Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: TSMC, Arwana Citramulia, Bukalapak, Tata Consultancy Svcs, Toyota Motor, Advanced Info Service, Mani Inc, Dohome PCL, Howard Hughes Corp and more

In today’s briefing:

  • TSMC – Exceptional as Usual
  • Arwana Citramulia (ARNA IJ) – Tiling the Nation in 2022
  • Bukalapak: Still Overvalued & Former CEO’s Ownership Is an Overhang
  • Earnings Update | TCS: Reports Decent Earnings
  • Toyota – Records Across the Board
  • ADVANC: Opportunities Fully Priced in for 2022, Downgrade to HOLD
  • Mani Inc (7730 JP): No Immediate Respite Seen
  • DOHOME: Expect 4Q21 Earnings Grow Both YoY and QoQ
  • HHC: CFO Change

TSMC – Exceptional as Usual

By Mio Kato

  • TSMC posted results at or above the top end of its guidance ranges for 4Q21 at the revenue, GPM and OPM levels. 
  • Guidance for 1Q22 was also punchy with the midpoint of revenue guidance 6.0% above consensus and mid to high 20s revenue growth guidance for the year. 
  • We still suspect however that momentum could actually accelerate through the year.

Arwana Citramulia (ARNA IJ) – Tiling the Nation in 2022

By Angus Mackintosh

  • Indonesia’s best quality ceramic tile producer, Arwana Citramulia (ARNA IJ), continues to register strong growth and higher margins due to improving product mix and improvements in manufacturing efficiency.
  • Arwana Citramulia (ARNA IJ) is introducing new higher-end porcelain tiles which will displace Chinese imports given lower pricing, better terms for wholesalers and significantly faster delivery times.  
  • The company remains a top choice amongst Indonesian industrials with high-quality governance and a strong growth track record along with attractive valuations. 

Bukalapak: Still Overvalued & Former CEO’s Ownership Is an Overhang

By Oshadhi Kumarasiri

  • With the penetration rate as high as 42%, Mitra could be fast running out of room for growth.
  • Consensus seems to be overestimating Bukalapak (BUKA IJ)’s 2021 and 2022 revenue by 22% and 40% respectively.
  • At 6.0x consensus FY+2 revenue, Bukalapak is still expensive compared to the peer average of 4.3x.

Earnings Update | TCS: Reports Decent Earnings

By Ankit Agrawal, CFA

  • TCS reported a healthy revenue growth of 15.4% YoY in constant currency (CC) terms. Operating margins contracted by -60bp to 25%, due to supply-side challenges. 
  • LTM attrition for TCS was 15.4%, best in the industry. However, on an absolute basis, it is high and TCS is continuously working on stabilizing it.  
  • Growth has been broad-based across sectors and the demand outlook remains robust on the back of strong spends by corporates on digital transformation and adoption of cloud.

Toyota – Records Across the Board

By Mio Kato

  • Toyota is up 52% in just over a year, posting impressive performance for a company of its size. 
  • Its displacement of GM as the number one automaker in the US has made headlines but results in China and Europe have also been impressive. 
  • Hybrid penetration is now also over 25% in all major regions and we expect this to continue to be a driver.

ADVANC: Opportunities Fully Priced in for 2022, Downgrade to HOLD

By Research Group at Country Group Securities

  • Downgrade ADVANC to HOLD from BUY rating with a TP of Bt227 due to limited upside.Share price soared by 14% since 19 November 2021 is due to magnified positive industry
  • We expect 10% upside to our target price from merger sensitivity analysis as ARPU growth may increase rapidly from limited consumer choice and 5G features.
  • We expect 4Q21 core profit at Bt6.6bn (-4%YoY, flat QoQ), as rising subscriber base is continuously offset by declining ARPU.

Mani Inc (7730 JP): No Immediate Respite Seen

By Tina Banerjee

  • Mani Inc (7730 JP) offers medical devices, which are mainly used in the elective procedures including cataract surgery and dental procedures.
  • In FY21, the company missed its guidance for both revenue and operating income by 2% and 5%, respectively, due to higher-than-expected impact of the COVID-19.
  • With the rising cases of highly infectious Omicron variant of the COVID-19 in major operating regions, the company is expected to miss or lower its FY22 guidance.

DOHOME: Expect 4Q21 Earnings Grow Both YoY and QoQ

By Research Group at Country Group Securities

  • A slowdown short-term performance but solid long-term growth outlook. We reiterate our BUY rating with a target price of Bt28.0 derived from 35xPE’22E,which is close to the biggest home-improvement player
  • We expect DOHOME to report 4Q21 net profit at Bt420m (+95%YoY, +23%QoQ), YoY growth will be supported by (1) a solid SSSG at +39%YoY, and (2) gross profit margin expansion 
  • We expect 1H22 earnings to slightly soften YoY pressured by (1) a drop in margin for steel products,which will trim down overall gross profit margin to roughly 19% from 21.7%-22.7% 

HHC: CFO Change

By Hamed Khorsand

  • HHC is making more changes at the executive level with the promotion of Carlos Olea to CFO, who replaces Correne Loeffler
  • HHC is not stopping with the 5 master planned communities (“MPC”) and has now added Douglas Ranch in the Phoenix area into the mix
  • We believe the increase in FFO HHC should generate over the next two years requires reinvestment that HHC is putting forth through the Seaport District and Douglas Ranch

Related tickers: TSMC (2330.TW), Arwana Citramulia (ARNA.JK), Tata Consultancy Svcs (TCS.NS), Toyota Motor (7203.T), Advanced Info Service (ADVANC.BK), Mani Inc (7730.T), Dohome PCL (DOHOME.BK), Howard Hughes Corp (HHC.N)

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