Daily Brief Equity Bottom-Up: Smartkarma Webinar | Singapore Investment Ideas and more

For our next Webinar, we have the pleasure of welcoming back Analyst Nicolas Van Broekhoven, who will go through his latest picks in the Singapore market, highlighting key stocks and names to watch out for in the Lion City.

The webinar will be hosted on Wednesday, 24 August 2022, 17:00 SGT/HKT.

Nicolas Van Broekhoven was on the buy-side for 15 years, and worked most recently at a medium-sized boutique asset management firm. He grew up in Europe, went to university in the US and has been living in Singapore for the last seven years, which has given him a broad scope on the world and investing in general. He considers himself a generalist investor with a preference for small and mid-cap companies and special situations. However, a large-cap that has gone temporarily out of favour might also pique his interest.

• Our profitability and credit quality screens, in terms of credit quality metrics to end-June 2022, continued in a constructive vein, although pre-provision profitability trends were mixed
• The key positive trend to end-June was the declining cost of risk, boosting post-provision profitability; nonetheless, the prospect of worsening delinquency could drive a reversal in NPA provision charges
• We believe HDFC Bank can best face credit quality deterioration; optically cheap State Bank of India is exposed to higher provisioning needs, as is ICICI Bank

• This research note is our first on SKYX Platforms, formerly known as Sky Technologies.
• The company is a distinguished player within the field of electrical engineering and caters mainly to the residential market.
• Most modern-day smart homes today rely on a large number of IoT (Internet of Things) gadgets coming from different companies and target high-income populations.

• This week, Thirdpoint’s Dan Loeb wrote a letter to Disney asking it to cut costs, spin ESPN, and buy in Hulu.
• We agreed with Loeb two years ago, but don’t see the strategic rationale this time around…Disney isn’t bloated, needs ESPN’s FCF, and doesn’t need to spend $9B on Hulu today.
• We do agree with Loeb’s points about not reinstating the dividend (better use of FCF on Disney + and other investments) and refreshing a (strangely weird) Board of Directors.

• Amvis Holdings Inc (7071 JP) is expected to have revenue CAGR of 57% and 600 basis points net profit margin improvement during FY18–23, driven by aggressive business expansion.
• Amvis plans to have 100 hospice facilities by 2025–2026 from 58 at the end of FY22. FCF is steadily improving, due to the high profitability of the business.
• With a float of 27.4%, Amvis is just maintaining the listing criterion on the Tokyo Stock Exchange’s Standard market. It has announced stock split, with record date of September 30.

• Plug Power had a disappointing quarter in terms of its financial results but the shareholders of the company are rejoicing.
• After President Joe Biden signed the Inflation Reduction Act (IRA) which includes clean energy tax credits, the company’s stock price has zoomed.
• The newly enacted bill would establish a clean hydrogen production tax credit, or PTC, to encourage clean hydrogen production and benefit Plug Power.

• Tyson Foods delivered mixed third-quarter result surpassing revenue expectations as a result of the price increases but failed to meet Wall Street expectations with respect to earnings given the inflationary pressures.
• In order to counteract the rise in the cost of goods, the company implemented pricing efforts, which resulted in an increase in sales for the entire year.
• Among major updates, Tyson entered into a joint venture agreement with the Saudi Arabian Tanmiah Food Company.

• The food-delivery company Deliveroo (ROO LN)  initiated the stock buyback program and will purchase up to £75M worth of shares to reassure investors. 
• Deliveroo (ROO LN)  is down ~77% from the IPO price as Covid lockdown restrictions have ended and revenue growth slowed significantly. 
• Deliveroo (ROO LN)  currently trades at 0.1x EV/2022E GMV, a discount relative to its key peers that trade at an average of 0.3x EV/2022E GMV.  

• Kraft Heinz delivered outstanding second-quarter results.
• The company is aware of the Despite the effects of the current inflationary environment on Kraft Heinz’s business, the company delivered a solid result, surpassing Wall Street expectations in terms of both, revenues and earnings.
• Overall, we are neutral on Kraft Heinz we give them a ‘Hold’ rating with a revised target price.