Daily BriefsEquity Bottom-Up

Daily Brief Equity Bottom-Up: TSI Holdings (3608) – New Year and more

In today’s briefing:

  • TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap
  • Semen Indonesia (SMGR IJ) –  A Set Up with New Capacity and Lower Costs
  • Fu Shou Yuan (1448 HK): Latest Mortality Rate Supports Long-Term Outlook
  • Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages
  • Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability
  • Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan
  • Cameco: A Turnaround Is En Route

TSI Holdings (3608) – New Year, New Buyback, Still Good, Still Cheap

By Travis Lundy

  • Last April I wrote about Tsi Holdings (3608 JP) which was trading at 0.5x EV/EBITDA and where I suggested it could double in 2-3yrs. 
  • The day after I wrote, the stock closed at ¥312/share, briefly touched ¥480 before ending the year at ¥444. On Friday they announced Q3 earnings, now TTM EV/EBITDA is 2.5x.
  • They also announced a buyback, and the stock is up further. It is worth looking into the details both near-term and what they mean longer-term.

Semen Indonesia (SMGR IJ) –  A Set Up with New Capacity and Lower Costs

By Angus Mackintosh

  • Semen Indonesia came through the worst of 2022 with flat sales, despite lower volumes, with profits rising by +18.9%, driven by cost savings, reduced debt, and use of DMO coal.
  • 4Q2022 may see a slowdown given. the onset of the rainy season but the company is well-positioned to ride a recovery in 2023 with additional capacity from Semen Baturaja.
  • Semen Indonesia (SMGR IJ) is well set up for a recovery in earnings for the next two years, with great synergies to come from Semen Baturaja. Valuations are well-below historic.

Fu Shou Yuan (1448 HK): Latest Mortality Rate Supports Long-Term Outlook

By Osbert Tang, CFA

  • China recorded 270,000 increases in deaths in 2022 to 10.41m (+2.7% YoY, vs. flat in 2020). This is a sad demographic trend but favourable to Fu Shou Yuan (1448 HK).  
  • Death rate of 0.74% has returned to the 1974 level. With termination of “zero COVID” policy, this is poised to increase. This will also stimulate demand for its pre-need services.
  • Despite a 73% rebound in share price from trough, valuation is still undemanding at 14.4x FY23F PER. This implies a 35% discount to the average of 22x since 2013. 

Fast Retailing: Growth Markets Look Weak & Uniqlo Japan Profitability Affected By Rising Wages

By Oshadhi Kumarasiri

  • Fast Retailing (9983 JP)’s 1QFY23 results were below consensus estimates with OP missing consensus by 13.2%.
  • The outlook for the rest of the year doesn’t seem too well either with Domestic profitability held back by rising wages and growth markets affected by slowing demand for apparel.
  • Even though China could emerge from COVID to boost Uniqlo’s profits, we see significant downside risk to Fast Retailing’s FY23 guidance.

Money Forward: Top Line Expands, Yet to See Meaningful Turnaround in Profitability

By Shifara Samsudeen, ACMA, CGMA

  • Money Forward (3994 JP) reported 4QFY11/2022 results yesterday. Revenue increased 42.5% YoY to JPY6.2bn (vs consensus JPY6.0bn) driven by growth in both MF Business and MF Home.
  • Operating losses for the quarter widened to JPY2.2bn (34.8% of revenue) from JPY661m (15.2% of revenue) in the same quarter last year (vs consensus JPY2.0bn).
  • Though MF’s top line continues to grow, we have not yet seen a meaningful improvement in its profitability, and we think, MF’s shares are overvalued compared to its counterpart freee.

Amvis Holdings Inc (7071 JP): Scale Expansion to Drive Revenue Growth; Formulated New 3-Year Plan

By Tina Banerjee

  • Amvis Holdings Inc (7071 JP) recorded 51% YoY revenue growth to ¥22B in FY22, 3% ahead of guidance. The company has added 16 facilities (825 beds), exceeding its initial plan.
  • Buoyed by strong FY22 results, business expansion, and favorable demand scenario, Amvis has raised FY23 guidance. In FY23, the company aims to open 19 new facilities.   
  • Amvis has formulated the new three-year plan, “Amvis 2025”. The company is accelerating the pace of opening Ishinkan to bring up the number to 127 by September 30, 2025.  

Cameco: A Turnaround Is En Route

By Pearl Gray Equity and Research

  • Plans are being made to reroute Inkai’s production to avoid Russian infrastructure and port reliance.
  • The firm’s joint acquisition of equipment supplier, Westinghouse, might add valuable cost synergies and improve Cameco’s economies of scope.
  • Uranium prices remain supportive, and an operational pivot could realign Cameco stock’s valuation.

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