In today’s briefing:
- S&P/ASX Indices: Quiddity Leaderboard for March 2022 Rebalance
- Nidec (6594): Catch a Falling Knife
- Adi Sarana Armada (ASSA IJ) – Crystalizing Used Car Value
- PLANB: Acquisition of New OOH Media Capacity Seems Worthwhile
- Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
- Sinotruk: Inventory Overhang at Dealers and Weak End Demand Will Take Time to Clear
S&P/ASX Indices: Quiddity Leaderboard for March 2022 Rebalance
- The S&P/ASX Index family is a widely-tracked group of indices and sub-indices which represent the performance of ASX-listed companies.
- In March 2022, Index rebalance events will take place for the S&P/ASX capitalization-weighted indices including ASX 300, ASX 200, ASX 100, ASX 50, and ASX 20.
- In this insight, we take a look at the leading candidates who could become Adds/Deletes during the March 2022 Rebalance and other potential intra-quarterly changes.
Nidec (6594): Catch a Falling Knife
- Operating profit declined in 3Q despite a 15% YoY increase in sales. FY Mar-22 profit guidance now looks too high.
- The Automotive division is suffering from the semiconductor shortage, high materials prices and the cost of ramping up EV motor production – which is scheduled to continue until 2025.
- But the share price has dropped 31% since the beginning of January. Long-term investors may now choose when to buy in.
Adi Sarana Armada (ASSA IJ) – Crystalizing Used Car Value
- Adi Sarana Armada (ASSA IJ) has successfully spun off its Auto trading subsidiary Autopedia Sukses Lestari (ASLC IJ) through an IPO reducing debt and raising capital to grow the business.
- Autopedia will focus on growing its online O2O business through Caroline, with a captive supply of used cars from its auction and car leasing businesses plus offline infrastructure in place.
- Adi Sarana Armada (ASSA IJ) also looks attractive for its logistics and last-mile business, which is close to profitability and now more than 50% of its revenues and growing fast.
PLANB: Acquisition of New OOH Media Capacity Seems Worthwhile
- We believe PLANB’s acquisition of media business from AQUA PCL at total cost of Bt2.9bn will create value accretive for the company as it purchases at PE multiple of 16x-18x
- 2022 to be harvesting period after heavy CAPEX investment in the past two years ,which also included the largest deal on Aqua’s assets.
- Media revenue is expected to grow 35%CAGR in 2022-23E, driven by revenue recognition of new media capacity in digital, static segments (mainly from Aqua), and, retail media in 7-eleven stores.
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
US equity markets closed almost flat with the S&P ending 0.15% lower and Nasdaq closing almost unchanged. The indices erased gains of over 2% post the hawkish FOMC meeting (details below). Sectoral gains were led by IT, up 0.7% while Real Estate led the losses, down 1.7%. US 10Y Treasury yields jumped 7bp higher to 1.85%. European markets recovered sharply yesterday with the DAX, CAC and FTSE up 2.2%, 2.1% and 1.3%. Brazil’s Bovespa closed 1% higher. In the Middle East, UAE’s ADX was flat and Saudi TASI was up 0.6%. Asian markets have opened in the red with Nikkei and HSI down 3.1% and 2.6% while Shanghai and STI are down 0.9% and 0.6% respectively. US IG CDS spreads were 1.4bp wider and HY CDS spreads were 5.4bp wider, EU Main CDS spreads were 1.3bp tighter and Crossover CDS spreads were 6.2bp tighter. Asia ex-Japan CDS spreads were 2bp tighter.
Sinotruk: Inventory Overhang at Dealers and Weak End Demand Will Take Time to Clear
- Sector outlook is weak with a -20% yoy decline on sales volume expected.
- End demand was largely brought forward in 1H2021. Lots of inventory at dealers are waiting to be sold.
- Sinotruk’s valuation looks fair now. However we see limited positive momentum to drive its share performance this year.
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