In today’s briefing:
- Bumitama Agri: Lagging CPO Price Action; Large Special Dividend Possible at FY21 Results Briefing
- Japan Post Insurance – Why This Could Double… In Charts
- Raffles Medical (RFMD SP) – Pivot in SG Travel Rules, Testing Regime and Its Implications
- CPO Plays Lag Palm Oil Prices As ESG Issues Weigh
- Appier – Baby Thrown Out With the Bathwater Number One
- Top Three Takeaways: Parade Technologies
- Roblox 4Q21: Metaverse or Optical Illusion?
- Bilibili (BILI): Upgrade to Buy for First Time Before 4Q21 Result
- Arwana Citramulia (ARNA IJ) – Tiling a Porcelain Path
- Tower Semiconductor (TSME.US): To Be Merged by Intel- A Fastest Way, but a Patience Test, Too.
Bumitama Agri: Lagging CPO Price Action; Large Special Dividend Possible at FY21 Results Briefing
- Bumitama Agri (BAL SP) is a pure-play CPO play on SGX which like the rest of its peers has lagged the price of CPO by a mile.
- What could be the catalyst to change this? We preview FY21 results which will be announced on 28th February and its dividend outlook going into FY22.
- BAL should take a page from the Geo Energy Resources (GERL SP) playbook and start to pay out aggressive bi-annual dividends to get Mr. Market’s attention.
Japan Post Insurance – Why This Could Double… In Charts
- Japan Post Insurance beat consensus 3Q estimates by 77% at the NP level and the company revised up FY guidance 30.5% to ¥365.49 in EPS.
- Consensus still forecasts EPS to drop to ¥234 next FY but we see little reason to not expect a further increase.
- If so, the name is likely to be close to 5x PE vs. peers at over 10x creating a significant opportunity.
Raffles Medical (RFMD SP) – Pivot in SG Travel Rules, Testing Regime and Its Implications
- Singapore will apply streamlined COVID-19 rules from 25 February 2022, with a focus on vaccination status instead of an aggressive testing and surveillance regime
- We previously discussed how Raffles Medical benefits as the primary testing services provider at Changi airport and by facilitating Singapore’s vaccination drive
- Given the latest pivot in border protocols, and taking into account Singapore’s high vaccination rates, we discuss whether our initial investment hypothesis remains intact
CPO Plays Lag Palm Oil Prices As ESG Issues Weigh
- Palm oil prices are up 177% since May 2020 and 66% since June of last year. Palm oil touched a record high of RM5,700/mt the 31 January.
- Yet while palm oil has enjoyed a meteoric price rise, the performance of listed palm oil plays has bifurcated.
- Valuations appear largely constrained by environmental, social, and governance concerns, resulting in plantation stocks trading below their historical averages.
Appier – Baby Thrown Out With the Bathwater Number One
- Appier reported 4Q21 results on Monday with revenue beating consensus by 5% and EBITDA beating by 323%.
- The company guided for ¥17.5bn in revenue, above consensus at ¥16.2bn but significantly below our guesstimate of ¥20.8bn.
- However, a close look at trends in the US suggest that our initial estimate remains reasonable enough.
Top Three Takeaways: Parade Technologies
- Revenue growth is slowing and would require additional capacity and new products to re-accelerate core segment growth
- Gross margin expectations are high, leaving very little margin of error
- The near-term revenue growth visibility and medium-term demand outlook remain robust
Roblox 4Q21: Metaverse or Optical Illusion?
- Roblox was crushed on 4Q21 earnings, owing to a weak guidance for January due to tough Covid comps.
- We think the selloff is overdone given the still strong user growth and the “of course” normalization that was due to occur after incredible growth for the past two years.
- Once growth normalizes midyear, the platform narrative will resume as reaccelerating core growth and 2023 advertising growth comes into view. A likely double from here.
Bilibili (BILI): Upgrade to Buy for First Time Before 4Q21 Result
- BILI’s stock price has plunged significantly over the past year.
- We believe the revenue growth will be stable in 4Q21.
- We believe all business lines remains promising except for advertising.
Arwana Citramulia (ARNA IJ) – Tiling a Porcelain Path
- Tile manufacturer Arwana Citramulia (ARNA IJ)‘s 4Q2021 results confirmed a strong finish to the year and management expects an equally vibrant performance in 2022, as a top quality Indonesian industrial
- Increased capacity, better product mix, greater efficiencies on gas usage, and the new line of porcelain tiles will help to drive better margins this year.
- Arwana Citramulia throws off high returns with ROEs of more than 30%. Valuations do not look challenging with a strong EPS 30% growth and a forward PER of 11x.
Tower Semiconductor (TSME.US): To Be Merged by Intel- A Fastest Way, but a Patience Test, Too.
- Transaction is expected to be immediately accretive to Intel’s non-GAAP EPS. The stock market reacted exciting for Tower raised 42% to reach $47.07 and Intel raised with ~1.8% respectively.
- Tower Semiconductor is emphasized on analog semiconductor specialty foundries. Namely, it’s different from TSMC, UMC and GlobalFoundries, which are focusing on digital products original, and expand into analog afterward.
- Intel wants to march into foundry business and have to count on Tower to bring in such operation know-hows, but Intel has to tolerate a completely different system.
Related tickers: Bumitama Agri (BUMI.SI), Japan Post Insurance (7181.T), Raffles Medical (RAFG.SI), Kuala Lumpur Kepong (KLKK.KL), Parade Technologies (4966.TWO), ROBLOX Corp (RBLX.N), Bilibili Inc (BILI.O), Arwana Citramulia (ARNA.JK)
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