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Smartkarma Daily Briefs

Mar 25
0

Equity Capital Markets: JD Logistics, aCommerce Group, Ferretti SpA and more

By | Daily Briefs, ECM

In today’s briefing:

  • JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps
  • Acommerce Pre-IPO – Beneficiary of COVID However, Has Been Losing Market Share
  • Ferretti IPO: Peer Comparison and Valuation

JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps

By Sumeet Singh

  • JD Logistics (JDL) aims to raise around US$1.1bn, with US$400m coming via an institutional placement. The balance will be funded by issuing shares at the same price to JD.com.
  • We have covered the stock extensively, links to our previous notes are below.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

Acommerce Pre-IPO – Beneficiary of COVID However, Has Been Losing Market Share

By Clarence Chu

  • ACommerce Group (ACOM TB) is looking to raise about US$200m in its upcoming Thailand IPO.
  • Acommerce is an ecommerce enabler providing end-to-end and ala carte ecommerce solutions for brands in Southeast Asia (SEA). 
  • Acommerce has been a key beneficiary of COVID, however, has been recording unexpectedly weak margins, suggesting that it does a lot of logistical heavy lifting. 

Ferretti IPO: Peer Comparison and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Luxury Italian yacht maker Ferretti Group plans to raise US$248.4m at a market capitalisation of US$1.1bn and a post-money EV of US$807m at the midpoint of the IPO price range.
  • Ferretti’s revenues suffered with COVID-19 and ongoing issues such as the Ukraine-Russia war and China-US trade tensions would only put further pressure on the company.
  • We think Ferretti’s shares are fairly valued at the indicative IPO price range given the current volatility in the market, political turmoil and lack of investor confidence.

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Mar 25
0

Most Read: JD.com Inc., Toshiba Corp, Hanil Cement Co Ltd/New, JD Logistics, KT Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling
  • Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail
  • KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes
  • JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps
  • KT (030200): MSCI Re-Inclusion Possibility with a Sharp Rise in Foreign Room

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

By Brian Freitas

  • We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
  • JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
  • The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail

By Travis Lundy

  • Toshiba EGM fails to provide a positive result as both Toshiba’s own Separation Plan and 3D Investment’s proposal to enhance privatisation bidder engagement and transparency fail. 
  • Activists are stuck. Management is too. 3+ years since the last big buyback and 3 new CEOs and we are back to the drawing board for both management and activists. 
  • But both have a head start. The Shareholder Return Plan, eventual disposition of Kioxia, and non-core asset sales would be a start. And Raymond Zage’s letter is worth a re-read.

KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes

By Brian Freitas

  • Over 3/4th of the way through the review period for the June rebalance, we see 7 potential changes to the KOSPI200 Index. Most are high probability changes.
  • Potential inclusions: F&F (383220 KS), SD Biosensor (137310 KS), Meritz Fire & Marine (000060 KS), Iljin Hysolus (271940 KS), K Car (381970 KS), Hanil Cement (300720 KS), Hana Tour (039130).
  • Potential deletions: Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Nexen Tire (002350 KS), Hyundai Home Shopping (057050 KS), Cuckoo Homesys (284740 KS), Sk Discovery (006120), Grand Korea Leisure (114090).

JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps

By Sumeet Singh

  • JD Logistics (JDL) aims to raise around US$1.1bn, with US$400m coming via an institutional placement. The balance will be funded by issuing shares at the same price to JD.com.
  • We have covered the stock extensively, links to our previous notes are below.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

KT (030200): MSCI Re-Inclusion Possibility with a Sharp Rise in Foreign Room

By Sanghyun Park

  • Based on yesterday’s closing price, KT’s foreign room fell to 17.6%. MSCI’s foreign room threshold for non-constituents subject to foreign ownership limit (FOLs) is 15%.
  • If KT’s foreign room stays above 15% by March 31, it will be re-included with an adjustment factor of 0.5 in May SAIR. Its float is 25%, 0.5x FOL (49%).
  • Passive flow is estimated at 6.17x ADTV, assuming a 25% float. This could provide momentum to outperform the sector peers, making us consider a sector long/short setup aimed at this.

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Mar 25
0

Indonesia: Bukalapak and more

By | Daily Briefs, Indonesia

In today’s briefing:

  • Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems

Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems

By Angus Mackintosh

  • Bukalapak (BUKA IJ) is rapidly broadening its exposure to a greater range of services, with the latest move increasing its exposure to gaming, a potential future cash cow. 
  • We have already seen Bukalapak (BUKA IJ) making bold moves into digital banking through Allo Bank Indonesia and a direct commitment to online groceries through AlloFresh with Trans Retail Indonesia.
  • We continue to focus on the improving fundamentals of Bukalapak (BUKA IJ) and its growing ecosystem and would use any short-term trading anomalies to accumulate the stock.

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Mar 25
0

Event-Driven: Toshiba Corp, JD.com Inc., Hanil Cement Co Ltd/New, KT Corp, Uniti Group Ltd, Yamaha Motor, Crown Resorts and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail
  • JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling
  • KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes
  • KT (030200): MSCI Re-Inclusion Possibility with a Sharp Rise in Foreign Room
  • Toshiba – Both Proposals Voted Down
  • Uniti (UWL): Competitive Bidding Situation As Macquarie/PSP Proposal Emerges
  • Uniti’s Indicative Bid from Connect Consortium to Set off a Bidding War?
  • Yamaha Motors Buyback (7272) – Medium-Bigly Buyback Complicated by TOPIX FFW and Cross-Holdings
  • No Surprise As Perth Royal Commission Finds Crown Resorts Unsuitable for WA Licence

Toshiba Coin Toss Is Neither Heads Nor Tails as Both Proposals Fail

By Travis Lundy

  • Toshiba EGM fails to provide a positive result as both Toshiba’s own Separation Plan and 3D Investment’s proposal to enhance privatisation bidder engagement and transparency fail. 
  • Activists are stuck. Management is too. 3+ years since the last big buyback and 3 new CEOs and we are back to the drawing board for both management and activists. 
  • But both have a head start. The Shareholder Return Plan, eventual disposition of Kioxia, and non-core asset sales would be a start. And Raymond Zage’s letter is worth a re-read.

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

By Brian Freitas

  • We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
  • JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
  • The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

KOSPI200 June Index Rebalance Preview: 7 Changes as Adds Outperform Deletes

By Brian Freitas

  • Over 3/4th of the way through the review period for the June rebalance, we see 7 potential changes to the KOSPI200 Index. Most are high probability changes.
  • Potential inclusions: F&F (383220 KS), SD Biosensor (137310 KS), Meritz Fire & Marine (000060 KS), Iljin Hysolus (271940 KS), K Car (381970 KS), Hanil Cement (300720 KS), Hana Tour (039130).
  • Potential deletions: Cuckoo Holdings (192400 KS), S&T Motiv (064960 KS), Nexen Tire (002350 KS), Hyundai Home Shopping (057050 KS), Cuckoo Homesys (284740 KS), Sk Discovery (006120), Grand Korea Leisure (114090).

KT (030200): MSCI Re-Inclusion Possibility with a Sharp Rise in Foreign Room

By Sanghyun Park

  • Based on yesterday’s closing price, KT’s foreign room fell to 17.6%. MSCI’s foreign room threshold for non-constituents subject to foreign ownership limit (FOLs) is 15%.
  • If KT’s foreign room stays above 15% by March 31, it will be re-included with an adjustment factor of 0.5 in May SAIR. Its float is 25%, 0.5x FOL (49%).
  • Passive flow is estimated at 6.17x ADTV, assuming a 25% float. This could provide momentum to outperform the sector peers, making us consider a sector long/short setup aimed at this.

Toshiba – Both Proposals Voted Down

By Mio Kato

  • Votes at Toshiba’s EGM ended up being cast in the most likely fashion with both management’s and 3D’s proposals being voted down. 
  • There was nevertheless considerable uncertainty and it will be interesting to see what the voting breakdowns were. 
  • For now, however, this just pushes out the prospect of any true resolution and we view that as negative.

Uniti (UWL): Competitive Bidding Situation As Macquarie/PSP Proposal Emerges

By David Blennerhassett

  • Buying 13.5% below Morrison & Co’s Offer terms last week for Aussie broadband player Uniti Group Ltd (UWL AU) was the right call as a new (indicative, non-binding) proposal emerges.
  • Macquarie Asset Management’s Real Assets division and Public Sector Pension Investment Board are offering to acquire Uniti for $5.00/share, via a Scheme of Arrangement, an 11% premium to Morrison’s tilt. 
  • The Board of Uniti is currently considering the new proposal.  Morrison’s four-week exclusivity period kicked off last Friday. 

Uniti’s Indicative Bid from Connect Consortium to Set off a Bidding War?

By Arun George

  • The Connect consortium will offer A$5.00 cash per share, an 11.1% premium to the Morrison & Co indicative offer of A$4.50.
  • Brookfield has joined Morrison & Co as joint bidders. This development suggests another round of bids for Uniti Group Ltd (UWL AU).
  • The A$5m fee to break the Morrison/Brookfield exclusivity pales in comparison to Connect consortium’s A$340m premium to the Morrison/Brookfield offer. Expect Connect consortium to secure due diligence access. 

Yamaha Motors Buyback (7272) – Medium-Bigly Buyback Complicated by TOPIX FFW and Cross-Holdings

By Travis Lundy

  • Yamaha Motor (7272 JP) announced a short-term buyback. 3 months, 3%. It isn’t huge but it helps with the TOPIX FFW changes to come in two weeks. 
  • It also helps with the extra overhang from last year’s selldown and the significant cross-holding overhang which exists. 
  • But the shares are very inexpensive vs peers when one looks at consensus forward earnings and EBIT, and better growth is expected too.

No Surprise As Perth Royal Commission Finds Crown Resorts Unsuitable for WA Licence

By David Blennerhassett

  • The Perth Casino Royal Commission has found Crown Resorts (CWN AU)‘s casino in Perth, Western Australia, is “not suitable” to hold a gaming licence.
  • This follows the findings in New South Wales and Victoria that two of Crown Resort’s other subsidiaries were either not suitable to be granted a casino license or not suitable.
  • As with the recently announced AUSTRAC proceedings, Blackstone would have been well prepared for this latest development.

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Mar 25
0

China: JD.com Inc., JD Logistics, Beijing Tiantan Biological Products, Cimc Enric Holdings, CSPC Pharmaceutical Group, Greenland Hong Kong Holdings and more

By | China, Daily Briefs

In today’s briefing:

  • JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling
  • JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps
  • Presentation for Impact of Russia/Ukraine War on Asian Markets-Tiantan Biological Products(600161CH)
  • CIMC Enric (3899 HK): Still Running on the Fast Lane
  • CSPC Pharmaceutical (1093 HK): 2021 Results Review- Double-Digit Top-Line Growth, Driven By Oncology
  • JD.com: Can Sustained Market Share Gains Be Transferred into Sustained Margin Progression?
  • Morning Views Asia: Adaro Energy, Powerlong Commercial Management Holdings, Ronshine China Holdings

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

By Brian Freitas

  • We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
  • JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
  • The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

JD Logistics Placement – Not Wholly Convinced, JD’s US$700m Support Helps

By Sumeet Singh

  • JD Logistics (JDL) aims to raise around US$1.1bn, with US$400m coming via an institutional placement. The balance will be funded by issuing shares at the same price to JD.com.
  • We have covered the stock extensively, links to our previous notes are below.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

Presentation for Impact of Russia/Ukraine War on Asian Markets-Tiantan Biological Products(600161CH)

By Xinyao (Criss) Wang

  • In the context of both the war and the pandemic, the blood products market would be a field of high-quality investment. 
  • Due to strict policy supervision, the number of plasma stations is the core competitiveness of enterprises in this industry, which basically determines the scale and outlook of blood products enterprises. 
  • With the background of state-owned enterprise and also having the most plasma stations among peers,Tiantan Biological Products (600161 CH) has an innate advantage over other competitors, with more certainty in long term.

CIMC Enric (3899 HK): Still Running on the Fast Lane

By Osbert Tang, CFA

  • Cimc Enric Holdings (3899 HK) posted a set of encouraging result for FY21. It achieved a 37.4% YoY growth in 2H21 even after a 77.5% growth in 1H21. 
  • Management suggests that gross margin will improve in this year as measures have been taken to cope with the factors that lead to the 2.3pp contraction in FY21.
  • Hydrogen energy is a bright spot – though contribution is still small, it expects to at least double its revenue in FY22, and remains bullish on the long term prospects.

CSPC Pharmaceutical (1093 HK): 2021 Results Review- Double-Digit Top-Line Growth, Driven By Oncology

By Tina Banerjee

  • CSPC Pharmaceutical Group (1093 HK) shares climbed nearly one-month highs after strong 2021 results and new drug approval. The company has recommended final dividend of HKD 0.10/share.  
  • 2021 revenue increased 12% y/y to RMB28 billion, mainly driven by the growth in the finished drug businesses. This has eased concern of CSPC’s revenue sensibility to pricing headwind.
  • The company is on track to launch more than 30 innovative and new-formulation drugs, and over 60 generic drugs in the next five years.

JD.com: Can Sustained Market Share Gains Be Transferred into Sustained Margin Progression?

By Wium Malan, CFA

  • JD.com Inc. (9618 HK) has been able to sustain its relative market share gains, in Chinese online retail sales, over the past two years, despite increased competitive pressure.
  • Recent weakness in its margin progression trajectory has cast doubts on its ability to realise its potential for long-term margin expansion.
  • With net cash at 31% of its market cap, relative valuation levels seem attractive.

Morning Views Asia: Adaro Energy, Powerlong Commercial Management Holdings, Ronshine China Holdings

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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Mar 25
0

TMT: Bukalapak, Novatek Microelectronics Corp, Adobe Systems, Shopify Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems
  • Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.
  • Adobe: Price Increase Bullish or Bearish?
  • Shopify ($SHOP)

Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems

By Angus Mackintosh

  • Bukalapak (BUKA IJ) is rapidly broadening its exposure to a greater range of services, with the latest move increasing its exposure to gaming, a potential future cash cow. 
  • We have already seen Bukalapak (BUKA IJ) making bold moves into digital banking through Allo Bank Indonesia and a direct commitment to online groceries through AlloFresh with Trans Retail Indonesia.
  • We continue to focus on the improving fundamentals of Bukalapak (BUKA IJ) and its growing ecosystem and would use any short-term trading anomalies to accumulate the stock.

Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

By Patrick Liao

  • Novatek’s monthly revenue is increasing above 20% YoY from July 2020.  However, the growth trend seems slowing down from 1Q22.
  • The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.
  • Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.

Adobe: Price Increase Bullish or Bearish?

By Aaron Gabin

  • Adobe’s stock has pulled back 35% since November, a far larger drawdown than megacap software peers on fears of pulled in growth for Creative Cloud.
  • Weak initial guidance for 2022 was reiterated this past week, implying reacceleration in 2H22.
  • Price increases should serve as a tailwind in 2H22, providing a good entry point on a quality compounder that is trading at 5 year trough multiples.

Shopify ($SHOP)

By MT Capital

  • Today I will be completing an in-depth analysis on Shopify. Within, I will spend time breaking down the opportunity in front of the company, both broadly within the e-commerce space as a whole, as well as more specifically from a value proposition point of view.
  • In addition, I will break down the company’s business model, clearly outline how the company makes money, analyze their most recent earnings report, delve into some KPIs and discuss some bear and bull cases that some investors should be wary of going forwards.
  • As always, the format of this research piece can be seen outlined below, feel free to skip ahead to the sections that you feel will be most useful.

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Mar 25
0

Singapore: Comfortdelgro Corp and more

By | Daily Briefs, Singapore

In today’s briefing:

  • Comfortdelgro (CD): Restriction Easing, Green And Low EV/EBITDA.

Comfortdelgro (CD): Restriction Easing, Green And Low EV/EBITDA.

By Henry Soediarko

  • The latest announcement by the SG Multi-Task Force to further relax COVID-19 restrictions is a major positive catalyst.
  • Its hybrid taxi accounted for more than 50% of its entire fleet as of end-December 2020. It remains on track to replace all diesel taxis with hybrid models by 2023.
  • Investors will be paying a discounted valuation for the cash flow if they own Comfortdelgro Corp (CD SP) compared to its peers which trades at a much higher EV/EBITDA.

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Mar 25
0

Consumer: JD.com Inc., Uniti Group Ltd, Yamaha Motor, aCommerce Group, Crown Resorts, Mynews Holdings Bhd, Ferretti SpA and more

By | Consumer, Daily Briefs

In today’s briefing:

  • JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling
  • Uniti (UWL): Competitive Bidding Situation As Macquarie/PSP Proposal Emerges
  • Uniti’s Indicative Bid from Connect Consortium to Set off a Bidding War?
  • Yamaha Motors Buyback (7272) – Medium-Bigly Buyback Complicated by TOPIX FFW and Cross-Holdings
  • Acommerce Pre-IPO – Beneficiary of COVID However, Has Been Losing Market Share
  • JD.com: Can Sustained Market Share Gains Be Transferred into Sustained Margin Progression?
  • No Surprise As Perth Royal Commission Finds Crown Resorts Unsuitable for WA Licence
  • Mynews Holdings (MNHB.KL) – 1 Qfy22 Results: Still In The Red
  • Ferretti IPO: Peer Comparison and Valuation

JD.com (9618 HK): Overhang a Bigger Worry than Immediate Selling

By Brian Freitas

  • We do not expect there will be huge selling in JD.com Inc. (9618 HK) immediately. However, there will be an overhang on the stock in the near to medium term.
  • JD.com could drop in the next few days as the ADR allotment is sold in the market. Shorts that have been built up could soak up some of the flow.
  • The big worry is the US$4bn of JD.com stock that Prosus will receive. It is likely they will look to sell and use the cash to buy back their own stock.

Uniti (UWL): Competitive Bidding Situation As Macquarie/PSP Proposal Emerges

By David Blennerhassett

  • Buying 13.5% below Morrison & Co’s Offer terms last week for Aussie broadband player Uniti Group Ltd (UWL AU) was the right call as a new (indicative, non-binding) proposal emerges.
  • Macquarie Asset Management’s Real Assets division and Public Sector Pension Investment Board are offering to acquire Uniti for $5.00/share, via a Scheme of Arrangement, an 11% premium to Morrison’s tilt. 
  • The Board of Uniti is currently considering the new proposal.  Morrison’s four-week exclusivity period kicked off last Friday. 

Uniti’s Indicative Bid from Connect Consortium to Set off a Bidding War?

By Arun George

  • The Connect consortium will offer A$5.00 cash per share, an 11.1% premium to the Morrison & Co indicative offer of A$4.50.
  • Brookfield has joined Morrison & Co as joint bidders. This development suggests another round of bids for Uniti Group Ltd (UWL AU).
  • The A$5m fee to break the Morrison/Brookfield exclusivity pales in comparison to Connect consortium’s A$340m premium to the Morrison/Brookfield offer. Expect Connect consortium to secure due diligence access. 

Yamaha Motors Buyback (7272) – Medium-Bigly Buyback Complicated by TOPIX FFW and Cross-Holdings

By Travis Lundy

  • Yamaha Motor (7272 JP) announced a short-term buyback. 3 months, 3%. It isn’t huge but it helps with the TOPIX FFW changes to come in two weeks. 
  • It also helps with the extra overhang from last year’s selldown and the significant cross-holding overhang which exists. 
  • But the shares are very inexpensive vs peers when one looks at consensus forward earnings and EBIT, and better growth is expected too.

Acommerce Pre-IPO – Beneficiary of COVID However, Has Been Losing Market Share

By Clarence Chu

  • ACommerce Group (ACOM TB) is looking to raise about US$200m in its upcoming Thailand IPO.
  • Acommerce is an ecommerce enabler providing end-to-end and ala carte ecommerce solutions for brands in Southeast Asia (SEA). 
  • Acommerce has been a key beneficiary of COVID, however, has been recording unexpectedly weak margins, suggesting that it does a lot of logistical heavy lifting. 

JD.com: Can Sustained Market Share Gains Be Transferred into Sustained Margin Progression?

By Wium Malan, CFA

  • JD.com Inc. (9618 HK) has been able to sustain its relative market share gains, in Chinese online retail sales, over the past two years, despite increased competitive pressure.
  • Recent weakness in its margin progression trajectory has cast doubts on its ability to realise its potential for long-term margin expansion.
  • With net cash at 31% of its market cap, relative valuation levels seem attractive.

No Surprise As Perth Royal Commission Finds Crown Resorts Unsuitable for WA Licence

By David Blennerhassett

  • The Perth Casino Royal Commission has found Crown Resorts (CWN AU)‘s casino in Perth, Western Australia, is “not suitable” to hold a gaming licence.
  • This follows the findings in New South Wales and Victoria that two of Crown Resort’s other subsidiaries were either not suitable to be granted a casino license or not suitable.
  • As with the recently announced AUSTRAC proceedings, Blackstone would have been well prepared for this latest development.

Mynews Holdings (MNHB.KL) – 1 Qfy22 Results: Still In The Red

By Maybank Research

  • Maintain HOLD with lower TP of MYR0.80
  • A disappointing quarter
  • Improved topline growth dragged by higher opex
  • Cut FY22-FY24 earnings estimates

MNHB’s 1QFY22 results were below our and consensus expectations due to higher-than-expected operational expenses related to its CU store expansion. Going forward, topline growth should see strong momentum in tandem with relaxed movement restrictions but start-up losses from its new CU stores may hinder group earnings recovery. Hence, we lower our FY22-FY24E earnings estimates by 17%-80%. Rolling forward our valuation base year to FY23, our TP is lowered to MYR0.80 (pegged on an updated normalised mean PER of 29x vs. 32x previously).

Ferretti IPO: Peer Comparison and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Luxury Italian yacht maker Ferretti Group plans to raise US$248.4m at a market capitalisation of US$1.1bn and a post-money EV of US$807m at the midpoint of the IPO price range.
  • Ferretti’s revenues suffered with COVID-19 and ongoing issues such as the Ukraine-Russia war and China-US trade tensions would only put further pressure on the company.
  • We think Ferretti’s shares are fairly valued at the indicative IPO price range given the current volatility in the market, political turmoil and lack of investor confidence.

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Mar 25
0

Equity Bottom-Up: Comfortdelgro Corp, MonotaRO Co Ltd, Shimadzu Corp, Novatek Microelectronics Corp, Bukalapak, Adobe Systems, Beijing Tiantan Biological Products, CSPC Pharmaceutical Group, Posco, Cimc Enric Holdings and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Comfortdelgro (CD): Restriction Easing, Green And Low EV/EBITDA.
  • MonotaRo: A Rare Winner in E-Commerce
  • Shimadzu (7701 JP): Excessive Valuation Gone, Business Doing Well
  • Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.
  • Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems
  • Adobe: Price Increase Bullish or Bearish?
  • Presentation for Impact of Russia/Ukraine War on Asian Markets-Tiantan Biological Products(600161CH)
  • CSPC Pharmaceutical (1093 HK): 2021 Results Review- Double-Digit Top-Line Growth, Driven By Oncology
  • War in Ukraine Is Driving Up Share Prices of Korean Steel Producers
  • CIMC Enric (3899 HK): Still Running on the Fast Lane

Comfortdelgro (CD): Restriction Easing, Green And Low EV/EBITDA.

By Henry Soediarko

  • The latest announcement by the SG Multi-Task Force to further relax COVID-19 restrictions is a major positive catalyst.
  • Its hybrid taxi accounted for more than 50% of its entire fleet as of end-December 2020. It remains on track to replace all diesel taxis with hybrid models by 2023.
  • Investors will be paying a discounted valuation for the cash flow if they own Comfortdelgro Corp (CD SP) compared to its peers which trades at a much higher EV/EBITDA.

MonotaRo: A Rare Winner in E-Commerce

By Oshadhi Kumarasiri

  • Among many e-commerce names, MonotaRO Co Ltd (3064 JP) is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.
  • Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.
  • At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.

Shimadzu (7701 JP): Excessive Valuation Gone, Business Doing Well

By Scott Foster

  • Sales of analytical and measuring instruments, medical systems and industrial machinery are all doing well. Aircraft equipment lags, but should improve next fiscal year.
  • Guidance has been raised three times and now calls for an 8% increase in sales and a 23% increase in operating profit in FY Mar-22.
  • Not compellingly cheap, but worth looking at from a long-term perspective.

Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

By Patrick Liao

  • Novatek’s monthly revenue is increasing above 20% YoY from July 2020.  However, the growth trend seems slowing down from 1Q22.
  • The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.
  • Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.

Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems

By Angus Mackintosh

  • Bukalapak (BUKA IJ) is rapidly broadening its exposure to a greater range of services, with the latest move increasing its exposure to gaming, a potential future cash cow. 
  • We have already seen Bukalapak (BUKA IJ) making bold moves into digital banking through Allo Bank Indonesia and a direct commitment to online groceries through AlloFresh with Trans Retail Indonesia.
  • We continue to focus on the improving fundamentals of Bukalapak (BUKA IJ) and its growing ecosystem and would use any short-term trading anomalies to accumulate the stock.

Adobe: Price Increase Bullish or Bearish?

By Aaron Gabin

  • Adobe’s stock has pulled back 35% since November, a far larger drawdown than megacap software peers on fears of pulled in growth for Creative Cloud.
  • Weak initial guidance for 2022 was reiterated this past week, implying reacceleration in 2H22.
  • Price increases should serve as a tailwind in 2H22, providing a good entry point on a quality compounder that is trading at 5 year trough multiples.

Presentation for Impact of Russia/Ukraine War on Asian Markets-Tiantan Biological Products(600161CH)

By Xinyao (Criss) Wang

  • In the context of both the war and the pandemic, the blood products market would be a field of high-quality investment. 
  • Due to strict policy supervision, the number of plasma stations is the core competitiveness of enterprises in this industry, which basically determines the scale and outlook of blood products enterprises. 
  • With the background of state-owned enterprise and also having the most plasma stations among peers,Tiantan Biological Products (600161 CH) has an innate advantage over other competitors, with more certainty in long term.

CSPC Pharmaceutical (1093 HK): 2021 Results Review- Double-Digit Top-Line Growth, Driven By Oncology

By Tina Banerjee

  • CSPC Pharmaceutical Group (1093 HK) shares climbed nearly one-month highs after strong 2021 results and new drug approval. The company has recommended final dividend of HKD 0.10/share.  
  • 2021 revenue increased 12% y/y to RMB28 billion, mainly driven by the growth in the finished drug businesses. This has eased concern of CSPC’s revenue sensibility to pricing headwind.
  • The company is on track to launch more than 30 innovative and new-formulation drugs, and over 60 generic drugs in the next five years.

War in Ukraine Is Driving Up Share Prices of Korean Steel Producers

By Douglas Kim

  • The war in Ukraine has been driving up the share prices of Korean steel producers including Posco (005490 KS), Hyundai Steel (004020 KS), and KG Dongbusteel Co., Ltd. (016380 KS).
  • On 20 March, the Azovstal steel plant, which is owned by Ukrainian steel and mining group Metinvest, was badly damaged by Russian shelling.
  • The war in Ukraine has resulted in reducing the steel supply in Ukraine and raising the steel prices globally. Korean steel producers have been key beneficiaries of these events.

CIMC Enric (3899 HK): Still Running on the Fast Lane

By Osbert Tang, CFA

  • Cimc Enric Holdings (3899 HK) posted a set of encouraging result for FY21. It achieved a 37.4% YoY growth in 2H21 even after a 77.5% growth in 1H21. 
  • Management suggests that gross margin will improve in this year as measures have been taken to cope with the factors that lead to the 2.3pp contraction in FY21.
  • Hydrogen energy is a bright spot – though contribution is still small, it expects to at least double its revenue in FY22, and remains bullish on the long term prospects.

Related tickers: Comfortdelgro Corp (CMDG.SI), MonotaRO Co Ltd (3064.T), Shimadzu Corp (7701.T), Novatek Microelectronics Corp (3034.TW), Adobe Systems (ADBE.O), Beijing Tiantan Biological Products (600161.SS), CSPC Pharmaceutical Group (1093.HK), Posco (005490.KS), Cimc Enric Holdings (3899.HK)

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Mar 25
0

India: JSW Steel Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

Encouraging Signs, But Concerns Still Outweigh; Buying Materials, Energy, Industrials, Health Care

By Joe Jasper

  • We continue to see some encouraging signs that suggest that the lows may have been established for this correction.
  • We still believe a bottoming process would likely take weeks or potentially months and could come with more tests of the lows — or even an undercut.
  • With that said, we continue to see attractive and actionable setups, primarily within cyclical value (Energy, Materials, Manufacturing, Transportation, and Financials).

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