In today’s briefing:
- Grab – The Fama Factor
- A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022
- Toyota – 11m Unit Production Target Is a Positive Surprise
- EC Healthcare (2138 HK): An Attractive Idea with Insider Buying and Continued Business Recovery
- Ping An Health (Part II): Health Mall Growth to Slow Down with Growing Competition
- Geely: Challenging Year Ahead, Share Price Reflects That
- COSCO Shipping Energy (1138 HK): When All the Bad News Is Out…
- UMC (UMC.US; 2303.TT) 4Q21 Financial Results/1Q22 Forecast: A Bit Higher in Revenue Outlook
- Maruti Suzuki – Are Profitability Improvements Enough?
- QH: 4Q21 Earnings Will Be the Peak Quarter in 2021
Grab – The Fama Factor
- The move by Grab and Singtel to take a combined 32.52% stake in Bank Fama, owned by Emtek (EMTK IJ) is a significant strategic move in digital banking.
- The Grab (GRAB US) consortium may increase its stake further given that the bank will need to raise future capital, especially given the magnitude of the initial stake.
- There is huge potential for Grab (GRAB US) and OVO to tap both their respective ecosystems to rapidly build Bank Fama’s customer base but competition will be fierce.
A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022
- In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.
- Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%.
- On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.
Toyota – 11m Unit Production Target Is a Positive Surprise
- The Nikkei is reporting that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023.
- That would imply a more than 20% YoY increase in production volumes.
- And that in turn is very positive news not just for Toyota but for several other auto-related names.
EC Healthcare (2138 HK): An Attractive Idea with Insider Buying and Continued Business Recovery
- EC Healthcare (2138 HK)’s Chairman and CEO acquired 543,000 shares at an average price of HKD9.1943 per share, thereby increasing his stake to 61.17% of the issued share capital.
- H1FY22 and preliminary results for Q3FY22 shows continued business recovery. Medical services, which contributes 52.5% of total revenue continue to be the key growth driver.
- In January, EC Healthcare acquired 55% equity interest in Bayley & Jackson Dental Surgeons Limited for HKD129 million. Bayley & Jackson operates seven dental clinics in Hong Kong.
Ping An Health (Part II): Health Mall Growth to Slow Down with Growing Competition
- This is the Second of a series of reports on Ping An Healthcare where we will be discussing the other three segments of the company.
- Health Mall is the largest revenue generator for Ping An Health but the segment is facing tough competition from other online healthcare providers which is negatively impacting its gross margins.
- Similarly, though revenue from Consumer Healthcare biz has seen strong growth, we expect the margins to remain under pressure due to increased focus on corporate customers who generate lower margins.
Geely: Challenging Year Ahead, Share Price Reflects That
- It would be very challenging for Geely to achieve its 2022 sales target of 1.65mn cars. However share price nearly halved from peak. Buy and wait for positive momentum.
- Zeekr 001 got new market pushback which are concerns besides supply chain issue. Lynk&Co seems have only facelifts for 2022
- Only Geely brand would launch new models to be the main sales booster.
COSCO Shipping Energy (1138 HK): When All the Bad News Is Out…
- We think the FY21 massive losses of Cosco Shipping Energy Transportation Co. Ltd. (H) (1138 HK) is a non-event, as reflected by the muted share price reaction following the pre-announcement.
- The huge impairment charges have positive implications as vessel values are reduced and earnings expectations have trimmed. This will lower the hurdle for CSET in the next two years.
- Focus should be on potential upside factors including recovery of tanker rate, higher LNG transportation contribution, rebound in vessel price and disposal gains and higher cost management incentives.
UMC (UMC.US; 2303.TT) 4Q21 Financial Results/1Q22 Forecast: A Bit Higher in Revenue Outlook
- Some investors are still questioning UMC if the inventory issues will become a problem. And UMC does not see the sign of inventory.
- The 4Q21/1Q22 revenue are NT$59.1bn/~NT$62bn, which are higher than our previous estimate by 1.7%/3.3% respectively.
- By 2024, UMC targets to grow revenue/ROE to US$10bn/>20% respectively.
Maruti Suzuki – Are Profitability Improvements Enough?
- Suzuki reported its 3QFY22 results on Tuesday with revenue of INR236bn (+15.0% QoQ, -0.2% YoY) and OP of INR12.5bn implying an OPM of 5.3% compared to 0.5% in 2QFY22.
- The reported revenue was 1.1% lower than the consensus estimates, while OP was 165.9% higher (INR7.8bn).
- That reads positive overall but we are concerned that margins are still not on track to achieve consensus estimates for next FY.
QH: 4Q21 Earnings Will Be the Peak Quarter in 2021
- Upgrade to BUY from HOLD rating and raise TP by 6%to Bt2.66 based on 11.8xPE’2022E, +1SD from its five-years trading average. Our rating factor in benefit from easing LTV policy
- We expect the peak quarter profit in 4Q21 at Bt522 m (-10%YoY, +99%QoQ), driven by higher housing revenue recognition and rising equity income especially from HMPRO
- Core operation in 4Q21 will be backed by secured backlog in 3Q21 worth Bt830m
Related tickers: Sony Corp (6758.T), Toyota Motor (7203.T), EC Healthcare (2138.HK), Ping An Healthcare and Technology Company Limited (1833.HK), Geely Auto (0175.HK), Cosco Shipping Energy Transportation Co. Ltd. (H) (1138.HK), United Microelectron Sp Adr (UMC.N), Maruti Suzuki India (MRTI.NS), Quality Houses (QH.BK)
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