In today’s briefing:
- Tencent Holdings – Getting Its House In Order
- NPS Exclusively Buying LG Energy Solution At the Expense of Other 2,400+ Stocks in Korea
- Advantest – Upside and Downside Scenarios
- China Evergrande Group – Fox in Henhouse
- Bank Mandiri (BMRI IJ) – Moving into Higher-Yielding Assets
- Global Cord Blood (CO US): No Immediate Respite Is Seen
- Keyence – Not a Gimme but Worth a Small Buy Into Earnings
- KBANK: More Focusing on Growth
Tencent Holdings – Getting Its House In Order
- Substantial disagreements over the video streamer DouYu International’s strategic direction, prompts ownership re-think at Tencent;
- Tencent is allegedly privatizing Douyu near the bottom of the market; and
- Unlike the JD.com move, this transaction maximizes shareholder value while getting into regulatory compliance.
NPS Exclusively Buying LG Energy Solution At the Expense of Other 2,400+ Stocks in Korea
- The trading data of Korean stock market on January 27th and 28th clearly shows how the NPS and other local pension funds strongly supported LG Energy Solution IPO’s stock price.
- What is concerning is that the local pension funds nearly neglected net purchase of all other 2,400+ stocks in Korea.
- NPS and local pension funds may have less room to overly support LG Energy Solution and other Korean stocks in February.
Advantest – Upside and Downside Scenarios
- Advantest shares are down 19% from their Jan 4th high after a post earnings rally on Friday.
- While order momentum remains strong it has moderated slightly since 2Q and longer-term risks are a concern.
- What remains to be seen is how sustainable Chinese demand is given its steady rise since 2016.
China Evergrande Group – Fox in Henhouse
- Evergrande’s seven-member risk management committee includes China Cinda, a major Evergrande creditor;
- Adding insult to injury, a China Cinda senior executive was appointed as an Evergrande director; and
- This is massive conflict of interest coupled with the local municipality bonepickers give us little confidence that any creditor will be treated fairly.
Bank Mandiri (BMRI IJ) – Moving into Higher-Yielding Assets
- Bank Mandiri (BMRI IJ) booked a strong set of results driven by operational improvements, lower credit costs, and lower cost of funds plus an increasing focus on digitalisation.
- The bank is moving more aggressively into higher-yielding assets plus driving its consumer and wholesale digital strategies to improve returns with significant potential upside.
- We are more optimistic on the prospects for Bank Mandiri (BMRI IJ) after the recent numbers given its drive towards enhancing future returns supported by a very low-cost funding base.
Global Cord Blood (CO US): No Immediate Respite Is Seen
- Global Cord Blood (CO US) has rejected the acquisition offer from Alternate Ocean Investment as it fails to properly reflect the value of the company and maximize shareholder value.
- Global Cord shares plunged 4% since we published our bearish view in late November. The shares are trading more than 35% below its 52-week high price.
- Although we are not seeing any upside potential, we have analyzed some key catalysts, which can move the share price higher.
Keyence – Not a Gimme but Worth a Small Buy Into Earnings
- We are broadly negative the FA sector as we expect earnings to fall next FY for most players and valuations are extended.
- Keyence is an exception in that we expect further growth next year although valuations are extended even for Keyence.
- We believe this is because the market is pricing in its greater earnings resilience but maybe not quite enough.
KBANK: More Focusing on Growth
- We reiterate our BUY rating with a new target price of Bt174. Our BUY call reflects (1) steady growth ahead from improving economic recovery; (2) adequate reserves against new NPLs
- Focus on the quality of growth and NPL management ahead.
- The bank guided lending growth of 6-8% YoY in 2022 with an emphasis on a rise in retail loans and SME loans.
Related tickers: Tencent (0700.HK), Advantest Corp (6857.T), Evergrande (3333.HK), Bank Mandiri Persero (BMRI.JK), Global Cord Blood (CO.N), Keyence Corp (6861.T), Kasikornbank PCL (KBANK.BK)
Before it’s here, it’s on Smartkarma
