August 02, 2022
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What happened in markets this week, and what are analysts talking about?
Reported a strong set of FY2021 results with net profit rising 4.6% higher than estimates. Strength in financial performance due to ICE segment which rose 11.3% yoy driven by logistics and e-commerce industry and delay in the switch over by its automotive client. ICE also has higher net margins than its consumer electronics segment.
•DBS; HOLD recommendation and TP of S$0.53 under review: Earnings beat is mainly due to delay in scheduled switchover of its automotive client. Believes a strong set of results is unsustainable with the potential loss of revenue from its automotive client as inevitable, although delayed. Automotive customer forms about 22.5% of FY20 revenue.
•UOBKH; HOLD recommendation and higher TP of S$0.66: Results better than estimates, with ICE segment’s contribution rising from 61.1% in FY20 to 70.2% in FY21.
• UBS; Maintain BUY with lower TP HK$350: House become more positive on Meituan after earnings. While Select losses expanded QoQ in 2Q, management believes losses will peak on a quarterly basis and narrow next year. Comments from Meituan and Pinduoduo also suggest operational efficiency is the main focus instead of early days user acquisition, to build a more sustainable business model. Lower PT due to lower profits over long term, with DCF TP of HK$350 implying 6.9x FY2022 sales in line with valuation of other large cap internet peers.
• Goldman Sachs; Maintain BUY with TP HK$396: Solid 1Q results from food delivery, in-store and hotel segments, while investments in to Meituan Select resulted in Group recording adjusted EBIT loss RMB4.2b. Company will continue to cooperate fully with regulators and does not see a material impact to business
• CIMB; Maintain BUY with lower TP HK$328: Results better than expected, but lower TP to reflect impact of margin from investment in Meituan Select. Select has penetrated 2,600 cities in China, with the largest order numbers in industry. Meituan added 58m new users in 1Q21 and 570m users in total. Meituan Select contributed half of new users.
•Maybank; Upgrade to BUY with higher TP of S$1.16: House believe the GENS-Sega Sammy JV will win the Yokohama IR RFP process, which could add S$1.8b to earnings and S$0.30 to TP, resulting in an upgrade to the recommendation. House sees stock as a tactical buy as they believe no value from a Yokohama IR has been imputed to current share price.
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