In today’s briefing:
- Sony – Uncharted and Horizon Forbidden West Start Well
- LG Energy’s KOSPI 200 Float Is 15%: Weight Adjustment Trading for Other Constituents
- Rakuten: At a New Forward EV/EBITDA Bottom
- India Household Appliances | Q3 Earnings Review and Channel Check Map
- Welcia’s Purchase of Kokumin: Watch Out Matsukiyo Cocokara
- Familymart, the Lifestyle Store
- IDP Education Placement – Time for Round 2 (US$700m Worth) Of the Selldown
- Toyota – Quick Wage Negotiation Agreement Means Something
- CBG: Expect Earnings to Recover YoY Supported by New Product Launches
- Ioi Corporation (IOIB.KL) – A Strong Pick Up In 2 Qfy22 Earnings
Sony – Uncharted and Horizon Forbidden West Start Well
- Sony had a busy 18th Feb as both the Uncharted movie and Horizon Forbidden West launched.
- Uncharted has done reasonably well though not to the extent we believed likely while the Horizon franchise could be on the way to truly elite status.
- We look for both releases to contribute to a strong 4Q along with Gran Turismo 7.
LG Energy’s KOSPI 200 Float Is 15%: Weight Adjustment Trading for Other Constituents
- The local street hears KRX has bumped it up to 14.68%. With the 1% rounding applied, it becomes 15%.
- It is extremely rare for a Fast Entry to come in with a float market cap of +₩10T. So, we will see significant weight adjustments for the other constituents.
- As we move towards the implementation date, we can consider basket-shorting those high-impact names for LG Energy’s long hedge.
Rakuten: At a New Forward EV/EBITDA Bottom
- Rakuten Inc (4755 JP) is currently trading 20% below the bottom end of the long term trend channel.
- With consensus FY+2 EBITDA at ¥309.8bn, Rakuten’s current EV/EBITDA is at an all-time low of 1.7x compared to the historical median and peak of 9.0x and 16.1x respectively.
- Based on the consensus FY+2 EBITDA and EV trend, we feel the fair valuation of Rakuten could be somewhere around ¥3,000bn EV.
India Household Appliances | Q3 Earnings Review and Channel Check Map
- We analyze Q3 FY22 Earnings for Bajaj Electricals (BJE IN) , Crompton Greaves Consumer Electricals (CROMPTON IN) , Havells India (HAVL IN) and Stove Kraft (0490943D IN)
- Stress in rural is hurting BJE, CROMPTON is riding high on new products, Upcoming AC season is the key for HAVL. For Stove Kraft growth is falling off a cliff.
- BJE and HAVL would be best placed to explore a potentially long and short respectively.
Welcia’s Purchase of Kokumin: Watch Out Matsukiyo Cocokara
- Last month, Welcia announced the acquisition of Kokumin, the 30th ranked drugstore that runs a well-respected chain stretching across the country.
- As the newly formed Matsukiyo Cocokara group continues to struggle, another year of high growth means Welcia will be only just behind when FY2021 results come in.
- Overall growth in the drugstore sector remains strong and could even overtake convenience stores in the near future.
Familymart, the Lifestyle Store
- Thanks to the huge supply chain capabilities of its parent Itochu Corp (8001 JP), FamilyMart Co Ltd (8028 JP) is moving into new categories of private label product.
- These are not the traditional staples of the convenience store but new types of more fashionable lifestyle products in clothing and cosmetics.
- Recent results show successful collaboration with Noin for cosmetics and with Hiromichi Ochiai from Facetasm for clothing basics, selling more than 1 million items each.
IDP Education Placement – Time for Round 2 (US$700m Worth) Of the Selldown
- Education Australia, the largest shareholder of IDP Education, last raised around US$858m (A$1.1bn) via selling 15% of IDP Education in Aug 2021.
- The lock-up from that deal is set to expire later this month, which will result in an additional 12.5% of the company’s shares, worth US$670m (A$927m) being unlocked.
- In this note we will talk about the recent results and the upcoming lockup expiry.
Toyota – Quick Wage Negotiation Agreement Means Something
- The Nikkei reported today that Toyota had already agreed to accept its unions wage hike demands and in full.
- This is unusual given typically fair but tough negotiations and Toyota’s penchant for very strict cost control.
- Although the news does not appear to be attracting any great attention we believe it is actually quite significant.
CBG: Expect Earnings to Recover YoY Supported by New Product Launches
- We upgrade our recommendation for CBG from HOLD to BUY with a new target price of Bt115 (-9% from previous TP), derived from 35xPE’22E, the average of the Thai energy
- We forecast 2022E earnings to recover to Bt3.3bn (+16%YoY) supported by (1) recovering sales in CLMV market, (2) Solid liquor’s distribution revenue growth, and (3) new product launches in Thailand.
- Expect earnings to bounce back to roughly Bt800m in 2Q22,while we believe gross profit margin had already bottomed in 4Q21and expecting it to recover in 1Q22,supported by higher sales contribution
Ioi Corporation (IOIB.KL) – A Strong Pick Up In 2 Qfy22 Earnings
- A 1st interim DPS of 6sen was declared
- 2Q core PATMI came in above expectations
- 2Q: Downstream returned to the black vs last year
- Raising our FY22-24E CPO ASP and core PATMI
Before it’s here, it’s on Smartkarma
