In today’s briefing:
- Alibaba (BABA US): Margin Pressure Overstated
- Swiggy Pre-IPO Early Look – Innovation Leader, Profitability Laggard
- Flagging a potentially interesting situation: IMAX China (HKG: 1970)
- Ferrari Q1 FY24: Another Beat, Conservative Guidance And High-Quality Growth
- Earnings Playbook | Shoppers Stop (SHOP IN) | Target of Quadrupling Network
- ADT Inc.: A Streamlined Business Model Driving Growth! – Major Drivers
- Columbia Sportswear Company: What Is The Expected Impact Of The Recovery Of U.S. Consumer Activity> – Major Drivers
- Harley-Davidson Inc.: Investment in LiveWire segment & The Impact On revenue! – Major Drivers
- Colgate-Palmolive Company: What Is Its New Consumer Behavior Management Strategy? – Major Drivers
- Mohawk Industries Inc.: Is Expectation of Consumer Confidence and Housing Market Improvement Realistic? – Major Drivers
Alibaba (BABA US): Margin Pressure Overstated
- We feel consensus overstates margin pressure for Alibaba’s March quarter results. We expect its group adjusted EBITA to deliver single-digit growth vs. investors’ concern about earnings retreat.
- March quarter should mark start of an earnings recovery cycle in our view, as improving China macro and well-executed business revamp plan put Alibaba back on growth track.
- This also means an end to its multiple contraction which lasted for five quarters. We see 50% upside on double-digit earnings growth and multiple expansion over next 12 months.
Swiggy Pre-IPO Early Look – Innovation Leader, Profitability Laggard
- Swiggy aims to raise US$1.25bn in its upcoming India IPO. The company has filed confidentially for its IPO, which is likely to be launched towards the end of the year.
- Swiggy, along with Zomato, operates a duopoly that has come to dominate the food delivery market in India. In 1H24, Swiggy serviced over 274,000 restaurants via its 370,000 delivery partners.
- In this note, we will take an early look at the company based on the publicly available financials.
Flagging a potentially interesting situation: IMAX China (HKG: 1970)
IMAX Corp, listed on the NYSE, is a 71% shareholder of IMAX China, a HKEX listed subsidiary – in charge of the release of IMAX films in Greater China.
IMAX HK is rather illiquid – 7.15 HK is a mere $0.93 USD – with no investor presentations, no earnings calls – again, as is common with ideas in this blog, we are dealing with a company that is more or less “unownable” for most, flies under the radar, and therefore sports a, for a lack of a better word, shite valuation.
- Whilst IMAX Corp, the parent company, trades at ~8x EBITDA, the “backwater” subsidiary IMAX HK, trades at a mere ~5x EBITDA, despite margins being more than 10 pts higher.
Ferrari Q1 FY24: Another Beat, Conservative Guidance And High-Quality Growth
- Ferrari N.V. (RACE US) reported yet another high-quality quarter with 11%/18% YoY revenue/net profit growth on a flat YoY(%) volume quarter driven by mix improvement.
- Although there seems to be earnings upside, and the street was literally searching for it in the concall, management stuck to their 6.5%/9% revenue/net profit growth guidance for FY24.
- Trading at 50x FY24, the stock seems expensive, but the strong branding and order book implies very visible earnings growth into the future.
Earnings Playbook | Shoppers Stop (SHOP IN) | Target of Quadrupling Network
- As we progress in earnings season in line with our previous Playbook, this one focuses on select consumer names.
- Names discussed include Titan Co Ltd (TTAN IN), Vedant Fashions (MANYAVAR IN) , Go Fashion India (GOCOLORS IN) & Shoppers Stop (SHOP IN).
- Most names expect a soft Q1, and SHOP is targeting the most aggressive expansion.
ADT Inc.: A Streamlined Business Model Driving Growth! – Major Drivers
- The first quarter 2024 results of ADT Inc. highlight the company’s positive growth and future investment opportunities.
- The company continues to focus on its consumer-oriented core security and smart home business, serving a vast market.
- Being an industry leader, ADT benefits from its trusted brand, national footprints, and the ability to tap stable and predictable cash flows to service and reduce its debt obligations.
Columbia Sportswear Company: What Is The Expected Impact Of The Recovery Of U.S. Consumer Activity> – Major Drivers
- Columbia Sportswear demonstrated solid management of its inventory and its operational costs.
- The company reported a 37% year-over-year reduction in inventory and the implementation of an inventory reduction plan that has reaped substantial benefits.
- Columbia Sportswear’s strong balance sheet supports its maneuvers to tackle the impact of coronavirus-induced disruptions and realign inventory.
Harley-Davidson Inc.: Investment in LiveWire segment & The Impact On revenue! – Major Drivers
- Harley-Davidson had a mixed performance in the recent result.
- The company delivered in line with expectations, reporting a 6% growth in North America, the most important region.
- However, this growth was offset by soft performances in Europe and the Asia Pacific primarily due to regional macroeconomic conditions.
Colgate-Palmolive Company: What Is Its New Consumer Behavior Management Strategy? – Major Drivers
- Colgate-Palmolive’s Q1 2024 earnings reveal a positive start to the year, with balanced top-line growth and consistent earnings per share growth.
- The company recorded organic sales growth across all four of its categories and all six of its divisions, as well as volume and pricing growth on a total company basis.
- This balanced growth enabled a 6% net sales growth, despite a nearly 4% headwind from foreign exchange.
Mohawk Industries Inc.: Is Expectation of Consumer Confidence and Housing Market Improvement Realistic? – Major Drivers
- Mohawk Industries’ Q1 2024 earnings call detailed a challenging period marked by economic headwinds and mixed performance.
- The company’s net sales for the first quarter were $2.7 billion, a drop of 4.5% compared to the previous year.
- However, the adjusted earnings per share increased by 6% year-over-year to $1.86.
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