In today’s briefing:
- India Channel Insight #38 | Ashok Leyland, Tata Motors (MHCV)
- Tokyo Electron (8035 JP): New Medium-Term Plan Vs. Reality
- Bank Mandiri (BMRI IJ) – Upping the Ante on Returns
- Bilibili 1Q2022: Widening Losses and There Is Further Downside
- RPPL: Set to Fire on All Cylinders
- Nesco: IT Park Occupancy Continues to Improve; BEC Recovery on Track
- Tactile Systems Technology (TCMD US): Subsiding COVID to Drive Mid-Teens Sales Growth in 2022
- RPSG Ventures (RPSGV): FMCG Business Gaining Traction; IPL Media Rights Auction – A Key Monitorable
- Brazil Digital Banks – Nubank and Banco Inter Shares Have De-Rated, but Still Face Challenges
India Channel Insight #38 | Ashok Leyland, Tata Motors (MHCV)
- Infrastructure and E-commerce are core drivers of the MHCV recovery
- The market for Retail fleet operators (1-5 trucks) has shrunk.
- Ashok Leyland (AL IN) ‘s market share gain has been on the back of discounting and is unlikely to sustain.
Tokyo Electron (8035 JP): New Medium-Term Plan Vs. Reality
- Tokyo Electron has announced a new Medium-term Plan that shows what the company could probably do if the next five years were as good as the last five years.
- That seems unlikely. The plan ignores rising interest rates, the risk of recession, political risk, and the possibility of demand from South Korea, Taiwan and China maxing out.
- It looks like FY Mar-23 guidance is intended to be conservative. That cannot be take for granted.
Bank Mandiri (BMRI IJ) – Upping the Ante on Returns
- Bank Mandiri (BMRI IJ) is executing well on its move to shift its focus toward higher-yielding assets in commercial, Micro, and SME segments and also high-quality corporate loans.
- The company has seen the cost of funds continue to decline as it picks up new savings accounts through its Livin’ app, helping to improve NIMs and returns.
- Bank Mandiri (BMRI IJ)‘s cost of credit continues to fall, with declining provisions also helping to improve profitability, and with ROEs hitting multi-year highs while valuations remain attractive.
Bilibili 1Q2022: Widening Losses and There Is Further Downside
- Bilibili reported 1Q2022 results yesterday. Revenue grew 29.6% YoY to RMB5.1bn (vs consensus RMB5.04bn) while operating losses as a % of revenue increased to 39.4% from 26.4% in 1Q2021.
- Monthly Paying Users (MPUs) reached 27.2m vs 20.5m in 1Q2021, however, blended ARPU declined to RMB41.8 from RMB43.4 a year ago suggesting that user growth comes at lower pricing.
- Bilibili’s ADS’ closed 15% lower at the end of yesterday’s trading as widening losses and softer guidance for 2Q2022 disappointed the market.
RPPL: Set to Fire on All Cylinders
- RPPL posted a decent FY22 despite significant rise in the raw material costs. Sales volume grew 30%+ and EBITDA per kg improved by 11%.
- FY23 is likely to be robust for RPPL. Revenue growth is likely to be strong at 20%+. Margins are guided to expand to 15%+ level from current 13.5%.
- RPPL is consistently improving the mix of value-added products like Barrier Packaging and Tube Laminates. Contribution from Barrier Packaging is likely to grow to 10-15% in FY23 from 5% currently.
Nesco: IT Park Occupancy Continues to Improve; BEC Recovery on Track
- IT Park occupancy has been steadily rising over the past few quarters. Q4FY22 IT Park revenue grew 3.3% QoQ.
- Bombay Exhibition Center (BEC) business is on track to normalize as COVID restrictions have been removed completely.
- With the BEC business normalizing, Nesco Foods business is also ripe to scale up.
Tactile Systems Technology (TCMD US): Subsiding COVID to Drive Mid-Teens Sales Growth in 2022
- Tactile Systems Technology I (TCMD US) offers pneumatic compression pump, which has total current addressable market opportunity of $10B+ in the U.S. The company’s annual run rate is ~$200M.
- To penetrate the addressable market deeper, Tactile is aggressively expanding commercial team, which should lay the foundation for long-term sustainable revenue growth and margin expansion.
- With the declining COVID-related headwinds, new product launch, and better commercial execution, Tactile should be well-positioned for accelerated growth trajectory.
RPSG Ventures (RPSGV): FMCG Business Gaining Traction; IPL Media Rights Auction – A Key Monitorable
- The FMCG Business reported Q4FY22 revenues, in line with the recent annualized revenue run-rate of around INR 400cr.
- The relatively new Naturali brand was advertised prominently at the IPL and its products are becoming increasingly visible at department stores.
- A key monitorable for RPSGV’s sports business is the IPL Media Rights Auction that is scheduled to be held on Jun 12.
Brazil Digital Banks – Nubank and Banco Inter Shares Have De-Rated, but Still Face Challenges
- Despite the compression in the Brazil digital banks’ multiples from the FinTech de-rating, big fundamental hurdles remain, especially for Nubank
- Nubank is delivering on increased loan penetration and this should drive revenue growth; still, this also drives higher and front loaded provisioning charges along with capital absorption
- Banco Inter is less challenged than Nubank on most metrics, and it is modestly profitable, but we believe it is too early to turn positive; we like Banco do Brasil
Related tickers: Ashok Leyland (ASOK.NS), Tokyo Electron (8035.T), Bank Mandiri Persero (BMRI.JK), Bilibili Inc (BILI.O), Nesco Ltd (NSEN.NS), Tactile Systems Technology I (TCMD.OQ)
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