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Daily Archives: March 2, 2022

Chart: S&P 500 Response to Geopolitical Events

Source : LPL Research

Mid-week Humour: News in Cartoons

Yum China Adds Machines, Not Workers, As It Expands Store Network

Kenji Kawase wrote . . . . . . . . .

Yum China’s network of KFC and Pizza Hut outlets has kept growing right through the COVID pandemic, even as the size of its workforce has remained steady, the group’s chief executive said on Wednesday.

“We increased our stores, but without increasing the total number of staff,” said Joey Watt on a call with analysts and investors, highlighting Yum China’s investments in artificial intelligence and digital technologies to support operations and training.

Many stores now feature touch screen panels where customers place orders. In several Chinese cities, KFC robots serve up soft serve ice cream cones. Elsewhere, take-away orders can be picked up from digital lockers without contact with staff.

Watt noted that the company now has around 420,000 full- and part-time staff, roughly the same number it had in 2016 when it was spun off by U.S. parent Yum Brands.

Over that same period, the number of outlets climbed 56%, reaching 11,788 as of December with the addition of a net 1,282 outlets in 2021. Meanwhile, between 2016 and 2021, annual net profits nearly doubled to $990 million, though last year’s figure included a one-off gain from a joint venture in the city of Hangzhou.

In announcing its annual results, Yum China said it planned to open another net 1,000 to 1,200 stores this year across its brands, which include Taco Bell, local hot pot chains Little Sheep and Huang Ji Huang, and coffee shops COFFii & JOY and Lavazza.

Of its projected annual capital expenditures of $800 million to $1 billion, roughly half would be spent on new stores, but Watt emphasized they are individually less costly than before despite being higher tech. In 2016, she noted, the company opened 575 outlets on an overall capital budget of $436 million. Last year saw 1,806 openings on spending of $689 million.

“The key is efficiency,” she said, again highlighting the role of automation. In October, she announced the company would invest up to $200 million to open research and development centers in Shanghai, Xi’an and Nanjing to tap those cities’ technology talent pools.

While construction continued apace last year, COVID did take a toll on Yum’s sales. Revenues for stores open at least a year fell 11% in the October-December quarter from the same period a year before.

More than 500 outlets were closed for dine-in or completely last month amid omicron outbreaks. Chief Financial Officer Andy Yeung said that sales were lower during last week’s Lunar New Year holiday compared with 2021 and that the situation “remains volatile,” but did not disclose figures.

Watt added that Yum will be pulling the plug on East Dawning, a five-outlet group of Chinese-style fast food outlets focused on transport hubs where customer traffic has declined amid the pandemic.

Most new stores in the country are being opened by Yum China itself, but Watt said it would continue to look to franchisees in remote areas such as Tibet and for strategic channels like highway rest stops.

With franchise stores, there are a “lot of challenges in terms of quality of service that we care most about,” Watt said, before adding that improved automation and technology had given her “better comfort” in assuring the service quality of such partners. Franchise outlets now represent about 15% of Yum China’s store portfolio.

Despite the cap on staffing, Yum China’s labor costs have continued to rise, reaching $2.25 billion last year, up 31% from 2020. Payroll and benefits have also made up a growing proportion of total store operational expenses, hitting 29.2% last year, up from 25.5% in 2016.

Part of this is due to higher insurance expenses. The company last year raised medical coverage for some store managers to 1 million yuan ($157,182) while extending critical illness and other coverage for 100,000 front-line staff and family members.

With help from new outlets, Yum China’s revenues rose 19% last year to $9.85 billion.


Source : Nikkei Asia

Is Hydrogen A Better Bridge Fuel Than Natural Gas?

Irina Slav wrote . . . . . . . . .

With the latest events unfolding in Ukraine, the topic of natural gas dependence and its implications has once again taken center stage. Natural gas is the least polluting fossil fuel, which has made it a preferred “bridge” to net zero. The dependence element, however, has cast a shadow over the future of gas, and alternatives are being actively—if not desperately—sought. One of the most talked-about among these alternatives is hydrogen—an energy carrier rather than a fuel—but an element so versatile it can be used for some of the things gas is now used for, including fuel for transport and heating.

In fact, according to a Goldman Sachs analyst, hydrogen could turn into a $1-trillion market in the future.

“If we want to go to net-zero we can’t do it just through renewable power,” Michele DellaVigna told CNBC earlier this week. “We need something that takes today’s role of natural gas, especially to manage seasonality and intermittency, and that is hydrogen.”

“And once we have it, I think we have a solution that could become, one day, at least 15% of the global energy markets which means it will be … over a trillion-dollar market per annum,” DellaVigna also said. “That’s why I think we need to focus on hydrogen as the successor of natural gas in a net-zero world.”

As with most things, however, this is easier said than done. Green hydrogen has been attracting growing attention as it is considered the cleanest form of hydrogen production but green hydrogen has problems such as the fact that electricity for it comes from intermittent solar and wind, and that a lot of the energy used to produce hydrogen through electrolysis is lost, which means the efficiency of the process is limited, which in turn makes it more expensive.

As for blue hydrogen that includes carbon capture and storage, environmentalists have slammed it for being, effectively, greenwashing on the part of energy companies as carbon capture and storage technology has no real future, being ineffective and expensive. On top of that, most of the captured carbon dioxide is used for enhanced oil production, which also does not sit well with environmentalists.

That said, hydrogen is, as Goldman’s DellaVigna called it, “a very powerful molecule”. Hydrogen is used in the treatment of metals; it is used in the production of fertilizers; and, of course, it can be used as fuel in fuel-cell cars. Hydrogen is also being blended already in the UK with natural gas and used for heating purposes.

Forecasts for the future of hydrogen and, more specifically, green hydrogen, the ultimate net-zero fuel, have been quite upbeat in the past couple of years. The main reason for this was falling costs associated with wind and solar energy as the technology continued to improve while raw material costs remained low.

Unfortunately for the upbeat forecasters, this is changing. The wind and solar industries are facing rising rather than falling costs as raw materials soar on the back of expectations for stronger demand and tight supply.

The Wall Street Journal reported earlier this month that wind turbine manufacturers are struggling with turning a profit because of costlier raw materials, logistical challenges, and uncertainty around subsidies, the last one in the United States. The report quoted a projection by Wood Mackenzie that anticipates a 10-percent increase in wind turbine prices over the next 12-18 months due to higher prices of steel, aluminum, copper, and carbon fiber.

Even so, companies are building electrolyzers in anticipation of more government support for hydrogen. Last year, for example, Shell built an electrolyzer in Germany to produce 1,300 tons of the element annually. The company admitted green hydrogen costs five times as much as fossil fuel-derived hydrogen but noted scale and efficiency improvements can bring costs down, as can additional government support.

France’s Engie and Emirati Masdar last year closed a $5-billion partnership to develop green hydrogen in the UAE. Per their plans, the two will develop projects with a total capacity of 2 GW by 2030, Engie said in December.

Then in January this year, Shell again announced the launch of a hydrogen project in China. The electrolyzer is one of the largest in the world and will take advantage of the abundant wind power capacity in the Hebei province of China.

The EU has plans to build electrolyzers with a total capacity of some 40 GW by 2030. Of this total, the EU wants to have 6 GW up and running within two years.

It seems obvious that the materialization of these plans would depend strongly on government incentives. Without them, the high costs of green hydrogen production would derail all the ambitious plans. The question, then, remains whether governments that are currently struggling with inflation rates not seen in decades, among other lingering effects of the pandemic, will have enough money to incentivize everything about the green transition they want to incentivize, including green hydrogen.


Source : Oil Price

Capital Follows Returns, Not The Other Way Around

jessefelder wrote . . . . . . . . .

“Whenever you find yourself on the side of the majority, it is time to reform (or pause and reflect).” -Mark Twain

One of the simplest but most important lessons an investor can learn is this: capital follows returns; returns don’t follow capital. In other words, money comes into a sector only after it has had a terrific run in terms of investment performance. Furthermore, that influx of new money necessarily means that the run of terrific performance will soon come to an end.

The chart at the top recently shared by Callum Thomas illustrates this point. First look at just the blue line, which represents the proportion of capital expenditures made by commodity sectors as a share of total spending by S&P 500 companies. In 2000, after a long period of under-performance which saw capital flee the sector, commodity sectors put in a major bottom as valuations became very cheap and the lack of investment resulted in a dearth of supply which supported prices.

Over the coming decade, these stocks outperformed the broad stock market in dramatic fashion. This eventually attracted a great deal of capital in the early-2010’s. That influx of money resulted in significant over-valuation of the stocks as well as over-investment in production which eventually led to oversupplies and a crash in prices.

Now look at the gray line, which represents the proportion of capital expenditures made by the tech sector as a share of the total. In 2000, as commodity sectors were largely being shunned by investors, the tech sector’s terrific performance over the prior decade led to a massive inflow of capital. The result was extreme over-valuation of tech stocks as well as massive over-investment in capex. That combination precipitated a crash not long afterwards.

The dearth of investment that came about as the result of the tech crash, however, set the stage for a reset in both valuations and in the overall supply of tech products and services. And just as commodity sectors were in the process of peaking, the tech sector was beginning to take off again on another stretch of incredible performance.

Today, the situation looks very much like it did just over 20 years ago. The technology sector’s terrific run has attracted another massive inflow of money that has pushed up valuations and has been invested into greatly expanding the availability and breadth of tech products and services. At the same time, commodity sectors have been starved of capital, resulting in deeply discounted valuations and a severe restriction of investment in supplies.

If history is a guide, the coming years should see terrific returns in commodity sectors once again and terrible returns for the tech sector. That’s just the natural result of the trends in the flow of capital in recent years. Investors will eventually come around to this way of thinking. But, by the time they do, it will likely be time to go the other way yet again.


Source : The Felder Report

虛擬宇宙 漸露勢頭

作者: 謝國生, 何敏淙 . . . . . . . .

不論在線上線下,「元宇宙」(Metaverse)都是城中熱話。何謂元宇宙?簡單來說,它是結合了虛擬實境(Virtual Reality)、擴增實境(Augmented Reality)、混合實境(Mixed Reality)、人工智能、區塊鏈(Blockchain)、社交網絡、網媒、網購等元素的新版互聯網。

元宇宙的誕生

雖然意指未來,此詞卻早於1992年的科幻小說《雪崩》(Snow Crash)中首度出現。2021年10月底,臉書母公司Facebook, Inc.正式易名為Meta Platforms, Inc.(商業名稱為Meta),並宣稱元宇宙為下一個前沿技術,供使用者日常生活、工作、娛樂之用。

元宇宙涵蓋虛擬世界和物質世界,日後人類在元宇宙內將可打破物理法則完成更多工作和活動,例如透過虛擬「分身」參加會議等等。在農曆新年期間,香港就在虛擬平台Cryptovoxels舉行了全港首個元宇宙年宵(Mart in Metaverse),讓參加者在虛擬市場購物和遊玩。

元宇宙用途極廣,可用作商務溝通、遙距醫療以及透過虛擬實境參觀物業單位等。筆者相信,未來各大企業將會結合「實體」和「虛擬」兩方面。微軟行政總裁納德拉(Satya Nadella)提出了「數碼分身」(Digital Twin)概念,即企業的實體廠房、辦公室、伺服器中心等,會全部複製到企業的日常運作系統,另備一個數碼模型(「分身」)。數碼分身能隨時模仿企業在實體世界的運作,針對在現實世界中可能發生的問題,及早作出改善建議,從而提升競爭力。

虛擬地產雛形

目前世界上已經有數個元宇宙虛擬平台,包括沙盒(The Sandbox)和Decentraland,當中的交易通常以加密貨幣或非同質化代幣(Non-Fungible Token;簡稱NFT)進行。數碼藝術家Beeple的作品《每天:前5000天》(Everydays : The First 5000 Days)就以NFT進行交易,去年在佳士得拍賣會上以近7000萬美元成交。除了錄像、音樂等數碼藝術,NFT交易市場還包含虛擬不動產的交易。NFT交易平台OpenSea更供用家買賣虛擬土地和房屋。

虛擬土地就是元宇宙中的地產,每塊地以獨一無二且不可複製的NFT來區分每筆交易。土地供應商(賣家)和用戶(買家)可在平台買賣虛擬土地,作居住或商業用途。為了確保數碼不動產保值,元宇宙的土地數量有限,而且供應也不可能增加,所以只有一部分人有機會購得。例如在Decentraland裏只有9萬幅地,每幅長、寬大約50英呎(15.24米)。限量供應的概念與比特幣相似,即有限的虛擬貨幣流通後,達到一定數量就不會再增加。故擁有虛擬業權可視為資產地位和身份象徵。

有人不禁會問:如此購得的土地或物業究竟有何用途?這裏不妨用元宇宙集團(Metaverse Group ),一家專注於虛擬平台的房地產公司為例。集團在Decentraland購買的土地位於時尚區,可用作潮流活動的場地。只要透過建設優質土地、內容,配合別出心裁的營運方式吸引用戶,就可為虛擬空間製造價值。通過建立並營辦商場、大學、醫院、美術館等,用戶可在元宇宙獲利。在不同平台購置虛擬土地,就好比在不同城市買地,各有定價標準。不過在元宇宙買賣土地需要使用平台認可代幣,比如Sandbox的Sand或Decentraland的Mana等,虛擬土地經轉讓或出租後便能產生價值。

2021年6月,虛擬地產商Republic Realm在Decentraland買了259幅地,花費大約等同90萬美元。根據追蹤NFT交易數據的網站DappRadar,這是Decentraland當時最昂貴的NFT土地交易。後來元宇宙集團更以240萬美元在Decentraland購買116塊土地,面積較Republic Realm購入的土地小。

同年12月,香港新世界發展集團宣布購買沙盒中一幅虛擬地皮,計劃建造創新中心;據報地價約為500萬美元,刷新Republic Realm早前在沙盒創下的430萬美元成交紀錄。由此可見,虛擬地皮有價有市!

在不少人心目中,元宇宙也許只是虛擬遊戲而已,投資虛擬房地產未免匪夷所思。正如三、四十年前,一般人還搞不懂互聯網到底是什麼,在踏入本世紀之際,社交媒體的應用還未普及;但時至今日,互聯網在工作、學習、購物等方面已是我們生活的一部分。虛擬土地價格一再飆升,買賣這類房地產可視作投機活動,畢竟有關交易只在虛擬世界內獲得認可,本質上是購買平台所提供的服務。一旦平台營運出現問題,投入的資金很可能化為泡影。

開拓融資空間

根據市場調查機構Emergen Research 2021年11月的研究報告,元宇宙這新興產業在未來10年內,將以每年43.3%的複合增長率高速發展,相關的概念股亦已陸續出現。同年6月,投資公司Roundhill Investments推出了Roundhill Ball Metaverse,一個以虛擬實境和擴增實境為主題的基金,為市場提供投資元宇宙的機會。該基金旗下管理的資產至今已上漲至9.16億美元之多。在2021年11月,加拿大單日內推出了兩項元宇宙交易所買賣基金(Exchange Traded Fund;簡稱ETF)。截至同年12月28日,全球元宇宙ETF資產已飆升至22億美元,其中大部分在2021年第三季推出。

根據美國ETF供應商ProShares提交美國證券交易委員會的文件顯示,該公司計劃推出ProShares元宇宙主題ETF(ProShares Metaverse Theme ETF),以追蹤Solactive元宇宙主題指數(Solactive Metaverse Theme Index)表現。該指數由元宇宙相關產品和技術的公司組成,蘋果、Meta和輝達(Nvidia)是當中權重最高的股票。

概念亦有可為

坊間或有疑問:元宇宙是騙局嗎?畢竟,在經歷2015年發行虛擬實境概念股和2021年加密貨幣起飛後,投資者才懂得以較審慎的態度看待這些新興概念股。須知元宇宙只是一個概念,還須種種技術(如:5G通訊、人工智能)加以配合;從這個角度而言,元宇宙並非騙局。

當前元宇宙就恍如一個原始世界,很多事物和生態還處於構建階段,可塑性甚高。市場普遍認為元宇宙將令線上模式出現鋪天蓋地的改變。事實上,只要元宇宙社區創建完善,就能吸引用戶和消費者。相關的企業自然會有發展潛力,各式各樣的商機亦會應運而生。

放眼未來,元宇宙的走勢仍是未知之數,但筆者認為,目前現實世界已開始與虛擬世界融合。任何新概念股均存在風險,虛擬資產交易也不例外,而且這些交易在多國更仍未受法律規管。不過在新冠疫情衝擊下,受限於社交距離措施、民眾減少外出,大眾唯有在虛擬世界聚會,甚至舉行婚禮,這無疑助長了元宇宙的發展。不容忽視的是,元宇宙的經濟模式可望於未來數年充分發揮,一如電子郵件和社交媒體,將為大眾提供一個與現實生活銜接的虛擬空間。


Source : HKU