Investment Research - Asia Consumer Sector, Investory

Devi Subhakesan

Investment Research - Asia Consumer Sector. 

Equity Research experience of over 20 years. Earlier, Analyst for leading Buy and Sell-side institutions, covering markets in ASEAN, India, and North Asia. Expertise spans various sectors - Consumer Discretionary, Media, Textiles, Oil, Gas, and Coal.
Passionate about mindfulness and meditation.

Investment Research - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/godrej-agrovet-ltd" target="_blank" data-smartkarma-citation="entities:25916:1" rel="noopener">Godrej Agrovet (GOAGRO IN)</a>, a conglomerate in the Agri/animal products space, now derives a dominant share of its profits from agro-chemicals and could be poised to benefit from a rise in agri-related demand as rural economy is shifting into high gear led by greater Government spending. The stock, however, is trading more than 20% below its 2017 listing price, likely bogged down by negative sentiment over weak animal feed (poultry) demand, partly attributable to social media rumors that linked chicken to COVID transmission. Expect the stock to rerate as Godrej Agrovet's rising agro chem profile comes into greater market focus.  A quick Sum-of-the-Parts (SOTP) valuation based on peer average multiples for individual segments suggests that it is currently trading at a meaningful discount.2QFY20 results announced last week marks a notable uptick in profits led by agro chem and packaged foods, despite COVID-led market restrictions; however, earnings recovery from animal feed, dairy, and oil palm segments remained weak. We believe revenue and profit outlook across most segments could begin to look up as (1) agri-related spending picks up as rural economy is shifting into high gear led by greater Government spending (2) COVID-led operational/logistics restrictions ease (3) stronger export demand for agrochemical ingredients and intermediates as buyers widen sourcing beyond China (4) shift in consumer behavior drive demand for processed and packed foods.   In the detailed note below, we analyze Godrej Agrovet's segment-wise earnings outlook going forward based on sector fundamentals and management discussion post 2Q2020 results. We also assess the stock's investment upside based on SOTP valuation.

Godrej Agrovet (GOAGRO IN), a conglomerate in the Agri/animal products space, now derives a dominant share of its profits from agro-chemicals and could be poised to benefit from a rise in agri-related demand as rural economy is shifting into high gear led by greater Government spending. The stock, however, is trading more than 20% below its 2017 listing price, likely bogged down by negative sentiment over weak animal feed (poultry) demand, partly attributable to social media rumors that linked chicken to COVID transmission. Expect the stock to rerate as Godrej Agrovet's rising agro chem profile comes into greater market focus.  A quick Sum-of-the-Parts (SOTP) valuation based on peer average multiples for individual segments suggests that it is currently trading at a meaningful discount.2QFY20 results announced last week marks a notable uptick in profits led by agro chem and packaged foods, despite COVID-led market restrictions; however, earnings recovery from animal feed, dairy, and oil palm segments remained weak. We believe revenue and profit outlook across most segments could begin to look up as (1) agri-related spending picks up as rural economy is shifting into high gear led by greater Government spending (2) COVID-led operational/logistics restrictions ease (3) stronger export demand for agrochemical ingredients and intermediates as buyers widen sourcing beyond China (4) shift in consumer behavior drive demand for processed and packed foods.   In the detailed note below, we analyze Godrej Agrovet's segment-wise earnings outlook going forward based on sector fundamentals and management discussion post 2Q2020 results. We also assess the stock's investment upside based on SOTP valuation. 

Godrej Agrovet (GOAGRO IN): More Agro Chem than Animal Feed; Rising Rural Spend Is a TailWind

Godrej Agrovet Ltd

Godrej Agrovet (GOAGRO IN): More Agro Chem than Animal Feed; Rising Rural Spend Is a TailWind