In today’s briefing:
- Oriental Watch: Increasing Visibility on H2 2022
- Toyota – So About That Whole Tesla Being Years Ahead of The Competition in Autonomous Thing…
- Square Enix – A Beat, A Bump and More to Come
- Amazon 4Q21: Don’t Call It a Comeback, We’ve Been Here (Investing) For Years
- Snapchat 4Q21: A Quick Turnaround…And Why Facebook Didn’t Snapback
- Korea Small Cap Gem #13: Daehan Flour Mills
- MAJOR: Expect EBITDA to Turn Positive from 4Q21 and Onward to 2022
- Suzuki – Steady but Nothing Special
- TUEM: Inventory Leading Turnaround
Oriental Watch: Increasing Visibility on H2 2022
- We have increasing confidence in Oriental Watch (398 HK) paying out a > 74 cent dividend for FY22 ( implied dividend >40 cents for H2 2022, full-year yield 17%).
- Current net cash (ex-of dividend payable) is 1.1 bn HKD accounting for >50% of the market capitalization ( 2.1 bn HKD ), providing a significant margin of safety.
- Expanding watch premiums for brands like Rolex and Patek Philippe due to tighter supply could result in better margins for the company, increasing upside potential.
Toyota – So About That Whole Tesla Being Years Ahead of The Competition in Autonomous Thing…
- We have pointed out previously that the hype surrounding Tesla’s FSD system was delusional.
- We have always regarded their differentiating factor as simply being a greater risk tolerance for endangering the lives of their customers.
- However, some automakers are actually making efforts to improve safety… and they actually know what they are doing.
Square Enix – A Beat, A Bump and More to Come
- We said that we expected MMO Final Fantasy XIV to drive a strong beat and FY OP towards ¥70bn rather than consensus’ ¥55bn.
- With 3Q OP of ¥21.0bn easily beating consensus at ¥14.4bn we believe we are nicely on track.
- Oh and there were some tidbits about NFTs which should get some segments of the market interested.
Amazon 4Q21: Don’t Call It a Comeback, We’ve Been Here (Investing) For Years
- Prime price increased, Covid expenses starting to moderate, margins set to rise.
- Fulfillment buildout moderates, 1-day shipping can now launch more widely, share gains will ensue, revenue growth will reaccelerate.
- We reiterate Amazon as our Top 2022 long idea. We think its worth $6,000.
Snapchat 4Q21: A Quick Turnaround…And Why Facebook Didn’t Snapback
- Snapchat largely dispelled the Apple bear case, and should return to the mid $60s.
- Actual competitive differentiation vs. TikTok and Facebook means Snapchat’s user growth and engagement remain strong.
- Revenue growth will reaccelerate as it works through IDFA, but international monetization is the kicker.
Korea Small Cap Gem #13: Daehan Flour Mills
- Daehan Flour Mills is the 13th company in our Korea Small Cap Gems series.
- Daehan Flour Mills is one of the largest companies in Korea engaged in the flour milling industry. It provides various types of flour in Korea.
- Daehan Flour Mills, which is a deep value play, has just become very interesting since Lee Jong-Gak (honorary chairman and largest shareholder of the company), passed away on 3 February.
MAJOR: Expect EBITDA to Turn Positive from 4Q21 and Onward to 2022
- We expect the company’s operating performance to improve gradually from the bottom in 3Q21as there are number of quality movies to be released after been postponed upon restricted measures induced
- Expect the company to report Bt47m net profit in 4Q21, seven-quarter high in terms of core business operation
- EBITDA in 4Q21 is expected to turn positive as it driven by pent-up demand after lockdown together with impressive ticket sales from Spider-Man: No Way Home.
Suzuki – Steady but Nothing Special
- Suzuki reported its 3QFY22 results on Friday with revenue of ¥901bn (+8.8% QoQ, -0.5% YoY) and OP of ¥47.5bn implying an OPM of 5.3% compared to 5.3% in 2QFY22.
- The reported revenue and OP were 3.8% and 5.9% higher than the consensus estimates respectively.
- The company revised its full year revenue guidance to ¥3,400bn (¥200bn up from the previous guidance), while OP guidance remained unchanged on ¥170bn.
TUEM: Inventory Leading Turnaround
- TUEM reported fiscal second quarter (December) results surpassing our expectations as the Company maintained a steady flow of inventory at its stores during the holiday shopping season
- TUEM’s inventory is the underscoring importance in the performance. Consumers responded to the improved merchandise quality and without TUEM having to undertake any promotions
- COVID-19 slowed the momentum towards the end of the quarter, but this should prove temporary heading into the warmer months of 2022
Related tickers: Oriental Watch (0398.HK), Toyota Motor (7203.T), Square Enix Holdings (9684.T), Amazon.com Inc (AMZN.O), Snap Inc (SNAP.N), Daehan Flour Mills (001130.KS), Major Cineplex Group (MAJOR.BK), Suzuki Motor (7269.T), Tuesday Morning (TUEM.OQ)
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