In today’s briefing:
- Shimano (7309) | Value Drivers in an Age of Sobriety
- JD Logistics (2618 HK): 3Q22 High Growth, Not Just Acquired But Organic, 29% Upside
- Anta Sports (2020 HK): Assessing the Impact of a Potential Amer Sports IPO
- Bank Central Asia (BBCA IJ) – The Mother of Connection
- Mexican Banks’ October Data and Trends – Credit Spread Erosion a Bigger Threat than Credit Quality?
- Kroger Co: Merger With Albertsons & Other Drivers
- Wentworth Resources Plc (AIM: WEN): Proposed Acquisition by Maurel & Prom
- General Mills: Delivering High Returns During Market Downturns
- Marvell Technologies: New Product Launch & Other Drivers
- NetApp Inc: The BlueXP Launch & Other Drivers
Shimano (7309) | Value Drivers in an Age of Sobriety
- Shimano’s stock has declined by 26% YTD reflecting concerns over an economic recession and sales normalization post pandemic
- We believe that Shimano is a key beneficiary of government policy aimed at decarbonization
- We analyse Shimano’s core value drivers and see at around 23% upside for the stock
JD Logistics (2618 HK): 3Q22 High Growth, Not Just Acquired But Organic, 29% Upside
- The growth rate of total revenue accelerated in the third quarter of 2022.
- We believe the organic growth was also strong besides the acquisition of Deppon.
- We set an upside of 29% and a price target of HK$19.90.
Anta Sports (2020 HK): Assessing the Impact of a Potential Amer Sports IPO
- The potential IPO of Anta Sports Products (2020 HK)‘s 52.7% owned Amer Sports is positive in unlocking the latter’s underlying value, though the impact is quite limited.
- Assuming a P/S of 1.8x (30% discount to peers) and 25% enlargement in share capital, we estimate the exercise may bring ~HK$6n of potential pre-tax deemed disposal gain.
- Although Anta Sports may not receive any cash, it can still pay out special dividends given its Rmb12bn net cash, and this will raise FY23 dividend yield to 3.1%.
Bank Central Asia (BBCA IJ) – The Mother of Connection
- A conversation with Bank Central Asia post results revealed some interesting near term and longer-term trends and initiatives as the economy recovers and it takes the brakes off lending.
- BIFAST for instant transfers 24-7 with lower fees will impact the bank’s fee income, although volume increases offset the impact plus BCA is gaining a share of transactions.
- Bank Central Asia‘s strategy is to follow its customers and enable their financial journey through connecting to an ever broader ecosystem. Valuations look more reasonable rolling into 2023.
Mexican Banks’ October Data and Trends – Credit Spread Erosion a Bigger Threat than Credit Quality?
- Bank sector trends to October continue to be sound, but return headwinds are emerging; further tightening credit spreads and initial signs of worsening in consumer credit quality
- To October, funding costs are rising faster than loan yields, crimping credit spreads, and the rising credit card cost of risk indicates a worsening outlook for consumer credit quality
- BBVA Mexico generates consistent premium ROE of 25%+, investors can gain exposure through BBVA equity; we continue to be cautious on Banorte, and we recommend taking profits on BanBajio
Kroger Co: Merger With Albertsons & Other Drivers
- Kroger announced another quarter of quite strong results powered by its strategy of accelerating with digital and leading with fresh.
- Kroger, along with Albertsons Companies, announces a definitive merger agreement whereby the companies will merge two complementary organizations with deep roots and iconic brands in their local communities.
- It launched its foremost in-app flash sales and also enabled its customers to clip the digital offers from their cart directly.
Wentworth Resources Plc (AIM: WEN): Proposed Acquisition by Maurel & Prom
- Maurel & Prom has made an offer to acquire Wentworth for 32.5 p per share in cash, valuing Wentworth at £61.7 mm.
- Deducting the cash value from the offer price suggests an offer price of 19.6 p per share for Wentworth’s non cash assets.
- This compares to a read through value of Wentworth’s non cash assets based on the share price of Wentworth on 2 December of p per share (25 p less12.9 p).
General Mills: Delivering High Returns During Market Downturns
- General Mills has significantly outperformed the broader equity market and the consumer staples industry as a whole.
- The share price seems to be running ahead of fundamentals which reduces expected returns going forward.
- The company would also need to dial-up investments in the coming year to secure its strong competitive positioning, according to the company.
Marvell Technologies: New Product Launch & Other Drivers
- In the last quarter, Marvell delivered a disappointing result as its revenues and earnings failed to meet Wall Street expectations.
- The company’s top-line continues to be driven by its auto, 5G, and cloud businesses.
- On a sequential basis, the data center revenue of the company declined because of softness in its on-premise business.
NetApp Inc: The BlueXP Launch & Other Drivers
- NetApp generated a mixed set of results for the last quarter as it failed to meet Wall Street expectations with respect to revenues and billings but managed an earnings beat.
- It is evident that their cloud services’ growth has slowed down.
- Besides, they have significantly adjusted their revenue projection for the remaining months of the fiscal year in light of impending economic headwinds.
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