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Technology Stocks

Despite a large year-over-year improvement, Gentex’s second quarter was hampered by parts shortages

Male gamer in headphones holds joystick and playing videogame on console or desktop PC, gaming lifestyle, cybersport. Computer games player in his room with neon light, streamer

, but sales fell by nearly 9% versus second-quarter 2019. Gentex shipped about 2 million less units than it expected at the start of the quarter, which caused diluted EPS of $0.36 to miss the Refinitiv consensus of $0.45.

The industry’s supply chains are in turmoil due to the semiconductor shortage impacting chip availability, but other disruptions unrelated to Gentex, such as foam shortages following Texas winter storms, caused automakers to change production at the last minute or refuse shipment of mirrors because other non-Gentex parts never arrived at the automakers’ assembly plants. This supply problem in our view will improve throughout 2021, and the worst of it is occurring in second quarter and early third quarter.

Gentex’s Revenue Growth

The lost production caused management to issue second-half 2021 guidance that implies lower full-year guidance than given in April. Revenue guidance is now $1.88 billion to $1.98 billion, instead of $1.94 billion to $2.02 billion, and we believe that second-half gross margin guidance of 37.5%-38.5% means April’s full-year guidance of gross margin between 39%-40% is not possible. We agree with management’s optimism around 2022 revenue growth being 10%-15%. Gentex’s cash-loaded and debt free balance sheet make times like this easier to get through management seems to be willing to continue share repurchases and spent $115.9 million on that in the second quarter.

Company Profile

Gentex was founded in 1974 to produce smoke-detection equipment. The company sold its first glare-control interior mirror in 1982 and its first model using electrochromic technology in 1987. Automotive revenue is about 98% of total revenue, and the company is constantly developing new applications for the technology to remain on top. Sales from 2020 totaled about $1.7 billion with 38.2 million mirrors shipped. The company is based in Zeeland, Michigan.

(Source: Factset)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Commodities Trading Ideas & Charts

Oil Futures Snap 4-day Winning Streak, Settle Marginally Lower

In other coronavirus news, Russia’s overall virus cases have topped 6 million, and Turkey’s infections have tripled since earlier this month.

China, the world’s largest petroleum importer, reported 76 new COVID-19 cases, the most since the end of January, amid a surge of local illnesses in Nanjing, in eastern China.

Floods and a typhoon have wreaked havoc on China’s central and eastern regions.

With robust demand in the United States and forecasts of restricted supply underpinning prices, investors are now looking for direction from the Federal Reserve meeting and reports on US oil inventories.

(Source: Factset)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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LICs LICs

MA1 Suspended from trading as the Restructure to an ETMF Continues

For the half-year ended December 31, 2020, the gross portfolio return before all fees and expenses was roughly 44.36 percent.

MA1 shareholders unanimously approved the company’s restructuring as an Exchange Traded Managed Fund on May 10th (ETMF).

MA1 was taken off the market on May 28th and will be delisted on June 1st.

Units in the newly formed ETMF Monash Absolute Active Trust (Hedge Fund) are being issued to shareholders on an in-specie basis, with the new ticker MAAT slated to begin trading on the ASX on June 10th.

The ETMF will use a Single Unit (dual registry) Structure, allowing unit holders to buy and sell units on or off the market.

Company Profile

In 2012, Monash Investors was established by one of Australia’s most experienced fund managers in Simon Shields, the previous head of equities at both UBS and CFS, and Shane Fitzgerald a senior equity analyst from UBS and JPMorgan. The firm was set up to manage money in a way that both Simon and Shane felt was simply smarter than riding the share market up and down, instead, attempting to achieve targeted positive returns of double digits p.a. after fees, over a full market cycle while seeking to avoid loss of capital over the medium term. Importantly, it was the experience gained across multiple investment styles and in seeing the pitfalls in managing very large pools of capital that shaped the way the Fund is managed today.

(Source: Factset)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Commodities Trading Ideas & Charts

DTE Energy: Spin-Off of DT Midstream Completes & the FVE Adjusted To Reflect Separation

We expect high-single-digit growth in utility earnings over the next five years, driven in large part by grid investment at DTE Electric and replacing aging infrastructure at DTE Gas. DTE Electric is also investing heavily in gas power generation and renewable energy to replace its aging coal fleet. We estimate DTE will invest $18.5 billion at its utilities during the next five years in a Michigan regulatory framework that is constructive for investors.

We are less bullish about the earnings contribution from the power and industrial segment as reduced emissions fuel, or REF, earnings decline from the expiration of tax credits. However, we believe new industrial cogeneration projects and renewable natural gas from landfill projects should, for the most part, offset the REF decline. We estimate flat earnings will reduce the segment’s contribution to consolidated earnings from almost 13% in 2021, following the separation of DTM, to less than 10% by 2025.

Financial Strength

DTE’s book debt/capital ratio rose to 61% at 2020 year-end, a significant increase from five years ago when it averaged in the low-50% range. A stable interest coverage ratio during the next five years is expected, with EBITDA/ interest expense over 4 times. On June 24, DTE declared a $0.825 per-share quarterly dividend ($3.30 per-share annualized) on its common stock payable on Oct. 15, 2021, for shareholders of record at the close on Sept. 20, 2021. DTE management has indicated that the DTE dividend plus the DT Midstream dividend will total $4.70-$4.80 per-share annualized starting in the third quarter of 2021. The midpoint of this guidance would represent a 9.4% increase over the previous DTE dividend before the separation of DTM. The current    annual DTE dividend of $3.30 per share represents a payout ratio of approximately 60% on our 2021 EPS estimate of $5.51

Bull Says

  • Shareholders will receive a dividend increase when the DTE Energy and DT Midstream dividend are combined. It is estimated a 9.4% combined dividend increase, followed by 6% annual increases for DTE from 2022 to 2025.
  • Michigan’s aging utility infrastructure needs investment, which will mean regulated growth opportunities for DTE.
  • Over the past 10 years, Michigan regulation has been constructive for shareholders and is expected to remain favorable.

Company Profile

DTE Energy owns two regulated utilities in Michigan. DTE Electric serves approximately 2.2 million customers in southeastern Michigan including Detroit. DTE Gas serves 1.3 million customers throughout the state. In addition, DTE has nonutility businesses and investments including energy marketing and trading, renewable natural gas facilities, and on-site industrial energy projects.

(Source: Factset)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
LICs LICs

AFIC share price hits all time high

Over the shoulder view of and stock broker trading online while accepting orders by phone. Multiple computer screens ful of charts and data analyses in background.

According to AFIC, the Commonwealth Bank of Australia (ASX: CBA) is the largest current position, followed by BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES), and Westpac Banking Corp. (ASX: WBC).

These top five positions, however, are supplemented by dozens of other ASX shares. And, with the ASX 200 index lately reaching new highs, AFIC would have benefitted from a rising tide lifting its whole portfolio (evidenced by its NTA per share growth).

This is most likely why the AFIC share price has reached an all-time high today. It isn’t the only one. Other LICs in the AFIC mould are also on the rise.

At the present AFIC share price, the organization has a market value of $9.62 billion and a trailing dividend yield of 3.05 percent (or 4.36 percent when AFIC’s full franking credits are considered).

The net tangible assets (NTA) per share increased to $7.45 per share in June (after tax). This is a significant increase over the previous month’s share price of $6.19. This means that for every AFIC share purchased, buyers receive $7.45 in other assets.

Over the last two decades, the AFIC has returned 5.23 percent in capital gains and 6.18 percent in fully franked dividends.

Company Profile

The Australian Foundation Investment Company Ltd (AFIC) is a Listed Investment Company in Australia (ASX: AFI) and it is one of the oldest on the ASX established in 1928.  It aims to provide shareholders with attractive investment returns by growing stream of fully franked dividends and growth in investment of capital. AFIC measures its performance through 2 measures namely portfolio return and the shareholders return. AFIC is presently Australia’s largest LIC, managing a portfolio worth around $8 billion for its stockholders.

(Source: Factset)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Currencies Trading Ideas & Charts

An e-commerce behemoth could be on the verge of making a huge foray into cryptocurrency.

So, what’s the deal?

A job offering for a “Digital Currency and Blockchain Product Lead” was recently posted on Amazon. The individual in charge of the e-commerce giant’s blockchain strategy and product roadmap will be tasked with filling the position.

Following a report from City A.M. on Monday, enthusiasm about Amazon’s digital currency plans reached a fevered pitch. Amazon is “absolutely” preparing up to take Bitcoin payments by the end of the year, according to the British financial journal, and plans to develop its own cryptocurrency by 2022.

Amazon, on the other hand, refuted City A.M.’s assertions, telling Bloomberg that “despite our interest in the industry, the conjecture that has ensued surrounding our precise plans for cryptocurrencies is not true.”           

Despite this, Amazon stated that it is keen to learn more about digital currencies and how they might be integrated into its large e-commerce network. The business stated, “We remain committed on investigating what this could look like for people shopping on Amazon.”

So, what’s next?

It would be a game-changer for the crypto business if Amazon accepted Bitcoin and other cryptocurrencies as payment. The action would immediately increase Bitcoin’s legitimacy and usability. As a result, the value of the cryptoasset would most likely increase.

Even if this happens, it will most likely take some time. In the interim, there are numerous dangers to be aware of. For instance, crypto investors should be on the lookout for a possible crackdown on stablecoin issuer Tether, which has piqued authorities’ interest in recent weeks after investors raised concerns about its reserve statements’ lack of clarity.

Source: Factset

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Commodities Trading Ideas & Charts

A look at the most recent commodity expert opinions and forecasts: forecast for resources; coal and iron ore

China’s demand for commodities is expected to weaken in the second half of 2021, according to analysts, but this will be largely offset by stronger demand outside of China and the global shift to a low-carbon economy.

The development of the more virulent Delta strain of coronavirus has hampered mobility and growth forecasts, putting pressure on commodities in recent weeks. However, central banks have signalling more aggressive policy positions, with several announcing a reduction in bond purchases.

The vigourous drive in China to put inflationary pressure on industrial metals prices, such as steel, is a third issue. After the run-up that brought copper and iron ore prices to all-time highs, the situation in the second half will be more unpredictable.

Coal

Spot prices for coking (metallurgical) coal have risen since the start of May, but the CBA analysts believe a peak is building, as some steel product margins are now declining.

However, thermal coal prices have remained high due to supply concerns and seasonal demand from a warmer-than-usual summer in North Asia. Thermal coal prices have climbed thrice since the commencement of the pandemic, according to Longview Economics.

Over 2020, China’s coal power capacity increased by 3%, while additions outside of China totalled just 9GW and retirements were 25GW. While a result, China’s coal capacity continues to expand even as the rest of the world cuts back.

Iron Ore

China’s economic report for June is unlikely to allay fears of slowing growth. As a result, ANZ Bank analysts expect that downward pressure on iron ore prices will intensify.

Despite the fact that the market remains tight, a severe correction is unlikely. While demand outside of China may be able to compensate for some of the downturn, iron ore prices are projected to fall in the second half, albeit the decline will be limited.

Source: Factset

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
ipo IPO Watch

Glenmark Life Sciences raises Rs 454 crore from cornerstone investors ahead of its first public offering.

According to a regulatory filing, the business has agreed to distribute 63,06,660 equity shares to 19 cornerstone investors at a price of Rs 720 per share, for a total of Rs 454 crore.

Amongst those cornerstone investors are HSBC Global Investment Funds, Government Pension Fund Global, Oaktree Emerging Markets Equity Fund LP, Copthall Mauritius Investment Ltd-ODI account, Societe Generale-ODI, Kuber India Fund, and Reliance General Insurance Company.

Glenmark Pharma would issue new equity shares worth up to Rs 1,060 crore and sell up to 63 lakh equity shares in the first public offering (IPO). The issue will begin on July 27 and end on July 29, with a price range of Rs 695-720 per share.

The proceeds from the new issuance will be utilised to cover the promoter’s outstanding purchase consideration for the API business spin-off as well as fund capital expenditure requirements. The IPO will raise Rs 1,513.6 crore at the top of the pricing band.

About Company

Glenmark Life Sciences, a subsidiary of Glenmark Pharmaceuticals NSE -3.62 percent, is a dominant developer and manufacturer of high-value, non-commoditized active pharmaceutical ingredients (APIs) in chronic therapeutic areas such as cardiovascular disease, CNS disease, pain management, and diabetes. APIs for gastrointestinal disorders, anti-infectives, and other therapeutic fields are also manufactured and sold by the firm.

Source : Factset

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Commodities Trading Ideas & Charts

Oil Prices Little Changed After Strong Overnight Gains

After a 2.3 percent increase the previous session, US West Texas Intermediate (WTI) futures were down 0.1 percent at $71.86.
After OPEC and allied nations signed a tentative deal to raise oil output, oil futures fell roughly 7% on Monday, owing to fears about the spread of the COVId-19 delta variant and concerns about oversupply.
The Energy Information Administration (EIA) reported earlier this week that gasoline stockpiles fell by 100,000 barrels last week, while distillate stockpiles fell by 1.3 million barrels.
The EIA report also showed a drop in crude stockpiles at the storage hub in Cushing, Oklahoma, to the lowest level in about seven months.

(Source: RTT News)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Dividend Stocks Philosophy Technical Picks

Kimberly-bottom Clark’s line is being eroded by cost pressures, and its stock isn’t providing much value

The pronounced pullback in retailer and consumer inventories in its North American consumer tissue arm (where volumes collapsed 27% against extraordinary 22% growth last year) drove a significant portion of its underperformance in terms of sales and cost leverage. More specifically, excluding this business, sales were up 4% over the same period in fiscal 2020.

Kimberly’s management lowered its full-year forecast, now calling for organic sales to hold flat or decline by up to 2% (versus flat to 1% growth prior) and $6.65-$6.90 in adjusted EPS (versus $7.30-$7.55 prior). While we intend to trim our 2021 outlook (0.6% organic sales growth and $7.41 adjusted EPS pre-print), we’re holding the line on our long-term expectations of 2%-3% sales growth and high-teens operating margins.

Commodity Cost Inflation

While we never anticipated that the significant level of consumer stock-ups realized a year-ago would persist (particularly as consumers become more comfortable venturing outside the home), commodity cost inflation has outpaced our expectations (serving as a 750-basis-point drag to gross margins in the quarter). In this context, Kimberly now sees inflation costs amounting to $1.2 billion to $1.3 billion in fiscal 2021, up from an anticipated $900 million to $1.1 billion prior (primarily reflecting a 30% increase in the market price for pulp in North America and a more than 90% increase in resin). In an effort to offset the hit to profits over the next several quarters, Kimberly is employing a multi-pronged approach, anchored in pursuing around $100 million in additional cost savings this year (totaling up to $560 million) and raising prices at the shelf at a mid- to high-single-digit clip (similar to its peer set).

Kimberly is employing a multi-pronged approach, anchored in pursuing around $100 million in additional cost savings this year (totaling up to $560 million) and raising prices at the shelf at a mid- to high-single-digit clip (similar to its peer set). Kimberly’s price increases hit shelves a few weeks ago, making consumer acceptance difficult to ascertain thus far. However, we are encouraged by management rhetoric that suggests enhancing its value proposition and leveraging consumer insights across geographies and categories has been an area of focus for its product development.

Company Profile
Kimberly-Clark is a leading manufacturer of personal care (around half of sales) and tissue products (roughly one third of sales). Its brand mix includes Huggies, Pull-Ups, Kotex, Depend, Kleenex, and Cottonelle. The firm also operates K-C Professional, which partners with businesses to provide safety and sanitary products for the workplace. Kimberly-Clark generates just over of half its sales in North America and more than 10% in Europe, with the rest primarily concentrated in Asia and Latin America.

(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.