Consumer

• After hitting the bottom during the COVID crisis, the only direction left for MINISO Group Holdings (MNSO US) to move is up.
• Given the current valuations, Miniso could generate multi-bagger returns during favourable market conditions.
• In addition, Miniso could help investors generate sizable returns in the short-term on the short side with increased short exposure to Chinese E-commerce.

• Alipay’s sale of 5m shares in Kakao Pay (377300 KS) has caused the stock to slide below its IPO price. Foreign investors have sold while retail have bought last week.
• Alipay still holds 34.7% of Kakao Pay (377300 KS) and this will be an overhang on the stock for some time.
• Kakao Pay (377300 KS) will be added to the FTSE All-World Index at the close on Friday. MSCI inclusion will likely be at the May 2023 SAIR.

• Winia Aid (377460 KS)  announced its IPO book building results. The IPO price has been determined at 16,200 won, which is at the high end of the IPO price range.
• There were 1,225 institutions that were involved in the IPO survey and the demand ratio was 955 to 1. The IPO offering amount is 87 billion won.
• Our base case valuation of Winia Aid is 21,724 won per share, which is 34% higher than the IPO price.

• Micromobility Operator Bird Global has gone through a roller coaster ride over the past five years, having a prominent rise followed by a massive collapse recently.
• An influx of competitors, resurgence in the pandemic and seasonality combined with supply chain shortages and record inflation has dented the company’s stock.
• With a likelihood of a prolonged recession on the horizon, can Bird re-focus its priorities to stop the cash burn and turn its business around?

• Tesla announced 3-1 Stock Split in a down market plus a surprising board shakeup as Larry Ellison quietly exits. 
• Is this another red flag with Elon’s troubled funding for his messy Twitter buyout?
• If so, this could trigger a stampede to the exits for already wary investors in Elon’s now comically overpriced hostile buyout of Twitter

• LRT Capital is a fundamental investment hedge fund. We invest only in companies with durable competitive advantages, i.e. “moats.”.
• May’s results for the LRT Economic Moat Strategy were below expectations.
• The effectiveness of our hedging strategy has been limited due to the extremely strong performance of energy and commodity related stocks.
• The wealth of tomorrow will be in the hands of the net buyers of today.

• BUY for cheap valuation and high cash on hand
• Auto production forecast to grow 6.8% in 2022
• Strong recovery in FY22E, more growth in FY23E
• High growth potential

• There are 48 – mostly firm – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals this week: Jardine Cycle & Carriage (JCNC SP) & Tunas Andolan’s indirect delisting proposal for Tunas Ridean (TURI IJ) & China Vast Industrial Urban (6166 HK)‘s pre-conditional Offer.
• Key updates took place for: Yancoal Australia (YAL AU), Hwa Hong Corp (HWAH SP), Mapletree North Asia Commercial Trust (MAGIC SP), and Lanzhou Zhuangyuan Pasture (1533 HK).

• The FMCG Business reported Q4FY22 revenues, in line with the recent annualized revenue run-rate of around INR 400cr.
• The relatively new Naturali brand was advertised prominently at the IPL and its products are becoming increasingly visible at department stores.
• A key monitorable for RPSGV’s sports business is the IPL Media Rights Auction that is scheduled to be held on Jun 12.

• Giordano International (709 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 8 June.  
• It is likely that the family of Cheng Yu Tung (the largest shareholder with a 24.4% stake) could either agree to sell into the offer or roll over its shares.
• The median trailing EV/EBITDA multiple of the precedent transactions is 5.1x, implying a privatisation price of at least HK$2.46 per share.

• Hyundai’s IONIQ 5 surpassed Tesla’s Model 3 within a year of its launch. Hyundai’s IONIQ 5 was the best selling EV in Korea in January to May 2022.
• Tesla EV sales in the first five months in Korea slipped to number three from its number one position in the same period last year. 
• Hyundai Motor is expected to introduce IONIQ 6 later this year. However, Elon Musk mentioned that Tesla will not launch any new models until 2023 at the earliest

• The Holdco trade involving Kirin Holdings (2503 JP), which we suggested last year has generated over 33% during the last 12 months against Topix’s 3.8% and Nikkei’s 2.6%.
• We expect additional gains from this Holdco trade mostly alongside improvements in the core-business EBITDA expectations.
• In addition, Kirin is looking outright positive with multiple catalysts assisting Kirin to turn around price performance.

• Into the final straight. Victora and NSW have signed off on Blackstone’s proposed acquisition of Crown Resorts (CWN AU).
• Gaming regulatory approval from Western Australia remains outstanding, but this is done. Crown’s conduct in WA was no better – or worse – than it was in Victoria and NSW.
• Trading super tight with potentially another month or so until payment.

• Haier Smart Home Co Ltd (6690 HK) sees mid-to-high single digit revenue growth for 5M22; and with many cities out of lockdown now, the re-acceleration trend is gathering pace. 
• China market experienced lesser cost pressure than overseas, with its gross margin expanded on a YoY basis. Cost containment measures should help to preserve flat YoY overseas margin.  
• Reliance on property market has reduced, with growth mainly comes from upgrade demand. Its high-end brand Casarte stays as a growth engine with 5M22 revenue recording double-digit increase. 

• Muji’s historically low valuations are no reason to get excited. We think normalisation is still several quarters out
• China growth was the key valuation driver, but Muji faces continued headwinds from sporadic lockdowns and weak foot traffic
• Rising costs are new problem for Muji in the domestic market. The company will remain behind the curve on price hikes, leading to weaker margins

• Same-store sales for company-owned stores were 141.7% vs. May 2021 (123.9% for April), 227.3% vs. May 2020 (743.9% for April), and 110.5% vs. May 2019 (102.7% for April).

• May sales were extremely strong, and the impression is positive.

• The company does not plan to revise prices for Yakiniku King. The company believes that it can control the cost of sales ratio by optimizing the menu mix, adjusting the portion volume per dish, improving the handling of ingredients, and enhancing the side menu

• The 2Q-2H22 outlook looks promising, thanks to solid oil sales volume growth owing to economic recovery from COVID grip and revamping tourism activities. The improving oil marketing margin 
• Recovering MM should drive 2Q22 earnings : We expect the 2Q22 earnings to improve QoQ on the back of better sales volume and marketing margin.
• The oil marketing margin should pick up to Bt1.7/liter in 2Q22(+3% QoQ)and remain at 1.7-to-1.8/Liter range in 2H22.From management guidance, the oil sales volume inched up 5% MoM and YoY

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• Giordano International (709 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code. 
• The Cheng Yu Tung family is the largest shareholder with 24.37%, as it has been since December 2015. A possible Offer ahead of a (potentially) improving retail outlook? 
• And just for some (possible) added excitement, David Webb holds 5.1%. 

• Ant Financial Services Group (6688 HK) is declaring a dividend at a time when regulators have forced the company to increase its capital base.
• Moreover, Ant’s financial performance doesn’t support a dividend payment of RMB 11.8bn in the short term.
• We think the sale of 5.0m Kakao Pay (377300 KS) shares today was forced upon Ant through the lack of usual funding sources at Alibaba Group (9988 HK)’s disposal.

• WM Motor Technology Co Ltd (WMT CH) is looking to raise about US$1bn in its upcoming Hong Kong IPO. The deal will be run by Haitong International, CMBI and BOCI.
• WM Motor is a smart EV player in China. As of the latest practicable date, it had a total of four main EV models (with various versions of each model). 
• As per the CIC, it was the first EV automaker in China to have established its own manufacturing facilities from the outset. 

• After the market close today, Lotte Chilsung Beverage Co announced that there will be a block deal sale of the company (200,000 shares), representing 2.15% of total outstanding shares.
• The discount rate range is 185,250 won to 189,150 won, which are 3% to 5% discount from the closing price today (195,000 won). 
• We have a Positive view on Lotte Chilsung Beverage and we would take this deal. 

• The Scheme Booklet for Morrison/​Brookfield/CSC’s Offer for Uniti Group Ltd (UWL AU) has now been despatched. The Scheme Meeting will be held on the 15th July. 
• The Independent Expert considers the terms to be fair and reasonable with a fair value range between A$4.65-A$5.20 compared to the Offer price of $5.00/share.
• Trading tight to terms, as it has done since parties entered into the Scheme Implementation Deed. 

• Unsurprisingly, the independent expert (IE) considers the consortium’s offer of A$5.00 per share to be fair and reasonable. We think that IE’s valuation approach is sound.  
• The key condition is approval from Uniti Group Ltd (UWL AU) shareholders and regulatory authorities (FIRB). The scheme meeting is scheduled for 9:30 am on 15 July. 
• We continue to think that offer is attractive. At the last close price and for the 4 August implementation date, the gross and annualised spread is 0.8% and 5.1%, respectively.

• Tuhu Car (2007986D HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO.
• Tuhu is an integrated online and offline platform for automotive services in China.   
• The firm remains loss making with no signs of being profitable in the near/medium term given its aggressive growth strategy.

• Our base case valuation of Kakao Pay is market cap of 7.1 trillion won or 53,767 won per share, which represents an additional 40% downside risk from current levels.
• Our base case valuation is based on 5x EV/Sales multiple and applying this to the consensus estimated sales of 898 billion won in 2023. 
• The fact that the share price ended 15.6% lower (much bigger than block deal discount range of 8.5% to 11.8%) suggests a lower probability of an MSCI Korea index inclusion. 

• Intel warned that conditions outlined in 1Q22 have worsened, key to see what AMD says tomorrow.
• Netflix – Roku rumor doesn’t make much sense, we think its more likely Roku cut off insider selling because it is looking to acquire Starz.
• Netflix churn is rising among longtime customers – going to ad-supported Peacock and Paramount. We think another guide down is coming in 2Q22.

• Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
• The Diamond Hill Long-Short Fund’s returns were just about flat—slightly positive— in Q1.
• After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
• From current levels, equity market returns over the next five years are likely to be below historical averages.

• Alipay aims to raise around US$386m via selling around 3.3% of outstanding shares of Kakao Pay.
• The stock more than doubled on listing, providing one of the best first day returns in 2021. However, its performance since then hasn’t been all that great.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• The June rebalance of the HSI, HSCEI and HSTECH indices will use today’s closing prices to cap the index constituents at 8%. This will lead to large flows.
• The largest inflows will be on JD.com Inc. (9618 HK), Tencent (700 HK), Baidu (9888 HK), SMIC (981 HK), Orient Overseas (316 HK), Zhongsheng Group (881 HK), Lenovo (992 HK).
• The largest outflows will be on Meituan (3690 HK), Alibaba (9988 HK), ASM Pacific (522 HK), Kuaishou (1024 HK), AIA (1299 HK), China Construction Bank (939 HK), HKEX (388 HK).

• Alipay’s return on investment is 10x, so it may be natural to realize a profit for some stakes. But the local market believes that the strategic partnership is cracking.
• Starting with this stake sale, it is highly likely that Alipay will go through a multi-phased stake sale process similar to that of Temasek/JPM’s Celltrion stake sales.
• Meanwhile, we should also pay attention to the possibility that this block deal by Alipay will likely lead to the inclusion of Kakao Pay in the MSCI August IR.

• Alipay’s stake sale raises another critical issue: Kakao Pay’s MSCI inclusion. Kakao Pay comfortably satisfies the full MC threshold but tightly exceeds the float MC hurdle.
• As for the passive flow, we should see an inflow of 6.11x ADTV, equivalent to 1.48% of SO. It represents nearly 2M shares, close to ₩210B.
• If we build up a position betting on Kakao Pay’s downward trend due to Alipay’s block deal risk, we should consider temporarily switching the position when this event is triggered.

• Given their market leadership in China’s personal care industry, Hengan International Group (1044 HK) and Vinda International Holdings (3331 HK) arguably make a valid pair trade.
• Yet Hengan’s bottom line is dominated by its sanitary napkin products; whereas Vinda’s tissue segment has a similarly high contribution to its net profit. 
• On various valuation metrics, both companies, relative to listed peers, and their historical trading numbers, appear inexpensive.

• Tuhu Car (2007986D HK) is looking to raise up to US$400m in its upcoming Hong Kong IPO.
• Tuhu is an integrated online and offline platform for automotive services in China.   
• Initially starting as a pure online retail platform, the firm has over time been building its offline network with well-managed stores and technicians to deliver standardized services in-store.

• Despite the 21% spike in share price, we believe good student enrollment outlook and earnings prospects of China Education Group (839 HK) are still yet to be fully reflected.
• The 70.1% YoY surge in approved top-up degree program quotas in China and the guidance for substantial quota increase for bachelor’s degree and junior college programs are both exciting.
• Its comprehensive cooperation agreement with Bank of China Jiangxi Branch adds another peace of mind as this suggests support from the state and lowers regulatory risks, in our view.

• Not many retailers could boast sales growth of more than 50% last year, especially a retailer from the fashion sector.
• Pal Group’s 3Coins managed this thanks to the huge success of the discount fashion to home decor format.
• Its success is one more example of the growth in discount chains.

• During the acceptance period, 73.53% of the shares were tendered or committed, below the 80% minimum acceptance threshold that allows to sideline the holdouts (Moneta and others are seeking €70/share).
• Tomorrow, 8 June, would be the last day for the offer to be declared unconditional. The minimum acceptance condition has to be waived (with prior written approval from the Boards).
• The share price has rebounded by c.11% over the last three trading sessions. Gross spread is 1.7%. 27 June would be the last day of a hypothetical post-tender acceptance period.

• MFE improves the cash component to €2.16/share, taking the package value to €4.75 (6 June). The acceptance period has been suspended; the CNMV will inform of the new acceptance period.
• The sweetened price seems more reasonable. The Board of Mediaset España is now minded to recommend the offer, but the low valuation of both companies does not help the deal.
• Holdouts may expose themselves to being trapped in a group with an even stronger control by MFE with no qualms about running its subsidiary for its own interests.

• Tunas Ridean (TURI IJ) announced a plan to change its status from an open company to a closed company. 
• In effect, TURI will undertake a buyback of its shares at Rp1,700/share, a lifetime high. Those who do not tender will be left holding unlisted scrip. 
• Jardine Cycle & Carriage (JCNC SP) and Tunas Andalan both hold 46.24%, leaving 7.52% in public hands. The proposal requires a shareholder vote. It appears no shareholder needs to abstain. 

• Back on the 25 April, PRC dairy farmer Lanzhou Zhuangyuan Pasture (1533 HK) announced a Conditional Cash Offer for all its H-shares at $10.89/share. The Offer Doc is now out.
• This two-step voluntary cash offer involves a Scheme-like vote and a 90% tendering condition. The EGM will be held on the 29 June. 
• This transaction could potentially be wrapped up late-July. The FY21 dividend should also be added to the Offer terms.

• Driven by a sharp rise in revenue and profitability over the last three quarters, Yonex Co Ltd (7906 JP) shares continue to go up in relatively choppy overall market conditions.
• We expect this strong growth momentum to continue over the medium term while Yonex builds popularity in new markets and new sports categories.
• We think there could be around 100% upside to Yonex alongside improving confidence about sustainability of Yonex’s current performance.

• Shimamura (8227 JP) is on a roll at the moment, clawing back share after a troubled few years of mis-merchandising and confused targeting.
• After a record year, Shimamura now thinks its merchandise teams are strong enough to take on urban centre consumers – without raising operating costs. This could be a worry for Uniqlo.
• Shimamura has tried this before but back then its focus was on young women and had weaker merchandising skills. This time around too urban consumers want more discount apparel.

• Over the past 2 years, customers cut back drastically on shopping and travel. Many worked in home offices in sweatpants and t-shirts.  
• But now, people are vaccinated, and lockdowns have lifted. Even Japan’s borders are starting to spring open.  
• Consumers are looking for ways to make up for lost time – we highlight 3 beneficiaries of revenge shopping. 

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• Subaru’s profitability is set to improve dramatically, driven by a weaker yen
• After two painful years, production is starting to normalise post Covid
• At 1xPBR, we think Subaru is significantly undervalued and see at least 30% upside

• The company sees the overall demand sentiment improving and is experiencing some early signs of demand recovery in both Rural as well as Urban areas.
• It expects double- digit growth in volume as all medium term and long term triggers are in place.

• Demand is recovering on the back of festive and marriage season, which is going really well, and retail volume has outdone wholesale volume, leading to correction in inventory levels, which are lower than 6 weeks now.

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.