In today’s briefing:
- Stylam (SYIL IN): Laminate Growth Play In India with 25% CAGR Growth
- JD Health: Profitability Remains Under Pressure
- CP ALL Pcl (CPALL TB) – Omnipresent Operator
- Balkrishna Industries Ltd- Forensic Analysis
- Malaysian Banks March 2023 Results Screener; Maintaining RHB Bank and CIMB on Our Buy List
- Tandem Diabetes Care (TNDM US): Missed Earnings + Severe Competition = A Bitter Pill to Swallow
- Focus On Profitability Expansion And Durable Growth: PT Reduced To $112 From $133
- Toyota Motor Corporation: How Long Are Production Constraints & Other Challenges Going To Last? – Key Drivers
- Coinbase: The Outlook Is Cloudy After The SEC Lawsuit
- Wynn Resorts
Stylam (SYIL IN): Laminate Growth Play In India with 25% CAGR Growth
- Stylam Industries (SYIL IN) is a play on the Indian laminate space with a 25% CAGR growth predicated on growth in both international and domestic markets.
- The stock trades at 23.6x/19x FY24e/25e. While this is not cheap by any stretch of the imagination, the company is a high grower/best in class amongst its competitors.
- Stylam Industries (SYIL IN) is completing an expansion to increase capacity by 40% in FY24 and expanding in a new segment that can double its revenue over FY23-25e.
JD Health: Profitability Remains Under Pressure
- In May, JD Health made a voluntary announcement that the company has made operating income of RMB795.4m (5.7% of revenues) in 1Q2023 vs RMB61.6m (0.7% of revenues) reported in 1Q2022.
- JD Health’s share price been down more than 25% despite the company announcing strong 1Q2023 results, as the market has become concerned over the company’s ability to sustain its profits.
- Our quantamental analysis proves that JD Health may not be able to generate OPM in excess of 2-3% as there is very little room for GPM to improve.
CP ALL Pcl (CPALL TB) – Omnipresent Operator
- CP ALL is increasingly one of the best proxies for consumption in Thailand, with its broad exposure to convenience stores, hypermarkets, supermarkets, wholesale through Makro’s cash & carry stores.
- The company continues to expand its store footprint and improve margins through a better product mix towards fresh and private labels, as well as group synergies around growing omnichannel sales.
- CP ALL is the largest weighting in MSCI Thailand and has seen pressure from foreign outflows due to political uncertainty but this may be about to work in its favour.
Balkrishna Industries Ltd- Forensic Analysis
- Balkrishna Industries (BIL IN) is one of the big names in Off-Highway Tyre (OHT) segment across the globe.
- The company is currently in a capex mode and looks to augment its tyre capacity and expand the carbon black manufacturing.
- However, there are some corporate level discomforts regarding the payouts to the stakeholders on the back of capex, and disclosure errs in few lone items on the balance sheet.
Malaysian Banks March 2023 Results Screener; Maintaining RHB Bank and CIMB on Our Buy List
- Of the six Malaysian banks screened, we maintain RHB Bank and CIMB on the buy list; we add funding and liquidity metrics to our screens
- RHB Bank is our top pick for its strong post-provision profitability, its high CET1 ratio understating its ROE, and it is attractive valuations on PE multiples and PBV ratios
- CIMB remains our deep value pick as we believe it has potential to improve post-provision returns; the constructive return outlook combines positively with CIMB’s modest valuations, including its PEG ratio
Tandem Diabetes Care (TNDM US): Missed Earnings + Severe Competition = A Bitter Pill to Swallow
- Tandem Diabetes Care (TNDM US) has been consistently missing earnings expectations. This is taking a toll on the share price performance, with shares plunging ~61% over the last one year.
- Tandem’s nearest rival has recently launched its new insulin pump in the U.S. This will affect Tandem’s Q2 sales growth. Tandem guided for 10–12% revenue growth in 2023.
- Tandem is a hugely beaten down stock. However, it will be wise to wait for Tandem to launch new product, ensure its good uptake amid competition, and exhibit earnings stability.
Focus On Profitability Expansion And Durable Growth: PT Reduced To $112 From $133
- Elastic NV (ESTC US) reported a solid 4QFY23, reflecting a stronger-than-expected non-GAAP operating margin of ~9% and GAAP subscription gross margin of ~79%.
- Elastic cloud revenue grew 28% y/y, representing 40% of total revenue. Elastic cloud is scaling well, and margins improved faster-than-anticipated.
- We are concerned about slowing H1 FY24 y/y growth in total revenue and failure to achieve the $2B revenue mark in FY25. Price target to $112.
Toyota Motor Corporation: How Long Are Production Constraints & Other Challenges Going To Last? – Key Drivers
- Toyota managed to exceed analyst expectations in terms of revenue as well as earnings.
- The company faced production constraints due to factors like semiconductor shortages, natural disasters, and the ongoing impact of COVID-19.
- Their expert team members also remain committed to managing risks, investing in growth, and shaping the future of the automotive industry.
Coinbase: The Outlook Is Cloudy After The SEC Lawsuit
- Coinbase lost 16% of its value after the SEC announced a lawsuit against the company.
- The lawsuit comes 24 hours after a similar action against rival exchange Binance, which saw $780 million in outflows.
- Coinbase may continue to make quarterly losses due to market uncertainty, loss of deposits and potential SEC fines.
Wynn Resorts
- Wynn Resorts managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
- In Las Vegas, Wynn Resorts achieved significant results in Q1, supported by a thriving consumer base.
- In Macau, Wynn Resorts generated significant earnings despite some challenges, including a lower VIP hold.
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