Equity Bottom-Up: Del Monte Pacific, Coinbase, Yamazaki Baking, BeiGene Ltd, Melco Resorts & Entertainment, SITC International, Posco International Corporation, The Walt Disney Co, Elastic NV, JCET Group and more

For our next Corporate Webinar we are glad to welcome Del Monte Pacific (DELM SP) Chief Corporate Officer Ignacio (Iggy) Sison and Investor Relations Manager Jennifer Luy.

In the upcoming webinar, Jennifer and Iggy will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 15 March 2022, 17:00 SGT.

Dual-listed on the SGX and the Philippine Stock Exchange, Del Monte Pacific Limited is a global branded F&B company that offers premium quality, healthy products. These include packaged fruit, vegetable and tomato, sauces, condiments, pasta, broth, stock, juices, and frozen pineapple under various brands – it also sells fresh pineapples under the S&W brand.

It is proud of its heritage brands – Del Monte, S&W, Contadina, and College Inn – some of which originated in the USA more than 100 years ago. The Group has exclusive rights to use the Del Monte trademarks for packaged products in the United States, South America, the Philippines, Indian subcontinent, and Myanmar, while it owns S&W globally except for Australia and New Zealand. The Group owns the Contadina and College Inn trademarks in various countries.

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.

• Coinbase reported strong Q4 results mainly driven by a significant increase in its transaction revenue.
• Bearish outlook in Q1’22 and FY22 due to the higher expense guidance from the management and declining crypto asset price and volatility in Q1.
• Albeit the bearish outlook, we continue to view that Coinbase represents one of the best ways for public equity investors to gain exposure to the growing crypto economy. 

• Yamazaki Baking (2212 JP) raised prices in January 2022 due to rising oil prices. We are expecting another price hike very soon to reflect the 60% increase in wheat prices.
• These price hikes may not increase Yamazaki Baking’s 2022 OP margin significantly above the guided level.
• However, once input prices normalise following the Russia Ukraine war, we could see Yamazaki Baking’s OP margin reaching 4.0% in the medium term.

• After raising over RMB70 billion,investors have much higher expectation on BeiGene than other biotech/biopharma, because BeiGene is “different”,but the real pressure will come over the next two or three years.
• Will BeiGene become China’s first truly international pharmaceutical company, or be dragged into mediocrity by the failure of key trials or the failure of commercialization to meet the market’s expectations?
• It is attractive if the market value is below US$20 billion. However, considering the Russia-Ukraine war and other potential external uncertainties, we advise investors to keep alert.

• We have guided bullish on Melco Resorts & Entertainment as an early bet on the improving conditions for its Philippines Entertainment Zone property and other group catalysts.
• GGR in Entertainment City Zone rose 20% in 2021 to US$1.35b–pandemic easing.
• Total industry Philippine GGR  for 2021 was up 14.5%  to $2.2b despite a decline in government run Pagcor casinos which had more widespread lockdowns.

• SITC International (1308 HK) achieved a record net profit which surged 2.3x in FY21, but our concern is that much of news has been well in the share price.
• While management is optimistic on its outlook, we think challenges are higher costs (port, bunker and charterhire) and little room for further significant freight rate increase. 
• Its 6.7x P/B for FY22F has well reflected its quality but with ROE likely to dip back in FY22 and FY23, we think upside does not look impressive.

• In this insight, we review Warren Buffett’s stakes in Japanese trading  companies and review investment opportunities in Korean trading companies amid a war between Russia and Ukraine. 
• The recent war between Russia and Ukraine has resulted in higher commodities prices. This has boosted the share prices of commodities related companies globally, including Japanese and Korean trading companies.
• We would focus on GS Global Corp, Hanwha Corporation, Posco International Corporation, and LX International as Korean trading companies that could continue to outperform the market amid war in Ukraine. 

• Disney announced a new ad-based tier for Disney+ last week.
• The decision to go this direction may imply market saturation, rising competitive intensity, or an inability to hit its subscriber targets organically.
• Disney’s streaming business is increasingly dominated by low value Hotstar+ subs

• Elastic NV (ESTC US) , a leading search technology company, reported strong Q3 FY’22 results that topped estimates. Cloud revenue surged 79% year-over-year, and free cash flow was ~$3M. 
• Elastic NV (ESTC US)  shares underperformed in CY’22, with shares down ~37% YTD versus a ~29% loss on the WCLD – WisdomTree Cloud Computing Fund. 
• Shares of Elastic jumped to ~$87.00/share after the company reported third-quarter earnings the previous week, but then the stock erased early gains due to broader sell-off in tech shares. 

• The 1st quarter is relatively a lower season. Therefore, we expect that the revenue/NM is about RMB$8. 7bn/9.0% in 1Q22 respectively, which declines ~10% QoQ and grow 30% YoY. 
• To our understanding, QCOM is still the biggest client in JCET. The rest of clients have changing a bit in JCET since Huawei was being driven out.
• Overall speaking, China is devoted in developing OSAT (Outsource Semiconductor Assembly and Packaging) business, and the gap shall be close to ASEH and Amkor.