In today’s briefing:
- StubWorld: China Conch Trades Cheap. As Does Anhui
- Indocement (INTP IJ) – A Bulky Take Off
- Growatt IPO: Peer Comparison and Thoughts on Valuation
- Make or break time for Gold // Goldman Sachs has no feeling for timing oil trades
- LyondellBasell Industries: Why Is The Company’s Stock a ‘Hold’ Despite Beating Earnings?
StubWorld: China Conch Trades Cheap. As Does Anhui
- The China Conch Venture Holdings (586 HK) / Anhui Conch Cement (600585 CH) ratio is at an all-time low. The implied stub is re-testing its all-time low.
- Preceding my comments on China Conch/Anhui are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
Indocement (INTP IJ) – A Bulky Take Off
- Indocement overperformed the overall Indonesian cement market in 1Q2023 in terms of growth, especially in the bulk market, where it also benefited from the contribution from its Maros plant.
- The company kept costs under control with 100% use of DMO coal during 1Q2023 despite the lower use of alternative fuels due to heavy rains and margins consequently improved.
- There is still some lingering cost pressure from gypsum and kraft paper but these are expected to subside by 2H2023, with Indocement’s volumes expected to increase +15-20% as demand recovers.
Growatt IPO: Peer Comparison and Thoughts on Valuation
- Growatt Technology (1833969D CH) has downsized it HKEx IPO to about US$400m and in this insight, we have compared the company’s financials against other listed PV inverter players.
- Our peer analysis reveals that Growatt’s top line has grown at much higher rates compared to No. 1 player Sungrow whose margins were well below the company.
- By looking at valuation multiples of listed peers, it seems that the company could easily command a valuation of more than US$5bn if it is valued in line with peers.
Make or break time for Gold // Goldman Sachs has no feeling for timing oil trades
- While the Flash Manufacturing PMI came in lower than expected at 48,5 (50,0 expected), the Flash Service PMI came in once again higher than expected at 55,1 (52,6 expected)
- Prometheus Research shared this overview with us that highlights that the Service sector continues to hold this economy up.
- The majority of service businesses continue to stay in the growing territory – this needs to change before we actually see a recession in the service sector as well. Keep in mind that the Manufacturing sector in the US accounts for “only” 11% of GDP!
LyondellBasell Industries: Why Is The Company’s Stock a ‘Hold’ Despite Beating Earnings?
- LyondellBasell delivered a mixed set of results in the last quarter with revenues below analyst expectations but managed an earnings beat.
- At the end of the first quarter, LyondellBasell had $1.8 billion in cash on hand.
- With the successful start-up of their world-scale PO/TBA facility, capital expenditures associated with plant construction will be substituted with increased cash generation.
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