In today’s briefing:
- SPH Shareholders – SPH REIT Options Decay in Value
- Elon Buying Twitter? Probably Not
- Fast Retailing (9983) – Summer Is the Time for Shorts
- Ace Hardware Indonesia (ACES IJ) – Back on an Expansion Tack
- Tailim Paper IPO Preview
- Clearbridge Small Cap Growth Strategy Portfolio Manager Commentary Q1 2022
- Fast Retailing: New Growth Pillar May Not Be Strong Enough to Support the Weight of Valuation
- Clearbridge Small Cap Strategy Portfolio Manager Commentary Q1 2022
SPH Shareholders – SPH REIT Options Decay in Value
- Shares in Singapore Press Holdings (SPH SP) stopped trading a week ago. The election period to choose cash or cash and SPH REIT shares started yesterday.
- The OBVIOUS choice is to take the cash. But you have ten days to see SPH REIT gain 2% to change your mind.
- I note Keppel wanted SPH back when SPHREIT was worth a fair bit less, but at that time they didn’t want SPHREIT when an MGO would have been cheaper.
Elon Buying Twitter? Probably Not
- Tesla CEO Elon Musk bid $43 billion to buy Twitter and take it private.
- Better odds: Elon was bored. Pulled the stunt to irritate the SEC.
- Musk gets attention. Collects cash! Bolts before paying the check…on 4/20
Fast Retailing (9983) – Summer Is the Time for Shorts
- Interim results were surprisingly strong considering the headwinds from China and rising costs
- 2H guidance looks optimistic. China remains a key risk and we still see risks to the gross margin
- The “R” word. Rising inflation, Rising Interest rates = Recession. Probably not good for consumers and certainly not good for high stock multiples
Ace Hardware Indonesia (ACES IJ) – Back on an Expansion Tack
- Ace Hardware Indonesia (ACES IJ) recently released its FY2021 results which reflected the intermittent lockdowns on the top line but cost controls meant the bottom line finish almost flat.
- The company benefitted from its regional diversity during the pandemic as not all cities were affected in the same way but its exposure to malls is quite high.
- Ace Hardware will resume its expansion plans in 2022 with plans for 15 new stores plus it will be a big beneficiary of easing mobility, given low online sales.
Tailim Paper IPO Preview
- Tailim Paper is the number one company in Korea specializing in the production of corrugated cardboard.
- Tailim Paper is getting ready to complete an IPO towards the end of May. The IPO price range is from 19,000 won to 22,000 won.
- According to the bankers’ valuation, the expected market cap of Tailim Paper is from 616 billion won to 713 billion won.
Clearbridge Small Cap Growth Strategy Portfolio Manager Commentary Q1 2022
- Small cap growth stocks entered bear market territory during the quarter, buffeted by the prospects of monetary tightening, spiking inflation and the uncertainties wrought by Russia’s invasion of Ukraine.
Fast Retailing: New Growth Pillar May Not Be Strong Enough to Support the Weight of Valuation
- Even though 2QFY22 results were broadly in line with consensus, Fast Retailing (9983 JP)’s share price rose 8.8% as markets expected the worst amidst the Russian controversy and Shanghai lockdowns.
- However, this price movement seems unwarranted given the impact of Shanghai lockdowns could only be seen in the 3QFY22 financial statements.
- During earnings, FR introduced North America & Europe as new growth drivers to replace the declining Chinese market. But we are not convinced that they are up to the task.
Clearbridge Small Cap Strategy Portfolio Manager Commentary Q1 2022
- Small cap stocks had a rough ride during the first quarter, as increases in market volatility and investor uncertainty from major macro catalysts weighed on performance.
- The process of ending a decade of cheap and available capital has begun, creating headwinds that pose a challenge for the market as a whole.
Before it’s here, it’s on Smartkarma
