In today’s briefing:
- Tesla Q4 Miss Is Big & Sets the Stage for a Drop in 2023 Profits
- ASML & Lam Results: Key Take-Aways for Semiconductors in 2023
- Hyundai Motor: Solid Earnings in 4Q 2022 + Shares Cancellation
- Hindustan Unilever (HUVR IN) | Royalty Rukus
- S&P (SPGI US) VS S&P (SPX Index): A Leveraged Play on Rate Expectations
- Technical Analysis On Exxon Mobil
- Record Sales at JR Tokai Takashimaya
- HYDB: Optimistically Backing High-Yield Corporate Bonds
- Itochu Signs L.L.Bean License, Gears up Forever 21 and Eddie Bauer Relaunches
- UI: Inventory Environment
Tesla Q4 Miss Is Big & Sets the Stage for a Drop in 2023 Profits
- Tesla reported a 6% Q4 EPS beat, but stripping out a one-off deferred revenue booking & higher than expected regulatory credits, Q4 results missed by 9%.
- Tesla rose +5.5% post market close after Musk said YTD orders are “2x” output. None of the data we have seen implies such demand, especially weekly China sales.
- What went unnoticed on the earnings call is that Tesla created a $7bn credit facility this month, which should dash all hopes of them doing a share buyback in 2023.
ASML & Lam Results: Key Take-Aways for Semiconductors in 2023
- ASML and Lam Research’s latest guidance implies extremely different near-term revenue outlooks but shows an industry pulling back near-term while investing for long-term.
- Results show the much weaker situation for Memory chips vs. Logic chips, and little discussion of a recovery for Memory from the firms so far.
- Firms servicing long-term strategic, specialized demand from customers are indeed performing better than those servicing more commoditized demand.
Hyundai Motor: Solid Earnings in 4Q 2022 + Shares Cancellation
- Hyundai Motor’s EV sales as a percentage of total sales increased from 4.3% in 4Q 2021 to 5.7% in 4Q 2022.
- Hyundai Motor announced that it will cancel 2.14 million common shares, representing 1% of its outstanding common shares.
- The company beat consensus sales and operating profit estimates in 4Q 2022 and the consensus is likely to revise up their earnings estimates.
Hindustan Unilever (HUVR IN) | Royalty Rukus
- Hindustan Unilever (HUVR IN)‘s strong quarterly performance was overshadowed by a proposed hike in royalty payments to parent Unilever PLC (ULVR LN)
- HUVR’s historical royalty growth has been below revenue and PBT growth and hence does not generate any red flags in terms of minority shareholder protection.
- While the impact on EPS is ~3%, we believe much of the reaction around HUVR’s Royalty is Noise.
S&P (SPGI US) VS S&P (SPX Index): A Leveraged Play on Rate Expectations
- S&P (the company) may be a lot more exposed than S&P (the index) if rates stay higher for longer and bets against the Fed unwind in 2H23.
- While we like the rating agency and financial data provider’s business portfolio, valuation is looking a bit stretched based on fundamental, relative and technical valuation metrics.
- We believe it is unlikely that the stock will push through the USD375/share resistance level in the near term, and would look for entry opportunities closer to USD325/share.
Technical Analysis On Exxon Mobil
- Exxon Mobil Corporation is engaged in energy business. The Company’s principal business involves the exploration for, and production of, crude oil and natural gas, and the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a range of specialty products.
- The Company’s segments include Upstream, Downstream and Chemical.
- The Upstream segment is organized and operates to explore for and produce crude oil and natural gas.
Record Sales at JR Tokai Takashimaya
- JR Takashimaya is a newbie in the world of department store retailing but has grown to become the fourth highest selling store in the two decades since it opened.
- As a result, it is increasingly regarded by brands as the Nagoyan version of Isetan Shinjuku in Tokyo and Hankyu Umeda in Osaka.
- The store is an example of Takashimaya’s successful strategy to surround its key stores with more shopping facilities to suit all population segments, so driving traffic to the main store.
HYDB: Optimistically Backing High-Yield Corporate Bonds
We might get a reasonable amount of flak for this article, as many investors fear a recession, and concurrently are staying away from high-yield bonds.
However, credit spreads are narrowing, and the equity market is receiving substantial support.
Thus, we believe the time is right to “risk it” on cyclical, high-yield corporate bonds with favorable interest rate sensitivity.
Itochu Signs L.L.Bean License, Gears up Forever 21 and Eddie Bauer Relaunches
- Three years ago, Itochu Corp made it clear it would be investing heavily in its brand business.
- It has been true to its word, adding the likes of Reebok, Under Armour and Forever 21 to its portfolio in the last year alone.
- It has now signed a deal with long-term Japan operator, L.L.Bean, while gearing up for a major relaunch of Eddie Bauer.
UI: Inventory Environment
- The enterprise segment has fueled revenue growth at Ubiquiti (UI) and it should remain the same in the fiscal second quarter
- Ubiquiti has expanded its product offering for enterprise customers where it includes a complete solution down to the EV charging station
- We have made several adjustments to our earnings model. We continue to assume gross margin rising sequentially due to lower costs
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