Equity Bottom-Up: MTR Corp, Tesla Motors, IREIT Global, Hitachi Home & Life Solutions India Ltd, Hyundai Engineering & Construction, Arrail Group, Total Access Communication, Pinterest Inc, Carvana Co, Uber and more

• HK reopening is debatable and seems to be very hard to predict as the Chinese government is keen to keep zero COVID stands although recent quarantine time reduction is positive. 
• The number of passengers remains weak although the shorter quarantine reduction could provide short-term relief to the share price. 
• Valuation looks undemanding compared to the peers although the outlook is more uncertain. Stay out for now. 

• Tesla faces stiffer competition in 2H 2022 as chip supplies at rivals recover faster than expected. This will put pricing pressure on Tesla amid rising costs. 
• Cash could be tight in 2H 2022 as Tesla ramps up 2 new factories. There is a distinct possibility of Tesla resorting to equity financing.
• If the drop in Q2 earnings doesn’t return to high growth again from Q3, Tesla could finally see its valuation fall down to earth. Its premium has already shrunk.  

For our next Corporate Webinar we are glad to welcome IREIT Global (IREIT SP) CEO, Louis d’Estienne d’Orves.

In the upcoming Webinar, Louis will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst Jesus Rodriguez Aguilar. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 12 July 2022, 17:00 SGT.

• Our checks suggest Hitachi Home & Life Solutions India Ltd (JCHAC IN) has lost market share this season. 
• Market share loss has come on the back of poor product quality due to focus on costs and competition, which is irreparable in spite of the strong dealer network. 
• Poor capital allocation, high receivables and low-profit margins, all warrant attention. 

• We highlight the top five catalysts of why we believe Hyundai E&C is likely to outperform the market in the next 6-12 months. 
• Higher housing supply, surge in new orders, expansion in nuclear projects/inclusion in nuclear ETFs, Neom mega project, and shift to value stocks are likely to drive Hyundai E&C’s outperformance.
• Housing/Architecture accounted for 57.1% and 59.7% of total sales in 2021 and 1Q 2022, respectively. Plants/power plants accounted for 25.7% of total sales in 2021.

• Despite regional lockdowns caused by COVID-19 during most part of FY21, Arrail Group (6639 HK) posted 7% y/y growth in revenue, driven by 14% y/y growth in total patient visits.   
• China dental services market is growing at an average 20% per annum. Arrail’s low debt and strong cash position should support its business expansion plans to grab the market opportunity.
• Despite competition, the company is expected to report accelerated double-digit revenue growth in next three years, by leveraging on its market leadership positioning and favorable macro tailwind.

• We maintain our HOLD rating and TP of Bt47.60 based on DTAC’s tender offer price. We believe the company will benefit from seasonal low costs despite weak sales performance. 
• Expect QoQ improvement in 2Q22 net profit : We expect 2Q22 net profit to be at Bt854m (-44% YoY, +18% QoQ) as a result of seasonal low costs. 
• We expect 2Q22 revenue at Bt19bn (flat YoY, -4% QoQ). Top-line performance continues to struggle YoY and QoQ due to weak economic activity.

• Pinterest co-founder/CEO Ben Silbermann is replaced by Google exec Bill Ready.
• Ready is a payments industry veteran and is perfectly suited to drive commerce adoption at Pinterest. 
• Unique pay package incentivizes Ready to succesfully pivot the business. 

• Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
• Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.
• Today we are flagging Carvana, Exact Sciences, Inspire Med, Freshpet, Enviva .

• Just Eat Takeaway’s Grubhub $7.3B acquisition has been a fiasco, an activist is demanding its sale.
• A rumored $1B price tag has attracted private equity investors Apollo and General Atlantic, but management yesterday said it preferred a strategic investment.
• We think Uber should make a bid – the deal logic from 2 years ago still holds and Doordash’s market share gains should blunt anti trust concerns.