Consumer Staples
Looking to raise US$375m in its upcoming IPO - TH operates a network of retail stores in Japan that offer one-stop shopping under its EDLP model. On the back of store addition (added 40 stores FY19-1H23; plans to add >20 more each year from FY24 onwards) and strong SSSG, FY22 sales were up 12.4% Y/Y, while 1H23 sales were up 10.9% Y/Y. However, the company’s net profit margin remains wafer thin at just 1%. In addition, TH's focus on low prices might make it difficult for it to pass on some of the recent price increases in food items. Finally, there are a lot of small shareholders who will still own ~16% of the company. Post lock up (180 days) they may well look to sell more shares.
Edition: 156
- 17 March, 2023