KGI DAILY MARKET MOVERS – 4 May 2021

In The Spotlight Gold | IPO Watch: The Honest Company | Market Movers | Trading Dashboard

IN THE SPOTLIGHT: GOING FOR GOLD

Gold seems to be in for more gains, having broken out of its 8-month vicious spiral.

Gold displayed a double-bottom pattern in the first quarter of 2021 following an 18% decline from the August 2020 peak, with the rebound starting near a key Fibonacci support zone. Furthermore, we note that the Bitcoin/Gold ratio that we track is plateauing at the 32 levels after a record run from the fourth quarter of 2020. What this implies is that Bitcoin seems to be consolidating at around the US$1 trillion market capitalisation while fund flows are turning to Ethereum and gold.

Overall, we expect more upside to gold prices. Street estimates are also constructive on gold prices going into 3Q 2021, with a median price target of US$1,800/oz and the highest target of US$1960/oz (by BNP Paribas).

Consensus estimates for Gold in 3Q 2021:

Firm	3Q 2021 Gold Price Target (US$/oz)
Jefferies LLC	1850
Deutsche Bank	1600
Commerzbank	1900
CIMB	1850
Capital Economics	1645
Westpac Banking	1837
ABN AMRO Bank	1738
BNP Paribas	1960

Gold Prices (5-years) – Double Bottom

Bitcoin/Gold Ratio (1 year)

Bitcoin vs Gold (year-to-date)

Products to Trade: Gold Futures

IPO WATCH

The Honest Company (HNST US): Will celebrity IPOs storm up the market, or stay invisible?

HNST is a household products company targeted at ethical consumerism, marketing their products as safe, eco-friendly and affordable. HNST currently generates the bulk of their sales from childcare products such as diapers and baby wipes, followed by other personal care and household products.
HNST’s journey to the public market was a tumultuous one, and we recommend reading this blogpost for further understanding on HNST’s background, where the company was valued at US$1.7bn at its peak before a series of setbacks.
HNST boasts a unique growth profile, with 28% sales gain in 2020 despite the pandemic through strong marketing reach amongst Gen Z.
Initial IPO price of US$14-17 is 5.2x Price/Sales at the midpoint at a market cap of around US$1.6bn. While we see potential for a 100% gain given that Lululemon and Farfetch trades at 10x P/S, HNST currently lacks the brand strength of Lululemon and the growth numbers of Farfetch to justify the valuation. We thus see 5-6x P/S as fairly priced.

MARKET MOVERS

United States

Nucor (NUE US) extended gains on Monday’s trading alongside other steel players like Cleveland-Cliffs and US Steel, behind rising prices of steel futures.
Endeavor Group Holdings (EDR US) punched to a new high on its 3rd trading day, while still falling shy of the 4-5x Price/Sales mark that WWE currently trades at. Read our IPO write-up here.
Vaxart (VXRT US) crashed after reporting growing 1Q21 losses, as R&D expenses for COVID-19 vaccine testing increased sixfold. Vaxart’s webinar on their oral COVID-19 vaccine progress did minimal to alleviate investors’ concern over the company’s results.
Estee Lauder (EL US) fell after 1Q21 results that missed sales estimates – the company posted 13% sales growth vs a pandemic-influenced 1Q20, while FY21 guidance of 11-12% sales growth is below consensus of 12%. However, adjusted EPS guidance of US$6.05-6.15 is slightly ahead of consensus at US$6.
Cameco Corp (CCJ US) and fellow uranium stocks saw strong buying momentum today alongside infrastructure stocks. Cameco is the largest holding of the Global X Uranium ETF (URA US) and is reporting earnings on Friday.
Trading Dashboard: Raise Green Brick Partners’ stop loss to US$26, include The Trade Desk into the dashboard at US$720. Take profit on Lululemon and US Steel at US$335.38 and US$24.68 respectively.

Singapore

Tuan Sing Holdings (TSH SP) rose 9% on significantly higher-than-average trading volumes, and is now trading at its highest level since early 2018. The company announced plans that its 44.5%-owned associated company Gultech China will sell its 13% stake in printed circuit board maker, Gultech, for 435m yuan.
Yangzijiang (YZJSGDP SP). Shares rose despite broad-based market weakness after the company announced an 89% YoY jump in 1Q2021 net profit last week. Yanyzijiang’s shares have gained 50% year-to-date, outperforming the main STI index, after it secured around S$4bn worth of new orders. The strong order wins so far this year is on pace to surpass its previous record order win of S$5bn set in the last shipbuilding supercycle in 2007.
Nanofilm Technologies (NANO SP). Shares of NANO continue to be under selling pressure and are now trading close to the 50-day moving average after the company said that it could defer selected projects due to the global chip shortage. The company noted that the global semiconductor market has “experienced significant tightening in Q1 due to the continued strong demand for semiconductors across multiple industries”. Bloomberg Consensus still has 6 BUYS and an average 12-month TP of S$5.84.
Wilmar (WIL SP). Shares declined the most among the STI components, dropping by 4% for the day. Last week, it reported 1Q2021 earnings of S$450mn, an increase from S$224mn in the prior year period. The overall outlook from management was positive but some business segments, such as its Feed & Industrial Products segment may see some weakness due to lower crush margins. Regardless, consensus estimates remain positive on the company as there are currently 14 BUYS, 0 HOLD, 0 SELL and a 12-month target price of S$6.37.
Trading Dashboard: Add Keppel Corp (KEP SP) at S$5.35 and Geo Energy (GERL SP) at S$0.21. Remove Singtel (ST SP) at S$2.46 and ComfortDelGro (CD SP) at S$1.69

Hong Kong

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (2196 HK) shares closed at another record high. BioNTech said the COVID-19 vaccine BNT162b2 which is effective against the mutant COVID-19 virus in India will be approved by China by June. Fosun Pharma is the exclusive distributor of the BNT162b2 vaccine in China.
China Datang Corp Renewable Power Co Ltd (1798 HK). The company announced 1Q21 results. Revenue grew by 41% YoY to RMB3.36bn. Net profit attributable to the company’s shareholders jumped by 152.8% YoY to RMB1.2bn.
COSCO SHIPPING Holdings Co., Ltd. (1919 HK). The shipping sector jumped as high freight rates remained. Investors continued to be positive on the outlook of the sector.
Sinopharm Group Co., Ltd. (1099 HK). Shares closed at a 15-month high as investors were upbeat about WHO’s potential approval for emergency use of the Sinovac vaccine. Indonesia has approved Sinovac for emergency use on 30th April.
Xinyi Glass Holdings Ltd. (868 HK). There was no company-specific news. The price correction could be due to profit-taking movements as the stock has surged by 45% since February.
Trading Dashboard: Remove Metallurgical Corp of China (1618 HK) at HK$1.80 and Yeahka (9923 HK) at HK$63.00.