Coca-Cola Company

KO Details
 
FY19 Net Income Grew by 39% on y-o-y:Coca-Cola Company (NYSE: KO) is a beverage company, which has a portfolio of more than 500 brands and is available across 200 countries and territories.

FY19 Operational Highlights for the Period ended 31 December 2019: KO declared its full-year results, wherein the company reported revenue of $37,266 million, up 9% on y-o-y basis. Operating Income came in at $10,086 million as compared to $9,152 million in FY18, representing a yoy growth of 10%. FY19 net income at $8,920 million witnessed a yoy growth of 39%.The business witnessed 5% growth in the price/mix during the year, which was driven by strong price realization followed by package programs across most key markets in addition to solid progress within the Bottling Investments. The business witnessed growth in the unit case volume by 2% on y-o-y basis, largely driven by road-based growth in developing and emerging markets and positive performance across the developed markets.The sparkling soft drinks segment grew 2% on y-o-y basis on account of decent growth across Asia and Europe geographies. Volume within the tea and coffee witnessed a growth of 1% on y-o-y basis, aided by strong performance across Japan, Fuze Tea across Western Europe and Leão Fuze Tea in Brazil.


Key Income Statement Highlights for FY19 (Source: Company Reports)

Outlook:As per the FY20 financial outlook, the company expectsa 5% growth within the organic revenues on a non-GAAP basis. The company expects slight tailwind in the comparable net revenues due to acquisitions, divestitures and structural items. The company expects its underlying effective tax rate at ~19.5% for FY20. Free cash flow is expected at ~$8.0 billion whereas cash from operations and capital expenditures are anticipated at ~$10.0 billion and ~$2.0 billion, respectively.
Stock Recommendation:The stock of KO closed at $59.75 with a market capitalization of $255.73 billion. The stock is trading at the upper band of its 52-week trading range of $44.42 to $59.45. The company made decent progress in FY19 with decent growth in its overall portfolio. Coca-Cola Zero Sugar maintained its growth trajectory while performing decently across the juice and smoothie brands. Considering the FY19 results, current trading levels, and business prospects, we recommend a “Hold” rating on the stock at the closing price of $59.75 per share, up 0.95% on 10^th February 2020.

 
KO Daily Technical Chart (Source: Thomson Reuters)

Teck Resources Ltd

TECK Details

Delivered Record Production from Line Creek and Greenhills Operations: Teck Resources Ltd (NYSE: TECK) operates in mining and mineral development with major business units specialized in copper, steelmaking coal, zinc and energy. Recently, the company informed that coal sales for Q1FY20 was affected by bad weather in British Columbia causing rail and terminal performance issues. The estimated impact was calculated at ~1 million tonnes, resulting in sales of 5.1 million tonnes to 5.4 million tonnes.

Q3FY19 Business Highlights for the Period ended 30 September 2019: TECK announced its quarterly reports, wherein the company reported revenues of CAD$3,035 million, down from CAD$3,209 million in pcp. The business recorded production of 6.5 million tonnes, depicting a growth of 2% on y-o-y basis, aided by record production at the Line Creek and Greenhills operations and strong processing output across other operations.  Gross profit and EBITDA stood at CAD$787 million and CAD$1,032 million, declined from CAD$1,009 million and CAD$2,064 million, respectively in Q3FY18. Profit attributable to shareholders stood at CAD$369 million, as compared to CAD$1.3 billion on pcp terms. Decline in profitability was attributed to the reduced contribution from its steelmaking coal segment due to lower prices and a reduction in sales volumes of ~600,000 tonnes.


Key Operational Highlights for Q3FY19 (Source: Company Reports)

Guidance:The company expects FY19 production at around 25.5 million tonnes to 26.0 million tonnes. Sales volumes for the fourth quarter of FY19 are expected at 6.2 million tonnes to 6.4 million tonnes. Capital expenditure is expected at ~CAD$120 million.

Stock Recommendation:The stock of TECK is closed at $13.15 with a market capitalization of $7.094 billion. The stock is trading at the lower band of its 52-week trading range of $12.72 to $25.75. The macro outlook of steelmaking coal market remains fundamentally sound supported by demand from steel capacity growth across India, Southeast Asia, and increased imports in China. The stock is available at an Enterprise Value to Sales multiple of 1.2x on TTM basis, as compared to the industry average (basic materials) of 1.3x. Considering the latest quarterly results, current trading levels, and macro scenario, we have a watch rating on the stock at the closed price of $13.15 per share, down 1.57% on 10^th February 2020.

 
TECK Daily Technical Chart (Source: Thomson Reuters)

Frontline Ltd.

FRO Details
 
Q3FY19 Business Highlights:Frontline Ltd. (NYSE: FRO) is a leading seaborne transportation company that transports crude oil and refined products.

FRO announced its quarterly report, wherein the company reported total operating revenues of $179.366 million, stood higher from $173.582 million in pcp. The company reported spot average daily time charter equivalent (“TCE”) for VLCCs, Suezmax tankers and LR2 tankers at $22,900, $16,200 and $15,900, respectively. During November 2019, FRO made a deal with ICBC Financial Leasing Co. Ltd for a sale-and-leaseback agreement amounting to $544.0 million, which is subjected to execution of a final transaction. The business reported net loss of $9.962 million, as compared to a profit of $2.241 million in the previous corresponding quarter. As on 30 September 2019, the company reported its fleet of 71 vessels, with an aggregate capacity of approximately 13.5 million DWT.


Q3FY19 Key Operational Highlights (Source: Company Reports)

Guidance:For FY19 outlook, the company expects its spot TCE of $64,800 contracted for 78% of vessel days for VLCCs, $49,400 contracted for 71% of vessel days for Suezmax tankers and $29,900 contracted for 74% of vessel days for LR2s.

Valuation Methodology: Price to Book Value Based Valuation

Price to Book Value based Valuation(Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Mont

Stock Recommendation:The stock of FRO is closed at $8.05 with a market capitalization of $1.59 billion. The 52-week low and high of the stock stood at $4.82 and $13.33. The company is focused on increasing its spot exposure throughout the year and expects that it will leave a positive impact in the results for the fourth quarter.Considering the current trading levels, and business prospects, we have valued the stock using Price to book based relative valuation method and arrived at a target price of lower double-digit downside. Hence, we have a watch stance on the stock at the closing price of $8.05 per share, up 3.21% on 10^th February 2020.

 
FRO Daily Technical Chart (Source: Thomson Reuters)

The Walt Disney Company

DIS Details
 
Top-line Grew by 24% on y-o-y:The Walt Disney Company (NYSE: DIS) is engaged in a diversified international family entertainment and media enterprise businesses.

O1FY20 Operational Highlights for the Period ended 28 December 2019: DIS announced its quarterly results, wherein the company reported revenues of $20,858 million, up 36% on y-o-y basis. Total segment operating income stood at $4,002 million, increased 9% from the previous corresponding period.During the period, the business launched Disney+, which has witnessed strong response. The Media Networks segment reported a revenue of $7.4 billion, depicting an increase of 24% on y-o-y basis. Operating income from the segment came in at $1.6 billion, up 23% from pcp. During the quarter, the business witnessed a decline across the legacy operations due to the reduction in the advertising revenue, followed by a decline in ABC Studios program sales. Parks, Experiences and Products segment delivered income of $2.3 billion, depicting a y-o-y growth of 9%. The segment was highlighted by growth across the merchandise licensing and domestic parks and resorts, which was partially offset by lower results at the international parks and resorts segments.


Q1FY20 Key Income Statement Highlights (Source: Company Reports)

Valuation Methodology:Enterprise Value (EV) to EBITDA based Valuation
 

EV/EBITDA Based Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation:The stock of DIS closed at $142.59 with a market capitalization of $257.43 billion. The stock is trading at the upper band of its 52-weeks trading range of $107.32 and $153.41. The business has an incredible collection of brands, outstanding content and is likely to cater to the growing consumer needs within the dynamic media environment. Considering the current trading levels, and business prospects, we have valued the stock using Enterprise Value (EV) to EBITDA based relative valuation method. For the purpose, we have taken peers like Fox Corp (NASDAQ: FOX), Viacom CBS Inc (NASDAQ: VIAC), Discovery Inc (NASDAQ: DISCK), etc., and arrived at a target price of lower double-digit upside (in % terms). Hence, we recommend a “Hold” rating on the stock at the closing price of $142.59 per share, up 1.11% on 10^th February 2020.

 
DIS Daily Technical Chart (Source: Thomson Reuters)

Slack Technologies, Inc.

WORK Details
 
IBM to Purchase Slack’s Workforce: Slack Technologies, Inc. (NYSE: WORK) isa new generation technology company that accumulates people, applications and data. The above application provides a hub for collaboration, wherein people can effectively work together, access critical applications and services. On 10 February 2020, the company released an update that International Business Machines Corporation (IBM) has purchased all the employees of the company.
Q3FY20 Business Highlights for the Period ended 31 October 2019: WORK announced its quarterly results, wherein the company reported revenue $168.7 million, up 60% y-o-y, aided by strong growth upmarket. The business reported calculated billings of $186.1 million, an increase of 47% year-over-year.Gross profit on GAAP basis, came in at $145.6 million as compared to $92.1 million in the previous corresponding period. The business posted net loss of $87.766 million as compared to $47.696 million in the previous corresponding period. The business reported 821 Paid Customers higher than $100,000 in annual recurring revenue, which is up 67% y-o-y basis. Paid Customers, at the end of the period, stood at 105,000, representing a growth of 30% on y-o-y basis.

 
Q3FY20 Key Financial Highlights (Source: Company Reports)

Outlook:For FY20, the company expects total revenue within the range of $621 million to $623 million. Operating losses on non-GAAP basis is expected at $144 million to $142 million, which includes one-time direct listing related expenses of $30 million. Calculated Billings is anticipated within the range of $745 million to $760 million, depicting a y-o-y growth of 44% to 47%. Free Cash Flow net burn is anticipated within the range of $85 million to $80 million, which includes ~$30 million of one-time direct listing-related expenses and $21 million of one-time direct listing expenses.

Valuation Methodology: Price to Book Value Based Valuation

Price to Book Value based Valuation(Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Mont

Stock Recommendation:The stock of WORK closed at $26.54 with a market capitalization of $14.60 billion. The stock is trading at the lower band of its 52-week trading range of $19.53 and $42. The business delivered robust growth in paid customers, revenue and in calculated billings, which indicates that large enterprises are increasingly standardizing on Slack as their primary collaboration platform. We have valued the stock using price to book based relative valuation method and arrived at a target price, which is offering a limited upside (in % terms). Hence, considering the decent growth in revenue, guidance for FY20, etc., we have a watch stance on the stock at the current market price of $26.54 per share, up 15.44% as on 10^th February 2020, on account of strategic collaboration with IBM.

 
WORK Daily Technical Chart (Source: Thomson Reuters)

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