In today’s briefing:
- Merger Arb Mondays (01 May) – HKBN, AAG Energy, United Malt, Blackmores, Origin, Metro Pacific
- GoTo (GOTO IJ) – Foundations Laid for Profitable Growth
- Carly Holdings Limited – The Right Operational Model
- Mediatek: TV Demand Peculiarly Strong Within Consumer Electronics Malaise
- Shekel Brainweigh Ltd – Aiming for EBITDA Breakeven in Q4 CY23
Merger Arb Mondays (01 May) – HKBN, AAG Energy, United Malt, Blackmores, Origin, Metro Pacific
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – 111 Inc (YI US), Estia Health (EHE AU), United Malt Group Ltd (UMG AU), Aag Energy Holdings (2686 HK), HKBN Ltd (1310 HK), Origin Energy (ORG AU).
- Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Lian Beng (LBG SP), Mincor Resources NL (MCR AU), Pushpay Holdings (PPH NZ), Blackmores Ltd (BKL AU).
GoTo (GOTO IJ) – Foundations Laid for Profitable Growth
- GoTo (GOTO IJ) 1Q2023 were impressive given the group is now contribution margin positive for all its divisions plus making good headway towards positive Adjusted EBITDA by 4Q2023.
- This came at a cost with substantial QoQ declines in GTV for both ODS and e-commerce but better take rates offset this decline. Further significant declines may raise concerns.
- GoTo Logistics and GoPay’s lending business are key foundational focus areas to underpin a lower cost to serve and higher future growth. Valuations remain reasonable relative to peers.
Carly Holdings Limited – The Right Operational Model
- Carly Holdings Limited (ASX:CL8) operates a vehicle subscription business, which it launched in March 2019, leveraging the existing DriveMyCar operations and technology.
- Car subscription allows business and retail customers to pay a single monthly fee to access a car for 30 days or more and is an alternative to purchasing or financing a vehicle.
- Carly has attracted larger automotive industry businesses as shareholders, with a model that facilitates sales volumes of new vehicles and delivers a new recurring revenue stream for automotive manufacturers and dealers.
Mediatek: TV Demand Peculiarly Strong Within Consumer Electronics Malaise
- Mediatek results showed it may be in one of the stronger positions through this cycle, part of the stronger group of company’s in what appears a ‘two-track’ semi industry recovery.
- The company reported notable strength in TV end-demand relative to the rest of the consumer electronics space.
- The company implied 2Q23E could be the company’s cycle bottom.
Shekel Brainweigh Ltd – Aiming for EBITDA Breakeven in Q4 CY23
- Shekel Brainweigh Limited (ASX:SBW) reported FY22 sales growth of 14% to US$26.3m, which included 117% growth in Retail Innovation sales to $US2.0m.
- Revenue growth has continued into Q1 FY23 with 13% underlying growth, driven by 32% growth in the Self-Checkout division.
- We estimate an adjusted FY22 EBITDA loss (before amortisation, one-off costs and share-based payments) of US$3.3m, in-line with CY21 and impacted by a ~530bps decline in gross margin, predominantly in H2 FY22.
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