In today’s briefing:
- Graftech Q1 2022: Debt Deleveraging Continues, LTA Pricing Overhang An Issue
- Conch Venture (586 HK): Another Spin-Off in the Pipeline
- Investing in HK Stocks
- Aristotle Capital Management International Equity 1Q 2022 Commentary
- Blue Star – Result Above Expectations; Expect Margin Improvement in FY23
- Aristotle Capital Management International Equity ADR 1Q 2022 Commentary
- Havells India – Results Above Expectations; Strong Demand Trends to Drive Growth in near Term
- KEC International – Result Below Expectations; Margin Headwinds Likely to Persist in FY23
Graftech Q1 2022: Debt Deleveraging Continues, LTA Pricing Overhang An Issue
- GrafTech International Ltd (EAF US) reported solid results for Q1 2022. The stock still continues to look cheap at 4.7x FY22 PE.
- The debt deleveraging target of 400 mn USD a year seems on track, and the company will be zero debt by FY23. FCF yield is 24% at the current price.
- The company also bought back 30 mn USD of stock (3 mn shares @9.88 USD/share representing 1.1% of the outstanding shares) in Q1 2022.
Conch Venture (586 HK): Another Spin-Off in the Pipeline
- Following listing of China Conch Environment (587 HK), China Conch Venture (586 HK) is seeking a spin-off of CV Green Energy in A-share market and we view this move positively.
- Limited details are currently available, but we think CV Green Energy, which operates WTE businesses, will trade at significantly higher multiples than its Hong Kong peers.
- Assuming CV Green Energy to hold all Conch Venture’s WTE businesses, we estimate the IPO will boost the latter’s sum-of-the-parts value by 8% or HK$2.14 per share.
Investing in HK Stocks
- I think most (value) investors go through four stages: Stage 0: Buy stuff that goes up. Especially when a lot of people around you get rich from doing it.
- Stage 1: Invest in the future! Buy into some fancy exciting new technology that will become big some day! The Cathie Wood stage. Usually stage 1 and stage 0 go hand in hand.
- Stage 2: Buy at low PE multiples. Some are smart and skip the first two. This stage is not bad, it should lead to slight outperformance. Can be dangerous without wide diversification as a lot of them are value traps.
Aristotle Capital Management International Equity 1Q 2022 Commentary
- For Q1 2022, Aristotle Capital’s International Equity Composite posted a total USD return of -10.28% gross of fees.Performance for the first few months of 2022 has undoubtedly been disappointing.
Blue Star – Result Above Expectations; Expect Margin Improvement in FY23
- UCP Segment Update: RAC business recorded 47% YoY growth in 4QFY22. BSTAR grew faster than the market and ended FY22 with a market share of 13.25% vs 13% in FY21.
- EMPS and Commercial AC segment update: Carry forward order book at the end of FY22 was up 10.2% YoY at Rs32.53bn.
- Net debt and capital employed position: Net borrowings at the end of FY22 were Rs671.4mn (vs net cash position of Rs1.51bn at the end of FY21) due to planned advancement in inventory levels related to the procurement of long-lead raw materials and components in order to de-risk supply chain constraints and investments in expansion projects at Wada & Sri City.
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Aristotle Capital Management International Equity ADR 1Q 2022 Commentary
- For Q1 2022, Aristotle Capital’s International Equity ADR Composite posted a total USD return of -9.75% gross of fees.
- The company is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management for institutional and advisory clients worldwide.
Havells India – Results Above Expectations; Strong Demand Trends to Drive Growth in near Term
- Strong demand to continue; Capex plans announced: Management highlighted that the underlying demand is strong despite price hikes.
- Strong summer season for Lloyds: The company is witnessing a good season in the AC segment on the back of early onset of summer, pent-up demand of the last two years.
- Other takeaways: (1) The company has set exports target of 10% of revenue over the medium term.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
KEC International – Result Below Expectations; Margin Headwinds Likely to Persist in FY23
- 15% growth guidance for FY23; margins expected to normalize in 2HFY23
- Working capital position: NWC declined to 137 days at end-4QFY22 vs.
- Key business updates: (1) The company expects to receive 100% payments from Afghanistan in the next 2-3 months, and hence has made no provisions related to it.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
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