In today’s briefing:
- TSMC (TSM.US; 2330.TT): The Outlook Is Positive in 2Q22, and Wafer Price Lift Is Not Decided Yet.
- Shakey’s Pizza: Getting Less Shaky As The Philippines Emerges From COVID
- Yaskawa – Results as We Expected, Guidance Much Stronger
- Fortescue Metals Group: 11% Dividend Yield for FY22
- PT Steel Pipe Industry of Indonesia Tbk (SPINDO): Breakout Year In The Bag
- Melco Resorts: A Bottom Fishing Opportunity in This Asia Gaming Leader
- Berli Jucker (BJC IJ) – Ride the Retail and Packaging Recovery
- HKEx (388.HK): Nickel Short Squeeze Saga Backlash over LME Credibility
- BNC Korea (256840 KS): Late Mover in COVID Pill; 2021 Operating Loss and Russia Exposure Add to Woe
- Global Cord Blood (CO US): Gloomy Regulatory and Business Environment Explain Cheap Valuation
TSMC (TSM.US; 2330.TT): The Outlook Is Positive in 2Q22, and Wafer Price Lift Is Not Decided Yet.
- We expect TSMC will grow ~4.7% QoQ in 2Q22, and the revenue/GM/OPG is around US$17.7bn/55.1%/43.8%.
- We highlighted TSMC was considering to increase the wafer price nearly 2 months ago, but TSMC has still not made the final decision yet.
- TSMC 4/5nm capacity will be ready for for 150k/month within 4Q22. We think the new iPhone 14 would request more than half of the capacity.
Shakey’s Pizza: Getting Less Shaky As The Philippines Emerges From COVID
- The Philippines’ largest full-service Pizza chain, Shakey’s Pizza Asia Ventures (PIZZA PM) is currently trading at PHP 7.60, 7.3% below its April 2022 follow-on offer price of PHP 8.20.
- With the ending of COVID restrictions, we expect the company’s financial performance to improve drastically over the next few quarters.
- This should alter the trajectory of Shakey’s to aggressively take back the share price towards the pre-COVID level.
Yaskawa – Results as We Expected, Guidance Much Stronger
- Yaskawa reported weak results as we expected (¥12.9bn OP vs. our ~¥14bn estimate and consensus at ¥16.7bn).
- Despite this the company actually guided for a very punchy ¥72bn in OP next FY even above consensus’ ¥65.5bn and our expectation for OP to be flattish or even decline.
- Nevertheless, there was nothing on the earnings call to suggest that guidance was anything more than overoptimism on the top line.
Fortescue Metals Group: 11% Dividend Yield for FY22
- Fortescue Metals (FMG AU) has an improving yield outlook, as iron ore prices are rising due to a shortage of iron ore, with supplies from Russia and Ukraine being affected.
- We expect the company to pay a 2.3 AUD/share dividend based on a 70% payout ratio, implying an 11% dividend yield. The company has low net gearing at 10%.
- Upsides could emerge from China stimulating its economy to counter the lockdowns and measures taken to improve their property market which will in turn boost steel production.
PT Steel Pipe Industry of Indonesia Tbk (SPINDO): Breakout Year In The Bag
- Indonesia’s leading steel pipe company PT SPINDO published FY21 results earlier this week, crystallizing a year of record profitability with EBITDA doubling and NPAT increasing 2.8x.
- The heightened profitability is attributable to a combination of high steel prices making room for wider margins (in both percentage and absolute terms) combined with an improving product mix and unwavering demand landscape.
- We note that EPS of just IDR 5.6 in 4Q21 was well below the 9M21 run rate of IDR 62.0 and was due to several unexpected one-time expenses and provisioning for a possible tax expense
Melco Resorts: A Bottom Fishing Opportunity in This Asia Gaming Leader
- By many standard measures, Melco Resorts & Entertainment shares appear to be either fully or overvalued even at its pandemic beaten down price of $US6.94.
- A discounted cash flow analysis revealed a negative -US($1.18) intrinsic value. But the calculation is based on assumed path of pandemic too difficult to predict accurately.
- The company had a pre-pandemic Macau market share of over 16%. It is among the leaders in Manila’s entertainment zone, and expects its Cyprus property to open by Dec. 2022
Berli Jucker (BJC IJ) – Ride the Retail and Packaging Recovery
- Berli Jucker (BJC TB) 4Q2021 results marked a turnaround in both its packaging business in glass and cans plus better performance from Big C as mobility improved during the quarter.
- The outlook for packaging looks positive and the Big C will open more outlets in 2022 plus renovating around 20 hypermarkets plus opening new formats this year.
- Berli Jucker (BJC TB) remains an interesting recovery play for Thailand and Vietnam, with the potential for more retail exposure there in the future. Valuations stack up versus peers.
HKEx (388.HK): Nickel Short Squeeze Saga Backlash over LME Credibility
- The bailout of Chinese billionaire’s nickel short position has received overwhelm backlash over LME’s credibility and China’s interference on global market. Nickel future trading continued to be choppy.
- HKEX (388 HK) first 3-month average daily turnover is down 35% year-over-year due to pandemic outbreak in HK and lower IPO activities, but March trading activities have rebounded from February.
- HKEx revealed New Digital Assets Marketplace “Diamond” in its corporate day in March, which will feature atomic settlement, multi-asset trading, use of Smart Contracts and cloud-based infrastructure.
BNC Korea (256840 KS): Late Mover in COVID Pill; 2021 Operating Loss and Russia Exposure Add to Woe
- BNC Korea (256840 KS), with its partnered COVID-19 pill will be a late entrant in the space, as two more COVID-19 pills are already approved in South Korea.
- The company reported operating loss of KRW11 billion in 2021 and 99% of its export comes from Russia and CIS countries.
- Since my bearish note published on the company in October 2021, shares have declined 50%. I am still not upbeat on the growth prospect of the company.
Global Cord Blood (CO US): Gloomy Regulatory and Business Environment Explain Cheap Valuation
- Global Cord Blood (CO US) is facing regulatory and business environment uncertainty. China has not released any update on the new licenses of the country’s new cord blood bank.
- The company is seeing slower than expected business recovery and new subscriber addition is decelerating since Q1 FY22, mainly due to COVID-related restrictions.
- China’s birth rate dropped to a record low in 2021, thereby indicating sluggishness in the total addressable market of Global Cord.
Related tickers: Taiwan Semiconductor Sp Adr (TSM.N), Yaskawa Electric (6506.T), Fortescue Metals (FMG.AX), Steel Pipe Industry of Indonesia (ISSP.JK), Melco Resorts & Entertainment (MLCO.O), Berli Jucker (BJC.BK), HKEX (0388.HK), Global Cord Blood (CO.N)
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