In today’s briefing:
- Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out
- The Rise of the Fourth Telco in Korea – Breaking the Oligopoly
- Genmab A/S (GMAB US): Darzalex Continued to Be the Cash Cow; Epkinly Approval Adds Another Catalyst
- Bank of Baroda (BOB IN) – A Diamond in the Rough, on the Sidelines of the HDFC Bank-HDFC Merger
- Anglo American: Noteworthy Developments
- Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room
- [NetEase(NTES US, BUY, TP US$102) TP Change]: Cut TP to $102 Due to More Near-Term Downside Risks
- Aperam S.A. – Quick Note – July 3, 2023
- TopBuild: Another Splendid GARP Opportunity
- FLASH NOTE – West Fraser Timber Co. Ltd.
Multi Bintang (MLBI IJ): Recovery Story With High Cash Flow Generation and Dividend Pay Out
- Multi Bintang Indonesia (MLBI IJ) is Indonesia’s leading beer company, with a marketshare of 50% by volume. The company is 89% owned by Heineken.
- The company has maintained an average 5 Yr/10 Yr ROCE of over 72%/82% and paid out 80-100% of its profits as dividends. It is also net cash.
- The stock boasts a 6.5%-7% dividend yield and trades at 14-15x PE if profits normalize due to increased tourism in Indonesia, where we believe most of the demand is.
The Rise of the Fourth Telco in Korea – Breaking the Oligopoly
- The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.
- This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.
- On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus’ customers.
Genmab A/S (GMAB US): Darzalex Continued to Be the Cash Cow; Epkinly Approval Adds Another Catalyst
- Genmab A/S (GMAB US) recorded 30% YoY growth in royalty revenue on net sales of Darzalex to DKK1,952 million, representing 68% of total revenue in 1Q23.
- Genmab has guided for 2023 Darzalex royalty revenue of DKK10.4–11.1B, compared to royalty revenue of DKK10.1B in 2022, based on estimated Darzalex 2023 net sales of $9.4 – 10.0B.
- In May 2023, Genmab received FDA approval for Epkinly as the first and only T-cell engaging bispecific antibody for the treatment of relapsed or refractory diffuse large B-cell lymphoma.
Bank of Baroda (BOB IN) – A Diamond in the Rough, on the Sidelines of the HDFC Bank-HDFC Merger
- The investor spotlight is on the HDFC Bank-HDFC merger, and we continue to favour HDFC Bank with its positive passive investor momentum, premium returns and merger synergy potential
- Bank of Baroda, although not in the limelight like HDFC bank, is our value stand-out among the Indian bank peer group and it warrants increasing investor attention, in our view
- Bank of Baroda is delivering on improving asset quality and returns; the shares have positive momentum, and we see great value on its 1x PBV ratio to ROE of 15%
Anglo American: Noteworthy Developments
- Recent events suggest change is en route at Anglo American plc.
- A managerial shakeup is in full swing with “next generation” leadership emphasized.
- Kio Kumba is pushing for a railway lease deal with the South African government.Investors must consider past and future impairment charges with caution.
Tesla Earnings Preview: Cash Flow Negative And An Elephant In The Room
- China accounts for over half of the automaker’s global sales.
- There is also potential for Chinese brands to encroach on European markets.
- Tesla’s valuation could be impacted by protectionism and nationalism, with questions over how China will tolerate overseas competitors in its electric vehicle market.
[NetEase(NTES US, BUY, TP US$102) TP Change]: Cut TP to $102 Due to More Near-Term Downside Risks
- Three risks in the short term: 1) Decreased gross billings from former legacies due to macro. 2) Lifecycle issues with new games. 3) Market over-optimism regarding new games and AI.
- NetEase still has some positive catalysts in the long term, including: 1) New games and content expansions. 2) Overseas game publishing. 3) Continual improvement in margins.
- We expect NetEase’s revenue in 2Q23 to be slightly lower than the consensus estimates of 2.5%, with a 13.3% beat in profits. Cut TP to $102, but maintain BUY rating.
Aperam S.A. – Quick Note – July 3, 2023
- 1st Vertical | Recycling and Renewables: A very important vertical segment helping APERAM Group to attain a neutral CO2 emission footprint.
- Innovative business based on new technology. Companies active within the segment are ELG (Recycling), BioEnergia (charcoal production from forests; plant in Brazil, CO2 neutral), Recyco (metal recycling from dust).
- Represented 13% of consolidated EBITDA in FY 2022.
TopBuild: Another Splendid GARP Opportunity
- The stock has surged by more than 60% since the turn of the year.
- The company’s acquisition strategy has resulted in significant market share and an ever-improving profit & loss statement.
- The stock’s PEG ratio of 0.26 speaks volumes.
FLASH NOTE – West Fraser Timber Co. Ltd.
- Our estimations for 2023 annual revenue range around $6,805 million and for 2024 around $7,354 million.
- The company’s annual revenue reached $9,701 million in 2022, compared to $10,518 million in 2021, posting a de- crease of 7.77%.
- West Fraser Timber Co. Ltd.’s gross profit for 2022 was $4,559 million, a decrease of 22% compared to $5,873 million for the corresponding period in 2021.
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