In today’s briefing:
- Tencent (700 HK): 4Q21, Weak Revenue and Significant “Other Gains”, 30% Downside
- Xiaomi 4Q: Good Results Despite a Challenging Environment
- Screen Holdings (7735 JP): Book-To-Bill 1.2x in 3Q
- AbbVie Inc (ABBV US): Great Value Stock to Buy in Choppy Market
- Channel Insight #29 | AU Bank, Kajaria, APL Apollo, Blue Star
- Tencent 4Q2021: Disappointing Earnings but Expected
- BBL: Good Quality Growth
Tencent (700 HK): 4Q21, Weak Revenue and Significant “Other Gains”, 30% Downside
- Tencent’s revenue growth continued to slow down to 8% YoY in 4Q21.
- The company used more extraordinary income to bolster EPS in recent years.
- We believe the stock has a downside of 28% within 2022.
Xiaomi 4Q: Good Results Despite a Challenging Environment
- Xiaomi Corp (1810 HK) reported 4Q2021 results on Tuesday. Revenue grew 21.4% YoY to RMB85.6bn (vs consensus RMB82.1bn) while reported OP declined 54.0% YoY to RMB4.5bn (vs consensus RMB4.3bn).
- Adjusted OP (excluding fair value adjustment and other gains) grew 21.4% YoY to RMB85.6bn, with an adjusted OPM of 4.0% vs 3.0% in 4Q2020.
- Xiaomi’s smartphone revenues bounced back in 4Q2021 after growing less than 1.0% YoY during the previous quarter. The company also announced a share buyback of HK$10bn.
Screen Holdings (7735 JP): Book-To-Bill 1.2x in 3Q
- The share price has bounced back from the Ukraine war sell-off. Attention should now shift to orders, sales and profits. 26% potential upside to our price target
- New SPE orders exceeded sales by 20% in the December quarter, taking the backlog to a new high and pointing to further sales and profit growth next fiscal year.
- Management’s FY Mar-22 guidance remains unchanged, with sales up 41% and operating profit up 2.2x. Upside potential of 26% to our price target.
AbbVie Inc (ABBV US): Great Value Stock to Buy in Choppy Market
- Abbvie Inc (ABBV US) shares remained rangebound in 2021, mainly due to Humira patent expiration overhang. Humira is the flagship drug of the company, accounting for 37% of total revenue.
- Increasing label expansion of its two other drugs, Skyrizi and Rinvoq are now increasingly opening up new growth avenues for AbbVie. Together these drugs contributed 8% to total revenue.
- Attractive valuation and healthy dividend yield make AbbVie a top value investment idea amid this turbulent time.
Channel Insight #29 | AU Bank, Kajaria, APL Apollo, Blue Star
- We spoke to channels associated with AU Small Finance Bank Limited (AUBANK IN) , Kajaria Ceramics (KJC IN) , Apl Apollo Tubes (APAT IN) & Blue Star Ltd (BLSTR IN)
- Small Business Loan growth is slowing at AU, some down trading due to price increases seen in Kajaria
- APL is getting hurt by cheaper alternatives, Blue Star channels are cautiously optimistic about the upcoming Air Conditioner season.
Tencent 4Q2021: Disappointing Earnings but Expected
- Tencent (700 HK) reported 4Q2021 results yesterday. Revenue grew 7.9% YoY to RMB144.2bn (vs consensus RMB146.5bn) while non-IFRS OP decreased 13% YoY to RMB33.2bn.
- This marks the slowest quarterly revenue growth for Tencent since 2004 mainly due to lower VAS revenue growth and decline in revenue from online advertising.
- Tencent’s 4Q revenues were in line with our forecast of RMB144bn while adjusted OPM of 23% was slightly below our estimates of 26%.
BBL: Good Quality Growth
- Maintain our BUY call with a target price of Bt162. Our valuation is derived from the Gordon Growth Model (ROE 6.6%,growth 2%), implying 0.6x PBV’22E, -1SD to its five-year means.
- With its focus on corporate and international loans, BBL will likely suffer fewer impacts when compared with its competitor from elevated household debts and a conflict between Russia and Ukraine.
- Net profit will continue to rise further in 2022-23, supported by solid fundamentals and an improvement in economic activity.
Related tickers: Tencent (0700.HK), Xiaomi Corp (1810.HK), SCREEN Holdings (7735.T), Abbvie Inc (ABBV.N), AU Small Finance Bank Limited (AUBANK.NS), Tencent (0700.HK), Bangkok Bank Public (BBL.BK)
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