Consumer

• In Feb-24, Aeon (8267) agreed with Oasis Management to buy its stake in Tsuruha Holdings (3391) and Tsuruha and Welcia Holdings (3141) would discuss a merger, details decided by end-2027.
• On Saturday 27 December, a Jiji article said the two would look to integrate by end-2025, now that they no longer need SEC approval. That reason sounds wrong.
• The language of the articles is odd but we have to take it at face value. That means we look to what might happen between here and there.

• When Vesync (2148 HK), a manufacturer of small home appliances, was suspended pursuant to the Takeovers Code, an Offer from the Yang family, led by chairman/CEO, controlling ~69.04%, was expected.
• And on cue, that is what unfolded. HK$5.60/share, a premium of 33.33%, by way of a Scheme. The price is final. A scrip option afforded. No dividends.
• The blocking stake is 1.675%. Expect around fourth months to complete. This is done.

• Vesync (2148 HK)‘s major shareholders proposed to privatise at HK$5.60, a 33.3% premium to the pre-suspension price. This is the same as we calculated using the 3-year average P/B. 
• At such a price, it will sit at 7.6x PER for FY25F, a level that it only touched briefly 3 times in the last two years. 
• This PER is at a 25-30% discount to the sector and justified by its smaller size and lesser diversification. All in all, the proposed price looks fair and reasonable.

• Sumber Alfaria Trijaya (Alfamart) looks well set for a strong finish to the year boosted by seasonal factors and a higher quarter for supplier rebates making it the peak quarter.
• The company should be able to surpass its guidance for new store build-out in 2024, emphasising Alfamart and Alfamidi outlets, as it consolidates its Lawson rollout. 
• Alfamart saw strong growth from online sales through Alfagift at +45% YoY, with Alfamart members reaching 20m, with 65% shopping every week. Valuations remain attractive with strong growth in 2025.

• The assembly character toy segment market size is not big and Bloks is already China’s largest player. So, there will be a day when the growth ceiling is reached.
• Bloks’ business model is more similar to Pop Mart, rather than LEGO, but Bloks’ profitability is lagging behind both of them. The current high revenue growth may not be sustainable.
• Pre-IPO valuation of Bloks reached RMB7.2 billion. Valuation of Bloks should be lower than Pop Mart. If Bloks’ valuation could reach the industry average after IPO, it is already good.

• GoTo Gojek Tokopedia remains optimistic for the coming year, with increasing focus on converting hemat users to take up more premium products and it expands its suite of fintech offerings. 
• Focus on profitability will remain core, with an emphasis on product-led initiatives such as GoFood Plus and GoFood Express, and increasing emphasis on growing its fintech offering across products. 
• GoTo is increasingly using AI to improve both the customer experience and improve efficiencies. Advertising will increasingly become a tool to improve take rates with Tokopedia providing valuable cash flow.  

• Vesync (2148 HK) disclosed a Cayman scheme privatisation offer from the Yang family at HK$5.60, a 33.3% premium to the last close price of HK$4.20. The offer is final.   
• While the offer is marginally above the IPO price, it is light compared to sell-side price targets, peer multiples and historical trading ranges.
• Nevertheless, the scrip option, irrevocables and no disinterested shareholder holding a blocking stake facilitate the scheme vote. The offer could be completed by May. 

• Of course, it’s desirable to be able to use cash to find effective investments, but it is important to return cash on hand with an immediate impact on ROE improvement.
• Looking at all listed companies, there are a great many companies that have a large amount of cash on hand relative to sales.
• Denso’s measures to reduce policy shareholdings plus share buybacks will directly improve ROE, even if the background was a desire to stem the rise in foreign shareholdings.

• The FMCG business continues to sustain annualized revenue of INR 500cr+ and with Q2FY25 revenue at INR 146cr, it is possible that annualized revenue may now sustain at INR 550cr+.
• After having bottomed out a couple of quarters ago, the BPO business – Firstsource Solutions (“FSL”), is now performing strong with 6.9% QoQ and 22.7% YoY growth in revenue.
• Revenue in the Sports business varies significantly each quarter based on scheduling of the sports events. Accordingly, in Q2FY25, revenues were not significant at INR 20cr.

• Honda (7267 JP)  announced a HUGE ¥1.1trln buyback. At ~¥1500/share, this would increase EPS by 17+%.  Buy the shares in the low ¥1,400s. Expect this to be a range trade.
• Shanghai Henlius Biotech (2696 HK)‘s Circular is now out. Hoome straight and done deal. 
• Murakami-San has started selling Exedy Corp (7278 JP), earlier than expected. Best to get out first, ask questions later.

• Lithia Motors, a significant player in the automotive retail sector, reported its financial results for the third quarter of 2024, showcasing both strengths and challenges.
• The company’s revenue for the quarter reached a record $9.2 billion, representing an impressive 11% increase from the same period last year.
• This growth was attributed to strategic expansions, improvements in cost efficiencies, and operational execution.

• Autoliv, Inc.’s recent financial performance in the third quarter of 2024 presents a mixed view of the company’s standing and market strategies.
• The company demonstrated resilience amidst declining global light vehicle production, maintaining stable earnings and effectively managing cost reductions.
• Autoliv outperformed the broader market, surpassing light vehicle production by four percentage points, an achievement attributed to its diverse product portfolio and robust customer relationships.

• American Express Global Business Travel (GBT) demonstrated strong financial performance in the third quarter of 2024.
• The company experienced growth in demand for its offerings and managed to significantly increase its adjusted EBITDA by 23% to $118 million, with a notable margin expansion of 300 basis points.
• This margin growth was supported by a focused approach on cost management and by leveraging operating efficiencies.

• Almost two years into China’s travel recovery, November outbound activity grew strongly
• Domestic air travel demand also showed solid growth, has accelerated since Spring ’24
• Trip.com best performing stock in this group in ’24, but it no longer offers much value

• Daesang is one of the leading F&B companies in Korea. It is especially well known for its sauces, kimchi, and miwon (MSG) food ingredients. 
• Daesang has relatively attractive valuation multiples. It is trading at P/E of 5.6x, P/B of 0.46x, and EV/EBIT of 6.4x in 2025. Daesang consistently generates positive net profit.
• Daesang Holdings (084690 KS) is the largest shareholder of Daesang Corp with a 39.3% stake. Two sisters (Lim Sang-Min and Lim Se-Ryeong) are the two largest shareholders of Daesang Holdings.

• Installed Building Products Inc. (IBP) reported a strong third quarter for 2024, displaying record revenue and profitability driven by organic growth and strategic acquisitions.
• The quarter’s earnings highlighted robust performance across residential and commercial segments, although some challenges persist.
• On the positive side, IBP achieved a consolidated net revenue increase of 8% year-over-year, reaching $761 million.

• Netflix has become synonymous with on-demand entertainment, revolutionizing how viewers consume content.
• Yet, in a bid to diversify its offerings and capture a broader audience, the streaming giant is making a calculated foray into live entertainment.
• On Christmas Day 2024, Netflix is set to air its first-ever NFL games, a high-stakes move that includes major star power like Beyoncé performing at halftime.

• Universal Corporation is experiencing challenges due to questions about its terminal value and high leverage, making its equity more vulnerable
• The company has significantly increased its debt in recent years, leading to a decrease in market cap while enterprise value has risen
• Universal is the top producer of tobacco leaf, primarily used in American-blend cigarettes, but faces competition from other producers like Alliance One in a declining market

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Three pre-existing Large Shareholders have not sold down. Two new 5+% shareholders have appeared since Tender Launch. Together, their reports give them 51.7% of shares out.
• That provides them with a significantly strong implied negotiating hand. Given the midpoint of the Target Company’s Advisor’s DCF Range, I expect a bump. 
• Today the Bidder extended for 10 more days. They didn’t have the shares to close. I expect they won’t unless they bump a lot. 

• The actual ratio of tradable shares, excluding ETFs held by BoJ, is low, as a result, the number of Japanese equities available for investment by large institutional investors is limited.
• ETFs owned by BoJ may be treated as being in favor of company-proposed proposals and against shareholder-proposed proposals, thus BOJ-owned ETFs are hindering the improvement of corporate governance.
• It is good that BoJ has begun to consider an exit from ETFs, but with several variables and unknowns, it is not easy for investors to predict the timing.

• On 26 December, Reuters mentioned that E Mart could announce a major JV announcement with Alibaba Group Holding’s Korean operations that could value the JV at about $4 billion.
• The official launch of the JV is expected to take place sometime in 1H 2025. Gmarket and AliExpress Korea will become subsidiaries of this JV.
• Although this is not a done deal, this potential JV between Gmarket and AliExpress Korea is likely to have a positive impact on E Mart Inc (139480 KS). 

• American Eagle Outfitters reported a strong third quarter for 2024, supported by their strategic initiatives, particularly their “Powering Profitable Growth” strategy.
• The company experienced a 3% increase in comparable sales, building on a 5% growth the previous year, and delivered an adjusted operating income at the high end of their guidance.
• Key highlights of the quarter include progress on brand amplification, with American Eagle maintaining its position as the #1 brand in denim for the 15-to-25 age group and experiencing its sixth consecutive quarter of comparable sales growth.

• Casey’s General Stores (CASY) is well-run and has a history of growth through organic and inorganic means
• Continued store growth, margin expansion, and sound capital allocation have led to success for CASY
• CASY is positioned for further growth in a favorable industry, with potential for a low-to-mid-teens IRR over the next five years

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Operating revenue increased YoY across segments, driven by domestic and overseas department stores, and commercial property development.
• Operating profit rose YoY, with significant growth in Domestic Department Store, Overseas Commercial Property Development, and Finance segments.
• Takashimaya Financial Partners Co., Ltd. saw increased revenue and profit due to higher transaction volumes and credit card income.

• Korea FSC announced on the 24th that the updated Capital Markets Act rules, approved by the Cabinet, will take effect on the 31st.
• Banning new shares to treasury stocks during spin-offs could shift board focus in Korea, reducing big shareholder influence and prioritizing the broader shareholder base.
• The capital markets law change could shift shareholder returns from buybacks to dividends, marking a key inflection point for traders, especially in Korea’s preferred stock market.

• Department store sales to locals plummeted in October, resulting in the first decline in 32 months.
• While sluggish clothing sales was one factor, another was crowded luxury concessions putting off locals from visiting.
• Matsuya thinks it has the answer: keeping locals and tourists separate using a new online store.

• Darden Restaurants recently delivered mixed financial results for its first fiscal quarter, marked by an earnings miss and a drop in same-store sales but bolstered by news of a promising partnership with Uber Technologies.
• The company reported adjusted earnings of $1.75 per share, slightly below analysts’ estimates of $1.83, and revenue of $2.76 billion, missing the consensus forecast of $2.8 billion.
• While total revenue improved year-over year due to acquisitions such as Tex-Mex chain Chuy’s for $605 million, same-store sales fell 1.1%, signaling challenges in attracting diners.

• CarMax, Inc., a prominent player in the used car retail market, reported a notably positive performance in its third quarter fiscal year 2025 results, reflecting the strength of its diversified business model.
• Retail, wholesale, and the CarMax Auto Finance (CAF) segments all posted year-over-year growth, contributing to a robust increase in earnings per share.
• The improved performance was driven by a combination of internal execution and favorable external conditions, such as a more stable environment for vehicle valuations.

• Lamb Weston reported financial results for the second quarter of fiscal year 2025, which fell short of expectations amidst challenging operating conditions.
• The company experienced an 8% decline in net sales compared to the same period last year, driven primarily by a 6% reduction in volume due to declining restaurant traffic both domestically and internationally.
• In the backdrop of a competitive environment, Lamb Weston faced incremental customer share losses and exit from lower-margin business in EMEA, further impacting sales and volume negatively.

• General Mills has shown a keen focus on accelerating its organic sales growth, particularly through targeting volume growth.
• Leadership has prioritized enhancing market competitiveness by employing a “remarkable experience framework” to broaden its market share.
• There are positive trends in consumer engagement with core brands, bolstered by increased investment in product innovation, brand building, and promotional activities.

• Conagra Brands’ earnings report for the second quarter and first half of fiscal 2025 reflects a mixed performance, characterized by both positive operational strides and challenges from external factors.
• The company’s revenues in the period have been consistent, with shipments increasing by 1% and consumption rising by 0.6%, indicating strong alignment between production and sales.
• There was no significant impact from Thanksgiving timing on these figures, which is typically a consideration for companies with similar fiscal calendars.

• Today, along with the announcement of Memorandum of Understanding between Honda Motor (7267 JP), and Nissan Motor (7201 JP) to work towards negotiating a Joint Holding Company by June 2025… 
• Honda cancelled their existing ¥100bn buyback, and initiated a truly mammoth NEW Buyback – up to 1.1 billion shares (23.7% of TSO), spending up to ¥1.1trln on market through Dec-2025.
• Assuming the stock pops, it is probably “only” worth 15-18%, but that’s still a LOT. At that rate it boosts BVPS by 8+% on its own, and EPS by 17%.

• Exedy Corp (7278 JP) announced a big buyback. Murakami-san did not sell the first pop. The shares fell. Exedy started buying back and the shares went up. Now Murakami’s selling.
• Today after the close, Murakami Group companies announced that City Index Elevens had started selling. They sold 1.25% of shares out in 6 trading days to 16 December. 
• I expect they sold another 2% in the past week through today. Shares tanked today. This is not a good signal. And it comes earlier than I expected. 

• On 17 December, Goldlion Holdings (533 HK) announced a scheme offer from Mr Tsang (Chairman/CEO) at HK$1.5232 per share, a 71.1% premium to the undisturbed price of HK$0.89 (20 November). 
• The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). The shareholder with a blocking stake is a seller. 
• The offer is reasonable compared to peer multiples and historical trading ranges. At the last close and for a late April payment, the gross/annualised spread is 7.3%/22.7%.

• Alibaba sells 100% equities in Intime Department Store to Youngor.
• Meituan plans to shorten delivery workers’ work hours due to sudden death cases.
• Mixue, the lowest price fresh drink provider, began to raise its prices.

• Isetan-Mitsukoshi has gone from being the most cautious forecaster among the big department store retailers to the most optimistic.
• This is largely on the back of previously unimaginable sales records at its main stores, especially Isetan Shinjuku.
• All of which is bringing in piles of profit, with projections of exceeding its previous average profit by four times.

• Carlsberg’s acquisition offers a 36% premium to Britvic’s June 2024 closing price and captures £2.10/share in taxed and capitalized synergies, ensuring value realization for shareholders.
• Regulatory Approvals: The UK Competition and Markets Authority (CMA) and the European Commission cleared the transaction by December 17, 2024, confirming no further probes.
• Low Deal Risk: All regulatory approvals secured; with a 0.68% spread (6.91% annualized), and closure expected by January 16, 2025, recommendation is long and tender.

• In addition to many manufacturing companies that are sensitive to economic cycles, TSE is also characterized by many companies with sluggish operating cash flow growth.
• Low interest rates in Japan can also be a factor in high volatility. As the volatility of low interest rates increases, corporate value volatility is likely to increase as well.
• Some overseas investors pay attention to the equity spread over JGB yields. As the risk of rising interest rates in Japan increases, they are likely to unwind their futures positions.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Arcadium Lithium (LTM AU), Seven & I Holdings (3382 JP), Get Nice Financial Group Ltd (1469 HK), ESR Group (1821 HK), Goldlion Holdings (533 HK). 
• Lowest spreads: Lifestyle China (2136 HK), Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP).     

• Hopson Development (754 HK) is cash-strapped and it will most likely choose cash dividend, which would increase the likelihood that Glorious Peace’s shareholding ratio will increase to more than 50%.
• If PAGD’s share price is higher than HK$6.12, there is arbitrage opportunity. Since Ping An may hope other shareholders to choose cash dividends, future stock price may fall below HK$6.12
• A risk point is Ping An can actually wait for other shareholders to make their choices before making the final decisions based on the stock price situation at that time.

• DFI Retail Group Holdings (DFI SP), a leading retail player in Asia, is navigating sector headwinds through strategic pivots and cost cuts to drive superior margins and returns.
• After hitting a 10-year low in early August, DFI Retail’s stock rebounded, driven by strong 1H2024 earnings that reflected the impact of management’s initiatives.
• With an attractive dividend yield, strong cash flow, and a positive earnings growth outlook, DFI Retail offers a low-risk, high-return opportunity for investors in 2025.

• D-Market’s controlling stake is being sold to Kaspi, acquiring Class A shares at $7.57 and Class B at $4.75.
• Turkish law mandates a takeover offer for minority shares, but HEPS’s ADR structure exempts it from this requirement.
• Activism efforts aim to increase HEPS’s shareholders to 500, potentially forcing Kaspi to include minority shareholders.

• Vesync (2148 HK)‘s suspension may suggest privatisation by the Yang family (68.8% stake). With US$192m public float and US$216m net cash, out-of-pocket cash needed is limited. 
• 1H24 is decent with a 37.5% earnings growth and 3.3pp margin expansion. The consensus forecast of 4.8% growth in 2H24 is conservative, providing a good opportunity for privatisation.
• Benchmarking the take-out price to the 3-year average P/B will mean a 33% upside while the sector’s average PER multiple implies ~70% higher than the pre-suspension price.

• D-Market Electronic Services & Trading’s (HEPS) controlling stake is being sold to Kaspi, exploiting a regulatory loophole to avoid a mandatory takeover offer.
• Aker Carbon Capture (ACC:OL) sold its business, leaving a cash shell trading at a 20% discount to net cash.
• Ambase (ABCP) is litigating over an Equity Put Right, with summary judgment motions scheduled, potentially impacting share price.

• Sleepy week highlighted by small closing price ranges that were among the 3-5 quietest of the year.
• Volumes across both indexes were down about 1/3 from the prior week.
• Despite low volumes open interest expanded across out-of-the-money options for both Puts and Calls.

• RaaS interviewed Ricegrowers Group CFO Dimitri Courtelis following the company’s H1 FY25 results.
• This is a full transcript of the interview.

• RaaS has published an update on and interview with FMCG agri-group Ricegrowers which trades as SunRice (ASX:SGLLV) following the release of its interim report last week in which it delivered RaaS-adjusted EBITDA of $67.9m (+10%) in line with our forecasts and NPAT of $31.2m (+4%), below our forecasts due to a higher than expected tax rate (28% vs our 22%).Branded sales represent ~70% of total SGLLV sales, with the benefits of new brands, brand extensions and increased ranging evident in the H1 FY25 result.
• Across Rice Food, Riviana and CopRice EBITDA growth far outpaced revenue growth, with EBITDA margins for Rice Food +400bps, +330bps for CopRice and +140bps for Riviana.
• SGLLV added SavourLife and Simply Delish to the portfolio over the half and can be expected to add and extend further brands in pursuit of its 2030 revenue target of $3.0b.

• The new article on Seven & I Holdings (3382 JP) from TV Tokyo is causing a dip on top of last week’s weakness. This is a dip to buy.
• CPMC Holdings (906 HK)‘s Offer is now open for tendering. Ignore the rumours. Zhang Wei will tender. Expect payment before Chinese New Year. 
• Accounting solely for the pre-IPO investors, 164.6m shares (US$1.9bn) in UBTech Robotics (9880 HK) will be unlocked, ~39.2% of the firm’s total shares outstanding, and 91 days of three-month ADV.

• Operating income and depreciation, the components of operating cash flow, have been sluggish. This has undeniably dampened expectations for expanding corporate value.
• Many companies have begun to be aware of cash flow, but have yet to see results. They are at the stage of producing results by selecting business to invest cash.
• In terms of “not being conscious of cash flow,” shareholder returns are still strongly net income oriented and not cash flow oriented.

• A potential merger between Nissan Motor and Honda Motor would create the third largest auto group in the world.
• If this merger is successful, it could have a short term positive impact on Hyundai Motor since it could result in a reduction of overlapping sales/marketing and production of Nissan.
• However, a merger of Honda and Nissan could negatively impact Hyundai Motor over the long term because the merged entity could produce more high quality, price competitive vehicles.

• As the year comes to its end, the trading calendar is impacted by two shortened weeks, with the Christmas holiday and New Year’s Day both falling midweek.
• Holidays market trends can be affected by various non-market factors but it’s always good to check the indexes probability of trend reversals, to avoid surprises.
• In this insight, we’ll take a quick look at the major Asia-Pacific market indices—a ‘Christmas Carousel of Odds‘ for Asian markets, if you will.

• Increasing revenue without increasing profits is “a big denial” of a company’s business model. Unless Zai Lab significantly reduces costs and maintains revenue high growth, its investment value is low.
• Junshi’s 2024 revenue is likely to return to over RMB1.5 billion due to market share expansion in PD-1. Strict cost control will be the main theme for the future.
• If PAGD’s share price is higher than HK$6.12, there would be arbitrage opportunity. If Ping An hopes other shareholders to choose cash dividend, future stock price may fall below HK$6.12.

• AH Premia are all over the place this week. Despite that, pairwise intracorrelation is…. up? Yup. Average Pairwise Volatility is up even more.
• Some of this may be stocks being bullied by large SOUTHBOUND flows in a quieter end-of-year market. 
• Finance is seeing big net SOUTHBOUND buying but that is not showing up in A/H premia. I expect things stay noisy through year-end.

• Seven & I Holdings (3382 JP) shares are in a lull here. Winter doldrums without news as the Ito consortium gets its ducks in a row and 7&i sells York.
• Alimentation Couche-Tard (ATD CN) is waiting patiently. They have the ability to wait, and to fund, and pay up. 
• An article/show is causing a dip today on top of last week’s weakness. This is a dip to buy.

• The automotive world is abuzz with speculation following reports that Honda Motor Co. and Nissan Motor Co. are exploring a potential merger.
• This development comes amid mounting industry pressures, including surging competition from Chinese electric vehicle (EV) makers and the relentless expansion of Tesla.
• The possibility of a Honda-Nissan tie-up has sparked market reactions, with Nissan’s shares skyrocketing while Honda’s stock faced a decline.

• Porsche SE, a holding company, controls 53.3% of Volkswagen (VW) and 25% (+1 share) of Porsche AG, leveraging a dual-class share structure to consolidate control with minimal economic stakes.
• Net debt of €5.16 billion, accrued from the Porsche AG stake acquisition, relies heavily on VW and Porsche AG dividends for debt servicing, with CF uncertainties tied to VW’s restructuring.
• Porsche SE trades at a 31.8% discount to NAV, reflecting legal liabilities, debt reduction priorities, and holding structure complexities, but this discount could tighten to 20% as risks subside.

• Bloks Group, a fast-growing toy company in China, will disclose the proposed size and the initial price range for the share sale soon.
• In my insight, I discuss IPO valuation, update relative valuation table and set a target valuation for Bloks Group ahead of an IPO.
• Bloks Group enjoys higher relative growth profile and superior gross profit margins. The company has over RMB600M in cash and equivalents and no debt.  

OPAP enjoys a leading and growing position in the Greek and Cypriot gaming markets. The majority of its revenue, from land-based activities, is supported by exclusive prepaid licences. To complement these activities, OPAP has developed a strong presence in the regulated online markets, where, by definition, there is greater competition. Management’s strategy is to grow its customer interactions in both the online and offline worlds, through a combination of rejuvenating its older games and developing new games that appeal to broader demographics, while maintaining its leading corporate and social responsibility credentials.