In today’s briefing:
- Keepers Holdings: Cheap Consumption Multibagger in the Philippines
- ECM Weekly (23rd Jan 2022) – Hyundai Engineering, KakaoBank, Wanda, AInnovation, Cloudr, LG Energy
- Index Rebalance & ETF Flow Recap: MSCI QIR, CSI300, Taiwan 50, EPRA Nareit, HDN/AVN, LG Energy
- RM pressures easing, but domestic demand remains weak
- High cost inflation, adverse mix induce first loss in a decade
- HSIE Results Daily: Hindustan Unilever, Asian Paints, Cyient, Mastek
Keepers Holdings: Cheap Consumption Multibagger in the Philippines
- The Keepers Holdings, Inc. (KEEPR PM) is a play on the imported liquor distribution business in the Philippines, with a >74% marketshare conservatively growing at 12-15% CAGR.
- Trading at 11.5x/10.0x FY21/22 PE with 35% of the market capitalization in cash ( implying an ex-cash PE of 7.5x), the stock is cheap with a significant margin of safety.
- Value enhancing asset injection angle with potential for the chairman Lucio Co to inject his Bodegas William and Humbers (W&H) stake into the listco.
ECM Weekly (23rd Jan 2022) – Hyundai Engineering, KakaoBank, Wanda, AInnovation, Cloudr, LG Energy
- Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
- LG Energy Solution (373220 KS) saw strong retail demand for its mega US$10bn+ IPO.
- Other IPO markets (ex-Korea) are starting to show signs of life. There were no major placements this week.
Index Rebalance & ETF Flow Recap: MSCI QIR, CSI300, Taiwan 50, EPRA Nareit, HDN/AVN, LG Energy
- The BHP Group (BHP AU) Unification will be implemented at the close on 28 January while the review period for the MSCI Feb QIR ends on 31 January,
- LG Energy Solution lists on 27 January and it should be a big one given the oversubscription during bookbuilding. The close on listing day will determine MSCI/FTSE Fast Entry.
- Relatively quiet week on ETF flows with the biggest outflow on the ChinaAMC China 50 ETF (510050 CH). Inflows continue into Hang Seng H Share Index ETF (2828 HK).
RM pressures easing, but domestic demand remains weak
Bajaj Auto (BJAUT)’s 3QFY22 beat was driven by lower RM cost pressures and favorable Fx. While exports remained robust and domestic 3W continued to recover, domestic 2Ws are yet to see recovery. In EVs, BJAUT is focusing on aggressively rolling out Chetak after ironing out supply chain issues. The e-3W launch is planned for FY23E. While we maintain our EPS estimates, we cut our P/E multiple to 16x (v/s 18x earlier) to account for hyper-competition in e-2Ws and the EV threat to…
High cost inflation, adverse mix induce first loss in a decade
CEAT’s revenue grew ~9% YoY (-2% QoQ) to INR24.1b, but EBITDA fell 59% YoY (39% QoQ) in 3QFY22 to INR1.3b (INR2.1b est.). It incurred a first quarterly loss in a decade at INR148m (v/s PAT of INR1.4b in 3QFY21). Its 9MFY22 revenue grew 27% YoY but EBITDA/PAT declined 28%/83.5% YoY. Volumes fell 5.5% YoY (3% QoQ), impacted by a decline in replacement (14% YoY) and OEM (7% YoY) but offset by strong exports (+27% YoY).
HSIE Results Daily: Hindustan Unilever, Asian Paints, Cyient, Mastek
Cyient: Cyient reported a good quarter; revenue was up 5.9% QoQ CC (higher than our estimate) and margin performed better than expected. The services segment reported double-digit YoY growth after thirteen quarters (+4.4/12.4% QoQ/YoY CC), led by recovery in aerospace (+3.9/14.5% QoQ/YoY). The worst phase of commercial aerospace is over and, going ahead, growth will be led by Avionics and MRO revival. The management has maintained its double-digit growth guidance for services but lowered the DLM growth guidance (single digit vs.
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