In today’s briefing:
- Techtronic Industries (669 HK): Forensic Analysis Viewpoint
- Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business
- Techtronic Industries: Jehoshaphat Research’s Allegations and Our Assessment
- Grab Follows Suit with GoTo and Accelerates Profitability Timeline
- Branded Camping from Goldwin and Snow Peak
- Nvidia: Don’t Let Narratives Fool You (Again)
- Banamex Update & Mexican Banks’ December Data; Risks of Credit Spread Erosion & Rising Credit Costs
- Airbnb Inc.: Major Drivers
- The Coca-Cola Company: Major Drivers
- Zoetis Inc.: Launch Of CircoMatch & Other Drivers
Techtronic Industries (669 HK): Forensic Analysis Viewpoint
- Jehoshaphat’s short report has alleged that Techtronic Industries (669 HK)/TTI has been inflating its profits dramatically for over a decade with manipulative accounting.
- Our forensic analysis of the allegations suggests that some are credible red flags while others are essentially an exaggeration.
- TTI’s response to Jehoshaphat is pitiful. Valuation is meaningless until management adopts more conservative accounting or compelling disprove the allegations.
Alibaba: Post Earnings Price Reaction Confirms Investors Are Worried Of a Fading Core-Business
- Alibaba’s 3QFY23 results marginally topped consensus. With the share price dropping 0.65% cf. +0.35% for the index, both results and the price reaction were in line with our expectations.
- Yesterday’s results confirm that Alibaba (ADR) (BABA US)’s core businesses, Taobao and Tmall are in trouble and cost-cutting elsewhere is insufficient to offset the short-term weakness.
- Therefore, we do think that this is a good opportunity to profit on the short side with Alibaba shares having the potential to fall another 40-45% in the short term.
Techtronic Industries: Jehoshaphat Research’s Allegations and Our Assessment
- Techtronic Industries (669 HK) was targeted by Jehoshaphat Research (JR) accusing that the company’s profits are inflated dramatically over a decade with manipulative accounting.
- As per the report, routine expenses incurred have been booked under various asset accounts such as deferred development costs thereby showing ever increasing margins for a cyclical business.
- We have assessed the merits of some of these claims using our forensic accounting framework and it appears that most of the claims are very difficult to refute.
Grab Follows Suit with GoTo and Accelerates Profitability Timeline
- Grab reported 4Q2022 results yesterday. Q4 revenue more than quadrupled to $502m (vs consensus $403.48) while reported a negative adjusted EBITDA of $111m (vs consensus $137m) vs $305m in 4Q2021.
- Deliveries business went on to report positive adjusted EBITDA driven by improvement in take rate coupled with reduction in total incentives.
- Grab Holdings (GRAB US) share price dropped 8.29% at the end of yesterday’s trade despite the company accelerating its profit timeline to breakeven in 4Q2023 vs 2H2024 previously.
Branded Camping from Goldwin and Snow Peak
- After decades of industrial, urban focus, city-dwelling Japanese first began a tentative reengagement with nature through hiking two decades ago.
- This has evolved into more extended trips that began to include camping and visits to wilder areas.
- These excursions are still a bit forbidding for many, so camping and outdoor activities in a park managed by a trusted brand have strong appeal, providing new revenue for brands.
Nvidia: Don’t Let Narratives Fool You (Again)
- Nvidia’s risk-reward profile remains unattractive, according to the company’s recent earnings report.
- Nvidia’s stock-based compensation also highlights some problems related to inventory levels and the amount of stock- based compensation.
- The company’s share price has risen 14% following recent earnings, the report says.
Banamex Update & Mexican Banks’ December Data; Risks of Credit Spread Erosion & Rising Credit Costs
- We explore Citibank’s upcoming Banamex disposal, which appears to have become a one horse race and question whether an IPO is completely off the cards
- Bank sector data trends to December remain robust, but headwinds are building; rising funding costs threaten credit spreads and worsening cost of credit trends, both set to erode 2023 returns
- BBVA Mexico generates consistent premium ROE of 25%+, investors can gain exposure through parent BBVA shares; we remain cautious on Banorte, due to the growing risks to returns and valuation
Airbnb Inc.: Major Drivers
- Airbnb had a solid year in 2022 with revenues growing 40% year-over-year.
- Moreover, they saw that guest bookings for trips continued to rise, maintaining a robust backlog for Q1.
- Excluding all of the Mainland China listings, the team increased supply by 900,000 listings, or 16%, in comparison to a year ago.
The Coca-Cola Company: Major Drivers
- Coca-Cola had a successful year in 2022.
- In spite of the difficult macro environment, the company performed well and expanded by concentrating on broadening the scope of its offerings.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Zoetis Inc.: Launch Of CircoMatch & Other Drivers
- Zoetis delivered a decent set of results for the last quarter of 2022 meeting analyst expectations as well as the high end of its management guidance.
- Despite the economic challenges, ongoing pandemic recovery, and the political unpredictability brought on by the war in Ukraine, they delivered operational growth for the year in each of their top 13 markets.
- The company’s unique companion animal portfolio drove its 8% operational revenue increase for the year, growing 14% operationally.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
