In this briefing:
- New Oriental (EDU): Stock Up 120% in 2019, But Still 23% Upside Due to Excellent Q2
- SK Holdings SoTP Valuation Sensitivity Analysis
- IndusInd Bank – NPL Formation Doubling
- RHB Bank – Quiet Transformation
- EDU’s stock price had risen more than 120% in 2019.
- The growth rate of both students and revenues accelerated in 2Q2020 (ended November 2019).
- The operating margin turned to 3% in 2Q2020 versus -5% in 2Q2019.
- The classroom-based business grew more rapidly than the online business and EDU has been utilizing learning centers more efficiently.
- We believe, in fiscal 2020 (ended May 2020), total revenues will grow 29% and the operating margin will improve to 14% versus 10% in F2019.
- The P/E band suggests an upside of 23%.
Our previous coverage on New Oriental:
- New Oriental (EDU): Operating Profits Up 54%, as a Main Competitor Goes Bankrupt
- New Oriental (EDU): Growth and Margin Recovered
- New Oriental (EDU): Do Not Fear Q2 Record Losses, 27% Upside
- New Oriental (EDU): Educator License Not A Concern
- New Oriental (EDU): Laws Harm Private Schools? Not This One
In this insight, we provide an updated sum-of-the parts (SoTP) valuation on SK Holdings (034730 KS). There are many moving parts of SK Holdings and it helps to review the main factors that have been impacting its share price. Our base case valuation of SK Holdings is 326,550 won, which represents a 36% upside from current levels.
We believe that the 7 MOST IMPORTANT FACTORS impacting the share price of SK Holdings are currently as follows:
1) Share price trend of Sk Innovation (096770 KS)
2) IPO of SK Biopharm
3) Share price trend of SK Telecom (017670 KS)
4) Changing values of SK Siltron, SK E&S and other private companies
6) Shareholder boosting measures (Share buybacks, dividends)
7) The ongoing divorce proceedings between SK Chairman Chey Tae-Won & his wife Roh So-Young
Indusind Bank (IIB IN) is one of India’s fastest growing financials. This means that it has higher unseasoned loans than many. Where this occurs alongside weak or deteriorating economic conditions, it can see higher NPL formation. The numbers just out, are illustrative of how this can look. Our emphasis herein is on Pillar 3 detail of NPLs and also credit costs, but for an intriguing read of questionable accounting and disclosure, we refer to Hemindra Hazari‘s report IndusInd Bank’s Charge on Shareholder Funds: Obscurity Is the Best Policy?.
RHB Bank Bhd (RHBBANK MK) used to be far more focused on corporate loans and this has changed dramatically over the years, in favor of consumer loans and SME loans. The bank’s transformation is also evident in its digitalization program, which may be easier for a medium-sized, well-managed bank to affect, than for large banks or less able small banks. The result of the bank’s strategic shift is evident in many facets, including ROA and ROE. But we believe there is more to come. Better credit metrics than most is also a stand out feature, as is the RHB’s relatively low market capitalization level compared with assets.
You are currently reading Executive Summaries of Smartkarma Insights.
Want to read on? Explore our tailored Smartkarma Solutions.