Consumer Archives | Page 52 of 122 | Smartkarma

• Yesterday after the close, Fast Retailing (9983 JP) reported salutary Q3 earnings, and raised its full-year (to August) guidance and its final dividend forecast (by ¥50/share)
• Q3 revenue and profit gained sharply (Rev +13.5%, OP +31.2%) everywhere but Greater China. OPMs were up, especially in Japan. Early summer has been good, despite FX impact. 
• New guidance is above consensus, the ADR popped, and with slightly stronger yen on US CPI, that should help. But we approach end-July. Expect lots of pop-sellers.

• Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations. 
• Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19% 
• Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium

• ADF Foods (ADFL IN) is undergoing significant expansions, including brownfield projects in Nadiad and Nasik, and a greenfield project in Surat.
• These projects are expected to boost revenue significantly, enhance operational efficiency, and support the company’s growth plans.
• Company will almost double its revenue in 3 years and similarly PAT will also grow, which makes it attractive on valuation side as well. 

• Jollibee Foods (JFC PM) recently acquired Compose Coffee, the second-largest take-out chain in South Korea’s competitive value coffee retail segment.
• While the acquisition presents growth opportunities for Jollibee, the intense competition and inherent challenges of the value coffee retail segment warrant caution.
• With Jollibee’s Coffee & Tea business vertical now growing into a meaningful size, we recommend listing it separately to enhance visibility, accountability and unlock shareholder value.

• Saint Bella (SAINT HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by UBS and Citic Securities.
• Saint Bella (SB) is a comprehensive family care group in China, focusing on premium services and products that addresses demand from the lifestyle-minded younger generation. 
• It is the largest postpartum care and recovery group in terms of revenue from ultra-premium postpartum centers in 2023, according to F&S.

• On 5th July 2024, Taste Gourmet (8371 HK)  submitted an application to Hkex to transfer the listing of all its issued Shares from GEM to the Main Board. 
• The company’s case is strong as it meets all the criteria proposed by the exchange, but there is no assurance that it will obtain relevant approval from the exchange. 
• Trading at 6.4x/5.2x PE FY24/25e with 25% of the market cap in net cash and a trailing yield of 8.5%, we believe a mainboard listing would provide incremental visibility. 

• Within Consumer, we see Health & Personal Care as mostly defensive.
• While perfect conditions are hard to align, or remain, these days, we see mostly favorable conditions ahead for this segment, at least where it matters the most.
• Throughout the last years, consumers have faced a wide array of HPC options, some of them later phased out as companies started to focus on their core products amid rising costs.

• Sales increased by 7.4% YoY to JPY47.5bn, driven by store expansion and effective product and sales strategies.
• Operating profit decreased by 38.6% YoY to JPY880mn, impacted by rising labor and raw material costs.
• Net income attributable to owners of the parent fell by 33.5% YoY to JPY681mn, despite higher sales and price revisions.

• SPB plans to spin-off its home & personal care (HPC) business into a separate listed company (SpinCo). The parent will retain Global Pet Care and Home & Garden business units.
• The separation will allow SPB to allocate capital and resources more efficiently towards higher growth categories.  SPB (ex SpinCo) will be a higher-growth, higher margin business.
• HPC business (low-growth and low-margin) has been a drag on the overall valuation of SPB. The spin-off will unlock value as SPB (ex SpinCo) will command higher multiple post spin.

• Target aggressively markdown prices to clear excess inventory and maintain momentum in the business
• Despite challenges, Target navigated through the shifting consumer landscape and drove positive sales growth, albeit at a slower rate
• Target strategically adjusted inventory management and focused on growing categories to stay strong in the retail 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.

• Founder/CEO Mohamed Salleh Maricar (MSM) and his family have made a voluntary unconditional general Offer for the 14.94% in gold/jewellery retailer Second Chance Properties (SCE SP) (“SCP”) not held.
• The S$0.30/share cash Offer is a 39.5% premium to last close. The Offer price is final.
• The Offer is unconditional in all respects. This will trade tight. A delisting Offer is next on the cards.

• The Hong Kong Television Network (1137 HK) vote on the share buyback for a maximum of 100.0m or 11.25% of outstanding shares at HK$2.15 was comfortably passed at the EGM.
• The partial offer is designed to help the co-founders bypass the creeper rule and increase their grip on the shares. There is no minimum acceptance condition. 
• While the IFA opines the offer is fair and reasonable, it is unattractive. A 100% minority participation rate implies a minimum proration of 20.74%. The offer closes on 23 July.  

• Last month, apparel play Shinsung Tongsang (005390 KS) announced a Tender Offer from Canaan Co for 22.02% of shares out, at ₩2,300/share, a 15.84% premium to undisturbed.
• Canaan Co. and related parties hold a combined stake of 77.68%, which increases to 99.7% IF the Offer is successful. Canaan needs 95% to force delisting. 
• Shinsung’s share price has languished over the past 12 months or so, despite improving market share and earnings. Getting to 95% might be a stretch. In need of a bump?

• Energy Growth: Tesla’s energy storage business surged to 9.4 GWh in Q2, a 135% increase from Q1’s 4 GWh.
• China’s Impact: Shanghai Gigafactory shipments fell 24.2% YoY in June, delivering 71,007 units amid a Chinese price war.
• FSD & Robotaxi: Full Self-Driving price cut to $8,000 from $15,000; investors await Robotaxi Day on 8/8.

• Second Chance Properties (SCE SP) has disclosed a voluntary unconditional offer from Mohamed Salleh’s family at S$0.30 per share, a 39.5% premium to the undisturbed price (10 July).
• The offer document will be despatched by 31 July. The offeree circular will be despatched by 7 August at the earliest, implying the earliest close of 28 August.
• The offer price has been declared final and is attractive as it represents an all-time high. The offeror will likely achieve the 90% compulsory acquisition threshold.

• The Technical Advisory Committee (CAT) in an extraordinary meeting adds Puig Brands (PUIG SM) to the IBEX 35 index and removes Melia Hotels International Sa (MEL SM).
• Although Puig Brands has only been publicly traded since 3 May, its market value exceeds €14.5 billion and its trading volume makes it deserving of a spot in the IBEX.
• Puig Brands is expected to see at least a 50% increase in trading volume by July 22, potentially adding four to eight additional days of trading volume.

• Recent acreage report shows benign planting figures and solid ending stocks for Corn sending its prices lower. Wheat also declined on higher stocks, while Soybeans rebounded.
• Wheat faces headwinds & tailwinds. Fundamentals are dragged down by favorable weather in exporting countries & imminent US harvest; Strong US demand & weak EU forecast has supported prices.
• Soybeans appear well supported from an unlikely ally in Trump. Import Duty tit-for-tat could see China slapping duty on Soy imports.

• We are reiterating our Buy rating, $25 price target and projections for Vera Bradley as we look forward to 2H24.
• Not surprisingly, our focus is on the start of the New Day, which is the relaunch of the company’s main line stores to reflect management’s vision, scheduled for July 11th, and the associated shifts for the company’s outlet locations in August.
• We believe this shift, which will impact all pieces of the store (and online) shopping experience, represents a bold move by management to fundamentally change the Vera Bradley shopping experience, making it more relevant to a wider range of consumers, easier to shop and offering both the pattern driven and feature driven shoppers compelling choices.

• We are reiterating our Buy rating, $3 price target and projections for Vince as we look forward to 2H24.
• We believe, as the company finally enters a period of “apples to apples” comparisons, Vince will be able to fully demonstrate the material positives blooming in the business model, from strong fashion looks, lower discounting in the outlet and main line channels, gains from better sourcing and a continued emphasis on cost controls.
• Further, as 2H rolls forward as a positive, we believe the company will be able to, on a much more credible basis, focus investors on the potential material gains from increasing the overall penetration in men’s wear, adding more stores to the mix and expanding internationally, all of which should refocus investors on VNCE.

• Hurricane Beryl started out as a category 5 hurricane, made landfall on the Texas Coast early Monday (08/July) & weakened to a Tropical Depression.
• Beryl has weakened and likely not significantly impact corn and soybean prices in the long run. Storm led rains will likely have a bearish effect on prices.
• Beryl might bring much needed rain to Illinois, Indiana, and parts of Ohio, potentially providing favorable weather for corn and soybean growth in these areas.

• Last September in the release of its new Mid-Term Management Plan, Toyota Group member Aisin (7259 JP) announced a plan to cut cross-holdings to zero. JTEKT Corp (6473 JP) followed suit.
• It started with a selldown of Denso Corp (6902 JP), then Toyota Industries (6201 JP), now Aisin. Last FY, Toyota Group cos reduced crossholdings by ¥870bn. This year will be more.
• Attached below is a general breakdown of Toyota Group cross-holdings, discussion of cross-holding policies, and analysis of what is next, and what is not.

• The review period for the Nikkei 225 Index September rebalance ends in three weeks. There could be three changes at the rebalance with sector balance used for the additions.
• Depending on the changes, passive trackers will need to buy between 3-57x ADV (2.4%-24% of real float) on the inclusions and sell between 3.7-8.4x ADV on the deletions.
• Fast Retailing (9983 JP)‘s index weight is currently higher than 10% and that will result in capping in September. Passives will need to sell 6x ADV in the stock.

• Hyundai Motor India (HMIL) saw a market share loss in India Passenger Vehicles sales reported for June 2024 and 1QFY2025, impacted by intensified competition in the SUV segment.
• Mahindra & Mahindra, and Toyota Kirloskar India gained market share in 1QFY2025 led by upgraded model launches in the SUV segment, traditionally a strong category for HMIL.
• HMIL’s declining market share, if not reversed soon, could challenge optimistic growth projections and valuation multiples for its upcoming IPO.

• Back in May, online shopping platform play Hong Kong Television Network (1137 HK) announced a buy-back of 11.25% of shares out, at $2.15/share, a mediocre 20.8% premium to undisturbed.
• The thrust of the Offer was to lift co-founder Ricky Wong’s stake to 51.55% from 45.75%.  But that required independent shareholders approving a whitewash waiver not to make a MGO.
• I didn’t expect shareholder pushback. And there wasn’t. Tendering closes on the 23rd July. Keep an eye on CCASS movements. Shares gained 4.7% yesterday prior to the EGM outcome. Mmm.

• Mercari’s US operations, responsible for major losses, saw a workforce reduction by 45%, potentially preceding a market exit to improve overall margins.
• Fintech growth is strong, with Mercari issuing over 3 million credit cards, achieving a 67% YoY credit balance increase, despite current operational losses
• Mercari Hallo, an on-demand work platform, has rapidly gained users and business partners, positioning it to capitalize on Japan’s growing gig economy.

• We continue to play the hand we have been dealt; i.e., riding the trend higher on the SPX and Nasdaq 100, and being overweight large-cap growth
• Russell 1000 GrowthVs.Value ratio is breaking out from a 4-year base, suggesting growth’s outperformance is likely to continue in the months ahead. Growth outperforming during bull markets is no surprise.
• Latest bullish developments include the equal-weighted Nasdaq 100 (QQQE) breaking out from a 4-month base, while Discretionary (XLY) displays a 6-month base breakout and RS is reversing its YTD downtrend

• CarMax has reported its fiscal 2025 first quarter results, revealing a mixed financial scenario.
• This analysis aims to objectively evaluate the performance by weighing the key positives and negatives reflected in the data and future company outlook.
• Starting with the positives, CarMax noted several encouraging business trends, such as a stabilization in vehicle values and a decrease in average vehicle selling prices, which fell by approximately $700 per unit.

• We are reiterating our Buy rating.
• $0.25 price target and projections for Starco Brands as we look at key trends for 2H24 and beyond.
• We believe 2024, while somewhat frustrating from an investor standpoint (given the downward revenue guidance and pulling of EBITDA guidance after 1Q), will be seen as a positive over the longer term, as the company has made material steps forward for all of their brands, positioning Starco for significant top line growth and going forward, material operating leverage, which we believe will become increasingly self-evident in 2025 and beyond.

• We are reiterating our Buy rating, $17 price target and projections for Lands’ End as we look at key trends for 2HFY24 and beyond.
• We believe management’s focus on reducing discounting, material product newness and excitement, telling product “stories” focused on key differentiating features, and shifting the product mix to higher levels of licensing, has been a hit, and we believe FY24 will continue to demonstrate there remain material upgrades still to come, with the potential for further top andbottom line upside.
• Further, with international top line growth nearing, digital marketplaces remaining a plus and the full positive margin impact of licensing still on tap, we believe there remain further catalysts going forward.

• We are reiterating our Buy rating, $41 price target and projections after visiting franchised stores in Milan, Italy.
• With the company ramping up penetration with commercial partners and international franchisees, we believe it will be increasingly important for investors to understand and appreciate what we believe are the impressive economics of the franchised Build-A-Bear business.
• Our Milan visits reiterated both the ability to recreate the experiential aspect of the Build-A-Bear operating model with partners and what we believe can be the lucrative nature of the business.

• Despite the significant offering size, passive fund demand is unlikely to materialize due to non-strategic selling shareholders.
• Company’s number of shares and free float in the main global indices are forecasted to remain the same before and after the offering.
• Upcoming buybacks can lead to a decrease in float shares which can even cause passive fund supply at a subsequent quarterly review.

• On 21 June 2024, Canaan Co. announced a tender offer and taking private of Shinsung Tongsang. Tender offered shares are 31.664 million shares, representing 22.02% of outstanding shares.
• It could be difficult to complete this tender offer at 2,300 won, because there could be many investors that simply refuse to sell their shares at such low valuations.
• On the business side, the company has successfully captured higher market share and enjoyed higher profit margins especially for the Top Ten apparel brand, taking away market share from Uniqlo.

• Around a third of the way though the review period, there could be 4 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the December rebalance.
• The impact on the potential inclusions ranges from 0.6-21 days of ADV while the impact on the potential deletions varies from 2.5-16 days of ADV.
• The potential adds have outperformed the potential deletions over the last few months and there could be more to go with short selling banned.

• Johor Plantations Group (2368120D MK) raised around US$156m in its Malaysia IPO. The IPO consisted of both primary and secondary shares.
• Johor Plantations Group (JPG) is an upstream oil palm plantation firm operating predominantly in Johor, Malaysia.
• We have covered various aspects of the deal in our previous notes. In this note, we will talk about the demand and trading dynamics.

• On 8 July (ahead of 19 July PUSU deadline), Carlsberg and Britvic PLC agreed a 1,315p/share offer, 5% above the prior one (I mentioned that an improved offer could come >1,300p).
• The offer represents a 12.6x EV/fwd EBITDA, above the 10-y 10.6x average, which seems reasonable, although interestingly, there are no irrevocable undertakings from any of the top shareholders.
• The offer price is towards my bull case and Britvic’s shareholders are capturing a good part of the synergies. Spread is 3.98%/5.93% (gross/annualised, assuming settlement by 15 March). Long.

• Matahari Department Store (LPPF IJ) results reflected a positive impact from the timing of Lebaran although the like-for-like comparisons were slightly below management expectations., although SSSG remains very strong YoY. 
• Management highlighted that better inventory controls meant that inventory levels finished 1Q2024 at significantly lower levels versus last year, with effective cost controls resulting in better EBITDA and net margins. 
• The company will slow its new store build-out to focus on improving the productivity of existing stores, with refurbishment of six stores and improving merchandise mix driving growth. 

• Zhou Liu Fu Jewellery Co., Ltd. (1716396D CH) is looking to raise US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC and China Securities.
• Zhou Liu Fu Jewellery (ZLFJ) is a jewelry company in China with a network of offline stores and online sales channels.
• According to F&S, the firm is ranked among the five largest brands in the Chinese jewelry market between 2017 to 2023 in terms of number of stores in China.

• The Walt Disney Company is a diversified worldwide entertainment company. The Company’s segments include Entertainment, Sports and Experiences.
• The Entertainment segment generally encompasses the Company’s non- sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distri- bution activities.
• Its line of business includes Linear Networks, Direct-to-Consumer, and Content Sales/Licensing. 

• “Life is like a cup of coffee, it is best made with love…” I’ve loosely followed Farmer Bros (FARM) for quite some time but a series of events triggered me to revisit the situation.
• Part of my New Year’s resolution was to go cold turkey on my addiction of the highly acidic blend of roasted Robusta and Liberica black coffee one would find all over Singapore, typically consumed sugarless and without milk for the true aficionados – their presence never going unnoticed as every sip leaves an unmistakable yellow taint on the crooked canvas assembled right behind those lips.
• This turkey survived for quite a bit until two weeks ago … I took a short trip to Shanghai to visit some buddies (will be flying to Bangkok in a week – drop me an email if you’d like to grab a drink) and in the spirit of “whatever happens on vacation, stays on vacation” decided to steal a couple cups of freshly brewed black coffee to tide through the day, especially after a number of late drunken nights.

• Valuation should not be the main factor when considering shorting DKNG
• Strong momentum in 2023 is waning, leading to focus on financials and valuation
• Competition intensifying and low margins in sports betting market may pose challenges for DKNG as investors shift focus to financial performance

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.

• EU, like the US, is considering lowering “de minimis” import threshold, soon
• Lowering import value thresholds or raising reporting requirements could make SHEIN/Temu/AliExpress goods more expensive, and fulfillment more onerous
• Threat of “de minimis” changes coming just as SHEIN reportedly seeks an IPO

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPO front, we looked at the recently launced offerings of Timee Inc , Chenqi Technology Limited and Cirrus Aircraft.
• On the placement front, this week too was dominated by the cross-shareholding unwinds, this time in Honda Motor (7267 JP).

• With just over a third of the review period complete, there could be 12 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX EQUITY) at the December rebalance.
• Even with 12 potential changes, there is sector balance with over half the changes in the Information Technology sector. Passive trading impact varies from 0.04-4.1x ADV.
• The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index (KOSDQ150 INDEX) since the start of the year with a big move higher since mid-May.

• Since TSE’s request, more companies have used ROE or ROIC as KPIs in mid-term management plans, but even now, more companies only indicate targets for sales, operating profit, etc.
• Larger companies have been the first to raise ROE; the key will be for smaller companies, which have been slower to improve their ROE, to raise their ROE.
• Many companies have only just begun to reduce their policy shareholdings and strengthen shareholder returns, and are still in the process of addressing the core issue of increasing profit margins.

• BYD’s sales volume increased by 35% YoY in June and by 39% YoY in 2Q24.
• Tesla’s Model Y is on the state-owned corporation procurement catalogs.
• Microsoft plans to close its franchised store chain in China due to the weak demand for Surface.

• Corn and Wheat planted acreage are down 3% and 5% YoY, respectively. Meanwhile, Soybean total planted area is up by 5% YoY compared to 2023.
• Planted acreage and ending stocks drove prices down for wheat and corn. Soybeans bucked the trend as reported acreage fell short of WASDE estimates by 400k acres.
• A positive picture for 2024 planting season is visible, with the early benefits of warm temperatures and improved moisture levels setting the stage for strong yields.

• CARD is a UK microcap retailer with impressive qualities despite appearing unattractive at first glance
• The company has shown consistent growth and gains market share each year in a stagnant market
• With a strong balance sheet, high return on capital employed, and efficient CEO, CARD presents a compelling investment opportunity at a low valuation

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.

• I tally 49 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Just one new deal was discussed this week on Smartkarma: Sermsuk PCL (SSC TB)‘s Delisting Offer. There are also rumours of an Offer for Raffles Medical Group (RFMD SP).
• Key updates took place on: L’Occitane (973 HK), Shinko Electric Industries (6967 JP), MMA Offshore (MRM AU), and Hollysys Automation Technologies (HOLI US).

• Chow Tai Fook Jewellery’s shares are down 28.2% YTD, sharply underperforming the Hang Seng Index which is up 6% in the same period. We believe this divergence is excessive. 
• Chow Tai Fook’s dividend yield averaged 4.8% from FY20 to FY24. Its annual dividend payout averaged 107% in the same period.
• Chai Tai Fook is currently trading at attractive valuations. It is trading at P/E of 10.1x, EV/EBITDA of 7.5x, and P/B of 2.9x based on FY25 consensus earnings estimates. 

• Berli Jucker’s modern trade supply chain under Big C continues to benefit from the tourism recovery, with 25 dedicated tourism stores and another 35 secondary tourism stores. 
• Tourism stores carry a slightly different mix of SKUs versus regular stores, which generate higher margins. Big C continues to expand its store network and margins are moving upwards.
• Berli Jucker provides direct exposure to Big C but its other divisions including packaging and consumer supply chain provide exposure to both Thailand and Vietnam. Valuations are attractive versus history.

• It’s just a question of when, not if, the bubble bursts for Barito Renewables Energy (BREN IJ), which is up 1,200% since it October 2023 IPO. 
• A Reuters article suggests a ¥500bn secondary offering for Honda Motor (7267 JP). Honda has since said there is smoke. And we can assume there is fire.
• Loo Choon Yong, Raffles Medical Group (RFMD SP)‘s founder and major shareholder, continues to chip away at minorities, and now holds 54.944%,

• Since the US$1.1 billion secondary placement announcement, Aisin (7259 JP)’s shares are up 2.5% from the undisturbed price of JPY5,243 per share (27 June).
• Looking at recent large Japanese placements is instructive to understand the potential trading pattern. So far, Aisin’s shares have deviated from the pattern of previous large placements.
• The offering will likely be priced on 8 July. Investors who have participated in previous large Japanese placements tend to secure positive returns.

• SHEIN’s fast-fashion apparel is set to hit India through Reliance Retail’s platforms, marking a major comeback after the 2020 ban.
• This partnership could be a win-win, tapping into India’s booming fashion demand and offering Shein access to the world’s largest youth market, ahead of its proposed IPO.
• With Shein’s affordable styles and Reliance’s extensive network, this alliance targets the youth market, challenging brands like Tata Group’s Trent Ltd (TRENT IN) owned Zudio.

• Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
• Tesla delivered 443,956 vehicles in Q2 with production of 410,831 vehicles. It deployed a quarterly record of 9.4 GW hours of battery storage, its best quarter ever.
• Future remains uncertain for Tesla and its investors. Tesla shares are pricing in the launch of a lower priced model and Tesla’s Robotaxi on 8/8.

• Sales rose JPY1.5bn YoY (+2.9% YoY) to JPY51.4bn, driven by higher sales in domestic and overseas apparel businesses.
• Operating profit decreased JPY306mn YoY (-5.7% YoY) to JPY5.1bn due to a decline in domestic profit and wider overseas losses.
• Full-year forecasts revised for recurring profit and net income attributable to owners of the parent, reflecting better-than-expected affiliate performance.

• If a company hasn’t improved its return such as ROE, it’s difficult to buy its shares until the plan is more certain that cash flow will expand in the future.
• Since cash flow margin must be raised to increase cash flow, the ultimate goal is to achieve sales growth while raising the profit margin on sales.
• Cutting costs alone isn’t enough; cash must be used for investments that will lead to future growth, so cash must be used for growth investments as well as stock repurchases.

• Signet Jewelers delivered a performance that aligns with its guidance amidst a challenging retail environmen characterized by macroeconomic pressures and heightened discount activities in the jewelry sector.
• The company reported $1.5 billion in sales and $58 million in adjusted operating income, which falls within the upper half of its guidance range.
• The quarter saw a sluggish start but improved significantly with late Valentine’s Day shopping and further momentum through March and April.

• Meritage Homes commenced the year with a remarkable first quarter in 2024, demonstrating both strong execution and a robust demand environment, yet facing challenges due to the unpredictability of interest rates and increased land and material costs.
• On the performance front, Meritage Homes reported substantial gains, with first-quarter sales orders hitting a record 3,991 homes, reflecting a 14% year-over-year increase.
• This noteworthy jump was primarily driven by healthy spring sales, an 8% cancellation rate, and robust demand across all regions, particularly from entry-level homebuyers who make up more than 90% of the order volume.

• J&J Snack Foods recently reported fiscal results for the second quarter of 2024 and showcased a promising outcome, marked by significant sales and profit growth.
• The company’s strategy and operational efficiencies appear to be paying off, with net sales reaching $357 million, an increase of 6.5% compared to the prior year.
• This results from a combination of higher volumes, new business performance, and continued robust sales in major segments like Foodservice and Retail.

• Under Armour, the prominent athletic performance brand, reported their Q4 2024 earnings.
• While the brand maintains a strong foundation and reputation amongst consumers, recent changes in leadership and the COVID 19 pandemic have presented challenges to the company’s operations, including increased competition and changes in consumer shopping behavior.
• The company expressed a commitment to improvement by prioritizing clarity and stability amid rapid executive team changes and industry shifts.

• We are reiterating our Buy rating and $22.50 price target and slightly back-end loading our 2024 projections after reviewing the July catalog and recent foreign exchange swings between the Mexican Peso and USD.
• July continued to demonstrate normalizing trends in the Betterware catalog, with SKU levels up YoY and discounting remaining down, as the division begins to compare against more normalized results from the prior year, as supply chains reset at more historic levels.
• That said, overall pricing power remains somewhat constrained, as YoY pricing dropped 8.4%, the sixth drop, and deepest decline, this year.

• Just pre-close on 2 July, Reuters carried an article suggesting a ¥500bn secondary offering in Honda Motor (7267 JP) as insurers sold. The stock fell 4% in minutes. 
• Honda semi-confirmed but it took two days to get to the details, now out. The stock climbed in the meantime. 
• At launch, this deal is two-thirds covered by buyback + passive demand but the supply is heavily-weighted to retail. Cheaper than it looks, lots of moving parts. Read the details!

• Small cap Japanese manufacturer and purveyor of apparel Daidoh Ltd (3205 JP) has consistently been a target for value investors. In late 2022, Strategic Capital went over 5%.
• They have bought more, and as of end-March, they declared 24.85% of TSO (28% of voting rights), but they have 33%. They made proposals for the AGM. They won one. 
• Now Murakami-san has bought in, going over 5%. This gets interesting. Together they have 39.4% as of last week, and probably more now. That should get them 50+% next AGM/EGM.

• Honda Motor (7267 JP) has announced a secondary offering of up to 298.9 million shares (including overallotment). At the close, the offer, including overallotment, is worth JPY535 billion (US$3.3 million).
• The offering is another sign that the unwinding of cross-shareholdings is catching pace as part of Japan’s corporate governance reforms.
• Looking at recent large Japanese placements is instructive for understanding the potential offer price. The pricing date will fall between 17 and 22 July (likely 17 July).

• A group of shareholders aims to raise up to US$3.2bn via selling around 5% of Honda Motor (7267 JP) .
• The possibility of such a selldown was flagged earlier in the week by Reuters. Thus, the deal is well flagged.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Dollar has 15% market share in the Indian hosiery space with 2,000 products
• Strategically expanding the Distribution network by targeting specific areas with Lakshya   
• Integrated value chain from Spinning to stitching to marketing and distribution

• Denso Corp (6902 JP), Toyota Motor (7203 JP) and Toyota Industries (6201 JP) are looking to raise US$1.1bn from selling some of their stakes in Aisin (7259 JP).
• We have covered the background of the deal in our earlier note, Aisin Corp Placement – US$1.1bn Selldown by Toyota and DENSO.
• In this note, we talk about the updates since and look at the performance of some of the past large Japan deals.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Road King Infrastructure
• Samvardhana Motherson International Ltd
• Vedanta Resources

• Strong candidate for shorting in the short-run, potential to miss revenue consensus by 4-5ppt in Q1 2024
• Recommendation to short LULU US when share price is above USD410, price target of USD300 before next earnings date in May 2024
• Lululemon is a leading brand in women’s indoor training and yoga, overvalued and likely to see a decline in share price

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.

• Arcos Dorados Holdings Inc. recently discussed its financial performance for the first quarter of 2024, highlighting both favorable outcomes and challenges that depict a mixed fiscal environment.
• The company, a major player in the fast-food industry in Latin America and the Caribbean, operates primarily under the McDonald’s brand, holding exclusive rights to own, operate, and grant franchises in 20 countries.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• D’Ieteren Group plans to unlock value through an IPO of its majority-controlled subsidiary, Belron
• Belron is a leader in the global auto glass and repair industry with strong market shares and impressive operating margins
• Appointment of Carlos Brito as CEO signals focus on international expansion and recent investments value Belron at €17.5Bn, offering upside potential for D’Ieteren shareholders

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.

• Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
• Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies. 
• Of these, they have a combined stake of over US$1bn in 23 companies.

• The reason why investor engagement is effective is in the exercise of voting rights. Engagement is considered to have been effective around 2014, when foreign ownership exceeded 30%.
• Engagement is generally effective in the funds entrusted to GPIF, according to the results of the study. GPIF should raise fees to allow investment managers to engage in fruitful engagement.
• This tends to be a generic question for passive funds. If we expect engagement to be more effective in the future, we need to increase the number of active funds.

• Cirrus Aircraft (0153126D US) seeks to raise up to US$197m in its Hong Kong IPO.
• Cirrus Aircraft designs, develops, manufactures, and sells premium aircrafts. Its two aircraft product lines, the SR2X Series and the Vision Jet, are currently certified and validated in over 60 countries.
• In our previous notes, we talked about the company’s historical performance and PHIP updates. In this note, we undertake a quick peer comparison and share our thoughts on valuation.

• On 2 July, Paradise Co Ltd (034230 KS) announced that it will construct a new high end luxury hotel in Seoul spending about 500 billion won to 550 billion won. 
• We believe that this construction of the new luxury hotel will have a negative impact on shares of Paradise. 
• Rather than investing a large sum of money to build a new hotel, many investors would rather have preferred Paradise to increase share buybacks and dividends. 

• Thai Beverage (THBEV SP) is proposing to take 64.67%-held Sermsuk PCL (SSC TB)  private by way of a voluntary Delisting Offer.
• The Offer price is THB 63/share, a 27.9% premium to last close.
• This Delisting Offer requires a Scheme-like shareholder vote. Payment may occur late 4Q24. This is an illiquid arb.

• Allied Blenders & Distillers‘ recent IPO spotlighted India’s alcoholic beverage sector, which bucks global trends with strong volume and value growth.
• India is the third largest alcoholic beverage market globally, and the second largest for spirits. It is projected to grow at a CAGR of more than 10% over the near-term.
• Incumbent players in this highly regulated sector can benefit from strong market moats and evolving growth opportunities if they can effectively navigate the highly regulated business  environment.

• Newell Brands displayed a strong performance in its first quarter of 2024, reflecting continued progress in its strategic turnaround efforts.
• The company reported improvements across multiple metrics, including gross margin, operational efficiency, and core sales despite a challenging external environment.
• Moreover, Newell Brands maintained its full-year outlook and highlighted ongoing focus on operational excellence and innovation.

• Capri Holdings Limited recently reported its financial performance for the fourth quarter and full fiscal year of 2023.
• Despite facing numerous challenges, including an uncertain macroeconomic environment and specific difficulties in the Americas, the company managed to achieve high single-digit revenue growth and mid-single digit growth in earnings per share on a 52-week constant currency basis.
• However, these figures fell short of the company’s initial expectations.

• The Simply Good Foods Company reported its fiscal third-quarter results for 2024, reflecting a combination of growth and investment strategies aimed at harnessing both immediate gains and longer-term opportunities.
• The company’s results were favorable, with a reported net sales increase of 3.1% to $334.8 million, driven primarily by Quest’s volume growth.
• Notably, retail takeaway across measured and unmeasured channels outpaced net sales growth, reaching approximately 5%.

• Nomad Foods, a prominent player in the frozen foods industry, experienced a mixed first quarter in 2024, balancing resilience in certain metrics with notable challenges typical of the consumer goods sector amidst a complex economic landscape.
• The company reported a slight net sales increase of 1.1% and organic sales growth of 0.3%, aided by favorable foreign exchange rates.
• Impressively, Nomad Foods has maintained positive organic sales growth for seven consecutive quarters.

• Today just before the close, Reuters came out with an article saying Japan’s four major insurers and some financial institutions would offer ¥500bn of shares in a secondary offering.
• That implies about 275-280mm shares (insurers hold ~195mm). In May, Honda announced a ¥300bn buyback with earnings, with nothing done so far. 
• The supply/demand dynamics here are key. There are a lot of moving parts over time. Honda is cheaper than it looks but there are moving parts there too.

• We see 37 potential adds (including plenty of new listings) and 25 potential deletes (on market cap and liquidity) for the Hang Seng Composite Index in September.
• We expect 32 stocks to be added to Southbound Stock Connect following the rebalance while 24 stocks could be deleted from the trading link and become Sell-only.
• There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

• Domestic Uniqlo SSS (including e-commerce) were +14.9% in June. Positive
• Impressive +8.1% increase in customer traffic and +6.3% gain in per-customer spend
• I have a bearish view on Fast Retailing due to rich valuations (25x EV/EBIT). However, the share price may perform well in the run up to the Q3 report.

• Tripadvisor’s fourth quarter and full year 2023 financial results exceeded expectations with the company reporting revenue growth of 10% year-on-year amounting to $390 million in Q4.
• In the same period, the adjusted EBITDA was $84 million attributed to exceptional brand performance and marketing efficiencies.
• For the full year, the company reported a consolidated revenue growth of 20%, recording an all-time high of $1.8 billion, with adjusted EBITDA experiencing a 13% growth to $334 million.

• The problem with cross-shareholdings is not simply that they weigh heavily on ROE and ROA improvement, but also that they do not create tension in management.
• The degree of seriousness of the company’s efforts to reduce policy shareholdings is a measure of the improvement in return on capital. The level of seriousness must be monitored.
• The fact that there are inappropriate entries in the items required of prime market listed companies indicates that many companies are not suitable for prime market listed companies.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Casino Guichard-Perrachon’s ESG as “Adequate”, in line with its Environmental score, while the Social pillar is “Strong”. We assess Governance as “Weak” due to a lack of data following the company’s recent debt restructuring, which led to a change of control. Controversies are “Material”, while Disclosure is “Strong”. 

• We are reiterating our Buy rating, $37 price target and projections for Guess?
• after visiting stores in London.
• We believe the company has continued to raise their fashion game worldwide, increasing overall elevation levels and remaining focused on creating a global fashion powerhouse.

• Investment analysis and result summary for Freshpet’s first quarter of 2024 show a mixed yet optimistic outlook for the company’s financial and operational progress.
• The company reported a robust 34% increase in net sales amounting to $223.8 million, mainly driven by substantial volume growth of 31%.
• This positive development suggests a successful adaptation to significant pricing changes, highlighting effective management and resilient operational frameworks.

• Lancaster Colony Corporation recently reported its fiscal year 2024 third quarter results, highlighting a mixed performance with significant strategic adjustments.
• The company achieved record net sales and gross profit, with consolidated net sales increasing by 1.4% to $471.4 million and gross profit growing by 10.9% to $104.5 million.
• Notably, operating income saw a substantial rise of 19.5% to $35.1 million, reflecting robust underlying business performance despite some challenges.

• RaaS Research Group has published an update on cloud-based digital twin solution provider Pointerra (ASX:3DP) following the announcement it has been awarded a US$1.63m contract for a US Department of Energy programme to model a range of electric grid resilience investment scenarios by electric utilities.
• We see the contract as validation of Pointerra’s digital twin solution for managing large-scale physical inventory with the potential to provide the company with invaluable exposure to new and existing US clients in the US electric utility sector.
• We have not made any changes to our forecasts as a result of this announcement, although note that we have already factored in substantial revenue growth in FY25f.