In today’s briefing:
- Empire Energy Group (ASX:EEG) – Gas Bells Are Ringing
- [Miniso Group (MNSO US）]: Strong Offline Traffic Bodes Well for C1Q23 Growth
- PT Surya Citra Media (SCMA IJ) – Primed for Reset in 2023
- Step One Clothing Ltd – Underwear Under Valued
- [Atour Lifestyle (ATAT US, BUY, TP US$34) Target Price Change]: A Steady Expanding Year in 2023
- Empire Energy Group Ltd – Gas Bells Are Ringing
- [Nayuki Holding (2150 HK) Target Price Change]: Business Model Change Has Risky Consequence
- Step One Holdings Ltd – Underwear Under Valued
- X2M Connect Ltd – China Contract Adds to H2 Progress
- Amaero International Ltd – “Plan B” Brings Risk but Potentially Greater Returns
Empire Energy Group (ASX:EEG) – Gas Bells Are Ringing
- Carpentaria-2H testing results continue to build the economic case for EEG
- IP30 gas flow of 3.0 mmcfd/1000m (normalised) is on the button and early analysis suggests gas recoveries of 6-8Bcf/well could be achievable
- The business case is building with upgraded resource certification to come heading to a FID target date of end-2023.
[Miniso Group (MNSO US）]: Strong Offline Traffic Bodes Well for C1Q23 Growth
- We expect Miniso to report C1Q23 revenue, operating profit, and net income 3.6%, 18.3% and 16.7% higher than consensus.
- We think the strong foot traffic to offline stores post CNY bodes well for Miniso’s domestic store sales in 2023;
- We maintain the Buy rating, and raise TP by US$1 to US$25 to factor in the sales recovery from higher foot traffic and ARPU.
PT Surya Citra Media (SCMA IJ) – Primed for Reset in 2023
- PT Surya Citra Media Tbk (SCMA IJ) had an exciting 2022, with a ramp-up in new audience share-winning original content along with the boost from the Word Cup rights.
- Both SCTV and IVM gained significant audience share in 2022, and Vidio led the charge on OTT driven by killer content, finishing the year with 5m paying subscribers.
- Profitability was hit by a sharp rise in production costs and investment in Vidio but we expect significant improvement in 2023. Valuations are attractive with SCMA on 12x FY2023E PER.
Step One Clothing Ltd – Underwear Under Valued
- Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear, with a core colour range supplemented by regular limited-edition releases, all with FSC (Forest Stewardship Council) certification throughout the supply chain.
- The company has operations in Australia (67% of sales), UK, (30% of sales) and the US (3% of sales). A H1 FY23 sales decline of 5.7% was better than our industry average estimate of-19% cycling lockdown, while lower sales and marketing spend saw EBITDA in-line with the pcp at $7.6m, the highest of any industry peer.
- H2 FY23 should see similar trends and deliver EBITDA well above consensus.
[Atour Lifestyle (ATAT US, BUY, TP US$34) Target Price Change]: A Steady Expanding Year in 2023
- Atour reported its 4Q22 revenue/non-GAAP operating profit/non-GAAP net income 8.0%/78.3%/114.6% higher than our estimate.
- We adjust Atour’s hotel expansion estimate from 2.4k to 1.9k until 2025 due to its low appetite in expanding midscale segment.
- We raise our 2023 earnings estimate due to better operating efficiency, but trimmed its hotel network expanding pace in 2023-2025, leading to TP cut by US$2.5 to US$34.
Empire Energy Group Ltd – Gas Bells Are Ringing
- Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
- EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
- The NT energy basins are fast developing as strategic high-calorific gas bolsters for east coast Australia’s future domestic requirements, growing Gladstone LNG ullage and potential supply for Darwin’s expanding LNG export terminals, amid funding support from Territory and Federal governments.
[Nayuki Holding (2150 HK) Target Price Change]: Business Model Change Has Risky Consequence
- Nayuki reported C2H22 top line 0.9% below our estimate but 18% below consensus，due to deteriorating cost ratios;
- Company chose to drastically expand store count by ~600 in 2023. Our concern is that Nayuki stores now are drastically different from its past.
- The company is abandoning its premium teahouse position, which begets unknown consequences in our opinion; We keep the TP unchanged at HK 3.1 and maintain SELL.
Step One Holdings Ltd – Underwear Under Valued
- Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear.,
- A H1 FY23 sales decline of 5.7% was better than our industry average estimate of -19%, while EBITDA was in-line with the pcp, the highest of any industry peer.
- On our estimates this superior business model currently trades at a PER of 1.0x ex-cash. Inventory is the key risk, currently representing ~two years’ sales, but is low fashion risk.leared.
X2M Connect Ltd – China Contract Adds to H2 Progress
- X2M Connect Ltd (ASX:X2M) has developed and is commercialising a patented proprietary Internet of Things (IoT) solution predominantly focused on the utilities sector across the Asia Pacific region, converting legacy meters into smart meters.
- The company has announced it has secured $1.8m in hardware water quality sensor sales in China with three new contracts.
- The contracts bring the contribution from China to $3.4m this financial year to date which exceeds the revenue generated from China in FY22.
Amaero International Ltd – “Plan B” Brings Risk but Potentially Greater Returns
- Amaero International Ltd (ASX:3DA) is a global specialist in metal additive manufacturing for the defence, aerospace, and other industrial sectors.
- Following a strategic review, Amaero has shifted its focus to titanium powder production and has created a new United Arab Emirates-based enterprise, Amaero Advanced Metals Ltd, to build an 827-tonne a year titanium powder operation within Abu Dhabi’s KEZAD industrial park.
- The nuances of the focus have shifted since the company first announced plans to concentrate on the UAE and titanium powder operations but “Plan B” allows Amaero shareholders to retain 100% ownership of the project which has been scaled back to focus on the opportunity with the greatest economic return.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
