In today’s briefing:
- Monex – Bitcoin Breakdown Means This Needs a Hedge
- Livestreaming E-Commerce – How the Sector Might Evolve After Viya Fine
- China Evergrande Group – Razing Cain
- Fast Retailing: An Earnings Miss Could Be Around the Corner
- Shinpoong Pharmaceutical (019170 KS): Three Concerns Are Clouding the Upside Potential
- SCC: CBM & Packaging Are White Knights to Drive 2022 Earnings
- PSL: Healthy Freight Rate Is Expected to Be Remained in 2022 and 2023
- SCB: Focusing on Quality of Growth
- HWKN: Outlook of a Beat
Monex – Bitcoin Breakdown Means This Needs a Hedge
- We said previously that we would remain positive on Monex until there were signs of a crypto currency breakdown.
- That now appears to be happening and we are thus leery of the pure long trade here.
- However, earnings trends are reasonable and we still like the name so we would examine hedging options.
Livestreaming E-Commerce – How the Sector Might Evolve After Viya Fine
- Viya, China’s livestreaming queen, was fined RMB1.34 billion (USD210 billion) for tax evasion and related offences in 2019 and 2020 and her internet presence erased
- This exposes existing risks in the livestreaming sector including over-dependence on top KOLs, additional layer of costs and sector-specific regulatory crackdown
- In this Insight, we examine the cost structure of livestreaming e-commerce and discuss the Viya incident’s implications on the livestreaming e-commerce sector
China Evergrande Group – Razing Cain
- Bad To Worse:Under mainland China’s real estate development law, the government has the right to repossess idle land sold to any developer without compensation;
- Demolition Man: Danzhou City is now in on the act, forcing China Evergrande Group (3333.HK) [Evergrande] to demolish 39 buildings for various violations; and
- Banks To Eat This As Well: Without any compensation to Evergrande, mainland Chinese banks no doubt will finally be writing down their exposure on Evergrande’s now non-existent buildings.
Fast Retailing: An Earnings Miss Could Be Around the Corner
- It is going to be challenging for Fast Retailing (9983 JP) to meet the 1QFY22 consensus revenue and OP, when it releases the first quarter results next week.
- Comps were quite strong in the last year, driven by pent-up demand and consensus is expecting 1QFY22 to be marginally higher than the same period of the previous year.
- We think there could be a substantial miss in 1QFY22, driven by lower than expected performance in Uniqlo’s Japan and Chinese businesses.
Shinpoong Pharmaceutical (019170 KS): Three Concerns Are Clouding the Upside Potential
- Shinpoong Pharmaceutical (019170 KS) management is accused of raising KRW 25 billion in slush funds. If found guilty, the shares may be suspended to trade in the stock exchange.
- The company’s oral COVID-19 drug is in phase 3 trial. However, late entry and uncertainty over the efficacy of multiple variants of the COVID are dampening sentiment.
- Shinpoong Pharmaceutical is investing heavily in R&D to build-up a rich pipeline, which will pressurize profit in near-term.
SCC: CBM & Packaging Are White Knights to Drive 2022 Earnings
- We expect 4Q21 earnings to recover from 3Q bottom quarter, driven by higher petrochemical spreads, gradual rise in CBM demand volume, and consolidation in packaging business.
- Expect 4Q21 revenue to grow both YoY and QoQ, through higher chemical prices, and cement demand from resumption of construction projects.
- Maintain positive on 2022 outlook, following reopening economic activities should see demand recovery for both CBM and packaging units. Likewise, chemical spreads are cushion by higher prices, despite feedstock hike.
PSL: Healthy Freight Rate Is Expected to Be Remained in 2022 and 2023
- We anticipate TCE rate for small-medium ships (Handysize and Supramax) to stay at high profitable level throughout 2022-23E supported by an absence of fleet supply glut issue given
- We expect China’s imports of iron ore and agriculture products to remain muted at least until 1H22,which is likely to pressured TCE rate for dry bulk carriers to come down
- We expect PSL to report 4Q21 net profit at Bt1,431m (-5%QoQ, +5120%YoY), a slight drop from all-time high level in 3Q21.
SCB: Focusing on Quality of Growth
- We expect SCB’s net profit to strongly rise 50% YoY to Bt7.4bn in 4Q21, underpinned by lower provisions and higher net fee income. But the profit is likely
- Thai economy is expected to be stronger in 2022 due to higher consumptions and continued rise in exports.An improvement in economic activities would boost new loan demands and ease NPLs
- SCB will concentrate on supporting existing customers rather than acquiring new ones in 2022. It will expand non-interest income from wealth management, insurance, and investment rather than aggressively provide loans.
HWKN: Outlook of a Beat
- HWKN used the backdrop of the holidays to add to its water treatment business, but the catalyst for fiscal third quarter (December) results could be the health and nutrition segment
- The health and nutrition segment experienced an increase in sales in FYQ2 due to the late summer wave of COVID-19. Current COVID-19 wave could result in FYQ3 sales also increasing
- HWKN was already benefiting from growth in the water treatment business and higher chemical prices
Related tickers: Monex Group Inc (8698.T), Alibaba Group (BABA.N), Evergrande (3333.HK), Fast Retailing (9983.T), Shinpoong Pharmaceutical (019170.KS), Siam Cement (SCC.BK), Precious Shipping (PSL.BK), Siam Commercial Bank Pub Co (SCB.BK), Hawkins Inc (HWKN.O)
Before it’s here, it’s on Smartkarma
