Chocolate pricing

Bottom-up action: Softbank Group, Tencent, Bukalapak, PT Nippon Indosari Corpindo Tbk. (ROTI), Hyundai Engineering & Construction, Kasikornbank PCL, Itau CorpBanca, BG Container Glass PCL, Pure Storage Inc, Ryohin Keikaku and more

In today’s briefing:

  • Softbank Group – SenseTime Lock-Up Expiration Slashed $1.5 Billion VF Valuation
  • Tencent: end of another quarter without new game approvals and sale of Prosus
  • Bukalapak (BUKA IJ) – Follow the execution not the headlines
  • PT Nippon Indosari Corpindo (ROTI IJ) – Added chocolate spread and UHT milk to the mix
  • Hyundai Engineering and Construction (000720 KS): redemption points
  • KBANK: return to normal operations
  • Itaú Corpbanca – Contrarian buying idea in Andean banks
  • BGC: Packaging remains a key objective
  • Pure Storage (PSTG): market leader faced with the commoditization of its products
  • Ryohin Keikaku (7453) | Oops something went wrong

By Kirk Boody

  • Just as the December quarter was flattered by the last-minute IPO of SenseTime Group (20 HK), the expiration of the lockup six months later delivered a corresponding valuation hit.
  • Vision Fund is still up on this investment, but the public portfolio is flirting with a $10 billion loss for the quarter depending on how US stocks trade later.
  • The discount improved slightly from 51% to 49%, but remains at the high end of the recent range, with concerns over tech valuations casting a long shadow.

By Shifara Samsudeen, ACMA, CGMA

  • Tencent’s share price is down 6.5% in the past five days as top shareholder Prosus said it would sell Tencent shares to fund the Prosus/Naspers share buyback.
  • Although Chinese regulators lifted the ban on new game approvals in April this year, none of Tencent’s new game titles have received any approvals in the past two months.
  • Tencent’s 1Q2022 earnings were weak and we expect 2Q2022E earnings to slow further with the resurgence of Covid cases in China alongside a weak macro economy.

By Angus Mackintosh

  • Bukalapak (BUKA IJ) held its AGM this week, which effectively repeated messages from its 1Q2022 results, including guidance for FY2022, but there’s more excitement underneath the headline numbers.
  • One of the key metrics monitored by management is contribution margin, which is trending into positive territory. Sales take rates will improve both for Mitra and through its specialty store strategy.
  • AlloFresh has launched and is testing the effectiveness of the offline line before being applied to Mitra partners and AlloBank has also started its digital journey. Bukalapak looks cheap.

By Angus Mackintosh

  • PT Nippon Indosari Corpindo (ROTI IJ) recently announced the launch of two new product lines away from bread, including Sari Roti Chocolate Spread and UHT Milk.
  • Investment in these products will be relatively low, but it will increase the visibility of Sari Roti brands on modern retail shelves by adding to its breads and cakes.
  • Wheat prices have stabilized recently, but ROTI may consider raising prices further after assessing June’s performance. 2Q2022 performance was stronger than expected after Lebaran as demand improved with greater mobility.

By Sanghyun Park

  • The market appears to be more focused on increasing cost risk than on Hyundai E&C sales growth following the expansion of urban renewal market revenue.
  • Instead, the market is eagerly awaiting the possibility that Hyundai E&C’s leap forward as a nuclear power solutions provider will result in a growth premium for the stock price.
  • The trading point should be to target this risk when the price peaks against the nuclear energy theme. Specifically, we need to consider a long/short sector pair pattern.

By Pi Research

  • Hold BUY for KBANK with a target price of Bt 174.00. We are bullish on the joint venture between KBANK and JMT. Going forward, we expect KBANK’s profitability to increase
  • A joint venture between KBANK and JMT: KBANK has partnered with JMT Network (JMT) to create JK Asset Management Co., Ltd. (JK AMC). The creation of JK AMC will allow KBANK
  • KBANK plans to sell 50 billion Bt NPLs to JK AMC by 2022, which will reduce KBANK’s future NPLs, improve net interest margin (NIM), and reduce potential provisions

By Victor Galliano

  • Itaú Corpbanca operates in Chile and Colombia, with the recent victory of Colombian presidential candidate Gustavo Petro hitting Colombian stock prices, including Itaú Corpbanca
  • Nevertheless, we see evidence of a fundamental recovery from an upward perspective in the case of Itaú Corpbanca, despite the political headwinds
  • We rate Itaú Corpbanca as a contrarian buy; it is an emerging recovering stock, unloved and undervalued by the market, but with a stronger balance sheet base and recovering yields

By Pi Research

  • Yesterday, the site visit of the BVP and BGP factories proved to be neutral. We see its underlying growth potential, but believe both will not be a growth driver for 2022-23.
  • Yesterday’s company visit was neutral: we visited BVP (paper packaging manufacturer) in Pathumthani and BGP (PET packaging and plastic films manufacturer) in Ayutthaya.
  • A tough growth roadmap, but only time will tell: the company’s goal is to reach $25 billion in sales by 2025, representing a CAGR of 19% over 4 years (2021-25E) through enterprise-focused M&A strategy

By Robert C. Prather Jr.

  • Enterprise Storage Hardware Market Faces Many Headwinds and Growing Commoditization
  • STaaS is cannibalistic, facing increasing competition and slowed down at the MRQ
  • Each of the past 2 quarters has seen significant, non-recurring revenue that has allowed PSTG to beat estimates

By Mark Chadwick

  • Ryohin Keikaku (Muji) cut its FY 8/22 profit forecast by 32%
  • The retailer faces a number of headwinds, only some of which are industry-wide
  • We remain bearish as Muji lacks the pricing power to push through higher input costs

Associated symbols: Softbank Group (9984.T), Tencent (0700.HK), PT Nippon Indosari Corpindo Tbk. (ROTI) (ROTI.JK), Hyundai Engineering & Construction (000720.KS), Kasikornbank PCL (KBANK.BK), Ryohin Keikaku (7453.T)

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