Equity Bottom-Up

• Mandi, OTC alopecia drug of 3SBio Inc (1530 HK), reported revenue growth of 42% y/y in 1H22 and gained 70bps market share over the last six months.
• With the resurgence of COVID-19 in China interrupting the regular operations of outpatient services at medical institutions, 3SBio’s performance is expected to be affected in near-term.
• 3SBio is preparing to launch its new drug nalfuraphine hydrochloride orally disintegrating tablets for liver and kidney disease pruritus in China.

• The operator of Chinese recruitment app Boss Zhipin reported drops in third-quarter revenue and profit after restarting new user registrations following a nearly one-year suspension as part of a national security probe. 
• During the three months through September, Nasdaq-listed Kanzhun Ltd.logged a net profit of 211.7 million yuan ($29.8 million), representing a year-on-year drop of 26%
• The firm generated about 99% of its revenue, or 1.16 billion yuan, from sales of recruitment services to corporate clients — a 2.7% year-on-year decrease.

• Liquidity shorts can be great short candidates.  The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements. 
• Liquidity shorts have built-in catalysts, have moderate to higher betas,  and can have strong down moves if a crisis develops.  They can go bankrupt, pushing the stock price near zero.
• Today we are flagging Luminar Tech, Asana, Appian, Oak Street Health

• Snowflake guided below consensus for 4Q2023 revenue growth on a mix of macro conservatism and a quirky point that more vacation travel will reduce the amount of workloads run.
• Margins continue to beat to the upside and management is guiding FY2024 FCF marginst to 23%, just 2pts below the LT guidance.
• Very conservative management team also guided for a stabilization in revenue growth for FY2024 at 47%, a bit below consensus, but better than feared given the earnings reports recently.

• Zoom Video Communications delivered a decent quarter and managed an all-around beat.
• From a product perspective, the company had robust growth in Zoom Phone, along with contributions from Zoom Rooms and other products.
• Zoom Video Communications has recently announced a wide range of updates in different business units like Zoom IQ for sales, Zoom Events, Zoom Spaces, Zoom Contact Centre, and Zoom One.

• After announcing a weak outlook in the last quarter and causing its stock price to plummet, Dell has shown a decent recovery.
• Its stock price has continued to recover after the company delivered an all-around beat in a challenging demand environment.
• Overall, we remain neutral on Dell and give it a ‘Hold’ rating with a revised target price.

• Despite operating in a turbulent market, including inflationary pressure on the consumer around the world, Foot Locker generated better-than-expected results and managed to surpass Wall Street expectations on all fronts.
• Due to strong brand consistency across the board and successful back-to-school marketing initiatives, Kids Foot Locker had mid-single-digit growth.
• Additionally, Foot Locker extended its partnership with Puma to connect with next-generation consumers through exclusive basketball and other high-end partnerships.

• Agilent performed well in the fourth quarter and its revenues as well as earnings were vastly exceeding its forecasts as well as market expectations.
• Revenue for the Agilent CrossLab Group in the fourth quarter was $381 million.
• With each of their three business areas expanding by double digits for the year, Agilent have shown a broad-based strength.

• Macy’s delivered a strong set of results surpassing Wall Street expectations in terms of revenues as well as earnings.
• Besides, they created permanent Toys “R” Us shop-in-shops within every Macy’s site, offering a unique experience not offered nationally anywhere else.
• Macy’s also has a flexible pricing plan to change discounts and markdowns if demand materializes slowly.

• Applied Materials delivered a strong quarterly performance and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
• Demand remains very high in cutting-edge foundry/logic, with customers vying for leadership and driving significant technological inflections that decide their respective competitive positions.
• AMAT should have a strong resilience because of their substantial backlog, expanding service business, and strong customer demand for their leading technologies that support significant technological inflection points.

• Masayoshi’s debt with Softbank group is big, and due to the poor performance of SoftBank Vision Fund 2, Masa’s equity interest as a co-investor is now zero
• Internal hedge fund Northstar, in which Masa has a 33.3% stake, is in liquidation leaving Masa’s share of his Northstar debt to SoftBank at USD1.2bn
• SoftBank’s collateral on Masa debt includes the Vision Fund 2 equity, as well as SoftBank shares and other personal assets; we expect SoftBank’s NAV discount of c 25% to widen

• First ever ARR miss, and big initial guide down on FY2024 ARR growth: low 30s vs. 37% into the Q. Pretty shocking given Crowdstrike’s track record.
• Macro Macro Macro – deal close times pushed out for SMBs and Enterprise customers reworking timing of deal starts to match opex budgets.
• Stock is overly punished down 20% and trading at 9x forward sales for a platform consolidator with 30% FCF margins.

• We try to stay away from the fool’s errand of forecasting the economy;
• But often, we notice that high-quality businesses actually benefit from harsh economic conditions in terms of (long-term) shareholder value;
• We provided an example of a company that we own to illustrate how.

• Driven by continued strong performance of Viltepso and other partnered drugs, Nippon Shinyaku (4516 JP)  is expected to report accelerated revenue growth momentum.
• Viltepso is expected to be the top selling drug of Nippon Shinyaku in FY23. For FY23, the drug is expected to report revenue of ¥14.7 billion (+90% y/y).
• In November, Nippon Shinyaku launched Fintepla (fenfluramine) for the treatment of seizures in patients with Dravet syndrome (DS) as an add-on therapy to other anti-epileptic medicines in Japan.

• Rakuten’s successful junk bond sale means the Rakuten Bank IPO will happen next year and not in December as some had feared
• More detail on mobile shows that network costs including D&A are 4x that of service revenue and slightly higher QoQ. Roaming alone is higher than service revenue 
• And that means Rakuten can’t aggressively go after new subscribers unless it wants operating losses to accelerate. Bad for Rakuten but good news for incumbents KDDI, NTT and Softbank. 

• Balrampur Chini Mills (BRCM IN) is one of the major integrated sugar manufacturing companies in India. Besides sugar, the company also engages in the business of ethanol and power generation.
• Balrampur has managed to turnaround its free cash flows and earnings quality. Additionally, it has also stabilized working capital on the back of declining debt. 
• While there are not many red flags, care must be given to inventory reconciliation with bank statement.

• BLS International Services (BLSIN IN) is engaged in business of providing outsourcing and administrative task of Visa, Passport and Consular services to various Diplomatic Missions across the world.
• BLS is troubled with several forensic discomforts. One should take into account the discomforts on the subsidiaries end and other linked entities like DSS Gulf Realtors.
• Other forensic setbacks include alarming bad debts, misstatement of operating cash flows and several grey areas pertaining to disclosure norms followed by the company.

• Mahindra & Mahindra (MM IN) ‘s production data provides more questions than answers.
• The drop in production for Thar and XUV 700 in October in spite of the high order backlog is surprising. 
• Considering the industry outlook and the existing sales and production for these two models, we believe this demand forecast may not materialise

• Alibaba Health reported 1HFY03/2023 results on Monday. Revenue increased 22.9% YoY to RMB11.5bn and reported an adjusted net profit of RMB350m vs net loss of RMB283m reported in 1HFY03/2022.
• Adjusted operating loss for the quarter decreased to RMB30m compared to RMB586m reported in the same quarter last year.
• Ali Health’s fulfilment and S&M costs were the highest among peers and cutting down these costs has helped the company reduce its operating losses.

• Saratoga Investama Sedaya (SRTG IJ) is the leading listed investment company with stakes in a number of leading companies across sectors in Indonesia with some of the highest growth potential.
• Investments include stakes in Adaro Energy, Merdeka Copper Gold, Tower Bersama Infrastructure, Mitra Pinasthika Mustika, and Aneka Gas (AGII IJ), and a number of tech companies providing unique thematic exposure.
• Saratoga Investama Sedaya (SRTG IJ) provides a one-stop shop to get well-rounded exposure to high-growth areas of the Indonesian economy and to early-stage growth companies in the digital space.

• The next six months will be critical for the future of the global gaming industry as Regulators carry out further investigations into the Microsoft acquisition of Activision
• This is particularly important for SONY, where games account for around one third of consolidated revenue and profits
• This is a battle for the future of subscription services and cloud streaming – Call of Duty yields unprecedented power over the industry. Regulators need to do their Duty. 

• Pinduoduo (PDD US)’s 3Q22 mirrored its strong previous quarter with revenue of RMB 35.5bn (consensus: RMB 30.8bn) and OP of RMB 10.4bn (consensus: RMB 6.7bn).
• CCP’s anti-monopoly drive and common prosperity measures are helping Pinduoduo to outperform the competition.
• Nonetheless, we refrain from being outright positive on any of the Chinese e-commerce names with the economy heading into a slowdown and the lowest sector-multiple at above 12x FY+1 OP.

• TSMC — Trading near parity, decent setup opportunity at the current level.
• UMC — Trading at a discount, another decent setup opportunity.
• Chunghwa Telecom — Rare opportunity here, trading at a steep discount compared to the tight historical range.

• China Education Group (839 HK)‘s 27.8% growth in net profit affirmed its solid fundamentals and minimal exposure to regulatory risks. We also welcome its resumption of dividends.
• Management expects profitability will be driven by the 48% new student enrollment growth, potential for tuition increase and global education segment recovery. Consensus forecasts are currently too conservative.
• Weaker 2H FY22 profit is due to higher depreciation and finance costs but will be absorbed with higher enrollment. Capex will be light and we also like its deleveraging move. 

• Commodities trader Theme International Holdings (990 HK) is up 670% since the inset of Covid, and that is after declining 52% from the July 2021 peak.
• A sharp increase in iron ore prices since 2020 resulted in FY21 net income of HK$1bn against HK$146mn in FY19. Net cash is currently HK$4.2bn, 38% of Theme’s market cap. 
• You Zhenhua is Theme’s largest shareholder. Theme recently acquired a 6.6% stake in You Zhenhua-controlled Esteel, which in turn holds a 61% stake in BRC Asia Ltd (BRC SP). 

• Intel has eked out a small outperformance vs. TSMC most recently, and we believe there is more to come.
• Events appear to be in Intel’s favor in the near-term.
• TSMC has outperformed by a historically extreme amount in just three weeks.

• Sentiment switch for Singtel after surge in buying among Asia Ex-Japan funds
• New positions from Fullerton Asia Focus, Jupiter Asian Fund and Fullerton Asia Growth & Income head a total of 14 funds opening exposure between 01/31/2022 and 10/31/2022.
• Follows broader rotation in to key Singapore names despite heavy selling in Sea Ltd.

• We interact with Home First Finance (HOMEFIRS IN)  branch managers to understand the reason behind the increase in bounce rates.
• The overall NACH data also shows a high rejection rate in October despite being a festive month, which is surprising.
• With 92% of Home First Finance (HOMEFIRS IN) loans being disbursed in less than 48 hours, this focus on TAT could lead to higher than industry-average asset quality issues. 

• The revenue growth rate rose for the first time in one year and a half.
• Also, operating loss shrank for the first time in one year and a half.
• We believe the stock has an upside of 38% for year end 2023.

• Nanya Tech shares have dropped, but there’s still a 10% trading sell from these levels.
• The company had dramatically outperformed the Taiwan market and Memory chip peers, yet is heading into weakening end-demand with inventory levels at multi-year highs.
• We see the potential for inventory write-downs and a negative operating margin in the coming quarters. Meanwhile, opportunities for near-term good news appear limited.

• Short video companies are taking users’ time from other kinds of apps.
• Kuaishou has a lot of promising data, such as active users, paying users, and time spent.
• The operating losses significantly shrank in the past four quarters.

• Across the major economies in East Asia (China, Japan, Korea), Korea is the only country that follows the global trend of rising interest rates and yields.
• Investing in the country’s life insurers could be a good way to play out the thesis of rising yield environment in 2023.
• Samsung Life is a better bet for this among the country’s two largest public life insurance companies.

• Jinxin Fertility is a leading IVF service provider in China. It has done a series of M&A in the past two years.
• We examine the thesis of the company for a trade into 2023.
• We believe the company has big potential to realize its synergy post acquisition and ramp up post expansion. More favorable policy to come.

In this webinar, we will be hosting Mr Lee Sanghyun, the CEO of Flashlight Capital Partners (FCP), who will discuss their case for Corporate Activism at KT&G Corporation (033780 KS). Interviewing Mr Lee, will be Smartkarma’s Co-Head of Research, Pranav Rao. The focus of the interview would be FCP’s shareholder return plan which aims to drive significantly higher returns (3x) versus the plan currently proposed by the company.

For further detail, please refer to prior insights by Smartkarma Insight Provider Douglas Kim, as well as relevant sections of FCP’s website.

The webinar will be hosted on Wednesday, 14 December 2022, 17:00 SGT/HKT.

Lee Sanghyun is the CEO of Flashlight Capital Partners. Previously, he was the head of The Carlyle Group Korea, and has spent time at Affinity Capital Partners in Hong Kong, as well as McKinsey & Co. in Seoul. Mr Lee Sanghyun is also a graduate of Seoul National University and Harvard Business School.

Pranav Rao is the Co-Head of Research at Smartkarma. 

• With three food deliveries a day, convenience stores need to optimise stocks to sell unsold items, most of which have only been on shelves for a few hours.
• Most chains deal with this problem manually by offloading the burden of optimal ordering and the cost of unsold stock onto franchisees,
• Lawson has a new AI system that can automatically apply markdowns on any item without the need for skilled labour in the store. Gross margins rose 1% in test stores.

• Integra Indocabinet recently reported 9M2022 results, which painted a less rosy picture than at the mid-year stage, with sales growth of +10.6% versus +46% YoY for 1H2022.
• A key change has been the drop off in demand for components for US housing given inflationary pressure and rising rates, which led to higher inventories with distributors. 
• Integra recently downgraded guidance for FY2022 to reflect the less optimistic outlook though remains upbeat on a recovery in 2023, as inventories clear and it goes direct to retailers.

• 3Q22E earnings came in mostly ahead of expectations, however, if one looks at margin and inventory performance, the latest earnings season doesn’t look so good.
• Semiconductor margins fell and inventory days rose multi-year highs, Hardware margins fell further and inventory days look worse than ever.
• Conclusion: 4Q22E end-demand could disappoint significantly and then companies will be slashing prices/writing off inventory into 1Q23E.

• PT Surya Citra Media Tbk (SCMA IJ) released solid 9M2022 results with revenues rising 12.8% YoY but profits were impacted but higher programming costs and switch to FTA digital.
• SCMA continues to gain audience share in FTA, especially through Indosiar as new drama series and sports attract eyeballs, with Vidio taking the lead on digital with 4m paying subs.
• The company looks attractive at these levels trading below its 5-year average forward PER plus its stake in Vidio alone is worth US$756m versus a Market Cap of US$1bn. 

• An unprecedented pace of expansion is underway at Trent Ltd (a TATA group company) with the rapid roll-out of Zudio, a youth-fashion retail store chain across India, beyond big cities.
• STAR Bazaar, its 50:50 JV with Tesco PLC (TSCO LN), in grocery retail, has the potential to drive long term growth given the segment’s immense size and scope. 
• Trent could emerge as one of the leading players in India’s fast-growing organized retail sector as it rapidly expands its pan-India network in apparel and plans to grow in grocery. 

• Shift offers outsourced software testing services and is the market leader in Japan. Software testing market is estimated at JPY5.5trn in Japan but only 1% of the market is outsourced.
• The company has been rebranding itself from software testing provider to digital transformation (DX) and business services provider and this expansion has further potential to drive growth in the long-term.
• Though Shift’s valuation multiples look expensive, we think there is further upside given the strong growth in top line alongside further improvement in margins.

• A “valuation system with Chinese characteristics” has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.
• In early 2020, SOE-backed clean energy play CGN New Energy Holdings (1811 HK) was subject to a potential privatisation from its parent; but it failed to materialise. 
• During the 14th and 15th Five-Year Plans (2021-30) period, China’s installed capacity for wind and solar power is expected double.

• Meituan reported 3Q2022 results. Revenue increased 28.2% YoY to RMB62.6bn (vs consensus RMB62.3bn) while reported an OP of RMB988m (consensus OP loss of RMB935m) for the first time since 3Q2019.
• However, on adjusted basis, Meituan made an adjusted operating loss of RMB1.1bn (1.7% of revenue) of revenues compared to an adjusted operating loss of RMB7.7bn (15.1% of revenue) in 3Q2022.
• Tencent announced that it will distribute majority of its shareholding on Meituan (3690 HK) to its shareholders in dividends and Naspers is expected to sell the Meituan Shares it receives from Tencent.

• Kakaku.com Inc. can be a rare species among listed companies in Japan;
• We had multiple email exchanges and meetings with the management team for a deep-dive view covering corporate cultural, management style, capital allocation, business model, and competitive strength.
• We would wait for a 20%-30% pullback in the share price before looking to add to our position but would certainly remain reluctant to sell any share that we own.

• Operating under the brand name J-Power, Electric Power Development C (9513 JP) is leading Japan’s efforts to make carbon dioxide-free electricity by 2050.
• The company’s investments in gasification and carbon dioxide separation technology and carbon dioxide-free hydrogen generation from coal are close to commercialisation.
• With the technology to serve other power producers to develop their own environmentally-friendly power projects, J-Power could turn into a global-leader in the power generation space in the next decade.

• Our forecast of the total peak sales of BRUKINSA, tislelizumab and the rest commercialized products is about RMB10 billion, which is not enough for BeiGene to turn losses into profits. 
• BeiGene has the highest R&D/academic ability among domestic pharmaceutical enterprises,but BeiGene cannot be assessed according to the standards of Chinese pharmaceutical enterprises due to its fundamentally different cost structure/breakeven point.
• The current market value has already priced in the success of TIGIT project to some extent. In other words, the upward elasticity may be limited. But BeiGene deserves long-term follow.

• While China Gas Holdings (384 HK) expects better gas dollar margin HoH, there are still high profit uncertainties and its full-year operational guidance does not look exciting.
• The expectation of flat to 10% YoY decline in new residential household connections is not encouraging. With 1H FY23 profit only amounted to 42% of consensus, we see downgrade risks.
• Despite achieving positive free cash flow, its high gearing of 69.9% (+4pp HoH) is still very stretched relative to peers. We prefer Kunlun Energy (135 HK).

• Amid the challenging market, Bosideng International Holdings (3998 HK)‘s 15% growth in 1H FY23 profit is decent. Excluding impairments, operating profit would have grown by 31.3%.
• It expects FY23 gross margin to expand and further store optimisation to enhance operating margin. The introduction of highly successful ultralight down jackets is an added driver.
• With 32% increase in online branded apparel sales, the channel will be Bosideng’s key growth impetus. For “double-11”, sales have outperformed peers significantly, showcasing its product strengths.

• Companies that went public through SPACs in 2020 and 2021 have struggled this year due to inflation and, most recently, a weakening economy.
• SPACs have gotten a bad reputation for making unproven, unprofitable companies public, ultimately leading to a majority underperforming the broader market and a few even going out of business soon after their debut.
• However, SPACs have also taken established companies public, like convenience store chain operator Arko, which has relatively fared better.

• Cisarua Mountain Dairy (CMRY IJ) remains one of Indonesia’s most interesting high-quality consumer staples companies, with strong brands in both premium dairy products and premium packaged foods. 
• The company grew total sales by 76% YoY for 9M2022, with dairy products growing 51% YoY and packaged foods by 125% YoY driven by increasing capacity to serve burgeoning demand. 
• Margins have been impacted by rising raw material prices but powdered milk prices have been falling which should mean margins recover but all the same 9M2022 net profit rose 1.5x.

• We calculated the intrinsic value of the stocks is ~30% undervalued at US$6.79 a share.
• The strong Manila market recovery and planned on time opening of Cyprus property does not seem to be baked into the price at writing.
• Macau travel bans will keep MLCO dead pooled, but value lies in its assets still at work

• NRDL negotiation has completely changed the pricing method/valuation logic of innovative drugs. Even if price reduction could be milder this year, it’s hard to reverse the shrinking market size/slowing growth.
• Wuxi Biologics (2269 HK) has successively acquired several factories/production facilities built by domestic biotech companies at low cost. However, we have several concerns.
• The industry is in the process of understanding and adapting to various changes. The model capital envisioned for biotech to both develop and then commercialize drugs successfully doesn’t work anymore.

• Nitori is one of few Japanese retailers to brave the US market. The US has beaten Nitori for now and it will instead focus on Japan and Asia. 
• Nitori’s ability to leverage its efficient supply chains to lower prices will likely lead it to further dominance at home and allow it to invest in the rest of Asia.
• The company expects pressures on costs to ease in 2023 as the Yen rises but is working on reducing the cost of goods and operations.

• During H1 2022, Yichang HEC Changjiang Pharma (1558 HK) recorded revenue of RMB1.3 billion, representing 540% y/y growth, driven by 1,776% y/y revenue growth from its core product Kewei.
• With gradual recovery of patient traffic in medical institutions and increasing number of flu cases, Kewei showed a trend of recovery in its sales volume leveraging on its market leadership.
• HEC Pharma has a comprehensive insulin portfolio, which covers both second and third generations of insulin. With 116 million diabetes patients, China has significant market opportunity for insulin.

• On November 22, Shionogi & Co (4507 JP) received emergency regulatory approval for Xocova  in Japan for COVID-19. It is Japan’s first homegrown oral antiviral for SARS-CoV-2 infection.
• On November 24, Shionogi has filed for manufacturing and sales approval of S-268019, a recombinant protein-based preventive vaccine, for use in priming and booster (third) doses, against COVID-19.
• Although Shionogi continues to expect ¥110 billion revenue from COVID-19-related products in FY23, the company has raised overall revenue guidance to ¥410 billion from ¥400 billion.

• In Mar 2022, GoTo (GOTO IJ) raised around US$1bn from what was essentially a domestic Indonesian IPO. 
• GoTo has already burnt through the cash it raised from the listing and cash burn still remains high, while its cash balance is amongst the lowest in its peer set.
• At its current cash burn pace, the company will have to come to the markets again soon.

• Sea Ltd 3Q2022 results should be seen as the poster child for the rest of the space given a crystal clear focus on profitability and pragmatic approach to future growth.
• The fact that the company is now contribution margin positive in ASEAN and even Adjusted EBITDA positive in Malaysia and Taiwan is a testament to its success in controlling costs. 
• Sea Ltd (SE US) has seen a significant compression in valuations and now looks attractive on 2.1x FY2023V EV/Sales and 1.7x FY2024E EV/Sales.

• Meituan is a leading “service e-commerce” platform in China, leveraging technology to connect consumers with merchants.
• With the gradual re-opening in 2023, core local commerce will deliver better than expected result.
• Tencent’s distribution of Meituan shares provides a good entry point. 

• Suzuki is our top pick in the auto sector in Japan as a key beneficiary of strong demand for autos in India
• Suzuki reported better-than-expected 2Q earnings – but the stock price has not reacted
• Suzuki remains mispriced. Suzuki’s market cap is negative if we strip out the value of Maruti

• China Tourism Duty Free (CDF) is the largest travel retail operator in the world primarily focusing on sales of high-quality duty-free and duty-paid merchandise to domestic and international travelers.
• As per Frost & Sullivan (F&S), it had 86.0% market share by retail sales revenue in China duty-free merchandise sales in 2021.
• With signs emerging of China finally looking to relax its COVID restrictions over the coming months, this will lead to a sales revival at its airports.

• The success of domestic brands in the low-cost cosmetics segment seems to be cascading into mid and high-price segments within the Chinese cosmetics market.
• This could be bad news for Shiseido Company (4911 JP), whose investors are expecting the company to maintain its historical superiority in the Chinese cosmetics market.
• We think that there’s a good chance for FY+2 EV/OP to return to the 12-20x range once the market price-in Shiseido’s weakening competitive position in the mainland China market.

• JD.com should have an outsized benefit from a recovery in Chinese retail sales as further macro stimulus and a gradual easing of China’s covid-zero policy stimulates demand throughout 2023.
• Following a return to margin expansion this year, due to economies of scale and curbing operating expenses during a challenging macro environment, the longer-term margin expansion trend remains on track.
• JD.com Inc. (9618 HK) trades on extremely attractive valuation multiples (PE, PEG, FCF yield) with net cash on its balance sheet equal to 32% of its market cap.

• Alibaba and JD stock prices have rallied around 20-30% in the past month, which was the low-hanging fruit for the investors.
• With the full re-opening in 2023 in China, there is still upside for the sector. 
• Ecommerce players will enjoy GMV growth acceleration and margin improvement next year. 

• Prosus NV, the Dutch unit of Tencent Holdings Ltd.’s largest shareholder Naspers Ltd., said it will consider selling the $4.6 billion of Meituan shares it will receive from Tencent as a special dividend.
• South African media giant Naspers owns about 28% of the Chinese internet giant indirectly via Prosus.
• On Nov. 16, Tencent announced a special distribution of 958 million Meituan shares to shareholders.

• Iqiyi’s 3Q results released on Tuesday disappointed markets due to dim growth despite  sustained profitability for the third quarter in a row.
• “Iconic” turnaround actually put IQ on firmer footing almost on all counts compared to one year ago.
• Stabilizing cost base, strong operating leverage potential and troughs in business and macro cycle spell for compelling asymmetrical payoff – limited downside VS. multi-fold upside.

• We highlight 14 stocks in Thailand that look interesting to us based on our FVMR Methodology
• Portfolio changes: Nine stocks remain, and five new join the fray
• Since inception, it has gained 105% versus the SET 100 Index’s return of 38%

• AviChina Industry & Technology H (2357 HK) offers unique exposure to China’s aerospace and defense sector and it will ride on China’s ambition to solidify its military strengths. 
• We think the key drivers are increase in civil and defense demand, commercialisation of C919 aircraft, localisation of helicopters and potential for corporate restructuring.
• The stock is undervalued with its holdings in four listed A-shares amounted to Rmb70.6bn, against its own market cap of HK$25bn. Also, earnings multiples are cheap relative to global peers.

• Revolution Medicines (RVMD US)  is focused on therapies to inhibit frontier targets in RAS-addicted cancers. The company’s pipeline is among the strongest in small-cap biotech. 
• We expect Revolution Medicines shares to outperform the market over the next 12 months as solid performance from the RAS(ON) inhibitor pipeline and oral inhibitor of SHP2 continues. 
• Investors gain confidence in the rest of the RAS(ON) inhibitor pipeline, including RMC-6291, RMC-6236, and RMC-5552. Management will provide topline data from RMC-4630-03 in 2H 2023. 

• Meituan’s recent price decline was partly due to the rumors about the social benefit payments.
• First, rumors are unverified statements. There was no such meeting at all.
• Second, the social benefit payment impact is probably controllable. I think the recent price decline provides a chance of adding on the stock. 

• Ownership in Alibaba Group Holdings is on the rise among active Greater China managers. 
• Stock price below $100 a catalyst for active Greater China managers to buy back in, with Invesco, JP Morgan and E Fund among those opening positions
• Alibaba remains well behind both TSMC and Tencent on an average weight basis and is the 2nd largest underweight in the Greater China region.

• Grab‘s recent results reflect a change of pace in terms of moving along the path to profitability with a more disciplined approach to incentives and a focus on cost controls. 
• Deliveries segment adjusted EBITDA turned positive for the first time, 3Qs ahead of previous guidance, and food 2Qs ahead of guidance both of which are positives.
• A continuing drag will likely continue to come from expenses related to the buildout of its three digibanks. Grab‘s headline EBITDA is not forecast to be positive until 2025. 

• Although spending on non-necessities withered from March 2020 onwards, some low-cost retailers of discretionary items continued to grow. 
• Workman’s mix of high cost performance and engagement with the ever more active outdoor market has, and will, support expansion, even if same-store sales growth has slowed.
• Future category expansion will deliver higher same-store sales as well as top line growth. 1,500 stores (from 1,000) is certain but 2,000 is possible thanks to new categories like footwear.

• Kuaishou Technology (1024 HK) reported 3Q2022 results. Revenue grew 12.9% YoY to RMB23.1bn (vs consensus RMB22.6bn) while reported operating losses declined to RMB2.6bn (vs consensus RMB3.1bn) from RMB3.1bn in 3Q2021.
• The company’s domestic business made an operating profit for the first time while there has been significant reduction in operating losses from the overseas business
• Kuaishou’s share price moved up 7% during today’s trade following its earnings announcement and we think there is further upside to the company’s current share price.

• Sector headwinds including supply chain shortage and business interruptions from Covid lockdown is easing.
• More new models in pipeline to drive sales volumes and earnings in 2023E
• Valuation re-rating would be triggered with earning recovery, consensus estimate upgrades, Zeekr ramping up and potentially Zeekr spin off.

• Lower losses for investment business and sportswear retailing have contributed to a 48.4% reduction in losses for 1H FY23 at China Dongxiang Group Co (3818 HK).
• The resumption of interim special dividend is a welcoming sign. Inventory clearance, store optimisation, cost reduction and growth at the PHENIX ski wear brands are positive drivers.
• Its market capitalisation of HK$1.88bn represents a steep discount of 79% to its cash and investment portfolio of Rmb8.46bn, and this also means sportswear business is free.

• PHC Holdings (6523 JP) has revised mid-term plan for FY23–26, targeting revenue of ¥420 billion in FY26, representing 5.4% CAGR. CGM will be one of the key growth engines.
• During H1FY23, total revenue increased 3% y/y to ¥171 billion, mainly driven by a 3% growth in diabetes management business, which contributed 32% of total revenue.
• In response to the recent depreciation of the Japanese yen, PHC has raised FY23 revenue guidance to ¥358 billion (+5% y/y) from ¥350 billion earlier.

• There are four major reasons why we like JB Financial Group.
• They include highest ROE among peers, highest dividend yield among peers, potential inclusion in KOSPI200 in 2023, and continued pressure by Align Partners to improve corporate governance.
• One of the key risk factors of the company is that it is not a nationwide banking group but most of its operations are in the southwestern portion of Korea.

• This is our first report on International Flavors and Fragrances (IFF), one of the global market leaders in the production of cosmetic active and natural health ingredients for use in consumer products.
• The increase in sales in the quarter was driven primarily by double-digit growth in its pharma and nourish solutions divisions.
• In spite of its volatile market environment, IFF continues to execute its operational priorities for achieving strong bottom and top-line results.

• Coal stronger for longer is making Indo Tambangraya Megah (ITMG IJ) a significant value investment with 40% of the market cap in cash and 2.5x PE FY22 after going ex-dividend. 
• The company continues to churn out 6-7% of the market cap in cash every month, with coal prices at Newcastle over 300$/ton (current spot at 350$/ton).
• Paying out >70% of its profits, the company trades at a 25% dividend yield at the very least, with a normalized yield of 10% at a 130-150$/ton coal price. 

• China funeral industry has large growth potential.The total market scale would be about RMB400 billion if based on annual death toll of 10 million and per capita expenditure of RMB40,000.
• Information asymmetry weakens the bargaining power of buyers. Administrative barriers raise the threshold of market access and weaken competition. So, related companies usually have high profitability and return on capital.
• Changes in population structure would have a negative impact on most consumer goods, but demand of funeral industry would continue to rise. Investors would have both alpha and beta superposition.

• The Keepers Holdings, Inc. (KEEPR PM) trades at 7.1x/5.6x FY22e/FY23e on revised numbers (including earnings from the W&H acquisition) and has 10% of its market cap in net cash. 
• The outlook from the conference call was bullish, and the Q4 2022 revenue growth trend is expected to be similar to the 9M2022 (34% YoY) and future structural teens growth.
• At a 300 mn USD market cap, you get a virtual monopoly (>70% marketshare by volume) of the imported spirits business with sole distributorship of the most recognizable brands. 

• GoTo (GOTO IJ) reported 3Q2022 results on Monday. Gross revenue increased 30.4% YoY to IDR5.9trn while adjusted EBITDA (losses) dropped to 81.3% of net revenues vs 289% in 3Q2021.
• There has been notable improvement in the company’s earnings (decline in losses in particular) driven by huge cost cuts on promotions which helped reduce losses.
• However, cutting down promotions/marketing costs could lead to drop in top line growth and market share.

• There are three positive signs in online marketing despite the business slowed down.
• For living streaming, both active user base and time spent grew rapidly.
• The operating margin improved significantly to -13% in 3Q22 from -37% in 3Q21.

• ZTO Express Cayman Inc (2057 HK)‘s 63.1% surge in 3Q22 adjusted net profit demonstrated its ability to thrive even amid the challenging operating environment.  
• It is positive on FY23 outlook and believes industry volume can return to double-digit growth. ZTO is confident of market share gain, better cost management and stable pricing. 
• We think its premium valuations are highly justified by strong cash generating ability. The increase of US$500m and lengthening of one year in share repurchase are very welcomed.

• This is our first report on Laser Photonics and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
• The revenues of Laser Photonics have more than doubled in the last two years.
• We believe that there is a good chance the company’s offering may become universally accepted in the years to come.

• This is our first report on Organicell and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
• Organicell’s drug candidates’ utilization of extracellular vesicles and perinatal-derived nanoparticles, represent the technological revolution of regenerative biologic drug treatments.
• Overall, we believe that Organicell has phenomenal growth prospects and is an excellent investment prospect.

• This is our first report on Save Foods and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
• Despite catering to a sizable addressable market, Save Foods is currently trading at valuation ratios far lower than its competitors.
• Baptista Research looks to evaluate the different factors that could influence Save Foods’ price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology to determine a suitable price for the company’s stock.

• This is our first report on Sharps Technology and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
• As the company starts reporting revenues in 2023, Sharps is expected to see its stock fly.
• With the Nephron transaction and income generation from the Hungarian facility, this is anticipated to start reporting a positive top-line starting in Q1 2023.