In today’s briefing:
- Pine Care Group (1989 HK): Chinachem Takeover Offers a Good Exit Opportunity for Investors
- Breaking Growth Short Candidates: Outset Med., NVIDIA, Intuitive Surgical, Plug Power
- Bandhan Bank Ltd (BANDHAN IN) | Still Waters, but May Not Run Deep
- Astra International (ASII IJ) – Autos and Commodities Driving Growth
- SillaJen Inc (215600 KS): Baselia Deal Enriches Pipeline; Stock Trading Resumption Decision Soon
- Hamamatsu Photonics (6965 JP): Difficult Year Ahead
- HWKN: Pricing the Expected
Pine Care Group (1989 HK): Chinachem Takeover Offers a Good Exit Opportunity for Investors
- Hong Kong’s leading property developer, Chinachem Group agreed to acquire a 56.15% stake in Pine Care Group (1989 HK) for HKD451.2 million ($57.5 million) from its controlling shareholders.
- Post-Acquisition, Chinachem will launch an unconditional mandatory offer for the remaining shares, which it does not hold at HKD0.89 per share, same as the purchase price.
- Considering delisting risk, limited upside potential of the shares after a huge run-up, and muted growth outlook of the company, investors should tender their holdings.
Breaking Growth Short Candidates: Outset Med., NVIDIA, Intuitive Surgical, Plug Power
- This model looks for slowing growth, margin declines, sales and/or earnings disappointments, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics.
- The key judgement is whether a slowdown is temporary or the beginning of a trend. These shorts tend to have high valuations and betas. Multiple compression accelerates the stock’s decline.
- Today we are flagging Outset Med., NVIDIA, Intuitive Surgical, Plug Power
Bandhan Bank Ltd (BANDHAN IN) | Still Waters, but May Not Run Deep
- Over the last 6M, Bandhan Bank Ltd (BANDHAN IN) has underperformed the Nifty 50 by ~7.3% (BANDHAN -5.92% vs Nifty +1.39%)
- Our flash checks across West Bengal and Assam indicate a stable to improving business environment.
- We reiterate our view of that the asset quality downcycle could be on the verge of ending. Additional provisioning requirements should be sharply lower from Q3 FY23.
Astra International (ASII IJ) – Autos and Commodities Driving Growth
- Astra International just held its public expose at which the company reiterated the strong performance in 1H2022 driven by automotive, finance, heavy equipment and commodity-related businesses.
- The momentum will continue into 2H2022 and car sales continue to show strong growth, with the tailwind of higher commodity prices and increased mobility.
- Astra International remains one of our top picks in Indonesia for the ongoing recovery in an environment where commodity prices remain high. Valuations are attractive versus history.
SillaJen Inc (215600 KS): Baselia Deal Enriches Pipeline; Stock Trading Resumption Decision Soon
- SillaJen Inc (215600 KS) has developed a differentiated pipeline of oncolytic vaccinia immunotherapy. Its lead drug candidate Pexa-Vec is in phase 2 clinical trial for renal cell carcinoma.
- SillaJen has acquired a first-in-class anti-cancer drug candidate BAL0891 from Basilea for upfront payment of $14 million. The company’s cash position is capable to fund the acquisition and R&D expenses.
- Korean Stock Exchange is expected to announce its decision on SillaJen stock trading resumption by October 12.
Hamamatsu Photonics (6965 JP): Difficult Year Ahead
- FY Sep-22 results are likely to beat management’s guidance, but this should be in the price. Recession and rising interest rates are probably not in the price.
- Growth rates slowed in 3Q and are likely to decline further in 4Q. In the year ahead, we expect both sales and profits to decline.
- The shares have rebounded by 21% since the 1st of July to 30x our EPS estimate for FY Sep-23. This does not look sustainable. Sell into current strength.
HWKN: Pricing the Expected
- The seasonal strength of the water treatment business should lead to Hawkins (HWKN) offsetting the sales decline from industrial specialty chemicals declining in price in the September quarter
- There is now evidence some specialty chemical prices are beginning to decline. When there has been no LIFO charge, HWKN has reported gross margin above 20 percent.
- Summer months are seasonally the time when there is greater demand from HWKN’s water treatment customers. Over the course of the past year HWKN has grown the segment through acquisitions
💡 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
