In today’s briefing:
- AEM: Stellar 1H22; Deeply Undervalued. Fair Value Remains at 8 SGD.
- Sea Ltd: Reduced Consensus Is Still Optimistic
- Sumber Alfaria Trijaya (AMRT IJ) – Gaining Momentum and Scale
- Roblox 2Q22: 15% or 35% EBITDA Margins?
- Freee: Medium-Term Plan Seems Attainable but Profits to Delay
- Faraday Future Raised $52m or 1/4 of Needed Funds
- Bangkok Express and Metro (BEM): Marching On
- Telix Pharmaceuticals (TLX AU): Illuccix Launched in US; Large Market Opportunity; Potential to Grow
- Consun Pharmaceutical (1681HK)- High-Priced Acquisition & Good Performance Show Big Upside Potential
- Arteria Networks (Buy) – Q1 22 Results Reaction: In-Line Quarter Includes 7% Revenue Growth
AEM: Stellar 1H22; Deeply Undervalued. Fair Value Remains at 8 SGD.
- AEM reported stellar 1H22 results beating street estimates as well as far outpacing their own guidance. CHIPS act in USA will benefit company in FY23.
- Stock reaction (+6%) muted despite great outlook and management optimism. Despite record results and strong outlook, stock is down YTD.
- AEM is cheap trading at only +/-10x FY22 EPS, too low given the growth and consistent margins profile. Fair Value remains 8 SGD.
Sea Ltd: Reduced Consensus Is Still Optimistic
- Consensus has revised down Sea Ltd (SE US)’s inflated estimates before 2Q22 earnings due on 16th August 2022.
- These revised estimates are on the optimistic side as consensus still thinks that 1Q22 was just a one-off drop.
- However, our analysis of Google Play and App Store data suggests that Sea Ltd’s gaming and e-commerce popularity has further deteriorated from the 1Q22 level.
Sumber Alfaria Trijaya (AMRT IJ) – Gaining Momentum and Scale
- A recent conversation with Sumber Alfaria Trijaya (AMRT IJ) which operates Alfamart and AlfaMidi mini-markets in Indonesia further cemented a positive view on the outlook for the company.
- The company should easily surpass its target for 1,000 new stores this year, with increasing basket sizes and fee-based income and some new features such as BeanStop potentially improving returns.
- Sumber Alfaria Trijaya remains a core retail holding with an increasing investor following after MSCI inclusion. Valuations remain attractive versus history and ROE at 25% is higher than pre-COVID levels.
Roblox 2Q22: 15% or 35% EBITDA Margins?
- Roblox initially fell 17% on earnings, but ended the week up 8%… why? Third party data is driving stock price action.
- Reacceleration of DAUs, engagement, and bookings is beginning to play out…bullish ST.
- LT EBITDA margins are anyone’s guess right now, which makes the coming 9/9 Analyst Day an important catalyst to frame up the size and margin impact of TAM extensions.
Freee: Medium-Term Plan Seems Attainable but Profits to Delay
- Freee reported 4Q and full-year FY06/2022 results. 4Q revenue increased 31.2% YoY to JPY3.87bn (vs consensus JPY3.9bn) while full-year revenue grew 40.2% YoY to JPY14.4bn beating own guidance by 0.2%.
- Operating losses decreased to 18.7% of total revenue from 32.5% of revenue in the same period a year ago. Full-year OP. losses were 15.7% of revenue vs guidance 17.1%.
- Improvement in profitability was driven by growth in ARPU from mid-and-large paying users.
Faraday Future Raised $52m or 1/4 of Needed Funds
- Faraday Future (FF) released an 8-K today saying they raised $52m and could see as much as $600m after 90 days.
- The 90-day lead time is obviously based on whether FF can survive. The company originally said it needed $200m to make it through the Q4 launch of its first EV.
- FF said it only had $52m in cash as of August 9th versus $233m on April 30th. With new funding, FF has 7.4 weeks of money at current cash-burn rates.
Bangkok Express and Metro (BEM): Marching On
- Q2 22 result was healthy derived from both increase in ridership as well as ASP in both expressway and rail.
- Cost increase but not as high as revenue increase therefore margin expanded while net profit went up 3x YoY. 2H 2022 will be even better.
- Compared to AOT, BEM’s PBR is 63% cheaper while its share price still underperformed AOT this year by 11%.
Telix Pharmaceuticals (TLX AU): Illuccix Launched in US; Large Market Opportunity; Potential to Grow
- Telix Pharmaceuticals (TLX AU) has launched its prostate cancer imaging product, Illuccix in the U.S. in April 2022. The U.S. total addressable market value is estimated at $750 million.
- The U.S. commercial launch of Illuccix is off to a strong start. Illuccix generated revenue of $13.6 million in the U.S. in the ten weeks following first commercial sales.
- Telix is progressing marketing authorization applications for Illuccix in Europe and Canada. The company’s partners are advancing toward Illuccix launch in China and South Korea.
Consun Pharmaceutical (1681HK)- High-Priced Acquisition & Good Performance Show Big Upside Potential
- After a downturn in 2019,Consun has turned things around and achieved amazing results in 2021. Its core business was not affected by VBP. Consun will continue to make further progress.
- Consun is undervalued if compared with industry average, the peers and considering its large cash balance. Share prices have decent upside potential, driven by fundamentals, promising outlook and favorable policies.
- Wanbangde’s intention to acquire Consun’s shares at high price would also be a catalyst. We recommended investors to follow Consun closely, which has certain investment value based on our analysis.
Arteria Networks (Buy) – Q1 22 Results Reaction: In-Line Quarter Includes 7% Revenue Growth
- ARTERIA Networks Corp (4423 JP) posted Q1 22 results in line with expectations
- 7% revenue growth was the highest in five quarters whilst core segment growth was the best since 2019, supported by work from home demand and data volume growth
- Operating income is down YoY as it laps one-time gains a year ago – this has been well-flagged by management and consensus
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