Tag: Recommendations

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Shares Small Cap

Oversupply Issues Are Behind Inghams, but Mix Shift to Drag in the Near Term

competition in poultry is intense. Poultry is largely commoditised, and Inghams possesses limited opportunity to differentiate its products, leading to our view that the firm lacks a sustainable competitive advantage required to award an economic moat. Further, Inghams’ customer base is highly concentrated, with the majority of its total sales comprising five customers, including supermarket giants Woolworths and Coles, and quick-service restaurant KFC. Population growth, relative affordability, and changes in consumer preferences have driven chicken consumption to all-time highs in Australia and New Zealand. 

Per capita chicken meat consumption in both Australia and New Zealand has steadily grown at a low-single-digit CAGR over the last decade. Chicken remains the cheapest meat by a significant margin, with the per-kilo retail price of chicken less than half that of pork, lamb, and beef. This price advantage is supported by favourable production dynamics, notably chicken’s superior food conversion ratio, or FCR. The chicken industry remains highly efficient in translating feed into live weight for production, with producers able to convert feed at a rate that is about 1.5 times more efficient than pork and 4 times more efficient than beef. The chicken FCR, measured by kilograms of feed required to produce one kilogram of meat, has fallen from over 2.5 in 1975 to less than 1.8 today.

Financial Strength 

Given relatively high lease-adjusted leverage, and slim operating margins, we rate Inghams’ balance sheet as weak–stronger than poor as we do not see risk of a dilutive capital raising. Net debt/EBITDA improved in fiscal 2020 to 1.2 at June 30, 2021, due principally to earnings recovery and tighter capital expenditure amid COVID-19 uncertainty over the year. This is down from 1.8 in fiscal 2020 and 1.3 in fiscal 2019 following the capital return and share buyback over fiscal 2019. Given heavy investment into automation and operational efficiency, capital expenditure requirements have been elevated, peaking at AUD 106 million during fiscal 2019 at 4% of revenue. 

Our fair value estimate for Inghams to AUD 3.70 from AUD 3.60 due to the time value of money boost to our financial model. Inghams’ fiscal 2021 underlying net profit of AUD 87 million matched our estimates and was at the top end of management’s guidance range. Inghams declared a fully franked final dividend of AUD 9 cents, bringing the full-year distribution to AUD 16.5 cents per share, implying a payout ratio of 71% of underlying EPS. Government-imposed shutdowns shift poultry demand from restaurants to retail, creating inefficiencies as Inghams is forced to adjust production lines. 

Poultry producers struggled to keep up with pantry-stocking and panic buying in March and April 2020, but this sales momentum was not maintained, and the poultry industry entered fiscal 2021 in oversupply. The chicken industry remains highly efficient in translating feed into live weight for production, with producers able to convert feed at a rate that is about 1.5 times more efficient than pork and 4 times more efficient than beef–leading to cost-efficient processing and a smaller environmental footprint. We expect low-single-digit growth in annual per capita chicken meat consumption to 53kg by fiscal 2026, before moderating as chicken consumption approaches saturation.

Bulls Say’s 

  • Inghams benefits from a consumer trend toward protein-rich, fresh, easy-to-prepare meals.
  • Per-capita chicken meat consumption continues to rise as chicken enjoys a relative affordability advantage compared with other meats, such as beef.
  • A shift in Inghams’ sales mix to value-added products could enhance margins.

Company Profile 

Inghams is the largest vertically integrated poultry producer in Australia and New Zealand. The firm enjoys a number-one position in Australia with approximately 40% market share and a number-two position in New Zealand with around 35% share. Inghams supplies poultry products, notably to major Australian supermarkets Woolworths and Coles, and quick-service restaurants McDonalds and KFC. Sales are heavily skewed toward poultry, which includes the production and sale of chicken and turkey products.

(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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Dividend Stocks

Hanesbrands’ Investment Key Brands Under Its Full Potential Plan Support

While the COVID-19 crisis adversely affected 2020 results, we think Hanes’ share leadership in replenishment apparel categories puts it in better shape than some competitors. Hanes’ management forecasts Champion will reach $3 billion in global sales in 2024, up from about $2 billion this year, which we see as an achievable goal. It has already made progress in this area, having achieved a 15% increase in manufacturing output over the past three years. More than 70% of the more than 2 billion apparel units sold by the company each year are manufactured in its own plants or those of dedicated contractors. 

Financial Strength 

Hanes is saddled with heavy debt from its acquisition spree in 2013-18 and closed June 2021 with $3.7 billion in debt. However, the firm also had nearly $700 million in cash and no borrowings under its revolving credit facilities of just over $1 billion. Moreover, we estimate Hanes will receive about $400 million in cash after it sells its European innerwear operations (expected in 2021). Hanes has a stated goal of bringing debt/EBITDA below 3 times by 2024, which we forecast may happen as early as the end of 2022.Hanes has suspended its share buybacks due to the pandemic, but we expect it will resume repurchases on a large scale in 2022. 

The company bought back significant amounts of stock in 2016 and 2017 and repurchased $200 million in shares in early 2020 before the virus spread. Its annual dividend has been set at $0.60 per share since 2017, but we forecast it will raise in 2022 and in subsequent years. We estimate an average annual dividend payout ratio of 38% in 2022-30.Hanes may expand the business through acquisitions, although it has not made a major acquisition since 2018. 

Our 2024 sales estimates for innerwear and activewear are $3.0 billion and $1.9 billion, respectively, up from $2.7 billion and $1.7 billion this year. In the long term, we model annual organic innerwear growth rates of 2%-3%. Although long-term growth in domestic innerwear (45% of 2020 sales) is low, Hanes has been gaining share in some basics categories. Our fair value estimate assumes moderate inflation in wage and cotton prices, resulting in a gross margin that stabilizes at 40%.

Bulls Say’s 

  • Hanes’ Champion is a contender in the hot but crowded athleisure space. The brand is already well known in North America and parts of Europe, and there is significant potential in China and other underpenetrated markets.
  • Hanesbrands has successfully introduced brand extensions that have allowed it to expand shelf space and increase price points in the typically staid category of basic apparel.
  • After a review, Hanesbrands announced a new strategic plan called Full Potential to boost growth and reduce expenses, which should benefit its brand strength.

Company Profile 

Hanesbrands manufactures basic and athletic apparel under brands including Hanes, Champion, Playtex, Bali, and Bonds. The company sells wholesale to discount, midmarket, and department store retailers as well as direct to consumers. Hanesbrands is vertically integrated as it produces more than 70% of its products in company-controlled factories in more than three dozen nations. Hanesbrands distributes products in the Americas, Europe, and Asia-Pacific. The company was founded in 1901 and is based in Winston-Salem, North Carolina.

(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.

Categories
Technology Stocks

TPG Telecom Fiscal 2021 First Half Broadly in Line

or NBN, and take-up of high-traffic products such as Internet protocol television and video streaming, will increase the demand for broadband and backhaul capacity. TPG Telecom’s price-leader strategy still sees the company delivering solid subscriber and market share performance. Product bundling has also become a key segment in the market, with all players using broadband as a lead-in product and cross-selling voice, mobile, pay-TV, and digital streaming services. 

The ownership of submarine cable between Australia and Guam offers the group broader cost advantages. Pricing is mainly a function of demand and supply, available capacity, and the length of cable. Economies of scale play a large part in pricing where costs are measured on per unit of volume. Contracts are structured in typical 15-year

leases, providing some certainty in revenue. Clients are allocated a fixed bandwidth and have the right to on-sell capacity. Maintenance fees of 3%-4% of the lease are also levied.

Financial Strength 

TPG Telecom’s financial health is solid. Historically, management has used debt to finance acquisitions and demonstrated a capacity to pay it down in due course. As of June 2021, net debt/EBITDA was 2.8 times, well below the covenant limit of 3.5 times. Highlights from the 2021 first-half result support the key planks of our positive investment thesis for TPG Telecom. The NBN-inflicted EBITDA damage in the broadband unit is on track to fall less than management’s prior AUD 60 million projection for the full year (AUD 25 million in the first half), down from AUD 83 million in 2020. 

Moderating fall in subscribers (128,000 in June half 2021 versus 361,000 in December half of 2020), and ARPU (underlying post-paid down 1.6% in first half versus an estimated 2.3% in 2020) are signs of likely improvements to come. While shares in narrow-moat-rated TPG have climbed 30% since the May 2021 lows, they remain 13% below our unchanged AUD 7.40 fair value estimate. 

The 4% decline in corporate EBITDA to AUD 236 million was especially disappointing. It was mainly due to a fall in lowmargin legacy services, as underlying EBITDA margin was up to 53.2%, from 52.3% a year ago. Nevertheless, the shortfall in this division, coupled with continuing likely impact from COVID-19 (AUD 11 million in the first half) has led to 2% decline in our 2021 group EBITDA forecast to AUD 1,779 million. TPG’s broadband business will also benefit from management’s concerted push into fixed wireless, to bypass the National Broadband Network, or NBN. Indeed, 17,000 fixed wireless customers were signed up in the current second half to date, just a month after launch of the TPG-branded fixed wireless product. 

Bulls Say’s 

  • Cross-selling opportunities remain for both consumer and corporate markets.
  • The merger with Vodafone Australia increases the scale of the combined entity and allow it to better compete against Telstra and Optus in the Australian market.
  • Further rollout of its fibre network also boosts growth, while incremental cost from an additional user is small.

Company Profile 

TPG Telecom is Australia’s third-largest integrated telecom services provider. It offers broadband, telephony, mobile and networking solutions catering to all market segments (consumer, small business, corporate and wholesale, government). The company has grown significantly since 2008, both via organic growth and via acquisitions, and in July 2020 merged with Vodafone Australia. It owns an extensive stable of infrastructure assets. TPG is also a very nimble competitor in the telecom space, with an aggressive operating culture unencumbered by any legacy issues facing incumbents.

(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.

Categories
Technology Stocks

CSL Limited (ASX: CSL)

The Seqirus flu business, which achieved positive earnings (EBIT) for the first time in FY18, continues to perform strongly.
There is a lot of interest in their product line.
High entry barriers in terms of knowledge, worldwide channels, and operations/facilities/assets.
The executive team is strong, as are the operational capabilities.
Leveraged against a weakening dollar.
Key Risks
Pressures from competitors.
Behring’s core business, product recalls, disappoints.
Growth is underwhelming (underperform company guidance).
The Seqirus flu business is stalling or deteriorating.
Unfavourable currency fluctuations (AUD, EUR, USD).

FY21 Results Highlights
CSL’s influenza vaccines business, Seqirus, reported NPAT of $2,375 million, up 10%, and revenue of $10,026 million, up 10%, thanks to strong performance in leading subcutaneous Ig product HIZENTRA and leading HAE product HAEGARDA, as well as exceptionally strong performance in CSL’s influenza vaccines business. EBIT increased by 11% to $3,025, while margins remained at 30.2 percent. Earnings per share increased from 10% to $5.22.
The final payout of US$1.18 per share (A$1.61 franked at 10%) brings the total dividend for the year to US$2.22 per share, up 10%. Highlights from each segment: (1) CSL Behring, relative to the pcp and in constant currency. Albumin (+61%), HIZENTRA (+15%), HAEGARDA (+14%), and KCENTRA (+7%) all contributed to an increase in total revenue of 6%. (2) Seqirus is a character in the game Seqirus.
Seasonal influenza vaccine sales increased from 41% on a record volume of 130 million doses, driving total revenue up 30%. FLUAD® QIV was released in the United States in FY21, while FLUCELVAX was marketed in Australia.

Company Description
The Commonwealth Serum Laboratories Limited (CSL) is a company that develops, manufactures, and sells pharmaceutical and diagnostic products made from human plasma. Paediatrics and adult vaccines, infection, pain medicine, skin problem treatments, anti-venoms, anticoagulants, and immunoglobulins are among the company’s goods. These are life-saving products that are not optional.

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
Funds Funds

Fidelity Asia Fund

and draws on the research capabilities of Fidelity’s analysts based on the ground in Asia.The Fund aims to achieve returns in excess of the MSCI AC Asia ex-Japan Index NR over the suggested minimum investment time period of five to seven years.

Our Opinion

Our rating is based on the following key drivers:

Capable PM/team:

The Fund’s star portfolio manager, Anthony Srom, and his supporting cast of analysts in high regard. Mr. Srom is well-supported by 50 on-the-groundanalysts in Asia and Fidelity’s global researchteam of 180 analysts and 400 investmentprofessionals worldwide. This makes the team one of the largest buyside firms. Nevertheless, we question the extent at which ongoing and deep research can be maintained in order to beat the index –in our view, it is increasingly difficult no matter how large an investment team is,to beat a benchmark of an efficient, liquid and well researched market.

Well-resourced and access to Company management

Relative to peers, the investment team is well resourced with additional access to third party research and consultants to conduct deep investment research as well as a thorough company visitation schedule (as a result of the investment firm’s reputation). Fidelity conducts more than 15,000company meetings a year, in order togain better insights andknowledge, to make investment decisions.

Sensible investment process rooted in bottom-up research, high conviction, highly concentrated and low turnover

The Fund conducts fundamentals bottom-up stock selection to build a high conviction and highly concentrated portfolio of 20–35 stocks based in the Asia Pacific ex Japan region. There is no deliberate portfolio management style bias, although new positions typically exhibit a contrarian/value bias. Mr. Srom is willing to take a long-term view on a stock, resulting in a low turnover strategy (40%–70%). This translates to a holding period of 18–24 months, but there are stocks that have been held for more than three years.

Downside Risk

Asian economic conditions deteriorate, leading to earnings downgrades at the company level. High quality companies underperform especially in stocks where the Fund has a relative overweight position.
Key-man risk should Portfolio Manager, Mr. Anthony Sromdepart.
The Fund invests in emerging markets which can be more volatile than other more developed markets.
The Fund invests in a relatively small number of companies and so may carry more risk than fundsthat are more diversified.

(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.

Categories
Technology Stocks

Carsales.com Ltd (ASX: CAR)

  • Heavily reliant on two growth stories (South Korea and Brazil).
  • Diversified geographic coverage.
  • Bolt-on acquisitions provide opportunity to supplement organic growth.
  • The Company can sustain high single-digit and low double-digit revenue growth. 
  • CAR’s move into adjacent products and industries. 
  • Increasing pricing in South Korea to boost margins.
  • Looking to take more of the car buying experience online with dealers (i.e. increasing its total addressable market).

Key Risks

 We see the following key risks to our investment thesis:

  • Rich and demanding valuation.
  • Competitive pressures, that is car dealer driven substitute platform or the No. 2 & 3 player gain ground on CAR.
  • Motor vehicle sales remain subdued.  
  • Value destructive acquisition / execution risk with international strategy.
  • Not immune from broader downturn in economy (consumer likely to delay a significant purchase in time of uncertainty).

FY22 Earnings Guidance:- 

CAR provided no quantitative guidance but provided outlook commentary (which excluded the impact of acquiring Trader Interactive). 

  • Consolidated Outlook: “in FY21… While current lockdowns and retail closures are having an impact on leads and private ad volumes, if our experience is consistent with prior lockdowns, the business is well placed to recover all or most of the declines once retail re-opens. On this basis we would expect to deliver solid growth in Group Adjusted revenue, Adjusted EBITDA and Adjusted NPAT1 in FY22. Depending on the duration and frequency of lockdowns in the first half, financial performance is likely to be more heavily weighted to the second half than usual”. 
  • Australia. Dealer: “Outside the states impacted by lockdowns, underlying market conditions remain solid”. Private: “Private listing volumes are growing strongly on pcp excluding NSW; tyresales has operated at lower volume levels in July 2021 due to the lockdowns in NSW and Victoria”. Media and new car market: “The new car market continues to demonstrate signs of improvement as evidenced by the solid performance in new car sales volumes over the last six months. This has resulted in an improvement in media revenue run rate, providing confidence that we can deliver growth in this segment in FY22”. Domestic Core expenses: “Anticipating core expenses to be higher in FY22 compared to FY21 largely reflecting the absence of wage subsidies”. 
  • International. (i) Korea: “In FY22 we expect strong growth in revenue and strong growth in EBITDA excluding the potential for continued marketing investment in Dealer Direct”. (ii) Brazil: “We expect strong growth in revenue and EBITDA in FY22”. (iii) U.S: “In July 2021, financial performance continues to be strong. We will provide guidance on Trader Interactive at the AGM in October-21”.

Company Description  

Carsales.com Ltd (ASX:CAR), founded in 1997, operates the largest online automotive, motorcycle and marine classifieds business in Australia. Carsales is regarded as one of Australia’s original disruptors and has expanded to include a large number of market-leading brands. The Company employs over 800 and develops world leading technology and advertising solutions in Melbourne. CAR has also expanded to numerous global markets, such as South Korea, Brazil, and other countries in Latin America.

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
Technology Stocks

Anthony’s Strong Sales Demand to Unwind as Restrictions Ease

 driven by the competitively advantaged Australian business which benefits from industry tailwinds. ARB provides automotive accessories for four-wheel-drive, or 4WD, vehicles–namely, 4WD utility vehicles, and medium and large sport utility vehicles, or SUVs. The vast majority of earnings are generated in Australia, where sales of 4WD vehicles have grown strongly in recent years. While headline new vehicle sales in Australia have remained stagnant over the five years to fiscal 2019, sales for vehicles in ARB’s niche target market have increased at a CAGR of around 6% over the same time period. 

We estimate this subsegment eclipsed 50% of new vehicles sales in fiscal 2020, up from around 35% of new vehicle sales in fiscal 2014.The firm’s network of store fronts defends ARB’s premium positioning, ensuring end-to-end reliability from manufacturing to fitting. We expect ARB will also need to continue to invest heavily in its brands and its narrow moat by maintaining a high level of expenditure on marketing, research and development. This expenditure is necessary to maintain the firm’s brand equity, and differentiate its products from lower-end competitors, allowing ARB to remain at the forefront of product innovation and quality, improving brand awareness and ensuring a healthy pipeline of new product releases. 

Financial Strength 

ARB’s balance sheet is in pristine condition. At June 30, 2021, the company had no debt and a net cash position of AUD 85 million. This is despite major investment in the Thailand and Victoria warehouses and continued new store rollouts. The firm’s major funding requirements are store rollouts, international expansion, and working capital in line with growing sales. We anticipate the firm will maintain expenditure on marketing and R&D at around 5% for the foreseeable future. We are confident the firm can maintain a dividend payout ratio of around 50% without stretching its balance sheet or compromising its expansion plans.

Profit before tax near-doubled to AUD 150 million as restrictions on international travel and government stimulus increased domestic driving holidays–both in Australia and in overseas markets, boosting demand for ARB products. After falling 14% in fiscal 2020, Australian new car sales have bounced back quickly, up 10% in fiscal 2021. The rebound is more pronounced for 4WD utilities and SUVs (ARB’s primary target market), which grew by 11% in fiscal 2021 after falling just 7% in fiscal 2020. The company declared a final dividend of AUD 39 cents per share, bringing full-year dividends to AUD 68 cents per share, fully franked. ARB maintains a dividend payout ratio of about 50%, and with no debt, we anticipate the firm can maintain this payout ratio without stretching its pristine balance sheet or compromising expansion plans.

Bulls Say’s 

  • Online competition is not a significant threat to ARB’s business. Products usually require professional fitting (often in ARB stores), and the often heavy and bulky accessories can make delivery cost prohibitive.
  • The 4WD accessories industry has few barriers to entry, and with products such as bull bars essentially just fabricated steel, ARB’s products are somewhat replicable.
  • ARB’s range of vehicle accessories have established significant brand strength, underpinning its narrow economic moat, allowing the firm to enjoy pricing power and high returns on invested capital.

Company Profile 

ARB Corporation designs, manufactures, and distributes four-wheel-drive and light commercial vehicle accessories. The firm has carved a niche with aftermarket accessories including bull bars, suspension systems, differentials, and lighting. ARB operates manufacturing plants in Australia and Thailand; sales and distribution centres across several countries. The Australian division, which generates the vast majority of group earnings, distributes through the ARB store network, ARB stockists, new vehicle dealers, and fleet operators.

(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.

Categories
Dividend Stocks

Bendigo & Adelaide Bank (ASX: BEN) Updates

  • Strong franchise model with funding predominately by way of deposits.
  • Expected low levels of impairment charges (especially as a low interest rate environment helps customers and arrears).
  • Continued strong cost discipline, improving efficiency and boosting performance. 
  • Advanced accreditation in progress (which may improve ROE).
  • Potential pressure on net interest margins as competition intensifies, with major banks in a low interest rate environment.
  • Leading in terms of customer satisfaction and net promoter metrics, which are increasingly key in a period where trust is paramount.

Key Risks

  • Intense competition for loan growth, combined with further discounting.
  • Volatility in Home safe earnings.
  • Increase in bad and doubtful debts or increase in provisioning. We continue to monitor the asset quality of Rural Bank and Great Southern portfolios.
  • Funding pressure for deposits and wholesale funding.

FY21 Results Summary

Relative to the PCP: Statutory net profit of $524.0m was up +172%.  Cash earnings after tax of $457.2m, was up +51.5%.  Net interest margin of 2.26%, was down 7 bps. Total income on a cash basis of $1,702.5m, was up +4.5%, with BEN exceeding system lending growth. Bad and doubtful debts were $18.0m, which equates to 2bps of gross loans. 

Excluding the provision release of $19.4m announced on 5 August 2021, bad and doubtful debts equate to 5bps of gross loans. Operating expenses of $1,027.4m were up +0.6% over the PCP, on increased investment in transformation. Excluding transformation, operating costs were -2.5% lower. BEN’s cost to income ratio of 60.3% was down 240bps relative to the PCP, but remains above BEN’s medium target of a sustainable cost to income ratio 50%. CET 1 of 9.57% was up 32 bps, and remains above APRA’s ‘unquestionably strong’ benchmark.  Cash earnings per share were 85.6 cents per share (cps), up +43.4%.

 The Board declared a final dividend of 26.5cps which brings the total fully franked dividend of 50.0 cps for the full year, with DRP discount of 1.5%. The dividend payment equates to 58.4% of cash earnings.  BEN saw growth in market share in lending (up to 2.41% from 2.24% in FY20) and deposits with total lending of $72.2bn, up +10.6%, driven by residential lending (at a rate of 2.8x system or up +14.8%), and total deposits of $78.0bn, up +15.2%, with customer deposits up +14.2%

Company Description

Bendigo and Adelaide Bank Ltd (BEN) offers a variety of banking and other financial services including internet banking, housing finance, retail and business banking, commercial finance, funds management, treasury and foreign exchange services, superannuation and trustee services.

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
Funds Funds

SBI Mutual Fund has launched Balanced Advantage Fund

The SBI balanced Advantage fund’s investment objective is to deliver long-term capital appreciation and income through a dynamic mix of equity and debt investments. The CRISIL Hybrid 50+50 – Moderate Index TRI would be tracked by SBI Balanced Advantage Fund.

The Balanced Advantage Fund would invest in equities and fixed income securities based on a number of factors, including valuations, earnings drivers, and sentiment indicators.

The SBI Balanced Advantage fund will work in the following manner

  1. Asset Allocation: The Fund Manager will decide on the asset allocation between equity and debt based on a variety of factors including sentiment indicators, valuations, and earning drivers.
  1. Quantitative Framework: Our investment strategy is based on a quantitative framework that determines how we invest based on market capitalization, investing style (value, growth, or quality) and sector preference.
  1. Stock/Security Selection: The equity portfolios are managed under the discretion of fund managers and portfolios are based on the analyst team’s high conviction views and the discretion of the Fund Manager. There is duration management to generate alpha across the yield curve. The portfolio is built in such a way that alpha is generated through equity while stability is sought through debt.

The scheme would invest in equities and equity-related products for a minimum of 0% and up to a maximum of 100% and the risk profile for the same would be high. It will also invest in debt securities (including securitized debt) and money market instruments, with a minimum of 0% and a maximum of 100% and the risk profile for the same would be low to medium and 0% to 10% in units issued by REITs and InvITs –the risk profile for the same is medium to high  

During the NFO period, the minimum application amount is Rs 5,000, with subsequent amounts in multiples of Rs 1. Dinesh Balachandran and Gaurav Mehta will handle the equity element of the SBI Balanced Advantage Fund, Dinesh Ahuja will manage the debt portion and Mohit Jain will manage the international investments.

The SBI Balanced mutual fund is suited for the following investor:

  • Investors looking for long-term Wealth Creation 
  • Investors looking for a Dynamic solution for the right mix of Debt & Equity
  •  Risk-averse Equity Investors with minimum 3 years+ of Investment Horizon

 (Source: www.sbimf.com)

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
Technology Stocks

Tesla Shares Crash as NHTSA Opens Autopilot Investigation; Shares are Slightly Overvalued

Electronic digital interface at a stock exchange or bourse showing the fluctuating prices of stocks and shares on the markets charting their performance

an investigation into Tesla Inc’s (NASDAQ: TSLA) autopilot software following 11 crashes from January 2018 through July 2021 where the software was engaged. Having reviewed the NHTSA report, the incidents highlight the need for Tesla to continue to improve its autonomous software before the company is likely to see a large revenue increase from its subscription-based full self-driving software. This is in line with our view that Tesla’s autonomous software will not contribute a large portion of revenue in the near term. While the outcome of the investigation is uncertain, the agency is investigating the software, rather than any hardware on a Tesla. 

Tesla shares were down around 5% at the time of writing. At current prices, Tesla shares are slightly overvalued with the stock trading in 3-star territory but roughly 20% above our fair value estimate. Accordingly, we reiterate our very high uncertainty rating for Tesla.

In all 11 crashes, a Tesla vehicle struck one or more vehicles at a first-responder scene. Most of the incidents took place after dark, where the crash scenes included typical control measures such as first-responder vehicle lights, flares, an illuminated arrow board, and road cones. While the software can take over many parts of driving features for more normal highway conditions, first-responder scenes represent a situation where drivers should likely disengage the software when approaching the scene and resume full manual control of the vehicle.

Company’s Future Outlook

As a result, the most likely outcome will include an over-the air software update, which Tesla already regularly does, and additional warnings about the limitations of driving with autopilot. The company’s Outlook intact at $570 per share fair value estimate and narrow moat rating for Tesla.

Company Profile

Tesla Inc’s (NASDAQ: TSLA) founded in 2003 and based in Palo Alto, California, is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. The company sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. Tesla has multiple vehicles in its fleet, which include luxury and mid-size sedans and crossover SUVs. The company also plans to begin selling more affordable sedans and small SUVs, a light-truck, semi-truck, and a sports car. Global deliveries in 2020 were roughly 500,000 units.

(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.