In today’s briefing:
- GMO Q2 2022 Quarterly Letter
- Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum
- STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race
- Mitra Adiperkasa (MAPI IJ) – Universally Retail
- Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code
- Vipshop: Rebound in Chinese Apparel Sales Should Trump Conservative Management Guidance
- Summers Value Partners Q2 2022 Investor Letter
- Tesla’s Q3 Ests Are Fading On Weaker China Sales—Again
- Omnicom Group Inc: Catering To The Gaming Market & Other Developments
GMO Q2 2022 Quarterly Letter
- Equity investors in countries with overvalued currencies have two ways to lose and those with undervalued currencies have two ways to win.
- Today’s strong USD looks, in the end, to be our currency and our problem.
- Keep an eye out for dangerously destructive economic policies, but don’t use that as an excuse to avoid the asset class entirely.
- The yen and euro are at their cheapest levels in decades and hedging emerging market equities would be an expensive proposition even if the currencies weren’t generally cheap versus the USD.
Rakuten: Two Consecutive Quarters of Narrowing Mobile Losses Could Change Price Momentum
- Rakuten’s Mobile losses have held back its share price over the last few years, but it is finally starting to show some improvements with costs shrinking sequentially in 2QFY22.
- However, most investors seem to have overlooked this QoQ drop thinking that it is driven by the impact of seasonality.
- With the loss of subscribers in the previous quarter seeming temporary, we are expecting revenue growth through ARPU expansion to more than offset Rakuten Inc (4755 JP) Mobile’s cost growth.
STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the December 2022 Rebalance.
- There could be five M&A-related intra-review deletions between now and the end of the year.
- There could be more index changes in the December 2022 Rebalance too.
Mitra Adiperkasa (MAPI IJ) – Universally Retail
- Mitra Adiperkasa (MAPI IJ) has proved itself with flying colours during the pandemic and continues to do so as mobility resumes, with offline sales recovering but digital remaining firm.
- The company continues to build out its newer brands such as Boots, Footlocker, Sketchers, DigiMAP, and Lego, with 161 store openings in 1H2022 and more to come in 2H2022.
- Mitra Adiperkasa is starting to ramp up its regional presence in Vietnam and the Philippines especially, which represents a future growth driver. Valuations are attractive despite the recent run up.
Main Issue Is the Content Rather than the Progress in Complying with the Corporate Governance Code
- Only 12.1% of prime market listed companies have a majority of independent outside directors who can at least ensure the independence of the board of directors.
- On the nominating/compensation committees, 1/3 of companies are chaired by an inside director. Few committees have clear policies for selecting directors/CEO, and aren involved in determining compensation of individual directors.
- More companies are complying with regard to sustainability. However, it is necessary to analyze whether the target is an acceptable time frame and whether the target value is too low.
Vipshop: Rebound in Chinese Apparel Sales Should Trump Conservative Management Guidance
- Following a contraction in Chinese apparel sales since 3Q21, and similar negative GMV and product revenue growth for Vipshop, we have witnessed a recovery to growth since June.
- Current sell-side forecasts are, however, still for a -10.8%y/y contraction in product revenue for Vipshop in 3Q22f, followed by a -4.4% contraction in 4Q22f which seems overly pessimistic.
- Given the conservative nature of near-term top-line growth expectation, and management guidance, the probability for positive earnings surprise seems high.
Summers Value Partners Q2 2022 Investor Letter
- Summers Value Partners is a boutique value manager that uses a focused, long-term approach to investing in areas of the market where most managers are unwilling or unable to participate.
- The Summers Value Fund LP (“the Fund”) returned -25.9% net in the first half of 2022.
- The majority of our decline took place in the first quarter as we were too slow to react to the Fed’s decision to increase interest rates and shrink its balance sheet to cool the over-heated economy.
- The next stage of the bear market will most likely involve lower corporate earnings due to a more challenging businessclimate and reducedaccess to capital.
Tesla’s Q3 Ests Are Fading On Weaker China Sales—Again
- Market consensus on Q3 deliveries has been dropping toward my ~330,000 estimate on weaker China sales, as we saw in Q2.
- This time they can’t blame Covid-shutdowns—Tesla’s production is wide open.
- Instead it looks like softer demand despite lower prices—signalling potentially more pressure ahead.
Omnicom Group Inc: Catering To The Gaming Market & Other Developments
- Omnicom’s performance in the second quarter was good as the company delivered an all-around beat.
- The company kept its attention on improving its current skills throughout the quarter to fulfill the demands of its clients and potential customers.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
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