Category: Global stocks

Global Stock refer to share that are traded on multiple exchanges with different currencies. For example, if a publicly-traded company issues shares in dollars on the New York Stock Exchange and in pounds on the London Stock Exchange, it is issuing global registered shares. Global stock to a portfolio offers diversification and may provide higher returns. Global stock markets may experience higher levels of volatility than other domestic markets with bigger swings to both the upside and downside.

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Global stocks Shares

Monster Beverage Glass Is Half-Full as Its Tremendous Commercial Success Is Offset by Inflation Headwinds

Stock exchange market concept, stock broker looking at graph working and analyzing with display screen, pointing on the data presented and deal on a exchange, Businessman trading stocks online.

 Monster continues to extract outsize growth and stella profitability from this market. Crucial to Monster’s positioning in the market is its partnership with Coca-Cola. Being able to rely on the widest moat in beverages for distribution, merchandising, and retailer negotiation reinforces and perpetuates the benefits of its resonant brand, in our view. With its entire U.S. footprint and most international territories fully incorporated into the Coke system, strategic and logistic planning should become more seamless, allowing products to be scaled more quickly, particularly in international markets (over 35% of sales). Despite the inevitable complexity of appealing to distinct local palates, we believe Monster’s continued geographic diversification should augment its positioning.

Given the importance of the Coke relationship, the launch of Coke Energy products following arbitration between the two parties was a significant development. Still, it has proved to be far from an existential threat, garnering trivial share in the markets where it launched (and recently discontinued in the U.S.). In addition to a seemingly more tenuous Coke relationship, Monster must contend with an intense competitive environment. While Red Bull remains the most formidable rival, Monster is also beleaguered by a number of both established and upstart firms looking to carve out niches in the energy space. Nevertheless, structural advantages and an experienced management team should allow the firm to navigate an evolving competitive landscape.

Financial Strength 

Moreover, the business churns out healthy free cash flow, with over $1.1 billion generated on average over the past three years (high-20s as a percentage of sales). The company’s free cash flow has historically supported persistent share repurchases, and the company’s ability to continue buying back shares amid market disruptions like the coronavirus pandemic is a poignant illustration of its financial health, in our view. As of June 2021, Monster had over $1.5 billion in cash and short-term investments on its balance sheet, with no long-term debt to speak of. 

Still, general liquidity is not a concern. In addition to its healthy cash balance and an untapped revolver, Monster has implemented certain nontraditional means of financing, such as a working capital line of credit that is similar to an interest-bearing liability but not treated as leverage for accounting purposes. 

Bulls Say’s

  • Monster is a leading pure-play incumbent in a secularly advantaged beverage category that is growing in the high single digits, meaningfully above the broader industry average (low single digits).
  • Monster’s strategic partnership with Coca-Cola aligns its fortunes with the widest moat in nonalcoholic beverages, affording it top-tier store positioning and merchandising.
  • International expansion through Coke’s bottlingsystem offers material runway for growth.

Company Profile

Monster Beverage is a leader in the energy drink subsegment of the beverage industry. The Monster trademark anchors its portfolio, and notable offerings include Monster Energy and Monster Ultra. The firm has also started to incubate new trademarks for emerging enclaves of the energy space, like Reign in performance energy. It is primarily a brand owner, outsourcing most of its manufacturing processes to third-party copackers. It primarily uses the Coca-Cola bottling system for distribution after a strategic agreement in which Coke became Monster’s largest shareholder (roughly 19%) and that also included the exchange of certain businesses between the two firms. Most of Monster’s revenue is generated in the United States, though international geographies are increasing in the mix.

(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.

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Global stocks

Softbank Group Reports Solid Quarter of Vision Fund Growth

JAPÓN BOLSA:KMA06. TOKIO (JAPÓN), 03/01/2018.- Un grupo de mujeres usan kimono durante la ceremonia de apertura de la Bolsa de Tokio de Japan Exchange Group, Inc. de la primera sesión comercial de Año Nuevo en 2018 en la Bolsa de Tokio, en Tokio, (Japón) hoy, jueves 4 de enero de 2018. EFE/KIMIMASA MAYAMA

as expected with the company reporting strong performance from the Vision Fund in line with stock market rises and generally strong recent IPOs.

Softbank fair value estimate of JPY 9200 is mainly due to a 4% downgrade in our valuation for Alibaba following its June quarter result, offset by increased valuation for Vision Fund 2 in line with valuation improvement over the quarter. The stock price is now below our fair value estimate with the main difference likely to be due to our valuation of Alibaba which is around 55% above the current stock price.

The Vision Funds and Latin America Fund held 221 investments at the end of June 2021. SFV1 reported a net realized gain of JPY 310 billion due mainly to selling some shares in Door Dash, Uber, and Guardant Health. The net unrealized gain of JPY 3.5 billion was much lower with strong share price performances of DiDi and Door Dash partially offset by weaker share price performance of some listed portfolio companies, particularly Coupang. In terms of sectors, the investments are also well diversified with 28% in consumer, 20% in transportation, 17% in logistics, and 10% in frontier tech 10%, 7% in proptech, 7% in fintech, and 3% in health tech.

Company’s Future Outlook

Softbank’s 40.2%-owned domestic telecom business, Softbank Corp, reported a fourth-quarter result in line with our estimates with revenue increasing by 0.7%, operating income increasing by 4.1% and net profit down 0.8%. Management estimated the first-quarter mobile price cuts negatively impacted the first quarter by around JPY 10 billion with a JPY 70 billion impact factored into unchanged full-year fiscal 2021 guidance for revenue of JPY 5.5 trillion (5.7% growth), operating income of JPY 975 billion (0.4% growth), and net income of JPY 500 billion (1.8% growth). A further price cut has been introduced for low end customers in July which looks likely to continue to put pressure on mobile pricing. The fair value estimated of JPY 1450 per share which is slightly below where the stock is trading.

Company Profile

Softbank Group Corporation’s (JPY: 9984)  is a Japan-based telecom and e-commerce conglomerate that has expanded mainly through acquisitions, and its key assets include a 28% stake in Chinese e-commerce giant Alibaba and a 40% owned mobile and fixed broadband telecom operator business in Japan. It also owns 75% of semiconductor chip designer ARM Holdings although has agreed to sell this and is waiting on regulatory approvals, and has a vast portfolio of mainly Internet- and e-commerce-focused early stage investments. It is also general partner of the $100 billion Softbank Vision Fund 1 and sole investor in Softbank Vision Fund 2, both of which primarily invest in pre-IPO Internet companies.

(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.

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Global stocks

Raising Our BioNTech (BNTX: NASDAQ) FVE to $172 Following Q2 Update; Forthcoming Oncology Data Could Add Upside

The emerging biotech’s first commercial vaccine, for COVID-19, received its first authorization in December 2020, and its early-stage pipeline and mRNA technology platforms have caught the eye of several large pharmaceutical companies, resulting in collaborations and partnerships. BioNTech’s internal discovery platform is focused on mRNA, including off-the-shelf and personalized mRNA drugs, but opportunistic acquisitions have brought in targeted antibodies and cell therapies as well. As such, BioNTech is not overly reliant on any one key drug candidate or drug class at this point, and it is poised to tackle cancer via many different mechanisms.

Further, the company has a burgeoning vaccine pipeline for infectious diseases. In partnership with the Bill & Melinda Gates Foundation, BioNTech is developing vaccines for HIV and tuberculosis, and the company’s COVID-19 program in partnership with Pfizer and Fosun Pharma was built off an existing partnership with Pfizer for an influenza vaccine. The COVID-19 vaccine, Comirnaty (BNT162b2), quickly progressed through human trials, culminating in authorization in the United States and Europe in December 2020.

Financial Strength

BioNTech has historically burned through cash to fund research and development of its pipeline. The company has minimal debt on its balance sheet, as it has funded discovery and development with equity issues and collaboration payments from partnerships with large pharmaceutical firms. Outside of BioNTech’s COVID-19 vaccine candidates, we think the earliest approval could arrive in 2023, which would put the company on a path toward steady profitability. Management has taken advantage of a couple of opportunities to acquire early-stage assets and expand its geographic footprint to establish a U.S. research hub at low prices.

BioNTech’s revenue soared to EUR 5.3 billion in the second quarter, with roughly EUR 1 billion in direct revenue for its COVID-19 vaccine in BioNTech territories and EUR 4.1 billion in gross profit share and milestones from partners (chiefly Pfizer, which reported $7.8 billion in COVID-19 vaccine revenue in the quarter). BioNTech now expects full-year revenue from the COVID-19 vaccine of EUR 15.9 billion in 2021. Based on these changes, full global sales of Pfizer/BioNTech’s COVID-19 vaccine of $35 billion in 2021 and $39 billion in 2022, as sales in developing markets and third-dose booster sales to developed markets continue to grow. Increased our assumed probability of approval for Pfizer/ BioNTech’s flu program BNT161 from 60% to 70% given continuing validation of this technology in infectious diseases.

Overall, these changes boost our fair value estimate to $172 per share from $139. BioNTech (and peer Moderna) rapidly building a moat based on novel mRNA technology, although multiple potential competitors, significant uncertainty around the duration of COVID-19 revenue beyond 2022, and ongoing validation of this technology outside of COVID-19 prevent us from assigning BioNTech a moat at this time. While the initial series continues to show 90%+ efficacy at preventing severe disease, efficacy against symptomatic infection has been slowly declining, from a peak of 96% down to 84% in individuals that are more than four months past their second dose. Both Pfizer/BioNTech and Moderna have early phase 2 data showing that a third dose of their authorized vaccines significantly boosts neutralizing antibody activity against the original strain and variants, including the delta variant.

Bulls Say’s

BioNTech’s pipeline, which relies on expertise in mRNA and bioinformatics, will be difficult to replicate by competitors.
BioNTech will be able to command a premium price with its personalized cancer therapies, if successful.
The rapid development of COVID-19 vaccine Comirnaty bodes well for the rest of BioNTech’s pipeline and the future of its mRNA research platform.

Company Profile

BioNTech is a Germany-based biotechnology company that focuses on developing cancer therapeutics, including individualized immunotherapy, as well as vaccines for infectious diseases, including COVID-19. The company’s oncology pipeline contains several classes of drugs, including mRNA-based drugs to encode antigens, neoantigens, cytokines, and antibodies; cell therapies; bispecific antibodies; and small-molecule immunomodulators. BioNTech is partnered with several large pharmaceutical companies, including Roche, Eli Lilly, Pfizer, Sanofi, and Genmab. Comirnaty (COVID-19 vaccine) is its first commercialized product.

(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.

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Global stocks

Vinci SA’s (PAR: DG) Strong Construction Market Drives for First Half Recovery & Shares Are Fairly Valued

The concessions business earns high profit margins and enjoys significant barriers to entry. In contrast, the contracting business is less attractive on a stand-alone basis but allows Vinci to draw on its expertise to bid on less competitive concession Greenfield projects, where construction capabilities are needed and thus allow Vinci to selectively bid for higher-margin contracting projects compared with pure-play contracting firms.

Vinci’s highly profitable acquisition of its motorway concession portfolio from the French government in 2006 has formed the backbone of the firm over the past 15 years. However, subsequent public disapproval of the deal has seen the state become less generous in awarding long-term extensions to Vinci’s existing network. Mergers and acquisitions have helped Vinci become the second-largest airport operator. The acquisition of the energy contracting division of ACS will provide Vinci with exposure to the fast-growing renewable energy sector as well as eight concessions mainly in electrical transmission.

Financial Strength

Vinci has been able to withstand the worst of global travel restrictions, which have kept earnings from the group’s concessions business heavily depressed, without a significant impact on the group’s balance sheet. Vinci has enough liquidity to meet financial and operating requirements despite low visibility on the duration of the recovery for the concession segment. Vinci holds EUR 9 billion of cash and cash equivalents, which is enough to cover debt repayments until 2025. Vinci also has access to an unused EUR 8 billion credit facility, which brings Vinci’s total liquidity to EUR 17.3 billion at the end of June 2021. Both Vinci’s airport and auto routes businesses have experienced a sharp upturn in traffic once travel restrictions have eased, which is expected to continue for the rest of 2021. Vinci’s healthy balance sheet has allowed the company to refinance debt at extremely attractive rates.

Bull Says

Vinci’s portfolio of diversified concession assets is a unique opportunity for investors to own irreplaceable infrastructure across multiple assets. Returns are supported by long-term concession contracts and favorable demographics.
Vinci’s balance sheet and global presence will allow the company to be well-positioned to boost their portfolio of high-quality assets, should governments look to privatize ageing infrastructure.

A record high order book of EUR 43 billion for the contracting segment provides earnings visibility as traffic from the concessions business recovers.

Company Profile

Vinci DG (XPAR) is one of the world’s largest investors in transport infrastructure. Significant concession assets include 4,400 kilometers of toll roads in France and 45 airports across 12 countries, making Vinci the world’s second-largest airport operator in terms of managed passenger numbers. The concessions business contributes less than one fifth of group revenue but the majority of operating profit. Vinci’s contracting business is made up of three divisions, offering a broad variety of engineering and construction services.

(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.

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Global stocks

Japanese General Insurers Tokio Marine (8766:TKS) Report Stronger-Than-Expected April-June on Rate Hikes, Fewer Accidents

and JPY 5,000 for Sompo Holdings (7% upside) after the three Japanese general insurers reported strong results for April-June, the first quarter in the fiscal year ending March 2022. The shares have risen 4%, 7%, and 13%, respectively, since we published a 51-page report “Pandemic Impact on Japanese Insurers Has Passed” on June 30. 

Economic profit for April-June reached 39% of full-year guidance for Tokio Marine, 48% for MS&AD, and 43% for Sompo, while net profit on a financial accounting basis was 51% of full-year guidance for Tokio Marine, 52% for MS&AD, and 46% for Sompo.  The insurers have thus earned more than 40% of their full-year guidance in the first three months of the year; however, any upward revisions to guidance would likely come later in the year given that insurers’ quarterly earnings are subject to short-term fluctuations from seasonality and technical factors.

The main driver of the stronger-than-expected results was the core domestic nonlife business, which benefited from a continued lower frequency of auto accidents, adjustments to pricing in the voluntary auto line (though we expect price cuts ahead), and robust rate hikes in fire insurance to address rising costs from water leakage and damage. 

Rate hikes in overseas insurance as the global market hardens were a secondary driver. The safe completion of the Tokyo Olympics confirms that potential large losses that might have occurred had the event been canceled are no longer a concern.

Company Profile

Dating back to 1879, Tokio Marine is Japan’s oldest insurance company and was its top property and casualty insurer in terms of market share for many decades. After mergers of its smaller rivals in the past few years, the company is now roughly the same size in the domestic nonlife market as MS&AD and Sompo Holdings, but it remains the most valuable listed Japanese insurer in terms of market capitalization due to its larger overseas business portfolio. The majority of its overseas business is in the U.S., where it has purchased four specialty insurers since 2008: Philadelphia Consolidated, Delphi Financial, HCC, and PURE. It is a member of the Mitsubishi keiretsu group and holds minority stakes in a number of group companies that also rank among its shareholders.

(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.

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Global stocks Shares

Cushman & Wakefield (NYSE: CWK) Reports Solid Q2 Results and Announces CEO Succession by John Forrester

Fee revenue has fully recovered to beyond prepandemic levels, as the company reported second-quarter fee revenue of $1.6 billion, a 34% increase year over year and a 3% increase from the second quarter of 2019. Adjusted EBITDA also came in strong for the current quarter at $220 million, 26% higher than the second quarter of 2019. 

Adjusted EBITDA margin calculated on a fee-revenue basis was 13.5%, significantly higher than the 10.2% reported in 2020 and 11.1% in 2019. The adjusted EBITDA growth and margin expansion reflect the impact of strong brokerage activity and permanent cost reduction actions, which management believes amounted to around $30 million in the current quarter and will reach $125 million in annualized permanent cost savings.

The company announced that John Forrester, who is the current global president, will succeed Brett White as the new CEO of the company effective Jan. 1, 2022. White will remain executive chairman after the transition and continue to lead strategy, mergers and acquisitions, and succession planning, alongside Forrester. 

The brokerage segment of the company displayed excellent recovery in the current quarter compared with the second quarter of 2020, when the pandemic suppressed business around the world. Capital markets revenue more than doubled in the current quarter on a year-over-year basis and was 17% higher than the second quarter of 2019. Leasing revenue was 67% higher in the current quarter compared with last year, but it remains 9% below 2019 levels.

Management Anticipates Revenue Growth

The valuation and other segment remains a bright spot for the company as fee revenue came in 16% higher in the quarter on a year-over year basis. The property, facility, and project management segment, which has been resilient throughout the pandemic, reported a 7% year-over-year increase in fee revenue. Management anticipates revenue growth in midteens for the full year as brokerage revenue growth is expected to be up more than 30% and the nonbrokerage segment is expected to grow in midsingle digits. Management said it expects adjusted EBITDA margins for the full year to be well above 2020 levels and will approach 2019 levels, which equates to an adjusted EBITDA range of $660 million-$710 million for full-year 2021.

Company Profile 

Cushman & Wakefield is the third largest commercial real estate services firm in the world with a global headquarters in Chicago. The firm provides various real estate-related services to owners, occupiers and investors. These include brokerage services for leasing and capital markets sales, as well as advisory services such valuation, project management, and facilities management.

(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.

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Global stocks

Novartis AG(NOVN)

  • Recent and upcoming divestments will streamline the business and provide increased focus to deliver shareholder returns. 
  • Recent product launches indicate solid sales momentum, with near-term product pipeline potentially providing further upside.  
  • Selective bolt-on acquisitions to supplement organic growth. 
  • Operating efficiency focuses to further support earnings growth.
  • As the new management team improves Company culture, investors are less likely to ascribe a discount to the stock based on legacy issues.  

Key Risks

We see the following key risks to investment thesis:

  • Recently launched products fail to deliver sales growth as expected by the market.
  • New product pipeline fails to yield “blockbuster” products or delays in bringing key products to market.
  • R&D programs do not yield new long-term ideas.
  • Increased competition (pricing pressure & innovative products) from new entrants or existing players.  
  • Value destructive M&A.
  • Regulatory / litigation risks.

Management’s outlook

Assuming a continuation of the return to normal global healthcare systems including prescription dynamics particularly oncology in 2H21, and that no Gilenya and Sandostatin LAR generics enter in FY21 in the US, management anticipates (in cc); (1) FY21 net sales to grow low to mid-single digit, with Innovative Medicines to grow mid-single digit and Sandoz to decline low to mid-single digit, and core operating income to grow mid-single digit (ahead of sales), with Innovative Medicines growing mid to high-single digit, ahead of sales, and Sandoz declining low to mid-teens. (2) 2H21 net sales growth to accelerate from 3% in 1H21 to mid-single digit, as the Company continues to return to normal prescribing behaviors, as well as further Sandoz stabilization, and core operating income growth to be high-single digit, driven by higher sales and ongoing productivity programs partly offset by increased investments in growth drivers and pipeline.

Company Description  

Novartis AG (NOVN) is an innovative healthcare company headquartered in Basel, Switzerland, with approximately 125,000 employees. In 2017, the Group reported net sales of US$49.1bn, while R&D throughout the Group amounted to approximately US$9.0bn. The Company sells its products in approximately 155 countries. The group has two segments which it reports on: (1) Innovative Medicines (Oncology / Pharmaceutical), and (2) Sandoz generics division.    

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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Global stocks

Federal Realty Outperforms Our Expectations and Raises both 2021 and 2022 Guidance in Q2

 Re-leasing spreads continue to be strong despite the pandemic, seeing rents on leases signed during the quarter increase 7.5% with leases to new tenants up 10.2% over the prior rent. Second quarter rent collection improved to 94% compared with 90% in the first quarter and improved to 98% compared with 96% if rent abatement and rent deferral agreements are included. Improving rent collection drove same-store net operating income growth of 39.4% in the quarter, ahead of our 28.1% estimate in the second quarter. 

As a result, funds from operations came in at $1.41 for the quarter, above of our estimate of $1.25 in the quarter and well above the $0.77 figure reported in the second quarter of 2020 but still below the $1.60 level reported in the second quarter of 2019. The strong second-quarter results led to management significantly increasing its FFO guidance. Management raised its 2021 FFO guidance by $0.49 at the midpoint to a new range of $5.05-$5.15, which is slightly ahead of our current $5.02.

Additionally, management also raised their guidance for 2022 FFO by 25 cents at the midpoint to a new range of $5.30-$5.50. While the increase is encouraging, the updated range is still below our current $5.96 estimate for 2022. However, REITs rarely give FFO guidance for the next year this far out and, given the high level of uncertainty that still exists in retail, we suspect that management is being conservative with its 2022 estimates.

Company Profile 

Federal Realty Investment Trust is a shopping center-focused retail real estate investment trust that owns high-quality properties in eight of the largest metropolitan markets. Its portfolio includes an interest in 101 properties, which includes 23.4 million square feet of retail space and over 2,600 multifamily units. Federal’s retail portfolio includes grocery-anchored centers, superregional centers, power centers, and mixed-use urban centers. Federal Realty has focused on owning assets in highly desirable areas with significant growth, and as a result, the average population density and average median household income are higher for its portfolio than for any other retail REIT.

(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.

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Global stocks

Taiwan Semiconductor Manufacturing Co.( TSMC)

JAPÓN BOLSA:KMA06. TOKIO (JAPÓN), 03/01/2018.- Un grupo de mujeres usan kimono durante la ceremonia de apertura de la Bolsa de Tokio de Japan Exchange Group, Inc. de la primera sesión comercial de Año Nuevo en 2018 en la Bolsa de Tokio, en Tokio, (Japón) hoy, jueves 4 de enero de 2018. EFE/KIMIMASA MAYAMA
  • Market leading position and room for further consolidation. TSMC’s significant expenditure on R&D should help it maintain this leadership position.
  • TSMC is leading the race in developing the new age of semiconductor chips such as Logic Technology, with thinner wafers being developed every year.
  • High barriers to entry – significant level of capital and know-how required to start a semiconductor business.
  • Independent and pure-play focus on manufacturing without marketing or branding of product eliminates conflict of interest with customers.

Key Risks

We identify the following key risks to investment thesis:

  • Moderating global economic growth, especially in the U.S. and China.
  • Trade tensions between the U.S. and China.
  • Operational risks such as suboptimal manufacturing quality of products e.g. Fab14B photo incident.
  • Softening smartphone sales and production. There may be a time-lag before the layout of 5G and AI materialize into sales for TSMC, e.g. regulatory restrictions.
  • Increasing commodity prices and difficulty for TSMC to improve margins. 
  • Unfavorable exchange rate movements between NT$ and currencies used in transactions (however, TSMC utilizes hedging strategies to manage this risk).

Management Outlook:

Forecasting strong demand for industry-leading 5nm and 7nm technologies, driven by all four growth platforms (smartphone, HPC, IoT and Automotive-related applications), anticipating 3Q21 revenue of US$14.6-14.9bn, and gross profit margin of 49.5-51.5% and operating profit margin of 38.5-40.5% (based on the exchange rate assumption of 1 US dollar to 27.9 NT dollars). Mr. C. C. Wei (CEO) noted, “For FY21, we now forecast the overall semiconductor market excluding memory to grow about 17%, while foundry industry growth is forecast to be about 20%, and remain confident we can outperform the foundry revenue growth and grow above 20% in 2021 in US$…we now expect our long-term revenue CAGR from 2020 to 2025 to be near the high end of our 10-15% CAGR range in US$…however, in the near term, we continue to observe both short-term imbalances in the supply chain driven by the need to ensure supply security as well as a structural increase in long-term demand, and while the short-term imbalance may or may not persist, we expect our capacity to remain tied throughout the year and into 2022, fuelled by strong demand for our industry-leading advanced and special technologies.”

Company Description  

Taiwan Semiconductor Manufacturing Company Limited (TSMC), together with its subsidiaries, engages in manufacturing, selling, packaging, testing, and computer-aided design of integrated circuits and other semiconductor devices. Based in Taiwan, the company manufactures masks and electronic spare parts; researches, develops, designs, manufactures, sells, packages, and tests colour filters; and offers customer and engineering support services. TSMC is the largest semiconductor manufacturing foundry in the world.

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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Global stocks

Wide-Moat MercadoLibre Continued to Ride latin America’s E-Commerce Wave in Q2

Mercado Libre reported 94% revenue growth in the quarter, well above the 66% Factset consensus estimate. This result was impressive considering it faced unfavorable currency movement (currency-neutral revenue rose 103%) and last year’s 61% growth at the beginning of the pandemic.

 In its commerce business, the firm recorded gross merchandise value and items sold growth of 39% (46% currency-neutral) and 37%, respectively, above our full-year estimates of 35% growth for both. In fintech, total payment volume soared 72% against our 53% full-year forecast. Thus, while the comparisons will get more difficult in upcoming quarters, we now think the firm is likely to eclipse our 58% revenue forecast for the year.

Indeed, its operating expenses increased 79% from last year on ongoing investments in fulfillment and delivery speed, marketing, customer acquisition, and loyalty. Even so, MercadoLibre recorded a second-quarter operating margin of 9.8%, well above our full-year 3.6% estimate.

Company Profile 

Founded in 1999, MercadoLibre’s commerce segment (representing 64% of net revenue in 2020) includes online marketplaces in more than a dozen Latin American countries, display and paid search advertising capabilities (MercadoClics), online store management services (MercadoShops), and third-party logistics solutions (MercadoEnvios). Its fintech segment includes an online/offline payment-processing platform (MercadoPago), mobile wallet platform, credit solutions for buyers/sellers, and asset management offerings (Mercado Fondo). The company derives more than 95% of its revenue from Brazil, Argentina, and Mexico.

(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.