In today’s briefing:
- Swedish Match Set Alight by Philip Morris
- Yum China (YUMC.US): COVID-19 Headwind Will Have More Impacts in Q2
- Macy’s: Amid Global Uncertainties, a Special Situation in an Out of Favor Sector
- ICHI: Disappointing 1Q22 Result Already in the Price
- Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary
- SHR: 1Q22 Results Indicate Rapid Recovery in 2022
- Polen Global Emerging Markets Growth Q1 2022 Portfolio Manager Commentary
- CAS Investment Partners Q1 2022 Letter To Investors
- Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary
Swedish Match Set Alight by Philip Morris
- PMI is making a recommended cash offer for the Swedish Match at SEK106/share, valuing it at SEK161.2 billion ($16 billion), 39% premium, 17.5x EV/Fwd EBITDA and 23.1x Fwd P/E.
- Swedish Match is strategic for PMI and a valuable asset amidst big tobacco diversification drive. Some shareholders make this point to try to extract a higher price.
- As of close of 12 May, gross spread is 3.3%, an interesting 8.7% annualised (assuming settlement by 7 October). The risk of not completing the offer seems low.
Yum China (YUMC.US): COVID-19 Headwind Will Have More Impacts in Q2
- Yum China Holdings, Inc (YUMC US) delivered a better-than-fear 1Q22 results helped by its strong execution. KFC delivered solid margins above expectations given its store format and take-out service.
- China COVID outbreak is getting worst, we expect 3000 stores will cancel dine-in service in April (compared with 1700 stores in March). Yum China might have deeper loss in 2Q22.
- We continue to think Yum China is the best-run restaurant chain in China. It has resilient business model to navigate through pandemic. Risk/reward is more compelling to own Yum China.
Macy’s: Amid Global Uncertainties, a Special Situation in an Out of Favor Sector
- Amid ghost malls of closed stores across the US, this reimagined middle class retail legacy operator has transformed itself and become a special situation buy at its price.
- With 794 stores in all major cities, Macy’s can move smartly up as global pandemic pressures begin to ease and bearish macro events like the Ukraine war find resolution.
- Current market cap does not reflect impressive transformation of its business model management has put in place that shows in FY 2021 and promises better in 2022.
ICHI: Disappointing 1Q22 Result Already in the Price
- ICHI reported 1Q22 net profit at Bt104m (-15%YoY, -22%QoQ). The 1Q22 result came out lower than our expectation.
- Excluding one-time tax items of Bt24m,1Q22 norm profit was at Bt128m(+5.4%YoY). The YoY and QoQ drop in earnings mainly from a contraction in gross profit margin to 14.7% in 1Q22
- We expect 2Q22 earnings to recover QoQ from high season quarter. Revised down 2022 earnings by 18% to 20% in 2022-23E to factor in rising cost.
Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary
- Polen Capital is a high-conviction growth investment manager.
- Over the first quarter of 2022, Polen Global SMID Company Growth Composite Portfolio returned -22.37% gross and – 22.48% net of fees, respectively, versus the -6.41% return of the MSCI ACWI SMID Capitalization Index.
SHR: 1Q22 Results Indicate Rapid Recovery in 2022
- We maintain BUY rating with TP Bt4.50 derived from 1x PBV’22E, to reflect better outlook post-COVID crisis.
- The company reported 1Q22 net loss of Bt204m compared to net loss of Bt311m in 1Q21 and net loss of Bt70m in 4Q21, in-line with our expectation.
- 1Q22 EBITDA remained positive for 3-consecutive quarter at Bt256m compared to a negative EBITDA of Bt59m in 1Q21 due to strong recovery of overall hotel operation. However, EBITDA dropped 15%QoQ
Polen Global Emerging Markets Growth Q1 2022 Portfolio Manager Commentary
- Polen Capital is a high-conviction growth investment manager.
- Over the first quarter of 2022, the Polen Global Emerging Markets Growth Composite Portfolio returned -14.68% gross and – 14.96% net of fees.
- The top relative and absolute detractors over the quarter included Yandex N.V.
CAS Investment Partners Q1 2022 Letter To Investors
- During the three months ended March 31, 2022, Sosin Partners, LP reported a loss on a mark to market basis net of all fees, expenses, and performance allocations of 26.7%.
- Since the end of March, we have continued to experience meaningful mark toMarket losses..
Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary
- Polen Capital is a high-conviction growth investment manager.
- Over the first quarter, Polen U.S.
- Small Company Growth Composite Portfolio returned -21.98% gross and -22.18% net of fees, respectively, underperforming the -12.63% return of the Russell 2000 Growth Index.
Before it’s here, it’s on Smartkarma
