In today’s briefing:
- SEA 110/102 Buy Zone
- ASMP (522.HK): 4Q21 Results/ 1Q22 Outlook- It’s a Record Q1 at the Mid-Point of Guidance.
- LG Electronics: Impact of Restructuring the Solar Panel Business
- Delhivery IPO: A Bumpy Delivery
- SEPI to Raise Stake in Indra
SEA 110/102 Buy Zone
- SEA has undergone a severe decline but is showing some light at the end of the falling wedge tunnel with physical support approaching near the 110/102 zone.
- RSI compelling bull divergence stands out as the upside energy driver. Align a buy entry with noted support at the 20-25 level that should nail down divergence.
- 170 is our initial recovery target if the 100 level holds.
ASMP (522.HK): 4Q21 Results/ 1Q22 Outlook- It’s a Record Q1 at the Mid-Point of Guidance.
- The 4Q21 revenue is HK$6.2bn (US$796.3mn), a 43.9% increase YoY. GM 41.3% is a 1,051bps increase YoY.
- Some memory market customers, like Samsung and Hynix, are adopting ASMP’s mainstream wire bond and advanced packaging tools for high volume manufacturing requirements.
- Full year 2021 dividend per share of HK$3.90, a 44.4% YoY increase.
LG Electronics: Impact of Restructuring the Solar Panel Business
- On 23 February, LG Electronics announced that it will exit the solar panel business due to lack of competitiveness as it has been losing money in this business.
- This restructuring will have a positive impact on LG Electronics. We applaud its strategy of focusing on what it does best and exiting businesses where it is not competitive.
- Assuming operating loss of 80 billion won and a 9% cost of capital, this would result in perpetuity value losses of 889 billion won.
Delhivery IPO: A Bumpy Delivery
- Delhivery (1058656D IN) is a fully integrated logistics player in India. The company’s application for a listing has been approved by the regulators.
- The company plans to raise US$650m through issuing new shares while existing shareholders will offer US$3120m worth of shares at the IPO.
- The company plans to use proceeds from the IPO for funding growth (both organic as well as inorganic growth through acquisitions and strategic initiatives) and for other general corporate purposes.
SEPI to Raise Stake in Indra
- SEPI will increase its stake in Indra Sistemas Sa (IDR SM) by 9.25% (22.2 days of trading volume) up to 28%, which should have a positive impact on the share price.
- Indra has dropped 9.4% on market fears that the Government might interfere in the company’s strategy. Nevertheless, this in my view, provides an entry point.
- My DCF valuation of Indra is €12.12/share, which implies 44% upside. I believe share purchases should act as a short-term catalyst for the share price.
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