ConsumerDaily Briefs

Consumer: Mcdonald’s Holdings Co Japan, Ijm Plantations, Missfresh, Alibaba Group, Nayuki Holdings, Tesla Motors, Nitori Holdings, Gajah Tunggal, Wonderla Holidays and more

In today’s briefing:

  • McDs Japan (2702) Update: Parent Selldown 80% Done, or 63.6% Done.
  • IJM Plantations’ Potential MGO From KLK
  • Missfresh Limited (每日优鲜) Pre-IPO – Worrying and Unsustainable Trend
  • Alibaba: Cloud Is on the Offence to Secure Its Dominant Status in APAC Through an $1.0bn Investment
  • Nayuki Holdings IPO: Drinking Habits
  • What The Market Is Missing About Tesla’s Rebound in China Sales in May
  • More Diversification to Come as Nitori Chases ¥1 Trillion
  • Gajah Tunggal – Event Flash – Proposed Issuance Of 5NC2 Notes – Lucror Analytics
  • WONDERLA: Wonderla Holidays reported a strong recovery in earnings post reopening of parks at Ben…
  • BATAINDIA: We trim our FY22/23E estimates given subdued discretionary demand due to extended lock…

McDs Japan (2702) Update: Parent Selldown 80% Done, or 63.6% Done.

By Travis Lundy

Ten months ago, in the 2020FQ2 earnings call for Mcdonald’s Corp (MCD US), CFO Kevin Ozan brought up the subject of Mcdonald’s Holdings Co Japan (2702 JP) a bit over 22 minutes into the call, saying that McDs fully supported McDs Japan, but they would be selling down their stake from ~49% and would in any case retain a stake of at least 35%. 

They started selling in the market. 

On 20 August, MCD announced it had sold a bit over 3% of McD J, selling 4.2mm shares at ¥5,340/share on 19 August 2020. On 20 November 2020, they announced they had sold another 4,000,000 shares at ¥5,370/share on 19 November. On 1 March, another tranche of 4,000,000 shares was transacted at ¥5,280/share (reported 4 March). 

Today, with half an hour to the close, McDs announced it had reduced its stake to 37.95%, which meant they sold 3.8mm shares. 

There is a pattern to these transactions which was not subtle at the beginning but may be becoming more flexible as time goes on. It is reasonable for those who understand how these things work in the U.S. And understanding how they work tells you what the supply looks like going forward. 

And the timing of other parts of the context will tell you about McDs and TSE Prime.


IJM Plantations’ Potential MGO From KLK

By David Blennerhassett

Palm oil play Kuala Lumpur Kepong (KLK MK) has made an Offer for Ijm Corp Bhd (IJM MK)‘s 56.2% stake in Ijm Plantations (IJMP MK).

The RM3.10/share Offer price, a 26% premium to last close, values IJMP at RM2.7bn, or US$0.65bn.

Should the transaction conclude – and there appears no reason why it won’t – KLK will be obligated to make an unconditional mandatory general offer for all shares in IJMP not held.

The transaction is subject to shareholder approval at EGMs for both IJM Corp and KLK. The SPA is also conditional on the consent from the lenders of IJM Corp and IJMP. 

IJM Corp is required to confirm on or before 5pm on June 11, if it wishes to proceed. IJM Corp said its board is in principle agreeable to finalise the terms and conditions with KLK.

This looks done.

More below the fold.


Missfresh Limited (每日优鲜) Pre-IPO – Worrying and Unsustainable Trend

By Zhen Zhou, Toh

Missfresh (MF US) (MFL) is looking to raise US$500m in its upcoming U.S. IPO.

Missfresh Limited (MFL) is a leading online and offline neighbourhood retail platform with three main businesses, on-demand distributed mini warehouse (DMW) business, intelligent fresh market, and retail cloud services. As per iResearch, MFL was the company that pioneered the DMW model in 2015 before any player in the industry. As of March 31, 2021, the company had a network of 631 DMWs in 16 cities in China.

In this note, we discuss the company’s business model, operational and financial data, and share our initial thoughts on the IPO.


Alibaba: Cloud Is on the Offence to Secure Its Dominant Status in APAC Through an $1.0bn Investment

By Oshadhi Kumarasiri

Earlier this week, Alibaba Group (9988 HK) unveiled a plan to invest US$ 1.0bn in Alibaba Cloud, focusing on the development of the cloud business in the APAC region. This comes after Byte Dance dropped Alibaba cloud services from its international businesses amidst concerns over data security and privacy raised by the US government. According to Ciaxin, the lost contract is worth around US$ 800m per year, around 9% of Alibaba Cloud’s annual revenue in FY21.


Nayuki Holdings IPO: Drinking Habits

By Arun George

Nayuki Holdings (NYK HK) is the second-largest premium teahouse chain in China accounting for 18.9% of China’s premium modern teahouse market as measured by total retail consumption value in 2020, according to CIC. Nayuki also has the most extensive teahouse network in China as measured by the number of cities covered, among premium modern teahouse chains in China in 2020, according to CIC. It is pre-marketing an HKEx IPO to raise up to $500 million, according to press reports.

In Nayuki Holdings IPO Initiation: A New Leaf, we noted that premium teahouses have rapidly gained popularity in China as they bring new tea-drinking experiences and benefit from the structural trend of consumer’s consumption upgrades driven by higher disposable income. We opined that Nayuki has the right ingredients to offer investors an attractive play on this market. 

In this note, we look at the PHIP which discloses the 2020 results and recent developments. We think that recent results show that Nayuki is well-positioned as a post-COVID-19 recovery play. Overall, we continue to think that Nayuki is worth a look.  


What The Market Is Missing About Tesla’s Rebound in China Sales in May

By Vicki Bryan

Tesla Motors (TSLA US)investors were encouraged that demand in China is back on track after the China Passenger Car Association reported May sales jumped versus disappointing April results, especially after troubling rumors about falling orders.

They should look deeper.


More Diversification to Come as Nitori Chases ¥1 Trillion

By Michael Causton

Nitori Holdings (9843 JP) had its 34th straight year of record results in FY2020 – and that’s before it has even begun to integrate its recent acquisition of Shimachu Co Ltd (8184 JP).

Last month, the largest furniture retailer confirmed further expansion into fashion and a new IKEA-like restaurant concept due to roll out in many of its larger stores.

Nitori is making progress online too; in FY2020, online membership grew 73% to 9.03 million users and Nitori expects to see 13 million users by the end of the current year.

It also plans to open more stores overseas after a pause in 2020 where the potential remains untapped.


Gajah Tunggal – Event Flash – Proposed Issuance Of 5NC2 Notes – Lucror Analytics

By Leonard Law, CFA

We view Gajah Tunggal’s proposed tender offer and Notes issuance positively, as these will extend the company’s debt maturity profile. More importantly, the smaller issuance size should reduce future refinancing risks, when the Notes come due in 2026. The transactions should also reduce FX risks, as there will be a more balanced mix of USD and IDR debt in the capital structure. We also view positively the amortising nature of Gajah Tunggal’s secured credit facilities, which might help contain the company’s debt level going forward.

The proposed Notes will have a smaller collateral pool than the existing Notes. That said, S&P estimates that the value of the collateral is worth c. 1.6x of the amount for the proposed Notes. 

We expect the proposed issuance to succeed, given the reduced size (compared to the existing ‘22s), improved post-issuance capital structure, as well as the company’s improved leverage in FY 2020. We see fair pricing for the proposed 5NC2 Notes at 8.0-8.5%.


WONDERLA: Wonderla Holidays reported a strong recovery in earnings post reopening of parks at Ben…

By ICICI Securities Limited

Wonderla Holidays reported a strong recovery in earnings post reopening of parks at Bengaluru, Kochi and Hyderabad in Q4FY21. Revenue for the quarter improved sharply from Rs 4.9 crore to Rs 33.3 crore QoQ though revenue remained down 21.4% YoY as parks were functional only during Thursday-Sunday till February 2021 while they remained open all seven days in March. The company achieved total footfalls of 3.11 lakh against 4.05 lakh last year. Thus, Wonderla managed to clock EBITDA of Rs 2.5 crore vs.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

BATAINDIA: We trim our FY22/23E estimates given subdued discretionary demand due to extended lock…

By Axis Direct

We trim our FY22/23E estimates given subdued discretionary demand due to extended lockdown in Q1FY22 and continue to maintain HOLD rating with a revised TP of Rs. 1500/share (Rs. 1600 earlier) we roll forward our target PE multiple of 45x to its FY23E EPS.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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