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Smartkarma Daily Briefs

Jun 01
0

Thailand: Digital Telecommunications Infrastructure Fund and more

By | Daily Briefs, Thailand

In today’s briefing:

  • Digital Telecommunications Infrastructure Fund Placement – Routine Trim Down from Parent

Digital Telecommunications Infrastructure Fund Placement – Routine Trim Down from Parent

By Clarence Chu

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Jun 01
0

Industrials: Daikin Industries, Aon Plc, Apple, FirstService Corp, G R Infraprojects, Cornerstone Building Brands, Apar Industries, PNC Infratech Ltd and more

By | Daily Briefs, Industrials

In today’s briefing:

  • India Channel Insight #36 | Daikin, Havells, Voltas
  • Weitz Investment Management Value Fund Q1 2022 Commentary
  • Weitz Investment Management Partners III Opportunity Fund Q1 2022 Commentary
  • Distillate Capital Q1 2022 Letter To Investors
  • G R Infraprojects: Efficient Execution to Drive Growth; Maintain BUY
  • Blue Tower Asset Management Q1 2022 Commentary
  • Apar Industries – Strong Quarter; Outlook Mixed
  • PNC Infratech – Monetization of HAM Portfolio a Key Monitorable

India Channel Insight #36 | Daikin, Havells, Voltas

By Pranav Bhavsar

  • The overall Air Condition (AC) season has been good, with volumes up by more than +20% compared to the last two years.
  • Daikin Industries (6367 JP) & Voltas Ltd (VOLT IN) have performed below expectations with stiff pricing and poor dealer support. 
  • Havells India (HAVL IN) (Lloyd) market share gain is on the back of lower prices. The focus has moved from premiumizing brand & expanding margins to gaining market share. 

Weitz Investment Management Value Fund Q1 2022 Commentary

By Fund Newsletters

  • Founded by value investor Wally Weitz in 1983, Weitz Investment Management, Inc. is a boutique, employee-owned asset management firm headquartered in Omaha, Nebraska.
  • The Value Fund’s Institutional Class returned -7.96% for the first quarter.
  • Our companies are generally reporting solid financial results, at least so far, and they are adapting fluidly to rapidly evolving conditions.

Weitz Investment Management Partners III Opportunity Fund Q1 2022 Commentary

By Fund Newsletters

  • Founded by value investor Wally Weitz in 1983, Weitz Investment Management, Inc. is a boutique, employee-owned asset management firm headquartered in Omaha, Nebraska.
  • The Weitz Investment Management Partners III Opportunity Fund’s Institutional Class returned -5.09% in the first quarter of 2022.
  • Anticipating a hawkish shift at the Federal Reserve, investors began the year repricing assets for a higher interest rate environment.

Distillate Capital Q1 2022 Letter To Investors

By Fund Newsletters

  • Distillate Capital Partners LLC was formed in 2017 and is based in Chicago, IL. The firm is 100% employee-owned, and DCP’s partners each have invested significantly in the firm’s investment strategies.
  • Distillate’s U.S. FSV returned -3.60% net of fees versus -4.60% for the benchmark.
  • Distillate’s Intl. FSV strategy returned -6.19% net of fees.
  • Distillate’s U.S. SQV’s 2022 Q1 total return after fees was -4.49%.

G R Infraprojects: Efficient Execution to Drive Growth; Maintain BUY

By Axis Direct

  • GR Infraprojects Ltd (GRIL) reported a decent set of numbers in Q4FY22. The company reported revenue of Rs 2,268 Cr, better than our estimate of Rs 2,103 Cr, down 13.7% YoY
  • It registered EBITDA Margins of 17.8% in Q4FY22 (our estimate: 14.9%) as against 15.6% in Q4FY21
  • We maintain a BUY on GRIL and value the EPC business at 15x FY24E EPS and HAM portfolio at 1x Book Value to arrive at a target price of Rs 1,765/share, implying an upside of 26% from the CMP.

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.

Blue Tower Asset Management Q1 2022 Commentary

By Fund Newsletters

  • Blue Tower Asset Management provides portfolio management services to individuals, financial advisers, and institutions.
  • Our strategy composite returned -15.87% net of fees in the first quarter (-15.62% gross).
  • We plan on liquidating our Russian portfolio companies as soon as they are unfrozen and we are able to receive a reasonable valuation for them.

Apar Industries – Strong Quarter; Outlook Mixed

By Nirmal Bang

  • Conductors segment update: The Conductors segment’s revenue increased by 28% YoY to Rs15.03bn (48.3% of total sales)
  • Oil segment update: Oil segment’s revenue grew by 29.2% YoY to Rs9.28bn (29.8% of total sales).
  • Outlook: We expect 8.1%/2.6% revenue/earnings CAGR over FY22-FY24E.

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.

PNC Infratech – Monetization of HAM Portfolio a Key Monitorable

By Nirmal Bang

  • Comfortable order book position: As on 31st March’22, the unexecuted orderbook stood at Rs146bn.
  • FY23 guidance: The management has given guidance of 15% revenue growth for FY23 and 13-13.5% EBITDA margin.
  • Asset monetization update: PNC has concluded the deal to sell the Ghaziabad-Aligarh project to Cube Highways on 29th May, 2022.

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 01
0

Equity Bottom-Up: Xinyi Glass Holdings, GoTo, Tencent, Daikin Industries, iQIYI Inc, Fast Retailing, Pagseguro Digital Ltd, PureTech Health, Intco Medical Technology Co., Ltd-A, United Spirits and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Xinyi Glass Vs Flat Glass: Collapse and Long XYG
  • GoTo (GOTO IJ) – Ploughing a Path to Profitability
  • Tencent: Is Tencent Trying to Cope with Revenue Slowdown?
  • India Channel Insight #36 | Daikin, Havells, Voltas
  • IQiyi – Generates Profits for the First Time; Can It Maintain Its Profitability?
  • Fast Retailing: China Near Pandemic Lows and America, Europe and Asia Affected by Rising Inflation
  • Payment Companies Screens – More Constructive Market Signals or a Bear Market Rally?
  • PureTech Health (PRTC LN): Own Pipeline and Strategic Investments Act as Dual Growth Engines
  • Intco Medical Technology (300677.CH) – Declining Performance & Overcapacity Indicate Gloomy Outlook
  • United Spirits Update: All Round Progress

Xinyi Glass Vs Flat Glass: Collapse and Long XYG

By Henry Soediarko

GoTo (GOTO IJ) – Ploughing a Path to Profitability

By Angus Mackintosh

  • GoTo announced its much-anticipated FY2021 and 1Q2022 results, which did not disappoint, with improvements in a number of different metrics across its main verticals.  
  • 1Q2022 saw a QoQ increase for on-demand, e-commerce, and fintech versus a seasonally strong 4Q plus the group improved take rates and contribution margin in 1Q2022 versus 4Q2021.
  • GoTo‘s guidance for 2Q2022 is positive and it should be boosted by higher commission rates plus continuing synergies across the group, helping to improve profitability and growth.

Tencent: Is Tencent Trying to Cope with Revenue Slowdown?

By Shifara Samsudeen, ACMA, CGMA

  • Tencent reported lowest YoY increase in revenue in 1Q2022. Subsequent to this, Tencent mentioned during earnings call that it continues to scale back on loss-making activities across its business segments.
  • Recent scale back of operation is in its cloud-services segment that includes loss-making activities such as projects with high proportion of sub-contractors and deeply discounted-contracts for CVM and CDN capacity.
  • Layoffs have become prevalent as a cost cutting measure and Tencent is in the process of reducing headcount at gaming and fintech businesses.  

India Channel Insight #36 | Daikin, Havells, Voltas

By Pranav Bhavsar

  • The overall Air Condition (AC) season has been good, with volumes up by more than +20% compared to the last two years.
  • Daikin Industries (6367 JP) & Voltas Ltd (VOLT IN) have performed below expectations with stiff pricing and poor dealer support. 
  • Havells India (HAVL IN) (Lloyd) market share gain is on the back of lower prices. The focus has moved from premiumizing brand & expanding margins to gaining market share. 

IQiyi – Generates Profits for the First Time; Can It Maintain Its Profitability?

By Shifara Samsudeen, ACMA, CGMA

  • IQiyi reported 1Q2022 results last week. Revenue fell 8.7% YoY to RMB 7.3bn (vs consensus RMB 7.22bn) and reported an OP of RMB 93.4m (vs consensus loss of RMB 297m).
  • Growth in ARM helped offset decline in the number of subscribers for membership revenue. However, online advertising and content distribution both declined due to lack of content and macroeconomic weaknesses.  
  • IQiyi’s shares have gained 11.2% since its earnings announcement as the company reported an OPM for the first time.

Fast Retailing: China Near Pandemic Lows and America, Europe and Asia Affected by Rising Inflation

By Oshadhi Kumarasiri

  • Fast Retailing (9983 JP)’s share price rose 10% towards the top end of the trend channel since reporting 15.8% YoY same-store sales growth in April 2022.
  • However, the growth rate was influenced by weak comps and in April 2022 domestic revenue was 9% below the pre-pandemic level.
  • Meanwhile, Uniqlo’s growth drivers are faltering with China’s revenue near pandemic lows and North America, Europe and Asia affected by rising inflation.

Payment Companies Screens – More Constructive Market Signals or a Bear Market Rally?

By Victor Galliano

  • Since our March-end report, our shorts – especially Kakao Pay – worked better than our longs, given the continuing turbulent conditions; Santander’s offer for Getnet minorities signals a specific opportunity
  • We still favour Mastercard in the megacaps, and we stick with PagSeguro and Nexi despite both having disappointed; Cielo has been a strong performer, but we would not chase it
  • Among our shorts, we remain negative on DLocal, given its very demanding valuations, and we still see Kakao Pay to be fundamentally over-valued; we reintroduce Paytm to the shorts list

PureTech Health (PRTC LN): Own Pipeline and Strategic Investments Act as Dual Growth Engines

By Tina Banerjee

  • PureTech Health (PRTC LN) has highly differentiated wholly owned pipeline of seven therapeutic candidates and four lymphatic and inflammation platforms. It also has strategic investments in six founded entities.
  • KarXT, lead candidate of founded entity Karuna Therapeutics Inc (KRTX US), is progressing toward commercialization, thereby entailing milestone and royalty opportunities for PureTech. 
  • PureTech’s lead candidate LYT-100 is in three late-stage clinical trials for three indications addressing large patient population. LYT-100 also has potential to address to other underserved diseases.

Intco Medical Technology (300677.CH) – Declining Performance & Overcapacity Indicate Gloomy Outlook

By Xinyao (Criss) Wang

  • Due to the reduction of glove selling price, lower demand, significant cost hike and inflation, it is expected that Intco would continue to face declining performance and margins. 
  • Under current circumstances, supply exceeds demand. The overcapacity could lead to substantial asset impairment. So, it would take some time before the industry clearing is finished or reach new balance.
  • Intco’s weak performance would continue. Its share price is likely to remain depressed for some time.So, it may not be wise to bottom fishing that early even with low valuation.

United Spirits Update: All Round Progress

By Nitin Mangal

  • United Spirits (UNSP IN) Q4F22 results have shown some good improvement.
  • There is all round progress witnessed, including debt reduction, focus on gaining market share, better scope of working capital management. There is an intent of supporting premiumization as well.
  • The results and strategic decision making reinforces our bullish stance on United Spirits; the cherry on top is that there is further room for improvement in the short-mid term.

Related tickers: Xinyi Glass Holdings (0868.HK), GoTo (GOTO.JK), Tencent (0700.HK), Daikin Industries (6367.T), iQIYI Inc (IQ.O), Fast Retailing (9983.T), PureTech Health (PRTC.L), United Spirits (UNSP.NS)

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Jun 01
0

Macro: A Crude Development and more

By | Daily Briefs, Macro

In today’s briefing:

  • A Crude Development
  • EA: Inflation Back to Brutal Beatings
  • CX Daily: The Covid-Fighting Struggle of China’s Nursing Homes

A Crude Development

By Shyam Devani

  • Brent Crude is approaching important levels at $124 and may be about to breakout
  • The overall picture on the chart indicates a move to $150. If seen with rising yields again, it would yet again provide a negative backdrop for equities.
  • While the S&P 500 may stretch up to 4,300 in the short term, that would be a sell zone as the medium term picture points to further downside.

EA: Inflation Back to Brutal Beatings

By Phil Rush

  • EA inflation resumed its trend rise and tendency to exceed forecasts with a 61bp jump to 8.05% in May-22. Headline rates increased for all countries except the Netherlands.
  • Upside news was broad-based across countries, except for the Netherlands, Spain and Cyprus. Food, energy, and core aggregates were all above our expectations.
  • We still forecast another rise in June into a higher flattish peak, with excess inflation remaining relatively persistent in our view. The ECB seems set to hike in July.

CX Daily: The Covid-Fighting Struggle of China’s Nursing Homes

By Caixin Global

  • Cover Story: The Covid-fighting struggle of China’s nursing homes

  • Beijing probes whether hospital Covid protocols contributed to man’s death

  • China draws from next year’s budget for local government handouts

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Jun 01
0

Most Read: Orient Overseas International, Mercari Inc, Renesas Electronics, LG Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far
  • Mercari (4385 JP): Section Transfer Means TOPIX & FTSE Inclusion
  • Mercari (4385) TOPIX Inclusion, Finally… And It’s Bigger Than It Looks
  • Nikkei 225 Index Rebalance Preview: Market Consultation & Potential Changes
  • Short LG Corp on the Unsustainable Price Spike

MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far

By Brian Freitas

  • For Asia Pacific, there are 48 adds/76 deletes for the Standard Indices and 166 adds/147 deletes for the Small Cap Index that will be implemented at the close today.
  • The adds have outperformed the deletes on average over the last few weeks/months. A long adds/short deletes trade performed better for Small Caps as compared to the Standard index.
  • There are a lot of stocks that will have same-way flow from other index trackers over the next few weeks and there could be a higher impact on these names.

Mercari (4385 JP): Section Transfer Means TOPIX & FTSE Inclusion

By Brian Freitas

  • Mercari Inc (4385 JP) was deleted from the MSCI Japan at the close today. Then the company announced that it would move to the Prime Market on 7 June.
  • Transfer to Prime Market will require passive TPX INDEX trackers to buy stock end July and FTSE All-World trackers to buy in September – around 19% of free float together.
  • Short interest is over 13% of free float. Some of the shorts would have covered against the passive MSCI selling today but the remaining shorts could look to cover.

Mercari (4385) TOPIX Inclusion, Finally… And It’s Bigger Than It Looks

By Travis Lundy

Nikkei 225 Index Rebalance Preview: Market Consultation & Potential Changes

By Brian Freitas

Short LG Corp on the Unsustainable Price Spike

By Sanghyun Park

  • The question now is whether this event can lead to a structural uptrend in LG Corp. I am skeptical about this.
  • LG Corp took a preemptive action to increase its attractiveness as a dividend stock to prevent a share price decline ahead of the listing of LG CNS.
  • However, this measure does not address the root cause of LG Corp’s massive NAV discount. So, I would consider a short position setup for LG Corp.

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May 31
0

Financials: Dollar Index, KakaoBank, Bancolombia SA and more

By | Daily Briefs, Financials

In today’s briefing:

  • USD Taking a Pounding in Asia
  • Kakao Bank: Market Share Losses to Other Internet Banks & More Loans to Less Creditworthy Customers
  • Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

USD Taking a Pounding in Asia

By Thomas Schroeder

  • DXY tactical top bet near 103/104 where we reduced USD longs and initiated some USD shorts in the event we broke trendline support at 102.50 (did).
  • Equity short squeeze is seeing a big unwind in USD longs in Asia. We have some fresh shorts on deck and outline higher conviction USD buy levels on weakness.
  • Sync 10yr yield support near 2.60% with DXY 101 to 100.70 support for a USD bounce with risk of a rejection a 103 and C wave risk to 100.

Kakao Bank: Market Share Losses to Other Internet Banks & More Loans to Less Creditworthy Customers

By Douglas Kim

  • We are increasingly concerned about Kakao Bank which has been losing market share to other leading Internet banks in Korea (especially to Toss bank). 
  • We are also concerned about the Kakao Bank approving greater amount of loans to customers with weak to moderate credit ratings who have been rejected loans from commercial banks. 
  • Our base case valuation of Kakao Bank is market cap of 16.4 trillion won or price of 34,504 won per share, which represents 16.5% lower than the current share price.

Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

By Victor Galliano

  • Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares
  • We believe that Gilinski’s strategy of  “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+
  • Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote

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May 31
0

United States: Dollar Index, Electronic Arts, Activision Blizzard, Apple, Retail Opportunity Investments Corp., Ebay Inc and more

By | Daily Briefs, United States

In today’s briefing:

  • USD Taking a Pounding in Asia
  • Harding Loevner International Small Companies Equity Fund Q1 2022 Letter
  • Harding Loevner Global Small Companies Equity Fund Q1 2022 Letter
  • Harding Loevner International Equity Fund Q1 2022 Letter
  • Earning excess returns in commodities
  • Sporting Crypto – May 30th 2022: eBay Skate to where the puck is going

USD Taking a Pounding in Asia

By Thomas Schroeder

  • DXY tactical top bet near 103/104 where we reduced USD longs and initiated some USD shorts in the event we broke trendline support at 102.50 (did).
  • Equity short squeeze is seeing a big unwind in USD longs in Asia. We have some fresh shorts on deck and outline higher conviction USD buy levels on weakness.
  • Sync 10yr yield support near 2.60% with DXY 101 to 100.70 support for a USD bounce with risk of a rejection a 103 and C wave risk to 100.

Harding Loevner International Small Companies Equity Fund Q1 2022 Letter

By Fund Newsletters

  • Harding Loevner has been investing globally in high-quality, growing businesses based on disciplined industry research since 1989.
  • Stock markets fell in the quarter, as the world watched in horror Russia’s invasion of Ukraine.
  • While we are optimistic that China will maintain its neutrality in the war, we can’t dismiss the possibility we are wrong.
  • With the volatility of stock prices thisquarter, portfolio activitypicked up as a handfulof high-quality growth companies we had long admired, but regarded as too expensive, saw their valuations fall into range.

Harding Loevner Global Small Companies Equity Fund Q1 2022 Letter

By Fund Newsletters

  • Harding Loevner has been investing globally in high-quality, growing businesses based on disciplined industry research since 1989.
  • Stock markets fell in the quarter, as the world watched in horror Russia’s invasion of Ukraine.
  • While we are optimistic that China will maintain its neutrality in the war, we can’t dismiss the possibility we are wrong. In that case, we’d need to parse which companies will be hurt and helped, relatively, from a further receding of globalization.
  • With the volatility of stock prices this quarter, portfolio activity picked up as a handful of high-quality growth companies we had long admired, but regarded astoo expensive, saw their valuations fall into range.

Harding Loevner International Equity Fund Q1 2022 Letter

By Fund Newsletters

  • Harding Loevner has been investing globally in high-quality, growing businesses based on disciplined industry research since 1989.
  • Stock markets fell in the quarter, as the world watched in horror Russia’s invasion of Ukraine.
  • While we are optimistic that China will maintain its neutrality in the war, we can’t dismiss the possibility we are wrong.
  • In recent years, as growth investors chased speculative and expensive“disruptive innovators” up, and more recently down, we have maintained a steady commitment to quality growth at steady premiums to the market over time.

Earning excess returns in commodities

By Turtles all the way down

  • Say that we have an industry selling a commodity and we want to figure out how above average returns can be generated.
  • Our starting point is almost perfect competition. 
  • We cannot create a brand, a differentiated product/service, a monopoly, a cartel or cheat.

Sporting Crypto – May 30th 2022: eBay Skate to where the puck is going

By Sporting Crypto

  • eBay have made their first foray into NFTs by launching Wayne Gretzky collectibles, starting as low as $10 for their ‘Green’ tier, ensuring affordability for the everyday fan.
  • They’ve partnered with OneOf, who help lifestyle and sports brands drop NFTs – as well as having their own marketplace for resale purposes.
  • Buyers were able to purchase in fiat and were then taken to a landing page to mint the NFT for free.

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May 31
0

India: Kolte Patil Developers, HealthCare Global Enterprises, JSW Steel Ltd, Bata India Ltd, Lumax Industries, Brigade Enterprises, CCL Products India and more

By | Daily Briefs, India

In today’s briefing:

  • Kolte Patil: Reported Stellar FY22 Earnings; All Is Set To Post Even Better FY23
  • HCG: Consolidation Continues to Boost Profitability
  • JSW Steel – Earnings Flash – FY 2021-22 Results – Lucror Analytics
  • Bata India: Showing Resilience Amidst Challenging Times; Maintain BUY
  • Lumax Industries: Strong Beat on Estimates; Long-Term Outlook Positive
  • Brigade Enterprises – Strong Launch Pipeline Amid Healthy Residential Demand
  • CCL Products: Decent Performance Despite Prevailing Uncertainties

Kolte Patil: Reported Stellar FY22 Earnings; All Is Set To Post Even Better FY23

By Ankit Agrawal, CFA

  • Kolte Patil reported a strong FY22 and guided for even a stronger FY23. FY22 closed with highest ever sales value and collections.
  • FY23 is set to fire on all cylinders – new launches, business development aka new project acquisitions and delivery of under-construction projects.
  • FY23 sales value is expected to be 2200cr, implying PAT potential of 220cr.  At current market cap of 1800cr, Kolte Patil is trading cheap at 8x P/E per FY23E PAT.

HCG: Consolidation Continues to Boost Profitability

By Ankit Agrawal, CFA

  • HCG’s continued focus on consolidation is leading to improving profitability.  Furthermore, with the normalization of post-COVID environment, elective surgeries and international footfalls are inching back to pre-COVID levels.
  • Since the onboarding of CVC Capital as the majority shareholder, HCG’s capex discipline has been noteworthy. Capex is focused now on driving growth in existing centers vs opening new centers.
  • We project HCG’s PAT to grow to INR 170cr+ by FY25. Valuing HCG at FY25 exit P/E of 47x suggests an IRR potential of 27% over the next 3Y.

JSW Steel – Earnings Flash – FY 2021-22 Results – Lucror Analytics

By Trung Nguyen

In our view, JSW Steel’s Q4 and FY 2021-22 results were robust, with strong growth in production volumes, revenues and earnings. The financial risk profile has improved and is healthy. Liquidity is sound.

However, we believe that JSW has experienced the peak of the cycle and profitability will likely reduce from current levels, driven by multiple factors including the Russia-Ukraine war which drove up key raw material prices (coking coal and iron ore). In addition, the recent export duty will likely also hurt India’s domestic steel players (particularly JSW), whose exports as a percentage of sales volumes were roughly double that of the industry. Hence, we foresee significantly lower earnings despite healthy growth in volumes and revenues in FY 2022-23. We expect a double-digit increase in volumes, driven by the capacity expansion programmes at Dolvi and Vijayanagar. We also project double-digit growth in revenues (c. 20%) in FY 2022-23, on account of the volume expansion and prices.

Bata India: Showing Resilience Amidst Challenging Times; Maintain BUY

By Axis Direct

  • Bata India (BATA) reported Q4FY22 revenue at Rs 665 Cr as against Rs 590 Cr in Q4FY21, registering a growth of 12.8% despite Omicron disruptions. 
  • We remain positive on the stock from a long-term perspective given its immense growth potential
  • Maintain BUY with revised TP of Rs 2,200/share and assign a PE of 43x FY24E EPS.

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.

Lumax Industries: Strong Beat on Estimates; Long-Term Outlook Positive

By Axis Direct

  • Lumax Industries (Lumax Inds) reported a stellar set of results which was ahead of our estimates.
  • The revenue for the quarter stood at Rs 549 Cr (our estimate – Rs 496 Cr), reporting a 9% YoY growth
  • We maintain a BUY rating on the stock with a revised target price of Rs 1,450/share (Rs 1,350 earlier) valuing it at 13x of FY24E P/E, implying an upside of 25% from the CMP.

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.

Brigade Enterprises – Strong Launch Pipeline Amid Healthy Residential Demand

By Nirmal Bang

  • Revenue grows by 19.1% YoY and 2.3% QoQ in 4QFY22 to Rs9,423mn: In 4QFY22, revenue grew by 19.1% YoY and 2.3% QoQ to Rs9,423mn.
  • Strong demand in residential segment: Revenue from the residential segment grew by 2% QoQ and 12% YoY to Rs7,186mn in 4QFY22.
  • Residential volume continues to remain strong in 4QFY22: The company sold 1.5mn sqft in 4QFY22, down by 9.6% YoY and up by 36% QoQ in 4QFY22.

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.

CCL Products: Decent Performance Despite Prevailing Uncertainties

By Axis Direct

  • CCL Products (CCLP) delivered a decent performance in Q4FY22 with consolidated revenue of Rs 376 Cr (Our est: Rs 381 Cr), up 13% YoY on account of ~7% volume growth and higher realizations.
  • However, the company’s GPM came in at 51.2% and declined by 642bps YoY mainly on account of the deferment of large consignments (500-600 tonnes) to Russia on account of the war
  • CCL Products is one of our high conviction BUY with a revised TP of Rs 560/share (Rs 585/share earlier), as we continue to value it at a target P/E multiple of 23x its FY24E EPS.

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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May 31
0

Health Care: Siloam International Hospitals, Genscript Biotech, HealthCare Global Enterprises and more

By | Daily Briefs, Healthcare

In today’s briefing:

  • Smartkarma Corporate Webinar | Siloam Hospitals: Riding on a Base Case Revival
  • Genscript Biotech – Commercialized CAR-T & Strong CGT CDMO Indicate Exponential Growth in Valuation
  • HCG: Consolidation Continues to Boost Profitability

Smartkarma Corporate Webinar | Siloam Hospitals: Riding on a Base Case Revival

By Smartkarma Research

For our next Corporate Webinar with Siloam International Hospitals (SILO IJ), we are glad to welcome Daniel Phua, CFO, and Varun Khanna, Senior Director of Healthcare Business, Corporate Strategy, and Investments.

In the upcoming webinar, Daniel and Varun will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Analyst Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 21 June 2022, 17:00 SGT.

Register for the Webinar here

PT Siloam International Hospitals Tbk (ticker: SILO) is recognised as a reputable and leading operator of private hospital network in Indonesia, with 41 hospitals spread across several islands, namely Java, Sumatra, Kalimantan, Sulawesi, Bali, and Nusa Tenggara. Siloam’s medical team of more than 3,000 general practitioners and specialist doctors, and 8,000 nurses and support staff, offers international quality healthcare services to around two million patients annually.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

Genscript Biotech – Commercialized CAR-T & Strong CGT CDMO Indicate Exponential Growth in Valuation

By Xinyao (Criss) Wang

  • The CARVYKTI commercialization will bring GenScript increasing revenue and cash flow. Together with the rapid growth of GCT CDMO, it is expected to see gradual improvement in GenScript’s financial performance.
  • The complex international relations, geopolitical conflicts and anti-globalization risks could weigh on bullish sentiment in the short term or cause stock prices to fluctuate wildly.
  • In the long term, GenScript’s “all-in” on GCT area enables it follow the industry trend closely. So,GenScript have the exponential growth potential in valuation, with possibility of surpassing WuXi Biologics.

HCG: Consolidation Continues to Boost Profitability

By Ankit Agrawal, CFA

  • HCG’s continued focus on consolidation is leading to improving profitability.  Furthermore, with the normalization of post-COVID environment, elective surgeries and international footfalls are inching back to pre-COVID levels.
  • Since the onboarding of CVC Capital as the majority shareholder, HCG’s capex discipline has been noteworthy. Capex is focused now on driving growth in existing centers vs opening new centers.
  • We project HCG’s PAT to grow to INR 170cr+ by FY25. Valuing HCG at FY25 exit P/E of 47x suggests an IRR potential of 27% over the next 3Y.

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May 31
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Event-Driven: Orient Overseas International, AGL Energy Ltd, Seazen (Formerly Future Land), Australian Unity Office Fund, LG Corp, Softbank Corp, Mediaset España Comunicación, S.A., AKM Industrial, Bancolombia SA and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far
  • AGL Drops Demerger Proposal – Back To Square Two
  • CCASS: Why Large Moves Continue To Matter
  • Australian Unity Office: Aliro’s Offer Should Get Up. With A Bump
  • Short LG Corp on the Unsustainable Price Spike
  • JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022
  • AOF’s Efforts to Maximise Value Draws an Offer from Aliro Group
  • MFE/​Mediaset España: Start of Offer Period with Lower Success Expectations
  • AKM (1639 HK): 22nd June Scheme Meeting. IFA Says Fair
  • Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

MSCI May 2022 Index Rebalance: Flows at the Close Today & Performance So Far

By Brian Freitas

  • For Asia Pacific, there are 48 adds/76 deletes for the Standard Indices and 166 adds/147 deletes for the Small Cap Index that will be implemented at the close today.
  • The adds have outperformed the deletes on average over the last few weeks/months. A long adds/short deletes trade performed better for Small Caps as compared to the Standard index.
  • There are a lot of stocks that will have same-way flow from other index trackers over the next few weeks and there could be a higher impact on these names.

AGL Drops Demerger Proposal – Back To Square Two

By Travis Lundy

  • After 14 months of Strategic Review and preparation for a Demerger of its generation and distribution businesses, the Board has dropped the Demerger Proposal in face of shareholder opposition.
  • While it isn’t clear exactly how much opposition there was, Michael Cannon-Brookes held 11+% and General Meetings have garnered 50-75% of investors for a vote which needed 75% approval.
  • CEO and Chair have announced their resignations, two other board members will leave, and now the Board will start another strategic review using preparation at hand.

CCASS: Why Large Moves Continue To Matter

By David Blennerhassett

  • In this latest installment in a series dating back to March 2018, I’ve analysed 5,500 moves over three years inside CCASS, targeting >5% of shares outstanding of individual stocks. 
  • The data continues to bear out the overall underperformance of stocks that exhibit such moves.
  • Additionally, the movement of large blocks of shares may illustrate that the beneficial owner of those shares has pledged them as collateral for a loan.

Australian Unity Office: Aliro’s Offer Should Get Up. With A Bump

By David Blennerhassett

  • Over the years, Australian Unity Office Fund (AOF AU) has had its fair share of suitors. Starwood Capital made no less than six bids between late 2018 and early 2020. 
  • Abacus Property (ABP AU) and Charter Hall (CHC AU) were also in the mix, but their Scheme failed, ostensibly after Hume, one of the largest shareholders voted down the Offer.
  • Aliro Group has now made an Offer for AOF, by way of Scheme, at $2.45 + dividends. Hume is supportive. Aliro’s executive chairman is the former head of Charter Hall. 

Short LG Corp on the Unsustainable Price Spike

By Sanghyun Park

  • The question now is whether this event can lead to a structural uptrend in LG Corp. I am skeptical about this.
  • LG Corp took a preemptive action to increase its attractiveness as a dividend stock to prevent a share price decline ahead of the listing of LG CNS.
  • However, this measure does not address the root cause of LG Corp’s massive NAV discount. So, I would consider a short position setup for LG Corp.

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022

By Janaghan Jeyakumar, CFA

  • JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
  • A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
  • Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.

AOF’s Efforts to Maximise Value Draws an Offer from Aliro Group

By Arun George

  • Australian Unity Office Fund (AOF AU) which has had a “for sale” sign up has disclosed an indicative privatisation proposal from Aliro Group, at A$2.45 per unit + permitted distributions. 
  • Hume Partners, the largest unitholder, will vote in favour of the scheme in the absence of a superior offer. However, a relatively concentrated shareholder register poses a risk.
  • AOF’s ongoing engagement with various parties suggests the possibility of a counterbid and/or a bump to Aliro Group’s underwhelming offer.

MFE/​Mediaset España: Start of Offer Period with Lower Success Expectations

By Jesus Rodriguez Aguilar

  • On 26 May, the CNMV authorized the bid. The offer period will end on 28 June. Mediaset España shareholders do not seem very excited about the offer though.
  • Analysts’ median TP (Refinitiv) of Mediaset España  is €6.58/share, vs. the package worth €4.452 as of 30 May, 19.4% below value upon offer announcement. Market sentiment is negative.
  • As of 30 May, risk arb spread is 4.2% (MFE dividend not included). It seems increasingly unlikely that the offer is successful and Mediaset España delisted, in my view.

AKM (1639 HK): 22nd June Scheme Meeting. IFA Says Fair

By David Blennerhassett

  • The Scheme Document Document for AKM Industrial (1639 HK), a flexible printed board player, has been despatched.  The Scheme Meeting will be held on the 22nd June. 
  • The Offer Price is HK$1.82/share. It will not be increased. No further dividends will be added, 
  • Trading tight at a gross/annualised spread of 1.1%/6.4%, assuming payment in early August.

Grupo Gilinski Stays Focused on BanColombia, with Political Risk Potentially Receding in Colombia

By Victor Galliano

  • Indirect stake-building in Grupo Sura and related companies means Gilinski is closing in on indirect control of BanColombia; Gilinski’s latest move is the offer for Grupo Argos shares
  • We believe that Gilinski’s strategy of  “indirect activism” towards BanColombia has incentivised management to deliver improved performance, as seen in 1Q22, with management’s perhaps conservative 2022E ROE guidance at 15%+
  • Political risk may be receding, now that the firebrand left-winger Petro confronts Hernandez in mid-June’s Presidential election run-off; Hernandez could win by uniting the right and centre anti-Petro vote

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