Daily BriefsEquity Bottom-Up

Equity Bottom-Up: Ultrajaya Milk Industry & Trading, Frasers Hospitality Trust, Hyphens Pharma International, Shiseido Company, Eicher Motors, NCSOFT Corp, True Corp Pcl, Asian Sea, Sappe Pcl, Minor International and more

In today’s briefing:

  • Ultrajaya Milk Industry & Trading (ULTJ IJ) – Dairy and Tea Driven Momentum Continues
  • Fraser Hospitality Trust (FRHO): Privatization + Recovery.
  • Smartkarma Corporate Webinar | Hyphens Pharma: Deepening Presence in ASEAN
  • Shiseido: Around 59% Upside Possible on Upgrades to Consensus
  • Eicher Motors (EIM IN) | The “Twins” (New Models & Exports) Are Firing
  • NCsoft: A Strong Turnaround Play in Korean Game Sector
  • TRUE: Merger Still Progressing but Large Losses Expected in 22E
  • ASIAN: Pet Food Unit Continue to Be Key Growth Driver
  • SAPPE: Targets to Hit Revenue at Bt10bn by 2026
  • MINT: Hotel Segment’s Recovery Will Boost 2022 Growth

Ultrajaya Milk Industry & Trading (ULTJ IJ) – Dairy and Tea Driven Momentum Continues

By Angus Mackintosh

  • Ultrajaya Milk Industry & Trading saw continued growth momentum in 1Q2022 both for its core UHT milk business (No.1) and its carton tea business as mobility restrictions were lifted.
  • The company also sources more of its milk requirements locally, which means less exposure to imported milk power but prices there have started to come off. 
  • Management remains optimistic that the company can achieve double-digit growth this year plus it has increased ASPs by +3% in April. Valuations at a discount to staple peers. 

Fraser Hospitality Trust (FRHO): Privatization + Recovery.

By Henry Soediarko

  • Most of the countries that Frasers Hospitality Trust (FHT SP) has assets in have their borders already opened. 
  • The full impact of the reopening will only be seen in the subsequent quarters thus it is almost certain that next quarter’s result will be better than the past one.
  • The upside from privatization is mostly priced in but the recovery of the business is real albeit potentially gradual. 

Smartkarma Corporate Webinar | Hyphens Pharma: Deepening Presence in ASEAN

By Smartkarma Research

For our next Corporate Webinar, we are glad to welcome Hyphens Pharma International (HYP SP) Chairman and CEO, Mr. Lim See Wah.

In the upcoming webinar, Mr Lim will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst Tina Banerjee. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 7 June 2022, 17:00 SGT.

Hyphens Pharma International Limited and its subsidiaries (the “Group”) is Singapore’s leading specialty pharmaceutical and consumer healthcare group, leveraging on its diverse footprint in ASEAN countries. The Group has a direct presence in Singapore, Vietnam, Malaysia, Indonesia, and the Philippines, and is supplemented by a marketing and distribution network covering 10 other markets – Bangladesh, Brunei, Cambodia, China, Hong Kong S.A.R., Macau S.A.R., Myanmar, Oman, South Korea, and Sri Lanka.

Singapore is the Group’s regional headquarters, where its strategic planning, finance, regulatory affairs, research and development, legal, business development, and logistics operations are based. The Group’s core business comprises the following segments: Specialty Pharma Principals, Proprietary Brands, and Medical Hypermart & Digital. Besides marketing and selling a range of specialty pharmaceutical products in selected ASEAN countries through exclusive distributorship or licensing and supply agreements with brand principals mainly from Europe and the United States, the Group also develops, markets, and sells its own proprietary range of dermatological products and health supplement products. In addition, the Group operates a medical hypermart for healthcare professionals, healthcare institutions and retail pharmacies, to supply pharmaceutical products and medical supplies and an online e-pharmacy for doctors to prescribe and have medications delivered to their patients’ homes.

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


Shiseido: Around 59% Upside Possible on Upgrades to Consensus

By Oshadhi Kumarasiri

  • At 4% below the COVID sell-off low level, Shiseido Company (4911 JP) is looking genuinely attractive over the medium-long term.
  • In addition, there could be a shift in the short term market sentiment towards Japanese cosmetics with China’s COVID lockdowns expected to ease from the beginning of next month.
  • With the downside risk limited to less than 10%, we think it may be a good time to start owning Shiseido.

Eicher Motors (EIM IN) | The “Twins” (New Models & Exports) Are Firing

By Pranav Bhavsar

  • Eicher Motors (EIM IN) is well-positioned to offset margin pressures due to its aspirational brand, the success of its new models and exports. 
  • Easing supply issues along with newer export markets provide a compelling runway for revenue growth. 
  • While our estimates are in line with consensus,  we believe the YTD outperformance is likely to continue and any opportunities presented amidst market volatility must be exploited. 

NCsoft: A Strong Turnaround Play in Korean Game Sector

By Douglas Kim

  • Amid recent market carnage, one of the strong turnaround stocks in Korea is NCSOFT Corp (036570 KS) which is down 54% from its highs in February 2021.
  • Three major reasons why NCsoft’s share price will turnaround include attractive valuations, better control of labor costs, and strong pipeline of new games. 
  • Short sale value/market cap ratio for NCsoft has declined materially in the past several weeks, reflecting increased optimism in the company’s future prospects. 

TRUE: Merger Still Progressing but Large Losses Expected in 22E

By Pi Research

  • Conference meeting on Wednesday came with negative news on 22E earnings prospects. We maintain our BUY rating with TP of Bt5.09, based on the tender offer price.
  • Management expects no pushback in terms of creditor approval.We believe that the merger will also receive regulatory approval,but with several regulations to also protect consumers, which could impact NewCo’s potential.
  • We revise 22E earnings down to Bt2.9bn loss from Bt736m loss, previously, to reflect higher D&A costs and ARPU decline due to harsh competition in 2022.

ASIAN: Pet Food Unit Continue to Be Key Growth Driver

By Pi Research

  • Maintain BUY rating with TP of B23.00 derived from 16xPE’22E, which is close to +1SD of 5-years trading average. Our rating reflects strong pet food growth outlook, attractive 3.8% yield
  • We foresee earnings momentum to improve QoQ in 2Q22, supported by better pet food business unit from new capacity, and further strengthen by Baht downtrend.
  • In our view, the new pet food capacity should gather pace in 2H22, upon better demand in light of favorable macro dynamics. Moreover

SAPPE: Targets to Hit Revenue at Bt10bn by 2026

By Pi Research

  • Yesterday analyst meeting came out with a positive tone.We reiterate our BUY rating for SAPPE with a target price of Bt35.25 (+10% from previous TP)based on 24xPE’22E, close to +1SD
  • Management targeted revenue at Bt10bn by 2026 or +22%CAGR(2022-26). •In our view, SAPPE target is quite challenging amid concern over rising inflation situation. 
  • We expect 2Q22 earnings to continue to grow YoY and QoQ supported by (1) higher oversea market penetration, (2) distribution channel expansion,  (3) more effective marketing activities

MINT: Hotel Segment’s Recovery Will Boost 2022 Growth

By Pi Research

  • Analyst meeting came out with a positive tone regarding 2022 outlook.We maintain BUY rating with a target price of Bt38.0,based DCF method (WACC of 8% and terminal growth of 2%)
  • Positive 2022outlook as we expect the hotel industry to make a strong come back in 2022due to vaccine roll outs and easing of international travel restrictions,making the earnings positive for2022
  • Since 1Q is typically the lowest travel seasonality,we expect the revenue from hotels to grow for next 3 quarters (around 50% by 4Q22), contributing around 75% of the total revenue.

Related tickers: Ultrajaya Milk Industry & Trading (ULTJ.JK), Frasers Hospitality Trust (FRHO.SI), Shiseido Company (4911.T), Eicher Motors (EICH.NS), NCSOFT Corp (036570.KS), True Corp Pcl (TRUE.BK), Asian Sea (ASIAN.BK), Sappe Pcl (SAPPE.BK), Minor International (MINT.BK)

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