KB Home

KBH Details

KB Home (NYSE: KBH) is one of the major homebuilders in the United States, having constructed about 645 thousand houses throughout its more than 60-year existence. KBH offers home building services as well as financial services such as mortgages and insurance. KBH has operations on the West Coast (California and Washington), the Southwest (Arizona and Nevada), the Central (Colorado and Texas), and the Southeast (North Carolina and Florida).

Latest News:

• Launched New home communities: Brookside Preserve, a new single-family home neighborhood near St. Johns, Florida, will open on October 15, 2021, according to KBH. In addition, Berry Springs, a new single-family home development in Georgetown, Texas, will be officially opened by KBH on October 14, 2021.
• Dividend Declaration: KBH announced a quarterly cash dividend of USD 0.15 per share on October 7, 2021, to be paid on November 24, 2021, to shareholders of record on November 11, 2021.

9MFY21 Results:

• Increase in Revenue: KBH's total revenues during 9MFY21 (ended August 31, 2021) was USD 4.05 billion, 35.49% higher than the USD 2.99 billion recorded in 9MFY20 due to growth in housing revenues.
• Improvement in Net Income: Net income during 9MFY21 improved to USD 390.51 million from USD 190.15 million during 9MFY20.
• Improvement in Net Orders: KBH's net order during 9MFY21 was 12,677 orders with a total net order value of USD 5.92 billion, up from 9,467 orders with a total net order value USD 3.71 billion during 9MFY20.

Key Risks: A consistent demand for housing since 2013, along with falling house inventories, indicating a low supply of new homes relative to historical levels, has contributed to above-average home price growth in most areas over the last several years. However, if housing prices rise faster than consumer income, most homebuyers may be unable to acquire a home, negatively influencing the company's operational affairs.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(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.

KBH Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: KBH's share price has improved by 12.75% in the past nine months and is currently trading below the mid-point of the 52-week range of USD 30.25 to USD 5248. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 51.14. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 48.61. Considering the company's market dominance, increase in new home communities, enhancement in credit rating, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 40.32, up by 5.08% as of October 18, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

Vinci Partners Investments Ltd.

VINP Details

Vinci Partners Investments Ltd. (NYSE: VINP) operates as an alternative investment platform in Brazil. Its business segments consist of Hedge funds, Public Equities, Private Equities, Financial advisory services, Investment products and solutions, Real Estate, Infrastructure, and Credit. As of June 30, 2021, the VINP had Assets Under Management (AUM) of BRL 57 billion. It was listed on NASDAQ on January 29, 2021. As of October 18, 2021, the company's market capitalization stood at USD 801.91 million.

Latest News:

Capital Raise for REIT: VINP closed the seventh issue of additional quotas for Vinci Shopping Centers (VISC) FII, a listed shopping mall Real Estate Investment Trust (REIT). VISC had used proceeds (BRL 364 million) of this fundraise to acquire an interest in four shopping malls via a BRL 660 million transaction with Ancar Ivanhoé, a shopping mall operator in Brazil. This fundraise makes VISC the largest shopping mall REIT in Brazil in terms of assets, participating in 19 shopping malls across the country and a net asset value of ~BRL 2 billion.

Acquisition of Farmax: On September 23, 2021, Vinci Capital Partner III (VCP III), the fund managed by Vinci Partners Private Equity, the subsidiary of VINP, signed an agreement to acquire Farmax, a Brazil-based manufacturer of beauty and personal care products. This acquisition marks the fifth transaction of VCP III, leading to a cumulative gross allocation of 61.3% of its total capital commitments and a cumulative net allocation of 71.1% after incurred expenses.

Q2FY21 Results:

• Significant Growth in Revenue: The company reported YoY growth of 37.93% in revenues to BRL 119.78 million during Q2FY21 (ended June 30, 2021) from BRL 86.84 million during Q2FY20, attributable to a YoY surge of 55.82% in net revenue from management fees.
• Surge in Profitability: VINP reported a sharp uptick in net income to BRL 53.41 million during Q2FY21 vs. BRL 34.92 million in Q2FY20.
• Cash and Debt Position: As of July 04, 2021, the company had cash and cash equivalents (including marketable securities) of BRL 23.51 million and total debt of BRL 102.95 million.
• Payment of Dividend: VINP declared a quarterly dividend of USD 0.30 per common share, paid on September 16, 2021, to shareholders of record on September 01, 2021.

Key Risks:

• Ownership Concentration Risk: As of December 31, 2020, Gilberto Sayão da Silva, owned 100% of its outstanding Class B shares, thus controlling ~77.30% of the voting power, which constrains the ability of other shareholders to influence corporate decisions.

• Regulatory Risk: VINP operates in a financial services industry subject to several federal and state regulations both within and outside the US. The issuance of stricter regulations or an increase in enforcement activity could adversely affect the operations and profitability of the company. 
  

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(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.

VINP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

VINP's stock price declined 0.07% in the past one month and is currently trading close to the mid-band of its 52-week range of USD 10.50 to USD 19.46. The stock is currently trading above its 50 DMA level, and its RSI Index is at 56.10. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 15.71.

Considering the company's growth prospects, solid margins, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 14.09, as of October 18, 2021, 12:05 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.