In today’s briefing:
- Japan Post Holdings – Good Play On the BOJ’s Conundrum
- KKR to Make a Move for Cleanaway?
- Energy China (3996 HK): Multiple Drivers for Bright Prospects
- CDC Ends Public Transportation Mask Mandate & Will the World Follow Shanghai or Vice Versa?
- Fiduciary Management All Cap Equity Q1 2022 Investment Letter
- Liquid Universe of European Ordinary and Preferred Shares: April ‘22 Report
- BEM: Expect to Report Five-Quarter High Net Profit in 1Q22
- SCGP: Elevated Product Prices to Drive Core Profit in 1Q22
Japan Post Holdings – Good Play On the BOJ’s Conundrum
- The BOJ looks increasingly trapped between a rapidly depreciating yen and a stated desire to hold rates low.
- We believe that the BOJ will eventually have to compromise on its 0.25% ceiling for the ten year JGB once inflation data gives them cover to do so.
- However, we believe Japan Post Holdings could potentially benefit from both macro forces and consider it one of the best risk-reward positions in Japan and perhaps globally.
KKR to Make a Move for Cleanaway?
- An AFR article claimed that KKR & Co Inc (KKR US) is preparing an offer for Cleanaway Waste Management (CWY AU). The shares rose 5.9% to close at A$3.24.
- KKR has a long history with Cleanaway. Private equity has recently acquired waste management companies that are increasingly viewed as “infrastructure-like’’.
- Cleanaway’s scale, cash generation and modest leverage make it a target. A forward EV/EBITDA multiple of 15.8x, in line with Bingo Industries (BIN AU)’s acquisition multiple, would imply A$3.92.
Energy China (3996 HK): Multiple Drivers for Bright Prospects
- We believe strong orders and backlog, increase in installed capacity and development of new business initiatives are the key drivers for brighter outlook of China Energy Engineering (3996 HK).
- Its new orders grew 51% YoY in FY21, with its backlog is enough to cover the revenue more than the next three years mean solid earnings security and visibility.
- Development of hydrogen energy and pumped storage businesses may take longer to contribute, but they also represent significant upside when enter into commercial launch.
CDC Ends Public Transportation Mask Mandate & Will the World Follow Shanghai or Vice Versa?
- On 19 April, the US CDC stated that the national mask requirement on public transportation is no longer in effect in the United States.
- The CDC lifting the mask mandate is a key catalyst and other major countries are likely to follow the US in the coming months.
- Will the world likely to become more like Shanghai and enforce even greater lockdown policies or will they become more like the US and drop social distancing and mask mandates?
Fiduciary Management All Cap Equity Q1 2022 Investment Letter
- The Fed Funds Rate went higher than the inflation rate to tame it, the Fed Funds rate went higher in the past fifty years.
- The Fed has made some adjustments, are optimistic about the COVID-affected names, and are confident in the lineup we have today.
Liquid Universe of European Ordinary and Preferred Shares: April ‘22 Report
- Spreads have generally tightened across our liquid universe, in line with the recent market gains.
- Recommendations Long ords / short prefs: Fuchs Petrolub, Svenska Handelsbanken, Ericsson.
- Recommendations Long prefs / short ords: Danieli, Sixt, Atlas Copco, Grifols, Telecom Italia, Volvo AB, Volkswagen, Schroders.
BEM: Expect to Report Five-Quarter High Net Profit in 1Q22
- We expect the company to report net profit of Bt400m in 1Q22. (+1%QoQ+31%YoY), the highest level in the past five quarters.YoY expansion will be due to effective operating cost management
- Expect daily ridership to reach 70% of pre-COVID19 level by 3Q22, under assumption that there will be no major restriction measures induced by the virus outbreak. Furthermore, we expect ridership
- Earlier-Than-Expected bidding for Orange line will be the re-rating catalyst (previously expected to take place within 1H22). We estimate upsides from this project at Bt1.90 per share.
SCGP: Elevated Product Prices to Drive Core Profit in 1Q22
- Maintain BUY rating with a new TP of B66.00 (down 8% from previous TP),based on 30.8xPE’22E which is close to its -1SD of 3-years trailing average. We believe, SCGP’s 24%
- We expect 1Q22E core profit to be the bottom quarter at Bt1.7bn (-21%YoY,-21%QoQ). Excluding one-time gain from the acquisition of Go-Pak adjustment, its recurring profit should rise 23%QoQ.
- We believe earnings momentum to recover in 2Q22 onwards by raising product prices in wake of costs turbulence, but would drop YoY due to fall from high base.
Before it’s here, it’s on Smartkarma
