Consumer

• Olam Group set to replace Olam International (OLAM SP) as the listed company entity on 16 March. It consists of Olam Food Ingredients (ofi), Olam Agri and Olam International (OIL).
• The complicated restructuring exercise which was announced in January 2020 is driven by the Board’s intent to unlock long-term shareholder value. 
• Our SoTP valuation is S$2.36 per share, which is a 34% upside to the last trading price of S$1.76 per share (9 March prior to the suspension of the shares).

• NHK Spring released an announcement mid-week to the effect that they were selling a golf practice facility they owned. The profit on the sale will exceed 10% of Enterprise Value.
• In addition, the company has another 25-30+% of Enterprise Value in shareholdings which return far less than the Mid-Term Management Plan target ROE of 8%. 
• On an Adjusted EV basis (EV less non-operating financial assets), this stock trades at less than 1.5x EBITDA two years out. 

• I sorted out those on KOSPI 200 with a weekly short-selling volume exceeding 10% of last week’s total trade volume and a 30-day ADTV of +₩5B.
• I further screened those having an increase in the weekly loan balance. As a result, I filtered 23 KOSPI 200 constituents meeting these conditions.
• Among the filtered ones, those whose stock price did not drop last week are screened, meaning that the market’s expectations for further share price declines are high for these names.

• The past decade has seen the rise of Big Tech emerge as a significant market leader as they continue to play a dominating role in innovation, consumer lives, and the enterprise.
• These names (i.e. Apple, Google, Microsoft, etc.) have tremendous economic moats, free cash flow, and have been a “flight to safety”
• However, so far in 2022, these names have languished as a fierce rotation into other market sectors like agriculture, energy, and metals have taken over while Big Tech consolidates

• With many cash grain/agri prices touching record highs amid war in Ukraine, boasting an upstream supply is not a bad thing. Yet Olam (OLAM SP) is a tricky beast to analyze.
• Bank of Kyoto (8369 JP) would be a screaming buy vs its basket a bit lower. As it is, it’s the same level after the bank changed its payout ratio. 
• The duo of Brookfield and Atlassian/Australian billionaire Mike Cannon-Brookes has lobbed a higher offer for AGL Energy Ltd (AGL AU) and AGL has rejected it.

• LG Energy offers extremely inflated valuation multiples that are even more stretched than frothy peers. 
• It also offers numerous other red flags due to fire risks and a regional production capacity spread that could prove disadvantageous. 
• Recent commodity price surges also impair the competitiveness of EVs overall but also LG Energy’s NMC chemistry vs. LFP.

• Yesterday analyst meeting came out with a positive tone. We reiterate our BUY rating for M with a target price of Bt61.0 based on 25xPE’22E,Asia ex-Japan consumer staple sector average
• Management target same-stores-sales-growth (SSSG) at above 30% in 2022 from -15% in 2021.SSSG has strongly recovered at +15% in Jan-Feb 2022 supported by resuming dine-in services together with restoring consumer 
• After resuming dine-in services,GPM recovered to 66.9% in 4Q21.We believe GPM to increase to 66% in 2022E from 64.1% in 2021 supported by a higher revenue contribution from dine-in service

• 1H RP 1.3bn yen, of which subsidy income 3.2bn yen. Torikizoku Holdings (3193, the company) announced 1H (Aug-Jan) results

• 2Q (Nov-Jan) operating loss significantly reduced to 0.1bn yen. Positive impression

• One of the few izakaya chains to survive the pandemic

• The High Court of Singapore has now sanctioned the proposed restructuring of Olam International (OLAM SP) and the proposed listing of OFI Group.
• Entitlement in respect of the Scheme will close on the 11 March. The last day of trading is the 9 March. The listing of OFI is expected in the 2Q22.
• With many grain/agri prices touching record highs amid war in Ukraine, boasting an upstream supply is not a bad thing. But the timing of OFI’s listing could work both ways.

• It was reported yesterday that Uniqlo plans to continue doing business in Russia despite the Ukraine war situation.
• Fast Retailing (9983 JP)’s decision to continue doing business in Russia has not gone too well with some of its customers.
• If this leads to a fully blown boycott, the price impact could be significant as the company’s valuation remains towards the expensive side even after a 45% drop in valuation.

• We visit dealers of Honda Motor (7267 JP) , Hero Motocorp (HMCL IN) and TVS Motor (TVSL IN) to understand the current demand environment for Electric Vehicles(EV).
• High fuel prices and a very low base lead to high growth for EV OEMs
• Customers are waiting for launches from legacy players and a reduction in battery cost to decide the best alternative, but this is costing the overall 2W industry lower volumes. 

• BBBY’s slower than hoped for turnaround has caught the attention of another activist, GameStop (GME US) Chairman Ryan Cohen’s RC Ventures
• Cohen is urging BBBY to spin-off its outperforming buy buy BABY business or sell BBBY as is outright in a Go-Private transaction
• With the long-term impact of the latest development uncertain, the boost already given to the shares may prove short-lived  leaving additional share price strength an even better reason to exit

• VBL has a diversified growth strategy, with multiple levers in place to drive its long-term growth.
• We expect volume growth momentum to continue, with: a gradual gain in market share on increasing penetration in underpenetrated markets, higher acceptance of recently launched products, and ramp-up of.
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For our next Corporate Webinar we are glad to welcome Del Monte Pacific (DELM SP) Chief Corporate Officer Ignacio (Iggy) Sison and Investor Relations Manager Jennifer Luy.

In the upcoming webinar, Jennifer and Iggy will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 15 March 2022, 17:00 SGT.

Dual-listed on the SGX and the Philippine Stock Exchange, Del Monte Pacific Limited is a global branded F&B company that offers premium quality, healthy products. These include packaged fruit, vegetable and tomato, sauces, condiments, pasta, broth, stock, juices, and frozen pineapple under various brands – it also sells fresh pineapples under the S&W brand.

It is proud of its heritage brands – Del Monte, S&W, Contadina, and College Inn – some of which originated in the USA more than 100 years ago. The Group has exclusive rights to use the Del Monte trademarks for packaged products in the United States, South America, the Philippines, Indian subcontinent, and Myanmar, while it owns S&W globally except for Australia and New Zealand. The Group owns the Contadina and College Inn trademarks in various countries.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• Yamazaki Baking (2212 JP) raised prices in January 2022 due to rising oil prices. We are expecting another price hike very soon to reflect the 60% increase in wheat prices.
• These price hikes may not increase Yamazaki Baking’s 2022 OP margin significantly above the guided level.
• However, once input prices normalise following the Russia Ukraine war, we could see Yamazaki Baking’s OP margin reaching 4.0% in the medium term.

• Tata Motors Ltd (TTMT IN) and Tata Motors DVR (TTMT/A IN) are likely inclusions to the S&P SENSEX INDEX in June while Dr. Reddy’s Laboratories (DRRD IN) could be deleted.
• Hindalco Industries (HNDL IN) could be added depending on sector balance while Nestle India (NEST IN) is a close delete on liquidity.
• The inclusion of Tata Motors could result in the discount on the DVR line Tata Motors DVR (TTMT/A IN) narrowing versus the common shares Tata Motors Ltd (TTMT IN). 

• We have guided bullish on Melco Resorts & Entertainment as an early bet on the improving conditions for its Philippines Entertainment Zone property and other group catalysts.
• GGR in Entertainment City Zone rose 20% in 2021 to US$1.35b–pandemic easing.
• Total industry Philippine GGR  for 2021 was up 14.5%  to $2.2b despite a decline in government run Pagcor casinos which had more widespread lockdowns.

• Disney announced a new ad-based tier for Disney+ last week.
• The decision to go this direction may imply market saturation, rising competitive intensity, or an inability to hit its subscriber targets organically.
• Disney’s streaming business is increasingly dominated by low value Hotstar+ subs

Japfa Comfeed’s FY 2021 results were better than we had expected, with a strong rebound in Q4 (after COVID-19 lockdowns). The financial risk profile remains stable. That said, cash flows, which can be volatile, were weak. Liquidity has deteriorated, due to a surge in short-term debt to plug the substantial negative FCF.

• February SSS 112.8% vs. 2021, 39.1% vs. 2019 (pre-pandemic)

• The number of stores at the end of February was 615 (unchanged MoM). The number of directly owned stores was 384 (unchanged MoM).

• Second Toriki Burger store to open in Shibuya on March 10