Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: UG Healthcare, Thai Beverage, iFast Corp Ltd, Seven & I Holdings, Ant Group, Samsung Electronics, Krungthai Card, Karnataka Bank, Intel Corp, BG Container Glass PCL and more

In today’s briefing:

  • Smartkarma Corporate Webinar | UG Healthcare: Demand Visibility & Pricing Trends
  • Thai Beverage (Thbev): Imminent Risk Ahead
  • IFast Corp: Higher AUA Growth Points Toward Significant Growth in 4Q Earnings (Quantamental)
  • Seven & I Holdings: OP Beats Could Continue into 4QFY21
  • Ant Group: Regulatory Pressures Drive the State’s “big Data” Grab, and a Revised SOTP Valuation
  • Samsung Closed the Gap with TSMC Already at 5nm? Whoa!
  • KTC – Too Far Too Fast?
  • Karnataka Bank Q3FY21: Re-Shuffling Loans and Improved Recoveries Positive but Write-Offs Spike
  • Intel CEO Change Brings Focus Back to Technology
  • BGC: Relieved Concern on Capital Raising

Smartkarma Corporate Webinar | UG Healthcare: Demand Visibility & Pricing Trends

By Smartkarma Research

In this Smartkarma Corporate Webinar, we welcome Jun Yih Lee, Executive Director and Director of Finance at UG Healthcare (UGHC SP). He will share a company presentation along with some key aspects about the firm, and then engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven, including a live Q&A session.

This Corporate Webinar will be hosted on Tuesday, 19 January 2021, 17:00 SGT/HKT.

Every week, Corporate Webinars by Smartkarma Corporate Solutions feature discussions with Corporate IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.


Thai Beverage (Thbev): Imminent Risk Ahead

By Henry Soediarko

The recent outbreak in Thailand may force the Thai government to initiate a nightlife entertainment ban and in-restaurant dining, two of the key critical avenues for alcoholic beverage sales for Thai Beverage (THBEV SP) . Although it is still uncertain on the timing and duration, it is a big ask to keep the stock in the portfolio for the time being. 

With fewer revenue contributions from alcoholic beverages, the company’s EBITDA can easily go down by 10-20% again although it is unclear when the Thai government will initiate the night entertainment and in-restaurant ban. Investors should take the profit and stay out of Thai Beverage stock until there is clarity. 


IFast Corp: Higher AUA Growth Points Toward Significant Growth in 4Q Earnings (Quantamental)

By Shifara Samsudeen, ACMA, CGMA

iFast Corp Ltd (IFAST SP)  offers investment products and services in Singapore, Hong Kong, Malaysia and China. The company’s platform offers fintech and wealth management services to a large client base and is the first fintech company to be listed on the Singapore Stock Exchange.

On 6th January 2021, iFast reported that its assets under administration (AUA) grew by 44.5% YoY to reach S$14.45bn as at 31st December 2020 from S$10bn in the previous year. This indicates a 14.8% QoQ increase from S$12.59bn as at the end of 3Q2020.


Seven & I Holdings: OP Beats Could Continue into 4QFY21

By Oshadhi Kumarasiri

Our 2021 High Conviction call, Seven & I Holdings (3382 JP) delivered 3QFY21 results yesterday with operating income surpassing consensus estimate by more than 20%. The company’s 3QFY21 consolidated revenue was 1.2% below consensus. However, the YoY rate of revenue decline narrowed to 10% in 3QFY21, compared to 15.8% in 1HFY21.

More importantly, Seven & I has rallied 28% from the August low of ¥3,052 per share (at the time of the Speedway acquisition) and 18% since the publication of our high conviction call.


Ant Group: Regulatory Pressures Drive the State’s “big Data” Grab, and a Revised SOTP Valuation

By Victor Galliano

  • Regulatory pressure is driving Ant Group to place its financial operations into a holding company which would be subject to bank-like regulation, as Chinese regulators seek increasing oversight of the fast growth in consumer and SMB debt
  • Furthermore, and more importantly, press reports indicate that regulators are pushing for Chinese FinTech giants to share their consumer credit data with state entities, to enhance the centralized “big data” repository at the PBoC
  • The planned launch of the PBoC’s digital currency – the e-yuan – is intended to try to level the playing field between electronic payments leaders Alipay (Ant) and WeChat pay (Tencent) and the bank system, as well as giving the state a powerful tool for digital financial surveillance
  • For Ant, more bank-like regulation of credit would imply higher capital requirement for its credit operations as well as slower loan growth, with the sharing of Ant Group’s many terabytes of data with the authorities also potentially detracting from Ant Group’s “big data” edge and, by extension, valuation
  • We take a preliminary stab at a revised SOTP valuation range – despite the lack of clear regulatory parameters so far – of USD130-160bn for Ant Group, a far cry from the market’s estimated USD250bn+ valuation in 4Q20
  • We see further upside potential in the near term for Chinese SOE banks, as regulators begin to level the regulatory playing filed with FinTech; it is also time, in our view, to look again at Alibaba Group (BABA US), 33% shareholder in Ant Group
  • Risks to our negative view on Ant Group include a less aggressive implementation of regulatory rules on Chinese FinTech, and only limited disclosure on its “big data” lake

Samsung Closed the Gap with TSMC Already at 5nm? Whoa!

By Ken S. Kim

Local press reporting that Samsung Electronics (005930 KS) has made significant improvement on their 5nm technology which is a significant improvement given Samsung Electronics (005930 KS) ‘s to desire to take close the gap with TSMC (2330 TT) this is a big step.  Or was it already in the cards from a prior deal? 


KTC – Too Far Too Fast?

By Daniel Tabbush

The Thai credit card company, Krungthai Card (KTC TB) has been a favorite for some time. This was due to margins, returns, cost containment, managing credit risk and stability of recoveries. None of this has really changed, although profit growth is now uncharacteristically negative. What has though changed is the apparent value, where shares are on current PB of 9.5x and 49x current annualized earnings. 


Karnataka Bank Q3FY21: Re-Shuffling Loans and Improved Recoveries Positive but Write-Offs Spike

By Saumya Agarwal

Karnataka Bank kicked-off the Q3FY21 earnings season for Indian Banks. With the asset quality standstill benefit lapsing now, Q3 saw a spike in write-offs even as the overall gross NPA’s trended lower, for Karnataka Bank. The Bank has been re-balancing its advances portfolio and improving its collection efficiency to offset the impact but reigning in Write-offs crucial


Intel CEO Change Brings Focus Back to Technology

By Jim Handy

Intel announced on January 13, 2021, that its CEO Bob Swan would step down to be replaced by departed Intel veteran Pat Gelsinger.  This Smartkarma Insight focuses on the work that Gelsinger must do to win back the company’s diminishing prominence in the processor market that it created.


BGC: Relieved Concern on Capital Raising

By Research Group at Country Group Securities

We upgrade our rating for BGC from HOLD to BUY with a new target price of Bt14.0 based on 14.9xPE’21E, close to the average of the Thai packaging sector backed by better outlook on its packaging segment.

• We expect BGC to report a strong earnings momentum in 4Q20 driven by recovery in revenue from packaging business after lockdown easing.
• We expect no capital increase in AGM in April. We believe the company will focus on BVP and BGP which the most profitable to the company.
• Given our better outlook toward its packaging segment after strategic move toward its diversification in this segment, we rerate our  P/E  target from 12.3x (Asia ex-japan materials sector) to 14.9x (the Thai packaging sector) and raised our target price by 22% to Bt14 based on our 2021 earnings forecast.

Before it’s here, it’s on Smartkarma