Equity Bottom-Up: Sea Ltd, W Scope Corp, Eubiologics and more

In today’s briefing:

Sea Ltd.’s Money Machine Is Broken, Downside Is Not Fully Priced-In
W Scope (6619): Wrong Victim of Nickel Price Surge
EuBiologics (206650 KS): Base Business Recovery; COVID Vaccine Undergoing Phase 3 Trial

Sea Ltd.’s Money Machine Is Broken, Downside Is Not Fully Priced-In

Perhaps, misled by the Chinese tech rally due to the change in stance from the Chinese Government, Sea’s shares rose by 33% compared to the broader market’s 8.3%.
With fundamentals deteriorating and the Federal Reserve signalling an aggressive rate hike outlook, Sea Ltd (SE US)’s 33% move seems unwarranted.
Meanwhile, the downside potential is quite significant as Sea trades at a significant FY+2 EV/Sales premium to regional peers whose cyclical bottoms are unknown.

Nickel price was the catalyst for the share price underperformance in the last 2 weeks, especially after the Russian invasion of Ukraine which drove it up to a 100% increase.
Its main product is a lithium-ion secondary battery separator that is critical for rechargeable battery safety. Thus the sell-off due to the higher commodity price especially nickel is unwarranted.
W Scope Corp (6619 JP) share price has underperformed the NCM and LFP battery makers presents a compelling buying opportunity.

Eubiologics (206650 KS) signed contract with UNICEF to deliver 67.1 million doses of its oral cholera vaccine, Euvichol-Plus, through 2023. Euvichol-Plus is the cash cow for the company.
The company’s COVID-19 vaccine EuCorVac-19 is in phase 3 trial and is one of the early movers among Korean vaccine manufacturers in terms of clinical timeline.
EuBiologics has successfully diversified portfolio and its pipeline of non-cholera vaccine and non-vaccine product candidates are also progressing, thereby lending long-term visibility beyond COVID.

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