In this briefing:
- CStone Pharma’s (基石药业) Lock-Up Expiry – Lack of Material Newsflow for Core Drug Candidates
- SMC (6273 JP): Contraction Accelerates Again in 1Q
- Douyu: Mixed Op Data in 2Q2019, A Weak July
- VGI: Moving Beyond Bt15bn Worth of Thai OOH Ads Market
- AGS Transact Technologies IPO – High on Cash but Low on Profit
Lock-up restriction for Cstone Pharma’s pre-IPO investors and cornerstone investors will expire on August 26th.
As we expect roughly USD 1 billion worth of shares will be eligible for sale, we look at the company’s recent development in this insight.
Despite numerous updates announced by the company in the past six months, there is a lack of newsflows for core drug candidates and hence, a lack of catalyst for the stock price.
The contraction of SMC’s business continued to accelerate in 1Q of FY Mar-20, with sales down 13.9% and operating profit down 25.8% year-on-year in the three months to June. Sales and operating profit were down in all regions. Net profit was down 35.4% due to forex losses.
Guidance remains unchanged. Management is guiding for a 9.1% year-on-year decline in sales and an 18.0% decline in operating profit in 1H of FY Mar-20 and a 4.7% decline in sales and an 11.2% decline in operating profit in the year as a whole. Guidance for 2H is the same as guidance for 1H, indicating a lack of visibility. Comparisons are likely to remain difficult through December, but this may be the bottom in terms of year-on-year change.
At ¥39,420 (August 14 closing price), the shares are selling at 23x management’s EPS guidance for FY Mar-20. This compares with a 5-year historical P/E range of 13.8x – 28.5x. Expectations of a trade deal and an ongoing share buy-back program appear to be supporting the share price.
Both Douyu and Huya, the top e-sports streamers reported earnings last night. In this insight, we will compare the key metrics of the two companies and highlight our observation in July 2019.
Both companies reported excellent 2Q2019 topline results. Having said that, we think Douyu has done better than Huya in terms of monetization but Huya has done better in terms of MAU growth and ARPPU growth.
Going into July, data of top streamers suggests that Douyu appears to lose out to Huya in terms of both monetization and active users.
1QFY20 Analyst meeting came out with a positive tone. We maintain our FY20-21E earnings outlook and BUY rating with target price at Bt10.80 derived from a SOTP methodology and implying a 2.1x relative PE to the Thai communication services sector, or 60xPE’FY20E.
- The management main trajectory for FY2020 is to create synergy between the subsidiaries and associates that have acquired in the past few years. So, heavy capex investment seems unnecessary apart from media capacity expansion for BTS extension line (maintain at Bt700m).
- Media revenue will be driven by transformation from static to digital screens, new developed bundling package and increase in price.
- Synergy with PLANB has just started to kick in
- Digital marketing is the next territory
Ags Transact Technologies (ATT IN) (ATT) plans to raise around US$150m via selling a mix of primary and secondary shares in India.
ATT is one of the largest providers of ATM managed services and cash management services. Earnings have grown steadily over the past few years although margins have been volatile. Moreover, the exit of PE investors with what seems to be tepid returns is probably not a great sign for future investors.