In today’s briefing:
- Comfortdelgro (CD): Restriction Easing, Green And Low EV/EBITDA.
- MonotaRo: A Rare Winner in E-Commerce
- Shimadzu (7701 JP): Excessive Valuation Gone, Business Doing Well
- Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.
- Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems
- Adobe: Price Increase Bullish or Bearish?
- Presentation for Impact of Russia/Ukraine War on Asian Markets-Tiantan Biological Products(600161CH)
- CSPC Pharmaceutical (1093 HK): 2021 Results Review- Double-Digit Top-Line Growth, Driven By Oncology
- War in Ukraine Is Driving Up Share Prices of Korean Steel Producers
- CIMC Enric (3899 HK): Still Running on the Fast Lane
Comfortdelgro (CD): Restriction Easing, Green And Low EV/EBITDA.
- The latest announcement by the SG Multi-Task Force to further relax COVID-19 restrictions is a major positive catalyst.
- Its hybrid taxi accounted for more than 50% of its entire fleet as of end-December 2020. It remains on track to replace all diesel taxis with hybrid models by 2023.
- Investors will be paying a discounted valuation for the cash flow if they own Comfortdelgro Corp (CD SP) compared to its peers which trades at a much higher EV/EBITDA.
MonotaRo: A Rare Winner in E-Commerce
- Among many e-commerce names, MonotaRO Co Ltd (3064 JP) is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.
- Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.
- At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.
Shimadzu (7701 JP): Excessive Valuation Gone, Business Doing Well
- Sales of analytical and measuring instruments, medical systems and industrial machinery are all doing well. Aircraft equipment lags, but should improve next fiscal year.
- Guidance has been raised three times and now calls for an 8% increase in sales and a 23% increase in operating profit in FY Mar-22.
- Not compellingly cheap, but worth looking at from a long-term perspective.
Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.
- Novatek’s monthly revenue is increasing above 20% YoY from July 2020. However, the growth trend seems slowing down from 1Q22.
- The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.
- Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.
Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems
- Bukalapak (BUKA IJ) is rapidly broadening its exposure to a greater range of services, with the latest move increasing its exposure to gaming, a potential future cash cow.
- We have already seen Bukalapak (BUKA IJ) making bold moves into digital banking through Allo Bank Indonesia and a direct commitment to online groceries through AlloFresh with Trans Retail Indonesia.
- We continue to focus on the improving fundamentals of Bukalapak (BUKA IJ) and its growing ecosystem and would use any short-term trading anomalies to accumulate the stock.
Adobe: Price Increase Bullish or Bearish?
- Adobe’s stock has pulled back 35% since November, a far larger drawdown than megacap software peers on fears of pulled in growth for Creative Cloud.
- Weak initial guidance for 2022 was reiterated this past week, implying reacceleration in 2H22.
- Price increases should serve as a tailwind in 2H22, providing a good entry point on a quality compounder that is trading at 5 year trough multiples.
Presentation for Impact of Russia/Ukraine War on Asian Markets-Tiantan Biological Products(600161CH)
- In the context of both the war and the pandemic, the blood products market would be a field of high-quality investment.
- Due to strict policy supervision, the number of plasma stations is the core competitiveness of enterprises in this industry, which basically determines the scale and outlook of blood products enterprises.
- With the background of state-owned enterprise and also having the most plasma stations among peers,Tiantan Biological Products (600161 CH) has an innate advantage over other competitors, with more certainty in long term.
CSPC Pharmaceutical (1093 HK): 2021 Results Review- Double-Digit Top-Line Growth, Driven By Oncology
- CSPC Pharmaceutical Group (1093 HK) shares climbed nearly one-month highs after strong 2021 results and new drug approval. The company has recommended final dividend of HKD 0.10/share.
- 2021 revenue increased 12% y/y to RMB28 billion, mainly driven by the growth in the finished drug businesses. This has eased concern of CSPC’s revenue sensibility to pricing headwind.
- The company is on track to launch more than 30 innovative and new-formulation drugs, and over 60 generic drugs in the next five years.
War in Ukraine Is Driving Up Share Prices of Korean Steel Producers
- The war in Ukraine has been driving up the share prices of Korean steel producers including Posco (005490 KS), Hyundai Steel (004020 KS), and KG Dongbusteel Co., Ltd. (016380 KS).
- On 20 March, the Azovstal steel plant, which is owned by Ukrainian steel and mining group Metinvest, was badly damaged by Russian shelling.
- The war in Ukraine has resulted in reducing the steel supply in Ukraine and raising the steel prices globally. Korean steel producers have been key beneficiaries of these events.
CIMC Enric (3899 HK): Still Running on the Fast Lane
- Cimc Enric Holdings (3899 HK) posted a set of encouraging result for FY21. It achieved a 37.4% YoY growth in 2H21 even after a 77.5% growth in 1H21.
- Management suggests that gross margin will improve in this year as measures have been taken to cope with the factors that lead to the 2.3pp contraction in FY21.
- Hydrogen energy is a bright spot – though contribution is still small, it expects to at least double its revenue in FY22, and remains bullish on the long term prospects.
Related tickers: Comfortdelgro Corp (CMDG.SI), MonotaRO Co Ltd (3064.T), Shimadzu Corp (7701.T), Novatek Microelectronics Corp (3034.TW), Adobe Systems (ADBE.O), Beijing Tiantan Biological Products (600161.SS), CSPC Pharmaceutical Group (1093.HK), Posco (005490.KS), Cimc Enric Holdings (3899.HK)
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