In today’s briefing:
- SMIC (0981.HK): Raising CapEx to $5bn in 2022. Exciting News, or Fierce Competition Ahead?
- China Evergrande Group – Just Stop the Nonsense
- Comfortdelgro (CD): Reopening and Green
- Korea Small Cap Gem #15: Vitzrocell Co
- PPIH: Q2 Should Ease Concerns on Profitability & Help The Share Price Return to Pre Q1 Level
- Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – The Strength and the Concerns
- IndiaBulls Housing Finance – Manufactured Bottom-Line
SMIC (0981.HK): Raising CapEx to $5bn in 2022. Exciting News, or Fierce Competition Ahead?
- SMIC had reported a very exciting outlook in 1Q22, and both of revenue and GM are rising up to US$1,817~1,848.7mn and 36~38% respectively, which is growing at 15~17% QoQ.
- SMIC plans to expand capacity in Shenzhen, Tianjin and Beijing in 2022 because of the unprecedently foundry demands. The Capex plan is ~US$5bn in 2022, which’s lager than UMC’s US$3bn.
- China is still 3-4 generations behind TSMC, which is a big gap to catch up with.
China Evergrande Group – Just Stop the Nonsense
- Be a hero, just take Evergrande to zero. The scrip isn’t worth the paper their written on;
- Without an Act of God, the likelihood that Evergrande has enough liquidity and will not have a fire sale of assets is nil; and
- Major creditor, China Cinda, be placed in charge creates a massive conflict of interest that no investor or creditor should get comfortable with.
Comfortdelgro (CD): Reopening and Green
- Southeast Asia has started to reopen amid increasing Omicron cases including Malaysia and Vietnam.
- Singapore has extended its F1 contracts for the next 7 years and there will be an F1 night race this year in Singapore, boosting the likelihood of reopening.
- More than 80% of its buses are Euro 5 compliant, creating a case for green transportation.
Korea Small Cap Gem #15: Vitzrocell Co
- Vitzrocell (082920 KS) is the 15th company in our Korea Small Cap Gems series.
- Vitzrocell is the domestic leader in lithium-based primary batteries. In the global market, it is considered as one of the top three players along with SAFT (France) and Tandiran (Israel).
- On 3 February, it was reported that Scion Asset Management increased its stake in the company to 5.25% (as of 26 January 2022).
PPIH: Q2 Should Ease Concerns on Profitability & Help The Share Price Return to Pre Q1 Level
- PPIH beat consensus 2QFY22 OP by 8.6% last week following a dismal 1QFY22 which saw quarterly OP fall 30.7% YoY due to lower sales of seasonal products and price competition.
- Q2 results showed investors that Q1 was a temporary blip and Pan Pacific International Holdings (7532 JP) managed to catch up most of the lost ground in the second quarter.
- Currently down 30% due to Q1 weakness, We predict PPIH’s share price to bounce back to the pre-Q1 earnings level over the next few weeks.
Zhangzhou Pientzehuang Pharmaceutical (600436.CH) – The Strength and the Concerns
- In terms of the business model,the uniqueness and scarcity of Pien Tze Huang keep the market demand at high level,supporting its strong ability to raise prices and establish high moat.
- The concerns on single product risk, scare raw materials and inadequate production capacity would cast a shadow over the Company’ future development.
- The breakthrough point lies in whether the Company can make use of the unique advantages generated from “Pien Tze Huang” series to cultivate a second strong growth point in time.
IndiaBulls Housing Finance – Manufactured Bottom-Line
- IndiaBulls reported FY 3Q22 results of INR 3.0 bn, improving INR 167 mn (5.8%) linked quarter; results were of poor quality;
- Net new NPLs had increased INR 7.1 bn for the quarter for an annualized rate of increase of 139.6%; and
- Given the continued break in credit, loss reserves appear light close to INR 28 bn – representing seven quarters of PBT and 17.1% of stated equity.
Related tickers: Semiconductor Manufacturing International Corp (SMIC) (0981.HK), Evergrande (3333.HK), Comfortdelgro Corp (CMDG.SI), Vitzrocell (082920.KQ), Pan Pacific International Holdings (7532.T), Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436.SS), Indiabulls Housing Finance (INBF.NS)
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