In today’s briefing:
- Shakeys Pizza: Encouraging Q1 2022, Despite Headwinds
- Coinbase Q1’22: A Deeper Look Into the Operating Expenses
- GlobalWafers (6488.TT): Not Settling Disturbing Reasons, but We Presume Stock Price Could Rebound.
- Alibaba (9988 HK) Pre-Earnings: Still Active Under Lockdown, Buy
- Aurobindo Pharma (ARBP IN): Regulatory Issues Continue to Haunt the Company
- Horiba (6856 JP): Semiconductor Division Leads Upward Revision for FY Dec-22
- JTower Q4 21 Results Reaction: Impact of Tower Deals Encouraging
- Phison (8299.TT): 2Q22 Could Expect a Slightly Growth QoQ
- KYEC (2449.TT): It Could Reach ~10% QoQ Growth in 2Q22 Because Some Orders Were Delayed in 1Q22.
- Sihuan Pharmaceutical Hldgs (460.HK)- Privatization Rumor, Upside Potential and Concerns on Business
Shakeys Pizza: Encouraging Q1 2022, Despite Headwinds
- Although we were more optimistic about FY22, we still see recovery backed by a very healthy momentum in Q1 2022 with 33% YoY systemwide sales (mid-teens ex-Potato Corner).
- EBITDA margins were weaker in Q1 2022 at 18.2% (with Jan/Feb 2022 restrictions), but management guided a sequential improvement QoQ and a 20-21% EBITDA margin for FY22.
- The stock trades at 16.6x FY12 and 11.1x FY23 on more conservatively guided numbers. (see: Shakey’s Pizza: High Conviction Three Bagger, Management Call Provides Superb Guidance For FY22 )
Coinbase Q1’22: A Deeper Look Into the Operating Expenses
- Coinbase reported its first net loss since listing, as warned by the management before, due to both declining trading/transaction revenue and a continued increase in operating expenses.
- Besides the impairment charges, the increase in Q1’22 operating expenses was mainly because of the headcount growth as Coinbase plans to further expand its business offerings this year.
- Coinbase’s earnings for the year will unlikely improve as the company sticks to the plan to make 2022 an investment year regardless of the downturns in the broader crypto markets.
GlobalWafers (6488.TT): Not Settling Disturbing Reasons, but We Presume Stock Price Could Rebound.
- Its revenue, GM and NM were NT$16.3bn, 42.6% and 36.1% in 1Q22.
- GlobalWafer experienced their China Suzhou subsidiary, SST, suspended production during April 2~27 by local government’s COVID-19 control measure, but it had resumed production.
- The stock dividend is NT$16 in 2022, which is 58.7% payout ratio from 2021 earnings. The payment date is to be 2022/08/05.
Alibaba (9988 HK) Pre-Earnings: Still Active Under Lockdown, Buy
- We estimate that the revenue growth will rise to 11.5% YoY in 4Q22 from 9.7% YoY in 3Q22.
- Freshippo is the store chain closest to the operation before the lockdown among all large retailers.
- We believe the stock has an upside of 27% for March 2023.
Aurobindo Pharma (ARBP IN): Regulatory Issues Continue to Haunt the Company
- Aurobindo Pharma (ARBP IN) has been issued six observations for its oral manufacturing unit by the FDA, which will further impact its business. The company closed its New Jersey facility.
- Aurobindo’s recent acquisition of Veritaz Health for INR1.7 billion does not really fit for the company’s high hope for the domestic formulation business.
- Aurobindo shares are trading at a forward P/E of 10.9x, which is cheaper than the peers. However, the company is not expected to see multiple expansion in near future.
Horiba (6856 JP): Semiconductor Division Leads Upward Revision for FY Dec-22
- Sales of semiconductor equipment are running ahead of guidance. Management now sees a considerably stronger 2H and 19% operating profit growth in FY Dec-22 as a whole.
- In the longer term, Japan – U.S. semiconductor cooperation should benefit Horiba and other companies in the Japanese semiconductor industry.
- Selling at 10.5x new EPS guidance for FY Dec-22. Not meaningfully cheap if a down-cycle is coming, but attractive if it is not imminent and security concerns support demand.
JTower Q4 21 Results Reaction: Impact of Tower Deals Encouraging
- Q4 and FY21 results released Thursday were largely in-line with forecasts although guidance for FY22 missed consensus as upfront costs for entering the tower business ramp up
- For FY22, JTower will compete the transfer of 2,000 DoCoMo towers (c. one-third) and 90% of NTT East/West towers with the handover starting in Q3
- By FY26, JTower expects annual revenue of ¥30bn (+51% CAGR from ¥6bn in FY22) and EBITDA margins of 60% (¥18bn in EBITDA v ¥ 1.6bn)
Phison (8299.TT): 2Q22 Could Expect a Slightly Growth QoQ
- Phison reached to NT$17.1bn, 32%, 14% and NT$10.49 for revenue, GM, NM and the Diluted EPS in 1Q22.
- We estimate it could be a slight positive growth in 2022, which could reach NT$18.1bn/32.5% for revenue/GM respectively.
- Phison and its competitors shall continuously strive in Flash card and the related business.
KYEC (2449.TT): It Could Reach ~10% QoQ Growth in 2Q22 Because Some Orders Were Delayed in 1Q22.
- KYEC reached revenue, GM, OPM and Diluted EPS of NT$8,984mn, 35.8%, 25.6% and NT$1.47 respectively in 1Q22.
- KYEC could reach to ~10% revenue QoQ growth in 2Q22 because of some orders delayed in Suzhou for COVID-19 controlling measure in 1Q22.
- The mainland China smartphone is not strong in 2Q22, but the smartphone chipset testing demand could still be the largest demand in KYEC.
Sihuan Pharmaceutical Hldgs (460.HK)- Privatization Rumor, Upside Potential and Concerns on Business
- The reason why Sihuan has received more attention from the market mainly lies in the medical aesthetics segment. However, both hyaluronic acid and botulinum toxin are facing challenges.
- Recently, China Resources is rumored to be in talks to privatize Sihuan Pharmaceutical Hldgs (460 HK), but Sihuan denied it.
- Sihuan is undervalued. The reasonable market value should be over RMB20 billion. We recommend investors to follow closely with Sihuan, either for decent upside potential or privatization possibility.
Related tickers: Globalwafers (6488.TWO), Aurobindo Pharma (ARBN.NS), Horiba Ltd (6856.T), Phison Electronics (8299.TWO), King Yuan Electronics Co, Ltd. (2449.TW), Sihuan Pharmaceutical Hldgs (0460.HK)
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