In today’s briefing:
- FTSE China A50 Index Rebalance Preview: Three Potential Adds/Deletes Due to Ground Rule Change
- Liquid Universe of European Ordinary and Preferred Shares: May ’22 Report
- Cloud Village IPO Lock-Up – Selling the PE Stock (US$350m) Might Solve the Liquidity Issues
- Eastside distilling part 2: review Q1 results
- CBG: Time to Reload
- Kadokawa – How Much Upside Potential Does Elden Ring Offer?
- Jamna Auto Industries – Ideal Play on CV Upcycle; Resume with Buy
- Result Update – Endurance Tech
- Endurance Technologies – Multiple Growth Levers to Drive Industry Outperformance
- Result Update – Automotive Axles
FTSE China A50 Index Rebalance Preview: Three Potential Adds/Deletes Due to Ground Rule Change
- We expect PetroChina (601857 CH) and Gree Electric Appliances (000651) to be deleted following a Ground Rule change. Chongqing Zhifei Biological Products (300122 CH) should be deleted on market cap.
- Potential inclusions are Tongwei Co Ltd A (600438 CH), China Citic Bank Corp (601998 CH) and Anhui Conch Cement (600585 CH).
- One-Way turnover at the FTSE China A50 Index (XIN9I INDEX) June rebalance is estimated at 2.91% and will result in a one-way trade of CNY 1,420m.
Liquid Universe of European Ordinary and Preferred Shares: May ’22 Report
- Spreads have generally tightened across our liquid universe, in line with the recent market gains.
- Recommendations long ords / short prefs: Fuchs Petrolub, Investor AB, SSAB.
- Recommendations long prefs / short ords: Sixt, VW, Danieli, MFE, Grifols, Atlas Copco, Ericsson Handelsbanken, Roche, Schroders.
Cloud Village IPO Lock-Up – Selling the PE Stock (US$350m) Might Solve the Liquidity Issues
- Cloud Village Inc. (CVI), also known as NetEase Music, raised around US$420m in its Hong Kong IPO in Dec 21. The IPO was almost entirely taken up by cornerstones.
- The company had also earlier obtained investments from Baidu and Alibaba, along with other mainly PE investors. These investors will be released from their lock-up on 1st Jun 2022.
- In this note, we will talk about the lock-up dynamics and updates over the past few months.
Eastside distilling part 2: review Q1 results
- I believe EAST might be a 0, or basically 0, before the end of this year and equity holders (as well as preferred equity holders) are going to be wiped out.
- Here is my analysis of the latest results. Please note that this is after my 3rd (but not last) whiskey shot so there is a chance this will just be a stream of disorganized consciousness
- EAST has $2.6 million of cash as of March 31st, but that is after raising $2 million of working capital financing during the quarter offset by paying off $900K of the Live Oak debt facility.
CBG: Time to Reload
- Last week analyst meeting came out with a positive tone regarding2022-25 earnings outlook.We reiterate our BUY rating for CBG and roll over target price to Bt125 (Previous TP is Bt115)
- We expect GPM to bottomed out in 1Q22 caused by 1) higher revenue contribution from branded own segment (higher than average blended GPM), 2) wholesale price adjustment by 1%-3%
- We expect CBG to show a strong performance in 2022-25 supported by recovery sales in Cambodia, solid revenue in Myanmar, breaking into the Chinese market successfully, growth opportunities in Vietnam
Kadokawa – How Much Upside Potential Does Elden Ring Offer?
- Kadokawa earnings were strong with 4Q OP 56% above consensus despite a meagre 1.5% beat at the revenue line.
- Margin guidance was nonsensically conservative however as despite revenue guidance being in line with consensus the company guided for OP to miss by 25% and actually decline by 3.9% YoY.
- That prompted a 16.3% decline the day after earnings but the stock has rebounded and now sits just 2.1% below its pre-earnings level.
Jamna Auto Industries – Ideal Play on CV Upcycle; Resume with Buy
- Revenue ahead of estimate driven by improving product mix and higher realisation
- Key beneficiary of a multi-year CV upcycle: We see strong multi-year CV upcycle over the next 2-3 years
- Rising share of high-margin products & cost-control initiatives to drive margins: Increasing share of more rofitable Parabolic Springs (share of Parabolic Springs has risen to ~37-40% in the last two quarters vs. ~22% FY19) due to vehicle premiumisation should lead to improvement in product mix and profitability.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Result Update – Endurance Tech
- Domestic business: The standalone revenue declined 3% YoY, impacted by weak 2W industry demand especially in the entry-level segment while production of premium motorcycles was impacted by the shortage of ABS ECUs
- EU business: Europe’s business reported a strong beat on both topline and margin despite multiple headwinds (weak PV production, RM pressures, and elevated energy costs, among others.).
- Healthy Order Wins: During FY22, the company won new orders worth Rs 742 Cr from the top domestic OEMs such as HMSI, HMCL, RE, Ather and others (this is excluding order wins from Bajaj Auto) while receiving RFQ of Rs 2,034 Cr. It includes EV orders worth Rs 160 Cr (including Rs 53 Cr for 2W brakes from Ather and Rs 70 Cr for suspension and brakes from Polarity).
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Endurance Technologies – Multiple Growth Levers to Drive Industry Outperformance
- Endurance Technologies’ (ENDU) consolidated revenue came in above our estimate by ~15%, mainly on the back of higher realizations following price hikes.
- Increase in content per vehicle due to premiumisation in the suspension business, new growth opportunities due to import substitution & regulatory tailwinds (alloy wheels and disc brakes), new products like ABS, growing orders in fully machined casting from automotive & non-auto companies and a sharper focus on aftermarket (recently entered tyre distribution business) are the growth levers going forward. ENDU’s wallet share across OEMs has been gradually rising via cross-selling of new products.
- EV order wins remain key: ENDU is in an advanced stage of discussion with start-ups, in addition to the existing OEMs, to supply them EV products
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Result Update – Automotive Axles
- Industry outlook: As per the management, the CV industry is witnessing a steady recovery due to a pick-up in economic activities and better freight rates.
- Cost inflation: Due to the unprecedented escalation in commodity prices and cost normalisation, the company’s gross margins remain impacted.
- Exports: The company is currently exporting to Europe, North America, South America, and China.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Before it’s here, it’s on Smartkarma
