ConsumerDaily Briefs

Consumer: Ryohin Keikaku, Tabcorp Ltd, Haier Smart Home Co Ltd, JD.com Inc., Asahi Group Holdings, Central Retail Corp Ltd, Invesco QQQ Trust Series 1, Discovery, Inc., Ohsho Food Service, Aeon Co Ltd and more

In today’s briefing:

  • MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup
  • Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment
  • Haier Smart Home (6690 HK): Smart Moves
  • JD.com (9618 HK): 1Q22 Result, Undervalued Despite of Weak Revenue
  • Asahi: More Downside Left After Maintaining The Optimistic 2022 Guidance
  • CRC: Growth Momentum Intact Despite Uncertainties
  • Panic Buying Achieved, Waiting for More Confirmation of a Bottom;Buying Staples & Auto Dealers/Parts
  • MergerTalk: Why Warner Bros. Discovery Is A Mis-Valuation Opportunity Rather Than A Value Trap
  • Ohsho Food Service (9936): OP Exceeds Our Forecast for Both FY3/22 Results and FY3/23 Guidance
  • Aeon Shows up Seven & I in E-Commerce Growth and Strategy

MSCI Japan Index Rebalance: Covering to Come After Large Short Buildup

By Brian Freitas

  • There are 22 deletions for the MSCI Japan Index at the May SAIR. The changes were expected and there is large short buildup on quite a few of the stocks.
  • Over the last month, the largest increase in shorts as a percentage of passive selling was on Mercari Inc, Ryohin Keikaku, Tokyo Century Corp, Sohgo Security Services, Pola Orbis Holdings.
  • The deletions have underperformed the TOPIX by 22% over the last 6 months and by 10% over the last two months. Position for a bounce post implementation.

Tabcorp & The Lottery Co Spin-Off – Valuation Grids and Index Treatment

By Travis Lundy

  • Tabcorp Ltd (TAH AU) will soon spin out its Lottery and Keno business, to be called The Lottery Corp (TLC AU). TAH shares go ex-TLC on 24 May.  
  • The question is where do they trade. What is in the price? What is not? What are the potential index implications?
  • This insight provides a grid of index implications and pro-forma valuations (EV/EBITDA, PER, Dividend Yield) for each and both and the combined entity.

Haier Smart Home (6690 HK): Smart Moves

By Osbert Tang, CFA

  • Besides as nationalistic consumption play, Haier Smart Home (6690 HK) also offers attractive investment theses with bright growth prospects. Despite share price rebound, valuations are still not yet reflecting fundamentals.
  • The surge in demand for refrigerators and freezers during the pandemic-led lockdowns has boosted HSH’s business in 4M22 while it will also reap benefits from Rmb depreciation.
  • The government’s support of healthy development of residential real estate market will be positive towards smart home appliance demand which HSH is set to gain from its leadership position. 

JD.com (9618 HK): 1Q22 Result, Undervalued Despite of Weak Revenue

By Ming Lu

  • JD will continue to close its unprofitable minor businesses in following quarters.
  • The growth rate of total revenue slowed down in 1Q21 due to weak demand of home appliance.
  • We believe JD has a significant upside despite that the revenue growth will continue to slow down.

Asahi: More Downside Left After Maintaining The Optimistic 2022 Guidance

By Oshadhi Kumarasiri

  • Asahi Group Holdings (2502 JP)’s 1Q22 OP of ¥9.0bn from ¥496.9bn revenue was significantly below the consensus OP of ¥34.0bn from ¥489.4bn revenue.
  • Yet the company maintained its aggressive 2022 guidance, which expects domestic beer volume growth while prices are scheduled to increase by 6-10%.
  • We don’t find this estimate credible, especially given that Asahi generates most of the domestic revenue from the price-sensitive high malt beer segment.

CRC: Growth Momentum Intact Despite Uncertainties

By Pi Research

  • Last week analyst meeting came out with neutral tone.We reiterate our BUY rating for CRC with a target price of Bt43.0,based on DCF (WACC of 8.2% and TG of 2%)
  • Management maintained its key 2022 financial guidance. CRC targeted 2022 sales growth of 15%-20%YoY, mainly from fashion business and targeted GPM retail sales to expend by 100-120bps YoY.
  • •CRC showed three measures to mitigate the effect from uncertainties under global issue such as(1)cost optimization by controlling OPEX growth to not be higher than 50% of total sales growth

Panic Buying Achieved, Waiting for More Confirmation of a Bottom;Buying Staples & Auto Dealers/Parts

By Joe Jasper

  • Following panic selling that we have outlined over the past month, we finally saw panic buying last Friday in the form of 92% upside volume on the NYSE.
  • There is hope that this panic buying could signal a major bottom, but we still need to see more confirmation before declaring that the low is in.
  • We are watching the Nasdaq 100 (QQQ) and the steep RS uptrends on Utilities (XLU) and Staples (XLP) for more confirmation that a major low is in place. Details below.

MergerTalk: Why Warner Bros. Discovery Is A Mis-Valuation Opportunity Rather Than A Value Trap

By Robert Sassoon

  • The Netflix Inc (NFLX US) fall out has created a significant buying opportunity in Warner Bros. Discovery (WBD US)
  • Warren Buffet’s purchases of WBD peer Paramount Global (PARA US) only serves to validate the buying opportunity in the much cheaper WBD
  • Attributing a PARA-like value multiple to WBD’s Consensus 2023 EBITDA which is a little lower than management’s reaffirmed guidance, indicates a value up lift of 80% plus

Ohsho Food Service (9936): OP Exceeds Our Forecast for Both FY3/22 Results and FY3/23 Guidance

By Mita Securities

  • On May 16, Ohsho Food Service (9936, the company) announced FY3/22 full-year sales of 84.775bn yen (+5.1% YoY), OP of 6.959bn yen (+14.6% YoY), and RP of 13.024bn yen (+89.7% YoY)
  • 4Q (Jan-Mar) OP was 1.938bn yen (+33.7% YoY; +6.0% QoQ), and OPM was 8.8% (7.2% in 4Q FY3/21; 8.2% in 3Q)
  • The company’s guidance for FY3/23 is sales of 90.029bn yen (+6.2% YoY), OP of 7.516bn yen (+8.0% YoY), OPM 8.3% (+0.1ppt YoY) and RP of 8.627bn yen (-33.8% YoY)

Aeon Shows up Seven & I in E-Commerce Growth and Strategy

By Michael Causton

  • Aeon has finally published numbers on its e-commerce growth and performance.
  • It has a ¥1 trillion target for FY2025 and while this is still a far off target, Aeon is making progress. 
  • Digital sales have doubled in the past two years and Aeon is now well ahead of Seven & I which continues to fail to present a coherent e-commerce plan.

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