In today’s briefing:
- Perfect Medical: Correction Provides An Opportunity For Entry
- A Pair Trade Between LG Corp & LG Electronics
- The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point
- General Mills Inc: Major Drivers
- McCormick & Co.: Major Drivers
Perfect Medical: Correction Provides An Opportunity For Entry
- Post the massive correction in the China market, Perfect Medical Health (1830 HK) trades at 9.6x/6.9x PE FY23e/24e with a 10.4%/14.6% dividend yield assuming a 100% payout ratio.
- From interactions with the management, HK’s operations are in good health, with Q2 revenues normalizing to precovid levels. China has yet to recover as intermittent lockdowns plague its operations.
- With cash and financial investments over 550 mn HKD ( 16% of market capitalization ), the company has the opportunity to make accretive acquisitions to grow its business.
A Pair Trade Between LG Corp & LG Electronics
- In this insight, we discuss a pair trade between LG Corp (003550 KS) (go long) and LG Electronics (066570 KS) (go short).
- LG Electronics is likely to have continued weakening results, due to rising interest rates on the household disposable income in major countries.
- Our base case valuation analysis of LG Corp suggests an implied price of 93,905 won per share, representing 19% upside from current levels.
The Timing of the Mandatory Disclosure of Human Capital Information Should Not Be a Sticking Point
- It is useful for statutory documents disclosing a company’s medium-to-long-term management strategy to include information on “human capital,” which plays a role in sustainable growth.
- If the mandatory timing of the information to be disclosed in annual securities report is accelerated, there is risk that the information will be similar to that of other companies.
- The government should not stick to 2023 for the mandatory inclusion in annual securities reports, but should give companies time to encourage them to deepen what they include.
General Mills Inc: Major Drivers
- General Mills delivered a mixed result for the previous quarter, failing to meet market expectations on the revenue front but delivering an earnings beat.
- The HMM cost savings, along with gains from pricing mix, offset inflation, deleverage, and the other types of operating costs benefitted General Mills’ bottom-line and helped deliver an earnings beat.
- The good news was that General Mills’ service levels increased slightly.
McCormick & Co.: Major Drivers
- McCormick had a disappointing quarter with a 3% top-line growth from the same quarter last year, just on par with expectations.
- The management remains focused on managing inventory levels and removing inefficiencies across the supply chain.
- High meat prices had an influence on grilling-related items compared to last year, although grilling is remains popular compared to pre=pandemic levels.
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