In today’s briefing:
- AEM: Increased FY22 Revenue Guidance; Riding on Intel’s Capex Binge into Multi-Year Ramp
- China Meidong: Back the Porsche at 20 HKD
- Health And Happiness (H&H) (1112.HK) – High Bankruptcy Risk Together with Gloomy Prospects
- Hoya – Getting Towards Genuinely Bullish Levels of Cheapness
- H&H (1112): Difficult Period?
- DoorDash 1Q22 Earnings: Are Delivery Platforms More Profitable than Ride Sharing?
- Aristocrat Leisure: A Value/Growth Bet on Gaming Trading near 52 Week Low
- BBL: Growth Momentum Intact Despite Uncertainties
- Vertex Pharmaceuticals (VRTX US): Trikafta Drove Q1 Results; 2022 Revenue Guidance Maintained
- BCH: Solid Start Expected in 1Q22
AEM: Increased FY22 Revenue Guidance; Riding on Intel’s Capex Binge into Multi-Year Ramp
- AEM reported strong 1Q22 results (+226% YoY) and raised its FY22 revenue guidance to 700-750M SGD. AEM management continues to believe they are in a multi-year ramp-up.
- While the US tech sector is imploding left and right AEM is a very specific story linked to Intel’s CAPEX binge. Expect momentum to remain in FY22 and into FY23.
- Fair Value of 8 SGD remains unchanged (based on 20x 0.40 FY22 EPS), or 62% upside from the current 4.92 SGD share price.
China Meidong: Back the Porsche at 20 HKD
- China Meidong Auto (1268 HK) trades at a 12x/9x PE FY22/23E with a 6.5% dividend yield at a 20 HKD/share price (assuming an 80% payout ratio).
- In buying China Meidong Auto (1268 HK), you get an industry leader in the dealership space with supreme execution (35% ROE/47% CAGR profit growth/best capital allocator).
- The integration of the Starchase Porsche Dealerships provides an upside potential, as the management, with their superior track record, can significantly improve the target’s operations.
Health And Happiness (H&H) (1112.HK) – High Bankruptcy Risk Together with Gloomy Prospects
- H&H is faced with multiple challenges. Internally, the performance is under pressure, with stagnating revenue, decreasing profits, cash flow shortage and bankruptcy risk.It’s difficult for H&H to turn things around.
- Externally, factors such as the declining birth rate, lower demand, fierce competition in the infant formulas market, rising costs due to inflation, and economic slowdown worsen the Company’s prospects.
- Based on our 2022 forecast (14% or lower adjusted EBITDA margin,1%-2% or flat revenue growth), we do not think H&H is a good investment. We are conservative about its outlook.
Hoya – Getting Towards Genuinely Bullish Levels of Cheapness
- Hoya’s 4Q beat slightly with revenue beating consensus by 2.2% and PBT beating by 7.0%.
- Those beats were better than peers such as Advantest and Lasertec and qualitative guidance suggests that YoY growth is likely driven by the Lifecare segment in particular.
- That contrasts with our negative outlook for peer momentum and we expect Hoya’s recent underperformance to reverse in short order.
H&H (1112): Difficult Period?
- FY 2021 was a difficult period for Health And Happiness (H&H) (1112 HK) with the lower than usual sales growth and a big one-off expenses.
- It is true that the D/E ratio has gone up to 161% but this is not the first time it happened.
- FCF/Sales remain at low double-digit and cash/TA is also at low double-digit so it is far from going bust.
DoorDash 1Q22 Earnings: Are Delivery Platforms More Profitable than Ride Sharing?
- Doordash’s multiple has come in from 14x to 4x, it is no longer a good standalone short, but its valuation discrepancy vs. Uber means it is a good paired short.
- Solid quarter overall, but commentary about pushing on investments remains openended, and with little quantification of unit economics, Dash remains uninvestable to us.
- We still prefer Uber to Dash on valuation and long term profitability.
Aristocrat Leisure: A Value/Growth Bet on Gaming Trading near 52 Week Low
- Tis diverse maker of land based gaming machines and publisher of social games platforms has sustained strong growth and built value at the same time over the years.
- The company’s core strategy involves a strong commitment to M&A that will continue to bring accretive EBITDA to its long range performance.
- A strong balance sheet suggests plenty of financial strength to fulfill its M&A goals.
BBL: Growth Momentum Intact Despite Uncertainties
- Maintain our BUY call with a lower target price of Bt159 (from Bt162) reflecting an earnings downgrade.Our BUY call reflects steady earnings growth,a resilient balance sheet, and an undemanding valuation.
- Management maintained its 2022 financial targets and affirmed that the bank had solid fundamentals against uncertainties ahead.
- Given the elevated volatility in the capital market ahead, we reduced our net profit projections by 4-5% for 2022-24 to reflect weaker non-interest income growth.
Vertex Pharmaceuticals (VRTX US): Trikafta Drove Q1 Results; 2022 Revenue Guidance Maintained
- Vertex Pharmaceuticals (VRTX US) reported Q1 revenue of $2.10 billion, a 22% y/y increase, reflecting continued growth in the number of cystic fibrosis (CF) patients treated globally.
- Vertex reiterated full year 2022 product revenue guidance of $8.4–8.6 billion. However, the company raised 2022 adjusted R&D and SG&A expenses by 5% at mid-point.
- The company has a broad pipeline beyond CF and the pipeline progress calls for continued investment for R&D and SG&A. This may pressurize near-term profitability of the company.
BCH: Solid Start Expected in 1Q22
- Reiterate HOLD rating with a TP of B21.00 derived from 14.36xPE’22E, which is close to -2SD of 3-years trailing average.Despite significant drop in 2022E earnings, we recommend a trading approach
- We estimate 1Q22E earnings to be the peak quarter at Bt2.3bn (+613%YoY,-7%QoQ), supported by YoY rise in COVID-revenue, but QoQ decline by margin erosion.
- We foresee earnings momentum to weaken in 2Q22, underscored by lower COVID-19 contribution, resulting from falling infection patients and stopped RT-PCR requirement.
Related tickers: AEM (AEM.SI), China Meidong Auto (1268.HK), Health And Happiness (H&H) (1112.HK), Hoya Corp (7741.T), Health And Happiness (H&H) (1112.HK), Aristocrat Leisure (ALL.AX), Bangkok Bank Public (BBL.BK), Vertex Pharmaceuticals (VRTX.O), Bangkok Chain Hospital (BCH.BK)
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