Investment Rating - The report provides a general investment rating for Restaurant Brands International Inc. bonds as "Ba2" for certain term loans and notes, indicating a speculative grade with potential for moderate credit risk [8]. Core Insights - Restaurant Brands International reported Adjusted EBITDA of $720 million for Q2'24, reflecting an increase of 8.3% compared to $665 million in Q2'23, with revenues reaching $2.08 billion, up 17.2% from $1.78 billion in Q2'23 [2][3]. - The performance of individual segments showed growth, with Tim Hortons achieving Adjusted EBITDA of $307 million (+7.7%) and revenues of $1.03 billion (+2.3%), while Popeyes reported Adjusted EBITDA of $70 million (+7.7%) on revenues of $194 million (+12.1%) [5][6]. - The International segment also performed well, with Adjusted EBITDA of $176 million (+2.6%) and revenues of $232 million (+5.9%), contributing to system-wide sales of $4.52 billion, an increase of 9.2% [6]. Financial Summary - The financial snapshot for Q2'24 indicates significant revenue growth across various segments, with Burger King revenues at $364 million (+11.3%), Tim Hortons at $1.03 billion (+2.3%), and Popeyes at $194 million (+12.1%) [3][5]. - The total revenue for Restaurant Brands International was $2.08 billion, marking a 17.2% increase from the previous year [3]. - The company ended Q2'24 with total debt estimated at $14.14 billion, reflecting a pro-forma leverage of 5.1x, indicating a slight increase from 4.9x in Q1'24 [6].

Investment Rating - The report does not explicitly state an investment rating for the industry [1]. Core Insights - The report highlights a focus on upcoming economic data releases, including US CPI and retail sales, which are expected to show a rise of +0.20% MoM for both headline and core CPI [2][4]. - In the UK, inflation is projected to increase to 2.3% for headline CPI and 3.5% for core CPI, indicating a steady rise after two months at the target [3]. - Japan's Q2 GDP is anticipated to show a real GDP growth of 2.7% QoQ annualized, while the PPI is expected to rise by 2.9% YoY [4]. - In China, industrial production is expected to slow slightly to 5.2% YoY, while retail sales are projected to improve to 2.5% YoY [4]. Economic Data Releases - The report outlines a detailed calendar of significant economic data releases for the week of August 12, including US July PPI, CPI, retail sales, and industrial production [5]. - Key earnings reports from major corporations such as Walmart, Cisco, and Alibaba are highlighted, indicating a focus on consumer health and corporate performance [4][5]. - The report notes that the University of Michigan consumer survey is expected to show an increase in the sentiment index to 69.1 from 66.4 in July [2]. Central Bank Focus - The report mentions upcoming rate decisions from central banks in Norway and New Zealand, as well as the MLF rate fixing from China [3][4]. - The Federal Reserve's Jackson Hole symposium is noted as a significant upcoming event for monetary policy discussions [2].

Investment Rating - The report rates ModivCare Inc.'s bonds as Buy, indicating an expectation for these bonds to outperform other issues in the sector over the next three to six months [1][27]. Core Insights - ModivCare Inc. (MODV) reported Q224 EBITDA of $45 million, slightly above Bloomberg consensus of $42 million and a significant improvement from $32 million in Q124, leading to a last twelve months (LTM) EBITDA of $179 million [4][18]. - The company won new NEMT contracts in Q224, generating $33 million in annual revenue, which is expected to positively impact the second half of 2024 [1][10]. - ModivCare's leverage target is set at 3x, with current net leverage reported at 5.2x, indicating a focus on improving core operations and considering strategic options [6][18]. - The company has lowered its 2024 EBITDA guidance to a range of $185-195 million, primarily due to weaker-than-expected results from its PCS segment [7][18]. - ModivCare's liquidity position is reported at $99 million, with cash of $11 million and revolver availability of $89 million [16]. Financial Performance - The LTM net leverage as of June 30, 2024, is reported at 5.2x, which includes $45 million of cost savings, while a calculation without these add-backs shows a net leverage of 6.5x [5][18]. - The company expects to generate positive free cash flow (FCF) in 2024, with a conversion rate of approximately 30% of EBITDA [7][18]. - ModivCare's revenue for FY2024 is projected at $2,818 million, with EBITDA expected to be $180 million [19]. Contractual Developments - In Q224, ModivCare secured new contracts that contribute to a total of approximately $211 million in annual revenue from contracts won in 2023 and 2024 [10]. - The company anticipates monetizing its Matrix asset in late 2024 or early 2025, which could significantly improve its leverage profile [13][18]. Market Position - ModivCare's PCS EBITDA improved to $15 million in Q224, up from $11 million in Q124, but remains below the annual run rate potential of $75 million [11]. - The company expects to exit 2024 with PCS margins approaching 10%, with NEMT margins projected to increase by roughly 100 basis points [12].

Investment Rating - The report does not explicitly state an investment rating for the industry or company, but it indicates that the results are "good enough to support current debt trading levels" [2]. Core Insights - The consolidated Adjusted EBITDA for Q3'24 was $104.7 million, a decrease of 3.3% compared to $108.4 million in Q3'23, while revenues increased by 21.4% to $504.2 million from $415.4 million in the previous year [4][10]. - The Restricted Group reported an estimated EBITDA of approximately $97 million, reflecting a growth of 13% from around $86 million in Q3'23 [4][10]. - Management noted improvements in business volumes at Mohegan Inspire, which is approaching profitability, and progress on debt reduction [2][4]. Revenue Summary - Mohegan Sun generated revenues of $235.7 million in Q3'24, up 2.2% from $230.7 million in Q3'23, while Mohegan Pennsylvania saw revenues increase by 5.3% to $68.7 million [3][4]. - Digital operations reported revenues of $41.9 million, a significant increase from $16.7 million in Q3'23 [3][4]. - Niagara Resorts experienced a revenue decline of 7.1%, down to $75.3 million from $81.1 million in the previous year [3][4]. Adjusted EBITDA Analysis - Mohegan Sun's Adjusted EBITDA was $62.9 million, down 8.2% from $68.5 million in Q3'23, while Mohegan Pennsylvania's Adjusted EBITDA increased by 40.6% to $19.8 million [4][5]. - Digital operations achieved an Adjusted EBITDA of $23.1 million, nearly doubling from $11.6 million in Q3'23 [4][9]. - Mohegan Inspire reported a loss of $7.6 million in Q3'24, indicating challenges in its early operational phase [9]. Operational Metrics - Table revenue decreased to $46.4 million, down 2.7% from $47.7 million in Q3'23, while slot revenue remained relatively stable at $98.7 million, a slight decrease of 0.2% [5][9]. - The lodging segment showed positive trends, with RevPAR increasing to $152, a 0.5% rise from $151 in Q3'23, driven by higher occupancy rates [5][9]. - Mohegan Inspire celebrated its grand opening on March 5, 2024, and received a five-star hotel rating, which may enhance its market position [10]. Debt and Leverage - The estimated restricted group debt stands at $1.77 billion, with a leverage ratio of 5.2x based on LTM EBITDA of $337 million [10][12]. - Management anticipates refinancing the 8.000% Second Lien Notes due 2026 before they become current maturities in 2025 [10].

Viewpoint | Citi Research 12 Aug 2024 01:10:13 ET | 28 pages South Africa Economics and Equities Two-pot retirement reform to boost GDP with stock implications CITI'S TAKE We expect the two-pot retirement reform (effective 1 September 2024) to boost GDP growth to 2.0% by 2025. We see upside for South African equities given the expected positive impact on consumption, namely for consumer stocks, while the impact on banks is likely to be more nuanced given our expectation that the reform will lead to repaymen ...

Investment Rating - The report maintains an underweight rating on Consumer Cyclicals due to a shift towards non-discretionary spending among low and mid-income consumers [6]. Core Insights - The report highlights a focus on labor markets as a key determinant for economic cycles, with expectations of a soft landing despite weak July data [6]. - There is an anticipated increase in corporate actions in the second half of 2024, driven by elevated cash levels and lower back-end rates, with buybacks projected to exceed $1 trillion [6]. - Mentions of "AI" are at all-time highs, indicating a strong trend towards efficiency and adoption in various sectors [51]. Summary by Sections Key Takeaways - Underweight stance on Consumer Cyclicals due to increased non-discretionary spending [6]. - Labor market dynamics are crucial for economic outlook, with a soft landing expected [6]. - Corporate actions, including M&A and buybacks, are projected to rise in 2H24 [6]. Corporate Mentions - Mentions of "Inflation" are stabilizing, indicating a shift in corporate focus [11]. - Hiring intentions are decreasing, while mentions of layoffs remain consistent [12]. - Corporate mentions of "Free Cash Flow" have reached an all-time high, reflecting a focus on capital allocation [23]. Industry Breakdown - The report provides a sector heat map indicating varying levels of cost pressures and pricing power across industries [29]. - Mentions of "Labor Shortage" and "Labor Costs" are significant, highlighting ongoing challenges in workforce management [38]. - The transportation costs are increasingly being discussed, reflecting concerns over freight and shipping expenses [72]. Trends and Themes - Key themes for 2024 include AI, longevity, and decarbonization, indicating a forward-looking approach to investment strategies [26]. - The report notes a mixed consumer outlook, with both strength and weakness being reported by companies [19]. - Pricing power remains a critical topic, with various sectors experiencing different levels of cost inflation and margin pressures [64][73].

Industry Investment Rating - The report maintains an **In-Line** rating for the technology sector, with specific sub-sectors such as **Greater China Technology Semiconductors**, **Electronic Components Japan**, and **IT Hardware** also rated as **In-Line** [1] - The **North America Semiconductors** sector is rated as **Attractive**, indicating a positive outlook for semiconductor companies in this region [1] Core Report Insights - The report highlights a median expectation of **37% Y/Y growth** for NVIDIA-related stocks and **14% Y/Y growth** for non-NVIDIA-related stocks in 2025 [1] - Global cloud capex is expected to grow **20-25% Y/Y** in 2025, significantly higher than the current tracker of **8% growth** [1] - The report introduces a **4 X 4 Matrix** to map out 16 scenarios for cloud capex growth, helping investors assess upside and downside risks for 46 covered stocks [1] Cloud Capex and AI Investment - The report emphasizes the importance of **AI cloud investment**, particularly in areas like **networking**, **CPU servers**, and **utilities**, as the technology landscape evolves [1] - NVIDIA-related capex is projected to grow **37% Y/Y** in 2025, driven by strong demand for AI infrastructure, while non-NVIDIA capex is expected to grow **14% Y/Y** [1] - The report identifies **Wiwynn** and **Advantest** as outliers with significant growth potential in the AI supply chain [1] Key Companies and Stock Implications - **TSMC** is expected to see tight supply for leading-edge foundry capacity in 2025, with potential price hikes for CoWoS capacity by **20%** [9] - **MediaTek** is expanding its partnership with Arm to develop server CPUs, positioning itself as a competitor to NVIDIA in the AI chip market [10] - **Alchip** is projected to see **>50% Y/Y growth** in AWS project revenue, driven by 7nm projects [11] - **Aspeed** is highlighted as a key NVIDIA-related play, with its new AST2700 chip expected to gain traction due to its integration of the LTPI protocol [12] - **Dell Technologies** is positioned to benefit from AI server demand, with **50k HGX AI server builds** expected in 2024, potentially driving **$11B in AI server revenue** in FY25 [14] NVIDIA and Competitors - **NVIDIA** is expected to see **18% Y/Y growth** in datacenter revenue in 2025, driven by strong demand for its Blackwell and Rubin platforms [15] - **Broadcom** is projected to grow its AI exposure, with non-AI semis expected to rebound in late 2025 [16] - **Marvell** is seen as a beneficiary of AI growth but remains **Equal-Weight** due to valuation concerns [17] Networking and Infrastructure - **Cisco** is expected to benefit from networking growth, with a **$1bn FY25 AI order target** [19] - **Arista** is positioned to capture a growing portion of the AI networking opportunity, with an incremental **$5bn AI networking opportunity** by 2027 [21] - **Infinera** and **Ciena** are expected to benefit from increased inter-data center traffic, though growth is seen as a longer-term opportunity [22][20] European Data Center Growth - The European data center market is expected to grow **5x by 2035**, driven by increased cloudification and AI adoption [126] - Key investments include **AWS's $17bn investment** in Spain and **Microsoft's £2.5bn investment** in the UK [126] Conclusion - The report concludes that **cloud capex growth** in 2025 will be driven by both NVIDIA-related and non-NVIDIA-related investments, with significant upside potential for companies in the AI supply chain [1][33]

Investment Rating - The report indicates a mixed investment rating across various sectors, with 38% of stocks rated as Overweight, 46% as Equal-weight, and 16% as Underweight [12]. Core Insights - The report highlights significant volatility in global equity and fixed income markets, with the S&P 500 index dropping over 6% and Japan's Nikkei 225 index experiencing a 20% decline before recovering [2][3]. - The changing narrative around US economic growth is identified as a core factor driving market volatility, with recent employment data raising concerns about a potential hard landing [3][4]. - The Federal Reserve's monetary policy outlook has shifted dramatically, with market expectations now pricing in over five rate cuts this year, compared to under two a month ago [3]. - The Bank of Japan's recent hawkish stance has contributed to global market fluctuations, indicating a divergence in monetary policy between the Fed and BoJ [5][6]. - In credit markets, the report suggests that recent weakness in spread products is justified, particularly in high-yield single B bonds, and recommends hedging against hard-landing risks [6]. Summary by Sections Market Overview - The S&P 500 and Nikkei 225 indices experienced significant declines in early August, with subsequent recoveries of about half of those losses [2]. - Market volatility remains elevated, with measures such as the VIX and MOVE indices reflecting ongoing uncertainty [2]. Economic Outlook - Economists maintain a base case for a resilient economy achieving a soft landing, expecting continued declines in inflation and three 25bp rate cuts in 2024 [4]. - Labor market data will be closely monitored, with a need for positive indicators to support the soft-landing thesis [4]. Monetary Policy - The Fed's path for monetary policy is under scrutiny, with a notable shift in market expectations regarding rate cuts following recent employment data [3][4]. - The BoJ's hawkish comments have led to a significant unwind of JPY carry trades, impacting global markets [5][6]. Credit Market Analysis - The report suggests that investors should consider hedges against hard-landing risks rather than liquidating cash portfolios, particularly in high-yield credit [6]. - Emerging market sovereign credit is expected to outperform high-yield credit, leading to a shift in preference [6].

Investment Rating - The report maintains a defensive stance and suggests staying with UST curve steepeners [1] Core Insights - Better-than-expected US data has improved global risk sentiment, reversing some repricing in central bank policies and exchange rates [1][5] - The upcoming US general election is expected to impact the US dollar, with a potential Republican victory likely to strengthen the dollar [1][15] - The report emphasizes the importance of monitoring US unemployment claims data as it approaches the reference period for the US establishment survey [5][11] Summary by Sections Interest Rate Strategy - In the US, the strategy includes maintaining UST 2s20s steepeners and re-entering September/November FOMC OIS flatteners [1][30] - The report anticipates a 25bp rate cut by the Fed in September, with discussions around a potential 50bp cut [1][49] Currency & Foreign Exchange - The report expects the USD to strengthen if global growth risks become a focus, particularly related to Republican campaign policies [1][15] - It discusses the implications of upcoming central bank meetings in Sweden and Norway, predicting a cut from the Riksbank and a hold from Norges Bank [1][12] Global Macro Strategy - The report highlights the significance of the US general election polling and its potential impact on market dynamics [1][8] - It notes that the breadth of weakness across industries challenges optimism regarding the labor market, as indicated by the private payroll diffusion index [5][11] Short-Duration Strategy - The report discusses the recent decline in RRP balances and the implications for funding conditions in the money markets [1][182] - It suggests that the risk of reserve scarcity is low into year-end, with expectations for higher reserves [1][191] Market Positioning - The report recommends maintaining short CAD/JPY positions and highlights the potential for further JPY appreciation if US economic data weakens [1][94][157] - It also discusses the positioning of various currencies in response to global economic conditions, emphasizing the bearish outlook for EUR and CAD [1][181]

M Update China Equity Strategy | Asia Pacific August 8, 2024 09:00 PM GMT A-Share Sentiment Fell Sharply Amid Domestic and Global Uncertainty Market sentiment has dropped significantly amid rising global volatility and lackluster macro prints this week. YTD Northbound flow approaches negative, first time in history. We remain relatively cautious given uncertain policy implementation and volatile global macro backdrop. A-share investor sentiment dropped notably vs. prior week: Weighted and simple MSASI dropp ...