In today’s briefing:
- Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- NIFTY50 Index Rebalance Preview: Adani Enterprises Should Replace Shree Cement
- Sebit Chem IPO Preview – A Major Competitor to Sungeel Hitech in Rechargeable Batteries Recycling
- BEM : Expect 2Q22 Earnings to Hit 11 Quarter High
- Sebit Chem Valuation Analysis
- Dredging Corp Of India: Lapse of Governance Controls
Nikkei 225 Sep Annual Review Predictions – 3 In, 3 Out
- The Nikkei 225 Annual Review is in September based on end-July data. Jumping the gun, I propose 3 additions and 3 deletions with granular data and details offered per sector.
- I see ¥600bn to buy and a funding trade of 99% of that. There are 15+ names with more than 1 day of ADV to sell (funding only).
- The impact on Real World Float is non-negligible. One name in particular is deserving of attention.
NIFTY50 Index Rebalance Preview: Adani Enterprises Should Replace Shree Cement
- With over 90% of the review period complete, Adani Enterprises (ADE IN) is a high probability inclusion to the NIFTY Index (NIFTY INDEX) and will replace Shree Cement (SRCM IN).
- We estimate passive NIFTY Index (NIFTY INDEX) trackers will need to buy nearly 7% of the real float on Adani Enterprises (ADE IN) and the stock should continue to outperform.
- Adani Green Energy (ADANIGR), Adani Transmission (ADANIT) and Avenue Supermarts Ltd (DMART) have higher average free float market caps and could be included if added to the F&O segment.
Sebit Chem IPO Preview – A Major Competitor to Sungeel Hitech in Rechargeable Batteries Recycling
- Sebit Chem is getting ready to complete its IPO in early August. The IPO price range is from 25,000 won to 30,000 won.
- The IPO base deal size is from US$21 million to US$25 million. The expected market cap after the IPO is from 126 billion won to 151 billion won.
- Sebit Chem is one of the competitors to Sungeel Hitech which completed a very successful IPO book building. Sebit Chem is also likely to enjoy strong demand among many investors.
BEM : Expect 2Q22 Earnings to Hit 11 Quarter High
- Maintain BUY recommendation for BEM with a target price of Bt9.50.We expect the company to report 2Q22 net profit at Bt577m,the highest level in the past 11 quarter, mainly supported
- Strong recovery in earnings in2Q22 and 2H22 2Q22 Revenue shall be reported at Bt3.3bn (+36%YoY +6%QoQ) supported by solid rebound in daily average MRT ridership to 231k trips (+94%YoY +23%QoQ)
- We anticipate average daily MRT ridership to recover substantially in 2H22 to around 310k trips by end of this year,the level last time we have seen in Nov’21. However, pre-COVID
Sebit Chem Valuation Analysis
- Our base case valuation of Sebit Chem IPO is target price of 50,775 won which is 69% higher than the high end of the IPO price range.
- Sebit Chem’s business is now mainly composed of recycling waste rechargeable batteries and waste acid (mostly from semiconductor and LCD related products).
- Our base case valuation is based on 23.7x P/E (comps’ average) using our estimated net profit of 10.8 billion won in 2023.
Dredging Corp Of India: Lapse of Governance Controls
- Dredging Corp Of India (DCIL IN) has been seeing a heavy churn in top personnel lately, including the most critical sacking of MD and CEO, Mr. G.Y.V Victor.
- It was reported that there has been suppression of facts, material misrepresentation of facts and false claims in support of his experience criteria submitted by GYV Victor.
- This is a key governance red flag and the fact that the investigation was made after one year of his appointment indicates loopholes in the governance and recruitment controls.
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