In today’s briefing:
- Softbank Corp (9434) – Accounting for the Accounting Is Complicated Redux – So Be Bearish
- The Beat Ideas: What Makes Deepak Nitrite an Interesting Bet on Chemical Revival Theme
- Haw Par Corp (HPAR SP): Unleash the Tiger, Unlock Shareholder Value
- BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)
- Sohu.com Inc (Nasdaq: SOHU): A Net-Net with $1.3B in Cash and Valuable Real Estate
- QUALCOMM INC. – Equity Research Flash Note
- Matahari Department Store (LPPF IJ) – Measuring Up With Initiatives
- Rapid7 Inc.: Comprehensive Security Solutions & 3 Factors Making It A Solid Acquisition Target! – Financial Forecasts
- The Walt Disney Company – FLASH NOTE
- Awakening a Sleepy Stock (FARM)
Softbank Corp (9434) – Accounting for the Accounting Is Complicated Redux – So Be Bearish
- Telecom companies are traditionally “easy” to value. They have assets, debt, depreciation, earnings, cashflow. Lots of people like to use EV/EBITDA to measure.
- In comparing Japan’s telcos, I believe when Softbank Corp (9434 JP) is in the mix, one has to use forward PERs. EV/EBITDA is too fraught with complications.
- Softbank is currently at its most expensive multiple since listing on a Price to Forward Earnings basis, and relative to its major Peers. And KDDI has a big buyback now.
The Beat Ideas: What Makes Deepak Nitrite an Interesting Bet on Chemical Revival Theme
- Deepak Nitrite spending INR 9000 crore on capex for backward integration and forward integration along with focus on import substitution with foray into domain like Polycarbonates and Fluorination
- Deepak Nitrite promoters have been continuously increasing stake by 5% in the last few years and recently added 36 crore worth of equities
- The most interesting thesis building operationally is the revival of its key chemical spreads
Haw Par Corp (HPAR SP): Unleash the Tiger, Unlock Shareholder Value
- Haw Par Corp (HPAR SP), with a rich investment portfolio and an attractive consumer health care business, trades at 4% dividend yield but at a steep discount to SOTP value.
- The recent rise in share price of UOB (UOB SP) , where it holds a 4.5% stake, has widened this discount.
- We believe the management can unlock immense value for share holders by de-merging the consumer healthcare business and publicly listing it.
BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)
- After hitting a low point in Q4 2023, Research on Hong Kong companies has been slow to pick up reflecting the ongoing skepticism from investors.
- Reports on the large China tech companies dominated the top ten companies covered over the last couple of years and in the first half of 2024.
- As China continues to dominate and make news in the global EV market, research in that sector has picked up.
Sohu.com Inc (Nasdaq: SOHU): A Net-Net with $1.3B in Cash and Valuable Real Estate
- This writeup was inspired by David Orr’s tweet about the U.S. listed Chinese company DouYu (Nasdaq: DOYU) paying out a $9.76 special dividend.
- The stock closed at $12.59 the day before and was $6.59 earlier in the year.
- Among Chinese ADRs with significant cash balances, SOHU is my favorite.
QUALCOMM INC. – Equity Research Flash Note
- The company’s annual revenue was $35,820 million in 2023 compared to $44,200 million in 2022, seeing a decrease of 18.96%.
- We estimate that for FY2024 the annual revenue will range at around $37,671 million and for 2025 at around $39,934 million.
- Gross profit for FY2023 was $19,951 million, decreased by 21.96% compared to $25,565 million for the corresponding period of 2022.
Matahari Department Store (LPPF IJ) – Measuring Up With Initiatives
- Matahari Department Store (LPPF IJ) results reflected a positive impact from the timing of Lebaran although the like-for-like comparisons were slightly below management expectations., although SSSG remains very strong YoY.
- Management highlighted that better inventory controls meant that inventory levels finished 1Q2024 at significantly lower levels versus last year, with effective cost controls resulting in better EBITDA and net margins.
- The company will slow its new store build-out to focus on improving the productivity of existing stores, with refurbishment of six stores and improving merchandise mix driving growth.
Rapid7 Inc.: Comprehensive Security Solutions & 3 Factors Making It A Solid Acquisition Target! – Financial Forecasts
- Rapid7, under the leadership of CEO Corey Thomas and CFO Tim Adams, remains at the forefront of cybersecurity solutions focused on delivering integrated risk and security operations.
- The company concluded the first quarter of 2024 with $807 million in Annual Recurring Revenue (ARR), which indicates an 11% year-over year growth.
- The quarter saw steady performance in its Direct Complete offerings but noted a shortfall in ARR expectations primarily due to slower transitions in the vulnerability management (VM) base to its integrated Cloud Risk Complete offering.
The Walt Disney Company – FLASH NOTE
- The Walt Disney Company is a diversified worldwide entertainment company. The Company’s segments include Entertainment, Sports and Experiences.
- The Entertainment segment generally encompasses the Company’s non- sports focused global film, television and direct-to-consumer (DTC) video streaming content production and distri- bution activities.
- Its line of business includes Linear Networks, Direct-to-Consumer, and Content Sales/Licensing.
Awakening a Sleepy Stock (FARM)
- “Life is like a cup of coffee, it is best made with love…” I’ve loosely followed Farmer Bros (FARM) for quite some time but a series of events triggered me to revisit the situation.
- Part of my New Year’s resolution was to go cold turkey on my addiction of the highly acidic blend of roasted Robusta and Liberica black coffee one would find all over Singapore, typically consumed sugarless and without milk for the true aficionados – their presence never going unnoticed as every sip leaves an unmistakable yellow taint on the crooked canvas assembled right behind those lips.
- This turkey survived for quite a bit until two weeks ago … I took a short trip to Shanghai to visit some buddies (will be flying to Bangkok in a week – drop me an email if you’d like to grab a drink) and in the spirit of “whatever happens on vacation, stays on vacation” decided to steal a couple cups of freshly brewed black coffee to tide through the day, especially after a number of late drunken nights.
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