In today’s briefing:
- Short-Term Itochu Buyback – A Cushion, But Style Bias Matters More
- HCM – Buy for the Commodity Upswing
- BayCurrent: Strong Earnings and an Upgrade to Guidance; Drop in Multiples Offers a Good Entry Point
- Review of Current Short Ideas
- ONEE: Expect Core Earnings to Hit All-Time High Level
- Waskita Karya (WSKT IJ) – Outlook stays rosy
Short-Term Itochu Buyback – A Cushion, But Style Bias Matters More
- Itochu today announced a buyback program to buy US$500mm+ in the next 10 weeks.
- Net income growth, a rising dividend, and balanced risk book help it perform with low beta and medium correlation to peers.
- The low volatility-relative multiple is supportive, and the buyback helps, but style bias vs Peers matters more.
HCM – Buy for the Commodity Upswing
- Hitachi Construction Machinery continues to trade under ¥3,000 following the revelation that it would not be bought out by Hitachi.
- There was little new at its conference call following the Itochu stake purchase announcement save some potential positives on the logistics front.
- Nevertheless, with the stock trading at five-year lows vs. TOPIX and Komatsu, and consensus looking light we are extremely bullish here.
BayCurrent: Strong Earnings and an Upgrade to Guidance; Drop in Multiples Offers a Good Entry Point
- Baycurrent Consulting (6532 JP) reported 3QFY02/2022 results last week. Revenue for the quarter increased 39.0% YoY to JPY15.0bn while OP increased 57.5% YoY to JPY3.7bn.
- The company has revised both its revenue and OP guidance upwards for full-year FY02/2022E to JPY56.5bn and JPY21bn respectively.
- The company has already met 73.5% and 72.7% of its revenue and OP target, we expect earnings beat for the full-year as fourth quarter is the strongest.
Review of Current Short Ideas
- This presentation runs through six current short ideas presented on a Smartkarma webinar on 22nd December.
- These are: Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and Renewable Fuels (REGI).
- The presentation also summarizes Two Rivers’ short idea generation process.
ONEE: Expect Core Earnings to Hit All-Time High Level
- We reiterate ONEE with a BUY rating, based on a new target price of Bt12.70 (previous TP:11.80)derived from 26.7xPE’22E,which is the average for the stocks in Thailand’s communication services sector
- We expect the company to report 4Q21 net profit at Bt221m (-15%YoY +32%QoQ). Excluding deferred tax item in 4Q20, core earnings would grow 17%YoY, all-time high level.
- Ads spending via TV look resilient relative to overall media
Waskita Karya (WSKT IJ) – Outlook stays rosy
Outlook stays rosy
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