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EbixCash banking contract, ABB 2Q21 schedule, 5G and macro +3

09:26 28-Jun-21


EbixCash has announced a 3-year contract with Punjab, India's second largest government-owned bank, starting next month.  There's no mention of the actual revenue, but this signals that consulting, which fell off a cliff for Ebix during the pandemic, is finally starting to thaw.  Furthermore, although India is currently still one of the worst pandemic places to be, along with much of South America, Google's expansion with Jio is the latest evidence that India is still probably the hottest long-term investment target AND a place where insider support is crucial.  That makes EBIX the only stock in this note that I would actually hold or buy at current prices.

A bevy of press releases from Amdocs signals that 5G and IoT are finally ready to hit the real world.  Nokia even introduced the high speed and density product line for operators that Intel scuttled well over a year ago.  Better late than never, but I'm not particularly motivated to buy either stock at current prices.  There will be lots of competition to manage these much more complex networks, and my mandate to preserve capital against potential swarm and index crashes far outweighs any fear of missing out at this point.  Concerns about costs and competitiveness in western markets also remain; to quote a Nokia exec:
Countries that seek to pad the treasury with these license fees hold back deployments and put themselves at disadvantage to China and others who don’t go down this path.
All this comes at a time when the Fed is ending its Paycheck Protection lending, though bank stress tests turned out to be a snooze.  On the consumer side, 30-year mortgage rates topped 3% for the first time in a year and the NAR expects them to rise another half point in the second half.  Antitrust moves won't help either, and though Google may actually be less exposed than other index majors, it has its own set of unique problems, including an unfocused and unfriendly video strategy in the face of intensifying competition.

So, as noted last week, I'll be holding off on positions in major implementors like ABB until at least year-end, and may not comment on the next report, which is scheduled for the early morning hours of July 22nd in real-time.  For the record, analysts are expecting 33 cents of EPS from $7b of revenue, which is expected to remain flat.