Smartkarma Daily Briefs

Birla Corporation (BCL) reported Volume/Revenue growth of 2%/6% YoY owing to better demand in its operating region.
The company reported a volume of 4.24 mtpa which was higher by 5% than our expectation of 4.02 mtpa
We roll over our estimate to FY24 and value the company at 7.5x FY24E EV/EBITDA to arrive at a target price of Rs 1,300/share, (1,500 earlier), implying an upside of 35% from the CMP.

Dalmia Bharat – Realization Drives EBITDA Beat; Outlook Cautious

By Emkay

Revenue increased 7% YoY to Rs33.8bn. Volumes rose 3% YoY/16% QoQ to 6.6mt.

EBITDA declined 11% YoY/increased 66% QoQ to Rs6.8bn (Emkay est. – Rs5.6bn).
Project updates: Dalmia expects to commission 4mt debottlenecking capacity by Mar’23.

Before it’s here, it’s on Smartkarma

May 13

Financials: Bitcoin, NIFTY Index, US Treasury (10 Yr Generic), Max India Ltd, Apollo Global Management Inc, SPDR DJIA Trust, Tokyo Stock Exchange Tokyo Price Index Topix, American Equity Investment Life Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Bitcoin – The Floor Has Gone
Nifty Floor Pressure with Exodus Risk
How Are Fed’s Rate Hikes Impacting EM?
Max Financial – VNB Margin Surprises Positively; Growth to Take Centre Stage in FY23
Apollo Global (APO)
Cedar Creek Partners 2022 First Quarter Results
Japan’s Governance: About an Article on Support for Activist Countermeasures
FPA Queens Road Small Cap Value Fund Q1 2022 Commentary

Bitcoin – The Floor Has Gone

By Shyam Devani

The break below 28k is a major development today opening the way for further losses
The 200 week moving average target is already in sight at 21,763
Below there, an extended target would be 19,511 – the major level from Dec 2017

Nifty Floor Pressure with Exodus Risk

By Thomas Schroeder

India stands out as a market at risk of breaking below congestive floor support (over owned, yield and FX pressure) like US big tech and more recently Europe.
Nifty 15,000 lower wedge support to come under pressure post bounce attempt.
USD/INR bull call to 77.80 and 78.64 on track. Watch rising resistance at 77.80/84 near term for a rally stall.

How Are Fed’s Rate Hikes Impacting EM?

By Gautam Jain, PhD, CFA

Notwithstanding the economic uncertainties, with the Fed’s path better defined now than a few weeks ago, I expect the volatility of rates to peak in the coming weeks.
Uncertainty around the Fed’s rate hikes has been spilling over to the monetary policy paths of EM countries even though many of them have been raising rates since last year.
If the US rates volatility falls as I expect, then it will be supportive of the short ends of EM rate curves in Latin American and Central European countries.

Max Financial – VNB Margin Surprises Positively; Growth to Take Centre Stage in FY23

By Emkay

Max Life delivers robust operational and financial performance: Max Life, the sole operating company of Max Financial, posted an overall good set of numbers in FY22, with VNB growing by 22% YoY to Rs15.3bn and VNB margin expanding by 2.2ppts YoY to 27.4%.

Focus on growth in FY23: In CY22, the company has so far delivered weaker topline growth owing to a host of factors, including a stronger base (on 2Y/3Y/5Y CAGR, Max Life has the best APE growth), Omicron-led disruptions in distribution and a slowdown in retail protection.

Current weakness in shares unwarranted: The performance of MAXF shares has traditionally been driven by a combination of fundamental performance of Max Life and noises around MAXF.

Apollo Global (APO)

By Enlightened Capital

APO is a top 5 alternative asset manager globally with $513bn of AUM as of 1Q22.
APO’s AUM is diversified across 73% of AUM in Yield strategies, 17% in Equity strategies, and 10% in Hybrid strategies.
APO recently acquired the remaining 65% of Athene (ATH), for $10.4bn (6x ’22 EPS), adding ~$200bn of insurance liabilities to APO’s balance sheet including fixed indexed annuities, fixed annuities, group annuities, and funding agreements.

Cedar Creek Partners 2022 First Quarter Results

By Fund Newsletters

The fund applies the typical bottom-up concentrated value approach of looking for a discount to intrinsic value to the neglected areas of the market, micro and nano caps.
As of the end of March 2022, the fund’s holdings were trading at less than 10 times our estimate of earnings for the coming year.

Japan’s Governance: About an Article on Support for Activist Countermeasures

By Aki Matsumoto

This article will discuss the issues in the Nikkei article on “Support for Activist Countermeasures.”
While % foreign shareholders increased, cross-shareholdings decreased. This coincided with the company’s desire to have agenda by the company at AGM and its interest in the real shareholder search service.
Institutional investors have expressed desire for communication with independent directors, but a few companies can respond to such needs. However, companies will listen to shareholder suggestions, albeit slowly but surely.

FPA Queens Road Small Cap Value Fund Q1 2022 Commentary

By Fund Newsletters

FPA Queens Road Small Cap Value Fund returned -3.3% in the first quarter of 2022.
First quarter performance was negatively impacted by the Fund’s overweight position in the technology sector.
The Fund’s overweight position in technology sector also negatively impacted the Fund’s first quarter performance.

Before it’s here, it’s on Smartkarma

May 13

Thailand: Thai Oil Pcl, Advanced Info Service, Bangchak Corporation, PTT Global Chemical and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

TOP: Solid Refinery Performance Drove 1Q22 Profit
ADVANC: 1Q22 ARPU Decline Could Be the Trend Throughout 2022
BCP: Solid Refinery Performance Drove 1Q22 Profit to All Time High
PTTGC: Weak Petrochemical Spreads Dragged 1Q22 Profit

TOP: Solid Refinery Performance Drove 1Q22 Profit

TOP reported 1Q22 net profit of Bt7.2bn (+114% YoY, +43% QoQ),a 5-quarter high, driven by strong refinery segment performance and stock gain. The result came out better than our expectation.
The accounting EBITDA spiked to Bt13.0bn(+58% YoY,+114% QoQ).Despite the weak performance of petrochemical,power and other segments, the strong refinery segment (+124% YoY, +178% QoQ) operation under pinned the overall growth.
Positive 2Q22 outlook, The strong GRM should continue in 2Q22 and ahead backed by solid gasoline, jet fuel and diesel spreads from global economic recovery.

ADVANC: 1Q22 ARPU Decline Could Be the Trend Throughout 2022

Maintain BUY rating with TP of Bt259 based on DCF,implying 23.8xPE’22E. Analyst meeting came out with slightly negative news on 2022 prospects. DTAC and TRUE fiercely competing for market share
We expect to see soft earnings recovery in 2Q22 from weak top-line growth.Price competition will remain intense, but the strong performances in broadband and CCIID segment will support revenue growth
Maintain our 2022 earnings at Bt29bn(+9%YoY).We still believe that in 2H22, 5G ARPU uplift and recovery in tourism to boost consumer confidence will help ARPU reverse and support earnings growth.

BCP: Solid Refinery Performance Drove 1Q22 Profit to All Time High

BCP reported 1Q22 net profit of Bt4.4bn (+91% YoY, +148% QoQ), an all time high. The result came out better than our expectation.
The earnings spike was mainly supported by improved performance of 1) refinery operations along with a huge stock gain of Bt4.1bn, 2) natural resources business from rise in crude oil
We expect 2Q22 recurring profit continue to grow from better refinery performance backed by rising GRM. The oil retail business should also improve as marketing margin picks up after easing

PTTGC: Weak Petrochemical Spreads Dragged 1Q22 Profit

PTTGC reported 1Q22 net profit of Bt4.2bn(-57% YoY, +30% QoQ). The result came out lower than our expectation and 24% below consensus.
Excluding the stock gain of Bt4.9bn, hedging loss of Bt8.6bn and FX gain of Bt595m etc., the recurring profit stood at Bt6.2bn (-29% YoY, +74% QoQ).
Dropped YoY mainly due to weak Olefins business performance (lower spreads, 26% YoY decline in EBITDA margin), while improved contribution from performance materials segment from Allnex acquisition in 4Q21

Before it’s here, it’s on Smartkarma

May 13

Macro: Gold’s Building Blocks Giving a Buy Signal and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

Gold’s Building Blocks Giving a Buy Signal
How Are Fed’s Rate Hikes Impacting EM?
EM Currencies Under Pressure – IDR Could Be The Next To Crack
Alpha Generating Trading Strategy of KOSDAQ150 Deletions & Additions in June 2022
CX Daily: The Troubling Balancing Act Facing Shanghai’s ER Doctors
UK: Cars Drive GDP Growth Back a Month
CX Daily: ‘Zero Covid’ Slams the Brakes on China’s Electric Car Industry

Gold’s Building Blocks Giving a Buy Signal

By Shyam Devani

Factors that typically impact Gold have, on average, reached an extreme
They include the USD, Bitcoin, and US TIPS Yields which have all trended strongly up till now
Are we about to see at least a minor but notable turning point that provides a buy signal for Gold?

How Are Fed’s Rate Hikes Impacting EM?

By Gautam Jain, PhD, CFA

Notwithstanding the economic uncertainties, with the Fed’s path better defined now than a few weeks ago, I expect the volatility of rates to peak in the coming weeks.
Uncertainty around the Fed’s rate hikes has been spilling over to the monetary policy paths of EM countries even though many of them have been raising rates since last year.
If the US rates volatility falls as I expect, then it will be supportive of the short ends of EM rate curves in Latin American and Central European countries.

EM Currencies Under Pressure – IDR Could Be The Next To Crack

By Nicholas Chia

There are more signs of stresses across EM economies. The Turkish Lira has crept past the TRY15-mark against the USD, spurring another bout of unconventional intervention by the authorities.
Sri Lanka has been rocked by protests and demonstrations, with the makings of macroeconomic mismanagement by the Rajapaksa family. PM Mahinda Rajapaksa’s resignation failed to soothe the anger of protestors.
Indonesia has benefitted from the upturn in commodity prices while inflation remains (relatively) manageable. But, the Rupiah could be poised for a meaningful correction.

Alpha Generating Trading Strategy of KOSDAQ150 Deletions & Additions in June 2022

By Douglas Kim

KRX is expected to announce the KOSDAQ150 rebalance in the next couple of weeks.
An alpha generating trading strategy would be to focus on companies with higher probability of getting deleted in the next round of KOSDAQ rebalance in December.
These 15 companies are those among the bottom 30 market cap in KOSDAQ150 that are ranked number 16 to 30 in terms of combined market cap and trading value range.

CX Daily: The Troubling Balancing Act Facing Shanghai’s ER Doctors

By Caixin Global

Shanghai / In Depth: The troubling balancing act facing Shanghai’s ER doctors
Southeast Asia / Southeast Asian exporters step up as China locks down
China-France / Xi, Macron discuss Ukraine war in phone conversation

UK: Cars Drive GDP Growth Back a Month

By Phil Rush

UK GDP growth declined in March as new car deliveries got delayed until April. The trend also disappointed amid downwards revisions and unsustainably sourced strength.
Occasional jumps, mainly in the past, skew headline growth rates higher. GDP’s pace still seems to be quartered in Q2, now from 0.8% to 0.2% q-o-q.
Stagflationary pressures from extensive cost shocks sustain an uncomfortable policy trade-off. We still expect the BoE to hike in June and August before slowing the pace.

CX Daily: ‘Zero Covid’ Slams the Brakes on China’s Electric Car Industry

By Caixin Global

In Depth: ‘Zero Covid’ slams the brakes on China’s electric car industry
Shanghai’s Covid hospitals struggle to handle patients with other serious illnesses
Exclusive: China’s ‘Big Four’ banks to start pilot program for retirement savings products

Before it’s here, it’s on Smartkarma

May 13

Most Read: Thai Beverage, MR D.I.Y. Group, Ichigo Inc, SinoPac Holdings, Softbank Group and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

ThaiBev BeerCo Pre-IPO – Back for Another Round
MSCI May 2022 Index Rebalance: In-Line With a Few Surprises
FTSE EPRA Nareit Developed Asia Preview: Two Adds Near the Inclusion Threshold
FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac Holdings Could Replace Momo.com
Softbank – Not Pretty

ThaiBev BeerCo Pre-IPO – Back for Another Round

By Sumeet Singh

On 5th May 2022, Thai Beverage announced that BeerCo will resume its Proposed Spin-off Listing. This time the company is aiming to raise less than US$1bn, as per media reports.
We have looked at various aspects of the deal earlier, as the company had tried to spin-off BeerCo in 2021 as well before finally calling it off in April 2021.
In this note, we talk about the recent updates for BeerCo.

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises

By Brian Freitas

For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US).

FTSE EPRA Nareit Developed Asia Preview: Two Adds Near the Inclusion Threshold

By Brian Freitas

The next FTSE EPRA Nareit Index review will use data from 23 May. The changes will be announced on 1 June and implemented at the close on 17 June.
Potential inclusions at the review include Frasers Hospitality Trust (FHT SP) and Ichigo Inc (2337 JP), though both are very close to the basis point threshold for inclusion.
Digital Core REIT (DCREIT SP) has still not published an audited annual report in English and is unlikely to be included in the index at the June rebalance.

FTSE TWSE Taiwan 50 Index Rebalance Preview: Sinopac Holdings Could Replace Momo.com

By Brian Freitas

The next FTSE TWSE Taiwan 50 Index review will use data from 23 May. The changes will be announced on 3 June and implemented at the close on 17 June.
Momo.Com Inc (8454 TT) is a potential deletion from the index, while SinoPac Holdings (2890 TT) should be included as the highest ranked non-index constituent.
SinoPac Holdings (2890 TT) has over 3.5 days of ADV to buy from passive funds and trades cheaper than its peers. The stock could outperform over the next few weeks.

Softbank – Not Pretty

Softbank results were about as ugly as expected and the only major new information in our view was that they took a small (too small) write-down on their private holdings.
Masayoshi Son did Masayoshi Son things regaling investor with tales of “To the moon bro!” but offered little of substance to suggest a turnaround was near.
Ultimately we keep coming back to the question of where margin calls might be struck.

Before it’s here, it’s on Smartkarma

May 13

Equity Bottom-Up: Softbank Group, Tokyo Electron, JD.com Inc (ADR), NTT (Nippon Telegraph & Telephone), Subaru Corp, XL Axiata, Coupang, Nissan Motor, Mitra Keluarga Karyasehat Tbk and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

Softbank – Not Pretty
Softbank Group Q4 21 Results Reaction: The Tech Winter Is Here
TEL – Margin Disappointment
JD.com (9618 HK): To Keep Revenue at Any Cost
NTT (Buy) – Q4 21 Results Reaction: Steady as She Goes
Subaru – One Of The Better Weak Yen Plays
XL Axiata (EXCL IJ) – Are You Converegent?
Coupang: Decelerating Revenue, Sporadic Profitability and Still Expensive
Nissan – Significant Upside But Peers Are Better
Mitra Keluarga Karysehat (MIKA IJ) – Back to the Business of Patient Health

Softbank – Not Pretty

Softbank results were about as ugly as expected and the only major new information in our view was that they took a small (too small) write-down on their private holdings.
Masayoshi Son did Masayoshi Son things regaling investor with tales of “To the moon bro!” but offered little of substance to suggest a turnaround was near.
Ultimately we keep coming back to the question of where margin calls might be struck.

Softbank Group Q4 21 Results Reaction: The Tech Winter Is Here

By Kirk Boodry

Softbank reported record losses, as expected, including some writedowns in the private portfolio. That may not be enough to assuage concerns with valuations still in free fall
Management says tech’s day will come again and it is best to be more defensive for now, including a slower pace of investing, which we think is positive
Concern on weak tech and high leverage likely keep the discount in the mid-50s range. There was nothing today to signal an inflection is at hand

TEL – Margin Disappointment

TEL generated ¥169bn in OP in 4Q, well above consensus at ¥150bn and even our ¥160bn estimate.
The issue is that this was on ¥565bn in revenue, well above ourselves and consensus, due to ramping R&D and depreciation expenses.
Those expenses also meant that guidance of ¥716bn in OP was just barely above consensus at ¥692bn.

JD.com (9618 HK): To Keep Revenue at Any Cost

By Ming Lu

JD is facing a severe logistics problem due to the lockdowns in many cities of China.
We believe JD is trying to secure its revenue no matter how large the fulfillment expense is.
We believe the stock has a downside of 22% for the year end 2022.

NTT (Buy) – Q4 21 Results Reaction: Steady as She Goes

By Kirk Boodry

Q4 results and FY22 guidance are in line with expectations and management is confident it is on track to meet its FY23 ¥370 EPS commitment
Returns to shareholders modestly better than expected with a ¥400bn buyback and the possibility of a further dividend hike later in the year still on the table
We remain positive on NTT shares which trade at an attractive 10-11x EPS with further support from expanding shareholder returns

Subaru – One Of The Better Weak Yen Plays

Subaru 4QFY22 was relatively strong compared to previous quarters with revenue of ¥737bn (+4.4% vs. consensus) but material prices pushed OP down to ¥13.3bn (-48.6% vs. consensus).
The FY23 guidance was relatively weak at just ¥3,500bn in revenue (+4.5% vs. consensus) and OP guidance of ¥200bn (-1.0% vs. consensus).
However with the yen where it is we believe Subaru is on track for a return to double digit OPM and OP of ¥370-450bn.

XL Axiata (EXCL IJ) – Are You Converegent?

By Angus Mackintosh

XL Axiata (EXCL IJ) results were encouraging with +8% revenue growth driven by data (95.5% of service revenues), with stable ARPUs and price competition easing during 1Q2022.
The march towards being truly converged continues with the completion of the Link Net acquisition giving it a significant leg up and due for completion on 27th May.
XL Axiata remains our top pick amongst Indonesia’s telcos, with the highest exposure to data and Indonesia’s headlong growth into all things digital and compelling valuations.

Coupang: Decelerating Revenue, Sporadic Profitability and Still Expensive

By Oshadhi Kumarasiri

Coupang (CPNG US)’s 1Q22 results were mixed with revenue 2.5% below consensus but an operating loss of $205.7m was $94.3m lower than consensus through a 3% gross margin improvement.
The company’s comments on the gross margin outlook are a bit concerning and make us think that the improvement in Q1 was just a one-off.
Coupang is fundamentally expensive on EV/GMV+Retail Sales. With selling pressure from Softbank and a significant downside to revenue estimates, we remain Short Coupang.

Nissan – Significant Upside But Peers Are Better

Nissan generated total revenue of ¥2,271bn (-12.0% vs. consensus) and OP of ¥56bn (+33.3% vs. consensus) in 4QFY22.
This enabled the company to hit ¥247bn in OP vs. our start of year projection of ¥250bn (when guidance was for breakeven).
Guidance looked superficially weak at ¥10trn in revenue (-0.4% vs. consensus) and ¥250bn in OP ¥250bn (-21.1% vs. consensus) but margin assumptions are silly and we expect ¥500bn in OP.

Mitra Keluarga Karysehat (MIKA IJ) – Back to the Business of Patient Health

By Angus Mackintosh

Mitra Keluarga Karyasehat released 1Q2022 results recently which reflected a changing patient mix with less COVID-related patients and a recovery in its core patient business.
Hospital occupancy is rising whilst Mitra Keluarga is also increasing bed numbers but margins have been impacted by changing patient mix but this is a positive long-term trend.
Mitra Keluarga Karyasehat (MIKA IJ) remains a key proxy for rising healthcare penetration in Indonesia, with valuation attractive from a historical basis.

Before it’s here, it’s on Smartkarma

May 13

Industrials: Bumhan Fuelcell, Sinosteel Engineering & Technology, American Equity Investment Life Holding and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Bumhan Fuelcell IPO Preview
Sinosteel Gets Permit to Exploit Iron Ore in Cameroon
FPA Queens Road Small Cap Value Fund Q1 2022 Commentary

Bumhan Fuelcell IPO Preview

By Douglas Kim

Bumhan Fuel Cell is one of the leading players in the hydrogen fuel cell industry in Korea.
Amid very difficult capital markets, a Korean company called Bumhan Fuelcell is getting ready to complete its IPO in June 2022.
IPO price range is from 32,200 won to 40,000 won. The expected market cap after the IPO is from 288 billion won to 358 billion won.

Sinosteel Gets Permit to Exploit Iron Ore in Cameroon

By Caixin Global

China’s Sinosteel Corp. has struck a deal with the Cameroonian government to begin production of iron ore at a mine, becoming the latest Chinese firm to tap the valuable resource in West Africa.
According to a company statement, Sinosteel obtained a permit to exploit the Lobé mine after signing a contract with Gabriel Dodo Ndoke, Cameroon’s minister of mines, industry and technological development
The state-owned mining giant will invest about $700 million to develop the Lobé mine, which is estimated to have about 600 million tons of iron ore reserves

FPA Queens Road Small Cap Value Fund Q1 2022 Commentary

By Fund Newsletters

FPA Queens Road Small Cap Value Fund returned -3.3% in the first quarter of 2022.
First quarter performance was negatively impacted by the Fund’s overweight position in the technology sector.
The Fund’s overweight position in technology sector also negatively impacted the Fund’s first quarter performance.

Before it’s here, it’s on Smartkarma

May 12

India: Aarti Drugs Ltd, Asian Paints, Bharat Petroleum Corp, Welspun India, Zensar Technologies and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Aarti Drugs: Price Hike and New Capacity to Aid in Growth
Asian Paints: Surprise on Margin Front; Maintain BUY
HSIE Results Daily: Asian Paints, SRF, Gujarat Gas, Dalmia Bharat, Max Financial
Bharat Petroleum – Tear Sheet – Lucror Analytics
Welspun India: No Respite from Margin Pressure Pain; Weak Outlook. Maintain Buy
Zensar Tech: Robust Recovery; Superior Outlook

Aarti Drugs: Price Hike and New Capacity to Aid in Growth

We believe the company’s profitability might be hit due to the above factors, prompting us to recommend a HOLD rating on the stock with TP Rs 450/share.
Aarti Drugs Q4FY22 reported revenue grew 38% YoY which stood above our expectations, led by healthy growth in Chronic therapies, especially in the anti- diabetic segment.
Domestic revenue grew ~37% on a YoY basis while exports grew by around 50% YoY and API volumes grew 23% on a YoY basis.

Asian Paints: Surprise on Margin Front; Maintain BUY

Asian Paints delivered a strong set of numbers in Q4FY22 with revenue up ~21% YoY to Rs 7,893 Cr, led by a combination of volume growth (up 8%) and price mix.
However, the near-term challenge still persists and we would wait to see if the visibility of the near term performance sustains before we change our rating to BUY
We continue to maintain our HOLD rating with an unchanged TP of Rs 3,200 (57x FY24E EPS).

HSIE Results Daily: Asian Paints, SRF, Gujarat Gas, Dalmia Bharat, Max Financial

By HDFC Securities

Asian Paints: Asian Paints’ (APNT) Q4 performance was broadly in line.
SRF: We retain our ADD rating on SRF, with a target price of INR 2,330, on the back of (1) continued healthy performance from speciality chemicals business and packaging films business; (2) strong balance sheet; and (3) deployment of Capex for high-growth speciality chemicals business over the next 3-4 years to tap opportunities emerging from agrochemical and pharmaceutical industries.
Gujarat Gas: Our BUY recommendation on Gujarat Gas (GGL), with a price target of INR 625, is premised on (1) margin improvement; (2) portfolio of mature, semi- mature, and new geographical areas (GAs); and (3) compelling valuations, given superior return ratios among the city gas distribution players. Q4FY22 EBITDA was 19% above our estimate and APAT was 18% above, owing to 27% above expectation per unit EBITDA margin.

Bharat Petroleum – Tear Sheet – Lucror Analytics

By Trung Nguyen

We view Bharat Petroleum Corporation Limited (BPCL) as “Low Risk” on our LARA scale, primarily due to its strategic importance to India and its SOE status (52.98% government-owned). It is the Indian government’s vehicle to manage retail fuel prices. Thus, BPCL enjoys significant credit uplift. We like the company’s large scale and leading position in the oil & gas downstream sector. It owns many of the country’s refineries, fuel stations and gas pipelines. However, BPCL remains exposed to volatility in crack spreads and crude prices, which affect its profitability. Capex requirements in its refinery, marketing and petrochemicals operations remain significant. BPCL’s credit metrics are quite healthy.

Our Credit Bias is “Negative” given India’s intended sale of its BPCL stake. The divestment is expected to be concluded in 2023, which could end the company’s SOE status and trigger the Change of Control clause for its debt. Uncertainty over the buyer and hence the strength of BPCL’s new parent is a potential negative for the credit.

We initiate coverage with a “Hold” recommendation on the BPCLIN notes.

Welspun India: No Respite from Margin Pressure Pain; Weak Outlook. Maintain Buy

Welspun India Ltd (WIL) posted its worst quarterly numbers in the last two years as company continues to face severe headwinds on cost front and which is also beginning to weaken demand environment.
The numbers were a complete miss on all fronts. WILs revenue for the quarter stood at Rs 2,227 Cr (down 10% from our estimate of Rs 2,477 Cr), up 4.3% YoY
Effectively, we change our rating from BUY to HOLD with a revised target price of Rs 70 (from Rs 133 earlier), valuing the company at 9x FY24 EPS of Rs 7.8 per share, implying an upside of ~2% from the CMP 69.

Zensar Tech: Robust Recovery; Superior Outlook

We recommend a BUY on Zensar, aided by strong revenue growth momentum and better recovery
Zensar Q4FY22 performance beat our expectations on the revenue front.
We assign 14.8x P/E multiple to its FY24E earnings of Rs 24.25 per share to arrive at a TP of Rs 360 per share, implying an upside of 25% from CMP.

Before it’s here, it’s on Smartkarma

May 12

South Korea: Meritz Fire & Marine Insurance, Coupang and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

KOSPI 200 Rebalancing: Shorting Event for Additions
Coupang 1Q 2022 Earnings: Beats Consensus Earnings Estimates (A High Conviction Turnaround Play)

KOSPI 200 Rebalancing: Shorting Event for Additions

By Sanghyun Park

There is a clear correlation between the resumption of short selling and the overvaluation of stock prices, which was actively reflected when short selling resumed.
So, in this rebalancing as well, we need to target those who have seen a significant share price rise recently while looking at the increasing trend of the loan balance.
The stocks to watch are Meritz Fire and Hana Tour as their recent share price has been the most solid. In particular, Hana Tour is conducting a capital increase.

Coupang 1Q 2022 Earnings: Beats Consensus Earnings Estimates (A High Conviction Turnaround Play)

By Douglas Kim

Coupang reported better than expected results in 1Q 2022. Coupang had operating loss of $205.7 million in 1Q 2022, which was 31% better than consensus.
This is a High Conviction turnaround story marked by significant improvement in profit margins. The company’s gross profit increased by an impressive 42% YoY.
Given Coupang’s excellent earnings in 1Q 2022, the tide has turned on Coupang and there is likely to be improving positive sentiment on this stock in the next several weeks.

Before it’s here, it’s on Smartkarma

May 12

Equity Capital Markets: Vista REIT, Thai Beverage and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Vista REIT IPO – Smallest of the Lot, Sector Has Been Under Pressure
ThaiBev BeerCo 2022 Pre-IPO – Peer Comp and Thoughts on Valuation

Vista REIT IPO – Smallest of the Lot, Sector Has Been Under Pressure

By Clarence Chu

Vista REIT (VR PM) is looking to raise about US$158m in its Philippines IPO. This would be a 100% secondary selldown by the Sponsors.
VREIT’s larger assets have seen their occupancies dwindle since FY19. A bulk of its office tenants are up for expiry in FY22 and sector momentum hasn’t been the greatest.
VREIT would also hold the smallest portfolio in terms of appraised valuation and would be the smallest REIT, as per mcap.

ThaiBev BeerCo 2022 Pre-IPO – Peer Comp and Thoughts on Valuation

By Sumeet Singh

On 5th May 2022, Thai Beverage announced that BeerCo will resume its Proposed Spin-off Listing. This time the company is aiming to raise less than US$1bn, as per media reports.
We have looked at various aspects of the deal earlier, as the company had tried to spin-off BeerCo in 2021 as well before finally calling it off in April 2021.
In this note we undertake a peer comparison and talk about valuations

Before it’s here, it’s on Smartkarma