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Admiral Benefits from a Pricing Flaw in Motor Insurance

Admiral tends to aggressively increase its customer numbers in times of pricing flux by undercutting the competition in terms of pricing. We have seen this at least once before, and we believe that much more recently, such as last year, we saw this happen again. As Admiral grows these customer numbers, it increases not only its profit from underwriting but also these ancillary sources.

There are three factors causing flux in U.K. motor insurance prices: emerging from lockdown, regulatory pricing review, and regulatory restructuring of claims. These are all affecting motor insurance prices and giving Admiral Opportunities to undercut the competition and expand its customer base.

We believe consensus completely ignores this dynamic of customer growth at Admiral, and on this

Element we are very different. Our estimates for customer numbers are only three fourths of the numbers that investors witnessed during the last global financial crisis, but we are still well over double the 590-basis-point average annual customer growth as per Visible Alpha consensus.

Company Profile

Admiral is a personal lines insurer that writes most of its business in the United Kingdom. The company operates three business divisions: U.K. insurance, international car insurance, and other. This is a reduction from four since April 2021, when new CEO Milena Mondini de Focatiis announced the sale of Admiral’s price comparison businesses within Penguin Portals. This included www.confused.com, www.rastreator.com, www.lelynx.fr, and the group’s technology division, Admiral Technologies. The sale excluded Admiral’s U.S. price comparison business, www.compare.com. The total net transaction value was GBP 460 million, which Admiral intends to return to shareholders.

(Source: Morningstar)

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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.

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IPO Watch

Zomato’s $1 Billion IPO Approved by SEBI

The company filed papers in April seeking regulatory approval for the Rs. 7,875 crore IPO, the year’s most anticipated public offering.

The approval comes after one of the company’s largest shareholders, Info Edge India, decided to reduce its offer for sale (OFS) in the IPO to Rs. 375 crore from Rs. 750 crore previously.

Info Edge India Ltd., one of Zomato’s early investors, will sell its stake in the company in the upcoming IPO for Rs750 crore.

Zomato will raise Rs. 7,500 crore from the public offering through the issuance of new equity shares. The proceeds will be used to fund organic and inorganic growth opportunities worth over Rs. 5,500 crore by the company.

The much-awaited initial public offer (IPO) of online food delivery and restaurant discovery platform Zomato is expected to open for subscription on July 19 at a price band of Rs 70-72 per share, said people with direct knowledge of the development. The offer size will likely be as much as Rs 9,375 crore at this price.

Revenue

Zomato reported revenue of Rs 2,743 crore in FY20, a 463 percent increase from revenue of Rs 487 crore in FY18. Its revenue was Rs 1,368 crore in the nine months ending December 31, 2020. In FY18, FY19, FY20, and the nine months ended December 31, 2020, the company reported losses of Rs 106.9 crore, Rs 1,010 crore, Rs 2,385.6 crore, and Rs 682 crore, respectively.

Company Profile

Zomato is an Indian multinational restaurant aggregator and food delivery companyfound in 2008. Zomato provides online information, menus and user-reviews of restaurants as well as food delivery options from partner restaurants in select cities.

(Source: The Economic Times)

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Currencies Trading Ideas & Charts

In May, India Inc’s foreign borrowings fell by 51% to USD 738 million.

In May, no borrower used rupee-denominated bonds to raise cash from international markets, as in the previous month.

Among the largest borrowers were BW Global United LPG India Pvt Ltd (USD 198.41 million for capital goods imports), Renew Sun Waves (USD 140 million for new projects), and Indian Oil Corporation NSE 0.32 percent (USD 100 million for working capital requirements). According to the data, Tata SIA Airlines Ltd raised USD 110.40 million for the import of capital goods.

Source:Economic times

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Property

Acquisition of EzStorage and Strong Pandemic Performances Elevating the Public Storage FVE to $279

Given the short-term nature of these leases and the growing demand for self-storage space, management had been able to achieve material rent increases from new and existing tenants. The industry has experienced tremendous growth in the last several years, and we see further societal shifts fueling that growth for years to come, albeit at a more modest pace.

Public Storage has achieved impressive growth over the years, but we do not think management can increase prices indefinitely. The low cost of building and the undifferentiated nature of self-storage facilities allow supply to enter the market and absorb tenants who eventually get priced out of Public Storage units.

Raising Public Storage FVE to $279 on Acquisition of ezStorage and Strong Pandemic Performance

We are increasing our fair value estimate for no-moat Public Storage to $279 from $207 after incorporating the recently announced acquisition of ezStorage for $1.8 billion into our model. The 48 self-storage facilities acquired are almost all high quality in Mid-Atlantic markets with higher-than average barriers to entry and a strong growth outlook. The impact of the company’s stronger-than-anticipated first-quarter results, which led us to increase our short-term internal growth outlook..

Additionally, we now anticipate increased storage facility usage over the next few years as the millennial generation seeks to move from their urban apartments to suburban homes, which could create additional short-term demand as they look for a new home.

Financial Strength

Public Storage’s balance sheet has long been the gold standard among real estate investment trusts light on debt and heavy on progressively cheaper preferred stock, with a good portion of acquisitions and facility developments fueled directly with cash flow from operations. Public Storage’s industry-leading EBITDA coverage ratio separates its balance sheet from its self-storage REIT competitors. Public Storage benefits from a diversified stream of financing, including minority investments from which it receives cash dividends.

Bulls Say

  • Public Storage’s commanding lead in supply restricted markets leads to consistent revenue growth.
  • Life changes related to the corona virus crisis will increase demand for self-storage facilities.
  • Public Storage’s industry-leading balance sheet leaves room for low-cost consolidation opportunities in a fragmented market.

Company Profile

Public Storage owns and operates over 2,500 self-storage facilities in 38 states, with over 150 million net rentable square feet of storage space. Through equity interests, it also has exposure to the European self-storage market through Shurgard Europe and to an additional 29 million net rentable square feet of commercial space in the United States through PS Business Parks.

(Source: Morningstar)

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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.

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IPO Watch

Info Edge reduces the size of the OFS in the Zomato IPO by half, to Rs 375 crore.

The cut in size indicates that Info Edge is confidence in the future of the company and wants to keep more of the company it bought for a low price. Many analysts and foreign investors are likewise optimistic about the situation. Zomato’s much-anticipated initial public offering is set to take place later this month. The date, on the other hand, remains unclear.

The stock is trading at Rs 80 a share in the grey market, or the unofficial market for unlisted shares, about 15% more than the projected IPO price of Rs 70. Zomato’s shares were sold at Rs 55-60 in the most recent round of investment.

If traders’ predictions are correct and Zomato offers its shares for Rs 70, Info Edge will profit 60 times its initial stake. According to the DRHP, the business led by Sanjeev Bikhchandani purchased around 18.55 % at an average cost of Rs 1.16 per share.

Source: economic times

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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.

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IPO Watch

India Pesticides is listed at a 22% premium to the issue price

Subscription

Rs 800 crore IPO was subscribed 29.04 times between June 23 and 25. The shares reserved for non-institutional investors (NIIs) were subscribed 51.88 times, while the quota reserved for qualified institutional buyers (QIBs) was subscribed 42.95 times. The retail quota was subscribed to 11.3 times.

According to a corporate news release, India Pesticides is the only Indian manufacturer of five technicals and is among the world’s leading producers of captan, folpet, and thiocarbamate herbicides in terms of manufacturing capacity.

The agrochemical stock had a P/E of 24.5 times and an EV/Ebitda of 18.2 times at the time of issuance. From a long-term perspective, Motilal Oswal Securities, Prabhudas Lilladher, Antique Stock Broking, Anand Rathi, Angel Broking, and ICICI Direct all gave the issue “subscribe” ratings.

Analysts View

The corporation has a 34 percent return on equity (ROE) and a 45 percent return on capital employed (ROCE), respectively. Angel Broking had predicted a 15-25 percent increase in listing gains. Short-term investors were urged to book profits at Rs 350.

Registrations and Licences

India Pesticides now has two manufacturing plants in Uttar Pradesh, one in Lucknow and the other in Hardoi. The combined capacity of the two plants is 19,500 mt for technicals and 6,500 mt for formulations verticals. For sale in India, the company has registrations and licences for 22 agrochemical technicals and 125 formulations, as well as 27 agrochemical technicals and 35 formulations for export.

Source: Economic times

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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.

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IPO Watch

Two IPOs will be launched next week, raising about Rs 2,500 crore in total.

This follows the initial public offerings (IPOs) of five companies last month: Shyam Metalics and Energy, Sona BLW Precision Forgings (Sona Comstar), Krishna Institute of Medical Sciences, Dodla Dairy, and Indian Pesticides. These companies raised a total of Rs 9,923 crore through public offerings.

Clean Science and Technology and GR Infraprojects’ three-day initial public offerings (IPOs) will begin on July 7 and end on July 9. The bidding for key investors will begin on July 6, according to data from exchanges.

Through IPOs, the two companies would raise a total of Rs 2,510 crore. The firms’ shares will be traded on the BSE and the NSE.The Rs 1,546.62-crore IPO of Clean Science and Technology is wholly an offer for sale (OFS) by current owners and other shareholders.

For its initial public offering, a speciality chemical producer has set a price range of Rs 880-900 per share. Functionally essential speciality chemicals, such as performance chemicals, pharmaceutical intermediates, and FMCG chemicals, are manufactured by Clean Science Technology. Customers employ its goods as crucial starting materials, inhibitors, or additives in their products.

The public offering of GR Infraprojects will be a full OFS of 1,15,08,704 equity shares by promoters and investor selling stockholders. Employee reservations are also included in the package. The IPO of GR Infraprojects, which has set a price range of Rs 828-837 per share, is expected to raise Rs 963.28 crore at the top end of the pricing range.

Source: Economic times

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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.

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ipo IPO Watch

IPO Stocks to Keep an Eye on in June

Squarespace(ticker: SQSP), a website builder, was the most high-profile listing in May. . Although the corporation’s initial public offering (IPO) was technically a direct listing rather than a typical IPO, the shares began trading on May 19. Squarespace’s price has risen approximately 17% so far.

The IPO boom is anticipated to remain in June and beyond, according to investors. Here are five initial public offerings to keep an eye on:

  • dLocal (DLO)
  • Krispy Kreme (DNUT)
  • Authentic Brands
  • Couchbase
  • Robinhood

dLocal (DLO)

dLocal, a payments startup, is part of a wave of digital payments companies that are going public. In late May, Paymentus Holdings (PAY) and Flywire Corp. (FLYW) completed their first public offerings. In addition, Marqeta (MQ) has filed to go public next week.

dLocal reported $104.1 million in revenue in 2020 in its IPO filings, up 89 percent over 2019. It also made a profit of $28.2 million last year, in stark contrast to many IPO growth stocks, which are losing money.On June 3, shares began trading on the Nasdaq. The payment startup raised $617.7 million in its initial public offering, which opened at $31 per share.

Krispy Kreme (DNUT)

Krispy Kreme, a doughnut company, said on May 4 that it has filed secret documents to execute an IPO. Krispy Kreme is aiming to re-enter the public market after its initial public offering (IPO) in 2000 ended in a Chapter 11 bankruptcy barely five years later.

Investors are hoping that the value of Krispy Kreme has increased since 2016. Dunkin’ Brands, a competitor, was taken private in 2020 for $8.76 billion.

Authentic Brands

Authentic Brands filed for an IPO in secret on May 26 and is aiming for a $10 billion valuation, according to Women’s Wear Daily. The data appears to back up an earlier Bloomberg report claiming that Authentic Brands is considering an IPO.

According to CNBC, Authentic Brands was estimated at between $4 billion and $5 billion in its most recent fundraising round in 2019.

Couchbase

According to insiders acquainted with the situation, Couchbase might be worth up to $3 billion. Cisco Systems (CSCO), Intuit (INTU), and PayPal Holdings are among the company’s high-profile customers, generating more than $100 million in annual revenue (PYPL).

Couchbase has been planning an initial public offering (IPO) since 2016. The company has been quiet about its anticipated IPO in recent months, but the March filing indicates that a formal announcement might happen at any time.

Robinhood

The past few years have been tremendously profitable for Robinhood, but they have also been marred by controversy. After the Reddit WallStreetBets community staged targeted short squeezes, Robinhood briefly suspended trading in GameStop Corp. (GME) and other so-called “meme” stocks, CEO Vlad Tenev was called to testify before Congress.

Tenev stated in his statement that Robinhood has over 13 million consumers. In 2020 and early 2021, a retail stock trading boom fueled Robinhood’s exponential growth. According to TechCrunch, the company’s payment for order flow revenue climbed from around $90 million in the first quarter of 2020 to around $220 million in the fourth quarter.

Source: money.usnews.com

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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.

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IPO Watch

OZZ Resources launches $5m gold IPO with five WA Projects, Pledges tight register

Money bag with the word IPO (Initial public offering; stock market launch) and a calculator. The first public sale of shares of a joint stock company. Business and finance concept

Chairman Alan Lockett, formerly of Olympia Resources and credited with the discovery of the now-mined Hart Range garnet deposit in the Northern Territory, and managing director Jonathon Lea, formerly of Polaris Metals and who has also been involved in the development of several gold projects in Western Australia, are at the helm of the company.

Following the offering, Mr. Lea believes shareholders may expect a highly busy exploration agenda. “Shareholders may expect a thorough, targeted, and systematic exploration effort across our core properties, as well as frequent news flow,” says the company. He went on to say that the corporation would retain strict financial discipline and expense management. A total of 25 million shares are being offered at a price of $0.20 per share, with the offer set to end on May 28.

By mid-June, OZZ hopes to be listed on the ASX. For the second half of 2021, a multi-pronged exploration campaign is planned, with drilling approvals already in place for Maguires Reward, where 5,000 metres of reverse circulation drilling will begin next month. In the meanwhile, at the Rabbit Bore and Petewangy projects, OZZ will conduct an airborne electromagnetic survey. Rabbit Bore has a 5km strike length of promising shear zones under cover, with anomalous copper, nickel, and cobalt found in soil sampling.

(Source: Morningstar)

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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.

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Global stocks

PetroChina and Sinopec Guides Significant Improvement in 1H Earnings; Positive Readthrough for CNOOC

Overall, the sector is still undervalued but our preferred pick is CNOOC, given its upstream focus and cost efficiency with all-in cost of below USD 30 per barrel. Higher oil prices should be positive for oil producers, this could be negative for PetroChina’s and Sinopec’s downstream operations, especially if the government decides to delay price hikes for refined products to prevent inflation. The better earnings are widely expected by the market, given that the weak results in 2020 were due to lower oil prices and COVID-19 disruptions. PetroChina and Sinopec attributed the improvement to recovery in prices and demand for oil and gas products, as well as stringent cost controls.

Oil prices are likely to remain elevated (above midcycle price of USD 60 per barrel for Brent) for at least another 6-12 months, in our view, as supply/demand dynamics support current price levels. All is going according to plan with a continued vaccine rollout, decline in infections, and recovery in demand. On the supply side, an accelerated return of Iran volumes continues to pose a risk, but we still see the situation as manageable.

Company Profile

China Petroleum & Chemical, or Sinopec, is one of China’s national oil companies and one of Asian’s largest integrated oil companies in terms of revenue. Its income is derived primarily from refining and marketing of oil products and petrochemical production. Sinopec has China’s largest petrol station network with over 30,000 stations and enjoys significant market share in petrochemicals. Established in 2000 by China Petrochemical Corporation, a state-owned enterprise and majority shareholder, the company also owns oil and gas assets in Shandong and Sichuan provinces. It has a smaller global upstream presence than peers PetroChina and CNOOC.

(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.