In today’s briefing:
- Oriental Watch: Steady FY23, Dividend Yield 14%, Cash >50% of Market Cap
- Grab Holdings (GRAB IJ) – Rationalising With Growth in Mind
- Advantest (6857) | Time to Cash in the Chips?
- Hero Motocorp (HMCL IN) | Course Correction
- Melco: Imminent Opening of Its Cyprus Resort Show Possible Upside in Sentiment Among Wary Investors
- Bank Rakyat Indonesia (BBRI IJ) – Shifting to Higher Yield Products
- Comms Group Limited – Vodafone Contract Extension and Expansion
- STEELCASE, INC. – 1QFY24 Earnings Ahead of Estimates
- OMG: High-Grade Drill Results Beneath Resource
- CI Financial (TSX:CIX) – One Page Stock Pitch
Oriental Watch: Steady FY23, Dividend Yield 14%, Cash >50% of Market Cap
- Oriental Watch (398 HK) reported a steady result, with 2023 earnings <18% YoY ( adjusted for one-time gains in 2022 <5% YoY), which was broadly in line with our expectations.
- The DPS for FY23 was 61 cents (FY22: 74 cents) lower than our expectation of 65 cents, a 100% payout ratio equating to a 14% dividend yield.
- Cash at 1.07 bn represents > 50% of market capitalization. We believe the management will dip into reserves when it requires to manage a decent payout for shareholders.
Grab Holdings (GRAB IJ) – Rationalising With Growth in Mind
- Grab‘s announcement this week that it would cut 11% of its workforce was a move to rationalise costs to give the platform a sure footing for longer-term growth.
- Near-Term profit targets would be achieved without these recent cuts which are focused on addressing geographical cost imbalances and taking into account potential automation through the impact of Generative AI.
- The outlook for growth this year looks promising, with the potential for a strong 2H recovery despite employee-related costs but cuts will establish a more competitive cost base long term.
Advantest (6857) | Time to Cash in the Chips?
- Advantest’s stock has doubled in the past two months, outperforming even Nvidia, indicating a potential peak in momentum
- Near term technical indicators suggest the stock could be running out of steam, with few catalysts ahead of July Q1 earnings
- The stock is trading at a significant premium to Japanese-listed SPE peers and its historical EV/EBIT multiple of 15x
Hero Motocorp (HMCL IN) | Course Correction
- Hero Motocorp (HMCL IN) is undergoing a course correction, acknowledging its past mistakes.
- Multiple levers on the horizon arguing for a change of stance on HMCL.
- The stock is reasonably valued, and institutional holdings are at a 12-quarter low, signaling the need for attention.
Melco: Imminent Opening of Its Cyprus Resort Show Possible Upside in Sentiment Among Wary Investors
- Melco has lagged other Asian operators as Macau recovery pits up speed. Concerns over debt levels continue.
- Fair value estimated slightly above current trade largely reflecting 2022 results.Maca
- Macau and Manila tracking positive, Cyprus could provide accretive EBITDA before end of this year and beyond/
Bank Rakyat Indonesia (BBRI IJ) – Shifting to Higher Yield Products
- Bank Rakyat Indonesia (BBRI IJ) continues to march to the tune of its micro-lending capabilities with recent moves focused on growing its higher-yield Kupedes and ultra-micro loans.
- Upward pressure on funding costs in 1Q2023 was more than offset by a shift to higher-yield loans and lower cost of credit, with greater efficiencies through digital initiatives.
- Bank Rakyat Indonesia (BBRI IJ) is somewhat overcapitalized which allows for higher dividend payout and higher ROEs over time. The bank remains a core holding in Indonesia
Comms Group Limited – Vodafone Contract Extension and Expansion
- Comms Group Ltd (ASX:CCG) has announced an extension of the Vodafone contract term to a minimum five-years together with an expansion in the range of services provided in delivering voice connectivity for Microsoft Teams, including the more advanced Operator Connect.
- The extended agreement also includes a minimum monthly payment to CCG of A$30k beginning October 2023.
- While our Vodafone assumptions are unchanged, and our medium-term expectations for Vodafone well above the minimum monthly payment, the revised agreement improves visibility and demonstrates Vodafone’s commitment to the relationship.
STEELCASE, INC. – 1QFY24 Earnings Ahead of Estimates
- After market close on June 21, Steelcase reported 1QFY24 GAAP EPS of $0.01 and non-GAAP (adjusted) EPS of $0.09, beating consensus of $0.01 and our $0.03 estimate (both adjusted).
- Adjusted EPS excluded $0.05 of restructuring and $0.03 in purchased intangible amortization.
- Reported consolidated 1QFY24 revenue of $751.9 million was also better than consensus of $719 million and our $715 million estimate.
OMG: High-Grade Drill Results Beneath Resource
- The Company has completed 11 drill holes, totalling 3,569m.
- This morning, Omai Gold Mines Corp. (OMG:TSXV, OMGGF:OTC) announced additional outstanding drill results from the Omai gold project in Guyana.
- In 2023, a total of 3,569m have been completed in 11 holes with one hole being reported today.
CI Financial (TSX:CIX) – One Page Stock Pitch
- CI Financial is a publicly owned asset management holding company.
- Through its subsidiaries, the firm manages separate client focused equity, fixed income, and alternative investments portfolios.
- It also manages mutual funds, hedge funds, and fund of funds for its clients through its subsidiaries.
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