Value Investing

Vladimir Dimitrov, CFA

Equity Bottom-Up

<ul>
<li>Kimberly-Clark has been among the worst-performing large-cap consumer staple businesses.</li>
<li>Even though management is executing well, the strategic positioning of the business remains weak.</li>
<li>Dividend increases appear unlikely, which does not bode well for returns given the inflationary environment.</li>
</ul>


Kimberly-Clark has been among the worst-performing large-cap consumer staple businesses.
Even though management is executing well, the strategic positioning of the business remains weak.
Dividend increases appear unlikely, which does not bode well for returns given the inflationary environment.


Kimberly-Clark: Strategic Positioning Matters

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Capital Markets

<ul><li>Kimberly-Clark suffered from a weak result which was a stark contrast to the company’s record strong growth in the year-ago quarter.</li><li>The company failed to meet analyst expectations in terms of revenues as well as earnings and the only silver lining was the personal care organic sales growing by 6% worldwide, driven by a 4% volume increase.</li><li>The company saw a decent personal care organic sales performance in markets like China, Brazil, Eastern Europe, Peru, India, and South Africa.</li></ul>

Kimberly-Clark suffered from a weak result which was a stark contrast to the company’s record strong growth in the year-ago quarter.The company failed to meet analyst expectations in terms of revenues as well as earnings and the only silver lining was the personal care organic sales growing by 6% worldwide, driven by a 4% volume increase.The company saw a decent personal care organic sales performance in markets like China, Brazil, Eastern Europe, Peru, India, and South Africa.

<ul><li>Since I first covered Kimberly-Clark back in June of last year, the total return has been disappointing, to say the least.</li><li>Rising commodity prices are proving to be a headwind for all Personal &amp; Home Care companies, however, KMB is hit disproportionally.</li><li>Kimberly-Clark is at a competitive disadvantage to its peers, which could have a lasting impact on returns.</li></ul>

Since I first covered Kimberly-Clark back in June of last year, the total return has been disappointing, to say the least.Rising commodity prices are proving to be a headwind for all Personal &amp; Home Care companies, however, KMB is hit disproportionally.Kimberly-Clark is at a competitive disadvantage to its peers, which could have a lasting impact on returns.

Kimberly-Clark Did Underperform, I Don't See This Changing

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Blue Moon Group Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/blue-moon-group-holdings" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (6993 HK)</a> is a leading consumer household care company in China.  Blue Moon will commence trading on Wednesday, 16 December. Blue Moon priced its IPO at HK$13.16 and <a href="http://www.aastocks.com/en/stocks/news/aafn-con/NOW.1063245/ipo-news" target="_blank" rel="noopener">opened 14% higher</a> at HK$15.00 in the grey market and last stood at HK$14.90.</p></div><div><p>In <a href="https://www.smartkarma.com/insights/blue-moon-ipo-initiation-laundry-list" target="_blank" data-smartkarma-citation="insights:41086" rel="noopener">Blue Moon IPO Initiation: Laundry List</a>, we stated that on balance we think the positives (market-leading brand, strong margin progression, solid cash generation) outweigh the negatives (declining revenue growth and short-term COVID-19 impact). In <a href="https://www.smartkarma.com/insights/blue-moon-ipo-doing-the-wash" target="_blank" data-smartkarma-citation="insights:45481" rel="noopener">Blue Moon IPO: Doing the Wash</a> we noted that the 1H20 results disclosed in the PHIP show that the Blue Moon has creditably navigated the adverse revenue decline on its core business due to the COVID-19 outbreak by improving margin and cash generation. In <a href="https://www.smartkarma.com/insights/blue-moon-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:46033" rel="noopener">Blue Moon IPO: Valuation Insights</a>, we noted that the IPO price range is attractive.</p></div><div><div><div class="content-highlight"><p>Our base-case DCF derived price target of HK$15.21 per share. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis shows that the IPO price continues to provide good upside potential. </p></div></div></div>

Blue Moon Group Holdings (6993 HK) is a leading consumer household care company in China.  Blue Moon will commence trading on Wednesday, 16 December. Blue Moon priced its IPO at HK$13.16 and opened 14% higher at HK$15.00 in the grey market and last stood at HK$14.90.In Blue Moon IPO Initiation: Laundry List, we stated that on balance we think the positives (market-leading brand, strong margin progression, solid cash generation) outweigh the negatives (declining revenue growth and short-term COVID-19 impact). In Blue Moon IPO: Doing the Wash we noted that the 1H20 results disclosed in the PHIP show that the Blue Moon has creditably navigated the adverse revenue decline on its core business due to the COVID-19 outbreak by improving margin and cash generation. In Blue Moon IPO: Valuation Insights, we noted that the IPO price range is attractive.Our base-case DCF derived price target of HK$15.21 per share. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis shows that the IPO price continues to provide good upside potential. 

<div>
<p><a href="https://www.smartkarma.com/entities/guangzhou-blue-moon-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (BMG HK)</a> is a leading consumer household care company in China. At the proposed IPO price range of HK$10.20-13.16 per share, Blue Moon will have a market cap of HK$58,621-75,632 million ($7.6-9.8 billion). At the mid-point of the IPO price range, the total net proceeds are HK$8,492 million ($1.1 billion). </p>
<p>Six cornerstone investors will subscribe for HK$1,821 million ($235 million) of the offer shares (20.87% of the offer shares at the mid-point of the price range). The cornerstone investors are BOCHK Asset Management, <a href="https://www.smartkarma.com/entities/shanghai-dazhong-public-utilities-a" target="_blank" data-smartkarma-citation="entities:7847:1" rel="noopener">Shanghai Dazhong Public Utilities - A (600635 CH)</a>,  Fullerton, Changjia Group, Greater Bay Area Fund and Veritas Asset Management.</p>
</div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/blue-moon-ipo-initiation-laundry-list" target="_blank" data-smartkarma-citation="insights:41086" rel="noopener">Blue Moon IPO Initiation: Laundry List</a>, we stated that on balance we think the positives (market-leading brand, strong margin progression, solid cash generation) outweigh the negatives (declining revenue growth and short-term COVID-19 impact). In <a href="https://www.smartkarma.com/insights/blue-moon-ipo-doing-the-wash" target="_blank" data-smartkarma-citation="insights:45481" rel="noopener">Blue Moon IPO: Doing the Wash</a> we noted that the 1H20 results disclosed in the PHIP show that the Blue Moon has creditably navigated the adverse revenue decline on its core business due to the COVID-19 outbreak by improving margin and cash generation. Overall, we would participate in the IPO due to an attractive IPO price range.</p></div></div>


Blue Moon Group Holdings (BMG HK) is a leading consumer household care company in China. At the proposed IPO price range of HK$10.20-13.16 per share, Blue Moon will have a market cap of HK$58,621-75,632 million ($7.6-9.8 billion). At the mid-point of the IPO price range, the total net proceeds are HK$8,492 million ($1.1 billion). 
Six cornerstone investors will subscribe for HK$1,821 million ($235 million) of the offer shares (20.87% of the offer shares at the mid-point of the price range). The cornerstone investors are BOCHK Asset Management, Shanghai Dazhong Public Utilities - A (600635 CH),  Fullerton, Changjia Group, Greater Bay Area Fund and Veritas Asset Management.
In Blue Moon IPO Initiation: Laundry List, we stated that on balance we think the positives (market-leading brand, strong margin progression, solid cash generation) outweigh the negatives (declining revenue growth and short-term COVID-19 impact). In Blue Moon IPO: Doing the Wash we noted that the 1H20 results disclosed in the PHIP show that the Blue Moon has creditably navigated the adverse revenue decline on its core business due to the COVID-19 outbreak by improving margin and cash generation. Overall, we would participate in the IPO due to an attractive IPO price range.

United States

Kimberly-Clark Corporation is a global health and hygiene company that manufactures and provides consumer products. The Company's products include diapers, tissues, paper towels, incontinence care products, surgical gowns, and disposable face masks.  Kimberly-Clark's products are sold in countries around the world.

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Kimberly Clark (KMB US)

Kimberly-Clark: Strategic Positioning Matters

Kimberly-Clark has been among the worst-performing large-cap consumer staple businesses. Even though management is executing well, the strategic...

Vladimir Dimitrov, CFA

Kimberly-Clark Corp - Investment Thesis

Kimberly-Clark suffered from a weak result which was a stark contrast to the company’s record strong growth in the year-ago quarter. The company...

Baptista Research

Kimberly-Clark Did Underperform, I Don't See This Changing

Since I first covered Kimberly-Clark back in June of last year, the total return has been disappointing, to say the least. Rising commodity prices...

Vladimir Dimitrov, CFA

Blue Moon IPO: Trading Debut

Blue Moon priced its IPO at HK$13.16 and opened 14% higher at HK$15.00 in the grey market. Our DCF sensitivity analysis shows that the IPO price...

Arun George

Blue Moon IPO: Valuation Insights

Blue Moon has launched its HK IPO to raise net proceeds of $1.1 billion, at the mid-point of the HK$10.20-13.16 price range. Overall, we think that...

Arun George

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