In today’s briefing:
- Siam Commercial Bank (SCB TB) – Let the Games Begin
- Hong Kong Exchanges & Clearing – Negative Jaws
- Astra International (ASII IJ) – Rock Solid
- China Evergrande Group – Drop In The Bucket
- Angelalign Technology (6699.HK) – Uncertain Growth Outlook
- Strong Quarterly Results And New $3B Share Repurchase Plan
- Malayan Banking – Heightened Credit Risk
- Square Pharmaceuticals (SQUARE BD): Recent Policy Changes Open Up International Opportunities
Siam Commercial Bank (SCB TB) – Let the Games Begin
- Siam Commercial Bank (SCB TB)recently published a solid set of results reflecting the gradual recovery of its core banking business and increasing digitalisation of its customers base.
- The real excitement will come with the formation of SCBX, involving the reallocation of excess capital, which will be invested in adjacent lending and high-growth technology businesses.
- Siam Commercial Bank (SCB TB)trades at a slight premium to peers on 0.92x FY2022E PBV but has the potential to generate higher returns, which should lead to further re-rating.
Hong Kong Exchanges & Clearing – Negative Jaws
- HKEX reported a weak set of 4Q21 earnings results of HKD 2.7 bn, declining HKD 577 mn (17.7%) linked quarter, driven by the decline in cash ADT and higher costs;
- Derivative activity remained flattish linked quarter with contract volume at 507 thousand – despite the successful launch of the MSCI China A50 Connect (HK A50); and
- With HIBOR set to increase, HKEx is likely to become more reliant on lower quality investment income.
Astra International (ASII IJ) – Rock Solid
- Astra International (ASII IJ) FY2021 results reflect a rapid recovery in its core auto business plus commodity-related businesses, with +96% YoY net profit growth stripping out Bank Permata (BNLI IJ).
- The auto and related finance businesses should continue to perform well in 2022, with government luxury tax stimulus measures in place plus commodity prices will support United Tractors’ performance.
- Astra International (ASII IJ) remains a top pick for the economic recovery in Indonesia plus the company continues to look for investment opportunities to redeploy funds raised from Permata sales.
China Evergrande Group – Drop In The Bucket
- In a move to shore up liquidity, but not to repay debt, Evergrande has sold stakes and “right to debt” in four development projects to SOEs at “fire sale” prices;
- Only USD 47.2 bn in liabilities to go Chairman Hui, but didn’t you say less than two weeks ago “no fire sales”?; and
- Municipalities, investors, and CINDA are picking off Evergrande assets on the cheap as well.
Angelalign Technology (6699.HK) – Uncertain Growth Outlook
- Currently, Angelalign could not be compared with Align Technology in many aspects, but Angelalign’s PE/TTM indicates it may have already overdrawn the performance of the next few years.
- The growth outlook of Angelalign has uncertainties. Any deceleration in revenues and profits in any given year is likely to lead to a significant valuation correction.
- High valuation cannot be supported without certainty of growth. Therefore, based on our analysis, our view is that Angelalign could be a short-term trade, but not long-term hold.
Strong Quarterly Results And New $3B Share Repurchase Plan
- Moderna Inc (MRNA US) , the leading biotechnology company and producer of mRNA-based COVID-19 vaccine Spikevax, reported total revenue of ~$18.5B and net income of $12.2B in CY’21.
- Management announced a new $3B share repurchase plan and fully utilized the previous $1B buyback program as valuations looked attractive.
- We expect the company will generate ~$22.1B of free cash flows from CY’22 through CY’24, and we would be buyers on any weakness in Moderna.
Malayan Banking – Heightened Credit Risk
- Maybank reported 4Q21 NPAT of MYR 2.1 bn, improving MYR 372 mn (22.1%) linked quarter, reflecting revenue improvement across the board and a provision cut;
- Net new NPLs aggregate MYR 2.3 bn, intimates an 83.4% QOQ increase in problem loans on an annualized basis; and
- Maybank was less than aggressive provisioning, and now an MYR 8.0 bn reserve shortfall exists today in its loan loss reserve or three quarters of NPAT.
Square Pharmaceuticals (SQUARE BD): Recent Policy Changes Open Up International Opportunities
- Square Pharmaceuticals (SQUARE BD) has received permission from the Bangladesh Bank to invest overseas, after the government issued new rules for overseas investment.
- Per initial plan, Square Pharmaceuticals will invest $1 million in Philippines, which is the third largest ASEAN region. The company’s Kenya manufacturing facility is expected to start production soon.
- During H1FY22, Square Pharmaceuticals revenue growth of 17% outpaced the industry growth. The company generated higher net margin than its closest competitors.
Related tickers: Siam Commercial Bank Pub Co (SCB.BK), HKEX (0388.HK), Astra International (ASII.JK), Evergrande (3333.HK), Angelalign Technology (6699.HK), Malayan Banking (MBBM.KL)
Before it’s here, it’s on Smartkarma
