Consumer

• Giordano International (709 HK) announced a voluntary conditional offer from the Cheng Yu Tung family at HK$1.88 per share, an 18.2% premium to the undisturbed price.  
• The VGO is conditional on the offeror and concert parties holding more than 50% of the voting rights (currently own 24.57%). The VGO price is underwhelming.
• David Webb’s (the retail activist investor) presence on the shareholder register likely deterred a privatisation bid. We think there is a 50% chance that the VGO becomes unconditional.  

• The MSCI immediately included 4.31% owned by Netmarble in Kakao Games’ float by applying one of the exception rules in Sections 3.2.4 or 3.2.5 of the MSCI GIMI Methodology Book.
• The exception rule used here must have been this one: Re-estimating free float figures resulting from the reclassification of shareholders from strategic to non-strategic.
• I can’t find a reason why this practice of the MSCI shouldn’t be equally applied to Alipay’s Kakao Pay stake.

• Water Oasis (1161 HK) reported a tepid H1 with profits coming in at 26 mn HKD, down 56.2% YoY.  This was below our expectations as the company received no subsidies.
• No interim dividend was paid as the profit in H1 was minuscule, and business had commenced on the 21st of April, impacting a month of H2.  
• Save for another lockdown in HK, we see a substantial improvement in profitability for Water Oasis (1161 HK) in H2, along with subsidies that are being paid retrospectively.

In our next Webinar, we are excited to host Analyst Chris Redl (SC Capital) who will outline his stock picks in the global automotive sector. What do major automotive names look like amidst the EV revolution? Tune in to hear more.

The webinar will be hosted on Wednesday, 29 June 2022, 17:00 SGT/HKT.

SC Capital has over 20 years’ experience covering the global automotive industry both on the Sell-side (UBS & Morgan Stanley) and Buy-side (Och-Ziff), along with a wealth of industry contacts. The current focus is on electric vehicle stocks & their supply chains, aiming is to identify the winners and losers from a long/short perspective. This includes close coverage of legacy automakers as well. From time to time, SC Capital covers opportunistic events with stocks in the manufacturing sector, food & beverage, healthcare, and tech.

• Fast Retailing (9983 JP)’s share price continues to hold at the post 2QFY22 level despite clear signs of weakness in many of its growth markets.
• Even though markets have partially priced in the losing competitiveness in the Chinese market, it still believes Fast Retailing can offset that with growth from North America and Europe businesses.
• As North America and Europe expose their true colours in the next quarterly results due mid-next month, we expect a much-needed correction to Fast Retailing’s share price.

• The Cheng family has made a voluntary conditional Offer of $1.88/share for Giordano International (709 HK). 
• The Cheng’s (and concert parties) control 24.57%. The Offer is conditional on the family getting to more than 50% via tendering. 
• The intention is to maintain Giordano’s listing. The Offer Price has not been declared final. 

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• Hotel Brands (Traditional business): IH has introduced AHVAAN 2025 strategy, under which it expects to reach a portfolio of 300 hotels, comprising Taj (100), Vivanta and SeleQtions (75), and Ginger (125).
• For details on AHVAAN 2025, refer to IH Analyst meet report.
• As on 31st March 2022, IH has 20,581 rooms, after adding around 1,156 rooms in FY22.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• After rising more than 40% since Q4 earnings, Alibaba (ADR) (BABA US) is threatening to break out from a downtrend that lasted a little less than 20 months.
• We think this bounce is quite normal given the fact that the stock lost more than 76% of its value during a challenging time period.
• We remain confident that Alibaba has more downside potential and thinks that this is yet another opportunity to make money on the short side.

• Aided by the weak yen, Imaging & Sensing Solutions should return as a major profit driver in FY Mar-23.
• Capacity expansion should help SONY regain image sensor market share over the next 3-4 years.
• Participation in TSMC’s foundry project in Kyushu should add to the division’s long-term potential.

• Electric Vehicle Startup Lucid Motors, the poster child for the SPAC Boom in 2021, has seen its valuation plummet in recent months amidst a string of production & quality control issues, in addition to other demand headwinds.
• As the macroeconomic environment deteriorates further, some rivals claim that the company could go bankrupt unless it cuts back on spending and reprices its vehicles.
• Elon Musk had an ominous warning for EV startup Lucid Motors last week

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

• This ETF’s AUM has decreased by 17% over the past three months to ₩200B. It has 18 constituents, and it is unlikely that there will be any addition/deletion.
• The first thing to note is Hana Tour because the increase in the number of shares through an offering will be reflected its the market cap right before the rebalancing.
• Among the top stocks by market cap, Asiana Airlines (020560 KS) (+0,.20x ADTV) and Kangwon Land (035250 KS) (-0.21x ADTV) will likely have a significant passive impact.

• TSI seems to be following a strategy of diversify or die. It is using its vast cash resources to invest in and build new businesses with some success.
• But it also has a couple of compelling brands in strong growth sectors, particularly in golf, providing growth of nearly 50% last year in one case.
• This isn’t enough to sustain overall growth however and more needs to be done to get on to a more secure footing.

• The FTSE TWSE Index family covers the 150 largest stocks listed in the Taiwan Stock Exchange Corporation (TWSE). 
• In this index family, Quiddity will primarily focus on the FTSE TWSE Taiwan 50 Index and FTSE TWSE Taiwan Mid-Cap 100 index.
• In this insight, we will have a look at the selection criteria and the historical price performance of past Rebalance Events.

• Decathlon entered the Japanese retail market in 2017 with the opportunity to take a significant share of a growing sports and athleisure sector.
• But the French firm is already retreating: it will close its two stores and focus on online and wholesaling. 
• The market is poorer for but it does leave the market wide open for Workman – which built a consumer chain to combat Decathlon – to become dominant.

• All of Japan’s big apparel firms have radically restructured but there is a lot more work to be done.
• Onward has done a great job of transitioning to e-commerce but this is not enough to sustain the business and provide new sources of growth.
• Trading will improve but slowly and more dynamism is needed in brand development and marketing.

• Sanyo Shokai has posted losses in every year since FY2016 despite promising a return to profit on an annual basis too.
• Its latest 3-year plan is typically optimistic but, equally typically, lacks real substance as to just where this growth will come from.
• Of all Japan’s larger apparel firms, Sanyo Shokai has the least promising outlook and that is saying something.

• The outlook for big apparel remains uncertain; most executives are optimistic about a rebound in sales of premium apparel brands, they are also running around looking for ways to diversify.
• Despite years of closing stores and a recent re-listing, World Co Ltd (3612 JP) remains in uncertain territory as it tries to boost sales of key brands.
• More brands may need to close but the apparel firm is at least investing in new ventures, even if small scale.

• No stock in the sector among major operators has taken a bigger hit than Melco, down over 60% this year.
• The bet is tied to whether Beijing will begin to ease travel bans and lockdowns or not before the end of this year. If so, Melco is very cheap here.
• Performance of its Manila property, the opening of its new Cyprus resorts could carry the company safely until Macau recovery is in place.

• Viva China (8032 HK) trades at a large discount to its 10.6% holding in Li Ning (2331 HK). 
• Apart from its Li Ning exposure, Viva has a controlling stake in Bossini International Holdings (592 HK), a sports experience segment, and net cash.
• The current NAV discount of ~46% is unlikely to meaningfully narrow near term given management’s reluctance to pay out a large dividend or undertake a corporate restructuring. 

• Chongqing Hongjiu Fruit (CHF HK) is looking to raise up to US$100m in its upcoming Hong Kong IPO. 
• Chongqing Hongjiu Fruit (CHJF) is a multi-brand fresh fruit distributor in China with an end-to-end supply chain. They have 1.0% market share as China’s second largest fruit distributor.
• While CHJF is already profitable, its long cash conversion cycle has been straining its balance sheet as the company tries to scale up.

• I visited a Clarks store in Putney, London today. I provide details of this store visit. 
• Clarks is well poised to stage a major turnaround in business, capitalizing on improving popularity of its core Wallabee shoes and expansion into other distribution channels such as Deichmann. 
• Clarks hired Jonathan Ram as its new CEO in April 2022. Previously, Ram headed up HanesBrands global activewear since 2018. He also worked 16 years at New Balance.

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry
• Overall, net inflow was ~US$1.9bn, split US$0.7bn for Shanghai and US$1.2bn for Shenzhen.
• The largest inflows were into CNOOC Ltd (883 HK)and Meituan (3690 HK). The largest outflow was in ICBC (H) (1398 HK).

• We update our earnings forecast for Monogatari Corporation (3097, the company) and fine-tune our target price to 8,900 yen
• Progress toward the company’s full-year guidance was 69% for sales, 41% for OP, and 86% for RP. RP includes subsidy income of 2.656bn yen.
• We lower our FY6/22 OP forecast from 5.012bn yen to 3.023bn yen (+18.3% YoY; OPM 4.1%; company guidance 4.798bn yen), but raise our RP forecast from 5.962bn yen to 6.240bn yen (+46.3% YoY; company guidance 5.500bn yen), assuming an upturn in subsidy income

• Motherson Sumi Wiring India (MSUMI), a JV between Sumitomo Wiring System (SWS) and Motherson Group, is a market leader in the Indian wiring harness industry with a market share of over 40%.
• MSUMI enjoys superior profitability led by improved efficiency and economies of scale, as reflected in the industry leading gross/EBITDA/ EBIT margins
• After the restructuring of Motherson Sumi Systems (MSS), MSUMI transformed into an India-based pure play wiring harness player with a focus on the domestic market

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• We discuss ways of finding alpha with the end of mandatory lock-up periods data from Korea Securities Depository (KSD) which comes out at the end of each month.
• Key companies that are highlighted in this monthly data have been typically underperforming the market much more than the market overall this year.
• Among these stocks, some of the big underperformers this year include Kakao Pay (377300 KS), HYBE (352820 KS), WYSIWYG Studios (299900 KS), and DearU (376300 KS).

• Maruti Suzuki India (MSIL IN) ‘s dealers are optimistic, expecting easing supply, new launches and the Maruti brand promise to drive back some of the lost market share. 
• Kia Motors Corp (000270 KS) is gaining when it comes to fighting with its big brother Hyundai Motor Co (005380 KS). 
• There is a set of customers that now prefers Indian brands giving a good tailwind for Tata Motors Ltd (TTMT IN) & Mahindra & Mahindra (MM IN). 

• Viva China Holdings is a deep value stock with several key catalysts. Viva China Holdings’10.36% stake in Li Ning (2331 HK) alone is worth 152% of its market cap.
• In addition, Viva China Holdings is making solid acquisitions in the global footwear/apparel sector such as Clarks, which is one of the most well known footwear brands in the U.K.
• A major ongoing risk factor is the recent major lockdowns in Shanghai and other cities in China, which is intent on pursing a zero COVID policy.

• When discussing Kakao Pay’s MSCI inclusion, the critical debating point SHOULD BE whether the MSCI will change Alipay’s classification from strategic to non-strategic in the wake of this block deal.
• Suppose the MSCI judges Alipay’s block sales as an investment recovery and anticipates further block sales. In that case, Alipay’s classification may change from strategic to non-strategic.
• The circumstantial probability that the MSCI will make such a decision is relatively high in light of recent examples. In this case, the inclusion will occur at this August QIR.

• The news that PT Surya Citra Media’s digital platform Vidio has raised an additional US$45m from Sinarmas, Grab (GRAB US), and Bali United should be seen as a positive.
• Vidio is Indonesia’s leading OTT platform with 61m subs and 2.5m paying subs forecast to grow to 4m by year-end with Champions League, World Cup, and Original Drama driving demand.
• PT Surya Citra Media looks cheap relative to its holding in Vidio, which is worth 71% of its market cap, and trading at a discount to 5-year average forward PER.

• Raccoon Holdings, Inc. (3031 JP) is currently maintaining the COVID growth momentum while all others in Japanese e-commerce are face a significant drop-off in demand conditions.
• If this outperformance continues, valuation multiples that look somewhat decent today could look cheap beyond any reasonable doubts in a few years.
• In addition, if Raccoon succeeds in bringing down advertising spending to the pre-COVID level, the share price could rise above the previous peak of ¥3,300.

• We had highlighted in our prior note that IPL Media Rights for next 5Y (2023-27) could fetch a value of over INR 40,000cr.
• The bidding concluded recently. Total value of IPL Media Rights came in at INR 48,390cr, well above the INR 40,000cr expectation and closer to our optimistic scenario of INR 50,000cr.
• RPSGV’s IPL team will receive INR 480cr+ per year from its share in media rights vs INR 300-350cr projected earlier. This improves IRR for RPSGV’s investment in IPL team substantially. 

• The Philippine gaming market is recovering fast from covid with the future of hs biggest casino property plagued by legal battles.
• Founder Kazuo Okada dismissed in 2017 by the Universal board over his alleged financial self dealing, is seen behind a May 31st strong arm takeover of the property.
• The Manila government thus far remains neutral but plans for a Spac IPO by Universal and a US based hedge fund is delayed, but is scheduled to debut by September.

• Indian Premiere League cricket auction has brought in $6.6B thus far, up 3x from the 2018-2022 package, though the per game increase is closer to 2.3x.
• Disney was smart to relinquish the digital rights, saving itself $3.6B in cash (~$2/share) rather than spending to drive worthless Hotstar+ subs (~$0.26/share).
• Google may open up YouTube advertising to 3rd party platforms to settle EU antitrust…a potential boon for The Trade Desk.

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.

• Country Garden Holdings Co
• JSW Steel Ltd
• China Datang Corp Renewable Power
• Wynn Macau Ltd

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• U/G to BUY from Hold
• Sales projected to hit record high in 2Q22
• Earnings to remain solid despite GPM pressure
• Promising 2H22E outlook

We upgrade SNNP to BUY from Hold after the share price corrected by 18% since 3 May when we deemed it to be fully valued. Sales momentum remains positive underpinned by greater mobility post-Covid and the successful launch of new products. Cost inflation and labour constraints may put pressure on GPM but solid top-line growth should buoy earnings growth. We believe the recent share price dip offers a buying opportunity, with 23% upside to our DCF-TP of THB18.80 (WACC 7.3% and G.3%).