Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: Sony Corp, China State Construction Development, PLBY Group Inc, Tuesday Morning and more

In today’s briefing:

  • Conviction Call Sony – PlayStation Showcase Underlines Strength of Pipeline
  • China State Construction: Great Numbers, But Taking a Breather for Now
  • Can Playboy (PLBY) Overcome the SPAC Hangover?
  • TUEM: Overreaction

Conviction Call Sony – PlayStation Showcase Underlines Strength of Pipeline

By Mio Kato

Overnight Sony held a PlayStation Showcase event which surprised to the upside in terms of the number and quality of titles on display. It further cemented Sony’s commitment to rolling out its own games on PC and the strategic implications for its first party studios also look intriguing.

China State Construction: Great Numbers, But Taking a Breather for Now

By Sameer Taneja

In our last report on China State Construction Development (830 HK) entitled China State Construction Development (830 HK): A Short-Term Opportunity with Tremendous Upside, we highlighted an opportunity to play the name before its results due to our belief that the company would report a profit alert. With this catalyst playing out now, we see limited upside in the short term.

Notable highlights of the result and our conversations with management:

  • New orders increased by 76% YoY from 2.5 bn HKD to 4.5 bn HKD in H1 FY21.
  • A 50 bps increase in gross profit margin from 13.6% to 14.1%.
  • A stated intention of decreasing net gearing from 38.7% to 10% by the end of FY21. 
  • A goal of paying out 40-50% of the net profits as dividends.

We believe that the stock has a reasonable valuation of 13x FY21 and 10x FY22 but provides a limited upside.  We expect a drop in profits (in line with previous years ) HoH, but an increase YoY by 70-80%.

Can Playboy (PLBY) Overcome the SPAC Hangover?

By Robert C Prather Jr

SPACs have not been performing well for the last few months and PLBY has not been immune to this, falling from ~$60 at the peak to the current level of $25. Currently, shares still look expensive and have a lot of the risks that accompany SPACs, but if recent acquisitions, NFTs, and a content creator platform that appears to be in the works could reward investors.

TUEM: Overreaction

By Hamed Khorsand

  • Tuesday Morning (TUEM) reported its long awaited fiscal fourth quarter (June) results providing insight as to the collateral damage TUEM has suffered from rising freight costs outstripping comparable sales growth. TUEM reported fiscal fourth quarter sales ahead of our estimates, but the bottom line failed to impress with TUEM reporting a net loss and negative EBITDA.


  • We have been sounding the alarm bells related to inflationary pressures the business could experience from higher wages and increased supply chain costs but underestimated the sheer magnitude of impact.


  • TUEM has a new management team yet to make many changes to a business still requiring some hand holding.


  • We believe the sell-off was an overreaction to the new management team laying out the need for more time to restructure the business. Our price target remains $6.

Related tickers: Sony Corp (6758.T), China State Construction Development (0830.HK), Tuesday Morning (TUEM.OQ)

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