In today’s briefing:
- Tencent Music (TME): 4Q21, Revenue Down for First Time
- Xiaomi (1810 HK): 4Q21, Growth Rate Bounced Up, as High End Strategy Worked
- UMS Holdings: Excellent Results in 2021 & Valuation Has Become More Attractive After Recent Sell-Off
- Capcom – The Prospects for Street Fighter 6
- Pinduoduo 4Q21: A Big Compromise
- TME 4Q Results: Earnings Continue to Weaken
- CPMC Holdings (906 HK): Short Term Tough but Long Term Story Intact
- SPA: Reopening Recovery Play Post 2021 Bottom
Tencent Music (TME): 4Q21, Revenue Down for First Time
- In 4Q21, TME’s revenue decreased YoY for the first time since its IPO.
- We do not believe the music rise will cover the social entertainment decline in 2022.
- Either, we do not believe social entertainment will recover based on its operating data.
Xiaomi (1810 HK): 4Q21, Growth Rate Bounced Up, as High End Strategy Worked
- The growth rate of total revenue bounced up and all business lines grew strongly in 4Q21.
- Smartphone revenue grew more rapidly than smartphone shipment, as the high-end strategy worked.
- We set an upside of 56% and a price target of HK$21 for the year end 2021.
UMS Holdings: Excellent Results in 2021 & Valuation Has Become More Attractive After Recent Sell-Off
- UMS Holdings’ stock price has been oversold in the past several weeks. It posted excellent results in 4Q 2021 and its valuations have become more attractive.
- If the global semiconductor cycle undergoes a major downtrend, UMS Holdings would not be immune from such downturn and the company is likely to experience lower sales and profit growth.
- We believe that UMS Holdings has 20% to 40%+ upside from current levels over the next one year, based on historical valuation multiples in the past three years.
Capcom – The Prospects for Street Fighter 6
- A month ago Capcom announced Street Fighter 6 with a small trailer featuring no actual gameplay footage.
- Given the somewhat haphazard launch of Street Fighter 5 expectations for the title are likely to be moderate.
- However, there has been much progress since the launch of Street Fighter 5 and there are some promising signs to consider.
Pinduoduo 4Q21: A Big Compromise
- Pinduoduo (PDD US) shares dropped 6.1% yesterday following the 4Q21 results as the company’s revenue fell short of the consensus estimate by 8.9%.
- Pinduoduo’s OP improved 223% QoQ to RMB 6.9bn (consensus RMB 3.2bn) through pushing back sales and marketing investments. However, it affected the company’s user growth as MAUs declined by 8.0m.
- Consensus is yet to factor in the impact on user growth through reduced marketing spend, which makes further downside to Pinduoduo shares possible.
TME 4Q Results: Earnings Continue to Weaken
- TME reported 4Q2021 results on Monday. Revenue for the quarter decreased 8.7% YoY to RMB7.61bn (vs consensus RMB7.66bn) and reported OP decreased 47.3% YoY to RMB682m (vs consensus RMB1.3bn).
- Revenue from Online music services grew single digit (4%) for the first time while revenue from Social Entertainment services dropped further during the quarter.
- TME expects its revenues to decline in 2022 as it expects the social entertainment services business to remain under pressure due to competition and regulatory pressure.
CPMC Holdings (906 HK): Short Term Tough but Long Term Story Intact
- FY21 result of CPMC Holdings (906 HK) indicated it is under pressure from higher input costs in 2H21, as profit growth rate has slowed to 3.1%, from 36.5% in 1H21.
- 1H22 will stay challenging, but management guided for improvement in 2H22. That said, CPMC expects gross margin for FY22 can be marginally higher than in FY21.
- Structural story of higher can demand, rise in industry concentration and increase de-plasticisation remains intact. We see any pull-back in share price as opportunity.
SPA: Reopening Recovery Play Post 2021 Bottom
- Maintain BUY rating with a TP of Bt8.30, based on DCF (WACC of 9.8% and Terminal Growth of 3.5%), implying 25.9xPE’23. We see attractive play on reopening, upon the progress
- Its 4Q21 net loss was at Bt46m, which continued for 7 consecutive quarters, attributed mainly to its operation below EBIT breakeven level.
- SPA’s 2021 net loss was at Bt287m, pressured by weak revenue growth, which drop 61%YoY upon brief closure of spas and massages in Jan 21 and end of Apr-Sep 21.
Related tickers: Tencent Music (TME.N), Xiaomi Corp (1810.HK), Ums Holdings (UMSH.SI), Capcom Co Ltd (9697.T), Pinduoduo (PDD.O), Tencent Music (TME.N), CPMC Holdings (0906.HK), Siam Wellness Group (SPAM.BK)
Before it’s here, it’s on Smartkarma
