In today’s briefing:
- Softbank Group – Vision Fund Losses Accelerate into Quarter End
- Indian Energy Exchange (IEX IN): Immense Value at Current Levels
- Redington (India) Ltd: Forensic Analysis
- Craftsman Automation Ltd: Forensic Review
- Bank Negara Indonesia (BBNI IJ) – More Than Meets the Eye
- Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise
- Boryung Pharmaceutical (003850 KS): Oncology Portfolio Expansion to Accelerate Growth Momentum
- Medikaloka Hermina (HEAL IJ) – Forging Ahead Beyond COVID
Softbank Group – Vision Fund Losses Accelerate into Quarter End
- Valuation losses in the Vision Fund public portfolio are now approaching $5bn as the end of the quarter looms versus break-even as recently as 13 September
- That may have influenced the level of VF staff reductions which press reports ut at 30% versus expectations of 20% last month
- The discount remains elevated on tech weakness and that is unlikely to change
Indian Energy Exchange (IEX IN): Immense Value at Current Levels
- IEX is a play on digital infrastructure (hedge against inflation), electricity reforms, decarbonisation and energy transition
- An opportunity that offers virtuous growth, minimalistic capital needs and presents a scalable business model (addressing INR 8trn electricity market)
- India will see an average power consumption growth of 5% over the foreseeable period. Power Exchanges should outgrow this meaningfully
Redington (India) Ltd: Forensic Analysis
- Redington India (REDI IN)‘s primary business pertains to distribution of Information Technology,mobility and other technology products. The company also is engaged in supply chain solutions and after sales services.
- Although company has a strong business, a glance at the balance sheet and financials reveals some concerns particularly at the subsidiary level which should not be ignored.
- Forensic discomforts revolve around goodwill, poor earnings quality, instances of margin flirting, branch audit not being carried out by statutory auditors, etc.
Craftsman Automation Ltd: Forensic Review
- Craftsman Automation (CRAFTSMA IN) is engaged in the business of manufacturing engineering components, sub-assemblies, products and rendering of contract manufacturing services to various industries
- Key forensic takeaways include working capital troubles, alongside inflation woes deteriorating gross margins etc. There is grey area noticed in accounting treatment pertaining to JV as well.
- Focus should also be on the aluminum segment, which is going through a tough phase regarding operating leverage and low margins.
Bank Negara Indonesia (BBNI IJ) – More Than Meets the Eye
- Bank Negara Indonesia (BBNI IJ) remains the laggard amongst the top four Indonesian banks but we see this as unjustified given improving returns and falling credit costs.
- The bank continues to focus on top-tier corporate clients and large commercial clients plus growing subsidized KUR loans as well as expanding mortgages and payroll loans in the consumer segment.
- Bank Negara Indonesia continues to improve returns with its ROE back to 15% in 1H2022 and it trades on 1.2x FY2022 PBV. The bank will benefit from rising interest rates.
Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise
- Micron’s near-term guidance implies that consensus estimates likely need to come down for both Micron and Nanya Tech.
- However, Micron indicated that they expect supply/demand balance to improve in 2023E.
- There could be more negative industry news to come, however Nanya Tech has a very strong balance sheet to weather some weak quarters and is trading at trough-type valuations.
Boryung Pharmaceutical (003850 KS): Oncology Portfolio Expansion to Accelerate Growth Momentum
- Boryung Pharmaceutical (003850 KS) is expanding its oncology portfolio mainly through in-licensing and co-promotion agreement and aims to achieve revenue of KRW217 billion from oncology segment in 2026.
- This month, Boryung received approval for in-licensed drug Zepzelca (lurbinectedin), indicated for the treatment of small-cell lung cancer in Korea. The drug has demonstrated high adoption rate in the U.S.
- This year, Boryung launched two in-licensed neutropenia drugs and one generic drug for breast cancer. The company plans to launch 18 oncology drugs during 2022–2026, including 10 first generics.
Medikaloka Hermina (HEAL IJ) – Forging Ahead Beyond COVID
- Medikaloka Hermina (HEAL IJ) is unique in Indonesia for its focus on women and children, which makes it a resilient performer plus more than half its patients are JKN related.
- The company booked a strong set of 1H2022 results despite coming off a high COVID base, with Inpatient and outpatient numbers already above pre-pandemic levels.
- Astra International now owns over 7% of the company in its first hospital investment and we could see this stake rising further. Valuations are attractive versus Mitra Keluarga.
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