Consumer

• A couple of years ago, Rakuten (4755 JP) – burning through cash to start its mobile business – announced it would its Bank and Securities units. Bank listed. Securities didn’t.
• Mizuho ended up buying 49% of Securities. Today, it was announced there would be discussions to put Bank, Securities, Card, and Insurance in a new listed Holdco.
• How this works will end up being complicated. More complicated than it should be. But the complexity would make this more of a win-win for everyone. 

• Isetan Singapore (ISET SP) disclosed privatisation through a scheme of arrangement from Isetan Mitsukoshi Holdings Ltd (3099 JP) at S$7.20 per share, a 153.5% premium to the last close.
• The high takeover premium reflects the fair value of investment properties of S$300.4 million, i.e., S$7.28 per share, marginally above the offer price.
• The offer is attractive and 2.1% higher than the all-time high. The vote should comfortably get up. The scheme meeting is from early to mid-July. 

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2024.
• Although the discount on the preferred shares versus the common shares has been gradually narrowing in the past decade, this discount increased from end of 2021 to 1 April 2024.
• On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.

• Isetan Mitsukoshi Holdings Ltd (3099 JP), the controlling shareholder of department store operator Isetan Singapore (ISET SP), is offering $7.20/share, by way of a Scheme.
• That’s a whopping 153.5% premium to last close. And a 178.9% premium to ISET’s NAV (as at 31 Dec 2023). 
• Apart from Mitsukoshi’s 52.73% stake, no other shareholder has >5%. This is a done deal. But why the large premium?

• Tencent Music Entertainment Group (TME) posted robust results in its fourth quarter and full year 2023 earnings call.
• Increasing subscribers and expedited revenue growth were notable positives, taking the total number of subscribers to the 100 million milestone due to the company’s focus on content leadership, platform value, and offering a high-quality user experience.
• Yet, the company also faced some headwinds, particularly in the social entertainment business.

• Market structure is the main factor hindering trading liquidity. In addition to the cross-holdings that remain, ETFs held by the Bank of Japan cast a shadow over trading liquidity.
• Companies are key on this issue. In addition to accelerating to reducte cross-shareholdings, English-language disclosure of annual securities reports, which are in high demand by long-term investors, should be promoted.
• If long-term overseas investors get serious about investing in Japanese equities, the increase in trading liquidity in Japanese equities will be sustainable, and broker coverage will naturally expand.

• This is our first report on Polestar.
• The company saw their highest-ever delivery volume for the Q3 2023 period.
• The said period witnessed record deliveries of 13,976 vehicles, representing a growth of 51% compared to the same period in the previous year.

• Delta Djakarta (DLTA IJ) came out with subpar FY23 results, with revenues/profits down 5%/13% YoY with a loss of marketshare to Multi Bintang Indonesia (MLBI IJ) 
• Q4 2023 showed an improvement, with revenues/profits up 1.5%/4% YoY, breaking a sequence of three consecutive quarters of negative growth.
• Trading at 13x FY23 PE with 25% of the market cap in cash and 9-10% dividend yield, the stock is worth exploring, although we prefer Multi Bintang Indonesia (MLBI IJ) 

• This is our first report on Nordstrom, Inc., a company that has captured the market’s attention given the recent rumors of a takeover offer from the founding family.
• The company’s fourth quarter results delivered revenues of $4.3 billion and an earnings per share of $0.96, an improvement over the previous year.
• Importantly, 2023 results met or exceeded company guidance.

• Group 1 Automotive presented solid performance in the fourth quarter of 2023 through all lines of business, reaching a total revenue of $17.9 billion, marking the highest for the company and attaining a record of total gross profit exceeding $3 billion.
• Though the company reported $131.2 million in adjusted net income, it is clearly driven by the parts and service gross profit, which amounted to $1.2 billion.This is our first report on retail player, the Kohl’s Corporation.
• The company’s Fourth Quarter 2023 Earnings showed a mix of positives and negatives in terms of the company’s financial performance and future outlook.

• Chinese outbound travel demand continued to recover nicely in February
• Major airlines’ decision to slow capacity rebuild now looks very prudent
• But the airlines have underperformed, surprisingly; Buy Trip.com below US$43

• Centurion Corp (CENT SP) is the leading light in purpose workers’ accommodation in Singapore and Malaysia, with high occupancy rates and healthy rental reversions, with a long-term secular growth backdrop.
• The company is also involved in purpose-built student accommodation in centres of excellence for education including the UK, Australia, and the US in a highly sought-after asset space.
• The outlook for both worker and student accommodation looks positive for the coming two years. Valuations look attractive with Centurion Corp trading at a 56% discount to NAV.

• Characteristic of companies TSE introduced as good disclosure examples is that they include more companies with a high foreign ownership and those that pay relatively close attention to cash allocation.
• Not all companies that are good examples have increased their valuations noticeably compared to before TSE market restructuring, but TSE has chosen them based on the content of their initiatives.
• These companies didn’t create their cash allocation policies abruptly, but had more opportunities to think through cost of capital, return on capital and stock price through engagements with overseas investors.

• This report identifies stocks at the extremes of their positioning or momentum ranges within our Asia Ex-Japan fund universe.
• We have pinpointed eight stocks either at their historical positioning extremes or undergoing significant changes in fund ownership, providing detailed ownership profiles for each.
• Pinduoduo Inc and UltraTech Cement make gains, Sunny Optical sees ownership drift south, New Oriental Education moves off the lows.

• I tally 53 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals were  discussed this week on Smartkarma: MMA Offshore (MRM AU)‘s  Scheme with Singapore’s Cyan Renewables; and Sciclone Pharmaceuticals (6600 HK)‘s Scheme.
• Key updates took place on: Boral (BLD AU), Orecorp (ORR AU), Lawson Inc (2651 JP), CPMC (906 HK), CIMC Vehicle (1839 HK), Roland DG (6789 JP), and Welbe (6556 JP).

• With the “Postcard” series, our objective is to bring to our readers on-ground insights based on interactions across key channels located in tier 2 and tier 3 locations.
• For this postcard, we travel to the magnificent and iconic city of Agra. 
• We were pleasantly surprised by the rapid pace of electrification among three-wheelers, which is the topic of this postcard.

• We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
• Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
• This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then…

• With a new Medium-Term Management Plan and a buyback, the stock was cheap as of Thursday’s close. It was less cheap after it went limit up +25% on Friday.
• That put it in the camp of “it may go up more but probably not a lot”. It has told you about big divs and buybacks.
• But model it up and they need to do more buybacks. Both to meet share price gains and the needs of legions of potential cross-holders looking to sell. 

• Ultrajaya Milk (ULTJ IJ) 4Q2023 and FY2023 confirmed a recovery on both its dairy and carton tea segments, with strong growth and a normalisation of raw material costs boosting margins.
• ULTJ continue to focus on new product launches in dairy and carton tea and growing its distribution network with its new distrbution centre at MM1200 under pilot testing.
• Prospects for FY2024 look healthy with expanding distribution and a number of new products helping to drive growth. Valuations look reasonable versus listed competitor Cisarua Mountain Dairy (CMRY IJ).  

• Lawson Inc (2651 JP)‘s Tender Offer is still too cheap. It is also a somewhat non-transparent and unfair process. And it does not adhere to the METI Fair M&A Guidelines.
• Samsonite (1910 HK)‘s pursuit of a dual listing (primary or secondary?) appears to be put the buyout on the backburner. For now.
• Socionext (6526 JP) and ZOZO Inc (3092 JP) have a large part of the Max Real World Float to displace. Neither of those two names are outlandishly expensive.

• This is our first report on Wendy’s Company.
• In Q4, Wendy’s global systemwide sales grew over 3%, supported by global same-restaurant sales growth and the benefit of global net unit growth.
• U.S. company-operated restaurant sales grew due to higher average check figures driven by cumulative pricing of around 4.5%.

• Mitra Adiperkasa (MAPI IJ) finished the year with strong sales growth of +17.4% YoY in 4Q2023 with solid growth across all segments and improving margins. 
• The company continues to add to its 150-strong brand portfolio in Indonesia, as well as extending its reach further in Southeast Asia and growing its omnichannel capabilities. 
• MAPI remains our top retail pick in Indonesia with its focus on the resilient upper-middle segment in Indonesia and increasing regional exposure. Valuations remain attractive at 12.5x FY2024E PER.

• Overseas investors tend to invest in companies with large market capitalization and high profitability, resulting in higher stock price valuations. They also tend to avoid investing in listed subsidiaries.
• Since companies with over 20% foreign ownership show superior board practices, it’s reasonable to assume that board practices improve as foreign ownership increases and the influence of overseas investors increases.
• Companies with more than 30% foreign ownership have many items that generally show excellent values in Key Actions. However, all companies still face challenges in cash allocation.

• Pinduoduo Holdings, Inc. closed its fiscal year of 2023 in a positive trajectory.
• The company reported sustained growth in consumer engagement on its platform in its fourth quarter results.
• High-quality development remains a key strategy for the company.

• This is our first report on golf distributor, Acushnet Holdings Corp.
• The company’s 2023 performance has been buoyed by the growth of its Titleist golf balls, increased 13%, led by strong demand for its new Pro V1 models; golf ball sales increased in all regions with the U.S. and EMEA markets leading the way.
• Despite concerns about the EMEA region, golf balls and clubs were vibrant, affirming golfers’ trust in the quality, consistency, and game performance of the Titleist brand.

• This is our first report on M.D.C Holdings, a major American construction company specialising in property development and mortgage services.
• The company reported strong profitability for its third quarter earnings call in 2023, with a net income of $107 million ($1.40 per diluted share).
• Despite the rise in mortgage rates, M.D.C. witnessed a robust demand trend, mainly attributable to the company’s financial incentives and lack of existing homes supply that drew more buyers to the new home market.

• The Q4 2023 earnings of Lululemon Athletica Inc. highlighted positive operational results with revenue increases across most regions.
• Total revenue was reported to have increased by 16% for the quarter.
• In the Americas, the increase was 9%, while Mainland China saw a rather prominent rise of 78%.

• General Mills reported encouraging third quarter results, especially with the underlying performance improvement in North America retail and the pet segment.
• CEO Jeff Harmening forecasts that the fourth quarter sales would look similar to the third quarter in terms of annual performance.
• However, there is uncertainty due to innumerable external variables that could influence the outcome.Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Restoration Hardware (RH) has consistently demonstrated its resilience in the face of various market challenges.
• RH’s Q3 2023 earnings call reiterated this persistence as the company navigated through higher-than anticipated expenses and a challenging housing market, reflecting on both the areas of strength and weakness in the company’s financial performance.
• One of the highlights was that the company’s net revenues for the quarter stood at $751 million, which was at the midpoint of its guidance.

• Despite being impacted by unfavorable weather during January, Five Below’s sales ended within the guidance and comparable sales were slightly more than their expected figures.
• The company’s growth was mainly driven by the increasing popularity of Five Beyond format stores and the upward trend of customers embracing the value-for-money concept.
• The total fourth quarter sales were $1.34 billion, witnessing a growth of over 19%, and the comparable sales increased by 3.1%.

• Koito Manufacturing (7276 JP) is a $4bn marketcap (~$6bn sales) Toyota Group auto parts manufacturer specialising in lighting parts, famous for being a T.Boone Pickens target in the 1980s.
• As Toyota Group’s leaders restructure their cross-holdings and try to get to 1.0x PBR and a high enough ROE to sustain it, capital efficiency is on the block. 
• Koito today announced a revised Mid-Term Management Plan, a change in KPIs (higher), a large shareholder return plan, and a large buyback. As always, the fun is in the details.

• Multi Bintang Indonesia (MLBI IJ) reported its FY23 earnings with revenues/profits up 6.7%/15% YoY.  Q4 FY23 revenues and profits were up 5.6%/17% YoY. 
• OPM (%) expanded 180 bps from 40.6% to 42.4%, and NPAT margins 240 bps to 32.1%. We believe that trends will continue to improve in 2024.
• At its board meeting, we expect the company to declare a full-year FY23 dividend of 500 Rph/share ( implying a 7% yield). The H123 dividend was 110 Rph/share.

• PT Nippon Indosari Corpindo (ROTI IJ) saw a relatively slow finish to the year with a slight decline in sales but the key drag came from a higher return rate.
• 4Q2023 did not see the usual seasonal spike but 2024 has started well and the return rate has come down, which will boost profitability as new products gain traction. 
• ROTI has launched several more affordable products to help drive its push into general trade whilst raw material prices remain under control. Valuations are attractive with recovery ahead.

Gym Group has accompanied confirmation of FY23 profit resilience and continued buoyancy (like-for-like revenue up 12% in the first two months of 2024) with a clear commitment ‘to accelerate, not reinvent the wheel.’ The latter is telling with new senior management endorsing Gym Group’s sweet spot as a low-cost operator in the long-term growth market of health and fitness. Its confidence in material scope for enhanced pricing and member acquisition and retention is complemented by expansion targeted at sites with perceived 30% return on invested capital (ROIC) potential (10 to 12 openings in 2024 with c 50 over three years), although the typical two-year profit maturation profile means no quick earnings fix. Improving finances (1.7x leverage) should allow this as well as increasingly important technology investment.

• We are reiterating our Buy rating, $37 price target and projections after visiting Guess?
• stores in the Metro NYC area and Long Island.
• We believe, with Spring now beginning to fully flow into stores, Guess?

Dalata’s FY23 deployment of €156m in high-profile hotel opportunities in London, Amsterdam and Edinburgh as well as the newly announced proposed redevelopment at Manchester Airport show the scale and nature of its accelerating growth strategy, enabled by ‘considerable firepower’ (FY23 net debt to EBITDA after rent of just 1.3x). While the focus on cities in the UK and Continental Europe with favourable dynamics, for example London, is self-evidently appealing, there is reassurance in the success of 2022 openings in the UK and a capital-light approach on the Continent. Dalata’s trading agility (like-for-like FY23 EBITDAR margin in line with 2019 despite high cost inflation) and maturing estate (H223 adjusted EBITDA up 20%) bode well for 2024 after a market-led slow start in Dublin.

S4 Capital had a difficult FY23, as flagged, with reduced client confidence and spend, particularly from those clients in the tech sector, and on larger transformation projects. Management is cautious in the short term, with no substantive changes likely in H124, but sees conditions likely to improve in H224 as economic pressures ease. The group’s longer-term prospects should be buoyed by its positioning across data and digital marketing and, in particular, in incorporating AI into hyper-personalisation at scale. The share price is down 77% y-o-y, -22% year-to-date, reflecting the history and short-term prospects rather than a medium-term view.

• KDDI has announced the launch tomorrow of its Tender Offer to buy out the minorities in Lawson Inc (2651 JP). 
• It’s still too cheap. It is still a somewhat non-transparent and unfair process as far as I can tell. And it does not adhere to the METI Fair M&A Guidelines. 
• There SHOULD BE some activist interest to get KDDI to bump but it is not clear that will show up. 

• Lawson Inc (2651 JP) has announced that the pre-condition for the KDDI Corp (9433 JP) tender offer is satisfied. The offer terms are unchanged at JPY10,360 per share. 
• The offer is arguably light due to the market re-rating, does not reflect significant synergies and is below the midpoint of the IFA DCF valuation range. 
• Nevertheless, the offer will likely succeed as it represents an all-time high, with no vocal opposition, an achievable 30.2% minority acceptance rate, and the shares never trading through terms. 

• While domestic revenues may have slowed, Uniqlo’s domestic OP shows upside potential driven by upside to GM and a gradual reduction in SG&A expenditure.
• Simultaneously, Uniqlo International is exhibiting strong performance, with anticipated revenue and OP growth of 21% and 30% YoY respectively.
• Despite expecting a strong earnings beat, concerns over high valuations and index issues make us cautious about trading Fast Retailing (9983 JP) in the current earnings cycle.

• Shenzhou Intl Group Holdings (2313 HK) reported 2023 results yesterday.  2H23 continued to be weak, with sales down 6% yoy.  Net profit grew 10% yoy in 2H23.
• Most importantly, the company sounded quite bullish on 2024 during the results briefing, which greatly improves the visibility in the order recovery thesis of the company.
• I continue to believe that Shenzhou is the best proxy for gaining exposure to the global sportswear sector, especially given the improved visibility now. 

• Full -year 2023 results  and 2024 forecasts indicate business going to plan
• The Baijiu division, key to a rerating, grew sales 50% y/y in the first two months of the year
• The beer division continues to reap the benefits of its premiumisation strategy

• Lotte Tour Development announced that it will conduct a major asset revaluation which could positively impact its share price. 
• The company’s assets will increase to 2.39 trillion won and equity will increase to 569.3 billion won (up more than 8x) at end of 1Q 2024 due to asset revaluation.
• As a result of the asset revaluation, the company’s balance sheet will improve significantly and this likely result in many investors taking another look at the company for potential investments. 

• With around 3.4% QoQ CC revenue growth in Q3FY24, the BPO business, Firstsource Solutions (“Firstsource”), is recovering back to normal, after seeing cyclical dip over the past couple of years.
• The FMCG business is scaling up well. Q3FY24 revenues came in at INR 135cr, a growth of around 12% QoQ, led by festive season demand. YoY growth was 17%+.
• The Sports business reported muted revenues in Q3FY24 as currently the revenue stream is dominated by the IPL event which typically happens in the March to June period.

• Abercrombie & Fitch Co.
• emerged from 2023 with significant achievements, marking it as a defining year for the company.
• The brand witnessed a 15.8% increase in sales, reaching $4.28 billion, which not only represents its second highest annual sales level in history but also a testament to its robust growth strategy.

• This is our first report on sports products major, Academy Sports and Outdoors.
• In the Q4 and 2023 fiscal year call of Academy Sports and Outdoors, the management reported impressive sales improvement during the quarter and significant progress in their long-term strategic objectives.
• Sales came in at $1.8 billion, which was a 2.8% increase in total and adjusted earnings per share increased by 8%.

• Although unavoidable under the provisions of Broadcasting Act, the fact that the right to receive dividends as interest-bearing securities was inhibited was problematic in terms of fairness with other shareholders.
• NTV Holdings, which has ignored this issue, changes its policy, which is a positive impact of “TSE’s request,” but NTV’s seriousness can be measured by whether it raises its ROE.
• If the intention is to leave cross-shareholdings intact and attract overseas investor purchases through some share repurchases, there would be little prospect of a serious increase in ROE.

• Total revenue increase by 42% and automobile revenue increased by 49% in 2023.
• The gross margin improved significantly in 2023, especially in 4Q23.
• We believe BYD will move its focus from ‘low price for sales volume’ to ‘development of new vehicle models’.

• HanaTour seeks new ownership after 4 years under IMM PE. Despite COVID-19 setbacks, successful restructuring attracts attention from online travel and investment giants.
• Market rumors hint at Yanolja and Hotels.com interest, possibly intensifying acquisition competition, leading to a higher price premium. IMM’s 16.68% stake may value at ₩250B, a 35% premium.
• Last year’s mandatory tender offer for 50%+1 share awaits legislation. Unlikely to affect HanaTour sale. Nonetheless, potential acquirers may buy additional shares, suggesting further premium formation in share price.

• At noon time today, Anta Sports Products (2020 HK) released strong 2023 results which beat expectations. 
• Anta currently trades at a forward PE of 18x based on estimated 2024 earnings (assuming a conservative 15% yoy growth in 2024 earnings). 
• I expect the company’s net profit to grow 15-20% CAGR in 2024-2026.  Anta’s historical forward PE is around 24x since 2017. 

• Bukalapak.com (BUKA IJ) booked a slightly weaker finish to the year than expected with a slowdown in revenue growth in 4Q2023 and a miss on adjusted EBITDA breakeven.
• The key reason was a thinning out of non-performing specialty businesses which impacted short-term revenues but will improve revenues and adjusted EBITDA. as the focus shifts to higher take-rate businesses.
• Bukalapak.com PT Tbk (BUKA IJ) is guiding for +15-20% revenue growth and positive adjusted EBITDA in 2024 with execution on this being paramount. Valuations remain attractive.

• The pace of share repurchases in 2023 (+1.4%, YoY) is not sufficient compared to the increase in corporate profits, and there is much room for reconsideration of cash allocations.
• In Japan, where many manufacturers keep CapEx within the depreciation, it’s more important to verify whether shareholder return is appropriate on a cash basis rather than a net income basis.
• Companies that fail to formulate measures to generate ROE that exceeds the cost of capital in accordance with TSE requests are not able to achieve an appropriate cash allocation.

• Alibaba Pictures (1060 HK) is expanding rapidly into complimentary areas such as online ticketing of cinema and live events with the recent acquisition of  Damai.cn from parent Alibaba.
• Alibaba Group Holding (9988 HK) is considering injecting other media platform assets like Youku  to realize synergies among its portfolio of companies.
• Ali Pictures (Alipics) legacy film production business continues to expand globally with its American film production company, Amblin which is a partnership with Steven Spielberg.

• Meituan reported C4Q23 revenue beat our estimate/consensus by 0.7%/1.4%; operating profit beat our estimate/consensus by 37.3%/48.6%, mainly due to order volume surprise, which is unsustainable in our view.
• However, we think Meituan’s near term pressures did not change: (1) core biz OPM drop due to rising low-price orders and subsidies; (2) resuming competition from Eleme/Douyin/PDD
• We maintain the stock as SELL rating but raise TP by HK$13 to HK$70 to factor in the loss cutting commitment in the community group buying biz.

• Hana Tour Service (039130 KS), the number one travel platform in Korea,  announced that IMM PE (controlling shareholder of the company) is planning to sell its controlling stake. 
• The total stake in the company that is up for sale could rise to 27.78%, including stakes held by Hana Tour founder Park Sang-hwan and co-founder Kwon Hee-seok. 
• Potential buyers of the controlling stake in Hana Tour include Yanolja, Hotels.com, Booking.com, and Trip.com.

• Net debt improved by around €1 billion to c. €5.8 billion. Prioritising deleveraging and allocations to new venture investments over dividends seem to have a negative impact on valuation.
• Porsche SE is viewed as a holding company of Volkswagen Group, which should warrant a discount of 15%-25% on the stock, instead of the massive 44.6% discount to NAV.
• Assuming a typical company holding discount of 15-25% range, the current share price indicates Porsche SE is liable for the whole c. €6.5 billion legal claims.

• This is our first report on recreation products manufacturer, Brunswick Corporation.
• Despite market headwinds, the company reports another successful year, claiming to have accomplished the second highest sales and adjusted earnings per share in its existence.
• In particular, Brunswick stresses the progress of its strategic initiatives, continued market share increases, cost control, the launch of new products, and an enhancement in operational efficiency.

• It seems like every week, Bloomberg reports a HK-listed company weighing privatisation options. HKBN (1310 HK), ESR (1821 HK), and Samsonite (1910 HK) have all been rumoured of late.
• Last Friday, Samsonite announced it was focused on pursuing the listing of its shares on a second exchange.
• No preferred exchange was mentioned. Nor whether the goal is to secure a dual primary listing, or a secondary listing. A buyout, for now, appears to be on the backburner.

• It’s time to revisit the network of Alibaba’s ( Alibaba Group Holding (9988 HK) ) affiliated listed companies for near term investment opportunities
• After investing in an ecosystem of online and offline companies over the last 10 years, Alibaba is rapidly restructuring its businesses to refocus on its most profitable opportunities
• Sun Art Retail (6808 HK) will benefit from the synergies of Baba’s restructuring

• Total revenue grew by 22.6% YoY in 4Q23, three percentage points higher than we expected.
• MT’s operating profit broke even for the fiscal year 2023.
• We conclude an upside of 113% and a price target of HK$188. Buy.

• In this insight, we take look at Quiddity’s expectations for index changes and capping flows for the TDIV Index for the June 2024 index rebal event.
• I currently see 5 ADDs and 5 DELs but there are several names close to the border and expectations could change before the base date as prices move around.
• The estimate for one-way flow in June 2024 is US$1.22bn.

• You know it’s bad when Tesla’s delivery trends blow through even my lowest estimates, which already had trailed market projections.
• With no help from the hapless CyberTruck which, not surprisingly, continues to shoot Tesla in the foot.
• See my latest Q1 and full-year estimates—which still prove to be too high.

• Fund Manager Positioning In March fund managers added to their energy position but reduced overall commodities like grains, softs and metals on a MoM basis — the latest BofA survey shows.
• Investors have been underweight commodities now for the past 4 months (longest underweight streak since Aug’19) Compared to the past 20-year z-score, fund managers remain heavily underweight in commodities and even more in energy.
• In March fund managers added to their energy position but reduced overall commodities like grains, softs and metals on a MoM basis — the latest BofA survey shows.

• United Arrows (7606 JP) is an industry leader in operating clothing select shops in Japan, and is the eighth largest apparel company in the country in terms of sales value.
• In FY03/23, United Arrows reported revenue of JPY130.1bn, operating profit of JPY6.4bn, recurring profit of JPY6.9bn, and net income attributable to owners of the parent of JPY4.3bn
• In May 2023, the company announced its long-term vision ending in FY03/33 and medium-term management plan ending in FY03/26 as the first step.

Meituan has released FY 2023 numbers that were excellent in our view, with significantly improved profitability and solid cash generation. The financial risk profile has strengthened further, with a large and growing net cash position coupled with robust leverage and coverage ratios. Liquidity is sound. We expect FY 2024 to be a better year for the company.

We revise our Credit Bias on Meituan to “Positive” from “Stable”, given the material increase in profitability and strong cash-flow generation following the pandemic. That said, we do not expect ratings upgrades in the near future.

• We are reiterating our Buy rating, $10 price target and projections for Vera Bradley after visiting stores in Connecticut and Long Island.
• We believe, as we near the launch of management’s full vision for Vera Bradley in July, both the outlets and main line locations increasingly reflect what is being added and what will be discarded in the shift.
• As such, we are seeing less inventory, especially in the outlet stores, flow in; further, there is an increasing emphasis on core categories, especially handbags, totes and luggage.

• We are reiterating our Buy rating and $0.25 price target for Starco Brands with the company announcing 4Q23 (December) results after the close on Monday.
• We believe 2024, with a full compliment of unique, value-added brands which leverage Starco’s aerosol and marketing infrastructure in hand, and a laser focus on adding key categories and new relationships, is shaping up as another year of material progress for Starco.
• We believe there are also continued margin expansion opportunities from both economies of scale and the company’s manufacturing expertise.

• ZOZO Inc (3092 JP) is +10% since the close after the Nikkei 225 inclusion announcement vs Nikkei225 +2%. Fellow upweight Nitori is up too. Disco and Socionext are up less.
• All three inclusions and one upweight see considerable inclusion demand when compared to active holdings. Some more than others. 
• Some trades here are more interesting than others, still. Cumulative excess volumes are one guide. Fundamentals, and flow dynamics are another.

• Concerns around slowdown in growth are behind the disconnect between PDD’s stellar 4Q23 results and lackluster share performance, in our view.
• We have seen this before. If history is a guide, its valuation will improve after growth hits bottom in 1Q24.
• We expect PDD to deliver 50% plus growth for 2024 and generate US$14 billion adjusted net profit. Reiterate US$240 billion target market cap or 50% upside.

• Fu Shou Yuan (1448 HK)‘s net profit grew 20.1% in FY23; and if not a withholding tax of Rmb87.4m, its net profit would have increased by over 30%.  
• Including a special DPS of HK$0.2139, full-year payout ratio reached 98.5%. Still, it has net cash of Rmb2.7bn or 24% of its market capitalisation.
• Profitability outlook is encouraging – structural demand increase, higher ASP, and well-contained costs. Its land reserve is enough to be consumed for 82 years.

• PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;
• We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;
• We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;

• The trade of being short Fast Retailing (9983 JP) vs Nikkei 225 or Sector Basket is fundamentally slightly short Nikkei 225 froth.
• Giordano (709 HK)‘s SGM will likely pivot off how the shareholders under Halcyon Securities vote. Digging a little deeper as to who these shareholders are, provides some (not-altogether) surprising results.
• AZ-Com Maruwa Holdings (9090 JP) intends to launch a Tender Offer on Chilled & Frozen Logistics Holdings (9099 JP) without having contacted C&F first. A HOSTILE deal. Yum!

• Companies with the highest Disclosure in English scores have the highest ROE, Tobin’s Q, Market Capitalization, and Foreign Shareholder Ratio, while companies with the lowest scores have the lowest values.
• Companies with the highest Disclosure in English scores also show generally higher Board Practices and Key Actions. Both Disclosure in English and these practices are the result of engagement efforts.
• If Disclosure in English and corporate governance efforts are advanced through engagement, it can be hypothesized that profitability will also increase through engagement with overseas investors.