Daily Brief Consumer: Kadokawa, Shimano Inc, Beenos Inc, Samyang Foods, Bloks Group, Nextage Co Ltd, LG Electronics India, PDD Holdings, CP Axtra , Industria De Diseno Textil SA and more

• Today, Kadokawa (9468 JP) announced it would sell ¥50bn of shares to Sony (6758 JP) in a 3rd Party Allotment to cement a Strategic/Capital Alliance. Sony will own 10% at ¥4,146/share.
• 40% of proceeds is to “create and develop new IP”, 60% is to “enhance global IP distribution”; both over 5yrs. Given ¥108bn of net cash/securities, this is a garbage reason. 
• Kadokawa shares have gained 44% in a month since Reuters carried an “Exclusive” article saying Sony was in talks to acquire Kadokawa. This is defensive entrenchment. The result will disappoint.

• Shimano, the Japanese maker of bicycle components and fishing equipment, is in need of a strategic gear change
• A significant -25% decline in FY23 net sales highlights Shimano’s struggles. Revenues dropped a further -11% in the first nine months of 2024
• For investors seeking opportunity at the bottom of the cycle, Shimano presents a compelling case. The stock is trading at 2.3x book value

• Early today, the Nikkei had an article saying LY (4689 JP) would launch a takeover of Beenos Inc (3328 JP). The stock went limit up. Shorts are many times ADV. 
• Post-Close, we get a deal much as implied by the Nikkei article. It seems light to me but the top three holders have agreed to the deal.
• Regulatory will take a couple of months. This will likely fall tomorrow. If you are a long-only fund holder, think about the alternatives (read the conclusions here).

• Local hedge funds, mainly prop traders and PEs, drove the price action in LS Electric and Hyundai Rotem, and are now leading net buying in Samyang Foods and Hyundai Mipo.
• Given the setup, it’s likely Samyang Foods and HD Hyundai Mipo will follow a similar move until mid-January when screening starts, so we should stay aware of this backdrop.
• This gives us a chance to capture upside. Plus, since Samyang Foods and Hyundai Mipo may pull back 30-40% post-screening, there’s also a solid opportunity during that dip.

• Bloks Group, founded in 2014, is China’s top assembly character toy company, targetting primiary school students.
• Bloks faces competition from multiple domestic competitors in a slow growing market. The company’s aggressive market expanison in the past 2 years has come at a significant cost .
• The IPO valuation may be high, considering the industry’s low barriers to entry and the company’s unstainable growth.

• Nextage is a prominent player in Japan’s fragmented used car dealer market
• The company is looking to grow through suburban superstores, similar to CarMax in the US
• Despite recent scandal involving competitors, Nextage is positioned for growth with potential for expansion in Japan’s used vehicle market

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Our base case valuation of LG Electronics India is implied market cap of 1,256 billion INR or US$14.7 billion.
• Several media accounts have mentioned that LGEI could be targeting a valuation of about US$13 billion to US$15 billion.
• LGEI’s valuation would need to be about US$13 billion or less in order for us to be Bullish on this IPO. 

• Temu, the Chinese cross-border e-commerce platform owned by PDD Holdings Inc. has suffered its first major setback since launching in 2022 after Vietnam banned its operations citing regulatory non-compliance only two months after it entered the market.
• Temu was ordered by the Ministry of Industry and Trade to stop using the Vietnamese language on its website and app, to notify customers that its e-commerce registration was under review, and to halt all marketing activities in the country, according to a report by Vietnam News Agency on Dec.
• The suspension is Temu’s first since expanding into more than 80 countries around the world.

• CP Axtra (CPAXT TB) has seen a heavy impact on its share price following an announcement it would invest THB12-15bn in a mixed-use property project with a related party. 
• Investing in malls is part of CP Axtra’s business although its major focus is on its retail business which includes wholesale under Makro and its Lotus hypermarket and supermarket businesses.  
• The sell-off looks overdone but has been clouded by the sale of shares in parent CP ALL by its vice-chairman ahead of the announcement raising further governance concerns. 

• Inditex’s success in fast fashion industry is attributed to vertical integration and decentralized decision making
• Alistair Whittet from Acus Partners discusses Inditex’s pivots and success in the fast fashion industry
• Inditex’s vertical integration and decentralized decision-making have been crucial to their success

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.