In today’s briefing:
- Shin-Etsu Polymer (7970) | Pipe Dreams or Parent-Child Break-Up
- Shimadzu (7701): Planing to Make High-End Products in China
- Splunk Inc.: Strategic Partnership with Microsoft & Other Major Drivers
- Salesforce Inc.: Can The New Starter CRM Put Salesforce On A Different Level Of Growth? – Major Drivers
- Taste Gourmet: Reaching an Inflection Point on Earnings Solid H1 FY24 Expected
- CrowdStrike Holdings: Can The Launch Of Counter Adversary Operations Become A Revenue Driver? – Major Drivers
- Shandong Weigao Group Medical Polymer (1066.HK) – Performance Rebound May Not Be as Fast as Imagined
- Freshworks: 2023 Investor Day and Valuation Update
- Dollar Tree Inc.: Revolutionizing The Retail Landscape With Multi-Price Models! – Major Drivers
- Veeva Systems Inc.: An Insider Peek Into Their Financial Operations! – Major Drivers
Shin-Etsu Polymer (7970) | Pipe Dreams or Parent-Child Break-Up
- Shin-Etsu Polymer Co., Ltd. has entered into a contract to transfer its PVC pipe manufacturing business to Sekisui Chemical Co
- Asset Value, a vocal activist shareholder, has likely had some strong words about better capital allocation.
- The unwinding of the parent-child relationship (one way or the other) is where the real value creation lies
Shimadzu (7701): Planing to Make High-End Products in China
- Starting in 2024, Shimadzu plans to produce high-end analytical instruments and medical systems in China. It must do this in order to maintain market access.
- China is the company’s largest and fastest growing market outside Japan. Concerns about IP protection notwithstanding, we regard this as a positive development.
- The shares are down 10% from its 52-week high and selling at 23x this fiscal year’s EPS guidance, which looks conservative. Buy for the long term.
Splunk Inc.: Strategic Partnership with Microsoft & Other Major Drivers
- Splunk Inc. delivered a decent result and managed an all-around beat in the last quarter, marked by solid execution, operational discipline, and favorable customer engagement.
- Total revenue experienced a healthy year-over-year increase, demonstrating Splunk’s ability to achieve this growth while managing costs underscores its strategic approach.
- Additionally, Splunk continued to innovate by leveraging AI in security and observability, introducing the concept of Splunk AI to empower organizations to detect, investigate, and respond more efficiently.
Salesforce Inc.: Can The New Starter CRM Put Salesforce On A Different Level Of Growth? – Major Drivers
- Salesforce delivered an all-around beat in the previous quarter.
- The company’s non-GAAP operating margin increased in the quarter.
- Salesforce also had fantastic victories throughout the quarter with JPMorgan, Bayer, FedEx, Maersk, as well as the Department of Veterans Affairs.
Taste Gourmet: Reaching an Inflection Point on Earnings Solid H1 FY24 Expected
- With 46 restaurants in HK (up 35% YoY) and the end of dining restrictions, we estimate an inflection point in earnings for Q2 FY24 for Taste Gourmet (8371 HK)
- We estimate revenues/earnings up 45%/40% YoY for Q2 2024 ( to be reported in November) and that the company declares a semi-annual dividend of around 5.5-6 cents (8% annualized).
- With a solid base for H2 2024, the stock trades at 8.5x/5.9x PE FY23/24e and a 10% FY24e dividend yield with 23% of the market cap in cash.
CrowdStrike Holdings: Can The Launch Of Counter Adversary Operations Become A Revenue Driver? – Major Drivers
- CrowdStrike Holdings managed to exceed analyst expectations in terms of revenue as well as earnings.
- The company outperformed top and bottom line metrics expectations, achieving strong, scalable growth, amazing leverage, and operating within its target model overall.
- CrowdStrike also successfully implemented a go-to-market strategy centered on cloud security this past quarter, hosting a virtual cloud security summit with over 12,500 security and DevOp attendees, followed by cloud-focused partner and sales plays.
Shandong Weigao Group Medical Polymer (1066.HK) – Performance Rebound May Not Be as Fast as Imagined
- Weigao’s 23H1 performance was unsatisfactory. 2023 full-year performance may continue to be under pressure because Weigao needs some time to digest the negative impact of centralized procurement on orthopaedic business.
- Weigao has hired advisers to find potential buyers for Argon. if Argon is ultimately sold, then the long-term prospects of Weigao’s interventional business and internationalization need to be reassessed.
- The unsatisfactory share price performance is related to Weigao’s business model – spin-off subsidiaries and IPO separately. There could be rebounds, but it is still possible for Weigao to underperform.
Freshworks: 2023 Investor Day and Valuation Update
- Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025.
- The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others.
- Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue.
Dollar Tree Inc.: Revolutionizing The Retail Landscape With Multi-Price Models! – Major Drivers
- Dollar Tree delivered a solid result and managed an all-around beat in the last quarter.
- For the quarter, Dollar Tree produced a combined increase in sales of 8.2% to $7.3 billion, 6.9% enterprise comp growth, and operating income of $287.8 million, resulting in earnings per share of $0.91.
- In the Dollar Tree sector, with a slight offset from average ticket, their 7.8% comp was driven by 9.6% increased visitation.
Veeva Systems Inc.: An Insider Peek Into Their Financial Operations! – Major Drivers
- Veeva Systems managed to exceed the revenue expectations as well as the earnings expectations of Wall Street, with a total revenue of $590 million and a non-GAAP operating income of $212 million.
- The Veeva team has made some truly impressive accomplishments as they develop the next generation of CRM.
- Nearly 25% of their revenue comes from Veeva CRM and their add-ons.
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