In today’s briefing:
- Samsung C&T: Deep Discount NAV, Capital Shifting to Value/Holdcos, & Trading Business Boost
- HK Inno. N (195940 KS): Flagship Drug K-CAB Is Set to Become a Global Blockbuster Drug
- Long Intel/Short AMD; Analysis of Technical Publications Suggests TSMC Will Play a Critical Role
- Bloomage Biotechnology Vs Yunnan Botanee Bio-Technology – Accumulate Richly and Break Forth Vastly
- CBG: Time to Reload
- Thai Banks Screener; Krung Thai and Kasikorn Are Our Top Picks
- HANA: Robust EV Demand Will Offset Global Smartphone Decline
- Kadokawa – How Much Upside Potential Does Elden Ring Offer?
- RATCH: New Capacity Addition Would Offset EPS Dilution
- Kubota (6326 JP) | US Housing Risk to Big to Ignore
Samsung C&T: Deep Discount NAV, Capital Shifting to Value/Holdcos, & Trading Business Boost
- Three major positive factors for Samsung C&T include deep discount NAV, capital shifting to value/holdcos, and higher commodity prices boosting trading business earnings.
- Shanghai lockdown remains a black box event and there are some increasing concerns that the China COVID induced lockdowns could result in a potential earnings miss for Samsung Electronics.
- Samsung C&T (028260 KS) has been outperforming Samsung Electronics (005930 KS). Samsung C&T is flat for the year versus Samsung Electronics which is down 13.6% YTD.
HK Inno. N (195940 KS): Flagship Drug K-CAB Is Set to Become a Global Blockbuster Drug
- HK inno.N (195940 KS)‘s K-CAB induces faster onset of action and can control gastric pH for a longer period than the existing treatments in acid-related disorders.
- K-CAB is expected to start global expansion in 2022. The drug obtained marketing approval in Philippines. It is already approved in China and is under clinical trial in the U.S.
- HK inno has entered into marketing alliances with several Southeast Asian and Latin American countries. The company aims to export the drug to 100 countries globally by 2028.
Long Intel/Short AMD; Analysis of Technical Publications Suggests TSMC Will Play a Critical Role
- Relative underperformance of Intel Corp (INTC US) versus Advanced Micro Devices (AMD US) over the last decade should reverse. We discuss what it would take in the note.
- Intel leads in number and quality of innovations versus AMD in core areas of Design and Manufacturing, but AMD’s use of TSMC has been a huge part of AMD’s outperformance
- If Intel adapts to new realities and uses TSMC (2330 TT) for next-gen products, outperformance versus AMD is highly likely otherwise given TSMC’s very significant lead in manufacturing very doubtful.
Bloomage Biotechnology Vs Yunnan Botanee Bio-Technology – Accumulate Richly and Break Forth Vastly
- Botanee has outstanding performance at the current stage, but WINONA alone is not enough to establish a high moat. Its weak R&D/innovation in raw materials/products would cast doubts on outlook.
- Bloomage is more R&D oriented and characterized by integration of industrial chain. Its advanced synthetic biology will bring more possibilities for future development.The collagen would be a new growth point.
- Although with lower net profit margin, Bloomage is expected to have better outlook than Botanee. So, we think Bloomage could have higher valuation than Botanee in the future.
CBG: Time to Reload
- Last week analyst meeting came out with a positive tone regarding2022-25 earnings outlook.We reiterate our BUY rating for CBG and roll over target price to Bt125 (Previous TP is Bt115)
- We expect GPM to bottomed out in 1Q22 caused by 1) higher revenue contribution from branded own segment (higher than average blended GPM), 2) wholesale price adjustment by 1%-3%
- We expect CBG to show a strong performance in 2022-25 supported by recovery sales in Cambodia, solid revenue in Myanmar, breaking into the Chinese market successfully, growth opportunities in Vietnam
Thai Banks Screener; Krung Thai and Kasikorn Are Our Top Picks
- The six value oriented Thai banks all have healthy credit quality, NPL coverage and sound capital adequacy ratios; in addition, encouraging cost of risk trends support the earnings outlook
- Of these, we believe Krung Thai Bank screens well, with its attractive pre-provision and post-provision profitability versus peers, whilst trading on relatively undemanding multiples; we also like Kasikorn Bank
- We see TMBThanchart as an early stage “turn around” stock, especially if management can improve credit quality, and push down its cost of risk sustainably to lower levels
HANA: Robust EV Demand Will Offset Global Smartphone Decline
- Analyst meeting came out with negative tone. We maintain BUY rating at Bt57.50, based on 21.3xPE’22 (+1SD of 10-yr trading average). Our TP and 22E downwards earnings revisal by 6%
- 2Q22 should be lowest of the year due to declining sales from decrease by 25% in output in Chinese factories.Recommend accumulating shares,due to attractive valuations, prior to 2H22 earnings recovery.
- 2H22 earnings will recover from GPM expansion from revenue contribution from new SiC segment (consistently gross loss until now)and better product mix in IC Thai factory.Sales should also grow moderately
Kadokawa – How Much Upside Potential Does Elden Ring Offer?
- Kadokawa earnings were strong with 4Q OP 56% above consensus despite a meagre 1.5% beat at the revenue line.
- Margin guidance was nonsensically conservative however as despite revenue guidance being in line with consensus the company guided for OP to miss by 25% and actually decline by 3.9% YoY.
- That prompted a 16.3% decline the day after earnings but the stock has rebounded and now sits just 2.1% below its pre-earnings level.
RATCH: New Capacity Addition Would Offset EPS Dilution
- Last week analyst meeting came out in a positive tone. We maintain the BUY call based on target price of Bt48.0 derived using SOTP methodology, implying 9.0xPE’22E.
- The 2Q22 earnings is expected to improve QoQ from1 higher share of profit from HPC, 2)equity income from new 145MWe gas PP COD in 1Q22.While full quarter profit from 476M
- We see the 2022-25 outlook promising,considering 1)Steady earnings growth supported by 28% PP operating capacity expansion and 2)rising RE proportion which will rule out the ESG concerns and support rerating
Kubota (6326 JP) | US Housing Risk to Big to Ignore
- Kubota’s stock declined in sympathy with agricultural major Deere following a quarterly earnings miss
- Kubota faces similar supply chain and cost pressures, but it is the US housing market that is a bigger concern
- We believe that the market is underestimating the earnings risk for Kubota should the housing market start to cool
Related tickers: Samsung C&T (028260.KS), Intel Corp (INTC.O), Carabao Group (CBG.BK), Krung Thai Bank Pub (KTB.BK), Hana Microelectronics (HANA.BK), Kadokawa Dwango (9468.T), Ratch Group PCL (RATCH.BK), Kubota Corp (6326.T)
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