s performance has rebounded.
• However, the path of transformation hasn’t yet been completed. Belle still mainly relies on heavy asset mode and is exposed to inventory risks. There ‘s still room for further improvement.

• Las Vegas Sands Corp.
• reported that Macao delivered $654 million of EBITDA for the quarter, a significant enhancement since the coronavirus pandemic’s end.
• According to them, robust growth in both gaming and non-gaming revenues is anticipated, propelled by their substantial share in non rolling table win, rolling table win, and slot ETG win.

• Mao Geping Cosmetics (1478187D CH) is looking to raise around US$300m in its upcoming Hong Kong IPO. The bookrunner on the deal is CICC.
• Mao Geping Cosmetics (MGC) operates in the premium beauty segment. Operating via its two brands, MAOGEPING and Love Keeps, MGC offers a wide range of color cosmetics and skincare products.
• As per F&S, MGC was the only domestic market player among the top ten premium beauty groups in China, ranking eighth by 2022 retail sales.

• Winmark operates five resale brands through a franchising model, including Plato’s Closet and Play It Again Sports
• The company’s focus is on providing access to quality used products at value pricing, contributing to the circular economy
• CEO Brett Heface discusses the dynamics of managing the brands, growth strategies, and the company’s mission to provide resale for everyone

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Levi Strauss & Co reported revenues of $1.6 billion, reflecting a decline of 8% on a constant currency basis due to a $100 million shift from Q2 into Q1 related to the ERP implementation in the U.S. However, excluding this shift and the effect of exiting the Denizen business in Russia, Q1 revenues were flat.
• The company’s adjusted diluted earnings per share (EPS) were $0.26, which outperformed expectations.
• This improvement was mainly driven by a 240 basis-point increase in gross margin and prudently managing the company’s expenses.

• SIG is a specialty jewelry retailer with a strong presence in the US, Canada, and the UK
• After struggling with poor management and high mall exposure, the company has made progress under new leadership in 2018
• SIG has focused on shutting down underperforming stores, particularly in malls, to improve productivity and aims to continue growth in the jewelry retail industry.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Sonos, the leading speaker manufacturing company, recently reported its Q1 2024 results.
• Extenuating despite various cyclical challenges, Sonos exceeded its expectations by delivering a revenue of $612.9 million, a GAAP gross margin of 46.1%, and adjusted EBITDA of $115 million.
• Its free cash flow was also improved to $269 million.

• Belle Fashion Group (2007708D HK), the largest fashion footwear company in China, is seeking to raise up to US$1 billion in a HKEx IPO. 
• Belle Fashion originated from Belle International Holdings (2129452D HK), which was privatised in 2017. In October 2019, Belle International spun off its sportswear business as Topsports International Holdings (6110 HK).
• The investment case rests on a market-leading position, return to growth, margin improvement, cash generation and modest leverage. 

• Company recently demerged from Ghcl Ltd (GHCL IN) and guiding for 30% revenue growth and double margins from here onwards with cotton prices being stable.
• A Debt Free Textile company available at 0.56x Price to Book with growth plan in progress and adding Value added products in its portfolio.
• Due to Forced selling from DII, FII company remained undervalued, now with changing margin profile, the Company will be available at a cheap valuation compared to peers.

• Shakey’s Pizza (PIZZA PM) had a disappointing end to FY23 despite the 32% YoY systemwide sales and 23% YoY profit growth. 4Q FY23 sales/profits were +15% YoY/-21% YoY.
• Network expansion was a solid 369 outlets (base of 1772 outlets), primarily led by Potato Corner (359 outlets). Expansion in FY24 was guided at over 400+ outlets (1+ bn Pesos). 
• Stock trades at 15.6x FY23 earnings and 13x FY24e with mid-teens growth on the top/bottom line guided by the company for FY24

• Leading furniture retailer Nitori recently announced it would work with French platform developer Mirakl to build an online marketplace. The site will be available late 2024 or early 2025. 
• Nitori wants the mall to contribute 20% of revenues by 2032 within a sales target of ¥3 trillion, when overseas store numbers are expected to be double those in Japan.
• But, founder Akio Nitori says he wants to see overseas sales much higher than official targets and may well get there through close targeting of the rising Asian middle class.

• In the recent fourth quarter 2023 financial results, Columbia Sportswear highlighted some key achievements and challenges they faced throughout the year.
• This provides an informative insight into both the company’s strengths and weaknesses moving forward, forming a neutral foundation for an investment thesis and resulting summary analysis.
• A cornerstone of Columbia Sportwear’s strategy in 2023 was their inventory reduction plan.

• Constellation Brands reported strong Q3 results, driven by robust performance in their beer business, achieving over 8% depletion growth for its beer portfolio.
• This performance is a testament to continued strong consumer demand and contributed to the company’s 55th consecutive quarter of depletion growth and tenth leading share gains.
• The company also executed $215 million of share repurchases in Q3, maintaining its net leverage ratio at 3.2x, excluding Canopy equity and earnings.

• CarMax, a leading used car retailer in the United States, reported its Q3 fiscal year 2024 results indicating a continuation of a strategic plan that has led to sequential year-over-year improvements across key business areas for four consecutive quarters.
• Total sales for Q3 FY ’24 were $6.1 billion, down by 5% compared to the previous year due to lower retail and wholesale prices and lower retail volume, partially offset by higher wholesale volume.
• Retail unit sales declined by 2.9% while used unit comps were down by 4.1%.

• Conagra Brands maintained an overall positive tone regarding its performance and future prospects in its latest earnings.
• While there were signs of optimism and forward-looking strategies, there were also concerns about certain aspects of its operations and broader market conditions.
• The company was seen focusing heavily on volume as being crucial for growth.

• The fourth-quarter earnings of Colgate-Palmolive were decent and the company demonstrated impressive resilience in 2023, focusing on sustainable organic sales growth, rebuilding margins and strengthening cash flow performance amid an increasingly challenging operating environment.
• However, some challenges persist, such as geopolitical unrest, foreign exchange headwinds and industry shifts, which might impact results in 2024.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• We are reiterating our Buy rating, $14 price target and projections after reviewing the company’s early summer catalogs for April 2023 and 2024.
• We remain impressed by the shifts in the catalogs, from a deeper focus on features and story telling, impressive gains in swimwear and related accessories, expansion of categories such as outerwear, totes and lifestyle apparel, shifts in footwear that we believe will presage the relaunch of the category as a licensed item and overall similar pricing.
• We continue to believe Lands’ End is on the right track to drive higher returns and strong consistent profitability, and reiterate our Buy rating and $14 price target.,

• Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, has launched an HKEx IPO to raise US$330 million. The shares will be listed on 23 April.
• We previously discussed the IPO in Baicha Baidao IPO: The Bull Case and Baicha Baidao IPO: The Bear Case. 
• There are no cornerstone investors. Our valuation analysis suggests that Baicha is fairly valued at the HK$17.50 IPO price. Therefore, we would pass on the IPO.

• We believe the criticism against Nongfu Spring will eventually help the company.
• Catching the trend of sugar free, tea revenue surged by 83% in 2023.
• The company achieved higher growth and higher margin, but its stock price is still flat.

• Sichuan Baicha Baidao Industrial is looking to raise up to US$330m in its HK IPO.
• SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
• We have looked at the company’s performance in our past note. In this note, we talk about valuations

• TSE officially announced that it will request prime market listed companies to simultaneously disclose two documents, financial statements and timely disclosure information, in Japanese and English from April 2025.”
• Given the characteristics of Japanese companies, which tend to implement only minimum requirements, few companies will engage in English language disclosure in their annual securities reports, which wasn’t explicitly stated.
• Rather than improving the quality of the market to make it easier for global investors to trade, TSE has set efforts targets to match the speed of the slowest ship.

• Vinfast (VFS US) is large on promise but low on delivery, with sales in FY2023 coming in well below expectations, and the vast majority being to related companies. 
• The company is building huge capacity in Vietnam, India, and Indonesia in the region, and in the US, where sales have been slow but where capex is required.
• Vingroup has set up ride-hailing company GSM, using Vinfast vehicles for its fleet, making up 50% of its sales in 2023, leaving question marks over the sustainability of its model.

• Johor Plantations Group (2368120D MK) is looking to raise around US$180m in its upcoming Malaysia IPO.
• Johor Plantations Group (JPG) is an upstream oil palm plantation firm operating predominantly in Johor, Malaysia.
• In this note, we look at the firm’s past performance.

• Corn prices are presently being pressured by ample supplies owing to the record US harvest.
• Corn prices face an upside risk owing to elevated demand for ethanol and supply uncertainty from the South American harvest.
• Premium for long-dated corn futures over near-term futures is on the rise. A calendar spread can be used to express this view. 

• Last week’s inflation data surprised market participants on the upside. CPI YoY: 3,2% vs. 3,1% estimate. Core CPI m/m: 0,4% vs 0,3% estimated
• Even larger was the upside surprise in the PPI data. Friends of the 70s double-dip inflation scenario will probably love this chart.
• Take a closer look at the 70s and how inflation recovered before it take of in the late 70s for another rip higher.

• We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear Workshop after meeting with management in their St.
• Louis headquarters.
• We believe there remain multiple near and longer term growth opportunities for the company, as they expand the product, places and prices they offer “Furry friends” and further leverage the trusted Build-a-Bear brand name.

• Following the positive response to our article on Perfect Medical , we are keen to introduce our readers to another noteworthy company in the healthcare and beauty industry, Water Oasis.
• Despite initial appearances suggesting sluggish revenue growth over the past decade, a deeper examination reveals significant improvements in business quality and consistent shareholder returns through substantial dividends.
• This under-the-radar company, we believe, presents an attractive risk-reward profile.

• A week ahead of trial, a defendant in massive fraud case copped a plea
• Terms of deal include guilty plea, asset forfeiture, restitution of US$158 mn
• US investigation continues; are other Chinese companies involved in case?

• The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• SOUTHBOUND’s consecutive buying streak ended on Monday 25-March, then started again. NORTHBOUND has started selling (but buying semi tech).
• Hs rebounded vs As. AH Premia still wide. Fabulous two-week performance by the Quiddity Portfolio (+2.09% over the two weeks) on a delta 3:1 long H/short A

• Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
• The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
• Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.

• Masked by a high base, 4Q FY24 sales of Sa Sa International Hldgs (178 HK) edged down by 4.1% YoY. However, sales for mainland China have increased by 18.2%.
• Overall sales for FY24 are in line with market projections and there is potential for further margin expansion. Its 6.7x and 5.9x PERs for FY25F and FY26F are inexpensive.
• The addition of more mainland cities to the Hong Kong individual visit scheme, promotion of Hong Kong tourism, and weaker USD in the medium term are all positive factors.

• Golden Throat Holdings is a gem. It has excellent fundamentals including an eye-catching dividend yield (17.9% in 2023) and a blistering DPS growth (10x from 2020 to 2023). 
• It also benefits from a compelling long-term theme (relieving sore throats caused by worsening air quality/smog/fine dust problems along with recurrent regular cold/flu symptoms among millions of people in China). 
• Golden Throat Holdings is one of the leading throat lozenges manufacturers in China. Its net margin averaged 24% from 2019 to 2023.

• I tally 51 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals discussed on Smartkarma this week: Madison Dearborn’s low-balled Offer for APM Human Services (APM AU); and NTT Data Corp (9613 JP)‘s Offer for Jastec (9717 JP).
• Key updates took place on: Boral Ltd (BLD AU), Azure Minerals (AZS AU), Genex Power (GNX AU), JSR Corp (4185 JP), Chilled & Frozen Logistics Holdings (9099 JP), & Lawson (2651 JP).

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Kokusai Electric (6525 JP) and J&T Global Express (1519 HK) lock-ups. HD Hyundai Marine Solution (443060 KS), ZEEKR (ZK US)and Sichuan Baicha Baidao Industrial (SCBCBDID CH) IPOs.
• Event-Driven developments L’Occitane (973 HK), CGN New Energy Holdings (1811 HK), Azure Minerals (AZS AU), Genex Power Ltd (GNX AU), Riso Kyoiku (4714 JP), Chilled & Frozen Logistics Holdings (9099 JP). 

• Since 2020, there has been a divergence between P/B and TOPIX movements, complicating matters for listed companies that have been asked to raise their P/Bs.
• Expectations are high for a rise in ROE, which has a certain correlation with nominal GDP, which is also increasingly correlated with TOPIX, as deflation exits.
• If price pass-through fails, escaping deflation may not lead directly to higher profit margins. If profit margin increase is insufficient, reducing cash on hand is essential to increase ROE.

• The Keepers Holdings (KEEPR PM) demonstrated a 5-year CAGR of 16%/25% revenue/profit growth with an ROE averaging 20%.
• FY23 surpassed our expectations with 17%/30% revenue and net profit growth. 4Q 2023 high season revenue and profit growth was an astounding 21%/75% YoY.
• The stocks trades at 6.9x/6.2x PE FY23/FY24e with a 7.5% dividend yield (assuming ten centavos/dividend based on FY23 earnings for FY24 and a 50% payout ratio). 

• Mitra Adiperkasa (MAPI IJ) has revealed more detail on the impact of boycotts stemming from the Gaza conflict on some of its brands, most notably Starbucks but also including Zara. 
• Management remains upbeat about the outlook for the expansion of new retail outlets across its brand portfolio in Indonesia and Southeast Asia but has reduced guidance for Starbucks. 
• Mitra Adiperkasa remains the best proxy for Indonesian retail with any weakness in the share price an opportunity, with valuations remaining attractive. 

• Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports.
• In Baicha Baidao IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on pedestrian store KPIs, unsustainable historical growth rates, declining contract liabilities, and margin pressure reflecting a fiercely competitive market.

• We expect Alibaba to report CY1Q24 top-line, non-GAAP EBITA and non-GAAP net income in-line, (14.2%) and (7.4%) vs. consensus. We cut non-GAAP EBITA by 10% and kept topline unchanged;
• BABA is prioritizing growth of both AliCloud and cross-border ecommerce (AliExpress), which will weaken profitability in the near-term but is the right thing to do. 
• BABA is transforming itself into Chinese Microsoft with hopes of e-commerce mainly pinned on overseas. We maintain BUY and US$ 85 TP, implying 9.5x CY24 P/E.

• Fast Retail missed analyst estimates for Q2 sales and operating profit. Revenue growth slowed to 5% YoY
• Full year operating profit guidance maintained at Y450 billion, just slightly below the street 
• The stock is trading at 27x EV/EBIT, in-line with historical averages, but still expensive in absolute terms and versus global peers

• Melco International (200 HK) gains as Lawrence Ho increases his position. Melco and 51.1%-held Melco Resorts (MLCO US) are the two worst performing gaming stocks over the past year.
• Preceding my comments on Melco are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports. 
• Biacha is China’s third largest freshly-made tea shop company in terms of retail sales value in 2023, according to Frost & Sullivan.
• The bull case rests on a rising market share, high revenue growth, sector-leading margins, cash generation and a strong balance sheet. 

• Net profit per listed company increased 4.4 times over the 33 years from 1989 to 2023, which means only a modest 4.5% annual growth.
• The reason why ROE has been sluggish since FY 2005 is due to the slow growth of Net Profit Margin, the decline of Asset Turnover, and the flat financial leverage.
• When the escape from deflation becomes a reality, the key is to have products ready to pass on prices, and defense by cash alone is not sufficient for this purpose.

There has been a lot going on under M&C Saatchi’s operational bonnet, so delivering FY23 results a shade above market forecasts is a good result, especially given the difficult market backdrop. Earlier issues regarding outstanding put option liabilities are in retreat, with minority interests in FY23 down to 13% from 25% in FY22, and most remaining liabilities are expected to be settled in FY24. The focus is now firmly on optimising the operational structure. There has already been good progress, simplifying and achieving greater coherence on a regional-first approach, with better alignment to how clients (and potential clients) want to utilise the group’s global capabilities. The incoming CEO, Zaid Al-Qassab, who starts in May, should be taking on the group’s navigation in less stormy waters.

• Trial, the discount FMCG and retail technology company, completed its IPO last month, achieving an initial market capitalisation higher than most of its rivals in the supermarket sector. 
• If forecasts for FY2023 are achieved, it will become the 5th largest chain in the country and its proprietary technology should give it an important advantage in the medium term.
• But its position at the centre of the fast-growing discount sector will drive the real growth, and the Kyushu-based firm will emerge as challenger to leading retailers.