Consumer

• Today, Itochu Corp (8001 JP) announced that it had received SAMR approval and would launch its Tender Offer to take private its affiliate, Descente Ltd (8114 JP). 
• As warned last year, Descente is cheap on a forward basis due to very strong growth and profitability of Descente China Holdings but Itochu can downplay that future.
• And indeed, it appear they did, and unless someone takes them to task, this probably gets done. So far, nobody has.

• Today, just before the close, the Nikkei put out a scoop that Bain would buy T Gaia Corp (3738 JP) for ¥140bn. Sounds big. It was a 30% discount.
• There is a three Tender Offer process whereby minorities, who could be squeezed out regardless, are offered the opportunity to block the deal by not tendering at ¥2,670.
• This not-quite “majority of minority” of the super-minority is an interesting governance condition established by the Special Committee. It bears some study.

• T Gaia Corp (3738 JP) disclosed a Bain tender offer at JPY2,670, a 35.9% premium to the undisturbed price but a 27.2% discount to the last close.
• Bain has set the minimum number of shares to be purchased at a 12.67% ownership ratio to appease the Board, which has a neutral recommendation. 
• Bain hopes the offer’s harsh reality check will burst the share price bubble, nudging minorities to accept. An auction process suggests that the chance of a competing offer is low.   

• Swiggy (1255298D IN) Swiggy is looking to raise about US$1.25bn in its upcoming India IPO. The deal will be run by Kotak, Citi, Jefferies, Avendus, JPM, BofA and ICICI.
• Swiggy Limited (Swiggy) is a business to commerce (B2C) marketplace company offering users a platform for ordering grocery and household items (Instamart) and food delivery, through its on-demand delivery network.
• The platform can also be used to make restaurant reservations (Dineout), event bookings (SteppinOut), product pick-up/drop-off services (Genie) and other hyperlocal commerce activities (Swiggy Minis).

• Descente Ltd (8114 JP) has announced that Itochu Corp (8001 JP)’s tender offer precondition has been satisfied. The offer terms are unchanged at JPY4,350 per share. 
• The offer is arguably light due to the peer re-rating and historical trading ranges. It is also below the midpoint of the special committee’s IFA DCF valuation range. 
• Nevertheless, the offer will likely succeed. There is no vocal opposition, the volume traded through terms is low, and the offer implies a premium multiple compared to peers. 

• Temu as a subsidiary of PDD becomes the second largest global e-commerce website.
• Meituan merges departments into fewer business units to cut expenses further.
• Mercedes-Benz left the joint venture with BYD, as its high end products are not as popular as Tesla models.

• Certainly, the “TSE’s request” has begun to change companies’ mindsets, but what we focus on now is whether they have put the plan into action and whether it’s producing results.
• The importance of investor engagement is also indicated in the Japan Investor Relations Association’s survey summary. Companies that receive overseas investor engagement are furthering their efforts to improve profitability.
• Even among companies with high IR awareness, few have taken serious steps to reform their business portfolios, as under 60% have begun to reform business portfolios.

• PepsiCo’s 2024 second quarter earnings report reflects a complex landscape shaped by strategic adjustments and variable consumer behavior, especially in the context of a challenging US market.
• The company’s results are indicative of both resilience and areas requiring attention, navigating ongoing economic shifts and consumer sentiment.
• 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.

• Harley-Davidson recently reported its financial results for the second quarter of 2024, showcasing several advancements and challenges in its performance.
• The company reported a 12% increase in consolidated revenue, driven by growth in both the Harley-Davidson Motor Company (HDMC) and the Harley-Davidson Financial Services (HDFS) sectors, marking a resilient performance amid prevailing economic headwinds.
• The earnings per share showed a significant improvement at $1.63, and the overall operating income grew by 9% to $241 million.

• The latest earnings presentation from British American Tobacco (BAT) provided an in-depth view of the company’s performance and strategic approaches amidst its significant transitory phase.
• BAT is navigating through a challenging market landscape, marked by robust investments in transformation and innovation, particularly aimed to strengthen their U.S. business and accelerate new category offerings globally.
• 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.

• Hong Kong is showing strong market momentum as consumer staples, consumer discretionary, healthcare and tech surge on increased momentum.
• Xtep International (1368 HK) had a good 1H24 and benefited from better consumer sentiment. Analysts are upgrading Tongcheng Travel Holdings (780 HK) on an improved outlook.
• Goldman Sachs upgraded their rating on Bilibili (9626 HK) , Bilibili (BILI US) to a BUY with improving user MAU/DAU measures and the success of its newly launched game.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• Despite weak consumer spending in China, there are a few bright spots—an example is Pop Mart International Group (9992 HK)’s strong sales growth partly driven by the “red lipstick effect.”
• Miniso (MNSO US)’s stock plunged early last week but quickly recovered, reinforcing our view that its deal with Yonghui Superstores Co., (601933 CH) has some promise.

• The Chinese drinking water and beverage maker, China Resources Beverage (CRB HK) has filed for an IPO on the HKEx to raise around US$1.0bn.
• The company’s operations are heavily concentrated towards drinking water products where the market competition is intensifying leading into a price war.
• CR Beverage’s margins are inferior compared to peer Nongfu Spring (9633 HK) who has diversified into other beverage products from drinking water to grow its financials.

• Since it’s difficult for all prime market companies to achieve the 30% female board members by 2030, the goal may be achieved by including non-statutory executive officers in board members.
• Companies are stuck in matching numbers, and government is unwilling to address the fundamental issues. There’s risk that original objective of shifting to value-creating management through ensuring diversity is lost.
• Policy changes to create environment where women don’t have to leave workforce for childbirth, childcare, etc., and to change people’s mindsets are impossible without the leadership of a non-diverse legislature.

• MercadoLibre continues its climb, hitting new highs in both Average Weight (0.4%) and Funds Invested (23.42%).
• In the last six months, 4.2% of funds have added MercadoLibre to their portfolios, while key EM holdings HDFC Bank and AIA Group have seen declining ownership.
• 20 new positions have been opened over the last 6-months, with Goldman Sachs Global Impact Opportunities and Fidelity Special Situations among the fresh buyers, against only 6 closures.

• The weak business, social entertainment, become insignificant in recent quarters.
• All operating data in music is promising, including paying user base, ARPPU, and sublicensing revenue.
• We set an upside of 20% and a price target of US$14.80 for the end of 2025.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front,  it hasn’t been this busy for a while, with deals live in Japan and Korea, and possible launches in Hong Kong and India as well.
• On the placements front, there were a few China ADR blocks and other placements across the region.

• RaaS has published an update report on agri-FMCG group Ricegrowers, trading as SunRice (ASX:SGLLV), updating our Sum of The Parts (SoTP) valuation as we move from FY24 estimates/consensus data to FY25.
• In moving our consensus valuation year from FY24 to FY25, we look back on selected RaaS peer EPS growth trends over the past four years (FY23a-FY26f inclusive).
• Only four stocks including SGLLV [the others (ASX:TWE), (ASX:RIC) and (SB:EBRO)] have not or are not forecast to have a down year during this period.

• Sun Art Retail (6808 HK) entered a trading halt under the Code on Takeovers and Mergers. Bloomberg suggests Alibaba Group Holding (BABA US)’s stake is attracting preliminary interest from PE.
• Alibaba built its 78.70% stake through two purchases in 2017 (HK$6.50) and 2021 (HK$8.10). An exit would align with the strategy to focus on the core business segments. 
• The recent Miniso-Yonghui transaction could have prompted PE to act. An offer at book value would imply HK$2.50, a 40% premium to the last close price. 

• Hypermarket reshuffles as JD.com (9618 HK) and DFI Retail (DFI SP) exit Yonghui Superstores (601933 CH); and Alibaba Group  (9988 HK) potentially exits Sun Art Retail (6808 HK).
• Evidently the influence of a younger hip third-generation tycoon-scion wasn’t the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
• MBK bumps the Tender Offer prices for Korea Zinc (010130 KS) by 13.6% to ₩750,000 and Young Poong Precision (036560 KS) by 25% to ₩25,000. What with the Choi’s do?

• Catur Sentosa Adiprana (CSAP IJ) has grown rapidly from a building material distribution company into the leading retailer in building materials and home improvement through Mitra10 and shop-in-shop Atria. 
• The company already has 52 Mitra10 superstores in Indonesia, with six distribution centres across the country, selling a range of home decoration products, with an increasing portion of private labels.
• CSAP has seen a market improvement in margins for Mitra10 through more private label and scale benefits, and margins will continue to improve. Valuations are attractive with earnings growth accelerating. 

• International Game Technology (IGT) has reported its Q2 2024 earnings, showing strong performance in both revenue and operational metrics.
• In its second quarter, IGT generated revenue of $1.05 billion, maintaining levels similar to the prior year, and achieved an operating income of $230 million.
• When excluding one-time separation and divestiture costs of $26 million, the operating income margin impressively improved by 40 basis points to 24.4%.

• Conagra Brands, in their Q4 and Fiscal Year 2024 earnings, presented a mixed set of results reflecting a transitional phase in consumer purchasing behavior and pricing adaptation.
• CEO Sean Connolly emphasized the gradual normalization of the operating environment as consumers adjust to new price benchmarks, a process he described as ongoing rather than immediate.
• 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.

• Outbound & domestic travel activity continued to recover nicely in August
• Initial reports suggest Mid-Autumn Festival travel activity was solid, too
• After recent surge, we’ve cut Trip.com to HOLD; check out airlines instead

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Bubbles Group’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental score is “Weak”. Controversies are “Immaterial” but Disclosure is “Weak”.

• Alibaba Group Holding (9988 HK)-backed hypermarket play Sun Art Retail (6808) is currently suspended pursuant to the Takeovers Code.
• Reportedly, SASAC-backed COFCO Group may acquire Alibaba’s 78.7% stake. Sun Art’s shares are up 45% since the middle of the month.
• Alibaba exiting – if true – follows JD.com (9618 HK) (and DFI Retail Group Holdings (DFI SP)) selling their respective stakes in Yonghui Superstores Co., (601933 CH) earlier this week.

• Swiggy (1255298D IN) , a popular food and grocery delivery platform in India, plans to launch its much-anticipated IPO in early November.
• The company has seen rapid growth in Gross Order Value and revenues, driven by increased food delivery demand and a surge in quick commerce, an on demand grocery delivery service.
• The Naspers and Softbank Group (9984 JP)  backed company that started operations in 2014 is yet to turn profitable while its close competitor Zomato reported profits in FY2024.

• LFX is a heritage jewelry retailer with almost 180 years of history, traded on the Shanghai Stock Exchange
• A shares trade at around 14-15x TTM earnings with a 3% yield, while B shares trade at a significant discount of 5x TTM earnings and a 7% yield
• Opportunity for investors to own stake in a growing business with strong returns on capital and conservative management at a discounted price, due to lack of attention to the B share class.

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.

• Tesla projects Q3 2024 EV sales of 460,000–470,000, reflecting 8% YoY growth, driven by high demand in China and robust Gigafactory operations. 
• The October 10 Robotaxi event will spotlight Tesla’s Full Self Driving tech, attracting intense investor interest in autonomous transportation’s future prospects. Investors eye a new cheaper Tesla model release.
• Waymo leads the U.S. market, with 100,000+ weekly paid robotaxi trips, intensifying pressure on Tesla to match or surpass this scale in its robotaxi rollout. 

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Vedanta Resources
2. Meituan
3. Yankuang Energy Group
4. Genting Bhd
5. Delhi International Airport Limited

and more…

• Since the total shares held by Founder Family, trust Banks and FamilyMart exceed 50%, this director appointment proposal will pass unless the shareholders held by the trust banks oppose it.
• Challenges will be noted in the function of the nominating committee, which nominated directors with few elements falling under the skills item, and in the disclosure of the skills matrix.
• While PPIH’s free cash flow is ample and growth is expected, shareholder returns and governance remain challenges, but with overseas investor equity exceeding 30%, much improvement is expected in future.

• Hong Kong is now the top-performing major world market this year.  With a large valuation disparity, both Hong Kong’s and China’s markets have more upside potential.
• Haidilao International Holding (6862 HK) and Anta Sports Products (2020 HK) are benefiting from the improvement in consumer sentiment with government stimulus targeting housing payments and consumption.
• Citic Securities (H) (6030 HK) surged in anticipation of increased market trading and IPOs.  Industry consolidation is also part of the improved sentiment.

• Volkswagen AG’s China joint venture (JV) with state-owned SAIC Motor Corp. Ltd. (600104.SH +2.57%) is considering shutting down a combustion engine car plant in Nanjing as it accelerates its pivot toward electrification in the world’s largest auto market where demand for fossil fuel powered vehicles is weakening.

• The move would be part of efforts by SAIC Volkswagen Automotive Co. Ltd. to “upgrade and optimize” its carmaking capacity as it joins other automakers in increasingly focusing on producing electric smart vehicles in China, the JV told Caixin on Saturday.

• The plant in Nanjing, the capital of East China’s Jiangsu province, is where the JV produces the conventionally powered Passat, one of its flagship models. It is one of SAIC Volkswagen’s eight manufacturing facilities in the country.

• SunCar Technology Group ((NASDAQ: SDA) is a leading Chinese cloud-based provider of digital enterprise auto services and auto eInsurance services in China.
• The company offers one-stop, fully digital, on-demand automotive service systems to help enterprise clients build up their customer base and serve their end customers (auto owners).
• The company has grown revenues rapidly in recent years, which we expect to continue in the near-to-midterm.

• On Tuesday, China announced fresh stimulus measures targeting the stock market and property sector.
• The PBoC reduced the main policy rate and cut the RRR, signaling that further cuts were on the cards for later this year.
• Further stimulus measures were announced today ahead of the Golden Week holiday. The discounts of Naspers and Prosus have rallied on the news, we see room for further upside.

• This is a short follow-up on HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024 
• To make the list more comprehensive, we added JNBY Design Ltd (3306 HK), which trades at 8x PE, has a 9% dividend yield, and is net cash.
• We also have updates from Crystal International’s (2232 HK) interim report, which has a very positive future outlook. 

• Mr. DIY Holding (Thailand) (2472516D TB)  is looking to raise as much as US$300m in its upcoming IPO in Thailand.
• It is the largest home improvement retailer in Thailand offering value prices i.e. “Always Low Prices” for over 15,000 products across a variety of departments. 
• In this note, we look at the firm’s past performance.

• Smartworks Coworking Spaces Ltd (1742134D IN) is looking to raise about US$120m in its India IPO.
• It is an office experience and managed campus platform, typically focused on leasing entire/large, bare shell properties in prime locations and transforming them into fully serviced, tech-enabled campuses with amenities.
• In this note, we talk about the company’s historical performance.

• Last week Friday, JSE indices were rebalanced in the closing auction. Turnover for the day was R53.7bn, R37bn traded in the closing auction (68%).
• Turnover at the June rebalance was R58bn, 66% traded in the closing auction.
• Foreign activity in MRP on Friday suggests that there was a large buyer, despite muted index weight changes.

• Volkswagen, an iconic symbol of German industry, is facing unprecedented challenges with potential factory closures
• The Volkswagen brand, which produces half of the cars for the entire Volkswagen Group, is struggling with high costs and low profit margins
• The potential layoffs and factory closures could have significant impacts on both Germany’s economy and its national identity as an industrial giant

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• RPSGV reported a decent Q1FY25 with FMCG business sustaining an annualized revenue run-rate of INR 500cr+. The Sports business also reported healthy Q1FY25 revenue (INR 500cr+) led by IPL contribution.
• To add to growth aggression, RPSGV announced a new CEO for the FMCG business in August. Mr. Sudhir Langer, an accomplished FMCG professional, took the baton from Mr. Rajeev Khandelwal.
• At the current valuation, RPSGV is available at a holding company discount of 75%+. As the scalability potential of the FMCG and Sports businesses become evident, significant re-rating could happen.

• Q3 is coming to an end and ADEA has yet to announce new licensing deals its management has been asserting would happen this year. 
• ADEA has maintained a revenue forecast of $380 million to $420 million on the expectation there would be at least two major new licenses announced this year.   
• Our earning model currently calls for ADEA to generate $400 million in revenue with the third quarter being a smaller step up in revenue compared to the fourth quarter.

• We are reiterating our Buy rating, $3 price target and projections for Vince Holding after visiting the company’s store in London and reviewing Vince’s wholesale offering with leading department stores.
• We continue to believe Europe, and especially the United Kingdom, remain key growth opportunities for Vince, as their fashion aesthetic and pricing are ideal to capture market share in Europe.
• Further, we believe, even with their limited current reach, Vince is already beginning to cultivate a very loyal local customer base that considers the product part of their overall lifestyle.

• 3D Investment Partners bought 5% of Tohokushinsha Film (2329 JP) by Mar-2023. A year later they had 17+%. 3D proposed changes. In July, 3D proposed a takeover, asking for DD. 
• Tohokushinsha responded to the proposals, then offered due diligence to 3D based on terms set by a Special Committee. 3D did not want those strict DD terms. 
• Yesterday, Tohokushinsha said “Fine.” The stock today fell 10% today. This is not a stalemate, but it means 3D may start to play harder.

• Taste Gourmet (8371 HK) will report its H1 FY25 earnings in early November. The company isn’t reporting quarterly earnings because GEM board stocks are no longer required to do so. 
• We expect revenue and profit growth of 22% %/20% YoY, as the average number of HK restaurants has increased from 45 to 54, and most have ramped up. 
• Trading at 4.5x PE with a 12% dividend yield, 27% of the market cap in cash and a mainboard listing on the horizon there abundant catalysts for the future. 

• Low-Cost retailer MINISO (9896 HK) has entered into SPAs to acquire a 29.4% stake in supermarket chain Yonghui (601933 CH) from DFI (DFI SP) and two units of JD.com (9618 HK). 
• Upon the completion of this US$890mn transaction, which is subject to regulatory and shareholder approvals, MINISO would become Yonghui’s largest shareholder. And DFI would exit its entire stake.
• Ye Guofu, MINISO’s founder/chairman, views the transaction “With a brave heart, start a new world!”. Yonghui has been spilling red ink since FY21. Perhaps “brave soul” is more apt.

• Asics is seeing robust D2C sales growth, now 40% of total sales, driving gross margins to 55.5% (+4.5 pp YoY) in 1H24.
• High-Margin models and strong sales in Onitsuka Tiger and Sportsstyle categories support a forecasted 13% YoY sales increase in 2H24.
• Asics’ strategic transformation, focusing on structural reforms and emerging markets, to drive upgraded MTP though FY26.

• The reason companies object to a reduction in the investment unit is the cost of shareholder relations, not the cost paid to the trust bank.
• We should discuss whether it is better for the “unit of investment” principle to remain in place for the convenience of companies that want to pass company proposals smoothly.
• It will be interesting to see if there will be a discussion on going back to basics and allowing single share holders to exercise their voting rights.

• Rakuten still gets a lot of flak for its mobile business but its core e-commerce operation continues to improve.
• Rakuten will launch Rakuten Mart this month,  an online supermarket but with Rakuten Ichiba vendors too.
• Online food retailing is becoming a major source of competition with Amazon, Aeon and Seven & I all investing heavily but Rakuten is holding its own.

• We are reiterating our Buy rating, projections and $20 price target for Lands’ End after visiting the company’s European headquarters in Oakham, United Kingdom and meeting with management.
• We believe, with operations overwhelmingly focused on the United Kingdom and German consumer, there remains multiple growth opportunities, from new categories, expansion into Europe-only looks, lower discounting and continuing to upgrade the customer mix to more lifestyle and features, rather than pricing, driven.
• Further, with Europe taking the lead in terms of quicker buys and reacting/setting fashion trends, they will increasingly have a roll in setting the product pace for the United States operations.

• The essence of Eternal Beauty’s business model is to earn a “price difference” of the brand and product portfolios, but this business model is difficult to generate high profit margins.
• The situation and prospects of China’s perfume market are facing major changes. It‘s uncertain whether the perfume sales in the China market can maintain double-digit growth in the long term.
• Eternal Beauty’s financial performance would face challenges due to changes in consumer preferences, shifts in China’s domestic policies, international trade disputes, geopolitical conflicts, etc. Valuation could be lower than peers.

• Xingda International (1899 HK) has disclosed a voluntary conditional offer from Mr Liu Jinlan (Chairman) at HK$1.30 per share, which aligns with the last close price. 
• The offer is conditional on the offeror and concert parties representing more than 50% of voting rights. The offeror and concert parties represent 37.03% of voting rights.  
• The offer is a reaction to Mr Zhao Yue’s “hostile” emergence as a substantial shareholder. It is unattractive and will require a bump to satisfy the minimum acceptance condition.   

• After tyre component manufacturer Xingda International (1899 HK) was suspended recently pursuant to the Takeovers Code, an Offer seemed more likely, not another Partial Offer. 
• On cue, Liu Jinlan, chairman and executive director, plus concert parties (collectively holding 37.03%), have tabled a voluntary conditional Offer (50% acceptance hurdle). But the price? A surprising zero-premium HK$1.30/share
• However, this Offer is a pre-emptive strike against former employee Yue Zhao, who holds 9.24%; and was recently appointed ED and vice-chairman of Shougang Concord (103 HK), Xingda’s major competitor.

• MINISO‘s  acquisition of a 29.4% stake in the loss-making supermarket chain Yonghui  for USD 890 million has been viewed negatively by investors, leading to a sharp decline in Miniso’s stock.
• The deal’s size, combined with Yonghui Superstores (601933 CH) unprofitable track record and   MINISO(9896 HK) ‘s unexpected move into the low-margin, highly competitive supermarket space, has likely fueled investor concerns.
• However, we believe the acquisition provides Miniso with a strategic opportunity for growth and diversification to a sector that remains vital in the offline retail landscape at undemanding valuations.  

• Mitchell discusses the success and potential of Crocs, noting its growth and potential for continued success
• Andrew asks if Crocs is a fad or a sustainable business, with Mitchell emphasizing the brand’s importance and continued innovation
• Mitchell highlights Crocs’ success during the pandemic and discusses potential growth strategies for the future, including the importance of jibbets.

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Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Samvardhana Motherson International Ltd
• Wynn Macau Ltd
• Yankuang Energy Group

• We are reiterating our Buy rating, $29 price target and projections after reviewing Guess?
• stores in London.
• As we near the peak Fall season, Guess?

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Meituan

• In Q4FY24, Globus Spirits (GBSL IN) changed its raw material from rice to maize to improve the margin and stability in margins.
• Globus Spirits (GBSL IN) increased its capacity in Q4 recently 120KLPD, 60 each in Jharkhand and West Bengal.
• Recently, the government also removed the ban on using FCI grain and sugarcane for Ethanol production.

• Uniqlo’s European arm is on a roll, with more stores, higher sales and a loyal fan base. 35% of customers were under 29 last year up from 16% in 2019.
• Uniqlo is also doing better at home but it needs the boost from newer markets given concerns over growth in China.
• And it is far too early to know whether GU’s formal launch in the US will pay off but so far so good.

• Nike recently announced a significant leadership change, with CEO John Donahoe stepping down and longtime company veteran Elliott Hill set to take over.
• This transition comes amid a broader restructuring effort at Nike, aimed at addressing the company’s evolving business challenges.
• Donahoe, who led the company through several years of strategic shifts, including the prioritization of direct-to-consumer sales, had faced increasing pressure due to flat revenue growth and lower-than-expected guidance for fiscal 2025.

• The sharp decline in revenue/profits indicates that Fu Shou Yuan’s business model is not as excellent as previously imagined. The Company’s performance would still be heavily influenced by macro factors.
• Once Fu Shou Yuan slows down external expansion and explores endogenous growth, it usually doesn’t require too much capital, which means the Company would have greater motivation to distribute dividends.
• The economic downturn leading to performance headwinds is just short-term logic. In the long run, the logic behind the increasing demand in funeral industry has not changed. Valuation would rebound.

• Information asymmetries between shareholders/investors and board directors, between inside and outside board directors, between inside and outside statutory auditors, and between insiders and the rest are constant challenges.
• Statutory auditors cannot be dismissed and have significant powers, including the right to investigate, and since statutory auditors are board members, they can attend and speak at board meetings.
• To make statutory auditors function, establish a process for nominating statutory auditors, raise the compensation of outside auditors, and run an open board meeting where board members’ comments are respected.

• According to the latest BofA fund manager survey, investors continue to sell commodities.
• Allocation-wise we’re now back at levels we were at the beginning of the pandemic back in 2020.
• Long commodities is now a contrarian trade again.

• Hong Kong tech sector leads the market higher with increased momentum and lower volatility.  Short selling has abated with unwind of HKD carry trade.
• Sands China (1928 HK) had a breakout from a Falling Wedge pattern. The share price broke above its short-term averages with increasing momentum.
• China Feihe (6186 HK) broke out from its downtrend with a Reversal from its U-Shaped Bottom.  Techtronic Industries (669 HK) broke out to a new YTD high.

• We are reiterating our Buy rating and $24 price target and raising our 2024 and 2025 projections for JAKKS Pacific after the company handily beat our 2Q24 projections, as gains in the core business offset expected material weakness in content-led (i.e. movie driven) offerings.
• Further, with the recent launch of The Simpsons and Authentic Brands driven licensed offerings, the upcoming launch of key Holiday movie properties (Moana 2 and Sonic the Hedgehog 3), new owned properties and a continued focus on international expansion, we view our projections, even after our top and bottom line increases, as conservative.
• Further, with JAKK continuing to trade at a material discount to their peers, we believe the risk/reward in the name remains impressive, and we reiterate our Buy rating and $24 price target.

• Ain is best known for running prescription pharmacies but also has a lifestyle-oriented cosmetics chain called Ainz & Tulpe.
• Without this, the acquisition of FrancFranc would look odd, but the merger of the two will create genuine synergies and a lifestyle business targeting women in their 20s and 30s.
• The move makes sense given the pressure on margins in drug dispensing, Ain’s main business.

• Webtoon Entertainment, a Korean the world’s largest digital comics platform, has successfully completed IPO and private placement in June.
• The NAVER-backed storytelling platform has raised ~$359M and priced its IPO and concurrent private placement at $21.00 per share, at the top end of price range.  
• However, Webtoon Entertainment shares significantly underperformed with shares down ~48% below IPO offer price.

• Stay long Shin Kong Financial Holding (2888 TT) and buy more, or get long. CTBC Financial Holding (2891 TT) may make a better run at it, and may even bump.
• It’s a hard to be bearish Swire Pacific (A) (19 HK) at 0.34x P/B. Yet the Hong Kong property market remains a challenging space. To put it mildly.
• Seven & I Holdings (3382 JP) saw breathless news articles suggesting a foreign takeover became more difficult. Not really.

• Sales increased 5.2% YoY to JPY273.4bn, with operating profit growing 7.1% YoY to JPY15.1bn.
• The revised forecast for FY02/25 includes revenue of JPY850.8bn and net income of JPY22.2bn.
• FY02/25 will cover a 9.5-month period, with expected one-time expenses and unchanged annual dividend levels.

• Installed Building Products’ fiscal 2024 second quarter showcased a dynamic operating environment with improvements and strategic divestitures reflecting the company’s focus on core growth areas.
• Key financial results included an impressive increase in single-family sales, steady multi-family segment performance, and a slight uptick in commercial sales, albeit varying by submarket dynamics.
• 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.

• Last year’s CAPEX plan was also a record high, but ROE growth was limited. We should closely monitor whether the allocation of CAPEX, shareholder returns, and retained earnings is appropriate.
• When a company finally begins using cash on hand for investments and lacks reliable track records, it should be monitored to ensure that it’s generating sufficient cash flow from CAPEX.
• The trend continues to remain that most investments are directed overseas. Note that many Japanese companies have a history of having difficulty managing their overseas operations.