In today’s briefing:
- Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations
- KCC: Plans to IPO Its Subsidiary Momentive Performance Materials in the US as Early as 2023
- JD.com Inc: Proposed Acquisition of Deppon Logistics Co & Other Drivers
- JD Property Pre-IPO – The Negatives – Unprofitable Without FV Gain. Gearing Could Limit Growth Plans
- Morgan Stanley: Initiation Of Coverage – A Series Of Synergistic Acquisitions & Other Drivers
- Box Inc: Benefitting From The Hybrid Work Era With Phenomenal Retention – Key Drivers
- Sabre Corp: Leveraging The Global Travel Recovery? – Key Drivers
- Cooper Companies Inc: Reaping The Fruits Of Myopia Management – Key Drivers
- Henry Schein Inc.: Initiation Of Coverage – Dental Sales Decline: A Temporary Setback or a Long-Term Problem? – Key Drivers
- Mettler-Toledo International Inc.: Continued Lab Growth
Rakuten Bank (5838 JP): Premium Growth Neobank Still Trading at Attractive Valuations
- The sharp run-up in the share price since its IPO does not, in our view, mean that Rakuten Bank’s rally is done; there is further fundamental justification for a re-rating
- Rakuten Bank trades on a LTM PE multiple of 14.4x, LTM PBV ratio of 1.6x and an ROE of 13.2%, which is the best return of our neobank peers
- Relative to its peer group, Rakuten Bank has premium long-run growth prospects; conservatively estimating Rakuten Bank’s growth (8% pa), implies a PEG ratio in the range of 1.2x to 1.3x
KCC: Plans to IPO Its Subsidiary Momentive Performance Materials in the US as Early as 2023
- On 24 April, KCC Corp announced that it plans to IPO its subsidiary Momentive Performance Materials Inc. in the US stock market as early as 2023.
- In 2021, KCC raised its stake in MOM Holding from 50% + 1 share to 60%. Momentive EBITDA increased from $300 million in 2018 to $450 million in 2022.
- Our valuation of KCC Corp suggests an NAV of 3.1 trillion won (post 50% discount) or NAV per share of 347,633 won per share, representing 49% higher than current price.
JD.com Inc: Proposed Acquisition of Deppon Logistics Co & Other Drivers
- JD.com had a successful year in 2022, achieving high-quality growth and surpassing 1 trillion RMB in full-year revenues for the first time.
- Despite external challenges, the company was able to maintain high-quality operations and record the highest-ever profitability for the year.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
JD Property Pre-IPO – The Negatives – Unprofitable Without FV Gain. Gearing Could Limit Growth Plans
- Jingdong Property (JDP HK) is looking to raise about US$1bn in its upcoming Hong Kong IPO.
- JD Property (JDP) develops and manages modern infrastructure, consisting primarily of logistics parks, as well as business parks and other assets in China and in Asia.
- In this note, we will talk about the not so positive aspects of the deal.
Morgan Stanley: Initiation Of Coverage – A Series Of Synergistic Acquisitions & Other Drivers
- Despite a more difficult environment, Morgan Stanley had a strong quarter and managed an all-around beat.
- The merging of Eaton Vance and E-Trade increased the company’s potential to gain new clients, increase assets, and support its stability.
- We initiate coverage on Morgan Stanley with a ‘Hold’ rating with a revised target price.
Box Inc: Benefitting From The Hybrid Work Era With Phenomenal Retention – Key Drivers
- Box had a successful third quarter and delivered an all-around beat with accelerating revenue growth, an operating margin of 21%, and RPO growth of 25%.
- Box’s net retention rate was 109%, with 97 deals over $100,000 and a 63% attach rate of Suites over $100,000 in the quarter.
- Box is seeing early success in customer adoption and use of Box Sign, with leading organizations replacing their incumbent signature solutions with Box Sign.
Sabre Corp: Leveraging The Global Travel Recovery? – Key Drivers
- Sabre had a challenging Q3 and failed to meet the revenue expectations of Wall Street while delivering wider-than-expected losses.
- Sabre generated total revenue of $441 million in the quarter, a substantial improvement compared to $278 million in Q3 2020.
- The distribution revenue of Sabre increased by $140 million year-on-year, and the IT Solutions revenue increased to $145 million in Q3.
Cooper Companies Inc: Reaping The Fruits Of Myopia Management – Key Drivers
- Cooper Companies had impressive Q3 results for both its CooperVision and CooperSurgical divisions and managed an all-around beat.
- CooperVision experienced strong and diversified growth in all product categories, with its Daily Silicone hydrogel portfolio and myopia management products leading the way.
- The company’s growth in the myopia management market has been strong, with revenues up 42%, and it remains a market leader with its FDA-approved MiSight product.
Henry Schein Inc.: Initiation Of Coverage – Dental Sales Decline: A Temporary Setback or a Long-Term Problem? – Key Drivers
- Henry Schein had a successful quarter, generating $3.4 billion in net sales and managing to surpass the revenue expectations of Wall Street.
- The company achieved an operating margin of 7.27%, which is an 18 basis point increase from the prior year’s GAAP operating margin, despite experiencing a decline in sales of PPE and COVID-19-related products due to pricing volatility.
- Although global dental sales declined by 3.1%, with LCI sales down 0.3%, LCI sales growth, except for COVID-19-related products and PPE, was 3.5%.
Mettler-Toledo International Inc.: Continued Lab Growth
- Mettler-Toledo experienced robust growth in most product lines and regions during Q3, particularly in the Lab business, resulting in a successful quarter which happened to be an all-around beat.
- While Product Inspection witnessed a 13% increase in sales during the quarter, Food Retail sales decreased by 19%.
- To capture growth and market share in its Lab business, Mettler has accelerated their digital transformation in sales and marketing and sharpened their focus on the most attractive market segments.
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