Consumer

• Murakami to tender stake in JSR Corp (4185 JP)? Maybe the “double arb”: i.e. short on swap, long on cash, will tender the cash, remain short the back end.
• Austal Ltd (ASB AU) rejected (for now) Hanwha Ocean (042660 KS)‘s bid based on regulatory concerns.  Hanwha reckons these should not be an issue.
• If you can tolerate owning the mobile biz, buy Rakuten (4755 JP) on dips. If not, avoid Rakuten Group and Rakuten Bank short-term; buy Rakuten Bank on larger dips.

• The Boston Beer Company’s Fourth Quarter 2023 Earnings revealed an operational performance meeting the midpoint of their forecast, with depletions down by 6% for the year and gross margins achieving an improvement of 120 basis points.
• However, net loss for the quarter indicated challenges, standing at $18.1 million, or $1.49 per diluted share.
• 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.

• The Simply Good Foods Company achieved financial results that were in line with their estimates for the fiscal first quarter that ended on November 25, 2023.
• The company reported an increase in its net sales by 2.6% to $308.7 million, propelled by the continuous momentum from its Quest range.
• The 40-basis point increase in the gross margin, which improved to 37.3%, was attributed mainly to lower ingredient and packaging costs.

• L’Occitane (973 HK) announced two solid moves this week:  1) Disposing the 70% stake in Grown Alchemist;
• And 2) granting additional call options to Sol de Janeiro CEO Heela Yang of up to 7%.
• The stock is trading at 19x FY25 PE (fiscal year ending March), up from just 14x six months ago.

• After flagging a proposed delisting exercise last month, direct seller Best World International (BEST SP) has announced an Exit Offer lead by Best World founders Dora Hoan and Doreen Tan.
• The Offer Price is S$2.50/share, a 42.86% premium to undisturbed. The Offer requires approval from 75% of disinterested shareholders. Hoan, Tan and concert parties holding 65.12%, are required to abstain.
• Best World shares resumed trading on November 2022 after 42 months of suspension, subsequent to media reports and a short seller raising regulatory concerns over its Chinese business model.

• Kura Sushi US Weighting as of writing: 4% 5th April 2024 – Q2 FY24 Results On April 4th, Kura Sushi US reported earnings for the second quarter of FY24.
• Nothing major to report and similar themes to previous quarters so will keep this one short. The market valuation is astronomically stupid.
• Average unit volumes at Kura are $4.28 million and have improved significantly; up 22% since 2019.

• BellRing Brands Inc. has reported the results from their first quarter ending fiscal year 2024.
• These results have come out better than the management’s expectations, with net sales increasing by 19% in comparison to the previous year.
• The company’s adjusted EBITDA also showed considerable growth, rising by 18%.

• Reynolds Consumer Products managed to maintain strong growth in Q4 2023, raising its share in some of its largest categories, including household foil and waste bags, achieving record profits, and boosting its cash flow.
• This was driven by double-digit profit growth across its various businesses.
• The operational stability of its Reynolds Cooking business has been restored and it has returned to historical earnings.

• While more companies should include the cost of capital in their disclosures, investors are demanding that management present specific solutions discussed by the board of directors to solve their company’s problems.
• Many companies with high foreign shareholding disclose their own management strategies, while companies without high foreign shareholding tend to lack the ability to think of measures to increase profitability.
• The TSE’s newly established department supports such companies to ensure that all listed companies are not left behind, but that seems to go against the quality of the market.

• Yesterday, the 3rd April, Hyundai G.F. Holdings (005440 KS) announced it would conduct a Tender Offer for 3mn shares, or 25% of Hyundai Home Shopping Network (057050 KS) (HHSN).
• A successful Tender would lift Holdings stake to 50% from 25% currently, satisfying the 30% holding company threshold introduced in 2022.
• Minimum proration is 33%. Shares popped 13.8% on the news. That looks a bit too aggressive. 

• Best World International (BEST SP) has disclosed an exit offer through selective capital raising and delisting. The offer of S$2.50 is a 42.9% premium to the undisturbed price of S$1.75. 
• The key conditions are approval for the selective capital reduction (at least 75% of eligible shareholders) and delisting resolution (a majority holding not less than 75% in value).
• The headcount test is a risk. The offer is light as only 66.7% of retained earnings will be distributed and the consideration will be covered 1.6x by the net cash.

• Crizac is looking to raise US$120m in its upcoming India IPO. The bookrunners on the deal are Equirus and Anand Rathi.
• Crizac is an education platform offering international student recruitment solutions to global institutions of higher education in the United Kingdom, Canada, Republic of Ireland, Australia and New Zealand (ANZ).
• Crizac is one of the largest student recruitment solutions providers from India to the UK with a market share of 13.0%, in terms of the number of students in 2023.

• After a solid FY23, Anta Sports Products (2020 HK)‘s outlook for FY24 looks equally encouraging. Its various brands are expected to grow by 10-30% YoY still.  
• Listing of Amer Sports (AS US) will provide Rmb1.6bn non-recurring gain in 1H24. For the full year, there will be a positive swing in its profit contribution. 
• Anta Sports can be considered as a sportswear brand incubator, and its premium PERs of 18.3x and 15.9x for FY24 and FY25 reflect the ability to brew new brands. 

• Papa John’s International, Inc. reported another year of record global system-wide sales for the fourth consecutive year of positive North America comps in 2023.
• The company’s success is attributed to the dedication and focus of its team, franchisees, and the restructuring efforts, especially the foundation improvements to restaurant operations, menu amelioration with novel products, the digital advancements of their operations platforms, and the expansion of the restaurant footprint.
• 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.

• We believe consensus has not fully captured the company’s margin upside for FY24/25, likely due to management’s excessively conservative guidances.
• Our confidence is underpinned by positive SSSG trend, accelerating store expansion and clear trajectory for store margin improvement.
• We expect the company to generate RMB150/320 million adjusted net profit for FY24/25 respectively, compared to RMB30/150 million baked in consensus. Reiterate buy with HK$80 target price (30x FY25 earnings).  

• Arcos Dorados Holdings Inc., also known as “Golden Arches,” recorded a strong performance for the full financial year and fourth quarter of 2023, supported by the company’s 3D’s strategy – Digital, Delivery, and Drive-thru.
• This strategy emphasizes expanding digital sales using mobile apps and self-order kiosks, which have quickly penetrated every market.
• Arcos Dorados also emphasized delivery sales and modernizing its restaurants to improve customer experience.

• Post Holdings began fiscal 2024 with a strong first quarter, with manufacturing performance, pricing and cost management aiding in growth momentum.
• Diverse channel, product, and price point offerings have allowed the company to weather various volume fluctuations.
• Although volume decreases were observed in branded retail businesses, Foodservice remained strong with shifts toward value offerings and positive momentum in their Refrigerated Retail business.

• Sprouts Farmers Market’s 4th Quarter 2023 Earnings demonstrated a decent performance.
• Positives include a 7% sales growth for the year while maintaining a stable margin, as well as a 19% increase in their adjusted diluted earnings per share.
• The company’s focus on specialty positioning in order to provide quality, differentiated, and healthy food products appears to be paying off, as indicated in the results.

• Calavo, a key player in the avocado industry, is currently experiencing a minor turnaround
• The investment thesis is based on “information arbitrage” and potential growth in earnings and share price
• Despite previous short write-ups, the focus now is on Calavo’s near-term turnaround rather than industry issues

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.

• It is somewhat unusual that there is still a spread of over 5%. This likely reflects concerns about the relatively high intensity of allocation risk.
• Retail: 30%, Institutions: 16% of float shares (46%). Retailers may contribute 20%, institutions 10-15%. Total tender rate: 30-35%.
• In that case, it means that roughly 70% of our holdings could be tendered. And at this level, it seems reasonable enough to target the current spread of 5%.

• With no stocks in outright inclusion or deletion zone, we do not expect any constituent changes for the Hang Seng TECH Index (HSTECH INDEX) in June.
• Capping changes will result in a one-way turnover of 5.3% leading to a round-trip trade of US$1.51bn.
• Li Auto (2015 HK) is expected to be the largest buy in June following the stock being the largest sell at the March rebalance (also due to capping).

• On 3 April, it was reported that Hyundai G.F. Holdings will be conducting a tender offer of 3 million shares of Hyundai Home Shopping (25% of outstanding shares). 
• The tender offer price is 64,200 won. The main reason for this tender offer is to meet the regulatory requirement of a holding company by 2025. 
• We are positive on the tender offer of a 25% stake in Hyundai Home Shopping by Hyundai G.F. Holdings.

• Aditya Birla Fashion and Retail Ltd (ABFRL IN) on 1st April announced a vertical demerger and separate listing of its matured and asset-light Madura brand portfolio.
• Assessment of demerger: whether it is seriously a value creation opportunity or just a strategic gimmick for merger-demerger in Mega Bull Run.
• Valuation of Aditya Birla Fashion and Retail Ltd (ABFRL IN) , whether any juice left in the company?

• Nongfu Spring (9633 HK) announced a set of strong 2023 results last week, with 2H23 net profit up 62% yoy and sales up 33% yoy. 
• The best performing category in 2023 has been tea beverage products (30% of sales), which grew 83% yoy for the year and 105% yoy in 2H23, picking up speed.
• Nongfu Spring is trading at 33x 2024 earnings, which I believe is attractive. 

• Q1 Deliveries trailed plunging market consensus, my even lower number, and Tesla’s expectations as sales crashed while it overproduced to a new record cumulative excess inventory which jumped 70% y/y
• This doesn’t square with Tesla’s explanation that sales were hurt by ongoing production issues—much like when the company used the same excuse for the disappointing Q3 2023. 
• This time deliveries were much lower, the miss versus market expectations much worse, and the deep well of unsold inventories even more formidable.

• Oriental Watch (398 HK)  has begun Q4 2024 slowly, with its SSSG dropping by double-digit levels in all its major markets (HK/China and Macau).
• As the year almost draws to a close, we expect profits to drop 10-15% YoY for FY24 and the company to pay out 100%, resulting in a 14% dividend yield.
• The company also has 1.2 bn HKD of net cash, representing 70% of its market capitalization. Additionally, it has 700 mn HKD of investment property. 

• Century Communities has reported its Q4 and Full-Year 2023 results, which demonstrated notable growth and profitability.
• The company’s Q4 deliveries hit a record high of 3,157 homes, reflecting a 9% year-on-year increase, and the year 2023 marked the firm’s 21st consecutive year of profitability.
• The housing market also witnessed considerable improvement, contributing to the company’s success.

• D.R. Horton is a leading homebuilder with high returns on equity and strong balance sheets, yet trades at a low price-to-earnings ratio.
• The company has shifted to being asset-light, generating significant free cash flow and maintaining a strong balance sheet.
• With a focus on market share expansion and efficiency, D.R. Horton is positioned as a growth company in a stable industry.

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.

• The essence of the declining birthrate problem is the increasing number of young people who aren’t getting married, but the government has been mismatched in focusing support on married couples.
• Since the reasons for unwillingness to marry are “financial reasons” for men and “limitation of activities and time” for women, along with increased income, child-rearing and housework shouldn’t burden women.
• Companies should shift to business model that allows them to raise profit margins without resorting to cost-cutting, raise employee salaries, and create work environment that supports child-rearing and family responsibilities.

• Midea Group Co Ltd A (000333 CH) posted strong 4Q23 results, with net profit up 18% yoy and sales up 10% yoy. 
• In terms of 2024 outlook, management targets a 5-10% yoy growth in both the top and bottom line. 
• The stock is has rerated up to 12x 2024E earnings, compared to an average of 13x over the last 10 years. 

• We like Dream International (1126 HK), the plush toy maker listed in HK for its long-term association with Disney and revenue growth profile (12% CAGR over 15 years).
• The 15-year ROE has averaged 18%, and the company currently has 40% of the market capitalization (1.3 bn HKD) in net cash on the balance sheet. 
• Trading at 3.7x FY23 PE, with a 12% dividend yield (and the company’s high likelihood of maintaining a payout ratio), this is an idea worth exploring.

• Spirits were high as we attended the TCL Electronics (1070.HK ) (“TCL”) investor conference last Thursday (28 March) at the Shangri-La in Hong Kong, following its after-market earnings release.
• The results topped our own expectations in some areas, which we outlined in our recent write-up on the Company .
• We decided to summarize the results, as well as management insights shared at the conference for added context.

The second full year of Greggs’ five-year growth plan to double revenue by FY26 should be marked down as very successful, especially so given the challenging external environment. Unlike many consumer-facing companies, high selling price inflation was accompanied by volume growth, leading to good market share gains. The consumer is responding well to new initiatives to grow revenue in new dayparts and digital channels. Profitability was well-managed with better recovery of input cost inflation than FY22. We look for more of the same in FY24, which will be a significant year from a capital investment perspective, and beyond.

• VIC has featured HGV multiple times, with the latest update in April 2021
• Stock price has remained stagnant, but potential upside of over 100% in next 2-3 years
• HGV became independent in 2017, acquired Diamond Resorts International in August 2021, and Bluegreen Vacations in November 2023, becoming the largest timeshare operator

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.

• 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.