In today’s briefing:
- Edelweiss: Scaling Up Well | Value Unlocking Is Catalyzing Re-Rating
- Aspirasi Hidup Indonesia (ACES IJ) – The Ace Hardware Separation Is a Rebranding Opportunity
- Bank Negara Indonesia (BBNI IJ) – A Distinctly Positive Tone
- Shivam Autotech Ltd- Forensic Analysis
- IBM Pulls R&D Units Out of China in Latest Withdrawal by U.S. Firm
- RLI Corp.: Expansion and Innovation in Surety Products & Major Drivers
- Globe Life Inc.: A Bear’s Perspective! – Major Drivers
- Reinsurance Group of America: What Are Its Enhanced In-force Management Strategies? – Major Drivers
- Ryan Specialty Group Holdings: E&S Market Dynamics & Major Drivers
- Selective Insurance Group Inc.: Enhanced Commercial Lines Pricing and Retention Strategies! – Major Drivers
Edelweiss: Scaling Up Well | Value Unlocking Is Catalyzing Re-Rating
- Edelweiss Financial Services (“Edelweiss”) continues to scale up well its asset management and insurance businesses. The credit business has been also turning around led by the co-lending model.
- In particular, the asset management business has been growing rapidly. The alternatives asset management AUM grew 17% YoY, of which fee-paying AUM grew 32% YoY.
- With all its businesses now running independently, Edelweiss is focusing on unlocking value. It already demerged Nuvama and is now close to unlock value in its Alternative Asset management business.
Aspirasi Hidup Indonesia (ACES IJ) – The Ace Hardware Separation Is a Rebranding Opportunity
- Ace Hardware Indonesia has been rebranded to Aspirasi Hidup Indonesia after the franchise agreement with ACE US was not renewed. Given ACES’s long-standing independence, we see this as an opportunity.
- The new names for the company will not be the brand names for the stores and Ace Hardware products are a tiny portion of the Indonesian company’s SKUs anyway.
- Concerns over the separation look overblown with ACES seeing a strong YTD performance above guidance with valuations looking attractive after recent share price weakness, with new store rollout ongoing.
Bank Negara Indonesia (BBNI IJ) – A Distinctly Positive Tone
- Bank Negara Indonesia (BBNI IJ) presented an optimistic picture from 2Q2024, with management upgrading the loan growth forecast range for the year by a notch with an improving liquidity backdrop.
- Credit costs remain low with the SME segment the only segment with lingering problems from vintage pre-2022 loans but otherwise, LAR are in decline with room to cut coverage ratios.
- BNI made a big fanfare of the launch of its brand new “wondr” banking app which is already off to a strong start with more active users. Valuations are attractive.
Shivam Autotech Ltd- Forensic Analysis
- Shivam Autotech (SVAT IN) or (SATL) serves OEMs by manufacturing a range of auto components and accessories including transmission gears, transmission shafts, etc.
- The company’s business performance over the last few years has looked grim with stagnant revenues, declining margins and ballooning losses. Balance sheet has only gotten more fragile.
- Auditor’s comments on material weakness on internal controls, increasing receivables, balance sheet ALM mismatch are few red herrings to look out for.
IBM Pulls R&D Units Out of China in Latest Withdrawal by U.S. Firm
IBM Corp. is shutting down two major research and development (R&D) units in China, amid declining business in the country and mirroring a broader trend of U.S. tech firms scaling back their presence in China.
The units affected by the pullback are IBM’s China Development Lab (CDL) and China Systems Lab (CSL), both established in 1999.
CDL, which focused on application software development, has more than 1,000 employees, while CSL, which focused on system development such as mainframe database, has a team of 695, one IBM worker told Caixin.
RLI Corp.: Expansion and Innovation in Surety Products & Major Drivers
- RLI Corp. reported strong financial results for the second quarter of 2024, reflecting a comprehensive picture of growth and financial stability across its various segments.
- The company, with its broad portfolio of insurance products, demonstrated robust underwriting profitability and significant net investment income growth.
- The deep dive into each segment reveals both strengths and areas with scope for vigilance.
Globe Life Inc.: A Bear’s Perspective! – Major Drivers
- Globe Life Inc., in the second quarter of 2024, reported a net income of $258 million, or $2.83 per share, compared to $215 million, or $2.24 per share, a year ago—an impressive growth of around 20%.
- The net operating income also saw a notable increase to $271 million, or $2.97 per share, reflecting a 14% rise from the previous year.
- This indicates a robust improvement in profitability, underscoring the company’s operational efficiency and financial strength.
Reinsurance Group of America: What Are Its Enhanced In-force Management Strategies? – Major Drivers
- Reinsurance Group of America, Incorporated (RGA) reported robust second quarter 2024 results, delivering adjusted operating earnings of $5.48 per share, showcasing strong performance across its business lines and geographies.
- This was supported by a pipeline of robust new business activities, contributing to an adjusted operating return on equity of 15.3% for the past 12 months, surpassing intermediate-term targets.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Ryan Specialty Group Holdings: E&S Market Dynamics & Major Drivers
- Ryan Specialty Holdings continued its robust growth trajectory in the second quarter of 2024, achieving impressive financial results with an 18.8% year-over-year increase in total revenue to $695 million, driven by robust organic growth of 14.2%.
- This growth is underpinned by the company’s clear focus on niche market specialization and talent.
- Adjusted EBITDAC saw a considerable rise of 27.6% to $248 million, while the adjusted EBITDAC margin expanded by 240 basis points to 35.6%.
Selective Insurance Group Inc.: Enhanced Commercial Lines Pricing and Retention Strategies! – Major Drivers
- Selective Insurance Group Inc. delivered a mixed performance in the second quarter of 2024, navigating challenges that reflect broader industry-wide issues affecting insurers.
- John Marchioni, the CEO, highlighted the company’s commitment to disciplined underwriting, pricing, and reserving practices, which remain intact despite the pressures of social inflation affecting liability lines, particularly general liability.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
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