In today’s briefing:
- SK Square: NAV Valuation Analysis, 2 IPOs of Affiliates in 1H22, & Higher Weighting in MSCI Korea
- Xpeng: Milestone Year Ahead
- Time to Get Back Into Our 2021 High Conviction Call Seven & I
- Sony – Microsoft’s Activision Blizzard Acquisition Shakes Things Up
- Globalwafers (6488.TT): Stock Price Can Go Higher Even If Siltronic Mergence Case Failed
- PT Surya Citra Media Tbk (SCMA IJ) – Undervalued in Digital
- Los Andes Copper: On Every Major Mining Company’s Radar; 150% Upside
- Credit Suisse Group – Lehmann Moment
- HKEx (388.HK): Soft 4Q21 Trading Volume; Expect Muted Quarterly Earning Results
- Dong E E Jiao (000423.CH) – Could the New Chairman Turn Things Around?
SK Square: NAV Valuation Analysis, 2 IPOs of Affiliates in 1H22, & Higher Weighting in MSCI Korea
- Our updated NAV analysis of SK Square suggests an implied price of 92,050 won per share, representing 46.3% upside from current levels.
- Among the affiliated companies, OneStore and SK Shieldus are expected to be listed in the Korean stock market in 1H 2022.
- MSCI is likely to increase the weight of SK Square in the MSCI Korea Index rebalance announcement on 10 February.
Xpeng: Milestone Year Ahead
- Short term interruption from chips and LFP battery shortage would be eased in 2H2022.
- Xpeng’s monthly delivery would ramp up to 30,000 cars with the launch of G9 in 3Q2022.
- We estimate Xpeng’s net profit will turn positive at the end of 2022, which would trigger further re-rating of the stock to HK$300 (or US$77).
Time to Get Back Into Our 2021 High Conviction Call Seven & I
- Following a strong third quarter the company has raised the full year revenue and OP outlook by 3.0% and 7.3% respectively due to stronger than expected overseas convenience store performance.
- Moreover, the company continues to raise the Speedway synergies with the new medium-term plan expecting Seven & I Holdings (3382 JP) to double the EBITDA and EPS through 2020-25.
- After rallying 65% in 1H21, shares took a breather during the last seven months. We think the timing is right to start the second half of Seven & I’s rally.
Sony – Microsoft’s Activision Blizzard Acquisition Shakes Things Up
- Microsoft has agreed to acquire Activision Blizzard for $95 per share (+45.3% vs. undisturbed) which values the company at $68.7bn in EV.
- ATVI had been under pressure since the middle of last year facing various sexual harassment allegations, but CEO Bobby Kotick will not be replaced.
- Like with ZeniMax this deal features a demanding valuation for a number of IPs which have seen better days… but there is Call of Duty…
Globalwafers (6488.TT): Stock Price Can Go Higher Even If Siltronic Mergence Case Failed
- We think the chance for GlobalWafers mergence case to have the final approval could be high. Even if it finally failed, the raw wafer supply should be full until 2024.
- This deal was granted by seven governments and organizations already. And it is still under review of Chinese and Japanese governments.
- The deal will not change the worldwide raw wafer supply status, especially such supply tightness. To our understanding, the secrets to achieve success are cost reduction and resource management mostly.
PT Surya Citra Media Tbk (SCMA IJ) – Undervalued in Digital
- PT Surya Citra Media Tbk (SCMA IJ) looks undervalued despite its increasing digital credentials through Vidio.com which continue to increase paying subscribers and MAUs
- Advertising spend continues to see a strong recovery, even through PT Surya Citra Media Tbk (SCMA IJ) has lost some audience share to Media Nusantara Citra (MNCN IJ).
- The company has a significant local content pipeline for 2022, especially for Vidio.com and valuations look attractive versus history plus there is now a market value for Vidio.com.
Los Andes Copper: On Every Major Mining Company’s Radar; 150% Upside
- Los Andes Copper Ltd (LA CN) is a Tier-1 copper asset in Chile; recent M&A activity in Chilean copper assets has increased substantially highlighting the undervaluation of Los Andes.
- Hired new CEO in October 2021 to increase investor awareness; multiple catalysts to unlock significant value in 2022.
- Current Market Value at 330M CAD significantly undervalues asset. Fair Value at 30 CAD/share or 150% upside.
Credit Suisse Group – Lehmann Moment
- Horta-Osorio Is Out:Credit Suisse Group (CSGN.VX) (“Credit Suisse”) Chairman Antonio Horta-Osório abruptly resigned on January 16, 2022, following breaches of quarantine rules in both Switzerland and the United Kingdom;
- Lehmann Not Lehman:With CEO Gottstein’s alleged resistance to strategic change, we remain cautious that the current strategic direction of Credit Suisse will not be maintained; and
- Blunders Could Force Sale:There have been numerous costly high profile blunders at Credit Suisse in 2021. A reversion to the “Bad Old Days” could force a sale.
HKEx (388.HK): Soft 4Q21 Trading Volume; Expect Muted Quarterly Earning Results
- 2021 full year ADT has grown 29% year-over-year compared with 2020. Trading activities in December continued to slowdown to year-end given the relative weak market sentiment and policy uncertainty.
- We expect HKEX (388 HK) upcoming quarterly earning release (on Feb. 24) will be muted and estimate its 4Q21 revenue and profit will decline 3% and 7% year-over-year respectively.
- However, we remain bullish on HKEX (388 HK) with the view that China economy will likely rebound in 2022, which will drive the rebound of IPO activities and trading volume.
Dong E E Jiao (000423.CH) – Could the New Chairman Turn Things Around?
- The high price of EJiao discouraged consumers, leading to increasing inventory backlog in the distribution channel and reduction in payment collection, which finally resulted in Dong-E-E-Jiao’s net loss in 2019.
- Although the performance has showed a recovery trend since 2020,concerns on raw material shortage, low inventory turnover, single product structure, high selling expense ratio and fierce market competition still remain.
- There is still a long way to go for the Company to get back to peak, so we are conservative about Dong E E Jiaoco Ltd A (000423 CH)’s outlook.
Related tickers: Seven & I Holdings (3382.T), Sony Corp (6758.T), Globalwafers (6488.TWO), PT Surya Citra Media Tbk (SCMA.JK), Credit Suisse Group AG (CSGN.S), HKEX (0388.HK), Dong E E Jiaoco Ltd A (000423.SZ)
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