Consumer

• We expect JD to report C2Q23 revenue in-line vs. cons., and non-IFRS net income 6% vs. consensus.
• Although we raised our GMV estimate, our 5% YoY revenue growth estimate is unchanged as we expect 3P take rate decline to partially offset GMV growth.
• We maintain SELL and TP but cut FY23 non-GAAP net margin to 3% due to the greater share of lower margin 1P revenue vs. our prior estimate.

• EbixCash (EBIXC IN), a subsidiary of Ebix Inc (EBIX US) and India’s largest end-to-end financial exchange, is seeking to launch an Rs60 billion (US$730 million) in July.   
• EbixCash’s Forex operations have emerged as a leader in India’s airport Forex business. Also, EbixCash’s inward remittance business in India is the clear market leader.
• The key elements of the bull case rest on fast-paced growth, growth runaway from the post-COVID recovery, declining contract assets, improving balance sheet, and declining leverage.

• We expect Shakey’s Pizza (PIZZA PM) to release its results for H1 2023 in the second week of August. The stock just went ex-dividend today (17th July 2023).
• We estimate Q1/H1 FY23 revenue to grow 36%/59% and profits to increase by 31%/71%, led by slight margin expansion for Q2 over Q1 as guided by the company. 
• Trading at 14.5x/11.1x PE with a growth profile of >20% CAGR over the next 4-5 years, given the Potato Corner expansion, Shakey’s Pizza could be an attractive investment opportunity. 

• The policy of extending retirement age to 65 is a measure to solve the immediate labor shortage, but it may lack the perspective of a mid-to-long-term human resource utilization strategy.
• Since most employees in their 60s are male employees, this may slow down the fading of the traditionally male-centric corporate culture. A more diverse workforce is required.
• Although seniors are still a promising market based on demographic composition, from the perspective of creating new value, it’s necessary to have more discussions about creating society that ensures diversity.

The Europe HY Trade Book for July 2023 includes current trade recommendations drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.

• Kaso, which bills itself as the largest B2B ordering platform for restaurants and suppliers in the Middle East, has raised US$10.5 million in a seed round to fuel its mission of disrupting the food supply chain.
• Founded in 2021, the Dubai-based firm currently has 5,000 partners in Saudi Arabia and the United Arab Emirates. Its platform streamlines the fulfillment process for restaurants and suppliers, enhancing efficiency and transparency as well as combating food waste.
• The company estimates that food waste in the Middle East and North Africa (MENA) region amounts to around 250 kilograms per capita per year.

• Sumber Alfaria Trijaya (AMRT IJ) booked some strong SSSG for June bringing its YTD number into line with its FY2023 projections after post Lebaran adjustment in May. 
• The company will embark on a more aggressive store rollout for this year with plans for 2,100 new stores, including 200 Alfamidi stores and 500 Lawson convenience stores. 
• Sumber Alfaria Trijaya Tbk Pt (AMRT IJ) continues to grow its membership program under AlfaGift with 16.3m members, which helps to gather valuable data and grow sales. Valuations are attractive.  

• Whole Earth Brands, a sustainable sweetener firm, has seen a slowdown in growth, tightening margins, and rising debt since going public.
• Despite the odds, the company is countering these challenges with a strategy that includes cost reduction, improved distribution, and portfolio expansion.
• A recent buyout proposal from the company’s largest shareholder has added a new dimension to the company’s future. 

• Aequitas Research 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, HK IPOs appear to be coming back to life with some deals managing to perform this week.
• For placements, Socionext (6526 JP) and Plus Alpha Consulting (4071 JP) were joined by LG Energy Solution (373220 KS) and Patanjali Foods (PATANJAL IN) in a relatively busy week.

• This is our first report on global beverage giant, Molson Coors Beverage Company. has exhibited commendable resilience this quarter, particularly with their premium light brands in the U.S.
• Their brands, Coors Light and Miller Lite, registered double-digit revenue growth, significantly aided by their first Super Bowl campaign in over three decades.
• We initiate coverage on the stock of Molson Coors Beverage Company with a ‘Hold’ rating.

• Nominating Committee’s main activity is the selection of individual director candidates, and the Nominating Committee tends to be less involved in issues related to top management appointments, including succession planning.
• Although most companies have a majority of independent directors as members of the nominating committee, the nominating committee may in fact be a body that approves top management’s proposals.
• Companies focus only on prime market listing criteria of “committee establishment and committee member composition” and overlook original intent. The problem is that it’s all about achieving the formal criteria.

• We expect the 2Q23 online music revenue growth to be 34.4% YoY, driven by more promotions to drive up users’ retentions;
• We anticipate the 2Q23 social entertainment growth rate to be (12.9%) YoY, due to intense competition and strengthened regulatory in live streaming. 
• We expect TME’s 2Q23’s rev./non-GAAP net income to be (1.8%)/ (3.9%) vs cons. We maintain SELL because of continuous pressure from Bytedance’s Soda Music, Wechat Video Account and Kuaishou.

• A combination of strong property values, sound balance sheet and expansion to second Philippine property will produce strong result in sequential quarters ahead.
• Macro factors in market blur expectations for investor interest at this point in other major players in the Entertainment Zone space.
• Regulators predict Philippine GGR wil reach US$10b by 2027, making it among the globe’s most attractive gaming investment targets.

• This morning (13 July), IMAX China Holding (1970 HK) announced a take-private transaction from its parent IMAX Corp (IMAX US) at HK$10/share.
• The Offer price is a 9.65% premium to last close but a 39.47% premium over the closing price on the last full trading day. Evidently, there was news leakage.
• IMAX US holds  71.63% in IMAX China, therefore the blocking stake at the Schene Meeting is 2.837% of shares out. 

• Fast Retailing (9983 JP) investors are in a conundrum. The stock is doing well. With one quarter to go, the company just raised its full-year EPS target by 8.3%.
• It also raised its H2 dividend by 20+% so the full-year div will be more than 20% higher than previously forecast and up 35+% since last year. All good. 
• Except for the selling. Potentially lots of selling. And more outperformance begets more selling. Then even more selling in 2024. And 2025? What about 2025? More outperformance begets more selling.

• The promoters of Patanjali Foods aim to sell up to 9% of the company via an FPO. 
• The sale is being done so as to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
• We have looked at the background of the deal in our earlier note, in this note we talk about the recent update and run the deal through our ECM framework.

• IMAX China Holding (1970 HK) disclosed a scheme privatisation offer from IMAX Corp (IMAX US) at HK$10.00 per share, a 39.5% premium to the undisturbed price (HK$7.17 on 10 July).
• The key condition is approval by at least 75% of disinterested shareholders (<10% of all disinterested shareholders rejection). No independent shareholder holds a blocking stake. 
• The offer price is final. While the offer price is light compared to peer multiples and historical share prices, the deal will likely succeed. 

• It will take a couple of years to see financial improvement but recent reforms suggest  criticism of Seven & I’s inability to change may be increasingly unfair.
• The latest in-group merger further demonstrates Seven & I’s desire to refocus on food and FMCG.It also suggests that Seven & I may double down on divestment from non-food retailing. 
• The share price may fluctuate but the outlook for domestic fundamentals are better than they have been for years.

• Another blow out quarter for Fast Retailing – beat and raise
• Fears (well, mine) of a miss in China were unfounded
• Still, Q3 results do nothing to change the view that this is one expensive stock

• Fast Retailing (9983 JP) announced its 3QFY23 results today, surpassing the consensus OP estimate by approximately 10%.
• Notably, there was strong revenue growth for Uniqlo, including in recently underperforming markets such as mainland China and South Korea.  
• Despite the strong set of results, it appears that Fast Retailing is overvalued as the stock is currently trading at a valuation of over 20.0x its medium-term FY27 OP target.

• Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
• Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
• In this note, we will undertake a peer comparison, share our earnings assumptions and discuss our thoughts on valuation.

• Fenbi Ltd (2469 HK) announced after market today a very strong positive profit alert for 1H2023, with adjusted net profit up not less than 182% yoy.  
• As a reminder, share price was heavily sold off in June due to pre-IPO shareholders selling, as well as weak market sentiment, niche sector, and new stock (under researched).
• Even with the recent bounce back in share price with heavy volume, Fenbi is still very undervalued.

• TSE, which receives listing fees from listed companies, has no choice but to take a negative attitude toward raising listing criteria that would reduce the number of listed companies.
• Behind many companies with stagnant P/Bs is the fact that managers lack stock price consciousness and companies with stock price stagnation for years eliminated and continue to be listing.
• In Japan, it is expected that industry restructuring, dissolution of parent-subsidiary listings, and going private will further increase through M&As, leading to a shakeout in the Japanese market.

• Last Friday, the FFW changes for the TOPIX July Free Float Weight Review were announced. There have also been other recent announcements creating flows on 30 July.
• Some of these other recent announcements represent a possible change in ad hoc methodology.
• Total Flow for 30 July is ~$3.3bn a side driven by selling flows (3/4 of the buy flows are reverse funding). $2.1bn of selling is > 3 days ADV.

• Genda Inc (9166 JP) is looking to raise around US$100m in its Japan IPO.
• Genda develops and operates amusement facilities in Japan, primarily operating under its Genda GiGO Entertainment subsidiary.
• As of Apr 23, the firm operated 250 amusement facilities domestically and four facilities in Taiwan. 

• Cinema XXI (CINEMA IJ) aims to raise up to US$160m in its Indonesia IPO.
• Cinema XXI is a premium theatrical exhibition, F&B and experience company. It is the largest cinema chain operator in Indonesia.
• We have looked at the company’s past performance in our earlier notes. In this note, we will undertake a peer comparison.

• A Review on Final Results Oriental Watch recently announced its earnings for the fiscal year, and the results were quite impressive.
• On June 20, 2023, the company reported a revenue of HKD3.7 billion and a net profit of HKD295 million.
• These figures surpassed our initial estimates of HKD3.

• In my previous insight Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV, I highlighted why one must explore the stock as a viable investment.
• NCAV (Net current asset value) in FY23 was 7.5 HKD/share ( Vs. current share price of 4.25 HKD/share), with net cash + ST/LT financial investments now at 9.7 HKD/share. 
• Absolute DPS ( dividend per share) was 35 cents representing a yield of 8.2% ( payout ratio of 55%). The trailing PE is 6.6x FY23. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess BRF’s ESG as “Adequate”, in line with the “Adequate” Environmental and Governance scores. The Social pillar is “Strong”. Controversies are “Immaterial” and Disclosure is “Strong”.

• Cinema XXI (CINEMA IJ) aims to raise up to US$160m in its Indonesia IPO.
• Cinema XXI is a premium theatrical exhibition, F&B and experience company. It is the largest cinema chain operator in Indonesia.
• We have looked at the company’s past performance and undertaken a peer comparison in our earlier notes. In this note, we talk about valuations.

• Colgate-Palmolive’s share price performance over the past few years is not as grim as it might look on the surface.
• Improving gross margin remains the only game in town for future shareholder returns, according to the company.
• Colgate-Palmolive Company (NYSE:CL) is rarely seen as an attractive investment opportunity as the company significantly underperformed the S&P 500 and the consumer staples sector in particular over the past 5-year period.

• Yerbaé announced a strategic partnership with Farrell Distribution, a renowned distributor of premium beverages in Vermont.
• YERB.U extended its partnership with CrossFit champion Annie Thorisdottir and launched new flavours in Sprouts Farmers Markets.
• However, Yerbaé (3.7x 2024E sales) continues to trade at a sizeable discount to Celsius at 7.7x 2024E sales and Monster Beverage at 7.0x 2024E sales.

• LG Chem Ltd (051910 KS) aims to raise around US$2bn via offering 2028 and 2030 puttable USD exchangeable bonds for LG Energy Solution (373220 KS) shares.
• LG Chem (LGC) had been rumoured to sell down some of its stake in LG Energy Solutions (LGES), hence, this deal will remove the overhang on LGES.
• In this note, we have a quick look at the deal and provide our thoughts on the structure.

• The exchange prices are ₩687,500 and ₩715,000 at a premium of 25-30% to the closing price of LG Energy Solution today.
• The commencement date for both the 5-year and 7-year bonds’ exchange is August 28th.
• We should design a strategic setup that targets a band play within the current price range and the low ₩700,000 range.

• Plus Alpha Consulting (4071 JP) listed on TSE Growth at end-June 2021 at ¥2300/share, which was 90x the trailing fiscal year’s earnings. but only about 65x then-current year earnings.
• The stock popped 20+% on Day 1 to close ¥2803. Last Friday, two years and 13% higher at ¥3185/share, the company announced a Secondary Offering and move to TSE Prime.
• It’s a big offering. It’s a smaller TOPIX inclusion event. Next spring we’ll see more upweights.  

• Three weeks ahead of the global launch of TMNT Mutant Mayhem momentum is building
• Google Trends searches reveal rising interest in both movies and toys
• Risk/Reward is still highly attractive, last time a TMNT movie was a success stock hit 4 HKD

• Nusantara Sejahtera Raya (Cinema XXI) aims to raise up to US$160m in its Indonesia IPO.
• Cinema XXI is a premium theatrical exhibition, F&B and experience company. It is the largest cinema chain operator in Indonesia.
• In this note, we talk about the positive aspects of the deal.

• Gasoline retail prices have caught up with declining wholesale prices, and it should lead to around 16-20% QoQ decrease in retail fuel margin to ¥35-37 cents per gallon.
• US gas station merchandise sales exhibited weak performance this year, experiencing YoY growth rates of 5%, -2%, -15%, -17%, and -22% during the first five months.
• We anticipate around 25% downside for Seven & I Holdings (3382 JP) after earnings, as it may face challenges in achieving its FY24 guidance.

• Cinema XXI (CINEMA IJ) aims to raise up to US$160m in its Indonesia IPO.
• Cinema XXI is a premium theatrical exhibition, F&B and experience company. It is the largest cinema chain operator in Indonesia.
• In this note, we talk about the not-so-positive aspects of the deal.

• McCormick managed to exceed the revenue expectations as well as the earnings expectations of Wall Street.
• The company’s sales performance reflects the strength of its diverse worldwide portfolio as well as the successful implementation of its strategy.
• Additionally, McCormick is extending into the quickly developing Mexican aisle with Cholula’s true Mexican flavor in new formats.

• Sonos delivered a positive result and managed an all-around beat in the last quarter.
• The reported revenues were slightly ahead of expectations, although there was a decrease compared to the previous year.
• Sonos observed softening demand in the home theater category due to macroeconomic factors and increased competition but managed to gain market share.

• WD-40 Company (WDFC) reported fiscal third quarter (May) results benefiting from already announced price increases while unit volume declined in Europe and Americas regions
• Unlike prior quarterly results where there was a clear negative in the business, this time WDFC benefited from order timing that is not likely to repeat in the fourth quarte
• The price increases WDFC implemented were to help push gross margin back towards the 55 percent level. This has not been the case as demand has waned

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• Anycolor (5032 JP) and Lifedrink (2585 JP) have already confirmed their moves to the Prime Market and are expected to have TOPIX Inclusion Events at the end of July 2023.
• More recently, Plus Alpha Consulting (4071 JP) announced their move to the Prime Market and are likely to have a TOPIX Inclusion Event at the end of August 2023.

• Back in October 2022, Costa Group (CGC AU), one of Australia’s largest fresh fruit and vegetable producers, was understood to have been approached by its former major shareholder, Paine Schwartz.
• This was discussed in Costa Group’s Low-Hanging Fruit: Paine Schwartz Renews Interest. At the time, media reports speculated Paine Schwartz had no current intention of making a takeover bid.
• Last week, Paine Schwartz made an A$3.50/share NBIO by way of a Scheme. Paine Schwartz currently holds 14.84%.

• It attracts investors when a company’s 15-year ROCE averages over 25% (and has never gone below 20%). Sheng Siong (SSG SP) is one of those companies.
• With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.
• We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.

• Last week, Hyundai Dept Store Group announced that it will establish a single holding company structure with Hyundai G.F. Holdings controlling all of the group affiliates.
• Hyundai G.F. Holdings plans to make an in-kind investment in Hyundai Department Store (HDS) to make Hyundai Green Food and Hyundai Department Store as subsidiaries.
• This in-kind investment in HDS and Hyundai Green Food by Hyundai G.F. Holdings is not a deal that adds clear-cut value to Hyundai G.F. Holdings’ shareholders. 

• Kraft Heinz delivered a positive result and managed an all-around beat in the last quarter.
• In the quarter, the company introduced It Has to be HEINZ, a new worldwide campaign that represents the brand’s first unification under a single creative approach.
• We give The Kraft Heinz Company a ‘Hold’ rating with a revised target price.

• PDD delivered an all-around beat in the previous quarter and the company saw clear recovery trends.
• Revenue increased in the quarter and contributed to a total of RMB37.6 billion.
• PDD has also launched its electronic shopping season and invested millions of RMB for promoting universal and high-quality access to reading.

• Honda Motor’s results were a major disappointment as the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street. but, their efforts in cost reduction and improved pricing strategies helped maintain an operating profit margin above 5%.
• Additionally, they aim to provide attractive dividends to shareholders, with a significant increase per share and a share buyback program.

• Interpublic Group of Companies managed to exceed analyst expectations in terms of revenue as well as earnings.
• The company’s organic revenue before billable expenses was down 20 basis points compared to last year’s extremely high first-quarter organic increase of 11.5%.
• We give the Interpublic Group of Companies a ‘Hold’ rating with a revised target price.

• China’s regulators on Friday imposed Ant Financial Services Group (6688 HK) with a fine of RMB 7.12bn. A day later, Ant Group unveiled a share buyback program worth $6bn.
• The last time media created a positive narrative around Ant Group was in January 2023 when Jack Ma relinquished control of the company.
• However, the media excitement was short-lived as Alibaba Group Holding (9988 HK)‘s share price quickly resumed a downward trend after rising by around 22%.

• CDF’s 1H23 preliminary results suggest that business recovery remains on track. Voices of bottom-fishing are getting louder as free fall in its share price already erased 50% market cap YTD.
• We believe the dynamics have fundamentally changed compared to three years ago when CDF was the stock market darling. Investors need be aware of the anchoring effect in making decisions.
• Moderate growth, pressured margin and contracted valuation multiple will be the new reality facing investors of the stock in our view. Wait for better entry point.

• Three shareholders of Plus Alpha Consulting (4071 JP) (PAC) aim to raise around US$230m via selling over 26% of the company.
• PAC was listed in 2021 and after a somewhat tepid initial performance it has been doing well over the past year.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework

• Companies that accept reductions in policy shareholdings tend to repurchase their own shares. Pressure to reduce policy shareholdings will increase further this year when share prices are rising.
• In order to verify whether institutional investors’ voting criteria and voting behavior are consistent, the reasons for supporting/opposing individual proposals should be disclosed in more detail.
• Investors are expected to base decisions on performance, as voting advisers returned to policy of recommending voting against top management in companies with lower-than-standard ROEs due to recovery from COVID-19.

• Delta Djakarta (DLTA IJ) is a cheaper small-cap option to play the recovery of tourism in Indonesia instead of Multi Bintang Indonesia (MLBI IJ) 
• It’s 5Yr/10Yr average ROCE is 22%/29% lower than MLBI IJ due to the high net cash on the balance sheet, ~25% of the market capitalization.
• Trading at 11x PE and 10% dividend yield on normalized earnings (Assuming a 110% payout ratio since the 5 Yr average is 120%), the stock is super cheap.

• The company’s international sales growth is somewhat of a hidden asset, as the arena is underserved.
• Lululemon’s regional brand exposure is expanding with new store openings.
• The stock is theoretically undervalued, which is why the stock is undervalued.

• It remains to be seen whether domestic institutional investors will support shareholder proposals on shareholder returns, which had low approval rate among domestic institutional investors at the previous year’s AGM.
• If domestic institutional investors are voting in favor of shareholder proposals, it wouldn’t be surprising if more companies passed them. It’s doubtful that passive funds have the same voting practices.
• There is concern about critical tone regarding the legally binding nature of the resolution of AGMs, which appears to come from companies feeling threatened by declining shareholdings by banks/business partners.