Daily Brief Equity Bottom-Up: Smartkarma Corporate Webinar | Metrodata Electronics: Rising with the Digital Tide and more

PT Metrodata Electronics, Tbk (MTDL:IJ), publicly listed company on Indonesia Stock Exchange since 1990, is a Digital Solution Provider and Technology Innovator in Indonesia that leads and enables the digital economy hub. MTDL builds strategic alliances with world-class ICT companies. The Company has two main business units, including Distribution Business (providing World-Class ICT Hardware and Software) that handles distribution through Omnichannel to partnered dealers (both offline and online) and ICT solution companies, as well as runs an e-commerce business (e-catalogue for Government/B2G). Its Distribution network covers more than 150 cities in Indonesia and has more than 5,200 channel partners and more than 100 world-class IT products and service brands. The second business unit, Solution & Consulting Business, is a digital solution provider that provides a complete range of ICT solutions based on Metrodata’s 8 Pillars of Digital Solutions, which consist of Cloud Services, Big Data & Analytics, Hybrid IT Infrastructure, Security, Business Application, Digital Business Platform, Consulting & Advisory Services, and Managed Services to support digital business transformation, for Enterprise, Corporate, SME, and Public Sector segment.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• While HDFC Bank (“HDFCB”) is doing all the right things (distribution expansion, digital infrastructure revamp) from a long-term perspective, it also has near-term growth triggers led by its retail book.  
• Excluding auto sector and two-wheeler loans, HDFCB’s retail book grew 25% YoY in Q1FY23. As the supply chain disruptions recede, HDFCB’s retail book growth could surprise on the upside.
• HDFC Bank (HDFCB IN) is also making decent progress in its digitization upgrades which should further bolster the growth and productivity.

• Shimano’s stock price has declined by 25% year to date on expectations that bike sales will soon start going downhill
• We model a GFC-style recession and find that Shimano’s valuation has already reflected the worst case scenario
• If we are heading for a collapse, then Ferrari N.V. (RACE US) should be acting more like Shimano. The valuation discount between the two is as wide as ever

• 1H22 was a story of two halves: 1Q22 still showed record profits but 2Q22 got progressively worse. 3Q22 started weak with inventory clearance and Nvidia new GPU launch awaited.
• Even after paying a fantastic final dividend in June 2022, it is now trading below net cash on the balance sheet.  
• We estimate net cash on the balance sheet is now 9 HKD vs 7 HKD share price.

• Revised guidance with 17.6% higher sales that caused a 40% increase in operating profit and an increase in EPS by 344% by 1H 2022.
• Spin off its Korean subsidiary by this August for up to KRW 900 bn or USD 692 million or almost as big as W Scope Corp (6619 JP)currently. 
• The company is trading at a 65% PBR discount to its Chinese peers which are bigger but less growth catalysts. Don’t sell too early. 

• Terumo Corp (4543 JP) earns 56% revenue from cardiac and vascular segment, which is the fastest growing segment of the company. The segment is seeing continued recovery from COVID impact.
• For FY23, Terumo guided for cardiac and vascular segment revenue of ¥445.5B (+12% y/y) and adjusted operating profit of ¥113.4B (+22% y/y), leading to operating margin of 25.5% (+200bps y/y).
• Over the next five years, Terumo aims for high single-digit revenue growth from the segment, through new product launches and expanding adoption of existing products across disease areas.

• AKR Corporindo (AKRA IJ) 1H2022 results were impressive, with sales up +107% YoY and profit by +74% YoY driven by strong demand for both petroleum products and chemicals.
• Land sales for its JIIPE industrial estate were slow at 3.5 hectares in 1H2022 but expect FY2022 sales to hit over 40 hectares, with a 37-hectare plot due in 3Q2022.
• AKR Corporindo (AKRA IJ) gives high-quality exposure to Indonesia’s economy across its major sectors and especially to the rapid growth in smelters which require chemicals in abundance.

• With a dominant presence on the Las Vegas strip as recovery revenue ballast, MGM is seeing recovery in its US regional properties, growth in digital and news flow from Asia.
• The company’s BetMGM sports betting partnership with UK giant Entain is thriving. It ambitions to buy out its partner, or its partner’s parent are clear.
• As Macau slowly reopens its long awaited recovery arc will be positive news flow in Q3 and Q4 for MGM due to its two property footprint there.

• China Education Group (839 HK) has retreated 23% from recent high with no regulatory and company news. Given its secured earnings growth outlook, we see an opportunity. 
• We believe drivers are higher enrollment and tuition, further capacity growth, good progress in overseas education and light capex. There are positive developments in these aspects recently. 
• CEG may return unused share buyback funds to shareholders via dividend, suggesting a potential resumption of payout. At just 5.7x PER for FY23F, its growth prospect is undervalued.

• Faraday Future (FF) announced that it has delayed the Q3 2022 launch of its first EV and is “continuing to engage” in fundraising talks. 
• FF says it needs $325m to last through the year or 47% of its market cap. A PIPE deal could be underway, albeit the 8-K filing was cautiously worded. 
• Depending on the agreement, it may pave the way for the recently deposed founder to place a crony on the Board, which could be negative for future funding.