Consumer

• Last August 13th we urged investors to take a hard look at the spurt in the Philippine gaming market as soon as covid related shutdowns ended. Bloomberry traded at 7.1php.
• We reiterated our bullish view this past November 13th at 9.7php.
• Price at writing has fallen back to 7.50 indicates that conviction in the Philippine gaming recovery has not yet been recognized by investors in the space.

• This is our first report on TJX Companies is pleased with its third-quarter performance.
• The company once more produced solid profitability and a fantastic merchandise margin.
• We initiate coverage on the stock of The TJX Companies with a ‘Hold’ rating.

• About ₩3T trillion is presumed to flow from NPS to KOSPI MID. Then, ₩0.8T from local publicly raised funds should be sitting in KOSPI MID. Adding these two alone amounts ₩4T.
• Of course, this is ACTIVE. In other words, they do not need to proceed with universe changes due to rebalancing at the same pace as ETFs.
• Nevertheless, we should note that the domestic fund industry does not allow a large gap with BM. Hence, at least ₩4T of funds follow KOSPI MID quite tightly.

• Dollar General Corporation is a major discount retailer operating in the U.S.
• The company’s business has been impacted by inflation and the ongoing supply chain issues but it has managed a decent comp sales growth and market share growth of both consumable and non-consumable product sales in recent results.
• This includes challenges within the company’s supply chain, higher inventory shrink and damages, sales mix pressures, and everything that impacted gross margin.

• This is our first report on major discount retailer, Dollar General Corporation.
• Its revenue growth was led by comp sales growth and in market share of both consumable and non-consumable product sales.
• Dollar General, during the quarter, experienced significantly higher cost pressures.

• This is our first report on Constellation Brands, a dominant player in the international alcoholic beverage market, particularly the Mexican beer space.
• The buy rate increased in the quarter for both total wine categories and high-end beer in tracked channels.
• The beer business of the company remained well placed that continues to support the steady growth of the brands.

• Constellation Brands is a major player in the international alcoholic beverage market, particularly the Mexican beer space.
• The beer business of the company is well placed that continues to support the steady growth of the brands.
• Among other developments, Constellation Brands has recently reached a pact with The Wine Growth to divest a portion of the company’s premium and mainstream wine portfolio.

• One of our routine channels is suggesting the possibility of some of Mahindra & Mahindra (MM IN) ‘s Scorpio-N bookings being fake.
• This channel (an online auto forum) has been a trusted source of information followed by various industry veterans including the company’s chairman.
• While the rationalisation of fake bookings as a recent industry practice could solace some, the fallacy of the bookings narrative only gets stronger. 

• Ryohin Keikaku (7453 JP) rose 24% following an earnings beat in the previous quarter. However, the share price progression afterwards was less than we anticipated.
• Our analysis points to one more big earnings beat as consensus is still conservative on cost assumptions.
• We think Ryohin Keikaku could take another big stride towards our target price following 1QFY23 results, due on the first week of January 2023.

• The target is those who purchase 25% or more of the shares of a listed company and become the largest shareholder with management rights.
• The minimum volume of a mandatory offer is [(50% of total shares + 1 share) – the management right purchase volume].
• We will be exposed to pro-rata risk, so it will be essential to figure out the nature and propensity of the shareholder composition to estimate the tendering rate in advance.

• Sula Vineyards raised around US$117m in its India IPO, although demand wasn’t all that great.
• Sula Vineyards (SV) distributes wines under a bouquet of brands. In addition to its flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” & “Dia”. 
• We have looked at various aspects of the deal in our previous notes. In this note, we will talk about demand and trading dynamics.

• Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.
• One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.
• Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.

• JD Health (6618 HK) is on the right track in terms of business model and investment logic. The Company has also begun to enter a virtuous circle in financial performance.
• There were some positive business updates in term of To B business in 22Q1-Q3, which would bring JD Health closer to establishing a complete “retail pharmacy + healthcare service” ecosystem.
• For trading strategy, at present, considering the complex external environment, we recommend investors to do short-term trade, rather than long-term hold.

• Sentiment driven rally is fading. Although COVID exit remains swing factor, individual company’s performance will increasingly be driven by their business models.
• Our proprietary store expansion framework suggests divergent growth outlook for major players – stretched for Haidilao, moderate for Jiumaojiu and Yum China, and ample for Xiabuxiabu.
• Xiabuxiabu is our top pick due to its strong turnaround not yet priced in depressed valuation. We also like Yum China but stay cautious on Jiumaojiu and Haidilao on valuation.     

• A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
• PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions. 
• This is done. The timing for approving the SPA was bang-on with my expectation.

• PAG completed the auction procedures for the acquisition of a 70.92% stake in Shandong Fengxiang (9977 HK). This will trigger an unconditional MGO at HK$1.5132 per H Share.
• As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
• The composite document is to be despatched on or before 28 December. At last close and for an end-of-January payment, the gross and annualised spread is 5.1% and 65.9%, respectively.

• Consumer sentiment is soft, but competition is limited for both Bata India Ltd (BATA IN) and Campus Activewear (CAMPUS IN) 
• Bata enjoys good relationships with its distributors and franchisees, traction for offline sales channels is strong.
• Campus is in an aggressive expansion mode, with leadership in the sports shoe segment driving sales.

• Match is down 70% in 2022, and down 50% relative to the S&P. 
• Despite impressive new CEO and a self help story, shares have continued to underperform rival Bumble and the market by wide margin on macro concerns.
• 13x Forward EBITDA for a company forecast to grow EBITDA at a 16% CAGR through 2025 (we think closer to 20%), has 35% EBITDA margins and $1B in annual FCF

• Multiple negative data points have come out reflecting limited initial uptake for Netflix’s ad-based tier.
• (We think) Netflix lack of AVOD uptake is due to it being fully saturated in its major markets wheras competing services starting from scratch have higher AVOD uptake.
• Lack of incremental subs from AVOD points towards a weaker than expected 4Q22 and downside to guidance…not good for a stock that has ripped since 2Q22 earnings.

• Discounts to NAV of covered holdcos have showed a mixed performance during November and the first half of December, with the same number of spreads widening and tightening.
• Discounts to NAV (31 October): C.F.Alba, 49.5%; GBL, 35.7%; Heineken Holding, 18%; Industrivärden C, 13.5%; Investor B, 15.5%; Porsche Automobile Holding 40.4%. The spread of Rio Tinto DLC widened to %.
• Spreads tend to widen in bear markets but short-term recoveries provide opportunities on tightening discounts. Recommended trades are: GBL, Rio Tinto (DLC), CF Alba (long position).

• Zx Inc (ZX CH) is looking to raise about US$100m in its upcoming HK IPO. The deal will be run by CICC and China Securities International. 
• Zx Inc runs three different businesses, namely an interactive entertainment business (Tan Wan), an instant food brand (Zha Zha Hui) and pop toy business (Bro Kooli). 
• Its interactive entertainment business Tan Wan focuses on publishing game products while while leveraging its precision marketing, in-depth operation and brand incubation capabilities. 

• As earnings recovered following the COVID drop, Oriental Land (4661 JP)’s FY+2 EV/OP returned to around 40-60x range, which in our opinion is too expensive, especially in current market conditions.
• The positivity surrounding the opening of Fantasy Springs got investors to pay huge multiples but Fantasy Springs is no longer looking enticing to investors.
• With a miss and a downgrade to FY23 guidance on the horizon, we are expecting OLC’s share-price to break the long-term trend to the downside in the next few months.

• Last evening, the CSRC and the SFC agreed to further deepen mutual stock market access between the Mainland and Hong Kong and promote the development of both capital markets.
• For Southbound Stock Connect, eligible foreign companies primary-listed in Hong Kong will become eligible. That could mean 5 additions to Stock Connect.
• Additionally, Southbound access via Shanghai Stock Connect will be expanded to being it in alignment with Shenzhen Stock Connect. That could see 131 stocks added to Shanghai Stock Connect.

• Saria agreed to acquire Devro for 316.1p/share in cash, for an implied equity value of £540.8 million and an implied EV of £667 million. This represents 9.6x EV/Fwd EBITDA, 65% premium.
• The offer price seems fair: the multiple is close to Viscofan’s (market leader) and my fair value estimate is 305p (DCF based). A competing bid seems unlikely.
• After the shares went ex-dividend, gross spread is 2.7%, but the estimated annual return is 3.6% (assuming settlement by 30 September 2023), which means there should be better opportunities elsewhere.

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 South City
• Kawasan Industri Jababeka
• Lifestyle International Holdings

• Both Kappa Kreate and ATOM are almost completely controlled by their parent company, ColoWide, and we cannot expect corporate governance practices that would actually be a relief to minority shareholders.
• With the parent company in full control, the subsidiary’s minority shareholders are likely to be aware that the interests of the parent take precedence over those of the minority shareholders.
• Parent company shareholders shouldn’t tolerate continuing to own subsidiaries that damage their interests. The problem isn’t a problem of the interests of the subsidiary’s shareholders, but of the parent’s shareholders.

• A perfect storm of inflation, aggressive monetary tightening, and recessionary fears in 2022 has rocked the Housing market.
• This is especially true for home builders like Landsea Homes, which went public through a SPAC last year.
• While not a household name, Landsea has firmly established itself as an affordable builder for first-time home buyers.

• MSCI’s quarterly comprehensive index review begins with the February review. QIR disappears, and all quarters are subject to the SAIR rules.
• Currently, no constituents face deletion risk. On the other hand, we have three potential additions: Hanwha Aerospace (012450 KS), Meritz Financial Group (138040 KS), and Kakao Pay (377300 KS).
• Meritz Financial will likely take Meritz Fire’s place through a Continuation. Kakao’s chances have increased significantly due to the recent price rise and the comprehensive index review.

• To MID migrants: Amorepacific Group (002790 KS), E Mart (139480 KS), Iljin Materials (020150 KS), Hanjin KAL (180640 KS), OCI (010060 KS), LX Semicon (108320 KS), and SOCAR (403550 KS)
• To LARGE migrants: Hyundai Rotem (064350 KS), Hotel Shilla (008770 KS), GS Retail (007070 KS), CS Wind (112610 KS), and Posco International (047050 KS) 
• This time, the degree of predictability is high as the MC gap widened from an early point. So, we should consider building our position in phases from early next month.

• China private higher education sector is recovering with the supportive government policy
• The sector trades at single digit P/E, which is attractive
• China Education Group with its largest scale and solid trade record is a good candidate for investment

• It was a busy Friday with the implementation of the December rebalance for multiple indices. The Yuanta/P-shares Taiwan Dividend Plus ETF will continue to rebalance over the next 4 days.
• The coming week should be relatively quiet with the announcement of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) changes expected.
• There were large inflows to ETFs focused on China, Korea, Japan, Taiwan. There were inflows to Hang Seng H Share Index ETF and outflows from Tracker Fund of Hong Kong.

• Zozo may be the leading online fashion mall but it has spent the last two years using its power to drive more traffic to its merchants’ physical stores. 
• Its latest service allows stores to sell stock held at Zozo’s fulfilment centre when they themselves have sold out and thus avoid lost sales opportunities.
• Zozo itself, meanwhile, will open a physical store in Omotesando but one entirely devoted to styling services for its customers.

• Las Vegas Sands Corp. is one of the largest operators of global resorts with integrated casinos, gaming, entertainment, and various amenities.
• The company has undergone a challenging period during and after the pandemic as travel restrictions continued to impact the financial results.
• The company continues to pursue opportunities for developing new land-based large-scale destination resorts in both Asia and the U.S.

• MGM is one of the major operators of casinos, hotels, entertainment resorts, and sports betting platforms in the world.
• The company’s domestic business has been strong with the Las Vegas Strip reaching new highs for revenues but its recent bottom-line has been negative.
• Cosmopolitan Las Vegas continued to surpass the company’s early projections while operating under MGM Resorts’ direction and had one of its finest quarters.

• The benefit of issuing ESG bonds for retail investors is that they provide an investment opportunity for retail investors to become familiar with the ESG initiatives of individual issuers.
• For the issuers, they can reduce issuance costs compared to institutional bonds. For the underwriting investment banks, the bonds are more profitable than institutional bonds because of higher sales fees.
• Since ESG bonds for individuals have a maturity of 3-10 years, ESG factors such as the environment may have a short time to affect credit risk.

• This is our first report on MGM, one of the largest owners and operators of casinos, hotels, and entertainment resorts in the world.
• The company reported a mixed quarterly result, surpassing Wall Street expectations in terms of revenues but reporting wider than expected losses.
• Cosmopolitan Las Vegas continued to surpass the company’s early projections while operating under MGM Resorts’ direction and had one of its finest quarters.

• This is our first report on Las Vegas Sands Corp, one of the largest operators of global resorts with integrated casinos, gaming, entertainment, and various amenities.
• The company has undergone a challenging period during and after the pandemic as travel restrictions continued to impact the financial results.
• We initiate coverage on the stock of Las Vegas Sands with a ‘Hold’ rating.

• Nitori dominates in home decor and furniture but now wants to become a top 10 fashion retailer through its N+ chain targeting older women. 
• It will raise the rate of new stores to 30 a year and then to up to 100 a year as it reaches scale. 
• Will it be the Uniqlo for the middle-aged? If so it could own a chunk of a segment worth an estimated ¥2.5 trillion.

The Europe HY Trade Book for December 2022 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

• “VTuber” (Virtual Youtuber) animated influencer company Anycolor (5032 JP) was listed on 8 June 2022 at ¥1530. The stock popped 214% on Day1.It is up another 60% since then.
• Today Anycolor reported Q2 earnings (result, presentation) and revised its full-year forecast to 30 April. Revenues will be +7-18% vs forecast, OP +18-39%, NP +15-39%. Price is 43x forecast EPS.
• The company also announced it is preparing a Section Transfer application, but gave little more info. So we dig into what THAT means.

• Back on the 6 May, Yashili International Holdings (1230 HK) announced a pre-conditional Offer, by way of a Scheme, from China Mengniu Dairy Co (2319 HK).
• Pre-Conditions concern three sales and purchase agreements, all of which Yashili shareholders voted through on the 16 August.
• From a regulatory standpoint, various conditions attached to Dumex China remain outstanding. But the wording in the most recent monthly update suggests the process is getting to the pointy end.

• Premier Anti-Aging (4934 JP) shares rose 6.1% today following a massive earnings miss and a substantial downgrade to FY23 guidance.
• This is perhaps due to low liquidity and depressed prices as the share price dropped more than 85% since July last year.
• We think there’s more downside to the stock, especially with DUO about to hit the bottom of the barrel and CANADEL and Clayence struggling to maintain growth momentum.

• We think Sa Sa International Hldgs (178 HK)‘s risk-return payoff still look favourable even after the recent rally, which rides on the expectations of HK-mainland China border opening.  
• Assuming net profit returns to 70% of pre-pandemic level in FY25, and applying a peak PER of 25x over 2011-2018, its share price still has 63% upside.
• Release of pent-up demand, stabilisation of gross margin trend, improved cost dynamics and manageable financial position are all positive factors for Sa Sa. 

• Results for Q2 were better than we expected as B2B sales growth remained robust whilst cost savings on the consumer side boosted margins
• A rather robust decline in revenue for Lohaco is the only negative that stands out but this was partially anticipated whilst the corresponding cost savings are a boon
• An 11% increase in operating profit for Q2 offsets weakness from the previous report and puts the company on track to meet guidance for full-year growth

• Lotte Shopping is a deep value stock poised for a turnaround. 
• Lotte Shopping has clear turnaround catalysts, cheap valuations, and a solid technical setup. 
• Perhaps the most important catalysts for Lotte Shopping include getting rid of the most restrictions/social distancing measures related to COVID-19 which have been in place in the past three years.

• MGM’s two Macau properties were moving toward increased market share pre-pandemic and should resume as market recovers in 2023. Stock movement supports this thesis.
• Company’s parent company’s strong balance sheet assures liquidity through to the post pandemic recovery cycle expected to begin by 1Q23.
• Stock has nearly tripled in last several weeks buoyed by renewed concession and slowly improving travel ban easing.

• Since mid-November, spreads have shown a mixed performance across our liquid universe with a slight bias towards widening (10 have widened, 9 tightened).
• Trade recommendations long ords / short prefs: Fuchs Petrolub, Henkel, Ericsson, Handelsbanken, SSAB Svenska Stal.
• Trade recommendations long prefs / short ords: Sixt, VW, MFE-Media for Europe, Grifols, Atlas Copco.

• Digital Entertainment Asset (DEA), operator of the PlayMining NFT gaming platform, announced that it had raised a US$10 million investment from Los Angeles-based LDA Capital
• DEA manages intellectual property (IP) monetisation for content creators and operates the PlayMining platform
• The funding was meant to further accelerate its business and market expansion and to help optimise the development of PlayMining.

• Filtering for governance and management comfort, we believe these names are best positioned and deserve attention to participate in Bangladesh’s transition.
• Olympic Industries (OLYMPI BD) is a domestic consumption story currently getting impacted by a margin compression.
• Square Textiles (SQTT BD) , Bashundhara Paper Mills (BPML BD) , the first is a pure export play, while the later is a play on domestic markets as well as exports.

• Yashili International Holdings (1230 HK)‘s latest monthly update suggests that the remaining pre-condition, the 25% Yashili acquisition, is entering the final stages towards being satisfied. 
• The wording “in the course of processing the relevant application” suggests that the government authorities will grant the new registration certificate, which should be received shortly.
• The gross spread is 6.2%. The downside is low as both Danone SA (BN FP) and China Mengniu Dairy Co (2319 HK) can waive conditions to satisfy the pre-condition.

• The SPX, $IWM, $QQQ continue to have trouble breaking above their 200-day MAs and YTD downtrends, while the DJIA has been unable to sustain a breakout above 34,280.
• With that said, all four of these indexes are consolidating within tight ranges just below the aforementioned resistance levels, building energy for the eventual breakdown or breakout.
• We still recommend shifting exposure to defensives (Staples,Utilities,Health Care) and/or taking profits following this rally, but we cannot rule out potential for major upside breakouts. We discuss specific levels below.

• DPC Dash (1405 HK) is the exclusive master franchisee of Domino’s Pizza in mainland China, Hong Kong and Macau with around 546 stores as of 9M2022.
• With Domino’s trailing Pizza Hut in the Chinese market, we think DPC Dash doesn’t deserve to trade on par with other leading Domino’s Master Franchisees around the world.
• Therefore, we see an opportunity to make money on the short side, once the IPO is completed.

• Weilong Delicious Global (9985 HK) has priced its IPO at HK$10.56 per share, slightly above the bottom of the IPO price range of HK$10.4-11.4 per share.
• The company’s HK offering was oversubscribed by 10.53x while the international offering was oversubscribed by 2.6x.
• Even at the above price, Weilong’s IPO is still at a significant premium to domestic as well as international peers.

• This is our first report on Wynn Resorts, a well-known operator of casinos and resorts across the globe.
• The company observed strength throughout the casino, with record gross gaming revenue and record hotel revenue, driven by strength in both ADR and occupancy on the nongaming side.
• In addition, Wynn is progressing with the planning for Wynn Marjan, their integrated resort in the United Arab Emirates.

• Wynn Resorts is a renowned operator of casinos and resorts across the world.
• Wynn’s management observed strength throughout the casino, with record gross gaming revenue and record hotel revenue, driven by strength in both ADR and occupancy on the nongaming side.
• In addition, Wynn is progressing with the planning for Wynn Marjan, their integrated resort in the United Arab Emirates.