In today’s briefing:
- Netflix 4Q21: Don’t Look Down
- MediaTek (2454.TT): 1Q22 Preview-A Little Bit Higher in Revenue Outlook
- Organo (6368 JP): From Taiwan to the U.S.
- TOP: Solid Refinery Margin to Drive 4Q21 Performance
- KT Corp: Near 6% Dividend Yield, Stock Swap with Shinhan Bank, IPO of K-Bank, & Shift to Value
- PT Metrodata Electronics (MTDL IJ) – Everything Is Digital, Digital Is Everything
- BBL: Strong Growth Rebound and Improving Asset Quality
- BCH: Share Price Exaggerated COVID Restrictions Easing
- COLL: Risks Abundant with No Guidance
- Banorte (GFNORTEO MM): 4Q21 Reveals Sound Asset Quality, but Returns Recovery Challenged in 2022
Netflix 4Q21: Don’t Look Down
- Shockingly poor 1Q subscriber guidance implies 9M net adds for 2022, well below the ~25M level investors are accustomed to, implying saturation, competition, or both. (We think both)
- Operating Margin guidance cut blamed on FX, we think more likely the demand for heightened content spend due to competition.
- Netflix valuation always built on a long term DCF…very sensitive to downward revisions in subscribers and ARPU…we think Netflix settles around $400 until it can disprove bear thesis.
MediaTek (2454.TT): 1Q22 Preview-A Little Bit Higher in Revenue Outlook
- In our estimate, the 4Q21/1Q22 revenue/GM is about NT$127.6bn/47.5% and NT$136bn/47.5% respectively.
- We forecast MediaTek to ship 4G/5G for ~355mn/220nm chipsets in 2022 respectively.
- Besides Oppo, Vivo, Xiaomi and Honor, MediaTek is shipping for a few thousand sets of Dimensity 9000 to Samsung in 1H22.
Organo (6368 JP): From Taiwan to the U.S.
- New orders are running ahead of sales as semiconductor capital spending continues to rise and the company follows TSMC to Arizona.
- Water treatment for the semiconductor industry is of growing importance as more emphasis is put on recycling.
- Share price up, but still reasonably valued. 3Q results should be out the first week of February.
TOP: Solid Refinery Margin to Drive 4Q21 Performance
- We expect TOP to post a solid 4Q21 net profit of Bt5.1bn (-30% YoY, +146% QoQ).
- The growth will be supported by solid spike in GRM. which should increase to US$5.5/bbl, up from US$1.2/bbl in 4Q20 and US$1.6/bbl in 3Q21,backed by strong rise in product spreads
- The Aromatics & LAB, and Lube base oil contribution should soften QoQ due to 25 to 50%decline in product spreads.However, overall base GIM should increase to US$7.1/bbl,(+97% YoY, +29% QoQ).
KT Corp: Near 6% Dividend Yield, Stock Swap with Shinhan Bank, IPO of K-Bank, & Shift to Value
- KT Corp (030200 KS) is expected to have a solid, near 6% dividend yield in 2022.
- KT’s partnership with Shinhan Bank is a strategy to accelerate KT’s transformation in the digital business.
- KT is currently trading at 0.5x P/B, which is at a steep discount to its liquidation value.
PT Metrodata Electronics (MTDL IJ) – Everything Is Digital, Digital Is Everything
- PT Metrodata Electronics (MTDL IJ) continues to be an increasingly interesting play on the growth in Indonesia’s digital economy and digitalisation, especially for banks and fintech.
- The company’s distribution business saw strong growth in 2021, offsetting the slower growth in Solutions & Consulting, which was impacted by project delays but will rebound in 2022.
- Management remains optimistic on the growth outlook for 2022, driven by strong momentum behind digitalisation and economic recovery driving ICT demand. Valuations are attractive given its exposure to growth segments.
BBL: Strong Growth Rebound and Improving Asset Quality
- Maintain our BUY call with a target price of Bt162. Our BUY call reflects steady earnings growth; a resilient balance sheet; and undemanding valuation.
- Net profit in 4Q21 came in strong and in line with expectations. Net profit increased 164% YoY (-9% QoQ) thanks to higher operating income.
- Asset quality improved. The NPL ratio surprisingly lowered to just 3.2% in 4Q21 (2020: 3.9%).
BCH: Share Price Exaggerated COVID Restrictions Easing
- Maintain HOLD rating, with a TP of Bt21, based on 23xPE’22E,which is close to -1SD of its 10-years trailing average. The 30% drop in share price from its August 21
- Yesterday, the Centre for COVID-19 Situation decided to relax some restrictive measures including a revision to the colour-coded zoning and resuming Test&Go registration for foreign travelers starting from 1 Feb
- Expect 4Q21 earnings at Bt1.3bn (+384%YoY,-54%QoQ), tumble by weak margin due to the Covid cases declined 69%, but partially offset by pent-up demand for core services
COLL: Risks Abundant with No Guidance
- COLL has yet to issue their annual revenue forecast after three consecutive years of providing such guidance, leading us to assume 2022 could be challenging than current consensus estimates imply
- XtampzaER revenue declined in third quarter 2021 with COLL facing difficulty in getting physicians to switch prescriptions. The slowdown in XtampzaER revenue has been the core of our investment thesis
- COLL has a balance sheet liability of $191.7 million related to rebates, returns, and discounts. This liability has grown faster than revenue
Banorte (GFNORTEO MM): 4Q21 Reveals Sound Asset Quality, but Returns Recovery Challenged in 2022
- Banorte delivered a mixed bag of quarterly results, with eroded interest margins and accelerating opex growth; insurance recovered slightly in 4Q, but pandemic claims still weighed on full year results
- The bank balance sheet, with a core capital ratio of 15%+ and the NPL ratio at 1%, is reassuring but we believe that the cost of credit is unsustainably low
- Recovering insurance earnings will add to 2022 group returns, but will not, we believe, offset the far larger Banorte bank, challenged by opex growth and a higher cost of risk
Related tickers: Netflix Inc (NFLX.O), Mediatek Inc (2454.TW), Organo Corp (6368.T), Thai Oil Pcl (TOP.BK), KT Corp (030200.KS), PT Metrodata Electronics (MTDL.JK), Bangkok Bank Public (BBL.BK), Bangkok Chain Hospital (BCH.BK), Collegium Pharmaceutical (COLL.O)
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