In today’s briefing:
- Tencent: 4Q2021 Earnings to Soften with Decelerating Games Growth and Weak Ad Revenue
- Mazda – Profitability Is Surging
- Shiseido: China Is Still a Question Mark But The Rest of The Business Deserves Plaudits
- Beyond 280 #6 | Zomato (Zomato IN) – Conversation with a Restaurant Chain E-Com Manager
- TEL – Great Results but Some Warning Signs
- Disney 1Q2022: Knockin It Out of the Park
- Yamaha Motor – Lowballing Guidance on Material Costs
- AVYA: Sales Slipped, ARR Grew
- FSN E-Comm (NYKAA IN): Macro, Micro & Marketing Drive Metric Growth
Tencent: 4Q2021 Earnings to Soften with Decelerating Games Growth and Weak Ad Revenue
- Tencent (700 HK) is expected to release fourth quarter and full-year 2021 results on 23rd March 2022.
- We expect fourth quarter 2021 earnings to be soft driven by slowdown in online advertising and online games revenues.
- In our 3Q2021 earnings note, we highlighted that weakness in Tencent’s earnings have begun to show up and we expect further declines in 4Q2021E.
Mazda – Profitability Is Surging
- We have been consistently saying that the sell side is utterly clueless about Mazda’s profit structure.
- The company just missed top line by 13.2% but beat on OP by 26% even excluding a reclassification of some costs to extraordinary losses.
- The thesis here is simple – consensus projects a 3% OPM next FY and we believe Mazda will double that.
Shiseido: China Is Still a Question Mark But The Rest of The Business Deserves Plaudits
- Shiseido Company (4911 JP)’s share price is up more than 6% today following the yesterday’s strong Q4 results with 2021 EBITDA surpassing the November 2021 guidance by ¥17.6bn (11.3%).
- The China business is still not completely out of the woods, although the like for like growth rate accelerated from 2.0% YoY in 3Q21 to 7.0% by 4Q21.
- Nonetheless, strong performance across skin and beauty care in all regions suggests that the company is on track to become the world’s number 1 skin and beauty care brand.
Beyond 280 #6 | Zomato (Zomato IN) – Conversation with a Restaurant Chain E-Com Manager
- We interact with E-Com manager of a large restaurant chain in South India with an objective to understand key demand drivers and current ordering trends for OFD players.
- AOV and Order volumes have seen YoY increase in Q3FY22 for both Zomato (ZOMATO IN) and Swiggy.
- Amazon.com Inc (AMZN US) has seen a jump in Food Delivery orders, but remains a pilot and is not a major threat to either Zomato or Swiggy.
TEL – Great Results but Some Warning Signs
- TEL’s 3Q results were strong as expected with revenue of ¥506bn beating consensus by 6% and OP of ¥156bn beating by 14%.
- Guidance was raised from ¥550bn to ¥570bn but could still prove about ¥20bn too light.
- While TEL expects 20% market growth in 2022, that may not justify current multiples and there are some other concerns.
Disney 1Q2022: Knockin It Out of the Park
- Incredible quarter for Parks, with sustainably higher levels of profitability in the cards due to Disney’s pricing power.
- Streaming is still worrisome, growth driven by bundling and Hotstar+ subs which we don’t value as worth much to Disney.
- SoTP gets us to ~$155 at best, which is where the stock trades post earnings. Not great risk reward here.
Yamaha Motor – Lowballing Guidance on Material Costs
- Yamaha Motor’s 4Q21 beat on margins with revenue of ¥450bn (+1.2% QoQ, +11.3% YoY) and OP of ¥27.7bn for an OPM of 6.2%.
- The reported OP was 8.6% higher than consensus estimates while revenue was relatively in-line.
- Yamaha’s FY OP generation was ¥182.3bn, right in the middle of our ¥180-185bn estimate and 2022 guidance was more or less in-line with consensus.
AVYA: Sales Slipped, ARR Grew
- AVYA continues to face revenue recognition challenges from transitioning to a subscription revenue model. AVYA reported fiscal first quarter results missing expectations even though AVYA won a $400 million contract.
- The issue at hand for AVYA is the ongoing transition is leading to its cash balance diminishing while management maintains a positive cash flow from operation outlook for the year.
- AVYA reaffirmed its annual revenue guidance. AVYA is projecting revenue in fiscal second quarter to jump back to a midpoint of $738 million, which is higher than our original estimate
FSN E-Comm (NYKAA IN): Macro, Micro & Marketing Drive Metric Growth
- FSN E-Commerce Ventures (Nykaa) (NYKAA IN) announced a steady growth across all key operating metrics in both the Beauty and Fashion verticals for the quarter ending 31st December 2021.
- Steady operating performance was helped by favorable macro (normalization in economic activity) and supportive sector-specific factors (Diwali, wedding season) as well as aggressive marketing (now 14% of revenues).
- Despite an 83% growth in 9MFY22 GMV and a resultant 89% growth in gross profits, EBITDA grew only 11% as increased marketing spend consumed most of the margin upside.
Related tickers: Tencent (0700.HK), Mazda Motor (7261.T), Shiseido Company (4911.T), Tokyo Electron (8035.T), The Walt Disney Co (DIS.N), Yamaha Motor (7272.T)
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