Consumer

• Fujitsu General (6755 JP) came out with an ugly Q3 and ugly full-year forecast change. It appears there is lots of inventory-clearing in the channel in addition to macroeconomic headwinds. 
• The split is a little difficult to discern, but the reason for channel-clearing makes a lot of sense from the distributor side. How long it lasts hard to know.
• This creates the impetus for more cost-cutting/restructuring measures before a delayed v-bound to March 2025. Fujitsu STILL wants to sell. It may make extraordinary proposals to get it done.

• New Oriental Education & Techn (9901 HK) reported better than expected FY2Q24 results last night, with sales up 36% yoy and net profit up 183% yoy.
• The company further guided a 42-45% sales growth in FY3Q24, well above market consensus. 
• The visibility for the next 2-3 years is actually quite high post-“double reduction” policy.

• Investment firms are using ten east to diversify their personal portfolios
• Business Breakdowns is a series of conversations with investors and operators diving deep into a single business
• John Reardon from Collectibility discusses what makes Patek Philippe such a special brand, including its history, craftsmanship, and exclusivity.

This podcast is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only.

• Yesterday, five companies disclosed dividend record dates and amounts. Hyundai Motor set record dates before March futures expired. Hyundai Motor offers single stock futures, presenting arbitrage opportunities.
• Daily updates and monitoring of dividend arbitrage spread are crucial. Despite limited English support, KLCA webpage proves effective with prompt updates, simplifying the process.
• KLCA webpage offers real-time updates and intuitive layout, ideal for dividend arbitrage trading preparation in the Korean market.

• Cello World Limited (CW IN) is a renowned company in the consumer products market. The company primarily operates in houseware, stationary and moulded furniture industry.
• The promoters recently undertook a major corp. restructuring post which several promoter entities were acquired by CWL. This has led to abnormally high ROCEs.
• Other forensic takeaways pertain to RPT, poor cash management, mysterious sale proceeds of PPE, subsidiaries audit, etc.

• Haier Smart Home (6690 HK)‘s management is confident about the FY24 outlook, with net profit growth of 12-13% can be sustained.  
• Casarte will continue to lead with 10-15% revenue increase. There is room for further margin expansion led by overseas markets and process optimisation in the domestic market.
• The plunge in real estate market does not have a material impact on sales and HSH is positive on replacement/upgrade demand. Its FY24F PER of 10.1x is undemanding.

• FirstCry (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, has filed for a US$700 million IPO. 
• The substantial shareholders are Softbank Group (9984 JP) Vision Fund (25.55% of shares), Mahindra & Mahindra (MM IN) (10.98%), Premji Invest (10.36%) and Supam Maheshwari – founder and CEO (5.95%).
• The bull case rests on growing addressable markets, strong market positioning, robust GMV growth and strong organic growth.   

• This is our first report on electronics major, Whirlpool Corporation.
• The company delivered a solid third quarter performance in a challenging macro environment, supported by satisfying North American growth and improved cost-management measures.
• The company also successfully achieved $300 million in cost takeout actions, a performance that charts Whirlpool on course to deliver over $800 million of cost takeout actions in 2023.

• This is our first report on cruise operator, Norwegian Cruise Line Holdings.
• The company achieved record revenue, meeting or exceeding the guidance on all key metrics.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• It is premature to start discussions on stopping raising the hurdles of the Corporate Governance Code when Japan’s boards are not dominated by a majority of independent directors.
• If listed companies are left to voluntarily improve their corporate governance practices, differences in corporate governance practice efforts among listed companies are expected to widen.
• Companies with high percentage of foreign shareholders, primarily those with large market capitalization, are expected to continue to improve their corporate governance practices through engagement by overseas investors. vice versa

• With the Hang Seng Index dipping below the 15,000 mark earlier this week, it’s time to dust off some old school perspective.
• This insight looks at Benjamin Graham’s Net Nets, (current assets less current liabilities), then subtract any debt not included in current liabilities. More simply, current assets less total liabilities.
• Graham would conclude these stocks are priced for liquidation.  Stocks discussed include Brilliance China (1114 HK), Ming Yuan (909 HK), Yidu Tech (2158 HK), and A-Living Smart City (3319 HK).

• Short notional in Hong Kong is HK$335bn and has been falling over the last 12 months due to a drop in the market.
• In terms of short notional to marketcap, the Materials, Consumer Staples, Health Care, Utilities, Real Estate sectors are most shorted while the least shorted are Information Technology, Communication Services, Energy.
• The largest shorts have been built on BYD (1211), XPeng (9868), ICBC (1398), Xiaomi (1810), Link REIT (823), JD.com (9618), Wharf Holdings (4) and New World Development (17). 

• The SET50 index tracks the performance of the top 50 largest and most liquid names listed in the Stock Exchange of Thailand (SET). 
• In this insight, we take a look at the potential ADDs/DELs for SET during the index rebal event in June 2024.
• There could be three ADDs and three DELs as things stand. There are a couple of names lurking close to the border too.

• On 24 January, Mohegan Gaming & Entertainment announced that it has received the final approval to open a foreigners-only casino at its Inspire resort complex in Incheon, South Korea.
• This will become the first new foreigners-only casino in Korea in 19 years. Currently, there are 17 foreigners-only casinos in Korea.
• The opening of the Inspire Resort in Incheon, Korea will likely have a negative impact on the foreigners only casino operators in Korea including Paradise Co Ltd (034230 KS).

• We attended Miniso’s Investor Day on January 18-19 and came away positively. Management outlined growth strategy of fostering strong connection with Chinese supply chain to achieve fast turnaround of…
• We expect MNSO to report C4Q23 revenue and non-GAAP NI at 2.9% and 4.0% higher than consensus mainly due to new store openings;
• We maintain the stock as BUY and raise TP by US$2 to US$33/ADS to reflect our endorsement of the growth strategy.

• IPAR closed out 2023 with the same momentum that has been generating sales growth the last several years.
• The consumer has been receptive to fragrance and there has been no sign of slowing demand for the category
• IPAR provided preliminary fourth quarter sales of $329 million versus our estimate of $316.5 million. Sales growth within IPAR’s top selling brands was through Coach and Guess

Key points (machine generated)

• YETI is recommended as a short investment for the next few years due to its declining growth and loss of ground to competitors like Stanley Tumbler.
• The sustainability of YETI’s brand advantage is questioned, comparing it to other companies that have failed in the past.
• The author suggests that YETI may face a similar fate if it does not reverse its current trends.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We are reiterating our Buy rating and $20 price target for Express, but lowering our 4QFY23 projections after visiting stores in Long Island and Connecticut.
• That said, we believe the near term impact will be to reduce gross margins; as such, while we are maintaining our 4Q23 top line projections, we are lowering our gross margin projections, which results in increased 4Q losses.
• We believe the negative impact will be localized into FY23 and are leaving our FY24 projections unchanged.

• Weiqiao Textile Co (2698 HK)’s IFA opines that Weiqiao Chuangye’s privatisation offer of HK$3.50 per H Share, a 104.7% premium to the undisturbed price, is fair and reasonable. 
• Despite amassing a blocking stake, Prudence’s ongoing buying supports the view that it intends to play the spread rather than block the deal.
• Despite the offer being below net cash, this is a done deal. At the last close and for the 28 March payment, the gross/annualised spread is 1.7%/10.2%. 

• Amer Sports (AS US) now aims to raise up to US$1.8bn in its US IPO. Proceeds from the listing will be used to pay down debt to the Anta-led consortium.
• Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
• We have looked at the company’s performance in our past note. In this note, we talk about valuations.

• Following the recent Offer for Weiqiao Textile Co (2698 HK), I flagged Pacific Textiles (1382 HK) in Pacific Textiles (1382 HK): Material Benefits as a potential M&A play.
• Also in this space is Texwinca Holdings (321 HK) which is trading down towards its Covid-affected lows.
• Both Pacific Textiles and Texwinca are pursuing a Vietnamese expansion. Texwinca is trading cheaper to Pacific Textiles, is net cash, and has a superior yield.. 

• Government ministries, agencies and the TSE want to raise the value of the Tokyo market, even if it means using the opinions of overseas investors, including activist investors.
• Companies with high foreign ownership and large market capitalization are proactive in corporate governance efforts, while many other companies are passive, indicating that differences in efforts among companies are significant.
• Thanks to the revision of the Corporate Governance Code, corporate governance practices have improved mainly in terms of formal criteria, and now substantive improvements are required.

• Guming Holdings (GUM HK) (Guming) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Guming Holdings (Guming) is a maker of freshly-made beverages in China.
• In this note, we will talk about the not so positive aspects of the deal.

• We are reiterating our Buy rating, $41 price target and projections for Build-A-Bear Workshop after visiting stores in Connecticut and Long Island.
• January is a key month for Build-A-Bear, as the company enjoys material traffic from gift card purchases post-Xmas and almost immediately thereafter shifts to the key Valentine’s Day season.
• As such, we are reiterating our Buy rating and $41 price target for BBW.

• Cash Converters International (ASX:CCV) is a consumer finance company operating as a service provider, owner and franchisor of second-hand goods and financial services stores in Australia and internationally.
• It derives its revenue from personal loans, vehicle finance, sale of goods and store services.
• In recent years, the business has faced both company specific and industry headwinds involving litigation and regulatory scrutiny, but it has worked through those and evolved into a highly regulated, well-run profitable business with a clear strategic direction and multi- layered growth opportunities. 

• FirstCry is looking to raise up to US$700m in its upcoming India IPO.
• FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
• In this note, we talk about the not-so-positive aspects of the deal.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. Amer has launched an NYSE IPO to raise US$1.6-1.8 billion at a US$16.00 to US$18.00 price range.
• We previously discussed the IPO in Amer Sports IPO: The Bull Case, Amer Sports IPO: The Bear Case and Amer Sports IPO: Valuation First-Look. 
• We revise our forecasts to reflect the FY23 preliminary estimates and long-term growth targets. Our valuation analysis suggests that Amer is fairly valued at the IPO price range. 

• We believe Hang Seng Index’s tumble was due to a comment in a governmental newspaper.
• BYD announced that it will sell three models of new energy vehicles in Indonesia.
• Trip.com began to sell tickets of scenic locations via the Kuaishou app.

• We identified Kato Sangyo (9869 JP) (Kato) as the most attractive Japanese laggard opportunity due to its net cash balance sheet, undemanding PER, and attractive PEG and P/FCF ratios  
• Management guides for 25% EPS growth in FY24 with only 15% net profit growth, implying a massive share buyback of ~JPY9 billion (5.4% shares in issue) with subsequent cancellation       
• The combination of impending share buybacks, cancellation of existing treasury shares, and dividends equates to 10% shareholder returns in FY24   

• In this insight, we discuss how Temu and AliExpress have been taking away meaningful market share away from Coupang (CPNG US) in Korea in the past year. 
• Temu’s MAU skyrocketed in the past year in Korea. Temu’s MAU surged from zero in January 2023 to 3.28 million as of December 2023.
• One could argue that Coupang’s valuations are overvalued relative to its Chinese competitors such as PDD Holdings (PDD US).

• Amer Sports announced it plans to raise up to $1.8 billion at $16 to $18 per share, targeting a valuation of up to $8.7 billion. 
• We estimate the company to generate revenue of $5.6 billion (up 23.5% YoY) and operating profit of $285.7 million (down 13.7% YoY) in 2024. 
• We would pass on this IPO due to lack of valuation merits, highly leveraged balance sheet, and inconsistent profit margins, despite its solid sales growth in the past several years. 

• GENDA (9166 JP) (GENDA) was listed on the TSE on 28th July 2023. The IPO had been a mix of primary and secondary shares. 
• Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
• Coming up for six-month lockup expiry are the pre-IPO shareholders, notably Midas Capital, and the firm’s executives and directors.

• On the 17th January, Weiqiao Textile Co (2698 HK) announced the pre-conditions – regulatory approvals from NDRC, MoC and SAFE – had been fulfilled. 
• The Composite Document was dispatched this morning (23 January), with an 8th March EGM, and expected payment on or before the 28 March, bang in line with my estimate.  
• Prudence has upped its stake to 10.47%.  IF they were intending to block, they’d stop at just over 10%. Buying any more shares >10% is simply a waste of money.

• Guming Holdings (GUM HK) (Guming) is looking to raise US$300m in its upcoming Hong Kong IPO.
• Guming Holdings (Guming) is a maker of freshly-made beverages in China.
• In this note, we will talk about the positive aspects of the deal.

• La Francaise des Jeux (FDJ FP) seeks scale in online gaming and betting through a recommended SEK 130 all-cash offer for Kindred Group (KINDSDB SS), 24% premium, SEK 27,951 million implied equity value.
• Minimum  acceptance condition is >90%, which considering irrevocables, requires acceptances from 86.1% of the float. At 8.1x EV/Fwd NTM EBITDA, the offer looks slightly cheap vs. the median of comparables. 
• Gross spread is 6.2%, partly due to 10+ months before settlement. Spread should tighten after the Kindred EGM. This deal appears to be a solid bet. Long Kindred.

• China’s catering industry has changed compared to pre-COVID19, where overall average selling price (ASP) is continually under pressure, and customers are increasing seeking value-for-money options due to weaker consumer sentiment. 
• Yum China’s same-store-sales growth could be under pressure if the company cannot raise ASP easily like in previous years. 
• Yum China’s historical valuation should not be used as a benchmark, given that the growth profile has changed (new store openings reaching a plateau; sustained increased competition; lower ASP pressure). 

• Tokyo Stock Exchange (TSE) has published the list of companies that are conscious of stock capital and share price; this will be a recurring monthly feat 
• The initial compliance rate is encouraging and should continue to grow as peer pressure is relentless and doing nothing is not an option. The shake-up is happening  
• We narrow down a list of companies that are the most compelling laggard opportunities based on their low price to book ratio (PBR) and strong balance sheet  

• An ugly week for HK stocks but SOUTHBOUND flows showed decent net buying at HK$14.7bn on the week. High-Div SOEs continue to be in favour.
• What appears to have been strong net selling on the mainland combined with CBBC unwinds in Hong Kong related to mainland-linked stocks caused HK to have a baaaaad week.
• The separately published AH Monitor highlights a Really Tough Week. Hs got KILLED vs their A-share counterparts as CBBCs sold the HK names and National Team bought A-shares.

• Dickson Concepts Intl (113 HK) reported the best result in its last six semi-annuals in H1 FY24, with profits rising 42% YoY. 
• Net cash on the balance sheet was 9.6 HKD/share (vs. share price of 4.54 HKD/share). Gross cash was over 12 HKD/share. 
• The company increased its interim dividend by 25% to 10 cents for the first time after four years (the expected full-year dividend is 37-40 cents).

• It’s no surprise that some companies consider the dissolution of parent-subsidiary listings as a swift and effective measure to raise ROE. However, not every listed subsidiary will be TOB.
• TOB of a high-profitability subsidiary can have significant impact on both the denominator and numerator of the parent company’s ROE because it uses more cash and will improve profit margins.
• Even if the “significance of parent-subsidiary listings” is disclosed, few investors believe that the listed subsidiary’s independence is fully ensured, and the dissolution of parent-subsidiary listings will eventually follow.

• Minsheng Education (1569 HK) is a highly undervalued Chinese education stock with high dividend yields. Market cap of the company has declined by nearly 90% from Jun 2018 to today. 
• Minsheng Education’s dividend yield averaged 5.1% from 2020 to 2022. Estimated dividend yield is 14.6% in 2023.   
• Minsheng Education mainly provides educational services in China. The company is one of the leaders of China’s private higher education industry.

• The review period for a global index commenced last week and will run through this week as well.
• The announcement of the changes for the LQ45 Index should be announced in the coming week and will be implemented at the close on 31 January.
• Huge inflows to CSI 300 Index trackers during the week while there was a big outflow from Tracker Fund of Hong Kong (2800 HK). 

• I tally 46 – 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 discussed this week on Smartkarma: Genetron Holdings Ltd (GTH US)‘s take-private transaction; andMedley (4480 JP)‘s buy out of GUPPY’s Inc (5127 JP).
• Key updates took place on: Orecorp (ORR AU), Weiqiao Textile (2698 HK), Benefit One (2412 JP), Taisho Pharmaceutical (4581 JP), T&K Toka (4636 JP), and Hollysys Automation Technologies (HOLI US).

• Market leader positioning to consolidate – IBJ is a marriage consultancy service with strong brand equity, offering high-quality services delivered by human professionals.
• With an industry-leading membership base, affiliated marriage consulting firms within the IBJ network harness the economies of scale through the platform, ensuring a cost-effective approach to service delivery.
• It has a strong track record of sustainable free cash flow generation. 

• Following Culp’s presentation at the WTR Furniture/Furnishings Virtual Conference, we are updating our 3Q estimates.
• CEO Robert Culp IV warned that 3Q operating income will fall short of previous expectations.
• The 3Q operating loss will approach $2.2 million, in line with the 2Q operating loss.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).

We view Travelodge’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

Travelodge is the second-largest hotel chain in the UK, based on the number of hotels and rooms operated.

• While disclosure of committee activities in annual securities report provides clues to the independence of committee, this might create higher hurdle for moving to Company with US type 3 Committees.
• Based on the premise that disclosure of committee activities can change management’s mindset and enable committees to function, more specific details should need to be disclosed to all listed companies.
• Many companies have nominating committees that meet 1-2 times a year before the AGM. Few companies have a Succession Plan, which is of great interest to investors.

4imprint’s year-end trading update indicates that 2023 was a strong year for the group’s financial performance. Revenue of $1.33bn is in line with guidance reiterated in November of ‘slightly above $1.3bn’, but PBT is now guided at ‘not below $140m’, above our previous expectation of $131m. We attribute the stronger profitability to a combination of higher gross margin and marketing efficiency. Strong cash performance resulted in the year-end balance of $105m exceeding our prior $84m estimate. Our revised FY24 and provisional FY25 profit and cash estimates are pushed ahead on this higher base on a 10% operating margin. The shares continue to trade at a substantial discount to our DCF valuation.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Upfield’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.
• Upfield (formerly Flora Food Group) is the world’s leading producer of margarine and other spreads.

• Budweiser Brewing APAC (1876 HK) has seen investors run for the hills over the last year. The halving of the stock price could mean deletion from passive portfolios.
• Other Hong Kong listed brewers, China Resources Beer Holdings (291 HK) and Tsingtao Brewery Co Ltd H (168 HK) have been beaten down too and have underperformed their Asian peers.
• The deletion from passive portfolios could provide a buying opportunity in Budweiser Brewing APAC (1876 HK) at the end of February (or earlier if the stock drops due to positioning).

• APR announced it will delay its IPO. Now, APR’s book building has been postponed to 2 to 8 February. The IPO price range remains the same.
• The company has provided updated preliminary sales and operating profits for 2023 in the revised IPO prospectus. Revenue was a bit light but OP was better than expected in 4Q23.
• Our base case valuation of APR is 370,809 won per share which represents an 85% upside from the high end of the bankers’ valuation range (200,000 won).

• The biggest risk for Amer Sports is its excessive leverage. It had net debt of $5.9 billion and equity of only $8.8 million at the end of 3Q 2023.
• Many investors are likely to emphasize the negatives more (especially the excessive leverage and inconsistent operating margins), rather than the positives such as China representing increasing percentage of total sales. 
• Amer Sports is trying to raise nearly $1 billion in this IPO which could value the company at about $10 billion. 

Key points (machine generated)

• GSMI is a leader in the Filipino spirits industry and is best known for its flagship brand Ginebra San Miguel, the largest gin brand in the world by sales volume.
• Local companies, including GSMI, Tanduay, and Emperador, dominate the spirits industry in the Philippines.
• Despite lacking global brand recognition, GSMI holds a strong position in the local market, although smaller players such as The Keepers Inc. importing foreign brands may pose competition in the long run.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Berli Jucker remains a core proxy for consumer recovery and increasing tourism numbers in Thailand, with earnings set to recover in 2024 driven by modern retail and packaging.
• Modern retail through Big C has resumed its expansion momentum across all formats with Big C Mini driving growth and supporting its omnichannel efforts, with rental income also recovering.
• The packaging business was impacted by the sluggish Vietnamese economy which impacted aluminium cans but new products and strong performance from glass should support growth in 2024. Valuations look depressed.

• (I didn’t want to send it out right away, because I wanted to proofread my post before sending it, and unfortunately DADA is already up 10% since writing 🙁 )
• Recently Dada Nexus (DADA) , a Chinese last mile delivery service and on demand retail platform reported that about 500mn RMB ($70mn US) of revenue and costs were overstated for the first 3 reported quarters of 2023.
• This news came right after 2 JD executives had taken over management of the company in December last year.

• While Singapore’s exports have lagged behind Taiwan and Korea in Nov-Dec 2023, they have showed signs of recovery after a year of steep drops.
• External factors also affect the prospects of the iEdge SG Advanced Manufacturing Index’s most traded stocks.
• Some of the most traded index stocks, such as Yangzijiang Shipbuilding, Dyna-Mac and Food Empire, have high P/B ratios compared to their historical averages, indicating strong market valuation.

• Duolingo, a leading language learning app inventor, recorded a spectacular Q3.
• The company’s revenue growth has caused it to revise earnings predictions upward, forecasting a 40% year-over-year growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on the Performance Food Group Company (PFG).
• The company delivered its fiscal first quarter 2024 earnings and in their earnings call, the company’s management highlighted the company’s strong financial results in the quarter, despite challenging macroeconomic dynamics.
• PFG’s top line performance slightly missed its guidance range, though its adjusted EBITDA surpassed the high end of the guidance range.

• This is our first report on Floor & Decor Holdings, a multi-channel specialty retailer of hard surface flooring and related accessories.
• The company posted its fiscal 2023 third quarter results.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Yamae Group Holdings (7130 JP) is looking to raise US$115m from a primary follow-on. As per the firm, proceeds will be used to pay down its acquisition-linked debt.
• We would argue that the deal is somewhat well flagged given the firm’s track record of acquisitions, with the most recent being Confex Holdings.
• That being said, the deal would result in a large dilution for the firm, and would be a large one to digest at 48 days of Yamae’s three month ADV.

• Weiqiao Textile Co (2698 HK)’s offer pre-condition is satisfied. Prudence has increased its shareholding to 3.39% of the outstanding shares (9.79% of H Shares), marginally short of a blocking stake.  
• The HK$3.50 offer has been declared final, which rules out a bump. Therefore, Prudence’s strategy could be to play the gross spread or to block the deal.
• The Shandong Luoxin Pharmaceutical (8058 HK) precedent supports the gross spread play view. However, unlike the precedent, Prudence is marginally short of a blocking stake in Weiqiao Textile.  

• Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO. 
• MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
• In this note, we talk about the positive aspects of the deal.

• Emperador (EMI SP) currently fails the liquidity test and could be removed from the SPDR Straits Times Index ETF (STTF SP) in March.
• Frasers Centrepoint Trust (FCT SP) is currently the highest ranked non-constituent and could be added to the ETF. FCT has a 6% higher market cap compared to Olam (OLG SP).
• We estimate trackers will need to buy 5 days of ADV in Frasers Centrepoint Trust (FCT SP) and sell over 37 days of ADV in Emperador (EMI SP). 

• Back on the 4th December, Weiqiao Textile Co (2698 HK) announced a pre-conditional privatisation at HK$3.50 per H-share, a chunky 104.68% premium to last close and around a six-year high
• Pre-Conditions – regulatory approval from NDRC, MoC and SAFE – have now been fulfilled. The Composite Doc is expected to be dispatched on or before the 24 January. 
• This Offer is a Merger by Absorption incorporating a Scheme-like vote. There is no tendering condition. Prudence Investment Management, which has now built a 9.79% stake, will be supportive.

• Naspers (NPN SJ) has underperformed Prosus NV (PRX SJ) by 3.9% since the start of the year.
• This has widened Naspers’ discount to Prosus’ market value to 13.3% from 9.9%, a level last seen during July 2023.
• Opportunity to put on a pairs trade, long NPN short PRX as we believe the relative underperformance is overdone and a structural shift in the discount is underway.

• In 4Q23, we expect Luckin Coffee revenue to increase 93% YoY to RMB7.1bn, and expect GPM/OPM to decline (5.8)/(1.3) ppt YoY to 19.0%/8.2%, respectively.
• We cut 4Q23 operating income by 12%. In 2024, we raised our revenue estimate by 5% due to the speed up of new store opening schedule.
• Furthermore, as price competition eased, we expect Luckin to offer less low-priced drinks, thus driving up OPM in 2024.

• Negative China sentiment from where Perfect Medical Health (1830 HK) derives about 15-20% of its revenue is causing the company’s share price performance to remain lackluster. 
• Stock trades on a 10% dividend yield with 15% of the market capitalization in cash, despite the outlook for HK, where it derives >75% of its revenue, is slightly better.
• With a 10-year average ROE of the business >40% and a 10.8x PE for FY24e, this stock is a dividend gem worth exploring. 

• Mixue Group is looking to raise about US$1bn in its upcoming Hong Kong IPO.
• MIXUE Group (MIXUE) is a freshly-made drinks company providing affordable products to consumers, including freshly-made fruit drinks, tea, ice cream and coffee, typically priced at around one USD per item.
• In this note, we talk about the not-so-positive aspects of the deal.

• Although there’s range in the cost of capital, a sense of level is shared among investors, so even if a company estimates lower, it will be found to be incorrect.
• The essential problem isn’t scrutiny of the cost of capital, but rather that many companies produce low returns. Investors are skeptical that companies produce returns above their cost of capital.
• If stock prices do not rise, investors will continue to demand that companies improve their management, attributing this to the negative gap between the cost of capital and return.

• K200 futures’ yearend contango exceeded expectations, triggering a surge in buy arbitrage. The subsequent selling pressure intensified, with strategic shifts observed in January futures/options, contributing to KOSPI’s underperformance this year.
• Still, significant closure of K200 futures buy arbitrage should come around March, impacting February or March single-stock futures, potentially introducing substantial contango and suggesting lucrative dividend arbitrage in select stocks.
• These 40 K200 constituents, with single-stock futures, are vital for our pioneering dividend arbitrage in Korea, directly influenced by buy arbitrage closures using K200 futures from last year.

• Amer Sports (AS US) is a global iconic sports and outdoor brand group. According to press reports, it has filed for a NYSE IPO to raise at least US$1 billion.
• We previously discussed the IPO in Amer Sports IPO: The Bull Case and Amer Sports IPO: The Bear Case.
• In this note, we present our forecasts and take the first look at Amer’s potential valuation range.

• On 15 January, Orion Corp announced that its subsidiary PAN Orion Corp will purchase a 25.7% stake in Legochem Biosciences for 549 billion won. 
• LegoChem Bio specializes in antibody-drug conjugate (ADC) technology. Legochem Bio signed a total of 13 technology transfer contracts amounting to 8.7 trillion won in the past 9 years. 
• Most investors in Orion Corp would rather have the company focus on its core confectionery/snack business, rather than expand into high risk/high reward biotech business.

• On 16 January, Dongwon Industries (006040 KS) announced that it will cancel 10.46 million shares, representing 22.5% of outstanding shares.
• We are positive on Dongwon Industries. This large amount of share cancellation will boost the company’s earnings per share and book value per share.
• The shares subject to cancellation are the treasury stocks acquired by Dongwon Industries when it merged with Dongwon Enterprises in 2022.

• Consensus estimates for Shakey’s Pizza (PIZZA PM) for Q4 FY23 (expected April 15th) are too conservative, implying a degrowth in profitability. We believe there would be a comfortable beat there. 
• We expect incremental growth plans on Potato Corner to continue to be the aggressive one-store-per-day addition. 
• Despite the recent move, the stock trades at 14x/10x PE FY23e/24e, with management-guided future revenue growth at 20% CAGR for the next three years.

Key points (machine generated)

• Mohawk Industries has a stock price of $80 per share, and despite a decline in the global construction market, the company has a strong market position and is considered a medium+ quality business.
• The current valuation at 8 times EBIT is seen as an attractive entry point, with expectations for EBIT in 2024 already lowered but still indicating a promising earnings power of $10-14 net income per share in the medium term.
• Mohawk Industries is seen as a cheap investment opportunity with significant growth potential in the future, and previous VIC notes have highlighted its potential. Readers are recommended to review the analyses provided by dsteiner84, Value1929, and Glory_Warriors.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• Tyson denies any involvement in illegal activities and believes the allegations made against it are baseless.
• The company is committed to defending itself and operating in compliance with all laws and regulations.
• The investigation into alleged collusion and price-fixing in the chicken industry is ongoing and the outcome is uncertain.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• The author believes that luxury clothing brand Ermenegildo Zegna is a compelling short opportunity due to an overvaluation based on a one-time hype super cycle.
• The author predicts that Zegna will reach its peak in popularity as the fashion boom/bust trend plays out.
• Weak brand standing within the stealth wealth category, significant exposure to the Chinese market, and execution risks from the acquisition of Tom Ford International are cited as reasons for the potential downside.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Flexsteel led the news in the furniture and furnishings industry last week with a positive preannouncement.
• The company said 2QFY24 EPS will be $0.57 versus preannouncement consensus of $0.27.
• Sales are expected to hit $100 million in the quarter, ahead of the preannouncement consensus of $96 million.

• We are reiterating our Buy rating, projections and price target after reviewing the Betterware January 2024 catalog.
• Further, management flexed the catalog categories back to 8, from a peak of 10, with the Better Kids and Pets categories now incorporated in other sections, allowing for an easier overall catalog read.
• As such, we believe the Betterware division continues to recover and reiterate our Buy rating and $17 price target for BWMX.