Smartkarma Daily Briefs

In the next webinar, we welcome Smartkarma Insight Provider Gauri Anand , who will be sharing with us her Top indian Equity Picks and the investment philosophy behind each of her picks. Have any burning questions about companies like Indian Energy Exchange (IEX IN), VA Tech Wabag (VATW IN), or UPL Ltd (UPLL IN)? Get them answered in the live Q&A that will conclude the session.

The webinar will be hosted on Wednesday, 21 December 2022, 17:00 SGT/HKT.

Gauri Anand is a mid-small cap specialist based in India. With a focus on equities, Gauri combs top down and bottom up approaches to identify themes and value stocks at its inflexion point. Sector agnostic with a value oriented – Inflexion approach, Gauri dives into bottom Up ideas with a biased towards Sustainability and ESG. 

• Richard Liu came back to manage JD.com after he resigned half a year ago.
• Alibaba Health revenue increased 23% YoY in 1H23, which benefited from hospitals being closed.
• Pinduoduo revenue increased by 65% YoY and operating profit increased 388% YoY in 3Q22.

• The revenue growth rate accelerated to 28% YoY in 3Q22 versus 16% YoY in 2Q22.
• Operating Loss was close to zero in 3Q22 and we believe it will turn positive in 2023.
• According to price / sales history, we believe the company has an upside of 89% for year end 2023.

• Aneka Gas is an interesting concept in that its product literally comes out of thin air given its position as Indonesia’s leading Industrial gas player with a 45% market share.
• The company provides investors with wide-ranging exposure to the Indonesian economy from industry to infrastructure, consumer goods, healthcare, and SME amongst others, which also reduces risk through diversity.
• Aneka Gas 9M2022 numbers reflected a change in revenue mix and demand for medical gas reduces post-COVID and other areas such as industry, retail, and infrastructure started to recover.

• Bilibili Inc (BILI US) reported 3Q2022 results Tuesday. 3Q revenue increased 11.3% YoY to RMB5.8bn (vs consensus RMB5.7bn) while operating losses for the quarter dropped to RMB1.8bn vs consensus RMB2.1bn.
• Recovery in mobile games biz alongside aggressive cost cutting measures supported improvement in Bilibili’s profitability during the quarter.
• Pandaily reported that Bilibili is exploring expanding into the SEA region and increased R&D spending could be an indication that plans are underway.  

• Daifuku is a growth stock that has fallen by 26% YTD reflecting near term risks to growth and margins
• We believe that Daifuku is a major beneficiary of continued investment in automation, especially in e-commerce and logistics
• We analyse Daifuku’s core valuation drivers and see around 16% upside for the stock

• ATRenew (RERE US) is one of the stocks in China that is starting to look very attractive after a sharp decline in its share price since its IPO.
• ATRenew has achieved noticeable improvements in operations and profitability in the recent quarter.
• Our base case valuation analysis suggests an implied market cap of US$720 million, representing an implied price of US$3.15 per share, representing an upside of 43% from current price.

• The cash comes from a one-off asset sale. CEL hasn’t been building cash on the balance sheet for years. While management has no intention of paying out the cash at present, they plan to use it for acquisitions. It won’t stay on the balance sheet for ever.

• CEL’s operating business is not a great business, but it’s not terrible either. CEL earned an average of 15% pretax on capital employed over the last three years (FY20-FY22). The operating business earns above its cost of capital, is consistently profitable and ~40% of earnings are paid out as dividends.

• Management has a lot of skin in the game. CEL’s founder and president, Masatsugu Shinno, owns 60% of the company, which aligns his interests with shareholders.

• NTGR held its annual investor day reflecting on the challenges it has incurred within retail and highlighting how consumer demand has remained strong for high-end devices and its 5G hotspot
• NTGR’s stock has been trading at levels valuing the Company near its working capital on fears the business would continue to generate losses
• NTGR’s transition in becoming a super-premium brand started over a year ago, but only in recent quarters has it began to take a bigger role on the consumer 

• JD.com Inc. (9618 HK)-backed ATRenew (RERE US), one of the pioneers of China’s circular economy, registered its first non-GAAP net profit in the 3Q22.
• The improvement pivoted off core business stability (consumer electronic devices recycling and sales) and an increasing revenue stream from its multi-category recycling business, including luxury goods.
• This is all positive. However ATR, like all US-listed China plays, faces the prospect of a potential delisting under the HFCAA just 16 months away.