In today’s briefing:
- Golden Energy (GER SP): Two Conditions Satisfied, Now for the Hard Part
- Advantest (6857 JP): 20% Potential Downside
- Sinotrans (598 HK): Still Seeing Uncertainties Ahead
- Carr’s Group – Weather affects H123 performance
- VIRGIN ORBIT, INC – Court Approves Process for Sale of the Company’s Assets
Golden Energy (GER SP): Two Conditions Satisfied, Now for the Hard Part
- Dian Swastatika Sentosa (DSSA IJ)/DSS shareholders have approved the sale of DSS’ 77.49% stake in Golden Energy & Resources (GER SP) to the Widjaja family.
- No objection has also been received from the OJK and IDX. The make-for-break condition is the GEAR shareholder approval of the distribution resolution, which DSS will abstain from voting on.
- Minorities and SIAS rightly claim that the revised offer remains light. A bump to the offer, particularly to the delisting offer price is S$0.181, is required for a done deal.
Advantest (6857 JP): 20% Potential Downside
- FY Mar-24 guidance – sales down 14%, operating profit down 37% – is not extreme compared with previous cycles.
- History shows that downturns at Advantest can last for two or even three years, not just one. Weak economic conditions add to this possibility.
- The share price has rebounded from the recent sell-off, but optimism is unwarranted. Historical valuation ranges suggest potential downside of 20% or more.
Sinotrans (598 HK): Still Seeing Uncertainties Ahead
- While meeting expectations in 1Q23, Sinotrans (598 HK) has relied on a 105.2% surge in other income, mostly government subsidies. Without them, pre-tax profit would have dropped 21%.
- For most business areas, volume has come down YoY and QoQ, highlighting challenging operating environment. JV contribution, mostly DHL-Sinotrans, has also declined 11.5% YoY.
- While we like its long-term fundamentals and undemanding multiples, we have concerns on near-term headwinds and weakened earnings quality; and risks of profit downgrades.
Carr’s Group – Weather affects H123 performance
As flagged in its February update, the Speciality Agriculture division of Carr’s Group experienced a weaker trading environment from November onwards, while trading in the Engineering division was initially slower than anticipated. This resulted in a 23% drop in adjusted operating profit year-on-year in H123 to £5.8m. Management expects trading conditions for the Speciality Agriculture division to improve later this calendar year, while a strong Engineering order book supports good divisional performance in H223 and FY24. We downgrade our FY23 and FY24 adjusted PBT estimates by 5% for both years.
VIRGIN ORBIT, INC – Court Approves Process for Sale of the Company’s Assets
- A federal bankruptcy court approved bidding procedures for the sale of Virgin Orbit’s assets.
- Bidders have until May 4 to submit indications of interest, with a deadline for formal bids of May 15.
- The auction is expected to take place on May 18, with the sale on May 24.
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