Hyphens Pharma International Ltd – Disruption in Specialty Pharma SupplyAuthor: traderhub8
The Positive + Healthy growth in proprietary brands. Proprietary brands revenue increased by 16% in 1Q23 supported by higher demand for Ceradan® dermatological products. Ceradan® and Ocean Health® have a pipeline of new products to be launched this year. The Group launched Ceradan® Advanced Emollient Wash in Singapore and Malaysia during 1Q2023.
The Negatives – Supply disruption in specialty products. Specialty revenue fell 27% due to the cessation of the distributorship of Biosensors products in Dec 22 and the delay in the shipment of key products in Vietnam. Of the three suppliers facing production disruption, two resumed production in 2Q23. – Weaker operating margins. Net profit margin suffered from higher R&D and travelling expenses. Margins will be weighed down further from DocMed investments into the platform. Source: Phillip Capital Research - 18 May 2023 Labels: Hyphens Pharma BRC Asia – Disappointing 1H23, Strong Uptick Expected in 2H23Author: traderhub8
The Negative – 1H23 earnings came in at only 31% of our FY23e estimates. The shortfall was due to lower order deliveries, which was impeded by low construction progress at work sites to meet heightened safety measures. The measures are mandated to last till end-May, but activities are picking up with improved safety conditions. BRC booked more lower-margined trading businesses during the period, and gross margin fell 1.3% pt to 7.4%. Interest costs rose 170% YoY to S$6.3mn, resulting in 34.1% YoY decline in 1H23 net profit.
The Positives + Net gearing improved to 0.38x (Sep 22: 0.76x). With easing of steel prices and freight costs, inventory holdings were brought down. Credit terms from suppliers become more favourable, leading to strong operating cash inflow of about S$0.608/share. + Orderbook edged higher to S$1.42bn (Sep 22: $1.4bn), as demand remains robust. BCA estimates that progress payments, which represent work done and revenue booked, to grow by 9-20% in 2023. We estimate about 60% of the orderbook are for jobs in the public sector which are less volatile and payments are more certain. While the delay in construction work had affected cash flow and credit conditions of some contractors, we do not see any risk of default that could impact building material suppliers. Source: Phillip Capital Research - 18 May 2023 Labels: BRC Asia Silverlake Axis Ltd – Higher OPEX Hurt EarningsAuthor: traderhub8
The Positives + Recurring revenue rose 8% YoY. Recurring revenue comprises maintenance and enhancement services, insurance ecosystem transactions and services, and retail transactions processing revenue. Maintenance and enhancement services increased 7% YoY to RM124mn as the dip in enhancement services revenue was more than offset by the increase in maintenance revenue. The decline in enhancement services revenue was mainly due to the timing and progress of contracts fulfilment and delivery, and Silverlake anticipates this will be recognised and booked in the following quarter. Insurance ecosystem transactions and services revenue increased 18% YoY as there was broad-based growth across all segments, from vehicle claims processing, insurance policies processing, productivity and analytics solutions, and integration services. Revenue from retail transactions processing surged 102% YoY mainly due to higher subscriptions for Silverlake’s cloud-based retail solution, AgoraCloud, from both retail and pharmaceutical customers in Malaysia and Singapore. + Order backlog healthy. Silverlake has a long track record and a proven client base in Southeast Asia. Three of the 5 largest Southeast Asia-based financial institutions use its core banking platform, and it has largely retained all its clients since bringing them on board its platform. Silverlake’s project pipeline is healthy, at RM1.8bn (2QFY23: RM1.8bn), with a record contract wins of RM259mn in 3QFY23 and an order backlog of RM261mn on the verge of closing in 4QFY23. Furthermore, Silverlake has recently secured their first multi-million 10-year core and channels digital banking MOBIUS deal with a client in Malaysia. Silverlake is beginning to close more deals and is witnessing an uptick in inquiries about its financial services market solutions and capabilities.
The Negatives – OPEX rose 14% YoY. Operating expenses were 14% higher YoY mainly due to the current inflationary environment and a need to support long-term growth and sustainability. The increase was across all segments, with increases in staff costs due to additional headcount, increase in finance costs due to a revolving credit facility drawdown, increase in foreign currency exchange losses due to the fluctuation of foreign currencies, and higher costs for internal and external branding activities as markets opened up. Nonetheless, the expense over revenue ratio was kept at 30%. – Project-related revenue fell 27% YoY. Software licensing revenue fell 65% YoY to RM7mn. This was mainly due to the progression of actual project delivery varying from quarter to quarter, resulting in a lag in revenue contribution. However, this was offset by software project services revenue increasing 6% YoY to RM26mn as there was additional revenue recognised from recently closed contracts from countries such as Thailand, UAE, and Malaysia. In addition, progressive project revenue recognised from on-going secured projects remained at a stable level. Source: Phillip Capital Research - 18 May 2023 Labels: Silverlake Axis ComfortDelGro Corp Ltd – Inflationary Pressures Gradually AbatingAuthor: traderhub8
The Positives + Taxi revenue improvement is still underway. Recovery of taxi revenue was due to booking commissions introduced last year (May 22: 4%, Oct 22: 5%) and a more stable taxi fleet. The improvement in taxi revenue would have been stronger but for incentives in China to attract drivers. Utilisation rate of taxis remains sluggish, especially in Beijing. Operating profit in China declined 46% to S$3.4mn.
+ With stable capex, cash piles up. Comfort generated free cash flow of around S$76.8mn in 1Q23 (1Q22: S$92.5mn). Net cash continues to pile up on the balance sheet. 1Q23 net cash is S$718mn, similar to last years S$754mn. Net cash is at record levels. Annualised capex is now S$200mn p.a., compared to the S$350mn-400mn p.a. pre-pandemic. We expect the large cash hoard will also boost earnings through higher interest income.
The Negative – Poor margins in public transport. Public transport operating margins are a paltry 3% vs pre-pandemic 8%. Margin pressure comes from low bus contracting fees in Singapore, higher electricity and increased bus driver fees in Australia and UK. Despite the jump in rail fees (via subsidies) and volumes in Singapore, margins were under pressure. UK suffered an operating loss of S$3.5mn in 1Q23, compared to S$1.6mn profit a year ago. Source: Phillip Capital Research - 17 May 2023 Labels: ComfortDelGro Thai Beverage PLC – No Fizz in the BeerAuthor: traderhub8
The Positive + Better product mix and selling price for spirits. Spirits volume in 2Q23 rose 7.8% YoY to THB31.4bn (S$1.2bn). Revenue growth was from a larger mix of the higher priced brown compared to white spirits. The price increase also supported sales growth. The mix of brown and white spirits have not been disclosed except for double-digit revenue growth for brown and marginal decline in white spirits. There remain ample production capacity in spirits and capital expenditure is minimal. Raw material cost from molasses is expected to rise this year based on the recent Dec22-Apr23 annual harvest.
The Negative – Beer volumes first decline in six quarters. Volume in 2Q23 declined 10.1% YoY, pulling down revenue by 7.3%. Operating margins fell as marketing expenses remain elevated. Gross margins were stable at 22.4%. Volumes decline was led by Sabeco, with revenues declining by 15% YoY in 1Q23. Vietnam, especially the industrial export sector, is suffering from weak economic conditions, job losses and poor consumer sentiment. Distributors are not willing to carry much inventory due to the weak demand and high interest rates. Thailand volumes were also impacted by higher prices but there has been market share gains. Source: Phillip Capital Research - 15 May 2023 Labels: ThaiBev StarHub Limited – DARE+ Drag DelayedAuthor: traderhub8
The Positive + Roaming revenue lifted mobile. Mobile revenue rose 13.4% YoY to S$152mn, supported by both ARPU and subscriber growth. Roaming is the largest driver of ARPU recovery despite ongoing migration to SIM only. Prepaid remains challenged with sluggish net adds and lower prices.
The Negative – Weakness in broadband. Excluding the MyRepublic acquisition, broadband revenue declined an estimated 5% YoY to S$49mn. Broadband is facing higher price contribution. ARPU and subscribers were basically flat QoQ. The acquisition of MyRepublic has only lifted StarHub broadband ARPU by S$1 to S$34. The launch of SIMBA (formerly TPG) broadband plans will further pressure prices. Source: Phillip Capital Research - 15 May 2023 Labels: StarHub |