In today’s briefing:
- PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.
- Burning Rock Biotech (BNR US): Attractive Growth Story Outshined by Surging COVID Cases in China
- SIS: Cloud and Cybersecurity Will Be the New Main Focus for Growth
- Mitra Keluarga (MIKA IJ) – Back On a Digitally Enhanced Expansion Tack
- HHC: Asset Sales and Buybacks
- After Falling 50%+ in a Few Months Is Nokian Renkaat (TYRES FH) A “Buy” Or “Sell”?
- M: Expect Strong Earnings Recovery in 1Q22
- SCB: More Challenging Ahead from New Regulations
PC Partner: Record FY21 Results and Strong Dividend. Cash Is 70% of Market Cap. Fair Value 18 HKD.
- Pc Partner posted record results with revenue and profits increasing by 99%% and 1,047% respectively. The final 1.61 HKD dividend was below my 2 HKD estimate but still solid.
- Cash grew to 3.1 b HKD vs a market cap of 4.37 b HKD, or 70% of market cap. By end of FY22 cash could be 100% of market cap.
- The outlook is mixed with short-term ASP pressure into 2Q22 but longer-term optimism into 2H22. As always visibility is low but offset by a cheap valuation and large cash buffer.
Burning Rock Biotech (BNR US): Attractive Growth Story Outshined by Surging COVID Cases in China
- Burning Rock Biotech (BNR US) shares plunged 35% since I published bearish insight on the company in November. Weak Q3 results, slower recovery, and the U.S.-China conflict remained major overhangs.
- However, the shares are now trading at two-week high, as the company received approval for its second NGS kit in China and reported slightly better-than-expected Q4 results.
- Investors should continue to avoid Burning Rock shares for near-term and wait for COVID cases to subside in China and resolution of the U.S.-China conflict.
SIS: Cloud and Cybersecurity Will Be the New Main Focus for Growth
- Analyst meeting came out with positive tone. Cloud and cybersecurity businesses should grow rapidly over the next few years.Current inventory stock provides 4 to 6 months buffer from Chinese lockdown
- We believe that cloud and cybersecurity will drive earnings at a CAGR of 18.5% between 2021-24E, led sales growth at 8.6% CAGR and slightly improved margins. Management maintains strong outlook
- We expect 1Q22E earnings at Bt201m(+6%QoQ, +6%YoY)driven QoQ by GPM expansion. We recommend accumulating shares now as earnings in 1H22 should be the lowest of the year due to seasonality.
Mitra Keluarga (MIKA IJ) – Back On a Digitally Enhanced Expansion Tack
- Mitra Keluarga Karyasehat Tbk (MIKA IJ) booked a strong set of FY2021 results driven by both COVID treatments and the start of a recovery in its core base case business.
- The company is back on an expansion tack in 2022, with increased capex and new hospital openings plus an increasing focus on digital initiatives.
- Mitra Keluarga Karyasehat Tbk (MIKA IJ) remains a core proxy for the growing penetration of healthcare in Indonesia and valuations are attractive versus history.
HHC: Asset Sales and Buybacks
- HHC is one week away from hosting its investor day and the Company has already presented value creation initiatives.
- HHC has a portfolio of non-core assets management has been slowly selling to go along with the funds from operation HHC’s master planned communities (“MPC”) generate.
- HHC’s stock continues to undervalue the funds from operation the MPCs are generating
After Falling 50%+ in a Few Months Is Nokian Renkaat (TYRES FH) A “Buy” Or “Sell”?
- Has the Russia/Ukraine Conflict’s Impact On Tire Retail Distribution and Manufacturing Been Priced In?
- Have The Impact of Higher Raw Materials Costs Already Been Factored Into Margin Expectations?
- Will Gasoline Prices Negatively Impact Miles Driven and Slow Replacement Cycles?
M: Expect Strong Earnings Recovery in 1Q22
- We reiterate our BUY rating for M with a target price of Bt61.0 based on 25xPE’22E, Asia ex-Japan consumer staple sector.
- We expect M to report net profit of Bt393m in 1Q22 (+343%YoY, -2%QoQ) driven by a positive same-store-sales-growth (SSSG) in three main brands (MK, Yayoi, and Laem Charoen Seafood)
- We forecast earnings to bounce back to Bt2.2bn in 2022 and continue to grow at 14%CAGR(2023-24) supported by 1) solid recovery in SSSG after resuming dine-in services together with restoring
SCB: More Challenging Ahead from New Regulations
- Maintain BUY with a target price of Bt149.Our BUY call reflects steady earnings growth,resilient asset quality, and compelling valuation. Our valuation is derived from the Gordon Growth Model (ROE 9.5%
- Net profit will likely rise 2% YoY (+30% QoQ) in 1Q22 given higher net interest income from elevated loans and lower provisions.
- The S&P Global Rating downgrade will likely have minimal impacts on SCB’s fundamentals.
Related tickers: PC Partner (1263.HK), Burning Rock Biotech (BNR.OQ), SiS Distribution (Thailand) PCL (SIS.BK), Mitra Keluarga Karyasehat Tbk (MIKA.JK), Howard Hughes Corp (HHC.N), Nokian Renkaat Oyj (TYRES.HE), MK Restaurants Group (M.BK), Siam Commercial Bank Pub Co (SCB.BK)
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