Asia Consumer Research, Investory

Devi Subhakesan

Asia Consumer Research

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

Kimly Limited operates and manages coffee shops and food courts. The Company offers prepared foods and drinks for on-premise consumption. Kimly serves customers in Singapore.

<ul>
<li>The ramp-up in public housing supply in Singapore could be an opportunity for <a href="https://www.smartkarma.com/entities/kimly-ltd" target="_blank" data-smartkarma-citation="entities:28157:1" rel="noopener">Kimly Ltd</a> to fast-track expansion given its outlets, food-stalls are mostly located in public housing blocks. </li>
<li>Bigger F&amp;B retail players like Kimly are better positioned versus others to weather the multiple headwinds faced by Singapore F&amp;B retail sector today. </li>
<li>Upcoming 1H FY2023 results can trigger an up move in the stock <strong>if</strong> the company reports a meaningful margin recovery. Current undemanding valuations reflect heightened investor concerns.  </li>
</ul>


The ramp-up in public housing supply in Singapore could be an opportunity for Kimly Ltd to fast-track expansion given its outlets, food-stalls are mostly located in public housing blocks. 
Bigger F&amp;B retail players like Kimly are better positioned versus others to weather the multiple headwinds faced by Singapore F&amp;B retail sector today. 
Upcoming 1H FY2023 results can trigger an up move in the stock if the company reports a meaningful margin recovery. Current undemanding valuations reflect heightened investor concerns.  


Kimly (KMLY SP): Ramp up in Public Housing Supply, an Opportunity to Expand

Sheng Siong Group Ltd is a retailer in Singapore.  The Company operates a groceries chain across Singapore. Sheng Siong's stores provide fresh and chilled produce, seafood, meat and vegetables, processed, packaged and preserved food products as well as general merchandise such as toiletries and essential household items.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> management hinted at possible accelerated store growth referring to news reports about Singapore ramping up public housing to meet strong demand. </li>
<li>Singapore minister's comment on public housing BTO projects under construction to increase to 150 in 2025 (from 100 currently) suggests a strong project pipeline in the next few years too.</li>
<li>Muted 1Q2023 performance reported- decline in revenues and profits, yoy - in line with expectations as shopping 'normalize' post-COVID.</li>
</ul>



Sheng Siong (SSG SP) management hinted at possible accelerated store growth referring to news reports about Singapore ramping up public housing to meet strong demand. 
Singapore minister's comment on public housing BTO projects under construction to increase to 150 in 2025 (from 100 currently) suggests a strong project pipeline in the next few years too.
Muted 1Q2023 performance reported- decline in revenues and profits, yoy - in line with expectations as shopping 'normalize' post-COVID.


Sheng Siong (SSG SP): Upbeat on Potential Ramp up in Store Growth

Del Monte Pacific Limited produces and markets packaged vegetable and fruit, beverage and culinary products. The Group has the exclusive right to use the Del Monte brand for packaged products in the USA, South America, Philippines, the Indian subcontinent and Myanmar, and the S&W brand for both packaged and fresh products globally except Australia and New Zealand.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd" target="_blank" data-smartkarma-citation="entities:5051:1" rel="noopener">Del Monte Pacific</a> reported a steep decline in profits led by a fall in gross margins and a steep rise in interest costs for the quarter ending 31st Jan 2023.</li>
<li>The company's gearing has risen to 5.8x led by (1) the refinancing of preference shares and expensive debt (2) acquisition of the Kitchen basics brand (3) increased working capital loan.  </li>
<li>Del Monte's precariously bloated debt levels and tighter operating conditions, given inflation-led cost pressures and moderating demand, in the current high-interest rate environment heightens the company's financial risk.</li>
</ul>



Del Monte Pacific reported a steep decline in profits led by a fall in gross margins and a steep rise in interest costs for the quarter ending 31st Jan 2023.
The company's gearing has risen to 5.8x led by (1) the refinancing of preference shares and expensive debt (2) acquisition of the Kitchen basics brand (3) increased working capital loan.  
Del Monte's precariously bloated debt levels and tighter operating conditions, given inflation-led cost pressures and moderating demand, in the current high-interest rate environment heightens the company's financial risk.


Del Monte Pacific (DELM SP): Deep in Debt, Slipping Margins, Rising Rates - Perfect Storm?

<ul>
<li>Sheng Siong reported a notable decline in same-store sales and operating profits (ex-one off income) for 6M/FY Dec2022 even as it marginally increased annual dividend payout to 70.5%.</li>
<li>With Singapore's 10-year Gov. bond yields at 3.34% (vs. sub1%, 3 years ago), dividend yield players like Sheng Siong (SSG SP) may not offer attractive risk-reward at current levels.</li>
<li>Sheng Siong has traded at dividend yields ranging 3%-3.9% over past 3 years, mostly at a premium to Gov. bond yields. Given muted dividend growth potential, stock faces downside risk.</li>
</ul>


Sheng Siong reported a notable decline in same-store sales and operating profits (ex-one off income) for 6M/FY Dec2022 even as it marginally increased annual dividend payout to 70.5%.
With Singapore's 10-year Gov. bond yields at 3.34% (vs. sub1%, 3 years ago), dividend yield players like Sheng Siong (SSG SP) may not offer attractive risk-reward at current levels.
Sheng Siong has traded at dividend yields ranging 3%-3.9% over past 3 years, mostly at a premium to Gov. bond yields. Given muted dividend growth potential, stock faces downside risk.


Sheng Siong (SSG SP): Slowing Sales. Dividend Yield Not Rewarding Enough

Health And Happiness (H&H) / Equity Bottom-Up

Health and Happiness H&H International Holdings Ltd provides health care supplements. The Company offers pediatric nutritional and baby care products. Health and Happiness H&H International Holdings serves nutrition and wellness industries worldwide.

<ul>
<li>Despite the steep stock rebound following a strong recovery in sales, stock attracts modest valuations in line with Infant milk players. Re-rating potential exists from valuing high-growth segments differently.</li>
<li>Strong growth in Adult Nutrition and Pet products fueled overall sales. Baby Nutrition sales growth is muted and accounts for less than half of total sales (vs 2/3rd in 2020).</li>
<li>Stock rebound triggered by a recovery in Sep. quarter sales thanks to its diverse product portfolio, and prospects of a revival in cross-border trade following China opening its borders.</li>
</ul>


Despite the steep stock rebound following a strong recovery in sales, stock attracts modest valuations in line with Infant milk players. Re-rating potential exists from valuing high-growth segments differently.
Strong growth in Adult Nutrition and Pet products fueled overall sales. Baby Nutrition sales growth is muted and accounts for less than half of total sales (vs 2/3rd in 2020).
Stock rebound triggered by a recovery in Sep. quarter sales thanks to its diverse product portfolio, and prospects of a revival in cross-border trade following China opening its borders.


Health & Happiness (1112 HK): Up 100% Since Nov. 2022. Still Awaiting a Re-Rating Upside

Asia Consumer Sector Focus. Special interest - Emerging sector trends. Fundamental Research.

Experience: Equity research analyst with Buy and Sell-side Institutions. ASEAN, India & North Asia Markets. Consumer Discretionary, Media, Textiles, Oil, Gas & Coal sectors. 
Mindfulness and Meditation Enthusiast.

Devi Subhakesan
Asia Consumer Research
• Investory

Kimly (KMLY SP): Ramp up in Public Housing Supply, an Opportunity to Expand

Upcoming 1H FY2023 results can reverse the stock's downslide if the company reports a margin recovery. Current undemanding valuations, despite...

Devi Subhakesan

Sheng Siong (SSG SP): Upbeat on Potential Ramp up in Store Growth

Possible accelerated store growth as Singapore ramps up public housing to meet strong demand even as COVID-related project delays ease. Defensive...

Devi Subhakesan

Del Monte Pacific (DELM SP): Deep in Debt, Slipping Margins, Rising Rates - Perfect Storm?

Faces heightened financial risk despite seemingly inexpensive earnings multiples. Recovery in margins and cash flow is needed to minimize liquidity...

Devi Subhakesan

Sheng Siong (SSG SP): Slowing Sales. Dividend Yield Not Rewarding Enough

Downside risk at current levels given muted dividend growth outlook amidst strong Gov bond yields. Notable decline in same-store sales & operating...

Devi Subhakesan

Health & Happiness (1112 HK): Up 100% Since Nov. 2022. Still Awaiting a Re-Rating Upside

Modest valuations in line with Infant milk players despite growing exposure to Adult/Pet Nutrition products (50%+ of sales). Re-rating potential...

Devi Subhakesan