Consumer

• The Somewhat-Brand-Spanking New (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
• We used to do it. We brought it back better, with lots of cool interactive tables, and charts, heat maps, and comparative data. And 50 Trade Recommendations.
• The last 10wks (since the start of the new Tracker and Portfolio 11 weeks ago) have seen net portfolio performance of +0.50%, +1.35%, +0.14%, +0.47%, +0.15%, +0.12%, -0.29%, -0.71%, -68%.

• During 2QFY24, Tokyo Disneyland and Tokyo DisneySea both saw a QoQ decline in Google search interest.
• This suggests to us that there might be an earnings miss when Oriental Land (4661 JP) reports its FQ2 results on October 30, 2023.
• Additionally, there are potential downside risks to both FY24 and medium-term consensus projections following a revised FY24 guidance announcement.

• With the review period nearly complete, we expect 7 changes to the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) in December. Couple of changes are low probability though.
• The Materials sector could be the biggest gainer at the rebalance while nearly all deletions could come from the Consumer Discretionary sector.
• The impact on the potential inclusion ranges from 0.15-15 days of ADV while the impact on the potential deletions varies from 1.7-8.1 days of ADV.

• Apple fired five employees of China App Store for corruption.
• Yonghui follows Alibaba’s Freshippo outlets to open discounted stores this year.
• JD.com sued 44 companies and 3 persons for abusing JD’s trademark.

• This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
• The data on liquid names is presented for 5 days and four weeks and anything seen can be ranked in tables or selected and charted (names, sectors, outperformance, etc).
• We like the nifty interactive tables+charts (please play with them!) and we welcome feedback. This 5-day week saw HKD 3.9bn+ of net buying. That makes 13 weeks of net inflows.

• The recent pullback in the share price of Xinhua Winshare (811 HK) is overdone, and it is now on attractive 4.5x PER, 6.7% yield, and 0.46x P/B. 
• It has minimal exposure to economic slowdown and global geopolitical tension. There is solid revenue growth and margin expansion in 1H23, and demand is totally domestic and resilient.
• Net cash amounted to 109% of its share price and this has not yet included Rmb2.2bn of equity investment on hand. Still, it is expected to generate ROE of 12%.

• Porsche is one of the world’s most successful luxury automotive manufactures, specializing in high-performance sports cars, SUVs, and sports limousines
• The investment case revolves around Porsche’s continued sustainable structural growth, electrification, best-in-class technology, luxury nature, and sustainability capabilities
• The stock price is trading near its IPO price of September 2022, at a 25% discount to summer highs.

• This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
• The performance/spread/flow data on liquid names is presented for 5 days and 4 weeks and anything seen can be ranked in tables or selected/charted (names, sectors, outperformance, etc).
• Please play with nifty interactive tables+charts. We welcome feedback. This 5-day week saw RMB 24bn+ of net selling. Back to Bigly Selling!

• We examine the value proposition of Sitoy Group Holdings (1023 HK) trading at 4x PE with a 12.5 % dividend yield ( assuming a sustainable 50% payout ratio ).
• The company has 400 mn HKD net cash and real estate worth 690 mn HKD on its balance sheet. This compares favorably with its 840 mn HKD market cap. 
• The major drawback of investing in the company is its track record, which shows a steadily declining revenue trend and a fluctuating ROCE (currently 11%). 

• Dongfeng Motor Group Co. Ltd. will acquire automotive assets from its joint venture (JV) with Stellantis NV, as part of the carmaker’s strategy to consolidate its manufacturing resources amid weak car sales in China.
• Dongfeng Peugeot Citroën Automobile Co. Ltd. (DPCA) will sell assets including certain land use rights, buildings, and structures in Wuhan and Xiangyang in Hubei province to Dongfeng Motor in a 1.71 billion yuan ($234 million) deal, the latter said in a filing to the Hong Kong Stock Exchange Thursday.
• The assets have been used by DPCA mainly to produce its existing Peugeot, Citroën and Fukang models, the filing said, and the JV will continue making the cars under a 10-year leasing agreement.

• Topsports International Holdings (6110 HK) announced first half FY24 (fiscal year ending February) results last week, with net profit up 17% yoy.
• The company trades at a 7% dividend yield, backed by strong free cash flow.
• The stock is not only a yield play, but also a call option on the recovery of Nike and Adidas’ retail performance in China.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• We add the Philippine Stock Exchange (PSE PM) and Ginebra San Miguel (GSMI PM) to our list of names that we look at after our recent Philippines trip. 

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• J&T Global Express (1519 HK) launched its US$500m HK IPO earlier in the week, with more than half of the Offer Shares going to its pre-IPO shareholders.
• It was a busy week for placements as well, with Liontown Resources (LTR AU)‘s stealing the spotlight with its equity/debt raising, after Albemarle withdrew its acquisition bid. 

• I tally 42 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deal was discussed on Smartkarma this week:Lithium Power International (LPI AU)‘s Scheme. Vinda International (3331 HK) and Shinko Electric Industries (6967 JP) are in the cross hairs. 
• Key updates took place for: Origin Energy (ORG AU), Liontown Resources (LTR AU), Golden Eagle Energy (SMMT IJ) and Kenedix REITs.

• On the 27 April, Vinda (3331 HK) announced its controlling shareholder Essity (ESSITYB SS) would commence a strategic review of its 51.59% ownership. See Essity Mulls Holding In Vinda (3331 HK).
• That shook a variety of suitors out of the woodwork (so to speak) including (reportedly) Brazil’s Suzano, the world’s largest hardwood pulp producer, Bain Capital, CVC Capital, and DCP Capital.
• The latest (alleged) interested party is the Tanoto family, currently holding a 7.03% stake, having first cleared 5% on the 26 September. 

• According to public news yesterday, WH Group (288 HK) plans to list its US pork business Smithfield Foods, the largest US pork producer, back in the US again. 
• WH Group currently trades at 5x 2024E PE, assuming earnings return to the 2022 level in 2024E.  Since 2016, the company has had an average PE of 11x. 
• The stock is a buy with a fairly strong catalyst in the potential US listing of the Smithfield Foods business, while downside is limited. 

• Giordano, one of the most recognizable apparel business in Asia, has been improving its operations materially with solid growth in sales and profits. 
• Giordano provides very high dividend yield and payout. The consensus expects DPS of HKD 0.28 for Giordano in 2023, which would suggest a dividend yield of 12.8%. 
• We like the company’s high dividend yield, loyal customer base, and attractive valuations. It is trading at EV/EBITDA of 3.6x and P/B of 1.5x. 

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. Medco Energi
2. NagaCorp Ltd
3. China Vanke
4. Lippo Malls Indonesia Retail Trust
5. Tata Motors Ltd

and more…

OPAP’s management is successfully executing its strategy of growing the core brands and customer interactions online and offline, as evidenced by increasing online exposure and revitalising growth in its mature retail core activities, while maintaining its leading corporate and social responsibility (CSR) credentials. Its exclusive licences in the majority of its activities enable high levels of profitability, cash generation and shareholder returns. We see attractive upside to our DCF-based valuation of €17.9/share, with the added appeal of a prospective dividend yield of 10.7%.

• Previous price increases by WD-40 Company (WDFC) led to the Company reporting a year over year increase in quarterly revenue, but with those prices increases being lapped in fiscal 2024
• WDFC was able to reduce its inventory level in the quarter, but unit volume growth remains elusive. Higher operating expenses are expected to prevent earnings growth in fiscal 2024
• WDFC reported fiscal fourth quarter sales of $140.5 million compared to $141.7 million achieved in fiscal third quarter.

• ZJLD Group (6979 HK) raised US$676m in its Hong Kong IPO in April 2023. Its six-month lockup will expire on 26th Oct 2023.
• ZJLD is a Chinese liquor company producing baijiu. As per F&S, the firm ranked third among all baijiu companies with three or more aroma types in terms of FY21 sales.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• On 19 October, Kolmar Korea announced that it will conduct a merger share swap with Yonwoo early next year to make it into a 100% wholly owned subsidiary.
• We believe the merger share swap agreement between Kolmar Korea and Yonwoo is likely to have positive impact on both Kolmar Korea and Yonwoo.
• After this share swap is completed, Yonwoo will be delisted. This merger is aimed at improving the inefficient governance structure caused by duplicate listings and improve management efficiency.

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.

• Medco Energi
• Sands China

• Yesterday, Anta Sports Products (2020 HK) held its Investor Day in Beijing. They talked about Descente Ltd (8114 JP) and their plans. 
• The presentation made by the Descente China Chairman talked about the evolution of performance and the target for 2026, suggesting higher profit now and growth going forward than market expectations. 
• None of this changes my outlook for why Itochu Corp (8001 JP) is buying Descente shares in the market. And the stock is going up.

• Macau’s mass GGR in 3Q23, including slots, was down just 6.7% on 3Q19 levels, but up 11.1% quarter-on-quarter.
• The shifting regulatory sands across the gaming landscape has resulted in VIP baccarat revenue accounting for 24% of GGR in 3Q23, down from 43.8% in 3Q19, and 64.6% in 3Q13.
• All concessionaires have been impacted by the collapse of the junket industry. But those who relied less on VIP flow have fared better on a comparative basis.

• Over the last few weeks, companies in India have been disclosing their shareholding pattern as of end-September. There are a few companies with significant float changes from end-March and/or end-June.
• The changes in free float could be reflected in domestic and global indices over the next couple of months resulting in action from passive trackers.
• We find 9 stocks where there could be inflows with passive trackers needing to buy over 1 day of ADV on most stocks.

• Our long held strong conviction on  LVS has not faltered despite its chronically undervalued.
• Monthly gross gaming win trends do not reflect sagging China economy.
• Imminent 3Q23  earnings release may well  hold upside surprises. We sense a beat.

• Sariguna Primatirta (CLEO IJ) is a differentiated bottled water player in Indonesia producing pure water using nano-technology, with around 5% market share but with significant upside given low penetration. 
• The company has established a long-term growth record over the past six years and booked +14.9% sales growth and +23.2% net profit growth, driven by increased demand and new products.
• CLEO continues to expand its manufacturing and distribution to cover more areas of the country. It also has an increasingly sustainable edge and valuations are reasonable relative to growth. 

• On 17 October, Autonation Inc (AN US) also withdrew its proposal for Pendragon PLC (PDG LN). Lithia’s deal is likely to obtain shareholder’s approval, for lack of a better offer.
• Holding on would mean receiving 24.5p and staying in a small cap SaaS, whose shares are implicitly valued at 6.5p, instead of the 10.9p that Pendragon claims it is worth.
• Readacross: Hedin, AutoNation, or someone else, could take a closer look at Vertu Motors (VTU LN).

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the December 2023 Rebalance.
• Dechra Pharmaceuticals (DPH LN) and Network International Holdings (NETW LN) are currently involved in takeover situations. When those deals close, intra-review changes can be triggered.
• Including these changes, there could be up to one F100 change and seven F250 changes between now and the end of the year.

• Xtep International (1368 HK) announced yesterday strong retail sales of high-teens growth in 3Q23.
• Though the growth was at the expense of slightly higher overall discounts of 25-30% off during the quarter.
• I prefer Anta over Xtep given higher visibility in Anta’s bottom line, as Xtep’s growth continues to be of lesser quality than Anta’s. 

• Anta Sports Products (2020 HK) achieved a decent 3Q23 with sales performance of major brands outperformed. With a low comparison base, 4Q23 sales will be even more impressive. 
• Indications are that sales for the Golden Week are satisfactory and “double-11” sales are optimistic. The acquisition of MAIA ACTIVE will further add to its product portfolio.
• Amer’s IPO is another catalyst and reports are that this has been filed in the US. Anta Sports’ stake may be valued at US$4bn, almost 12% of its market cap.

• Freshippo opened its first high-end supermarket, Premier, in Shanghai in September.
• We believe it is a good idea to take business from independent stores and small store chains.
• However, we do not believe those foreigner-oriented foods will be popular.

• HDFC Bank (HDFCB IN) is the largest buy (XSOE) – estimated flow $44m. Grupo Financiero Banorte SAB d (GFNORTEO MF) is the 2nd largest buy – estimated flow $40m.
• Wistron Corp (3231 TT) is the largest sell – estimated flow $68m. POSCO Holdings (005490 KS) is the 2nd largest sell – estimated flow $59m.
• Our estimate for the total value of new constituent buys is $1.38bn. We expect deletions to the value of $1.41bn to be sold down across the 3 funds.

• Shakey’s Pizza (PIZZA PM) is set to declare its Q3 2023 result in the 2nd week of November. We expect revenue/earnings growth of 41%YoY/44%YoY. 
• Q4 is the seasonally highest growth quarter, where the company makes 40% of its annual profits. A strong Q1-Q3 sets up a solid end to the year. 
• We believe the company will easily be able to meet or beat its guidance of 30% revenue and profit growth for FY23. Stock trades at 13x/9.8x PE FY23e/24e.

• The Keepers Holdings (KEEPR PM) is set to declare Q3 2023 earnings in the 2nd week of November. We expect the company to report a 9%/18% YoY revenue/net profit growth.
• We expect a steady improvement in Bodegas W&H and operations and overall gross profit margins to remain stable at 26-27%. 
• The stock is cheap at 7.7x/6.6x FY23e/24e with a 5.1%/5.9% dividend yield and 10% of the market capitalization in cash. 

• Schaeffler (SHA GR) offers €91.00/share for Vitesco Technologies Group (VTSC GR), in cash, 20% premium to 3-month VWAP, 3.3x EV/Fwd EBITDA. There is no minimum acceptance rate.
• Later Schaeffler will unify its share classes (current voting ratio 3.01) to use them as currency for Vitesco shareholders not accepting the cash offer (essentially the parent company of Schaeffler).
• Vitesco shareholders are being generously rewarded (my fair value estimate is #€74/share), I believe most will tender. Spread is 1.04%/3.70% (gross/annualised, assuming settlement by 31 January). I’d buy below €90/share.

• Seijo Ishii is Japan’s leading premium supermarket chain with some 200 stores and is being prepped for an IPO by its owner, Lawson. 
• After strong growth during Covid, sales have now flattened and the company’s large import business has suffered from higher costs due to the weak Yen and global crises.
• To maintain its market position, it is reducing imports of packaged goods and increasing volumes of imported, high-end raw materials – and then manufacturing products itself.

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.

• Lippo Malls Indonesia Retail Trust
• Tata Motors ADR

• CyberAgent, Lixil Group, Hakuhodo Dy Holdings, Kobayashi Pharmaceutical, Welcia Holdings, Persol Holdings, GMO Payment Gateway, Kurita Water Industries and Open House have all underperformed the Nikkei 225 over the recent past.
• The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
• Short interest has increased on some stocks and there could be more pre-positioning to come over the next few weeks.

• In April 2022, I wrote about Tsi Holdings (3608 JP) saying in the first three bullet points it could double in two years. It doubled in one. 
• They bought back shares held by JDB in April 2022, then they launched another buyback program in January 2023, and completed it last month.
• Now they have launched another to buy back 8.46% with a ToSTNeT-3 for half on Monday AM. The rest is expected on market through end-March 2024.

• Post-Close Friday it was announced that Light & Wonder (LNW AU) Chess Depositary Interests would replace United Malt Group Ltd (UMG AU) at the close on 17 October.
• This was announced before US markets opened. Light & Wonder (LNW US) shares popped 5.65%, closing 5.8% through the Aussie line.
• This is a possibly deceptive index add. I’d be quite careful. 

• Iconic Indonesian mass-market department store retailer Ramayana Lestari Sentosa (RALS IJ) has struggled with sluggish growth this year, especially over Lebaran but management remains confident in some recovery in 2H2023.
• The company embarked on transformation pre-pandemic but COVID put a brake on this change and forced a number of stores to close and resurrection has begun again but slowly.
• Ramayana is taking a conservative approach this year, opting not to expand its store network as anticipates weakened purchasing power but pre-election spending could provide a boost. Valuations are attractive.

• Market expectation for FY23/24 earnings of Sa Sa International Hldgs (178 HK) is overly conservative. It achieved HK$110-125m of profit in 1H, and 2H is the normal peak season.
• Offline sales in 2Q23/24 recovered to 47.2% of the 2019 level and the rebound in mainland tourist arrivals should boost sales over the next 12 months. 
• Lower rent costs should allow for higher operating leverage as revenue revives. Its gross margin for 1H23/24 has further expanded and we think this trend can be sustained. 

• As outlined in previous reports, Aeon has been working hard to streamline its vast retail empire but also rethinking the fundamentals of retailing for each major format it operates.
• The results are now coming through with a big increase in operating profits in 1H2023, up 23% on last year.
• There is real momentum now, and the new online supermarket business is central to its ambitions to create the first true national FMCG business.

• Aequitas Reserach puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, Kokusai Electric (6525 JP) managed to get strong support, even though we remain somewhat unconvinved. 
• In the placement space,  we looked at the upcoming lockups for Rakuten Bank (5838 JP) and Zomato (ZOMATO IN), along with the Ingenia Communities (INA AU) placement.