Daily Brief Consumer: Mixue Group, Smithfield Foods, Guming Holdings, Fu Shou Yuan, Kimberly-Clark De Mexico-A, Dowlais Group and more

• Stock Exchange of Hong Kong issued a consultation paper titled Proposals to Optimise IPO Price Discovery and Open Market Requirements with new mechanisms proposed for the IPO in the future.
• In this note, we summarize key points for ECM investors and analyze the impact from a historical perspective the impact for ECM investors.
• We are of the view that overall the changes will benefit ECM investors by reallocating a portion of the profits from cornerstone investors.

• Spin-Off of WH Group’s could raise up to $939 million if priced at the high-end of the range
• The IPO is set to price on Monday January 27th for a Tuesday, January 28th debut
• Flash numbers revealed sales for the three months ended December 29, 2024 will range from $3,873 million to $3,953 million (prev. year $3,998 million)

• Guming Holdings (GUM HK) (Good me), a freshly-made tea store brand, is pre-marketing an HKEx IPO to raise US$300 million, according to press reports. 
• Guming is China’s largest mid-priced freshly-made tea store brand and the second largest freshly-made brand across all price ranges, regarding GMV in 2023.
• The bull case rests on a rising market share, strong franchisee profitability, top-tier revenue growth, high margins, cash generation and a strong balance sheet. 

• Guming Holdings (GUM HK), a leading player in China’s freshly-made branded beverage sector, is widely expected to launch its IPO soon.
• Guming’s Good Me brand is China’s largest mid-priced freshly-made tea store brand in terms of store count as well as GMV.
• Guming reported robust revenue and profit growth for first nine months of 2024 led by new store openings, although same-store sales declined due to rising competition and weak consumer spending.

• Fu Shou Yuan’s performance in full-year 2024 is likely to fall short of expectations. The current pain point is declining performance growth due to difficulty of expanding beyond Shanghai region.
• If Fu Shou Yuan’s dividends/stock buybacks are lower-than-expected, we don’t think the stock is worth holding for the long term, since long-term revenue growth rate would fall to single digit.
• Since high growth is difficult to achieve, it’s better to buy at a low price (e.g. PE of 10x).When valuation bounces back to 15x PE, investors could consider taking profits.

• Amid a more cautious view on FX we are lowering our estimates ahead of results.
• With c.60% of its raw materials dollarized —and fairly minimal sales exposure to the same currency—, Kimberly-Clark de México is in our view one of the most impacted companies amid recent FX turmoil.
• We thus lower our 4Q24 estimates onwards at the margin level, while slightly lowering our sales estimates.

• Dowlais Group Plc. has experienced a sharp decrease in share price in the past 18 months
• Current management is making improvements and conducting a strategic review of their powder metallurgy business
• Shareholders have the potential to see returns of 100-200% in the near future, making it an attractive investment opportunity

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.