Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/woolworths-ltd" target="_blank" data-smartkarma-citation="entities:500:1" rel="noopener">Woolworths Ltd (WOW AU)</a> yesterday <a href="https://www.woolworthsgroup.com.au/content/Document/ASX%20announcements/2021/F21%20Profit%20Announcement.pdf" target="_blank" rel="noopener">announced</a> earnings to June 2021 with revenues up 5.7%yoy (e-commerce now at 8.3% of the total and up 58% on the year), EBIT +13.7%, and NPAT +22.9% to A$1.972bn for the year. The final dividend was announced at 55 cents, up 14.6% on the year for a full-year dividend of 108cts (+14.9%) after EPS from continuing operations was 119.1cts (+20.7%yoy) and EPS from continuing operations after one-offs was 127.1cts (+73%). In addition to a high payout ratio, the company also <a href="https://www.woolworthsgroup.com.au/content/Document/ASX%20announcements/2021/210826%20Woolworths%20Group%20Buy-Back%20-%20Announcement_Booklet_Flyer.pdf" target="_blank" rel="noopener">announced</a> a A$2bn Off-Market Buyback (OMB). This was not unexpected. Like the previous off-market buyback executed in May 2019, this OMB has a two-tier approach, significantly favouring small investors.

Woolworths Ltd (WOW AU) yesterday announced earnings to June 2021 with revenues up 5.7%yoy (e-commerce now at 8.3% of the total and up 58% on the year), EBIT +13.7%, and NPAT +22.9% to A$1.972bn for the year. The final dividend was announced at 55 cents, up 14.6% on the year for a full-year dividend of 108cts (+14.9%) after EPS from continuing operations was 119.1cts (+20.7%yoy) and EPS from continuing operations after one-offs was 127.1cts (+73%). In addition to a high payout ratio, the company also announced a A$2bn Off-Market Buyback (OMB). This was not unexpected. Like the previous off-market buyback executed in May 2019, this OMB has a two-tier approach, significantly favouring small investors. 

Woolies (WOW AU) Announces ~4.4% Off-Market Buyback

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Our neutral and cautious outlook continues to be reinforced by market dynamics that have generally deteriorated over the past week. RS improvement for defensives (Utilities, Staples, Real Estate, and Health Care) continues to make these Sectors attractive. Meanwhile, not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Until supports start to break we cannot be bearish, though we would not be surprised to see ~5% downside with potential for more.

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

David Blennerhassett

Last Week in Event SPACE: SOHO China, Toshiba, Boral Ltd, Yageo/Chilisin, Microstrategy

Back on the <a href="https://www.woolworthsgroup.com.au/content/Document/2019-11-01%20Restructure%20Booklet.pdf" target="_blank" rel="noopener">3 July 2019</a>, supermarket and grocery chain giant <a href="https://www.smartkarma.com/entities/woolworths-ltd" target="_blank" data-smartkarma-citation="entities:500:1" rel="noopener">Woolworths Ltd (WOW AU)</a> announced plans to spin off its retail drinks and hospitality business via <a href="https://www.smartkarma.com/entities/endeavour-group-ltd-australia" target="_blank" data-smartkarma-citation="entities:33512:1" rel="noopener">Endeavour Group (EDV AU)</a>.
The demerger was expected to simplify the organisational structure, unlock long-term shareholder value for the company, and provide Endeavour greater access to capital. Shareholders agreed and approved the demerger at the EGM on the <a href="https://www.woolworthsgroup.com.au/content/Document/2019%20AGM%20%26%20EGM%20results.pdf" target="_blank" rel="noopener">16 December 2019</a>.
The internal structure was completed on the <a href="https://www.woolworthsgroup.com.au/content/Document/Completion%20of%20Internal%20Restructure%20and%20ALH%20Merger.pdf" target="_blank" rel="noopener">4 February 2020</a>, such that Woolies held 85.4% in Endeavour. The Bruce Mathieson Group held the remaining 14.6%. 
The timing of the demerger was subsequently <a href="https://www.woolworthsgroup.com.au/content/Document/Woolworths%20Group%20update%20on%20impact%20of%20coronavirus%20(COVID-19).pdf" target="_blank" rel="noopener">delayed</a> on account of Covid-19. 
A new meeting was held on the 18 June to re-consider the demerger, which was also <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02385935-2A1304198?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">duly passed</a>. 
Via an in-specie distribution to existing shareholders, Woolies' shareholders received one Endeavour share for every Woolies' share, in addition to maintaining their one share in Woolies. 
Woolies commenced trading on the ASX, ex-entitlement, on the 24 June, the same day Endeavour commenced trading. 
Woolies is now a cleaner supermarket play, whereas Endeavour may find itself on the wrong side of ESG investors. 
More below the fold.

Back on the 3 July 2019, supermarket and grocery chain giant Woolworths Ltd (WOW AU) announced plans to spin off its retail drinks and hospitality business via Endeavour Group (EDV AU).
The demerger was expected to simplify the organisational structure, unlock long-term shareholder value for the company, and provide Endeavour greater access to capital. Shareholders agreed and approved the demerger at the EGM on the 16 December 2019.
The internal structure was completed on the 4 February 2020, such that Woolies held 85.4% in Endeavour. The Bruce Mathieson Group held the remaining 14.6%. 
The timing of the demerger was subsequently delayed on account of Covid-19. 
A new meeting was held on the 18 June to re-consider the demerger, which was also duly passed. 
Via an in-specie distribution to existing shareholders, Woolies' shareholders received one Endeavour share for every Woolies' share, in addition to maintaining their one share in Woolies. 
Woolies commenced trading on the ASX, ex-entitlement, on the 24 June, the same day Endeavour commenced trading. 
Woolies is now a cleaner supermarket play, whereas Endeavour may find itself on the wrong side of ESG investors. 
More below the fold.

Woolworths/Endeavour: Taking A Bet On Alcohol & Gaming

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Thematic (Sector/Industry)

For investors who are not based in Singapore, the mini lockdown in Singapore has started again due to the sudden increase in the number of community cases which previously was relatively under control. Before one thinks that it is a too-harsh of a policy, the rate of the increase of unlinked community cases in Singapore is high. This matters a lot because every Singapore residents need to check in every establishment using either an Identification card, Trace Together app, or token which has proved to be very effective as for months, most of the COVID-19 cases can be traced and therefore allows the government to take the necessary actions. 
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This time is different. Alongside the third wave that has hit India and Thailand, Singapore, too, is hit. The Singapore government's response to this is very much like the first lock-down (Circuit Breaker), that they minimize public interactions so that the number of community cases does not increase and provide them with the time to perform contact tracing thoroughly. 
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In this report, we identify that <a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> , <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and <a href="https://www.smartkarma.com/entities/singapore-post-ltd" target="_blank" data-smartkarma-citation="entities:150:1" rel="noopener">Singapore Post (SPOST SP)</a>as winners while <a href="https://www.smartkarma.com/entities/comfortdelgro-corp-ltd" target="_blank" data-smartkarma-citation="entities:497:1" rel="noopener">Comfortdelgro Corp (CD SP)</a> and <a href="https://www.smartkarma.com/entities/genting-singapore-ltd" target="_blank" data-smartkarma-citation="entities:439:1" rel="noopener">Genting Singapore (GENS SP)</a>as losers.

For investors who are not based in Singapore, the mini lockdown in Singapore has started again due to the sudden increase in the number of community cases which previously was relatively under control. Before one thinks that it is a too-harsh of a policy, the rate of the increase of unlinked community cases in Singapore is high. This matters a lot because every Singapore residents need to check in every establishment using either an Identification card, Trace Together app, or token which has proved to be very effective as for months, most of the COVID-19 cases can be traced and therefore allows the government to take the necessary actions. 

This time is different. Alongside the third wave that has hit India and Thailand, Singapore, too, is hit. The Singapore government's response to this is very much like the first lock-down (Circuit Breaker), that they minimize public interactions so that the number of community cases does not increase and provide them with the time to perform contact tracing thoroughly. 

In this report, we identify that Sheng Siong (SSG SP) , Sea Ltd (SE US) and Singapore Post (SPOST SP)as winners while Comfortdelgro Corp (CD SP) and Genting Singapore (GENS SP)as losers. 

Singapore Mini Lockdown: Winners and Losers

Australia

Woolworths Limited operates supermarkets, specialty and discount department stores, liquor and electronics stores throughout Australia.  Woolworths also manufactures processed foods, exports and wholesales food and offers petrol retailing.  The Company also operates hotels which includes pubs, food, accommodation, and gaming operations.

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Woolworths Ltd (WOW AU)

Woolies (WOW AU) Announces ~4.4% Off-Market Buyback

Woolworths announced results. NPAT came in slightly ahead and EBIT slightly behind consensus. The big news is a A$2.0bn (4.4% as of now) off-market...

Travis Lundy

Crude Oil and Copper Breakdowns Reinforce Our Concerns; Defensive Sectors Remain Attractive

Our cautious outlook is reinforced by ongoing developments. Relative strength improvement for defensives (Utilities, Staples, Real Estate, Health...

Vermilion Research

Last Week in Event SPACE: SOHO China, Toshiba, Boral Ltd, Yageo/Chilisin, Microstrategy

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Woolworths/Endeavour: Taking A Bet On Alcohol & Gaming

I side with ESG-focused super investors' concerns on Endeavour, given its exposure to gaming & alcohol. Woolies is now a pure-play on grocery and...

David Blennerhassett

Singapore Mini Lockdown: Winners and Losers

In this report, we identify that Sheng Siong (SSG SP) , Sea Ltd (SE US) and Singapore Post (SPOST SP)as winners while Comfortdelgro Corp (CD SP)...

Henry Soediarko

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