Daily BriefsEquity Bottom-Up

Equity Bottom-Up: Alibaba Group, Softbank Group, Money Forward, Arwana Citramulia, Honda Motor, Shift Inc, Pacific Basin Shipping, Venus MedTech, Jinxin Fertility Co Ltd and more

In today’s briefing:

  • Alibaba (BABA): Shanghai and Its E-Commerce Under Lockdown
  • Softbank Group Sale of TMUS Shares Helps Modestly With Leverage Concerns
  • Money Forward (3994) – Surprisingly Strong SaaS Sales
  • Smartkarma Corporate Webinar | Arwana Citramulia: Tiling Indonesia
  • Honda – EV Briefing Raises Some Interesting Questions
  • Shift 2Q Results: Earnings Beat with Further Upgrade to Full-Year Guidance
  • Pacific Basin (2343 HK): Optimistic Outlook Reaffirmed
  • Venus MedTech (2500 HK): Overcrowded Market, Margin Pressure, Expanding Loss
  • Money Forward: SAAS Model Begins to Take-Off but Interpret 1Q Results with Caution
  • Jinxin Fertility Co Ltd (1951.HK) – The Outlook Is Not Optimistic Even with Policy Support

Alibaba (BABA): Shanghai and Its E-Commerce Under Lockdown

By Ming Lu

  • Shanghai is in lockdown and citizens are finding it hard to get enough food.
  • Community group purchase has been taking consumers from e-commerce apps.
  • The central government reiterates the zero-COVID policy, but the Omicron variant is spreading with very few death cases.

Softbank Group Sale of TMUS Shares Helps Modestly With Leverage Concerns

By Kirk Boodry

  • Softbank has raised $2.4bn (¥300bn) from the sale of TMUS shares to DT with proceeds likely earmarked for VF2 and possibly supporting ongoing share buybacks
  • The sale price is below market but surfacing cash is the more positive takeaway and should ease concerns on leverage that have lingered as tech valuations fall
  • The impact on the discount to NAV is likely to be weaker than the reaction to the TMUS/DT monetization in August/September

Money Forward (3994) – Surprisingly Strong SaaS Sales

By Mark Chadwick

  • Q1 results are better than expected, achieving record-high quarterly growth in SaaS revenue
  • Growth is driven by Corporate Customer ARR, which rose by 47% YoY
  • For growth investors, Money Forward is out top pick in Japan

Smartkarma Corporate Webinar | Arwana Citramulia: Tiling Indonesia

By Smartkarma Research

For our next Corporate Webinar we are glad to welcome Arwana Citramulia (ARNA IJ) CFO & Corporate Secretary, Rudy Sujanto.

In the upcoming webinar, Rudy will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Analyst, Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 26 April 2022, 17:00 SGT.

Arwana Citramulia (ARNA IJ) is a public company engaged in the ceramic and porcelain industry. The Company began commercial operations on 23 June 1995, with the commencement of production at Plant I in Pasar Kemis, Tangerang, Banten. Plant I’s then-production capacity was 2.88 million square meters per year. By the end of 2021, the Company’s installed capacity has grown significantly to 64.37 million square meters per year through the establishment of four other factories, as well as by adding new production lines and upgrading machinery. The Company’s five factories were established in five different locations based on strategic foresight and also in order to empower the economy of the local communities. Plant I and Plant II are each located in Tangerang and Serang, Banten, respectively. Plant III and Plant V are each located in Gresik and Mojokerto, East Java, respectively, while Plant IV is located in Ogan Ilir, South Sumatra.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets. 


Honda – EV Briefing Raises Some Interesting Questions

By Mio Kato

  • Honda’s Briefing on its Automobile Electrification Business yesterday laid out a reasonably aggressive EV rollout plan emphasising some existing partnerships. 
  • It also highlighted that they would procure batteries domestically from Envision AESC. 
  • That is another move that takes Honda a step closer to Nissan’s supply chain and has us pondering a potential merger/partnership once again.

Shift 2Q Results: Earnings Beat with Further Upgrade to Full-Year Guidance

By Shifara Samsudeen, ACMA, CGMA

  • Shift Inc (3697 JP) reported 2QFY08/2022 results last week. Revenue grew 43.5% YoY to JPY15.6bn (vs consensus JPY15.2bn) while OP 99.2% YoY to JPY1.9bn (vs consensus JPY1.1bn).
  • Both enterprise and entertainment markets saw strong growth in revenue while GPM of enterprise biz further expanded during the quarter.
  • Shift’s share price has moved up by about 16% since its results announcement and we think there is further upside.

Pacific Basin (2343 HK): Optimistic Outlook Reaffirmed

By Osbert Tang, CFA

  • Pacific Basin Shipping (2343 HK) stays positive towards the outlook of the bulk shipping market despite the Russia-Ukraine war, higher inflation and lockdowns in China.
  • 1Q22 coverage rates are 117% and 122% higher YoY for its Handysize and Supramax fleet, resepctively, and coverage for 2Q22 is also promising, securing good 1H22 earnings.
  • We expect it to turn into net cash by end-FY22, and even with such strong financial position, it will still generate over 30% ROE for the next two years.

Venus MedTech (2500 HK): Overcrowded Market, Margin Pressure, Expanding Loss

By Tina Banerjee

  • Venus MedTech (2500 HK) is facing competition in China TAVR market and its market share has deteriorated to 70% in 2021 from 79.3% in 2018.
  • Due to declining ASP and low pricing power, the company’s gross profit margin has declined to 78% in 2021 from 86% in 2018.
  • During 2021, the company’s loss expanded 103% y/y to RMB372 million, mainly due to elevated selling and distribution expenses and R&D costs.

Money Forward: SAAS Model Begins to Take-Off but Interpret 1Q Results with Caution

By Shifara Samsudeen, ACMA, CGMA

  • Money Forward (3994 JP) reported 1QFY11/2022 results yesterday. 1Q revenue grew 37.0% YoY to JPY4.8bn and beat consensus estimates by 4.4%.
  • Operating losses for the quarter was JPY1.6bn and accounted for around 34.7% of revenues during the period.
  • MF’s SAAS model has started taking-off, we would highlight that string user growth comes at the cost of heavy advertising and subsidies.

Jinxin Fertility Co Ltd (1951.HK) – The Outlook Is Not Optimistic Even with Policy Support

By Xinyao (Criss) Wang

  • IVF penetration rate in China is not high and the rate of improvement is very slow. With public hospitals accounting for over 90% market share, Jinxin’s growth space is limited.
  • Jinxin has extended its business scope to support the entire fertility and pregnancy lifecycle. But it could drag down the overall net profit margin,resulting in lower-than-expected performance in the end.
  • The breakthrough point is internationalization. If COVID-19 is under control and Jinxin continues to expand overseas markets successfully, it could change its valuation logic and open up upward potential.

Related tickers: Alibaba Group (BABA.N), Softbank Group (9984.T), Money Forward (3994.T), Arwana Citramulia (ARNA.JK), Honda Motor (7267.T), Shift Inc (3697.T), Pacific Basin Shipping (2343.HK), Venus MedTech (2500.HK), Money Forward (3994.T), Jinxin Fertility Co Ltd (1951.HK)

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