Daily Brief Consumer: Mercedes-Benz Group , Havas SA, Alibaba Group Holding , Garrett Motion, BYD, Dentsu Inc, Games Workshop Group PLC, Connect, Dhampur Bio Organics and more

• Mercedes-Benz Group (MBG GR)’s EBIT fell 30% in 2024 and another 24% in Q12025; management expects significantly lower earnings &free cash flow in 2025 amid rising capex, weak pricing and tariffs
• China & JV Risk: 34% of units sold in China yield limited profit. EV price wars and slowing demand in the region continue to erode margins.
• Valuation Trap: Despite a low P/E (~8x FY25e), high dividend yield (~8%), the cheap valuation may be unsustainable as structural pressures mount from tariffs, EV transition costs, and falling RoS.

• Since I recommended Havas about a month and a half ago, the stock is up about 19% while the Euro has appreciated ~4%.
• As such, the position has appreciated by ~23% in a month and a half.
• While my price target of €1.89, implies additional upside of 20%, the stock is not as compelling of a bargain today. I plan to sell my HAVAS shares and redeploy proceeds into higher conviction ideas.

• Alibaba Cloud is doubling down on globalization with a bold new strategy and 380-billion-yuan ($52.7 billion) investment plan aimed at creating a unified global cloud network and accelerate the international rollout of its AI offerings.
• The initiative seeks to establish Alibaba Cloud as the digital backbone for China’s next generation of global companies.
• Speaking at the Alibaba Cloud “Go Global Summit” on Thursday, Wu Yongming, Alibaba Group CEO and Alibaba Cloud chairman, said China’s globalization is entering a new era — one led not just by product exports but by the global rise of Chinese technology, brands and advanced manufacturing.

• I’m closing my Garrett Motion (GTX) recommendation.
• I’ve been trying to understand why the stock has been so strong since reporting earnings, and I can’t figure it out.
• The quarter was fine but not exceptional. The story remains the same. 

• BYD (1211 HK) has been rallying hard since its 309.80 bottom in early april, the stock closed at 465.20 last Friday, a +50% rally! Probably well deserved.
• This insight analyzes the short-term tactical outlook on a WEEKLY time period basis. Our model finds that the stock is currently very overbought, however some upside is still possible.
• You may want to consider hedging your bets with some puts (probably cheap at this point), 1-2 weeks expiry, to protect against a (probably mild), upcoming pullback.

Dentsu Group’s Q125 figures show 0.2% organic net revenue growth and an improvement in operating margin. Japan performed well, with international operations more challenged. Dentsu’s new management plan aims to drive profitability and competitiveness, particularly ex-Japan. It targets up to ¥50bn of operating cost reductions, returning the group to consistent profit growth from FY27. The ¥50bn cost of reshaping the group weighs on FY25 profits but should result in a simpler organisation. A further ¥45bn will be invested over three years with the aim of no markets being loss-making by FY26. The group will focus on the key Japanese and US markets, with the international business centred on adding value to Dentsu’s existing strengths in media. The goal is to achieve a mid-teens return on equity by the plan’s completion.

Games Workshop Group’s year-end (2025) trading update shows a better Q4 than we expected, notably in its core business with high operational gearing. Licensing revenue and profit are broadly in line with our prior estimates. FY25 has been a great year, helped by the launch of the fourth edition of Age of Sigmar, following a strong FY24 when the tenth edition of 40K was released. All eyes will be on coming products in the next financial year. FY26 will begin to see the full-year impacts of the recent US tariffs but the weak US dollar versus sterling is not helpful for the translation of earnings.

Smiths News’ PBT increased by 11% in H125, a combination of higher profits and lower financing costs as both debt and debt margins declined. However, in addition to this and perhaps more exciting is confirmation that Smiths has appointed a managing director for its recycling operations from within the industry, a clear endorsement of the potential in this area. Furthermore, its new activities are already gathering momentum, which is mitigating the structural decline of the news and magazine activity and, we believe, has the potential to result in long-term profit growth. This in turn underpins cash generation and dividends, and could see further distributions. We have maintained our operating profit forecasts and valuation of 93p/share, but reduced our FY25 net debt estimate.

• DBOL reported a revenue increase in FY25, driven by sugar and country liquor segments, but faced profit headwinds from lower ethanol volumes and sugar recovery issues.
• Despite a challenging sugar season with reduced recovery rates and ethanol sector pressures, DBOL is strategically diversifying into grain-based ethanol and aggressively expanding its country liquor market share.
• The focus on varietal replacement in cane, commissioning of a grain distillery, and aiming for country liquor market share provide avenues for future margin improvement and stability, despite near-term risks.

Games Workshop Group’s year-end (2025) trading update shows a better Q4 than we expected, notably in its core business with high operational gearing. Licensing revenue and profit are broadly in line with our prior estimates. FY25 has been a great year, helped by the launch of the fourth edition of Age of Sigmar, following a strong FY24 when the tenth edition of 40K was released. All eyes will be on coming products in the next financial year. FY26 will begin to see the full-year impacts of the recent US tariffs but the weak US dollar versus sterling is not helpful for the translation of earnings.