In today’s briefing:
- Tianqi Lithium A/H Trading – A-Shares Have Done Relatively Well, H-Shares Should Follow
- Able Global Berhad – Dragged By Spike In Raw Material Costs
- Deleum Berhad – Healthy Performance Amid Adverse Sector
- Sapura Energy – Officially Classified An Affected Issuer
- Aether Industries – Composite of Competencies
Tianqi Lithium A/H Trading – A-Shares Have Done Relatively Well, H-Shares Should Follow
- Tianqi Lithium (TL) raised around US$2bn via its H-shares listing. It undertakes mining of lithium ore and manufacturing of lithium concentrate, lithium compounds and derivatives.
- TL was the largest producer of mined lithium globally in terms of output in 2020 and ranked third in terms of revenue generated from lithium in 2020.
- In this note, we talk about the updates since our last note, along with the trading dynamics.
Able Global Berhad – Dragged By Spike In Raw Material Costs
- Able Global Berhad (AGB)’s 1QFY22 net profit fell by 56.6% YoY to RM4.1m, as the F&B segment slipped into the red due to higher cost of goods sold.
- Stripping out non-operating items, AGB’s core net profit of RM4.4m was down 54% YoY. Results were below our and consensus expectations, accounting for 10% of our full-year estimates.
- While we are wary over potential near-term margin compression, we remain optimistic on the group’s long-term outlook, premised by the strong demand for dairy products and higher contribution from its Mexico JV.
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Deleum Berhad – Healthy Performance Amid Adverse Sector
- Initiate coverage on Deleum with BUY recommendation and a TP of RM0.96 per share
- Deleum specialises in upstream O&G services primarily in gas turbines, slicklines and well services, and corrosion solutions
- Resilient orderbook at RM2b, tenderbook at RM116m. Positive earnings since FY07 despite CAGR at 7.4%
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Sapura Energy – Officially Classified An Affected Issuer
- Sapura Energy (SapE) announced that it has been classified as a PN17 listed issuer due to going concerns on its shareholders’ equity position of RM85.0m as of 31 January 2022, which is less than 50% of its share capital of RM10.9bn.
- The Group appears to be a high-profile casualty of the COVID-19 pandemic with operational challenges resulting in impairment losses on goodwill in its drilling segment (RM1.7bn) and Engineering segment (RM1.6bn), and impairment on its fixed assets (RM2.3bn).
- The Group has since acted to resolve liquidity challenges and improve its financial health, including negotiations with clients on existing contracts, with the aim of amicable solutions to recover or limit losses.
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Aether Industries – Composite of Competencies
- Market leadership in products with INR 37.5bn opportunity size in CY25 – In the eight major products that contributed ~75% to the revenue in FY22, Aether is a market leader globally for four products and the second-largest producer globally for two products.
- The company has achieved these market positions by developing differentiated processes with the use of its core competencies of chemistry and technology.
- The market opportunity for eight of their major products is INR 37.5bn in CY25.
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