In today’s briefing:
- Harmonic Drive – Orders Rolling Over
- About an Article on Corporate Governance or Economic Security
- SMC – Guidance Ignores Potential For Down Cycle
- Sampyo Cement: Likely Exit from KOSDAQ150 & Move to KOSPI
- Kalpataru Power – All Eyes on Merger
- 4QFY22 Result Update – Triveni Turbine
Harmonic Drive – Orders Rolling Over
- Harmonic Drive posted revenue that was a touch above guidance but just below consensus and rather weak OP of just ¥2.23bn.
- While that was just below consensus it represented a deviation from typical gross margin and SG&A trends that is concerning.
- More troubling however is the drop in orders and particularly the composition thereof.
About an Article on Corporate Governance or Economic Security
- I have considered the Nikkei article, “How to lead Toshiba, which has been split at the seams over security and the Corporate Governance Code, down the path of revitalization.”
- Toshiba may not have made serious business decisions on its own for many years because it’s been working in tandem with METI as a company responsible for METI’s key policies.
- Toshiba has adopted its Company with US-type 3-Committees for over 10-years, but provides a case of how board practices that are just for appearances don’t improve actual practices and performance.
SMC – Guidance Ignores Potential For Down Cycle
- SMC 4QFY22 was in-line with consensus revenue estimates at ¥185bn, but missed at the OP level with ¥52.7bn (10% below consensus) in a now familiar pattern for the sector.
- The company’s FY23 guidance was strong projecting revenue of ¥805bn (+4.5% vs. consensus) and OP of ¥265bn (+6.9% vs. consensus).
- The problem is that this ignores the typical cyclicality for the company and we believe OP will in fact be down YoY.
Sampyo Cement: Likely Exit from KOSDAQ150 & Move to KOSPI
- Sampyo Cement which is currently included in KOSDAQ150 is likely to be removed from this index in the coming months as the company wants to move to KOSPI.
- If Sampyo Cement is excluded from KOSDAQ150, we estimate there could be about 9 billion won worth of passive funds which could exit the stock. ADTV is 1.6 billion won.
- Therefore, we believe Sampyo Cement’s shares could face further weakness in the next several months. It will hold an EGM to vote on the move to KOSPI on 4 July.
Kalpataru Power – All Eyes on Merger
- KPTL results highlights: A lower order book and delays in dispatch led to an 8% revenue decline in FY22, with a margin decline of ~130bps.
- JMC Projects results highlights: JMC Projects delivered 45% revenue growth on the back of a very strong order book (Book-to-bill of ~4x), better than management’s guidance of 20% growth.
- Large projects: KPTL has been bidding for large projects in the recent past and recently bagged a large HVDC order worth Rs32bn.
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4QFY22 Result Update – Triveni Turbine
- Domestic market update: In FY22, the domestic market under 30MW is estimated to have grown by 71% YoY in MW terms.
- Exports update: The international market under 30MW is estimated to have declined by 24% YoY in FY22 in MW terms.
- mpact of Russia-Ukraine conflict: TTL has reduced orderbook by Rs400mn due to the Russia-Ukraine conflict as it took out certain orders from steel mills in Ukraine due to lack of visibility.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
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