In today’s briefing:
- Grab 4Q2021: Heavy Spending on Customer and Driver Incentives Hurts Earnings
- Snowflake 4Q22 Earnings: What a Buying Opportunity
- Edvantage – Solid Execution Not Priced In
- Coupang: No Substance to The Steady State EBITDA Guidance
- HDFC BANK: Steady As She Goes
- Renesas – Synergies Outperform and Some Potentially Bad News for Arm
- IHI (7013 JP): Ukraine Puts the Spotlight on Japanese Defense Contractors
- Rajshree Polypack (RPPL): Margin Expansion Led The Q3FY22 Earnings Growth
- MediaTek (2454.TT): We Expect High-End 5G Smartphone Chipset Will Aim at 10-14% Shipment in 2022.
- Bilibili (BILI): 4Q21, Slow Than Expected, But Many Positive Signals
Grab 4Q2021: Heavy Spending on Customer and Driver Incentives Hurts Earnings
- Grab (GRAB US) reported 4Q2021 results yesterday (before market). IFRS revenue decreased 44.29% YoY to $122m (vs consensus $219m) compared to $219m in the same quarter a year ago.
- Adjusted EBITDA (loss) for the quarter was -$305m (vs consensus -$206m) compared to -$102m a year ago as the company heavily spent on incentives to attract and retain drivers.
- Grab’s shares have lost almost 40.0% during intra-day trading as its growth story did not bode well with the investors.
Snowflake 4Q22 Earnings: What a Buying Opportunity
- Snowflake dropped another monster quarterly result, with product revenues growing 102%, with rising margins and FCF generation.
- The 30% after hours drop was insane due to a misunderstanding of revenue guidance.
- An incredible entry point for those who wanted to buy Snowflake but were waiting for it to return to the low $200s
Edvantage – Solid Execution Not Priced In
- Edvantage Group (382 HK), a play on higher education and vocation in China, now trades at 4.9x FY22e/3.8x FY23e. Concerns over the regulatory overhang are overdone, although they do exist.
- With a 30% payout ratio, the stock now trades at dividend yields of 6.1% FY22e/7.9% FY23e, assuming an EPS CAGR of 30% from FY21-23e.
- The company continues to execute positively in its release in Q1 FY22 with a 62% increase in gross profits YoY, and it has low gearing at 21.7% net debt/equity.
Coupang: No Substance to The Steady State EBITDA Guidance
- With attention on profitability of e-commerce increasing, Coupang provided guidance on its steady state margins. However, it lacked substance and only slightly better than consensus medium term expectations.
- Coupang (CPNG US)’s 4Q21 results, released after markets closed yesterday, was also disappointing as both revenue and OP fell short of consensus expectations.
- With the fair valuation as low as 50% of the current valuation, we think this earnings miss offers an opportunity on the short side with 50% potential returns.
HDFC BANK: Steady As She Goes
- HDFC Bank continues to make steady efforts on the digitization front as it gears up to be a digitally savvy bank. It has been revamping its apps, PayZapp and Smartbuy.
- HDFC Bank (HDFCB) posted steady growth and improvement in asset quality in Q3FY22. The growth focus and risk-on stance is back in the retail book with normalization of the environment.
- While HDFCB’s stock has been under pressure over the past 1Y, we believe apprehensions around its restructuring book and the impact on its payments led fee business are overdone.
Renesas – Synergies Outperform and Some Potentially Bad News for Arm
- Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog.
- The strong overall growth outlook and progress offering integrated solutions was also emphasised.
- However, what we found most interesting was some of their commentary on RISC-V developments.
IHI (7013 JP): Ukraine Puts the Spotlight on Japanese Defense Contractors
- IHI likely to benefit from rising defense spending as events in Ukraine serve as a wake up call to a Japan already worried about North Korea and China.
- Japan’s top maker of jet engines and solid-fuel rockets. Also geared to the recovery of commercial air traffic and auto production, and to carbon neutral technologies.
- Sales and profit recovery underway. 60% upside to 15x FY Mar-24 EPS estimate.
Rajshree Polypack (RPPL): Margin Expansion Led The Q3FY22 Earnings Growth
- RPPL reported decent Q3FY22 earnings as gross margins expanded to 36.9% vs 33.7% QoQ and EBITDA margins expanded to 13.7% vs 13.5% QoQ.
- The margin expansion seems to have been led by higher utilization of finished goods and WIP inventory which helped in curtailing adverse impact of volatility in raw material pricing.
- The material decline in depreciation and amortization expenses by 13% QoQ is likely due to consolidation of the Unit 1 and Unit 3 facilities.
MediaTek (2454.TT): We Expect High-End 5G Smartphone Chipset Will Aim at 10-14% Shipment in 2022.
- We expect MediaTek Dimensity 8000/8100 and 9000 are targeting shipment of ~30-40mn and 5-10mn sets respectively, which means high-end 5G smartphone chipset will aim at 10-14% 5G shipment in 2022.
- We consider the inventory argument raised for China smartphone could be a kind of fake issue.
- In 5G era, the PMIC is about 2~3 times of 4G in size with the mature nodes.
Bilibili (BILI): 4Q21, Slow Than Expected, But Many Positive Signals
- The paying user base continued growing in 4Q21 and has space to grow further.
- Game revenue recovered for the second quarter, as the games launched last year began to earn money.
- BILI’s advertising revenue grew significantly faster than the market size of Chinese online advertising.
Related tickers: Snowflake Inc (SNOW.N), Edvantage Group (0382.HK), Coupang (CPNG.N), HDFC Bank (HDBK.NS), Renesas Electronics (6723.T), IHI Corp (7013.T), Mediatek Inc (2454.TW), Bilibili Inc (BILI.O)
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