🔩Sectors Highlights: Industrials and Materials

As bond yield surge, it is common to see sectors such as industrials and materials closely linked to the economy do well. However, they have been lacklustre due to the usual reasons such as supply chain disruption and earnings estimates.

As analysts drop their earnings estimates due to intense supply constraints, these companies need to source their parts globally and given that they can’t get access to these necessary supplies, they cannot meet their goals.

Companies like 3M are also facing profit margin pressure given that the increase in the selling process cannot make up for the rise in cost pressure.
Pika World sees the sector as continuing to face headwinds.

🚘Tesla: Yes to Solid Delivery Figure

The EV pioneer broke yet another record as it delivered more cars than expected. As a result, analysts are now boosting their earnings estimates, given their robust delivery figure. More than 241,000 vehicles were delivered in 3rd quarter

The result is incredible given a backdrop of semiconductor shortage that constrains its rivals such as General Motors and other traditional legacy companies. Nevertheless, Pika World continues to have exposure on the EV giant, and our eyes are now set on Thursday Annual General Meeting.

⛽️Evergrande: Shares Halt Pending Corporate Action

The shares of China Evergrande halted as it is reported that Hopson, which is a rival, is planning to purchase a portion of Evergrande property-services unit for around $5 billion. However, Pika World does not see this as a game-changer to solve its deep debt of $300 billion.

The company also plans to sell its $1.5 billion stakes in Shengjing Bank to an SOE asset management company as it seeks to raise massive cash. More importantly, it is reported to make a $260 million payment on a dollar note on Monday. However, unlike other bond payments, this repayment does not have the luxury of 30-day grace. Essentially, the default happens if the sum is not paid within a 5-day grace period.

Pika World continues to see ongoing drama surrounding Evergrande. Still, it may be comforted that the Chinese company or its SOE will come in to limit the damage of the fallout and default risk spilling over to other sectors of the economy.