In today’s briefing:
- KWEB Index Rebalance: Few Changes at the Close Today
- JD Health: Profitability Remains Under Pressure
- CP ALL Pcl (CPALL TB) – Omnipresent Operator
- Balkrishna Industries Ltd- Forensic Analysis
- What Is the Effective Way to Ensure That “TSE Request” Does Not End up Being a Formal Disclosure?
- Toyota Motor Corporation: How Long Are Production Constraints & Other Challenges Going To Last? – Key Drivers
- Fox Corporation: Formation of Tubi Media Group To Lead Fox’s Digital Expansion Efforts – Key Drivers
- Tyson Foods Inc.: Continued Challenges In Beef
- Wynn Resorts
KWEB Index Rebalance: Few Changes at the Close Today
- The June rebalance of the KraneShares CSI China Internet ETF (KWEB US) will take place at the close of trading today.
- There are a couple of deletions and one inclusion. Plus there will be capping changes on the other stocks, but the impact of those changes is not large.
- The stocks have already been moving in the right direction during the day and the pre-positions could be flipped to the ETF at the close.
JD Health: Profitability Remains Under Pressure
- In May, JD Health made a voluntary announcement that the company has made operating income of RMB795.4m (5.7% of revenues) in 1Q2023 vs RMB61.6m (0.7% of revenues) reported in 1Q2022.
- JD Health’s share price been down more than 25% despite the company announcing strong 1Q2023 results, as the market has become concerned over the company’s ability to sustain its profits.
- Our quantamental analysis proves that JD Health may not be able to generate OPM in excess of 2-3% as there is very little room for GPM to improve.
CP ALL Pcl (CPALL TB) – Omnipresent Operator
- CP ALL is increasingly one of the best proxies for consumption in Thailand, with its broad exposure to convenience stores, hypermarkets, supermarkets, wholesale through Makro’s cash & carry stores.
- The company continues to expand its store footprint and improve margins through a better product mix towards fresh and private labels, as well as group synergies around growing omnichannel sales.
- CP ALL is the largest weighting in MSCI Thailand and has seen pressure from foreign outflows due to political uncertainty but this may be about to work in its favour.
Balkrishna Industries Ltd- Forensic Analysis
- Balkrishna Industries (BIL IN) is one of the big names in Off-Highway Tyre (OHT) segment across the globe.
- The company is currently in a capex mode and looks to augment its tyre capacity and expand the carbon black manufacturing.
- However, there are some corporate level discomforts regarding the payouts to the stakeholders on the back of capex, and disclosure errs in few lone items on the balance sheet.
What Is the Effective Way to Ensure That “TSE Request” Does Not End up Being a Formal Disclosure?
- The test will be how many companies will disclose details that include the measures investors expect and whether the stock price will react positively when the panel concludes this fall.
- The most effective measure to ensure that “TSE’s request” doesn’t end up as a formal disclosure is for shareholders to press management at the AGMs to raise the share price.
- It’s important that the company’s resources are used effectively to maximize corporate value, and such measures should be put in place to increase the share price above the current level.
Toyota Motor Corporation: How Long Are Production Constraints & Other Challenges Going To Last? – Key Drivers
- Toyota managed to exceed analyst expectations in terms of revenue as well as earnings.
- The company faced production constraints due to factors like semiconductor shortages, natural disasters, and the ongoing impact of COVID-19.
- Their expert team members also remain committed to managing risks, investing in growth, and shaping the future of the automotive industry.
Fox Corporation: Formation of Tubi Media Group To Lead Fox’s Digital Expansion Efforts – Key Drivers
- Fox Corporation delivered an all-around beat in the previous quarter.
- The significant Super Bowl LVII bolstered the quarter’s success on the Fox Broadcast Network, which generated significant advertising revenue across their businesses and contributed to a remarkable 61% growth in advertising revenue in the Television segment.
- Despite the industry challenges, We give Fox Corporation a ‘Hold’ rating with a revised target price.
Tyson Foods Inc.: Continued Challenges In Beef
- Tyson Foods delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as earnings expectations of Wall Street.
- While the overall performance was disappointing compared to the previous year, Tyson Foods claims to have performed reasonably in volume and dollar sales, gaining market share in the retail core business lines.
- Despite these challenges, Tyson Foods remains focused on strengthening its branded foods business.
Wynn Resorts
- Wynn Resorts managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
- In Las Vegas, Wynn Resorts achieved significant results in Q1, supported by a thriving consumer base.
- In Macau, Wynn Resorts generated significant earnings despite some challenges, including a lower VIP hold.
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