Consumer

• Korea Investment & Securities announced the final competition rate for the tender offer of SM Entertainment by Kakao Group (8,333,641 shares of SM Entertainment at 150,000 won per share).
• The competition ratio of the tender offer was 2.2655436 to 1. Accordingly, the allocation ratio was set at 44.1395170%. 
• At the current price of 95,100 won, SM Entertainment’s shares are undervalued by about 25% to 45% over the next 6-12 months, in our view. 

• The review period for the Nikkei 225 (NKY INDEX) September rebalance ends end July. We highlight 3 potential inclusions and exclusions for the index.
• There are a few alternate adds that are interesting and their inclusion in the index could move things around a fair bit.
• Due to the large size difference between the potential adds/deletes, there will be a large funding trade with passive trackers needing to sell over 0.5x ADV on many index constituents.

• DPC Dash (1405 HK) raised around US$75m, after pricing its IPO at the bottom-end. 
• The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 604 stores across 17 cities, as of Feb 2023.
• In this note, we talk about the subscription levels and trading dynamics.

• The promoters of Patanjali Foods (PATANJAL IN) are looking to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
• We had discussed about this in their effective re-listing FPO last year, and the deal has been well covered by media sources as well, thus it is very well flagged.
• While it would be a large one to digest, representing at least 62.1 days of the firm’s three month ADV, the deal will lift the remaining overhang on the stock.

• Seven & I has revamped its corporate board and announced an updated MTP that improves capital allocation. However…
• Activist investor ValueAct has turned hostile and is seeking to replace the President and three other directors
• The stock price has declined by 12% from its year high and we see substantial upside to our intrinsic valuation

• Consensus estimates suggest that Nitori Holdings (9843 JP)‘s gross margin will experience a sudden change affecting profitability for a few quarters, before returning to 6-8% below the long-term trend.
• We see no apparent reason for a drastic change in Nitori’s profitability and expect it to remain slightly below trend, in line with guidance.
• Nitori is expected to reach ¥140bn and ¥150bn OP for FY24 and FY25, with valuation at 13.3x and 12.4x OP. This is reasonable given Nitori’s rare history of low multiples.

• United Malt Group Ltd (UMG AU) has offered exclusive due diligence to Malteries Soufflet for its non-binding indicative proposal of A$5.00 per share, a 45.3% premium to the undisturbed price.
• The offer follows on from three previous undisclosed proposals. The offer is subject to several conditions such as due diligence, Board recommendation and FIRB approval.
• The presence of several substantial shareholders necessitates an attractive premium. The offer is attractive in comparison to historical share prices and peer multiples. 

• Fujitec’s board composition was above average of Japanese companies in form. This was an opportunity to see an example of a board that is formally structured but not actually functioning.
• Bringing manager’s buddy on as an “independent director” is not likely to contribute to sustainable growth in corporate value.
• If domestic institutional investors, including passive funds, vote according to the will of the company, it will lead to stagnation of the substance of corporate governance in Japanese companies.

• Parkson Retail Group Ltd (Parkson) is a department store operator with 19 years of operating history in China.
• With an extensive network of 50 stores in 36 cities in China under the “Parkson” brand, the Group is one of the largest store operators.
• It targets the middle- and mid-upper-end of the Chinese retail market, with most of its revenues derived from concessionaire sales (90% of total revenues), while direct sales account for the rest.

OPAP’s FY22 results benefited from the ongoing retail recovery post COVID, and a still-growing contribution from online (despite the tough comparative) as the company’s enhanced offering attracts growing customer numbers. The higher-than-expected profit, despite relative disappointment about Q422’s revenue due to the FIFA World Cup, reinforces management’s cost control credentials against a background of higher external cost pressures. Management’s guidance for further profit growth in FY23 and an undergeared balance sheet should be supportive of high cash returns.

• First quarterly profit in 4Q’22 (first amongst the 3 main emerging brands) has raised expectations of full year profitability in ‘2023
• Launch of BEV will increase production, R&D, platform depreciation and marketing costs
• Despite our expection of revenues doubling y/y in ’23, profitability may not increase accordingly

• There are 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.
• Four new deal was discussed on Smartkarma this past week: Australian Clinical Labs (ACL AU)/Healius (HLS AU), Wyloo/Mincor (MCR AU), JIC/Toshiba Corp (6502 JP), and MBk/ Osstem Implant (048260 KS).
• Key updates took place for Essential Metals (ESS AU), Golden Energy & Resources (GER SP), and S.M.Entertainment Co (041510 KS).

• While policy holdings have declined, passive funds have appeared among the top shareholders of many companies. The Bank of Japan’s ETF purchases have accelerated this growth. 
• The question is whether the passive funds that have appeared as major shareholders in each company are exercising their voting rights on reasonably reasonable basis that fulfills their fiduciary duties.
• In reality, engagement is limited to a few companies due to the large number of portfolio companies and low management fees.This implies that the same is true for proxy voting.

• Toyota Industries (6201 JP), one of the world’s leading forklift manufacturers, has admitted to fabricating the results of parts testing, forcing some forklift shipments to be halted.
• TICO has decided to suspend the shipping of three models of forklifts equipped with the suspect engines, which account for ~6% of total forklift sales (in terms of count). 
• Shares, quite rightly, have taken a hit. But this correction appears excessive.

• JD Health reported 2H2022 results. 2H revenue increased 55.5% YoY to RMB26.5bn (RMB24.2bn) while fall in GPM and an increase in fulfilment costs led to operating losses during the period.
• Product revenues (JD Pharmacy) continues to account for a majority of JD Health’s revenues that generate lower GPM compared to Marketplace and other revenues.
• JD Health’s share price has moved up over the last few months but further decline in GPM  could pull the share price down suggesting it could be a Good Short.

• Net debt of Porsche SE (HoldCo) amounted to €6,672 million, as a result from the debt financing of around €7.1 billion to purchase ordinary shares of Porsche AG (operating company).
• Porsche SE trades at a 49.2% discount to NAV, but maintaining the dividend involves maintaining the net debt position and its detrimental effect on value.
• The attractiveness of Porsche SE shares has been reduced as a result of the acquisition of the Porsche AG stake, still the discount is massive, even accounting for litigation risk.

• Yilli’s aggressive marketing in 2Q raised market concerns over intensifying competition
• An outright price war is unlikely as its closest competitor, Mengniu, is not willing to follow suit
• Margin remains under pressure on rising input cost
• Trimmed fair value to CNY22.5 (from CNY26.1)

Games Workshop Group’s (GAW’s) update highlights that Q323 trading to the end of February 2023 is in line with expectations. In addition, a further dividend of £1.20 per share has been declared, taking the year-to-date total to £4.15 per share, a very healthy current yield of 4.6%, well ahead of FY22’s £2.35 per share. Separately, this week the company announced that the tenth edition of Warhammer 40,000 will be released in the summer of 2023.

• General Mills continues to perform exceptionally well relative to the broader equity market.
• The ability to offset a record high input cost inflation highlights the importance of a strong brand portfolio in strategic areas.
• As volumes return to positive territory, profitability in the pet food segment remains an area of concern, according to the company.

• On 17 February, NSE Indices announced the results of the March index review for the Nifty Next 50 Index (NIFTYJR INDEX). There are 5 adds and 5 deletes. 
• Last evening, NSE Indices announced a change in the index methodology where the cumulative weight of non-F&O stocks in the index will be capped at 10% (down from 15% earlier).
• This changes the flows at the March rebalance that will be implemented at the close of trading on 29 March.

• As Rakuten Bank (5838 JP) prepares for an IPO in April 2023, we see the potential for Rakuten’s NAV discount to narrow significantly from its current level of over 52%.
• We think the market could be unaware of the hidden value in smaller Rakuten businesses and other investments.
• Rakuten-Bank, which seems like a small piece of Rakuten’s ecosystem producing as much as 26-31% of Rakuten’s market-cap could open markets’ eyes to the undervaluation of Rakuten businesses & investments.

• Oisix is Japan’s largest online food retailer but sales were flat in 1Q-3Q2022 as people returned to work and cooked less, and profits suffered as inflation brought increases in costs. 
• The company’s US operation also shrank as fewer people bought food online now that many Japanese are back to normal working patterns again.
• But other international subsidiaries and its expanded wholesale businesses at home all grew strongly.

• XPeng Inc. has predicted that revenue and vehicle deliveries will nosedive in the current quarter after the Chinese electric-vehicle (EV) upstart reported slowing sales growth and a loss that nearly doubled in 2022.
• The company’s revenue will likely plunge 43.7% to 46.3% year-on-year to between 4 billion yuan ($581 million) and 4.2 billion yuan in the first quarter of 2023.
• The outlook is based on an estimate that its deliveries will plummet 45% to 47.9% year-on-year in the same quarter to around 18,000 to 19,000 vehicles.

• Once a major hit with young women, Samantha Thavasa has struggled to find relevance in the past five years.
• Despite an injection of capital and management from new parent, Konaka, the business has continued to close stores.
• While Konaka is restructuring the business, the brand’s low levels of recognition with the younger generation will likely mean further retreat.

• Looking at all listed companies over past 10 years, despite the gradual dissolution of cross-holdings, the Total Asset Turnover has not increased and the Equity Ratio level has not changed.
• Reducing equity capital through shareholder returns is effective in raising ROE, but ROE is unlikely to rise continuously if the company’s cash flow does not continue to increase.
• ROA is the product of the ROE components of net sales and asset turnover, excluding financial leverage. ROA is a key factor for increasing valuations.

• JDHealth (JDH) reported C2H22 top line, non-IFRS operating profit and IFRS net profit 9.2%, (25%) and (54%) versus our estimates, Annual active customers beat our estimate by 6.5%; 
• Gross margin, however, continued to deteriorate, mainly due to another all-time low (the 5th consecutive interim) of product gross margin. 
• The company however, showed strong ability in OPEX and working capital control; We raise TP from HK$39 to HK$44 and maintain SELL.

• KKR-backed home decor unicorn Livspace said it has let go of 2% of its over 5,000-member workforce as it aims to hit profitability as early as this year.
• Founded in 2014, Livspace offers tech-enabled interior design and renovation services, positioning itself as the Amazon of home decor.
• One of its notable offerings is Canvas, a SaaS platform that lets designers engage with their customers.

• Historical data suggests that the company’s gardening sales are set to surge.
• However, the stock’s price multiples reveal that it is at a deep discount relative to its cyclical average.
• A peer-based analysis implies that the stock is undervalued, but dividends remain astray, according to the company.

• TME reported 4Q22 results with topline beat our est. by 3.6% and bottom line beat our est. by 2.4%. 
• While the growth of online music gradually stabilizes without large catalyst in near future, its social entertainment segment continues to decline due to competition pressure.
• Maintain SELL and cut TP to US$ 6.2 to reflect limited top line growth and possible cost rebound. Our TP implies 13.6X PE in 2023.

• Rakuten Bank (EBANKZ JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 21 April.
• News reports indicate a raise of US$800mn (JPY 106.8bn) at the mid-point of the IPO range, valuing the company at JPY 305bn (US$2.3bn). 
• The stock should be added to the TPX INDEX at the close on 30 May where trackers will need to buy over 14% of the stock issued in the IPO.

• Good news from Nike’s Q3 report, which bodes well for Asics March quarter
• Why was Nike’s stock down? Margins were down 330bps on inventory mark downs
• Running is recession proof according to the footwear makers themselves

• Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. 
• Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.
• The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. 

• Byc Co Ltd (001460 KS) is the 20th company in our Korea Small Cap Gems series.
• Estimated value of BYC’s real estate is more than 2 trillion won, which is much higher than its current market cap of 302 billion won. 
• A large local fund called Truston has been going activist on BYC for more than a year. Plus, BYC’s Chairman Han is being sued by his mum for inheritance recovery. 

• Liberty intends to launch an offer to acquire the minorities in its subsidiary Telenet, taking advantage of the drop in the share price over the last two years.
• Liberty offers €22/share in cash, cum dividend, 5.9x EV/Fwd EBITDA, a minimum 95% threshold and no MAC with respect to BEL-20 index and shares of Telenet peers prior results announcement.
• My fair value estimate (DCF based) is €16.2, i.e. 26% downside to the intended offer price. Spread is 5.2%/15.6% (gross/annualised). Cautious long.

• Tencent Music (TME US) reported 4Q2022 results yesterday. Revenue decreased 2.4% YoY to RMB7.4bn (vs consensus RMB7.3bn) while reported operating profit more than doubled to RMB1.4bn (vs consensus RMB1.3bn).
• Online music revenues grew 24% YoY while social entertainment business continues to see decline in paying users and ARPU. Margin improvements were driven by spending cuts.
• Social Entertainment is losing its importance and the segment continues to remain under pressure due to competition from other platforms.

• Renault finished 2022 with a record high year, a testimony of the “Renaulution” phase successfully being completed
• The Company enters its strategy’s second phase: “Renovation”; the aim is to now grow with a focus on high quality vehicles
• Equity story: sales, margins, earnings, and free cash flow improvement. 2022 was a turning point, the start of a new dynamic, a new mindset and enthusiasm for Renault

H&H International has released reasonable FY 2022 results, despite the challenging macro economy and operating conditions during the year. Revenue rose more than 10% y-o-y to c. CNY 12.8 bn, mainly due to the full-year inclusion of Zesty Paws in the US. The gross profit margin contracted 2.5 ppts to 60.3%. Debt/EBITDA remained elevated at 5.7x as at FYE 2022. Liquidity is sound, with a cash balance of over CNY 2 bn and short-term debt of only CNY 1 bn.

The company aims to reduce net leverage to below 2.0x within three years. In our view, this plan is aggressive albeit attainable.

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

• Leapmotor (9863 HK) raised around US$800m in its Hong Kong IPO, after pricing at the low-end. The stock was listed on 29th Sep 2022, its six-month lockup will expire soon.
• LM is a smart EV company based in China, founded in 2015.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Every year it’s the same trade. But it isn’t really. But it kinda is. This year it is Wednesday and Thursday. There are risks to the analysis – notably allocation.
• But, ceteris paribus, it is still possibly a ¥1,580,876,450,407 buying spree to take place on one day into the close later this month. Or something close to it.
• And for a two-day period, over the last ten years, the average return is 1.60% on these two days with a 9:1 win ratio. Lots of angles here.

• After HYBE (352820 KS) conceded to Kakao Corp (035720 KS) earlier this month, S.M.Entertainment Co (041510 KS)‘s shares have declined 23%. 
• Kakao’s Partial Offer of  ₩150,000/share closes on the 26 March. 
• Unadjusted proration is 36.8%, conservatively rising to 48.5%. It may settle at 61% if HYBE maintains its position – but that is probably a tad optimistic. 

• International Housewares Retail (1373 HK) is an interesting value/growth (5-10% CAGR) play with a high-dividend yield of >10%, trading at 8.1x FY23 PE. 
• The claim to fame for this company is the investment of legendary HK mid/small cap investor David Webb (who has a 6.9% stake in this company). 
• At a market cap of 2 bn HKD, the company has about 400 mn HKD net cash (20% of market cap), making it 6.9x ex-cash PE.

• Del Monte Pacific reported a steep decline in profits led by a fall in gross margins and a steep rise in interest costs for the quarter ending 31st Jan 2023.
• The company’s gearing has risen to 5.8x led by (1) the refinancing of preference shares and expensive debt (2) acquisition of the Kitchen basics brand (3) increased working capital loan.  
• Del Monte’s precariously bloated debt levels and tighter operating conditions, given inflation-led cost pressures and moderating demand, in the current high-interest rate environment heightens the company’s financial risk.

• The stock is down sharply over the past few weeks as investors price in higher interest rates and weaker spending on durables
• Mitsubishi recently unveiled its mid-term plan and further details on its electrification strategy
• If management can hit its targets, the stock would have significant upside. We have our doubts

• The Korean government removed mask mandates for public transportation in Korea as of Monday, 20 March including in buses, taxis, and subways.
• There are four major reasons why it will take much longer time for most people in Korea to stop wearing masks. 
• As millions of people stop wearing masks in the coming year, there will be clear, visible higher demand for cosmetics, which should benefit companies such as Korea Kolmar. 

• With the impact of cost-cutting and monetisation wearing out, consensus looks overly aggressive to expect revenue and OP CAGRs of 24% and 35% respectively over the next two years.
• Based on Pinduoduo (PDD US)’s revenue and cost trends discussed below, we think the steady state OP margin could be substantially lower than consensus.
• Expecting consensus to downgrade expectations, we don’t think it is worthwhile paying up to 45.0x FY+2 OP (on our steady-state OP margin) for Pinduoduo at its current EV of $80.5bn.

• Over the past 12 months, we have written insights on 14 stocks in the small/mid-cap space with high dividend yields, inexpensive valuations, and a great margin of safety. 
• We re-examine these to shortlist 3-4 names of our highest conviction amidst the current macroeconomic climate.
• Our high conviction shortlist includes Water Oasis (1161 HK), Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), and Taste Gourmet (8371 HK).

• Our 2023 outlook remains unchanged; we see the market indexes consolidating within broad horizontal ranges, and we expect the top-end of the range to be 4165-4200 on the S&P 500.
• The bottom-end of the range is at the 2022 lows (3490). Another possible support level we are monitoring is at the December 2022 lows (3765).
• The Russell 2000 (IWM) is testing important support at $170 (the Dec. 2022 lows and the prior downtrend from 2022), suggesting this is a logical time for an oversold bounce.

• Fu Shou Yuan (1448 HK)’s 2022 results were below our expectations. Affected by the 22Q4 pandemic, the performance recovery in 22H2 was lower than expected. 
• The high demand due to soaring death rate since 22Q4 would be reflected in 23H1 results. Together with low base last year, strong performance rebound in 23H1 is worth expecting.
• The reason behind short-term trade and long-term hold is different. But considering the Company has no obvious flaws in its long logic, every pullback can be a good buying opportunity.

• Hankyung exclusively reported that the Korean regulators were considering abolishing the foreign ownership limit. This morning, the Ministry of Economy and Finance released a statement that this report is untrue.
• Nevertheless, circumstantially, given the current government’s all-out effort to make it to MSCI Developed Market status, there is a high possibility that it will resurface not too far from now.
• Four out of the 33 foreign ownership-restricted stocks will likely be immediately affected: SKT, KT, and Korea Gas (MSCI inclusion) and SBS (flow improvement).

• Global branded food and beverage outfit Del Monte Pacific (DELM SP) recently announced group sales grew by 3% to US$68mn in the 3Q23 (April Y/E).
• However net profit declined by 62% to US$9.8mn due to lower operating results and increased interest expense from higher cost bank loans.
• Del Monte’s net debt, net gearing, and net debt/EBITDA were S$2.2bn, 582.5%, and 6.1x, compared to S$1.45bn, 211%, and 4.2x a year ago. 

• Trial Holdings (5882 JP)  is looking to raise around US$375m in its Japan IPO.
• TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
• In this note, we will undertake a peer comparison against some of its listed peers.

• After a dip in earnings in FY22, Fu Shou Yuan (1448 HK) guides for an encouraging rebound in FY23 with at least 35% revenue and 30-35% net profit growth.
• We think the 12.7% growth in earnings in 2H22, against -28.9% in 1H22, showed that pandemic impact has faded. It is still very well positioned to benefit from aging population. 
• Net cash equals 19% of its share price and its 13.9x PER for FY23 is not expensive relative to peers. We estimate, ex-cash, ROE is at a high of 24%. 

• In 4Q22, revenue grew by 46% YoY, lower than consensus, but higher than competitors.
• The operating margin improved significantly from 7% in 2021 to 23% in 2022.
• We believe the stock has an upside of 31% and a price target of US$120.

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.

• Melco Resorts & Entertainment
• Sunny Optical

• We don’t think that a strong-looking demand in the domestic market is sufficient to warrant an upside to Fast Retailing (9983 JP)’s current consensus FY+2 EV/OP of 19.9x.
• Although on the downside we see significant risks with China’s rebound, decelerating revenue growth in high growth markets and margin pressure from wage hikes and inventory growth.
• Therefore, we think the company’s FY+2 EV/OP could potentially go down to around 15.0x, which is towards the bottom end of Fast Retailing’s pre-COVID FY+2 EV/OP range.

• Trial Holdings (5882 JP) is looking to raise around US$375m in its Japan IPO.
• TH operates a network of retail stores that offer one-stop shopping under its everyday low price model, across a variety of daily necessities, food items and other products.
• In this note, we talk about earnings forecast and provide our thoughts on valuation.

• Our estimations for 2022 annual revenue range around €22,982 million and for 2023 around €23,696 million.
• The company’s annual revenue reached €23,223 million in 2021 compared to €19,208 million in 2020, posting an in- crease by 20.9%.
• McDonalds’ gross profit for 2021 was €12,580 million, increased by 29% compared to the €9,752 million for the corresponding period of 2020.

• Xpeng reported soft 4Q22 results, with top line of RMB 5.14bn, missing our estimate/cons. by (5.6%)/(9.7%); GPM of 8.7%, missing our estimate/cons. by (1.6ppt)/(3.4ppt), primarily due to increased sales promotions. 
• We maintain SELL, because 1) price war and intensified competition in 2023 are still key challenges facing its existing and new models; 
• 2) margin pressure ahead amid the price war, while its cost reduction initiatives starting from 2H23 take time to verify effect.

• While investment managers spend money on expanding their ESG investment systems and disclosures in preparation for the FSA’s guidelines, they expect the business of ESG funds to continue to grow.
• It’s desirable for investment managers to disclose qualitative and quantitative information, recognizing the need to incorporate ESG factors into their investment decisions and to show that results are being achieved.
• Some investment managers are redefining ESG funds to incorporate ESG factors beyond ESG integration, and this trial-and-error process will continue as investment managers position ESG investment trusts as key products.

• 25% reduction on hardware cost of car production in one year would be remarkable if achieved
• Integrating two sales systems into one is a positive move, but not good enough in our view.
• Mr. He taking direct resposibility of styling design division is a sign that the company acknowledges that it is a key improvement area for estabilishing brand image

• There are 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 past week: Thai Beverage (THBEV SP)‘s delisting Offer for Oishi Group PCL (OISHI TB).
• Key updates took place for AAG Energy Holdings (2686 HK), Pushpay Holdings (PPH NZ), GK Goh Holdings (GKG SP), Halcyon Agri (HACL SP), and S.M.Entertainment Co (041510 KS).

• PDD stock price has been increasingly driven by TEMU as of late, thanks to TEMU’s fast growth and aggressive geographical expansion.
• TEMU rollout introduces more variables to upcoming 4Q results , especially with regard to incremental investments that pose downside risks to earnings, which will sharply decelerate in 4Q and beyond.
• We are turning more constructive on TEMU, but acknowledge the challenges in trading off between topline growth and bottom line deceleration in a potentially prolonged tightening cycle. Stay neutral.

• Addition of Writing Legends to existing maths and literacy apps will create more opportunities to upsell and cross-sell. 
• Brightpath, the recently acquired assessments technology provider, adds a new horizontal with the potential to reduce school customer churn
• Competition is high from groups such as DreamBox, IXL, ABC Mouse, Khan Academy and BYJU’S . 3P Learning remains a significant player with a strong customer base and improving product portfolio.

• TL5 holdouts have exposed themselves to being trapped by MFE, which has already shown in the past that it has no qualms about running its subsidiary for its own interests.
• The implied exchange values the audiovisual business of TL% at 1.2 EV/22eEBITDA TL5/MFEA spread is +3.02%, I would wait for it to turn negative to open a position.
• MFE A shares are trading at a 34.7% discount, which seems excessive nevertheless. With more A shares coming in the market (and higher liquidity), I would be long MFEA/short MFEB.

• RPSG Ventures Limited (RPSGVENT IN) [“RPSGV”] continues to scale up its FMCG business. Q3FY23 FMCG revenues saw a YoY growth of 23%. QoQ, there was some de-growth due to seasonality.
• Excluding one-off other income, Firstsource Solutions (FSOL IN) reported weak Q3FY23 earnings led by sluggish growth and weak margins.
• RPSGV remains a deep-value holding company that is trading at a discount of >85%. As its FMCG and Sports businesses scale up, the stock has potential to re-rate significantly.

• On March 2 we discussed how the pullback in global equities was in full swing as Europe/UK indexes displayed 4.5-month uptrend breaks, joining the pullback in the MSCI ACWI.
• At the time, we expected this pullback in the MSCI ACWI (ACWI-US) to move down to $86-87 at minimum, and potentially $84 (December 2022 low) or $75-77 (the 2022 lows).
• ACWI-US broke below $86 and is approaching $84. $84 will be an important support level to monitor, but if it breaks, the $75-77 level is still firmly in the cards.

• Japanese companies are keen on obtaining ISO certifications, so it’s relatively easy for companies that have obtained these certifications to ensure the comprehensiveness of sustainability information by disclosing such information.
• It’s useful to know the degree to which management recognized the challenges and the leadership that management could exercise in solving those challenges, rather than laundry list of self-praise information.
• For management to recognize issues and implement initiatives at global level, it’s expected to hire a head who is sensitive to global initiatives and work with him/her to resolve issues.