In today’s briefing:
- AEM: Stellar 1H22; Deeply Undervalued. Fair Value Remains at 8 SGD.
- Jardine Matheson (JM SP): MSCI Blues
- Sea Ltd: Reduced Consensus Is Still Optimistic
- Ascott Residence Trust Placement – Accretive Acquisition to Bolster Stable Income
AEM: Stellar 1H22; Deeply Undervalued. Fair Value Remains at 8 SGD.
- AEM reported stellar 1H22 results beating street estimates as well as far outpacing their own guidance. CHIPS act in USA will benefit company in FY23.
- Stock reaction (+6%) muted despite great outlook and management optimism. Despite record results and strong outlook, stock is down YTD.
- AEM is cheap trading at only +/-10x FY22 EPS, too low given the growth and consistent margins profile. Fair Value remains 8 SGD.
Jardine Matheson (JM SP): MSCI Blues
- Jardine Matheson Holdings (JM SP) (JMH) has shed ~8% since MSCI said it was cutting the conglomerate’s weighing in two indices.
- The reweighting follows the cancellation of the 59% shareholding in JMH held by Jardine Strategic Holdings (JS SP), which was privatised last year.
- I see the discount to NAV at ~40%, right at the 12-month -2 STD level. JMH bought back ~149mn shares in the 1Q22, paying ~US$59/share, 17% above the current price.
Sea Ltd: Reduced Consensus Is Still Optimistic
- Consensus has revised down Sea Ltd (SE US)’s inflated estimates before 2Q22 earnings due on 16th August 2022.
- These revised estimates are on the optimistic side as consensus still thinks that 1Q22 was just a one-off drop.
- However, our analysis of Google Play and App Store data suggests that Sea Ltd’s gaming and e-commerce popularity has further deteriorated from the 1Q22 level.
Ascott Residence Trust Placement – Accretive Acquisition to Bolster Stable Income
- Ascott Residence Trust (ART SP) is looking to raise US$110m (S$150m) in its primary offering to partially fund the acquisition of nine properties in France, Vietnam, Australia, US and Japan.
- The deal is a relatively large one to digest at 23.6 days of three month ADV, although it would represent just 3.9% of current mcap.
- The proposed acquisitions are expected to be accretive, increasing DPU by 2.8% and would increase the REIT’s proportion of stable income to 71%, up from 69% in end proforma-FY21.
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