Bunge Limited

BG Details

Usage of Renewable Energy Agreement: Bunge Limited (NYSE: BG) is engaged in connecting farmers to consumers to deliver essential food, feed and fuel. The market capitalization of the company as on 23 February 2021 stood at ~$10.81 billion. As per a recent update, the company has announced a 10-year agreement with Direct Energy Renewable Services to use renewable energy at its Fort Worth, Texas facility.

FY20 Results Update: The company reported decent financial results for the period Q4FY20 and FY20. Net sales during the year were at $41,404 million and the net income attributable to Bunge stood at $1,145 million.  It delivered GAAP EPS of $7.71 in FY20, compared to a negative $9.34 in the prior year. The full-year adjusted funds from operation stood at ~$1.9 billion during the year. The cash position was at $352 million on 31 December 2020.

Q4 & FY20 Financial Performance (Source: Company Reports)

Outlook: The company expects favorable market environment to continue into 2021, reflecting decent demand and tight supplies.

Valuation Methodology: P/CF Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The total debt stood at $7,288 million on the balance sheet as on 31 December 2020. It had a high debt to equity ratio of 1.35x as on 31 December 2020 as compared to the industry median of 0.56x. The stock of BG is trading above its average 52-weeks’ levels of $79.45-$29. The stock of BG gave a positive return of ~23.55% in the past three months and a positive return of ~105.22% in the past nine months. On a technical analysis front, the stock of BG has a support level of ~$73.81 and resistance level at ~$78.62. We have valued the stock using a P/CF multiple-based illustrative relative valuation and have arrived at a target price with limited upside. For the purpose, we have taken peers such as Archer-Daniels-Midland Co (NYSE: ADM), Tyson Foods Inc (NYSE: TSN), to name a few.  Considering the current trading levels, steep rise in price levels in the past few months, decent performance in Q4FY20 and FY20, and high debt to equity ratio, we are of the view that most of the positive factors of the company have been discounted at the current juncture. Hence, we suggest investors to wait for better entry-level and give an ‘Expensive’ rating on the stock at the closing price of $77.41, down by 1% as on 23 February 2021.

BG Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Cassava Sciences, Inc.

SAVA Details

Positive Phase 2 Meeting with US FDA: Cassava Sciences, Inc. (NASDAQ: SAVA) is a biotechnology company that develops products for the treatment of Alzheimer's disease. The market capitalization of the company as on 23 February 2021, stood at ~$2.04 billion. As per a recent update, the company has announced a positive Phase 2 meeting with the USFDA for its drug candidate Simufilam for treating Alzheimer’s disease.

Q3FY20 Results Update: During the quarter, the company reported a net loss of $1.4 million, compared to a net loss of $0.7 million in the previous corresponding period. Net cash used in operations stood at $4.2 million during the nine months ended September 30, 2020. R&D expenses were at $0.4 million compared to a negative $0.1 million in the pcp. There was an improvement in the cash position of the company to $24.1 million as on 30 September 2020 with no debt on the balance sheet.

3QFY20 Financial Performance (Source: Company Reports)

Outlook: The company is optimistic on its progress in FY21, and its focus would be to advance simufilam in Phase 3 clinical program along with the expansion of drug manufacturing capabilities to support the clinical program.

Stock Recommendation: On 2^nd February 2021, the company has announced the results of an interim analysis of simufilam and observed that the patients' cognition and behavior scores improved following six months of treatment. The stock of SAVA is trading below its average 52-weeks’ range of $117.54-$1.63. The stock of SAVA gave a positive return of ~622.34% in the past three months and a positive return of ~306.91% in the past one month. On a technical analysis front, the stock of SAVA has a support level of ~$43.62 and resistance level at ~$59.22.  Considering the current trading levels, steep rise in price levels in the past few months, positive results from the study and optimistic progress towards the Phase 3 clinical program, we are of the view that most of the positive factors of the company have been discounted at the current juncture. Hence, we suggest investors to wait for better entry-level and give an ‘Expensive’ rating on the stock at the closing price of $52.37, down by 1.23% as on 23 February 2021.

SAVA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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