Smartkarma Daily Briefs

• Following the collapse of SVB and Signature Bank last week, Japan’s big four banks have fallen by around 15% due to their exposure to US government bonds.
• However, the Japanese banks have managed the interest rate risk far better than the collapsed US banks and therefore, we feel the price drop is unwarranted.
• With Japan likely to scrap its zero rates policy, we think this could be a rather intriguing opportunity to make generous gains on the long side in Japan’s banking sector.

• Good news from Nike’s Q3 report, which bodes well for Asics March quarter
• Why was Nike’s stock down? Margins were down 330bps on inventory mark downs
• Running is recession proof according to the footwear makers themselves

• We believe both 4Q22 and 1Q23 can be weak quarters.
• However, we believe operating losses will shrink significantly in 4Q22 and 2023.
• We believe the stock has an upside of 77% for year end 2023.

For our next Corporate Webinar, in partnership with the SGX, we are glad to welcome Uni-Asia’s Group CFO, Lim Kai Ching.

In the upcoming webinar, Kai Ching will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Osbert Tang, CFA . The Corporate Webinar will include a live Q&A session.

About Uni-Asia

Uni-Asia Group Limited is an alternative investment group specialising in creating alternative investment opportunities and providing integrated services relating to such investments. The Group’s alternative investment targets mainly include dry bulk ships and properties. The Group also has extensive know-how and a network relating to such alternative investments and provides services relating to these investments. The two main alternative asset classes the Group focuses on are Shipping and Property.

• Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. 
• Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.
• The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. 

• As we expected in the preview, total revenue stopped decreasing in 4Q22.
• WeChat advertising recovered in 4Q22 earlier than we expected in the preview.
• We believe game-related revenues will grow by 8% in 2023 and 19% in 2024.

• CSPC Pharmaceutical Group (1093 HK) reported 11% YoY revenue growth in 2022. The finished drug business maintained steady growth in 2022, with a continued increase in contribution from new products.
• Within the next 5 years, more than 40 innovative drugs are expected to be approved, which will provide continuous momentum for the company’s development.
• In March 2023, CSPC’s COVID-19 mRNA vaccine SYS6006 has become the first independently developed mRNA vaccine product in China that has been granted for emergency use.

• Tencent (700 HK) reported 4Q2022 results yesterday. Revenue increased 0.5% YoY to RMB145bn (vs consensus RMB)143.5bn while adjusted OP increased 30.1% YoY to RMB28.4bn (vs consensus RMB37.2bn).
• Online advertising revenues saw a 14.8% YoY increase during 4Q2022 after 4-consecutive quarters of decline with January and February showing sustained recovery.
• Though Domestic gaming revenues declined in 4Q2022, with new gaming licenses and international expansion, we expect gaming revenues to start growing from 1Q2023.

• While adjusted net profit of Tongcheng Travel Holdings Ltd (780 HK) plummeted in 4Q22, the positive momentum in 1Q23 as revealed supports a sharp recovery in FY23.
• Its huge exposure to lower-tier cities will fuel outlook while increase in monetisation will support profitability rebound. Success at Blackwhale membership program is another growth engine.  
• Management is confident that revenue growth and better efficiency will lead the return of FY23 margin to pre-pandemic levels. Net cash position (12% of share price) is an added strength. 

• Tencent Music (TME US) reported 4Q2022 results yesterday. Revenue decreased 2.4% YoY to RMB7.4bn (vs consensus RMB7.3bn) while reported operating profit more than doubled to RMB1.4bn (vs consensus RMB1.3bn).
• Online music revenues grew 24% YoY while social entertainment business continues to see decline in paying users and ARPU. Margin improvements were driven by spending cuts.
• Social Entertainment is losing its importance and the segment continues to remain under pressure due to competition from other platforms.