Fresh Del Monte Produce, Inc.

FDP Details

Fresh Del Monte Produce, Inc. (NYSE: FDP) is one of the world’s leading producers and distributors of fruits, vegetables, and other prepared foods to major markets such as North America, Europe, the Middle East, and Asia. FDP sells its products under the Del Monte trademark and operates in three segments viz. 1) Fresh and Value-Added Products (pineapples, fresh fruits and vegetables, avocados, and other prepared foods like juices, meals, and snacks), 2) Banana, and 3) Other products & services, including poultry and meat products, plastic products, and other third-party freight services.

Promoting Sustainability in Costa Rica and Guatemala: On June 29, 2021, the company declared a three-year project with the German Federal Ministry for Economic Cooperation and Development (BMZ), focusing on sustainability, education, community collaborations, and green recovery to encourage progress in emerging nations such as Costa Rica and Guatemala. The partnership aims to restore productive areas, encourage the economic development of communities affected by COVID-19, boost water conservation, and spread awareness about sustainable development in these countries.

Digital Investments to Improve Product Portfolio and Efficiency: FDP announced a relationship with I Squared Capital, a global infrastructure investment manager, on June 2, 2020, under which FDP will invest in the I Squared Global Infrastructure Fund. Selective investments in IT infrastructure will assist the company's supply chain to become more efficient by removing bottlenecks. This is intended to lead to a better product portfolio and increased consumer satisfaction in the long run.

Q1FY21 Results: FDP reported a slight decrease of 2.66% in total revenue to USD 1.09 billion in Q1FY21 (ended April 02, 2021) compared to USD 1.19 billion in Q1FY120 (ended March 27, 2020), due to the continued impact of COVID-19 restrictions on its foodservice customers and the reduced supply of fruits due to the two hurricanes in Guatemala. However, net income increased by 3.18x YoY to USD 41.4 million in Q1FY21 vs USD 13.0 million in Q1FY20. FDP reported 1.88x YoY increase in EBITDA to USD 84.3 million in Q1FY21 compared to USD 44.8 million in Q1FY20.

Global Net Sales (Source: Factsheet, Q1FY21)

Key Risks: Water scarcity in the company's growing regions could cause problems for its agricultural operations and finances. In the last five years, water shortages in Brazil have harmed FDP's banana production, while a drought related to El Nino harmed its pineapple fields in Kenya during FY16, FY17, and FY19. Furthermore, because of supply and demand imbalances, the pricing and availability of fresh produce goods fluctuate throughout the year. As a result, during the first half of the year, the sales price from bananas (which accounts for most of the FDP's net sales) is usually higher.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

FDP Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: FDP share price has declined by 6.89% in the past 1 month and is currently leaning towards the higher-band of the 52-week range of USD 20.71 to USD 36.57. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 45.40. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 38.40. On the technical chart, the next support level is USD 27.30. Considering the company’s healthy balance sheet, expected business recovery, inorganic initiatives, and associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 32.42, up 0.46% as of July 12, 2021, at 02:55 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.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

Tutor Perini Corporation

TPC Details

Tutor Perini Corporation (NYSE: TPC) is a civil, building, and specialty construction company, and offers diversified general contracting and design-build services to private clients and public agencies worldwide. The company’s services include general contracting, pre-construction planning, and comprehensive project management services, as well as self-performed construction services (site work, concrete forming, and placement, electrical, plumbing, and ventilation, etc.).

Geographic Footprint (Source: Investor Presentation, May 05, 2021)

Building the I-70 Missouri River Bridge: On July 12, 2021, the company’s subsidiary, Lunda Construction Company, was selected for designing and constructing the new I-70 Missouri River Bridge near Rocheport (comprising two three-lane bridges, one in each travel direction) by the Missouri Department of Transportation. The design team for this project is comprised of Parsons Corporation, Dan Brown & Associates, and HZ United. Budgeted at USD 220 million, work will commence in late FY21, with most of the construction expected to complete by FY24 end.

Q1FY21 Results: Due to lower activity in the Building Segment, which was somewhat offset by higher volumes realized from the Specialty Contracts Segment, total revenue fell 3.45 percent to USD 1.21 billion in Q1FY21 (ended March 31, 2021) compared to USD 1.25 billion in Q1FY20. Operating income for Q1FY21 was USD 49.70 million, up 5.24% from USD 47.23 million in Q1FY20. TPC’s net income for Q1FY21 was USD 25.11 million vs USD 26.14 million in Q1FY20. The backlog was robust at USD 8.10 billion, marginally down from USD 8.35 billion at the end of FY20. Backlog shrank in the quarter as revenue outpaced new awards by a small margin.

Key Risks: The majority of TPC's contracts have strict completion timeline criteria, and failure to fulfill these deadlines could harm the company's reputation as well as expose it to financial risk. Furthermore, the civil construction and public-works construction markets are reliant on government support. Hence, the company’s operating results could be negatively impacted by any decrease or delay in government funding.

Outlook: For FY21, the company expects EPS to range from USD 1.80 to USD 2.20. In its Q1FY21 Report, TPC stated that it is currently bidding on several large projects, with a large stream of other significant bids expected to occur later this year and continue into FY22. In addition, the company is likely to benefit from the Biden Government’s proposed Infrastructure Bill.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

TPC Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: TPC stock price fell by 27.41% in the past 3 months, and is currently leaning towards the lower end of the 52-week range of USD 10.79 to USD 20.24. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 36.89. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 16.66. On the technical chart, the next support level is USD 10.53. Considering the correction in the stock price in the past 3 months, various upcoming projects, strong backlog, positive outlook, and associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 13.16, down 0.23% as on July 12, 2021, at 12:41 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.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level.

Leju Holdings Limited

LEJU Details

Leju Holdings Limited (NYSE: LEJU) is the provider of online real estate services such as advertising, e-commerce, and listing services through its online platform, which comprises local websites and other mobile applications covering 391 cities. LEJU integrated its online platform with offline services to enable residential property and home reconstruction transactions. LEJU’s American Depositary Shares (ADS) are listed and trading on the NYSE, with each ADS representing one ordinary share.

E-House Enterprises Buys a Majority Stake in LEJU: Mr. Xin Zhou and SINA Corporation sold 76,401,247 ordinary shares of LEJU to E-House (China) Enterprise Holdings Limited on November 04, 2020, representing a 56% stake in the company. As a result, LEJU is now a publicly quoted subsidiary of E-House Enterprises.

FY20 Results: Total net revenue increased by 3.89% to USD 719.53 million in FY20 (ended December 31, 2020) compared to USD 692.61 million in FY19, owing principally to an increase of 18.78% in revenue from online advertising. Net income for FY20 was USD 21.00 million, as compared to USD 10.87 million reported in FY19. As of December 31, 2021, the company’s cash and cash equivalents amounted to USD 288.79 million with no outstanding debt.

Key Risks: The Chinese authorities' recent crackdown on its US-listed Tech businesses and the consequential possibility of tougher rules could dent the company's operations. This is after the passage of a bill in the US that could lead to the delisting of some Chinese companies from the country’s exchanges (in case the US authorities are unable to satisfactorily audit the company for three consecutive years). These constitute significant political and regulatory risks for the firm.

Further, a significant amount of the company's revenue comes from major Chinese cities, including Beijing, Hainan, Guangzhou, and Ningbo. Therefore, if the real estate market or internet advertising in any of these areas suffers a setback, demand for LEJU's services could drop dramatically, resulting in a negative impact on its financial situation.

Outlook: The company stated that the total revenues for FY21 are estimated to range between USD 755 million and USD 790 million, representing an increase of 5% to 10%.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

LEJU Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: LEJU's share price has decreased by 22.41% in the past 6 months and is currently trading at the lower end of the 52-week range of USD 1.71 to USD 6.96. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 41.90. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 2.29. Considering the significant correction in the stock price in the past 6 months, the increasing demand for digital services, no long term debt, and the associated risks, we recommend a “Speculative Buy” rating on the stock at the current price of USD 1.87, up by 4.47% as of July 12, 2021, at 3:26 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.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.