Consumer

• There are currently 43 – mostly firm – transactions currently being discussed and analysed on Smartkarma.
• Two new deals this week: Far Eastone Telecomm (4904 TT) merging with Asia Pacific Telecom (3682 TT); Zip Co Ltd (Z1P AU) merging with Sezzle Inc (SZL AU).
• Key updates took place for: Singapore Press Holdings (SPH SP), Virtus Health (VRT AU), Crown Resorts (CWN AU), Total Access Communication (DTAC TB) / True Corp (TRUE TB) 

• NIO announced that it would look to list in the HK by way of introduction with trading set to begin on 10th March 2022.
• Unlike a secondary or a dual primary listing, there will be no new capital raised and there will be no secondary shares sold either.
• In this note we take a quick look at the deal dynamics.

• Edvantage Group (382 HK), a play on higher education and vocation in China, now trades at 4.9x FY22e/3.8x FY23e. Concerns over the regulatory overhang are overdone, although they do exist.
• With a 30% payout ratio, the stock now trades at dividend yields of 6.1% FY22e/7.9% FY23e, assuming an EPS CAGR of 30% from FY21-23e. 
• The company continues to execute positively in its release in Q1 FY22 with a 62% increase in gross profits YoY, and it has low gearing at 21.7%  net debt/equity. 

• With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.
• Coupang (CPNG US)’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.
• With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.

• Farm Fresh Berhad (FF MY) is a leading vertically integrated dairy player in Malaysia. It has launched an IPO to raise $239 million.
• In Farm Fresh IPO Initiation: Bet the Farm, we stated that the IPO is worth a closer look on a fundamental basis. The offer period is from 28 February-10 March.  
• 30 cornerstone investors will take up c.80% of the institutional offering tranche. Our valuation analysis suggests that the IPO price is attractive. 

• RPSG Ventures reported strong Q3FY22 earnings, led by the BPO business where revenues grew 5% QoQ in INR terms and EBIT grew ~20% QoQ.
• The FMCG business however saw tepid performance with revenues declining to INR 95cr vs INR 100cr QoQ, due to temporary headwinds, however, the long-term prospects remain promising. 
• The sports business is in nascent stage currently but the newly acquired IPL Lucknow franchise holds good promise.

• Monthly data for February: Positive impression

• Ohsho Food Service (9936, the company) disclosed monthly data for its directly-owned stores for February (on a preliminary basis)

• The company maintained solid sales despite Omicron impact, which gives us a positive impression.

• Analyst meeting came out with a positive tone. we expect 2022-24E earnings to continue to grow at 19%CAGR supported by new products launch and market expansion in SEA, especially 
• Both product and market expansion will be key growth drivers in 2022.
• Cut 2022-24E forecast  to reflect the sluggish economy.  Announce annual DPS of Bt0.50 (XD on 5 May).

• Varun will start contract manufacturing for Pepsi’s snack brand Kurkure Puffcorn and we believe it is a step in right direction.
• Depending on the Varun’s progress in Kurkure Puffcorn business, we expect Pepsi to offer more products and regions to Varun.
• As of now Varun will set up a plant in Uttar Pradesh for Rs200-250mn and will produce Kurkure Puffcorn.

• The March 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 Alibaba Group (9988 HK), JD.com Inc. (9618 HK), Meituan (3690 HK), Nongfu Spring (9633 HK), Li Auto (2015 HK) and Lenovo (992 HK). 
• The largest outflows will be on HSBC Holdings (5 HK), Kuaishou Technology (1024 HK), China Construction Bank H (939 HK) and Tongcheng-Elong Holdings Ltd (780 HK).

• Big valuation and multiples despite on delivering its first care in 4Q21 (no revenues and burning free cash flow)
• Lofty delivery goals provided for 2022 and 2023….already disappointing investors
• Optimistic market share and ASP assumptions have been made by management

• This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  
• They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.
• These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.

• We believe revenue will grow by 23% YoY in 4Q21 and by 18% in 2022.
• We believe JD is the most promising direct-sales e-commerce company in China.
• However, short video apps have been taking advertising market share from e-commerce apps.

• The deal is fairly valued (already at acquisition premium, the stock has run up 2x in the last 6 months).
• Any valuation upside from this deal will be based on Crompton’s success on execution (growth with margin improvement).
• Crompton has announced the acquisition of Butterfly Gandhimathi Appliances (Butterfly) in order to extend its kitchen product line.

• Easy Trip Planners or EaseMyTrip.com (EMT) is the fastest growing and only profitable company in the online travel portal in India
• The company offers a comprehensive range of travel-related products and services
• Airline tickets accounted for 94.0% of revenues (pre-Covid levels) while hotels and other services contributed 5.4% and 0.6% of revenues, respectively

• Acquisition of Butterfly Gandhimathi Appliances Ltd.

SJM Holdings’ FY 2021 results remained weak, in a continuation from the soft H1 numbers. The company continued to report sizeable negative EBITDA in contrast to peers (which are all likely to report small positive EBITDA for the year). Moreover, operating cash burn has persisted in the two months YTD.

Liquidity is weak, given SJM’s low cash balance and lack of RCF availability. Moreover, the company would need to refinance its loans due February 2023. SJM’s delay in obtaining new long-term facilities is disappointing in our view, and reflects negatively on management’s execution. Still, we believe the company would not face issues seeking extensions or an eventual refinancing of its loan facilities, especially since the loans are secured against SJM’s assets.

• TVS Motor Company Ltd. (TVSL) is the 3rd largest two-wheeler company in India with an annual sale of more than 30 Lc units
• It manufactures the largest range of 2W including mopeds, scooters, commuter motorcycles, and racing-inspired bikes
• We recommend a BUY on the stock with a target price of Rs 720/share, implying an upside of 14% from the CMP.

• NIO Inc (NIO US) has applied to list in Hong Kong by way of Introduction. No new shares will be issued or sold in connection with the Secondary Listing.
• NIO Inc (9866 HK) will not get Fast Entry to the HSCEI INDEX and is unlikely to get Fast Entry to the Hang Seng Tech Index (HSTECH INDEX) either.
• NIO Inc (9866 HK) should be included in the HSTECH INDEX in June, while inclusion in the HSCEI INDEX in September will require the stock to trade higher.

• This is an agreement between one fish merchant Chuo Gyorui (8030 JP) and another fish merchant Nissui (1332 JP) to take over a third fish merchant, Hohsui Corp (1352 JP). 
• And the takeover PER and forecast PCFR are low. But there really is nothing fishy here. Hohsui has a lot of debt.
• This is a done deal and there is nothing anyone can do about it.

• Morinaga & Co is selling down a near-10% stake in Morinaga Milk in a ToSTNeT-3 buyback on 1 March. 
• Morinaga Milk will see an EPS and ROE uplift. Eventually, there are a lot more cross-holdings to buy back.
• Near-, medium-, and longer-term there are different flow patterns worth understanding if you have a position or are looking for one. If you want to sell lots, you can tomorrow.

• The Cuscaden Scheme Composite Document is out. Finally. No points for the own time own target completion to the own time own target restructuring.
• With the electronic despatch and an approximate timetable, last traded price gives 7.7% annualised agak agak. 
• At S$2.33, shareholders can lepak this to the close pretty easily. 

• Tesla’s is in a slump entirely of its own making—and totally predictable.
• Waves of recalls and lawsuits and government probes. Profitability has a serious asterisk. Market share is shrinking.
• January monthly sales were sad. Will February results look better?

• Globus Spirits (GBSL IN) , incorporated in 1993, is engaged in manufacturing, marketing and sale of industrial alcohol comprising rectified spirit, ENA and IMFL.
• Over the years, GSL has successfully got transformed from a grain-based bulk alcohol manufacturer to a 360° alcohol beverage segment player.
• The story of GSL has had some setbacks, however there are also positives in the form of margin boost, debt reduction and better efficiency.

• Astra International (ASII IJ) FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out Bank Permata (BNLI IJ). 
• The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support United Tractors’ performance.  
• Astra International (ASII IJ) remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.

• I would value Porsche on 18.9x €5.3 billion 22eEBIT, i.e. €100bn; Ferrari, which has moderately higher EBIT margins (25% vs. 16%), trades on 31.2x EV/22e EBIT (Capital IQ consensus).
• The current discount of VW prefs to ords is 23.2%. A Porsche IPO without major changes on VW share structure, would be positive for the preference shares. Long prefs/short ords.
• An IPO of Porsche would be beneficial for the Porsche SE shares and the current discount to NAV should tighten even more, in my view. Long 1 PAH3 GR/short 0.5136 VOW GR.

• In the past week, it was announced that Tving, a leading local OTT service provider in Korea, received 250 billion won in investment, valuing it at about 2 trillion won.
• Previous to this investment, Tving was last valued at 350 billion won in July 2021. In other words, Tving’s value surged by nearly 6x in the past seven months. 
• Our NAV per share of CJ ENM suggests a target price of 185,824 won, representing a 43% upside from current levels. 

• Market leader in the domestic fan industry with value market share of 27%.
• The company has enhanced focus on increasing market share in home appliances categories like (air coolers, water heater and kitchen appliances) Robust balance sheet with RoE & RoCE of 34% & 39% (three-year average),.
• .

• Targeting long-term growth by leveraging external funds and talents

• Selecting a financing scheme that is unlikely to weigh on the stock price

• Koshidaka HD’s capital raising scheme has a high minimum exercise/conversion price and a high base price (800 yen)

• Alibaba Group (9988 HK)’s 3QFY22 results was disappointing with the company’s revenue growing by 9.7% YoY, the slowest YoY growth since inception and missing the consensus revenue target by 1.3%.
• The situation appears far worse on the profitability side considering that OP (excluding impairment of goodwill) fell more than 34% YoY to RMB 32.2bn in 3QFY22.
• We feel there’s a lot more downside to Alibaba shares over the medium term as the company’s cash cows are starting to falter in these tough conditions.

• We interact with channels of Mahindra & Mahindra (MM IN) , Bajaj Electricals (BJE IN) & Havells India (HAVL IN) with an objective to understand sources of stress in rural India. 
• Price increases, lack of savings and irregular rural cash flows are taking a toll on Tractor Sales. 
• In durables, there are no signs of recovery, with lower prices being the only catalyst that would bring back volumes. 

• Barbeque Nation Hospitality (0823884D IN) is among the largest casual dining chains in the country, and its been a year since it got listed on the bourses. 
• In our earlier insight Barbeque Nation IPO: Not Grilling Fine , we had highlighted the business, financial and governance discomforts seen in the IPO document.
• A year later, these setbacks still continue to be visible in the balance sheet. In this insight, we try to update our insights regarding the company.

• Crown resorts displays a clear sell top zone near 13.00-50 that will induce a tactical rejection to short. On pullback we see a buying opportunity.
• Rising price wedge is ultimately bearish. RSI bear divergence warns of a weakening rise (not confirming new price highs on weaker bull momentum).
• Initial pullback support at 11. Higher conviction buy level at the 10 support where price and trend meet.

• The deal is fairly valued (already at acquisition premium, the stock has run up 2x in the last 6 months).
• Any valuation upside from this deal will be based on Crompton’s success on execution (growth with margin improvement).
• Crompton has announced the acquisition of Butterfly Gandhimathi Appliances (Butterfly) in order to extend its kitchen product line.

• New order wins in EVs/hybrids; Focus on energy cost pass on to customers MACA’s weak performance in 4QCY21 was reflection of high RM/energy cost and operating deleverage in both geographies.
• It is negotiating with customers to pass on hyper inflation in energy prices.
• We cut our CY22E EPS estimates by 3.5% to account for margin pressures across both geographies and maintain CY23E EPS estimates.

• Butterfly Gandhimathi (BGAL) is one of the leading manufacturers of kitchen & electrical appliances in India and sells its products branded as ‘Butterfly’.
• The company is a market leader in India for SS LPG stoves & table top wet grinders and major supplier of mixer grinders & pressure cookers
• Over the last three years, BGAL has enhanced its focus on modern trade/online distribution channels to capture higher revenue growth

• Swiggy is a leading food delivery platform in India. It along with its listed rival, Zomato, control nearly the entire food delivery market in India.
• Swiggy last raised another $700m investment led by Invesco US with a valuation of $10.7bn in Jan 2022. 
• Recent media reports have indicated that the company could look to raise around US$800m via an IPO in early 2023

• Inclusions are FSN E-Commerce Ventures (NYKAA), Mindtree Ltd (MTCL), Paytm (PAYTM), SRF Ltd (SRF) and Zomato (ZOMATO), while Indian Oil Corp (IOCL IN) moves lower from the NIFTY Index.
• Deletions are Aurobindo Pharma (ARBP), Hindustan Petroleum (HPCL), Indraprastha Gas (IGL), Jindal Steel & Power (JSP) and Yes Bank (YES), while Apollo Hospitals (APHS) moves up to the NIFTY Index.
• Estimated one-way turnover on the NIFTY NEXT50 Index is 10.24%, the one-way trade is INR 8,486bn and there is over 1 day of ADV to trade on a few stocks.

• Lawson will begin offering made-on-demand meals direct from its convenience stores. 
• Suitable stores are being renovated to include in-store kitchens, with 100 planned for this time next year and 1,000 by 2025, with delivery handled by companies like Uber Eats.
• Most other chains offering made-to-order meals are small, so Lawson could well take a large share of this growing market.

• Marui Group (8252 JP) is increasingly ethereal, shifting further away from selling merchandise through tenants. 
• While seen as a shop building operator, Marui is still true to its service origins as a consumer finance business.
• Now even its shop buildings are increasingly devoted to non-stuff with the company aiming for 70% of tenancies to be selling things other than merchandise by 2025.

• Excluding extraordinary items, ERW’s 4Q21 normalized loss was at Bt371m, the eighth consecutive quarter loss, due to operations under EBIT breakeven.
• 4Q21 negative EBITDA declined to -Bt29m compared to -Bt30m in 4Q20 and -Bt243m in 3Q21 backed by recovering overall hotel operation.
• Lockdown easing and launching ‘Rao Tiew Duay Kan phase 3’ program during 4Q21 resulted in improving occupancy rate (ex. Hop INN segment) to 30%  up from 25% in 4Q20 

• Maintain BUY call and tweak TP to MYR3.37 (-1sen)
• FY21 losses narrower than expected
• 4Q21 core net profit the first since 4Q19
• Cautiously optimistic about FY22

• Automotive Axles (AAL), established in 1981, is largest independent manufacturer of rear axle drive assemblies in India (primarily for CVs, M&HCV)
• As of FY20, rear drive axles comprise ~60% of its topline with brakes share at ~20% and other parts comprising the rest
• Target Price and Valuation: We introduce FY24E. We now value the company at a revised target price of Rs 1730 i.e. 20x P/E on FY24E EPS (earlier TP Rs 1260).

• An excellent proxy to CPO price rally
• 4Q results: Another beat
• Anticipating 2% YoY FFB output growth in FY22E
• Raising CPO ASP and PATMI forecasts

FY21 core PATMI beat our/street estimates by 37%/35% due to record palm oil products ASP. SOP is now in net cash position, allowing it to raise DPS beyond the yearly 5-6sen. A final DPS for FY21 will be proposed before its AGM (in addition to 4sen interim DPS paid). SOP is poised to benefit from high spot prices in 2022 as it has minimal forward sales. Following our EPS upgrade, we raise TP to MYR5.88 after rolling forward valuation to FY23E (from FY22) on unchanged 13x PER, its 5Y mean.

• Maintain BUY call and tweak TP to MYR5.48 (+3sen)
• Losses wider than expected but DPS outperformed
• Earnings recovery will be gradual, in our view
• Cut FY22E/FY23E earnings by 30%/23%

• Maintaining TP of 1,600 yen and a Hold rating. We are updating our earnings forecast for Skylark Holdings (3197, the company)
• On February 14, the company announced full-year IFRS OP of 18.2bn yen (vs. -23.0bn yen loss in FY12/20)
• Our new forecast for FY12/22 is for sales of 311.9bn yen (+17.9% YoY; previous forecast 311.8bn yen) and OP of 8.8bn yen (-51.5% YoY; previous forecast 10.4bn yen)