In today’s briefing:
- Alibaba: May Be a Good Time to Double Down On Shorts With 4QFY22 Set For Another Disappointment
- PT Nippon Indosari Corpindo (ROTI IJ) – Oven Ready Despite the Wheat Price
- LG Corp: Updated SoTP Valuation & Key Catalyst of LG CNS IPO
- Nihon M&A: Earnings Drop Due to New Revenue Recognition Criteria; Guidance Seems Unrealistic
- Takara Bio (4974 JP): FY23 Looks Uncertain as COVID-19 PCR Testing Number Decline Is Inevitable
Alibaba: May Be a Good Time to Double Down On Shorts With 4QFY22 Set For Another Disappointment
- Alibaba Group (9988 HK)’s fourth-quarter results will be out soon and we predict another disappointing quarter with mid-single-digit revenue growth.
- The company’s FY23 revenue guidance could be significantly weaker than the current consensus estimate as rumoured layoffs and budget cuts are likely to affect Alibaba Group (BABA US)’s growth.
- With the share price near the upper end of the trend channel leading up to 4QFY22 earnings, we think it’s a good time to add to existing short positions.
PT Nippon Indosari Corpindo (ROTI IJ) – Oven Ready Despite the Wheat Price
- PT Nippon Indosari Corpindo (ROTI IJ) released an impressive set of 1Q2022 results with higher wheat prices being offset by price rises plus greater operational efficiencies.
- Modern trade saw an especially strong recovery in 1Q2022 but general trade also saw good growth and continues to hit record highs.
- PT Nippon Indosari Corpindo (ROTI IJ) management remains optimistic on the outlook for 2022, with guidance for +15% growth in sales together with improving margins.
LG Corp: Updated SoTP Valuation & Key Catalyst of LG CNS IPO
- In this insight, we provide an updated SoTP valuation analysis of LG Corp (003550 KS) and discuss some of the key upcoming catalysts including the IPO of LG CNS.
- Our base case valuation analysis of LG Corp suggests an implied price of 107,664 won per share, representing 45.5% upside from current levels.
- The IPO of LG CNS is likely to be a positive catalyst in the next 6-12 months for LG Corp.
Nihon M&A: Earnings Drop Due to New Revenue Recognition Criteria; Guidance Seems Unrealistic
- Nihon M&A Center (2127 JP) reported 4QFY03/2022 results last week. Revenue declined 20.5% YoY to JPY6.1bn (vs consensus JPY7.6bn) while OP decreased 60.3% YoY to JPY889m (vs consensus JPY3.1bn)
- Revenue for FY03/2022 increased 16.1% YoY to JPY40.4bn (vs guidance JPY39.bn) while OP increased 7.1% YoY to JPY16.4bn (vs guidance JPY18bn).
- The company also announced in December last year that there were irregularities in recording sales and the share price has declined 47% since then.
Takara Bio (4974 JP): FY23 Looks Uncertain as COVID-19 PCR Testing Number Decline Is Inevitable
- Takara Bio Inc (4974 JP) reported 55% y/y growth in revenue during the first nine months of FY22, mainly driven by 129% y/y surge in COVID-19 PCR test reagent revenue.
- Although Takara Bio is likely to beat its FY22 guidance, uncertainty is prevailing for revenue earning potential beyond FY22, when the COVID-19 test demand will fade away.
- We would stay away from this idea for now and wait on the sideline for a clarity of growth potential and recovery in the base business in FY23 and beyond.
Related tickers: PT Nippon Indosari Corpindo Tbk. (ROTI) (ROTI.JK), LG Corp (003550.KS), Nihon M&A Center (2127.T), Takara Bio Inc (4974.T)
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