In today’s briefing:
- Price Comparisons of SK Telecom, KT, & LG Uplus When SK Telecom Reaches 99%+ Foreign Ownership
- Hero Motocorp (HMCL IN) | Structural Problems Persist
- Taisho Pharmaceutical (4581 JP): A Compelling Play on Japan’s Consumer Spending Recovery
- TOWA (6315): Watch the Order Flow for an Entry Point
Price Comparisons of SK Telecom, KT, & LG Uplus When SK Telecom Reaches 99%+ Foreign Ownership
- We analyzed the different share price movements of SK Telecom relative to KT and LG Uplus from 2005 to 2022 when foreign ownership of SK Telecom remained above 99%.
- From 2005 to 2022, KT and LG Uplus outperformed SKT in 7 and 6 out of 11 periods, respectively when the foreign ownership of SKT was above 99%.
- Once KT’s foreign ownership rises to the 93-95% range, there will be more concerns about foreign ownership limit which means that LG Uplus could be in focus once again.
Hero Motocorp (HMCL IN) | Structural Problems Persist
- We anticipate the uptick in retail primarily aided by the wedding season to be short-lived for Hero Motocorp (HMCL IN).
- HMCL has not been able to keep pace with changing consumer preferences, the limited success in premium segment and scooters is likely to remain an overhang even on new launches.
- Inventory correction at the dealer’s end could aid wholesales supporting valuations, but the company remains structurally unattractive.
Taisho Pharmaceutical (4581 JP): A Compelling Play on Japan’s Consumer Spending Recovery
- Taisho Pharmaceutical Holdin (4581 JP) is the leader in the Japanese OTC drug market. The company’s Lipovitan, Pabron and RiUP brands capture top market share in their respective categories.
- With the re-opening of economy, increasing number of people are indulging in outdoor activities and consumer spending is recovering. These should boost Taisho’s OTC drug business.
- The company’s prescription pharmaceutical business is well-positioned for long-term growth, driven by strong performance of existing drugs and upcoming new product launch.
TOWA (6315): Watch the Order Flow for an Entry Point
- Management is guiding for single-digit sales and profit growth in FY Mar-23, but new orders fell 39% from Q2 to Q4 of last fiscal year.
- The Book-to-Bill Ratio fell from 1.66 in Q2 to 1.01 in 4Q, but quarterly orders and sales both remained far above the levels recorded in the three years to Sep-21.
- Even if the company does not drop into the red as it did in previous cycles, the downside risk to profits could be 50%.
Related tickers: KT Corp (030200.KS), Hero Motocorp (HROM.NS), Taisho Pharmaceutical Holdin (4581.T), Towa Corp (6315.T)
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