Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: Evergrande, SGX, Zhejiang Expressway Co H, DRB-Hicom Bhd, Mitra Adiperkasa and more

In today’s briefing:

  • China Evergrande Group – Thanks S&P
  • Singapore Exchange – Ringing Hollow
  • Zhejiang Expressway (576 HK): Is There Any Room for Higher Dividend Payout?
  • Drb Hicom (DRB): Tax Exemption, Shariah and Low Valuation
  • Smartkarma Corporate Webinar | MAPI: Transforming Retail in Indonesia

China Evergrande Group – Thanks S&P

By Thomas J. Monaco

  • C’mon Guys, Where Have You Been?: S&P issued a scathing report suggesting that China Evergrande Group (3333.HK) [Evergrande] “will likely default because the company has lost its main business”;
  • Other Pearls:S&P also believes that “Evergrande’s massive debt will catch up with it”; and    
  • Ratings Agencies Are More Than Culpable: Wouldn’t you know it, the sleepy, fee hungry ratings agencies are finally starting work on Evergrande after the market embarrasses them once again.

Singapore Exchange – Ringing Hollow

By Thomas J. Monaco

  • A50 Challenges:Hong Kong Exchange & Clearing (388.HK) [HKEx] launched the MSCI China A50 Connect (HK A50). This new product competes with 20% of Singapore Exchange’s (SGX.SP) [SGX] PBT; 
  • Completely Distracted: On top of weaker equity volumes/fees and the HK A50 launch, SGX has made numerous moves which are more of a distraction than they’re worth; and 
  • Time For Massive Strategic Move: SGX must consider significant strategic alternatives if it is to avoid being hollowed out over the longer-term.

Zhejiang Expressway (576 HK): Is There Any Room for Higher Dividend Payout?

By Osbert Tang, CFA

  • We believe there is room for Zhejiang Expressway Co H (576 HK) to raise dividend payout ratio moderately, following that of Anhui Expressway (995 HK) and Shenzhen Expressway (548 HK)
  • It has a comparable gearing with SZEX, positive earnings outlook, improved operating cash flow and manageable capex which all are supportive to raise payout ratio.
  • If it increases to 55% payout, versus an average of 45.6% previously, we estimate the stock is trading on attractive dividend yield of 11.3% and 12.4%, respectively for FY21-22.

Drb Hicom (DRB): Tax Exemption, Shariah and Low Valuation

By Henry Soediarko

  • Increased market share despite total industry volume shrank resulting in a higher market share domestically.
  • 52 week low PE multiples that may invite investors to take a look including Lembaga Tabung Haji as they anticipate a healthier capital structure. 
  • Sales Tax exemption to last until June 2022, creating momentum for an increase in auto sales.

Smartkarma Corporate Webinar | MAPI: Transforming Retail in Indonesia

By Smartkarma Research

For our next Corporate Webinar we are glad to welcome Ratih Darmawan Gianda, Vice President, Group Investor Relations, Corporate Communication, and Sustainability at Mitra Adiperkasa (MAPI IJ).

The Corporate Webinar will be hosted on Tuesday, 30 November 2021, 17:00 SGT.

Mitra Adiperkasa is the leading lifestyle retailer in Indonesia with over 2,600 retail stores and a diversified portfolio that includes sports, fashion, department stores, digital technology, F&B, travel, lifestyle, and convenience stores. Its diversified portfolio of brands are unified by the MAPCLUB app, which creates a new shopper dimension by conveying who shops where, when, why, and how across the archipelago.

The Covid-19 pandemic has created unprecedented challenges to retailers. MAP is adapting its model to capture sales at every layer of consumerism by leveraging its 150+ exclusive brands across all modes of physical, digital, and social channels. Their new Unified Retail strategy aims to reinvent the shopping experience, ensuring that it remains consumer-relevant while also upgrading its proposition across stores,, value pricing, and first class loyalty engagement.

In their upcoming webinar, Ibu Ratih will share a short company presentation after which, she will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. This will be followed by a live Q&A session.

Related tickers: Evergrande (3333.HK), SGX (SGXL.SI), Zhejiang Expressway Co H (0576.HK), DRB-Hicom Bhd (DRBM.KL), Mitra Adiperkasa (MAPI.JK)

Before it’s here, it’s on Smartkarma