Daily Brief Consumer: Alibaba Group, Pphe Hotel, Tata Motors Ltd, Interpublic Group Of Companies, Vf Corp, Webuy and more

• We visited a store of Freshippo Outlets in Shanghai in workhour.
• We believe the store is popular and accumulating more customers.
• However, the digitalized services bring some difficulties to old customers.

• In this insight, we take a look at the potential index changes for FTSE 100 and FTSE 250 in the run up to the December 2022 Rebalance.
• There are multiple FTSE 100 and FTSE 250 members involved in M&A situations and there could be many intra-review changes during 4Q 2022.
• Most interestingly, the names leading the race to become intra-review ADDs seem to have decent volume impact.

We view Tata Motors as “Medium Risk” on the LARA scale. The company has weathered the impact of the COVID-19 pandemic better than expected. Compared to other major automotive players, Tata Motors is small in terms of scale and product offerings. Meanwhile, the global market is becoming increasingly consolidated. The large capex required for the company to catch up in terms of electric and petrol vehicle development (in the latter case due to diesel falling out of favour) will likely restrict its ability to generate FCF and deleverage. 

That said, Jaguar Land Rover (JLR) has a respectable position in the premium (luxury) auto market and highly differentiated product offerings (superior off-road capability), while Tata Motors India boasts a strong position in the domestic commercial vehicle market. We also note positively Tata Group’s reputation and the likelihood of extraordinary support from parent Tata Sons.

Our fundamental Credit Bias on Tata Motors is “Negative”. This is due to JLR’s weak sales and production, in turn owing to the ongoing semiconductor shortage.

Controversies are “Immaterial” and the ESG Impact on Credit is “Neutral”. The auto industry is exposed to environmental risks in general, with stringent regulations pushing the industry towards zero-emissions vehicles and away from others (e.g. diesel). The industry is also exposed to fines related to the disclosure of emissions or manipulation of test results to attain certain emissions standards.

That said, Tata Motors has navigated the challenging operating environment very well in the wake of Volkswagen’s emissions scandal. The company has not been penalised by regulators.

• Interpublic Group reported another strong quarter surpassing Wall Street expectations in terms of both, revenues as well as earnings.
• Organic net revenue growth of the company has been consistent growth and has been seen in the company’s U.S. and other international markets.
• Interpublic Group remains a highly client-centric organization, and its culture and major involvement with its clients involve custom solutions.

• VF Corporation gave a mixed performance in their last quarter with growth in its big four brands as well as a healthy top-line performance beyond expectations.
• The growth in the quarter was driven by the footwear of men led by seasonal executions, trekkers, and lifestyle hikes.
• We provide the stock of VF Corp with a ‘Hold’ rating and a revision in the target price.

• Community group buying is a type of B2C e-commerce where purchases are instigated or influenced not by individual buyers alone, but by reseller agents or a group of fellow consumers

• Community group buying is a 3-5bn USD market in Southeast Asia today; future outlook depends on how well current players will be able to continue to innovate

• In its most basic form, Community group buying is innovating by introducing agents of resellers who can take on the tasks performed by traditional distributors or retailers