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Smartkarma Daily Briefs

Jun 15
0

Indonesia: Bank Jago Tbk PT, Fosun International and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • LQ45 Index Rebalance Preview (July 2022): Candidates for Change
  • Morning Views Asia: Adani Transmission, Bharti Airtel, Fosun International, Lenovo

LQ45 Index Rebalance Preview (July 2022): Candidates for Change

By Brian Freitas

Morning Views Asia: Adani Transmission, Bharti Airtel, Fosun International, Lenovo

By Charles Macgregor

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.

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Jun 15
0

Consumer: LG Energy Solution, KT&G Corporation, Carabao Group, Trent Ltd and more

By | Consumer, Daily Briefs

In today’s briefing:

  • FTSE GEIS Korea: Rebalancing Week Trades
  • FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy’s Potential Inclusion
  • KT&G Is a Prime Candidate for Corporate Activism in Korea
  • CBG : Promising Growth Outlook
  • Trent – Pursuing Aggressive Growth

FTSE GEIS Korea: Rebalancing Week Trades

By Sanghyun Park

  • We typically estimate the size of the FTSE All Cap tracking fund to be around $600B. However, empirically, one-third of this was witnessed in Korean stocks during the rebalancing week.
  • Estimating each passive flow based on this, we should expect LG Energy to receive the most significant flow at 1.16x ADTV from this point until the closing of this Friday. 
  • As for Kakao Pay, the FTSE announced an increase in the investability to 15.8% (due to Alipay’s block deals), offering a passive inflow of 0.36x ADTV.

FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy’s Potential Inclusion

By Sanghyun Park

  • Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.
  • LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.
  • In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.

KT&G Is a Prime Candidate for Corporate Activism in Korea

By Douglas Kim

  • In this insight, we discuss the major reasons why KT&G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.
  • KT&G shares are up 0.6% YTD, outperforming KOSPI which is down 16.3%. We believe KT&G shares are well poised to continue to outperform the market in the next 6-12 months. 
  • Corporate activists may be looking to force KT&G to cancel treasury shares. Also, there can be a case made to separate the non-tobacco businesses (including ginseng) from KT&G. 

CBG : Promising Growth Outlook

By Pi Research

  • The medium to long-term outlook looks promising,thanks to high demand for energy drinks across Asia-Pacific owing to trend of urbanization and rising disposable income. Meanwhile, 2H22 earnings are confirmed recovery 
  • More room to expand in Asia-Pacific Mordor Intelligence projected the Asia-Pacific energy drinks market value, which is the CBG key market focus to increase 8.46%CAGR in 2022-2027
  • China market (4% of total revenue in 2021) is one of the CBG’s key market given the largest size of energy drinks market in Asia-Pacific with plenty of opportunity 

Trent – Pursuing Aggressive Growth

By Motilal Oswal

  • Despite the adverse impact of COVID-19 over the last two years, Trent’s standalone revenue/PAT reported an encouraging CAGR of 11%/27% over FY20 to reach INR39b/INR2.5b, respectively, which was by far the best among peers.
  • However, due to the increased losses in its subsidiary (Booker India), Trent’s consolidated PAT (post-minority interest) contracted to INR346m in FY22 from INR1.0b in FY20.
  • Consolidated EBITDA (Pre IND-AS 116) posted a 7% CAGR to INR2.3b over FY20-22.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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Jun 15
0

China: Baidu, Dongyue Group, Orient Overseas International, WuXi AppTec Co Ltd, ClouDr Group, ZTO Express Cayman Inc and more

By | China, Daily Briefs

In today’s briefing:

  • Baidu: Can AI Cloud, Intelligent Driving Save the Day as Marketing Continues to Lose Market Share?
  • Dongyue (189 HK): Fast-Growing FCEV Play… With Baggage
  • OOIL (316 HK) Mature Rise
  • WuXi AppTec (603259.CH/2359.HK) – Behind the Proposed Disposal of A Shares
  • ClouDr IPO: Strong Business Model with Multiple Revenue Channels
  • ZTO Express (2057 HK/ZTO US): Growth at a Reasonable Price

Baidu: Can AI Cloud, Intelligent Driving Save the Day as Marketing Continues to Lose Market Share?

By Wium Malan, CFA

  • Chinese digital advertising revenue growth has slowed down considerably over the past 4 quarters and Baidu has continued to consistently lose market share to the broader industry.
  • Non-Marketing revenue has led the growth for Baidu over the past 2 years and now contributes roughly 26% to Baidu Core (excludes iQiyi) revenue.
  • On a PE basis, Baidu is trading at only a slight discount to global giant, Alphabet, which testifies to the negative impact on earnings expectations from Baidu’s growth engines.

Dongyue (189 HK): Fast-Growing FCEV Play… With Baggage

By David Blennerhassett

  • Dongyue Group (189 HK) is a leader in the manufacturing of fluorochemicals and organosilicons, and the largest player in second-generation refrigerants. 
  • FY21 profit was up 69% yoy. The company just announced profit in the first five months of 2022 recorded an increase of 170%+ compared to the corresponding period last year.
  • The trade pushback centers on corporate governance issues, both in Hong Kong and in the PRC.

OOIL (316 HK) Mature Rise

By Thomas Schroeder

  • OOIL’s (316 HK) macro uptrend remains intact but does exhibit some weak tactical signals for a pullback to the 200 support zone. 270 is the near sell zone.
  • Buy volumes on the rise in late May showed a slowing pace and the recent sell down saw sell volumes pick up. Wedge support is due to come under pressure.
  • RSI shows support pressure to break post uptick. WTI key levels to hold/break are 115 and 105 as pressure release valves.

WuXi AppTec (603259.CH/2359.HK) – Behind the Proposed Disposal of A Shares

By Xinyao (Criss) Wang

  • Our interpretation of WuXi AppTec’s proposed disposal is that its founder affiliates could be concerned about the Company’s future prospects, so they choose to offload in advance.
  • A possible reason for WuXi AppTec to highlight the optimism about its performance and deliver a prosperous outlook/positive signal to the market is to “shield” the implementation of its proposed disposal.
  • The risk is out of proportion to the opportunity. We advised investors to catch the rebound and offload rather than hold long term. It’s just temporary rebound not complete reversal.

ClouDr IPO: Strong Business Model with Multiple Revenue Channels

By Shifara Samsudeen, ACMA, CGMA

  • ClouDr was the largest digital chronic condition management solution provider in China. The company’ application for a HKEx IPO has been approved and plans to raise proceeds of around US$500m.
  • The company is well positioned to benefit from growing demand for digital healthcare marketing and services in China driven by increased health awareness, technological advancements and prevalence of chronic conditions.
  • In this insight, we examine the company’s business model, segments and financials.

ZTO Express (2057 HK/ZTO US): Growth at a Reasonable Price

By Osbert Tang, CFA

  • ZTO Express Cayman Inc (2057 HK) has outperformed industry volume growth in 1Q22 and such trend continues into 2Q22 with good ASP improvement and cost control. 
  • Its strong operating cash flow and declining capex will lead to an accumulation of cash over the next few years, adding to the 1Q22 net cash position of Rmb4.1bn. 
  • We think the stock’s underperformance against peers not warranted. With a below-sector earnings multiple, leadership position and successful business model, we consider ZTO a “Growth at a reasonable price”.

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Jun 15
0

Japan: Kansai Paint, Softbank Group, Tokyo Stock Exchange Tokyo Price Index Topix, Zenkoku Hosho and more

By | Daily Briefs, Japan

In today’s briefing:

  • Kansai Paint (4613) – Huge Buyback Launched
  • Softbank Group – Semiconductor Weakness Expands Discount
  • Japanese Companies Targeted by Activist Investors Not Thinking of Cash Allocation, Corporate Value?
  • Zenkoku Hosho (7164): Capital and Business Alliance with Shisoushin

Kansai Paint (4613) – Huge Buyback Launched

By Travis Lundy

  • Kansai Paint (4613 JP) today announced a very large buyback.
  • Given the shareholder structure, the 11.2% buyback may not have the direct market impact that one might think, but there are still ways to play this. 
  • Kansai Paint starts from a near 5-year low against three of four large competitors. And we have accretion and likely cross-holding unwinding. It’s not a bad story.

Softbank Group – Semiconductor Weakness Expands Discount

By Kirk Boodry

  • Tech weakness has not only eroded the underlying asset value but raised concerns on leverage and the potential for an ARM IPO. The discount expanded by 4pp in one week
  • The timing and pricing of an ARM IPO looks more precarious as the semiconductor sector fell 13% over two days and is now down 34% from all-time highs
  • Currency tailwinds have provided some offset with an unprecedented dollar move mimiting downside in Softbank shares to 8% YTD versus a 24% decline for the $-based ADR

Japanese Companies Targeted by Activist Investors Not Thinking of Cash Allocation, Corporate Value?

By Aki Matsumoto

  • I discuss the article with the argument that “Companies that have moved to take drastic shareholder returns in response to activist investors’ proposals have seen their share prices rise conspicuously.
  • When the stocks continues to slump and there are no positive factors to be found in a company’s performance, corporate actions such as TOBs and shareholder returns are the focus.
  • Companies that move aggressively to shareholder returns only after being proposed by activist investors have’t given much thought to cash allocation, cost of capital, and corporate value (shareholder return) before.

Zenkoku Hosho (7164): Capital and Business Alliance with Shisoushin

By Mita Securities

  • On June 13, Zenkoku Hosho (7164, the company) announced that it would enter into a capital and business alliance with Shikoku Sougou Shinyou (Shisoushin)
  • Shisoushin is a guarantee company established as a joint venture of the second-tier regional banks in Shikoku, and is engaged in the business of guaranteeing mortgages and consumer loans
  • The company now plans to acquire a 19.5% stake in Shisoushin

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Jun 15
0

Financials: Bank Jago Tbk PT, HDFC Bank, Tokyo Stock Exchange Tokyo Price Index Topix, ZAR 10Y, Zenkoku Hosho, Muthoot Finance, NFT, State Bank Of India and more

By | Daily Briefs, Financials

In today’s briefing:

  • LQ45 Index Rebalance Preview (July 2022): Candidates for Change
  • The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans
  • Japanese Companies Targeted by Activist Investors Not Thinking of Cash Allocation, Corporate Value?
  • South African Bonds Switch from Outperformers to Underperformers
  • Zenkoku Hosho (7164): Capital and Business Alliance with Shisoushin
  • Muthoot Finance – Channel Checks in Southern India: A Few Interesting Insights
  • Sporting Crypto – June 14th 2022: Steph Curry from NF3
  • State Bank of India – Well Poised to Sustain the Growth Momentum

LQ45 Index Rebalance Preview (July 2022): Candidates for Change

By Brian Freitas

The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans

By Hemindra Hazari

  • Issues with  HDFC Bank’s Head-MSME statements which analysts and shareholders need to consider. 
  • In MSME lending based on cash credit system verfication of stock statement is extremely important but there is no mention of it in his speech
  • HDFC Bank’s MSME loans growing at a rapid pace but asset quality remain sound. It appears HDFC Bank’s customers are very different as compared to the industry.

Japanese Companies Targeted by Activist Investors Not Thinking of Cash Allocation, Corporate Value?

By Aki Matsumoto

  • I discuss the article with the argument that “Companies that have moved to take drastic shareholder returns in response to activist investors’ proposals have seen their share prices rise conspicuously.
  • When the stocks continues to slump and there are no positive factors to be found in a company’s performance, corporate actions such as TOBs and shareholder returns are the focus.
  • Companies that move aggressively to shareholder returns only after being proposed by activist investors have’t given much thought to cash allocation, cost of capital, and corporate value (shareholder return) before.

South African Bonds Switch from Outperformers to Underperformers

By Gautam Jain, PhD, CFA

  • With US rates reaching the highest levels in a decade, it is not a surprise that the volatility is spilling over to emerging markets.
  • While South African local bonds had weathered the volatility in 2021 well, this time around, they have gone from outperforming against the rest of EM to underperforming.
  • Besides external drivers, domestic factors have turned negative as well – particularly rising inflation and worsening debt profile – indicating that rates in South Africa should continue to underperform.

Zenkoku Hosho (7164): Capital and Business Alliance with Shisoushin

By Mita Securities

  • On June 13, Zenkoku Hosho (7164, the company) announced that it would enter into a capital and business alliance with Shikoku Sougou Shinyou (Shisoushin)
  • Shisoushin is a guarantee company established as a joint venture of the second-tier regional banks in Shikoku, and is engaged in the business of guaranteeing mortgages and consumer loans
  • The company now plans to acquire a 19.5% stake in Shisoushin

Muthoot Finance – Channel Checks in Southern India: A Few Interesting Insights

By Motilal Oswal

  • Teaser rates have not gone away – 6.9% replaced with 9.9%-11.9% rates
  • We agree with consensus to the extent that the 6.9% p.a. (0.57%p.m.) products have been withdrawn by the gold loan NBFCs and that disbursement yields in 1QFY23-QTD are much better than the insanity that was evident in the gold lending segment in 4QFY22. 
  • However,westillchoosetocallthe9.9%-11.9%goldloanproductsasteaser- rate products since: a) these products are being offered at ticket sizes above INR50K (albeit with a lower LTV of 65%), and b) we believe that if MUTH continues to offer these interest rate products, there is a risk to the compression in the blended portfolio yields (in FY23E) despite the sequentially higher disbursement yields in 1QFY23E.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Sporting Crypto – June 14th 2022: Steph Curry from NF3

By Sporting Crypto

  • He, and Under Armour, who we’ve seen the superstar sporting for most of his career, launched the “Genesis Curry Flow” NFT to celebrate his record-breaking achievement for most 3-pointers in NBA history.
  • The NFTs sold out very quickly, and have had over 2000 ETH in trading volume since their creation.
  • The price of them, however, like most NFTs has dropped dramatically, but you’d still need to cough up about $100 to own a pair. And beyond the price, they do look really good, visually.

State Bank of India – Well Poised to Sustain the Growth Momentum

By Motilal Oswal

  • Digital penetration improving; remains watchful of rising rate environment
  • Loan growth gaining traction; utilization levels improving
  • Deposit share steady; high mix of floating loans to support NII growth

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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Jun 15
0

Macro: CX Daily: The Disarray in China’s Vocational Training System and more

By | Daily Briefs, Macro

In today’s briefing:

  • CX Daily: The Disarray in China’s Vocational Training System
  • South African Bonds Switch from Outperformers to Underperformers
  • Asian Monetary Policy: Growing Impetus For Graduated Rate Hikes In 2H22
  • UK: Strain Shows as Labour Cycle Turns

CX Daily: The Disarray in China’s Vocational Training System

By Caixin Global

  • Cover Story: The disarray in China’s vocational training system

  • China will go to war if ‘anyone dares’ aid Taiwan independence, defense minister warns

  • North China city launches flash campaign to curb gang violence amid national outcry

South African Bonds Switch from Outperformers to Underperformers

By Gautam Jain, PhD, CFA

  • With US rates reaching the highest levels in a decade, it is not a surprise that the volatility is spilling over to emerging markets.
  • While South African local bonds had weathered the volatility in 2021 well, this time around, they have gone from outperforming against the rest of EM to underperforming.
  • Besides external drivers, domestic factors have turned negative as well – particularly rising inflation and worsening debt profile – indicating that rates in South Africa should continue to underperform.

Asian Monetary Policy: Growing Impetus For Graduated Rate Hikes In 2H22

By Manu Bhaskaran

  • With major central banks ramping up rate hikes, slow action by emerging Asian central banks could produce financial stresses. 
  • Asian central banks have started raising rates and will step up the pace in 2H22.
  • A key caveat, is that Asian policy tightening can be less aggressive than in the US since most countries still have slack in their economies except South Korea & Singapore. 

UK: Strain Shows as Labour Cycle Turns

By Phil Rush

  • A shock spike in the UK unemployment rate broke its resilient trend. Less depressed labour force levels matter less than data about price-relevant gaps, like the UR.
  • The UR rise appears to be a genuine shift, despite the high demand for workers helping to drive higher wages. The wage trend appears comfortably above 4%.
  • The peak cyclical pressure in the UK labour market may have passed, with the UR trend turning and wage growth not rising as much. A burn-out phase may be starting.

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Jun 15
0

South Korea: LG Energy Solution, Samsung Electronics Pref Shares, KT&G Corporation, HYBE, POSCO Holdings and more

By | Daily Briefs, South Korea

In today’s briefing:

  • FTSE GEIS Korea: Rebalancing Week Trades
  • FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy’s Potential Inclusion
  • Samsung Electronics Yearend Special Dividend Projections
  • KT&G Is a Prime Candidate for Corporate Activism in Korea
  • HYBE: Consensus to Slash Earning Estimates Due to BTS Going on A “Temporary Break” For Solo Projects
  • Cargo Truckers Strike, Post Office Couriers Strike, & More Strikes Likely in Korea in 2022

FTSE GEIS Korea: Rebalancing Week Trades

By Sanghyun Park

  • We typically estimate the size of the FTSE All Cap tracking fund to be around $600B. However, empirically, one-third of this was witnessed in Korean stocks during the rebalancing week.
  • Estimating each passive flow based on this, we should expect LG Energy to receive the most significant flow at 1.16x ADTV from this point until the closing of this Friday. 
  • As for Kakao Pay, the FTSE announced an increase in the investability to 15.8% (due to Alipay’s block deals), offering a passive inflow of 0.36x ADTV.

FnGuide Top 10 (TIGER ETF) Rebalancing Review & Preview: LG Energy’s Potential Inclusion

By Sanghyun Park

  • Among the local theme ETFs in Korea, the TIGER (FnGuide) Top 10 has the highest win rate on rebalancing flow trade.
  • LG Energy deserves the most attention at the next rebalancing event. If LG Chem disposes of some of its LG Energy shares, LG Energy can bypass those on the borderline.
  • In this case, Shinhan, the one on the borderline at this point, will face a passive flow of -0.65x ADTV, while LG Energy will receive +0.25x.

Samsung Electronics Yearend Special Dividend Projections

By Sanghyun Park

  • This year’s consensus OCF is at least ₩75T, and CAPEX is ₩45T, less than last year. As a result, we will likely reach an FCF of ₩30T.
  • Then the yearend special DPS would be ₩764, which provides dividend yields of 2.97% (Ord) and 3.22% (Pref), respectively, even based on the conservative OCF estimates.
  • This is a sufficiently attractive dividend yield for Pref. Hence, unless the SEC’s price enters a sharp uptrend, the bullish Pref will likely continue. 

KT&G Is a Prime Candidate for Corporate Activism in Korea

By Douglas Kim

  • In this insight, we discuss the major reasons why KT&G Corporation (033780 KS) is a prime candidate for corporate activism in Korea.
  • KT&G shares are up 0.6% YTD, outperforming KOSPI which is down 16.3%. We believe KT&G shares are well poised to continue to outperform the market in the next 6-12 months. 
  • Corporate activists may be looking to force KT&G to cancel treasury shares. Also, there can be a case made to separate the non-tobacco businesses (including ginseng) from KT&G. 

HYBE: Consensus to Slash Earning Estimates Due to BTS Going on A “Temporary Break” For Solo Projects

By Douglas Kim

  • HYBE announced a major news which was that the BTS group will go on a “temporary break” so that its members could pursue various solo projects.
  • Rather, we believe the consensus sales and operating profit estimates will decline by 20-40% in 2023 and 2024.
  • If P/E multiple is lowered to 20x (2024E), this would suggest an implied market cap of 4.8 trillion won or 117,138 won per share, representing a further 39% downside risk. 

Cargo Truckers Strike, Post Office Couriers Strike, & More Strikes Likely in Korea in 2022

By Douglas Kim

  • Amid the global markets chaos, there has been a huge truckers strike in South Korea, causing havoc across many industries.
  • On 14 June, the Post Office Courier Labor Union (POCLU) also warned that it will strike soon.
  • The labor union strikes by major industry groups in Korea could pose another big headache on the Korean equity markets in 2022. 

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Jun 15
0

India: Go Air Limited, HDFC Bank, Fosun International, Trent Ltd, Muthoot Finance, Shree Cement, State Bank Of India and more

By | Daily Briefs, India

In today’s briefing:

  • Go Air (Go First) Pre-IPO – The Positives – Was Flying Reasonably High Pre-COVID
  • The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans
  • Morning Views Asia: Adani Transmission, Bharti Airtel, Fosun International, Lenovo
  • Go Air (Go First) Pre-IPO – The Negatives – Competition Is About to Pick-Up Again
  • Trent – Pursuing Aggressive Growth
  • Muthoot Finance – Channel Checks in Southern India: A Few Interesting Insights
  • Shree Cements Ltd. – Sluggish Demand in April’22; Cost Inflation Remains an Overhang
  • State Bank of India – Well Poised to Sustain the Growth Momentum

Go Air (Go First) Pre-IPO – The Positives – Was Flying Reasonably High Pre-COVID

By Sumeet Singh

  • GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia Industries (BRIT IN).
  • Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
  • In this note, we will talk about the positive aspects of the deal.

The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans

By Hemindra Hazari

  • Issues with  HDFC Bank’s Head-MSME statements which analysts and shareholders need to consider. 
  • In MSME lending based on cash credit system verfication of stock statement is extremely important but there is no mention of it in his speech
  • HDFC Bank’s MSME loans growing at a rapid pace but asset quality remain sound. It appears HDFC Bank’s customers are very different as compared to the industry.

Morning Views Asia: Adani Transmission, Bharti Airtel, Fosun International, Lenovo

By Charles Macgregor

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.

Go Air (Go First) Pre-IPO – The Negatives – Competition Is About to Pick-Up Again

By Sumeet Singh

  • GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia.
  • Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
  • In this note, we talk about the not so positive aspects of the deal.

Trent – Pursuing Aggressive Growth

By Motilal Oswal

  • Despite the adverse impact of COVID-19 over the last two years, Trent’s standalone revenue/PAT reported an encouraging CAGR of 11%/27% over FY20 to reach INR39b/INR2.5b, respectively, which was by far the best among peers.
  • However, due to the increased losses in its subsidiary (Booker India), Trent’s consolidated PAT (post-minority interest) contracted to INR346m in FY22 from INR1.0b in FY20.
  • Consolidated EBITDA (Pre IND-AS 116) posted a 7% CAGR to INR2.3b over FY20-22.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Muthoot Finance – Channel Checks in Southern India: A Few Interesting Insights

By Motilal Oswal

  • Teaser rates have not gone away – 6.9% replaced with 9.9%-11.9% rates
  • We agree with consensus to the extent that the 6.9% p.a. (0.57%p.m.) products have been withdrawn by the gold loan NBFCs and that disbursement yields in 1QFY23-QTD are much better than the insanity that was evident in the gold lending segment in 4QFY22. 
  • However,westillchoosetocallthe9.9%-11.9%goldloanproductsasteaser- rate products since: a) these products are being offered at ticket sizes above INR50K (albeit with a lower LTV of 65%), and b) we believe that if MUTH continues to offer these interest rate products, there is a risk to the compression in the blended portfolio yields (in FY23E) despite the sequentially higher disbursement yields in 1QFY23E.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Shree Cements Ltd. – Sluggish Demand in April’22; Cost Inflation Remains an Overhang

By Nirmal Bang

  • Eastern region poised to grow: Eastern states are comparatively under-developed and in the last few years, new cement companies have entered these markets and existing players have added capacities to capitalize on the potential boom in the region in the medium to long term.
  • SRCM has commissioned a third clinker line at Chhattisgarh (4mn mt), which will supply clinker to the recently commissioned grinding units in the Eastern markets.
  • The recent clinker capacity additions by SRCM and UTCEM are likely to result in higher supply in the near term. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

State Bank of India – Well Poised to Sustain the Growth Momentum

By Motilal Oswal

  • Digital penetration improving; remains watchful of rising rate environment
  • Loan growth gaining traction; utilization levels improving
  • Deposit share steady; high mix of floating loans to support NII growth

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

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Jun 15
0

Thailand: Carabao Group and more

By | Daily Briefs, Thailand

In today’s briefing:

  • CBG : Promising Growth Outlook

CBG : Promising Growth Outlook

By Pi Research

  • The medium to long-term outlook looks promising,thanks to high demand for energy drinks across Asia-Pacific owing to trend of urbanization and rising disposable income. Meanwhile, 2H22 earnings are confirmed recovery 
  • More room to expand in Asia-Pacific Mordor Intelligence projected the Asia-Pacific energy drinks market value, which is the CBG key market focus to increase 8.46%CAGR in 2022-2027
  • China market (4% of total revenue in 2021) is one of the CBG’s key market given the largest size of energy drinks market in Asia-Pacific with plenty of opportunity 

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Jun 15
0

Equity Bottom-Up: Sea Ltd, Softbank Group, Baidu, Thomson Medical Group Limited, HDFC Bank, HYBE, WuXi AppTec Co Ltd, POSCO Holdings, ZTO Express Cayman Inc, Carabao Group and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Sea Ltd: Mass Layoffs at Shopee, Tinkering Here and There Won’t Make Shopee A World-Class Business
  • Softbank Group – Semiconductor Weakness Expands Discount
  • Baidu: Can AI Cloud, Intelligent Driving Save the Day as Marketing Continues to Lose Market Share?
  • Thomson Medical (TMG SP)/Tmc Life Sciences (TMCL MK): Strong Recovery; Scale Expansion to Aid Growth
  • The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans
  • HYBE: Consensus to Slash Earning Estimates Due to BTS Going on A “Temporary Break” For Solo Projects
  • WuXi AppTec (603259.CH/2359.HK) – Behind the Proposed Disposal of A Shares
  • Cargo Truckers Strike, Post Office Couriers Strike, & More Strikes Likely in Korea in 2022
  • ZTO Express (2057 HK/ZTO US): Growth at a Reasonable Price
  • CBG : Promising Growth Outlook

Sea Ltd: Mass Layoffs at Shopee, Tinkering Here and There Won’t Make Shopee A World-Class Business

By Oshadhi Kumarasiri

  • Sea Ltd (SE US)’s share price fell 7.42% yesterday after a report broke out about mass layoffs across Shopee’s international operations.
  • We think Shopee has a fundamentally flawed business model and tinkering here and there won’t be enough to make Shopee a world-class business.
  • With Free Fire falling fast and Shopee starved of funds, we fear that there could be another leg down for Sea Ltd shares in the short term.

Softbank Group – Semiconductor Weakness Expands Discount

By Kirk Boodry

  • Tech weakness has not only eroded the underlying asset value but raised concerns on leverage and the potential for an ARM IPO. The discount expanded by 4pp in one week
  • The timing and pricing of an ARM IPO looks more precarious as the semiconductor sector fell 13% over two days and is now down 34% from all-time highs
  • Currency tailwinds have provided some offset with an unprecedented dollar move mimiting downside in Softbank shares to 8% YTD versus a 24% decline for the $-based ADR

Baidu: Can AI Cloud, Intelligent Driving Save the Day as Marketing Continues to Lose Market Share?

By Wium Malan, CFA

  • Chinese digital advertising revenue growth has slowed down considerably over the past 4 quarters and Baidu has continued to consistently lose market share to the broader industry.
  • Non-Marketing revenue has led the growth for Baidu over the past 2 years and now contributes roughly 26% to Baidu Core (excludes iQiyi) revenue.
  • On a PE basis, Baidu is trading at only a slight discount to global giant, Alphabet, which testifies to the negative impact on earnings expectations from Baidu’s growth engines.

Thomson Medical (TMG SP)/Tmc Life Sciences (TMCL MK): Strong Recovery; Scale Expansion to Aid Growth

By Tina Banerjee

  • Thomson Medical Group Limited (TMG SP) is a dual play on the re-opening of both Singapore and Malaysia. The company has a 70% stake in Tmc Life Sciences (TMCL MK). 
  • The company is seeing strong recovery across all its business segments and is cautiously optimistic of its business prospects in the current financial year.
  • The recent pullback in the shares provides a good entry point for long-term investors.  

The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans

By Hemindra Hazari

  • Issues with  HDFC Bank’s Head-MSME statements which analysts and shareholders need to consider. 
  • In MSME lending based on cash credit system verfication of stock statement is extremely important but there is no mention of it in his speech
  • HDFC Bank’s MSME loans growing at a rapid pace but asset quality remain sound. It appears HDFC Bank’s customers are very different as compared to the industry.

HYBE: Consensus to Slash Earning Estimates Due to BTS Going on A “Temporary Break” For Solo Projects

By Douglas Kim

  • HYBE announced a major news which was that the BTS group will go on a “temporary break” so that its members could pursue various solo projects.
  • Rather, we believe the consensus sales and operating profit estimates will decline by 20-40% in 2023 and 2024.
  • If P/E multiple is lowered to 20x (2024E), this would suggest an implied market cap of 4.8 trillion won or 117,138 won per share, representing a further 39% downside risk. 

WuXi AppTec (603259.CH/2359.HK) – Behind the Proposed Disposal of A Shares

By Xinyao (Criss) Wang

  • Our interpretation of WuXi AppTec’s proposed disposal is that its founder affiliates could be concerned about the Company’s future prospects, so they choose to offload in advance.
  • A possible reason for WuXi AppTec to highlight the optimism about its performance and deliver a prosperous outlook/positive signal to the market is to “shield” the implementation of its proposed disposal.
  • The risk is out of proportion to the opportunity. We advised investors to catch the rebound and offload rather than hold long term. It’s just temporary rebound not complete reversal.

Cargo Truckers Strike, Post Office Couriers Strike, & More Strikes Likely in Korea in 2022

By Douglas Kim

  • Amid the global markets chaos, there has been a huge truckers strike in South Korea, causing havoc across many industries.
  • On 14 June, the Post Office Courier Labor Union (POCLU) also warned that it will strike soon.
  • The labor union strikes by major industry groups in Korea could pose another big headache on the Korean equity markets in 2022. 

ZTO Express (2057 HK/ZTO US): Growth at a Reasonable Price

By Osbert Tang, CFA

  • ZTO Express Cayman Inc (2057 HK) has outperformed industry volume growth in 1Q22 and such trend continues into 2Q22 with good ASP improvement and cost control. 
  • Its strong operating cash flow and declining capex will lead to an accumulation of cash over the next few years, adding to the 1Q22 net cash position of Rmb4.1bn. 
  • We think the stock’s underperformance against peers not warranted. With a below-sector earnings multiple, leadership position and successful business model, we consider ZTO a “Growth at a reasonable price”.

CBG : Promising Growth Outlook

By Pi Research

  • The medium to long-term outlook looks promising,thanks to high demand for energy drinks across Asia-Pacific owing to trend of urbanization and rising disposable income. Meanwhile, 2H22 earnings are confirmed recovery 
  • More room to expand in Asia-Pacific Mordor Intelligence projected the Asia-Pacific energy drinks market value, which is the CBG key market focus to increase 8.46%CAGR in 2022-2027
  • China market (4% of total revenue in 2021) is one of the CBG’s key market given the largest size of energy drinks market in Asia-Pacific with plenty of opportunity 

Related tickers: Sea Ltd (SE.N), Softbank Group (9984.T), Thomson Medical Group Limited (ROWS.SI), HDFC Bank (HDBK.NS), HYBE (352820.KS), WuXi AppTec Co Ltd (603259.SS), POSCO Holdings (005490.KS), Carabao Group (CBG.BK)

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