Singapore

• Emperador (EMI SP) will replace Comfortdelgro Corp (CD SP) in the FTSE Straits Times Index (STI) (STI INDEX) at the close of trading on 16 September.
• Though the changes were expected, there is over 4 days of ADV to trade on both stocks and we do not feel there are a lot of pre-positions built up.
• There are some risks in the stocks, and we would look to close out positions prior to the implementation of the changes.

• Singapore-based Carro more than doubled its revenue in its latest financial year, raking in more than S$650 million (US$464.2 million) in revenue.

• The used-car platform, which also achieved profitability in FY 2021, said it is tracking at over US$930 million in run-rate revenue. It expects to see another 2x growth in revenue for FY 2023.
• Aaron Tan, co-founder and CEO of Carro, attributed the firm’s profitability to its focus on online retailing and machine learning.

• Glints, a Singapore-based careers platform, has raised US$50 million in a series D funding round co-led by DCM Ventures, Lavender Hill Capital, and Persol Holdings.
• The deal pushed the firm’s total funding to date to more than US$80 million, making it the most funded startup in Southeast Asia’s talent recruitment space.
• Glints connects companies to talent pools in Indonesia, Malaysia, Singapore, Vietnam, the Philippines, and Taiwan

• Rex reported a disappointing set of results mainly due to continued struggles in Oman. While Oman production was well over 10K bpd in 1H21 it deteriorated every month in 1H22.
• Revenue was 99.45M USD (+31%) but we estimate it would have been closer to 149M USD if the Yumna field wouldn’t have stopped producing for almost 70 days in 1H22.
• YTD stock is -23% and can only reverse if management proves Oman is ready to rebound. Dividend payments will start on a quarterly basis as of October 2022.

• Frasers Hospitality Trust (FHT SP)’s EGM and trust scheme meeting will take place on 12 September. The effective date is 12 October with a payment date of 19 October.
• The offer comprises S$0.70 cash per share + permitted distributions (estimated 1.356 cents). The IFA considers the scheme consideration to be fair and reasonable.  
• This is a done deal. For a 19 October payment, the gross and annualised spread of the offer (inc. permitted DPU) S$0.714 per unit is 1.9% and 12.1%, respectively. 

• There are 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals were discussed this week: Thoma Bravo’s tilt for Nearmap Ltd (NEA AU); Net Marketing (6175 JP)‘s MBO. 
• Key updates took place for Frasers Hospitality Trust (FHT SP), Tassal (TGR AU), Genex Power Ltd (GNX AU), MACA Ltd (MLD AU), and Giordano International (709 HK).

For our next Webinar, we have the pleasure of welcoming back Analyst Nicolas Van Broekhoven, who will go through his latest picks in the Singapore market, highlighting key stocks and names to watch out for in the Lion City.

The webinar will be hosted on Wednesday, 24 August 2022, 17:00 SGT/HKT.

Nicolas Van Broekhoven was on the buy-side for 15 years, and worked most recently at a medium-sized boutique asset management firm. He grew up in Europe, went to university in the US and has been living in Singapore for the last seven years, which has given him a broad scope on the world and investing in general. He considers himself a generalist investor with a preference for small and mid-cap companies and special situations. However, a large-cap that has gone temporarily out of favour might also pique his interest.

• A little long in the tooth but the Scheme Doc for Frasers Hospitality Trust (FHT SP) was released this morning. 
• It is the standard multi-hundred page document (in this case 502 pages). And it does little other than tell the same weak story as the announcement did.
• But the price is unchanged and the Scheme Meeting is 10 September 2022. This looks like it will be a done deal. 

• In June-July I warned of a reinvestment trade into S-REITs due to the S$2.0-3.0bn cash-out by investors in Mapletree North Asia Commercial Trust and sellers into the SPHREIT Chain Offer.
• Many investors who would need to re-allocate. The trade was to buy major S-REITs. From my last insight, a basket is up 5.3%. MCT has already topped out vs peers.
• The question is…. is there still a trade left to run?

• Sea’s share price dropped 14% yesterday following its 2Q22 results as $2.9bn revenue ($3.0bn for consensus) and $659.4m operating loss excluding goodwill impairment ($594m for consensus) were weaker than expected.
• After lowering the e-commerce revenue guidance by $400m in 1Q22, Sea Ltd (SE US)’s decision to suspend 2022 e-commerce revenue guidance in 2Q22 is an early indication of difficulties ahead.
• Digital Entertainment’s gross bookings are down another 10% QoQ in 2Q22, which indicates that Free Fire’s revenue and profitability could continue to go down during the second half of 2022.

• AEM reported stellar 1H22 results beating street estimates as well as far outpacing their own guidance. CHIPS act in USA will benefit company in FY23.
• Stock reaction (+6%) muted despite great outlook and management optimism. Despite record results and strong outlook, stock is down YTD. 
• AEM is cheap trading at only +/-10x FY22 EPS, too low given the growth and consistent margins profile. Fair Value remains 8 SGD.

• Jardine Matheson Holdings (JM SP) (JMH) has shed ~8% since MSCI said it was cutting the conglomerate’s weighing in two indices.
• The reweighting follows the cancellation of the 59% shareholding in JMH held by Jardine Strategic Holdings (JS SP), which was privatised last year.
• I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.

• Consensus has revised down Sea Ltd (SE US)’s inflated estimates before 2Q22 earnings due on 16th August 2022.
• These revised estimates are on the optimistic side as consensus still thinks that 1Q22 was just a one-off drop.
• However, our analysis of Google Play and App Store data suggests that Sea Ltd’s gaming and e-commerce popularity has further deteriorated from the 1Q22 level.

• Ascott Residence Trust (ART SP) is looking to raise US$110m (S$150m) in its primary offering to partially fund the acquisition of nine properties in France, Vietnam, Australia, US and Japan.
• The deal is a relatively large one to digest at 23.6 days of three month ADV, although it would represent just 3.9% of current mcap. 
• The proposed acquisitions are expected to be accretive, increasing DPU by 2.8% and would increase the REIT’s proportion of stable income to 71%, up from 69% in end proforma-FY21.

• Comfortdelgro Corp (CD SP) operating number has improved during COVID compared to before COVID such as fixed asset turnover from 0.4x to 0.8x. 
• Public transport and taxi operating numbers adjusted for government relief went through the roof.
• It is trading at 6x EV/EBITDA vs Singapore Airlines (SIA SP) at 13x EV/EBITDA. 

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.

• Azure Power Global Ltd
• Olam Group

• It is a recovery play yet its has lagged to SIA. 3 year basis, Comfortdelgro is -46% yet SIA has recovered to only -15% despite the former having better numbers.
• SIA Free Cash Flow is often in red while Comfortdelgro’s has been consistently on the green. 2021 Comfortdelgro’s FCF was SGD +433 million while SIA was SGD -83 million.
• Taxi demand has gone up through the roof judging from the price you have to pay. 

• Coca-Cola has been implementing various growth initiatives off-late to continue expanding its top-line.
• The company had a good quarter and delivered an all-around beat and increased its volume and value share during the quarter.
• Coca-Cola continued its strong marketing efforts and launched end-to-end digital-first brand campaigns for smartwater and vitaminwater.

• General Electric has started seeing a solid recovery in its aerospeace business which has become an important growth driver for the company.
• Macro pressures and supply chain have affected the revenue adversely by approximately 5%.
• The company has recently unveiled the innovative branding of its new companies, GE Vernova, GE Healthcare, and GE Aerospace.

• Mondelez International has been looking to strengthen its position in the snacking category and the recent $2.9 billion acquisition of Clif Bar is a key step in the process.
• The company managed to deliver a strong result and an all-around beat with strong bottom and top-line performance growth in overall categories and regions.
• These results, along with ongoing revenue growth management, simplification, and cost discipline, are delivering strong cash flow and robust profit dollar growth.