In today’s briefing:
- Stylam Industries Q1 FY24: Slow Revenue Quarter, But Healthy Margin Expansion and 32% Profit Growth
- Keisei Electric (9009): The Chinese Are Back.
- Suzlon Energy QIP – Well Flagged Deal and Will Allay Any near Term Debt Concerns
- [Huitongda (9878 HK, SELL, TP HK$20.5) TP Change]: Downsizing Minority Interest Drive up Earnings
- Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further
- TVS Supply Chain Solutions IPO- Forensic Analysis
- ACCO: Caution Reigns Supreme
- IPower, Inc. -Building a Dynamic E-Commerce Home and Commercial Goods Business
- Q1 FY3/2024 Results Update – Japan Elevator Service Holdings (6544)
Stylam Industries Q1 FY24: Slow Revenue Quarter, But Healthy Margin Expansion and 32% Profit Growth
- Stylam Industries (SYIL IN) reported a good quarter on the profitability front, with PAT up 32.4% YoY but revenues down 4% YoY.
- Exports showed degrowth temporarily by 11% YoY due to a slowdown in Europe and other key markets, but the company guided an improvement in subsequent quarters.
- Trading at 20x/16x FY24e/25e, the stock is not a steal, but with a remarkable growth profile of 20-25% CAGR, we see tremendous potential as a multibagger for the company.
Keisei Electric (9009): The Chinese Are Back.
- The moment of truth is here, the Chinese are finally coming back to Japan.
- Keisei Electric Railway Co (9009 JP) is one of the biggest beneficiaries of increased tourist arrivals in Japan.
- It is trading at 0.04 PEG, a very low valuation considering its potential for producing large growth rate.
Suzlon Energy QIP – Well Flagged Deal and Will Allay Any near Term Debt Concerns
- Suzlon Energy (SUEL IN) is looking to raise INR20bn (US$240m) from its QIP, with proceeds used to pay down debt.
- The firm has struggled with a debt issue in the past, most recently undertaking a rights issue in 2022 to raise INR12bn (US$150m).
- With the proceeds from this deal, the firm should enter into net cash territory.
[Huitongda (9878 HK, SELL, TP HK$20.5) TP Change]: Downsizing Minority Interest Drive up Earnings
- We expect Huitongda (HTD) 1H23 revenue in-line with consensus, and non-IFRS NI 15.6% lower than consensus.
- The lower bottom-line is due to 1) product mix change result in lower gross margin; 2) higher impairment loss from account receivables due to its SME focused model.
- We maintain the stock as SELL. We raise TP by HK$2.5 to HK$20.5 to factor in the upward revision of NI from downsizing of minority interest.
Recruit 1Q: Earnings Further Slow Down; New Pricing Model Seems to Impact HR Tech Further
- Recruit Holdings (6098 JP) reported 1QFY03/2024 results yesterday. Revenue and OP increased 0.9% and 1.9% YoY to ¥850.8bn (vs consensus ¥818.7bn) and ¥121.6bn (vs consensus ¥109.9bn) respectively.
- 1QFY03/24 revenues of ¥850.8bn and adjusted EBITDA of ¥165.9bn were higher than the company guided revenues and adj. EBITDA of ¥800-830bn and ¥140-160bn respectively.
- HR Tech segment’s revenues declined 9.1% and Recruit has shifted to a new pricing model for HR Tech which we think would further impact the segment’s earnings.
TVS Supply Chain Solutions IPO- Forensic Analysis
- TVS Supply Chain Solutions (1915741D IN) is one of the leading Indian supply chain solution companies in India with an approximate market share of 7%.
- Around 70% of the operations come from outside India, however the foreign subsidiaries are not doing pretty well. Moreover, the profits that were only posted in F23 look unsustainable.
- Other concerns which are not to be overlooked, relate to impairment of assets, levered balance sheet, pricey acquisitions, disposal of fixed assets, high remuneration to promoter, etc.
ACCO: Caution Reigns Supreme
- ACCO reported second quarter results with a greater pull-in of back-to-school related sales, but management took a cautious stance on outlook for the rest of the year
- The second quarter is seasonally one of the stronger periods of the year due to the timing of retailers taking inventory for the back-to-school season
- Without a stable back to school shopping season ACCO would be dependent on the holiday season in fourth quarter to achieve its free cash flow guidance for the year
IPower, Inc. -Building a Dynamic E-Commerce Home and Commercial Goods Business
iPower has built a growing, efficient e-commerce platform to market a wide range of home and commercial goods, including hydroponics supplies, fans, shelving systems, pet supplies, and furniture.
The company has multiple product expansion opportunities, setting the business up for continued strong long- term top-line growth.
iPower leverages extensive data analytics at every step of the value chain to optimize its processes, from product conception and design, to sourcing, logistics, and marketing.
Q1 FY3/2024 Results Update – Japan Elevator Service Holdings (6544)
- Accelerating growth profile – Japan Elevator Service (JES) made a strong start in Q1 FY3/2024, reporting high double-digit growth for both sales (+21.4% YoY) and operating profit (+35.7% YoY).
- It continues to gain market share in Maintenance & Repair with its quality and cost-efficient offering and is experiencing accelerating demand in its Modernization business with its structural tailwinds.
- While this may dilute the sales mix, the combination of cost management and rising engineer productivity is driving operational leverage.
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