Daily BriefsEquity Bottom-Up

Daily Brief Equity Bottom-Up: Arwana Citramulia (ARNA IJ) – Polished Porcelain Performance and more

In today’s briefing:

  • Arwana Citramulia (ARNA IJ) – Polished Porcelain Performance
  • Snap 2Q22: Why We Buy Meta
  • NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement
  • Keepers Holdings: 4.5x PE (Ex-Cash), Cash 50% of Mkt Cap, Structural Double Digit Growth
  • FactSet Research Systems Inc.: Defensive Business Model & Key Drivers, Major Competitive Threats & Other Risks, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
  • Intuitive Surgical (ISRG US): Q2 2022 Results Missed Expectations; Raised Procedure Growth Guidance
  • Accenture Plc: Continued Bolt-On Acquisitions Strategy & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
  • FedEx Corporation: Partnership With Boxed, Business Strategy & Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)
  • Kia Corp: The Best Performing Stock Among Top 10 Market Cap Companies in KOSPI YTD
  • Carnival Corporation: Market Position, Resumption Update & Key Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

Arwana Citramulia (ARNA IJ) – Polished Porcelain Performance

By Angus Mackintosh

  • Arwana Citramulia‘s latest 1H2022 numbers unline its prowess in navigating a difficult operating environment with growing production volumes and better margins as it continues to improve its product mix.
  • An ongoing shift to its higher-end products through line conversion to Digi Uno plus additional capacity for its ARNA porcelain tiles will underpin growth and pricing this year and next.
  • Arwana Citramulia continues to expand its distribution through Catur Sentosa and now through MITRA10, which now sells ARNA tiles. Valuations are attractive and analyst forecasts look shy of the mark.

Snap 2Q22: Why We Buy Meta

By Aaron Gabin

  • Snap had yet another earnings related meltdown as management has lost all credibility in forecasting its business. 
  • Because co-founders Spiegel and Murphy have 99.5% voting shares, there is not an opportunity for an activist to fix the situation like Pinterest and Twitter.
  • The issues plaguing Snap are likely not hurting META as much given a broader ad base, better ROI on its ads, and a mgmt team that has already guided down.

NTT (Buy) – Some Quick Takeaways from the Subsea Cable Announcement

By Kirk Boodry

  • NTT announced it would build and operate a third trans-Pacific subsea cable (JUNO) with NEC as the vendor and a 2024 activation date
  • This also represents the second trans-Pacific cable in five years and the one with the highest capacity to date
  • This is not core to NTT’s business but it does highlight how capacity needs are expanding as network speeds accelerate and how those costs can be managed

Keepers Holdings: 4.5x PE (Ex-Cash), Cash 50% of Mkt Cap, Structural Double Digit Growth

By Sameer Taneja

  • The Keepers Holdings, Inc. (KEEPR PM), the largest imported spirit distributor in the Philippines with >70% marketshare, now trades at 9.1x/7.6x FY22/FY23e with a 15-20% CAGR revenue/profit growth profile.
  • The company has almost 50% of its market capitalization in cash, and we believe it is at the cusp of making an acquisition, making it more integrated. 
  • We believe for the Q2 2022 results ( released before the 15th of August ), the company will continue to show a growth profit trajectory of >20% and execute well.

FactSet Research Systems Inc.: Defensive Business Model & Key Drivers, Major Competitive Threats & Other Risks, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

By Ishan Majumdar

  • FactSet has a fundamentally solid business model and its business has not been significantly affected despite the bearish trends in the S&P500.
  • Asia Pacific continued to be a growth-driving geography with ASV growth at 14.3%, driven by demand from asset managers and vested owners.
  • With greater expansion with asset owners and asset managers, respectively, both CTS and analytics contributed to growth.

Intuitive Surgical (ISRG US): Q2 2022 Results Missed Expectations; Raised Procedure Growth Guidance

By Tina Banerjee

  • Intuitive Surgical (ISRG US) reported Q2 results, which missed expectations. Overall performance was impacted by COVID-19 resurgence and macro headwinds including inflation and supply chain constraint.
  • Despite lockdowns in its second biggest market of China, the company reported worldwide da Vinci procedures growth of 14% y/y, in-line with earlier full-year guidance range of 12–16%.
  • With China showing signs of recovery, Intuitive now expects worldwide da Vinci procedures to grow 14.0–16.5% in 2022. However, soft U.S. hospital capex remains an area of concern.  

Accenture Plc: Continued Bolt-On Acquisitions Strategy & Other Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

By Ishan Majumdar

  • In its last result, Accenture delivered robust overall results, reflecting strong double-digit revenue growth across all areas of its business and ongoing operating margin expansion due to its ongoing large-scale investments in its company.
  • Accenture continued with its acquisition-led growth approach and agreed to acquire The Stable.
  • In a nutshell, Accenture is in a unique position to support both its clients’ growth objectives and cost-saving initiatives.

FedEx Corporation: Partnership With Boxed, Business Strategy & Key Drivers, inancial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

By Ishan Majumdar

  • FedEx ended the 2022 fiscal year with its highest-ever revenue of $93.5 billion and adjusted operating income of $6.9 billion, both up 11% year over year, in the face of an increasingly difficult global backdrop.
  • After a successful turnaround effort, the company has been enjoying the fruits of a successful long-term strategy.
  • In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Kia Corp: The Best Performing Stock Among Top 10 Market Cap Companies in KOSPI YTD

By Douglas Kim

  • Amid a major decline in the Korean stock market (KOSPI down 19.6% YTD), one of the best outperformers has been Kia Corp (000270 KS) which is down only 2% YTD.
  • Kia Corp is well poised to continue to outperform KOSPI in the next 6-12 months, mainly driven by its increasing market share for EVs globally and cheap EV/EBITDA valuation multiples.
  • The company also reported outstanding 2Q 2022 results, which should boost near-term sentiment on the stock. Kia Corp plans to launch its flagship EV9 model (large sized SUV) in 2023.

Carnival Corporation: Market Position, Resumption Update & Key Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (07/22)

By Ishan Majumdar

  • Carnival Corporation continued its recovery story from the pandemic and delivered a decent quarterly result by restarting 20 more ships, using 74% of its fleet’s capacity for guest cruise operations throughout the entire period.
  • The company currently operates guest cruises with 91% of its fleet’s capacity which is a very positive sign.
  • Regarding the ships in operation, occupancy for the second quarter was 69%, a significant improvement over the first quarter’s 54%.

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