In today’s briefing:
- Seven & I’s Valuation Nears Breaking Point
- PPG Industries Inc.: Initiation of Coverage – Business Model & Key Drivers
- Ecolab Inc.: Initiation of Coverage – Business Model & Key Drivers
- BlackRock’s Q4 Earnings Beat Conveys An Inflection Point
- Progressive Corp: Initiation of Coverage – Technological Superiority & Other Drivers
- DoorDash Inc.: Initiation of Coverage – Recent Collaborations & Other Drivers
- United Rentals Inc.: Initiation of Coverage – Acquisition-Led Growth & Other Drivers
Seven & I’s Valuation Nears Breaking Point
- Seven & I Holdings (3382 JP)‘s Q3 OP of ¥160.1bn was a significant surprise to the upside with consensus OP at ¥130.2bn and us expecting around ¥125-130bn.
- This was mostly driven by an unexpected upside to the retail fuel margin while gasoline prices have come down by more than 34%.
- Nevertheless, we would expect this temporary misalignment in retail fuel margin to correct over the next few quarters, resulting in around 35-40% downside to the company’s valuation multiples.
PPG Industries Inc.: Initiation of Coverage – Business Model & Key Drivers
- This is our first report on PPG, a well-known manufacturer of paints, coatings and specialty materials.
- The company performed well in several of its companies, notably PPG Comex.
- They also began collaborating with the HD Supply team to find new paint clients, particularly in the commercial maintenance sector.
Ecolab Inc.: Initiation of Coverage – Business Model & Key Drivers
- This is our first report on Ecolab, a major provider of water, hygiene and infection prevention solutions and services.
- The company delivered a below-par result with revenues just about meeting Wall Street expectations on account of the price increases.
- The company saw overall pricing increasing from 9% to 12% and consistent double-digit organic sales growth of 13%.
BlackRock’s Q4 Earnings Beat Conveys An Inflection Point
- BlackRock’s Q4 earnings report suggests an inflection point might be near.
- The company managed to mitigate systemic risks during its latest quarter, preserving its base rate rate-centric business model.
- In addition, aggressive investment in technology prompted a rise in product launch costs, according to the report.
Progressive Corp: Initiation of Coverage – Technological Superiority & Other Drivers
- This is our first report on auto insurance major, Progressive Corp.
- The company had a disappointing quarter and failed to meet Wall Street expectations in terms of revenues as well as earnings.
- This quarter, the company increased personal auto rates in 20 states at an average of around 5% each day for an overall countrywide premium impact of +2%.
DoorDash Inc.: Initiation of Coverage – Recent Collaborations & Other Drivers
- This is our first report on DoorDash, the largest online food aggregator in the U.S.
- The company is a market leader in its domain and has demonstrated incredible resilience.
- Even in the last quarter, its market revenues have increased significantly despite the oil crisis, relatively persistent inflation, and the European war.
United Rentals Inc.: Initiation of Coverage – Acquisition-Led Growth & Other Drivers
- This is our first report on United Rentals, one of the largest equipment rental companies in the world, known for renting out construction, aerial and industrial equipment, general tools and light equipment.
- The company’s fleet productivity increased by roughly 9%, while rental revenue increased by 20% year over year in the last quarter.
- The demand for its equipment rental services is relatively high, even though some parts of the economy are slowing down.
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