Equity Bottom-Up

• Bilibili reported 4Q2022 results. Net revenue increased 6.2% YoY to RMB6,142m (vs consensus RMB6,154m) while operating losses expanded to RMB2,327M (vs consensus RMB1,905.9m).
• Mobile Games revenues declined 11.5% YoY in 4Q2022 due to the restructuring of the games biz to focus on self-developed gaming titles.
• We expect Bilibili’s earnings to remain under pressure with aggressive cost controls to impact growth and Mobile games to slow-down in 2023E with lack of new titles for launch.

• Indo Tambangraya Megah (ITMG IJ) dividend yield at an assumed 150 USD/ton price in FY23e ( FY22 px: 192 USD/ton) is over 20% (FY22 yield 25-28%).  
• Investors staying over FY22/FY23e will get 45-48% of the share price returned in dividends assuming a 70% payout ratio, and the company’s cash pile will be >1.5 bn USD.
• Coal prices have been softer recently, but the recent mining incident threatens a slower rebound in coal production from China. The company looks cheap at 3-3.5x PE FY23e.

• Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; PB Bank and Maybank are quality but seem fully valued by comparison
• RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples
• CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned

• Occidental Petroleum had a weak financial performance in the last quarter and failed to meet Wall Street expectations with respect to revenues as well as earnings.
• Storm effects in the Permian and Rockies were largely countered by superior performance in the Gulf of Mexico and the Al Hosn.
• While Midstream and marketing earnings were within projections, OxyChem’s performance exceeded expectations due to stronger-than-anticipated market dynamics.

• NetEase delivered a mediocre set of results for the last quarter as it failed to meet market expectations with respect to net revenues.
• The company’s legacy titles, including the Westward Journey Online series and Fantasy Westward Journey Online did perform well and helped deliver an earnings beat.
• The company’s new game, the Egg Party, hit the Chinese market by storm this quarter.

• Celltrion Inc (068270 KS) reported Q4 results, with revenue, operating profit, and net profit declined YoY and QoQ. Absence of COVID-related products dragged revenue, while non-recurring expenses impacted margins.
• Pricing pressure in biosimilar products and elevated R&D expenses are negatively impacting bottom line. With pipeline progress and upcoming product launches, R&D expenses are expected to remain elevated.
• Celltrion expects to launch Humira biosimilar in the US in July 2023. This year, 8 players are expected to launch Humira biosimilar.

• Viatris delivered a mixed set of results as it failed to meet the revenue expectations of Wall Street but managed an earnings beat.
• They dealt with intense competition for important products like Wixela and the loss of exclusivity for Miacalcin and Perforomist.
• In addition, they acquired Oyster Point Pharma and Famy Life Sciences in January to create their new Viatris Eye Care division.

On 21 February 2023, Wheaton Precious Metals (WPM) announced that it had produced and sold 286,985oz and 293,234oz gold, respectively, and 23,979koz and 21,570koz silver, respectively in FY22. Subject to any historical restatements in its FY22 financial results next week (possible but unlikely and very unlikely to be material), this implies that it produced and sold 66,025oz and 68,996oz gold and 5,353koz and 4,935koz silver, respectively, in Q4. In the case of gold, in particular, this was below our prior forecast (see Exhibit 1), but is consistent with the 14.7% quarter-on-quarter decline in copper production at Salobo announced by Vale on 31 January on account of ‘major maintenance’. This note updates our forecasts for Q422 and FY22 in the light of WPM’s actual production and sales numbers and for FY23 in the light of maiden, detailed guidance.

• ASRT could significantly benefit from a new guideline set by American Society for Gastrointestinal Endoscopy (“ASEG”) this week related to the use of indomethacin (Indocin) post ERCP surgery.
• Indocin is ASRT’s largest source of revenue and nearly all the revenue from off-line use related to post ERCP surgery.
• We updated our earnings model when ASRT issued preliminary fourth quarter results. We believe the ASEG guidance could lead to accelerated market expansion in coming months

According to BB Biotech’s (BION’s) investment team, the biotech industry remains in a very good position. Following a sell-off in the last two years, valuations are still close to the levels seen three years ago, reflecting ongoing challenges and despite the fundamental industry strength. In the sector, BION is differentiated from the Nasdaq Biotechnology Index by its concentrated portfolio (c 30 stocks). The investment team anticipates that 2023 will include multiple catalysts for the sector and for BION portfolio companies, including product launches, important clinical trial results, licensing deals and renewed M&A activity. During 2022 the investment manager, Bellevue Asset Management, strengthened the investment team with three new members (two data scientists and one neurologist).

• We believe the revenue growth rate would still be low at 8.5% YoY in 4Q22, even lower than 11.4% YoY in 3Q22.
• However, we believe the growth rate of total revenue will be 10% in 2022, 15% in 2023, and 18% in 2024.
• We believe the stock has an upside of 47% for year end 2023.

• ChatGPT has focused the investment community on the potential of AI to drive business performance and investment returns.
• Forbes picked Adobe as its top AI pick in 2023. We pick Appier, which is a faster-growing alternative in the digital marketing space.
• Appier’s revenue grew by over 50% last year and unlike many SaaS companies, it is profitable.

• Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.
• This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.
• With a lasting pricing-power and a relatively inelastic demand than competitors, we think Yakult Honsha (2267 JP) and Nissin Foods Holdings (2897 JP) are in a great position to outperform competition. 

• Baidu managed to deliver an all-around in the last quarter beat despite the fact that its financial performance was impacted by a challenging environment because of a rapid rise in COVID-19 cases as well as its impact on the broader economy.
• Both feeds distributed through the Baidu app and mobile search queries continued experiencing double-digit growth in the quarter.
• Baidu is expected to launch Ernie Bot, its new conversational AI bot, powered by its latest in-house large language models, to counter ChatGPT.

• In Q3 FY23, Aurobindo Pharma (ARBP IN) recorded net profit of INR4.9B (~$60 million), down 19% YoY. Consensus expected the company to report net profit of INR5.2B during the quarter.
• Net profit was negatively impacted by 51% YoY increase in R&D expenditure due to biosimilar pipeline progress. R&D expenses are expected to remain high over the next 6–7 quarters.
• The company had negative free cash flow of $82M. With lack of any immediate catalyst or shareholders’ reward, we don’t expect multiple expansion for Aurobindo Pharma at least in near-term.

AFT Pharmaceuticals (AFT) has announced it has received FDA approval for Maxigesic Rapid tablets, a quick-release version of its flagship Maxigesic product line. Notably, this marks the first regulatory win for AFT in the US (the world’s largest analgesic market), valued at c US$7bn. While AFT awaits Maxigesic IV’s clearance in the US, we expect this approval to help it build initial commercial traction in this high-margin market. The Rapid tablets, a patented combination of paracetamol (325mg) and ibuprofen (97.5mg), has been authorised for the treatment of mild-to-moderate acute pain. Negotiations with potential distribution partners are ongoing, with plans to release other dose versions in the future. The market has reacted positively to the news, with shares trading up by 10% at close of business.

• Alibaba managed to deliver an all-around beat despite experiencing significant challenges because of the rapid change in the Covid situation.
• The company delivered double-digit growth in its free cash flow and adjusted EBITA through operating efficiency and cost optimization.
• The strong net cash position of Alibaba is supported by its healthy cash flow generation.

• Booking reported a strong finish to 2022 as it delivered revenue and adjusted EBITDA above Wall Street expectations.
• Gross Booking increased as compared to the pre-pandemic time.
• Room night growth trends have strengthened in the quarter, with the improvements driven by the U.S. and Asia.

• BILI’s 4Q results missed expectations across key metrics from revenue and MAU growth to guidance for 2023
• The results suggest fast growth will not return in 2023 and an uncertain road to breakeven by 2024.
• Reiterate our bearish view on the stock and see further downside risks ahead.

• 4QFY22 results in-line with guidance and expectations; guidance for FY23 lower
• Growth outlook while weakening, is surprisingly stronger-than-expected
• Share price unlikely to move up materially due to overhang from Figma acquisition; but valuations seem fair given growth is holding up; fair value (FV) rises to USD365

• Meilan Airport issued a profit warning last night expecting a net loss of not more than RMB280 million for 2022. 
• While the magnitude of loss surprised us, positive share price reaction suggests investors are ready to look beyond.
• We incorporate both higher passenger throughput and financial expenses estimate in our model and trim our net profit forecast for 2023 from RMB600 million to RMB500 million. Maintain Buy. 

• Weaker 2H22 and FY22 earnings are primarily caused by disruption from the pandemic, and the 18.7% share price retreat since 2022 should have well factored in an unexciting year.
• Recovery of construction revenue, rebound in margin, completion of pipeline projects, increase in water tariffs and faster receivable collections are the key positive factors to watch. 
• China Everbright Water (1857 HK) will generate ROE of 9.8% and 10.3% for FY23 and FY24. Such return profile renders its 3.5x PER and 0.35x P/B for FY23 inexpensive. 

• Applied Materials performed well in the first fiscal quarter and delivered an all-around beat.
• For the seventh consecutive quarter, the company increased its backlog.
• We give Applied Materials a ‘Hold’ rating with a revised target price.

• Twilio delivered a strong result with revenues above Wall Street expectations and strong profitability as against the analyst expectation of a negative EPS.
• The fact remains that its revenue growth lags behind booking growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Miniso reported its C4Q22 revenue at RMB2,494mn, (2.6%)/1.1% vs. our estimate/consensus,  non-GAAP net income at RMB373mn, 27.8%/29.0% higher than our estimate/consensus; 
• We expect Miniso’s revenue to achieve 33% YoY in C2023, driven by 1) the store expansion in both domestic and overseas market, 2) domestic single store revenue recovered;
• We maintain the stock as BUY rating, and raise TP by US$2 to US$24, reflecting Miniso’s expansion of domestic store network in low tier cities

• HubSpot delivered profitable growth in the quarter with revenue increasing 35% year on year in constant currency in Q4.
• The company delivered an all-around beat and saw an operating profit margin of 14% in the fourth quarter and 10% for the year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• ETU’s flagship Hawkins project sits in one of the best mining neighbourhoods in the world with its massive 681km2 land package spanning 80km along the Porcupine-Destor Fault which hosts >100 Moz Au
• The Band-Ore Project is an asset that the market is not yet giving ETU any credit for, however, the high-grade historical resources and recent drill results make for a highly promising project
• Committed partners – Kinross & Crescat Capital each own 10% 

• Mayne Pharma (MYX AU) reported triple-digit revenue growth in branded products division in H1FY23, driven by oral contraceptive Nexstellis, which contributes ~80% of segment sales.
• The company had an encouraging start to H2FY23. Both Nexstellis and dermatology are expected to exit FY23 with a positive run-rate contribution.
• The company has decided to cancel the previously proposed pro rata capital return and intends to use its cash in a better and productive way.

• Far too much volatility in credit costs, making clarity on earnings difficult
• All core fee income items down sharply in quarter, credit cost delta main driver
• Despite good lending growth, there is little to show for it in ROA and core income

• Leading Chinese drug-ingredients supplier Northeast Pharmaceutical Group Co. Ltd. was fined 133 million yuan ($19 million) for abusing its dominant market position in materials used to make a treatment for kidney dialysis patients.
• The market regulator in northeastern China’s Liaoning province conducted a three-year investigation of Northeast Pharmaceutical’s monopoly in the market for ingredients to make levocarnitine.
• The medicine is used to treat dialysis patients for a lack of carnitine, a substance that helps the body convert fat into energy

• Astra International’s results reflected its exposure to commodities, especially coal, through heavy equipment and mining through United Tractors (UNTR IJ) but most divisions booked growth as the economy recovered.
• The company’s core auto and financing business made much more than half of its profits and also contributed to its growth with a slower performance from agri-business and construction.
• Astra International (ASII IJ) announced a generous 85%-dividend payout to reward investors for its coal exposure in 2022, implying a 10% dividend yield. Valuations remain significantly below historical averages.

• Investors have completely ignored “The New MCG”. If management can hit EBITDA targets, we see over 50% upside for the stock
• Rapid cost cuts of Y135 billion will be a catalyst for the share price
• Transformation to leaner, more focused group with strategic growth in EVs, hydrogen, semicon and health

• Varun Beverages Ltd (VBL IN) is engaged in manufacturing, selling, bottling and distribution of beverages of Pepsi brand.
• It operates mostly in India but also looks after, Sri Lanka, Nepal, Zambia, Morocco and Zimbabwe, as per franchisee agreement with PepsiCo India.
• Key forensic concerns include unusual accounting with respect to containers, trend in discounting, advances to a related entity, etc and some governance alarms. 

• We first check whether additional cost savings have been achieved in the center and whether there has been any deterioration in short-term liquidity due to the hasty pursuit of automation.
• Then, we check the soundness of new businesses such as quick commerce, which boasts delivery within 30 minutes but carries the risk of deteriorating short-term profitability.
• Lastly, we check how seriously Coupang’s real estate cost structure has deteriorated and assess the risk that this could lead to devaluation by potentially undermining Coupang’s growth premium.

• IQIYI Inc (IQ US) ‘s share price is up 30.8% YTD primarily driven by upbeat 4Q2022 results. The main highlight was strong increase in members alongside improvement in OPM.
• The company’s aggressive cost cutting measures have helped reach operating profits, however, we don’t think this is sustainable given user growth depends on content.
• We expect iQiyi’s 1Q2023E results to be strong driven by the launch of The Knockout series, however, further cutting down costs will impact the company’s long-term prospects.

• The recently announced Meta Verified could generate an incremental $2.2B in revenues.
• Incremental layoffs being reported could amount to $5B in incremental savings this year.
• Between the two reports, we could easily see 10% upside to EPS.

• The convenience store sector was one of the worst hit by a downturn in sales during the early pandemic, but all three major chains have implemented changes and improvements. 
• Results for the first three quarters of FY2022 show that the big companies are almost all trading above 2019 levels already.
• While top line growth at home will be increasingly hard to come by in a saturated sector, innovations will help boost same-store sales a little and profit a bit more.

• Arwana Citramulia released a solid set of numbers for FY2022 but we expect growth to continue for the next two years driven by new capacity in higher margin products.
• The company’s new capacity will be focused on expanding its porcelain tile business but it will also expand its higher-margin DigI UNO ceramic product, which will be positive for margins.
• Arwana Citramulia (ARNA IJ) remains a top-quality and high-growth industrial choice in Indonesia. Valuations are attractive with a single-digit PER and high teens EOS growth for the next two years.

• Sheng Siong reported a notable decline in same-store sales and operating profits (ex-one off income) for 6M/FY Dec2022 even as it marginally increased annual dividend payout to 70.5%.
• With Singapore’s 10-year Gov. bond yields at 3.34% (vs. sub1%, 3 years ago), dividend yield players like Sheng Siong (SSG SP) may not offer attractive risk-reward at current levels.
• Sheng Siong has traded at dividend yields ranging 3%-3.9% over past 3 years, mostly at a premium to Gov. bond yields. Given muted dividend growth potential, stock faces downside risk.

• Share buybacks and stock-based compensation also will be an important part of the upcoming earnings release.
• GAAP operating profitability will be in the spotlight as the company lays off a significant amount of its workforce.
• The level of share buybacks will be a key part of Salesforce’s growth strategy.

• Grab Holdings (GRAB US) 4Q2022 numbers late last week made encouraging reading with revenues exceeding expectations significantly despite slow GMV growth in the quarter, as it maintained regional category leadership.
• The company saw continued improvement in segment-adjusted EBITDA margins in 4Q2022 versus 3Q2022 for both mobility and deliveries, with the latter making significant progress towards steady-state margins. 
• Grab‘s relatively high regional cost remains a drag but should stabilise here and outside this, it looks to be firmly on track to accelerate profitably. 

• BABA reported F3Q23 (C4Q22) total revenue largely in line with our est. and cons. Non-GAAP net profit beat our est. and cons. by 5% and 13% YoY.
• Taobao will face pricing pressure against JD and PDD. We expect BABA to focus on user content, which leads to improvement in app time spent and advertising. 
• We cut TP from US$130 to US$110 to reflect intensified competition in eCommerce. Maintain BUY rating due to recovery in CMR and international retail, and rebound in cloud business. 

• Raffles Medical reported 2H2022 and full-year 2022 results today. Full-year revenue increased 5.9% YoY to SG$766.5m (vs consensus $774.7m) and OP increased 61.4% YoY to $195.8m (vs consensus $170m).
• Despite Covid-19 related revenues tapering off and China under lockdown during 2H2022, Raffles’ earnings saw a boost from Singapore reopening borders and recovery in foreign patient volume.
• Consensus forecasts are too conservative and does not reflect the recovery in demand for Raffles’ healthcare services in Singapore and China (post reversing of zero-Covid policy).

• Vision Fund II private companies accounted for 87% of the fund’s 3QFY22 fair value; versus investment cost, private companies’ downward valuation revisions have been more modest than the public companies
• Vision Fund II accounted for 22% of the group’s 3QFY22 equity value of holdings, so any further downward valuation revisions would hurt group NAV and add to Masa’s Softbank liabilities
• Softbank currently trades at a 42% discount to its stated NAV; we believe that the stated NAV is likely to be overstated, with private company valuations needing further scrutiny

• Kalbe Farma (KLBF IJ) revealed an indicative set of 2022 numbers, which fell slightly short of estimates due to product mix changes and inflationary pressure from higher input costs.
• Management guidance for 2023 looks more positive and implies stable margins in the coming year, with strong momentum across prescription drugs, consumer health, nutritionals, and logistics and less inflationary pressure.
• Kalbe Farma looks interesting with more positive expectations for earnings growth in 2023, coupled with valuations below its 5-year average forward PER.

• Investor interest in Pinduoduo (PDD US)  has surged, hitting record-high levels of fund ownership this month.
• Over the period from the recent lows in March 2022 to today, Pinduoduo’s +20% increase in the percentage of funds invested was the highest across all stocks in China.
• New positions from JSS All China (+7.49%) and Tamaq China Champions (+4.99%) were complemented by increased weights from China Fund (+5.35%) and GAM China Evolution (+5.26%).

• Baidu delivered 4Q22 results with top line beating cons. by 3.2% and non-GAAP net income beating cons. by 13.4%. 
• We expect both its ads and AI cloud businesses to recover with accelerated pace, which could partially offset the increase of R&D investment in AI related technologies.
• Reiterate BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.

• A key re-rating trigger for Edelweiss’ stock is nearing as its wealth management (WM) arm gets close to demerge and list over the next couple of months.
• Edelweiss’ WM business could list at a market cap of around INR 8750cr, suggesting that Edelweiss’ 44% stake in it alone could be valued at INR 3850cr.
• Edelweiss also reported strong Q3FY23 earnings with 31% YoY growth in ex-insurance PAT. Edelweiss has significant potential to re-rate over the next couple of years as the credit business normalizes.

• Raffles Medical (RFMD SP) reported strong 2022 results, with 6% growth in revenue and 71% increase in net profit. Growth was driven by healthcare services, which contributed 58% of revenue.
• With the reopening of borders and easing of COVID-19 related protocols in H2 2022, RMG saw a return of foreign patients seeking medical treatment in Singapore.
• In view of the company’s strong performance, the Board recommended a dividend of 3.8 cents/share for 2022, representing an increase of 36% as compared to the previous year.

• China’s securities regulator is investigating auto component supplier Nanjing Aolian AE&EA Co. Ltd. (300585.SZ -3.76%) after its stock price fell more than 30% this week when questions arose about its expertise in a key solar panel technology. 
• The China Securities Regulatory Commission (CSRC) has started scrutinizing the firm on suspicion of providing false information to the public about its new business, according to a note that Nanjing Aolian received Thursday night.
• The investigation added to doubts about the company’s expertise in perovskite batteries at a time when it is defending itself from a separate regulatory inquiry into whether it took advantage of market interest in the technology to inflate its stock price.

• Short-Term borrowing plays an important role in the Adani group
• Rescinding of Adani Enterprises FPO and meltdown in share prices heightened liquidity concerns of the group
• This analyst estimates the liquidity gap to be around US$ 8 bn for FY2023 which needs to be bridged by long-term funds and/or cash flow from operations

• InMode Ltd (INMD US) reported record-high quarterly revenue of $134M in Q4, up 21% YoY, mainly driven by the strong demand for its innovative, energy-based, minimally invasive product platforms. 
• However, quarterly revenue growth is deteriorating since Q3 2021. Q4 2022 revenue growth of 21% is the lowest in last two years or eight quarters.
• Demand for aesthetic procedures in the U.S., which is the core market for InMode is expected to deteriorate in next 6–12 months due to macroeconomic headwind.

• The decline in 2H22 profit (53.1% YoY and 43.8% HoH) for Pacific Basin Shipping (2343 HK) is a matter of the past. Market rates have already rebounded from the trough.  
• Demand recovery on China re-opening, good forward cargo cover, reduction in operating costs, strengthened financial position and diversified customer base are Pacific Basin’s key merits. 
• Lower profit for FY23 should be well anticipated by the market, yet it still generates ROE of 20.9%, making its 1.0x P/B inexpensive. Moreover, yield will stay at 10% level. 

• Meituan has been hiring delivery workers in Hong Kong since February 20.
• JD will provide a subsidy of RMB1.5 billion to customers to compete with Pinduoduo (PDD) in early March.
• Four companies released financial performance for 4Q22, including Baidu, iQiyi, NetEase, and Sohu.

• Intel cut its dividend by 2/3rd, freeing up $4B in cash.
• The company revised own capital intensity guidance for 2023 to low 30s% from 35%, while maintaining 24/25 guidance.
• Recent $11B debt raise and Mobile eye shares should provide enough capital for the next year.

• Haidilao issued a positive profit alert last Friday which beat our and market expectations by a big margin. Profitability improved  mainly due to shutting restaurants and labor optimization. 
• We expect the news and the street’s earnings revision will drive near-term stock rally. 
• That said, growth challenges remain and will be under spotlight during 2023-24. The expected stock rally will just build more expectations in the price. Take profit from the rally. 

• BABA’s December results highlighted how the performance of this e-commerce giant – as a proxy for China consumption – increasingly tracks Chinese economy.
• The Alibaba that suffered from China’s slump in 2022 should also be the Alibaba that stands to reap the fruits from China’s recovery in 2023.
• Trading at 12x PE on the cusp of economic recovery, the payoff of BABA is much better for bulls than bears. Maintain $500 billion target valuation. Buy.

• HCG continues to scale up well as its new centers are maturing. Its mature centers are also growing at a healthy pace.
• Margins are improving across the board led by 1) Realization Improvement 2) Operational Efficiencies 3) Operating Leverage and 4) Improving Mix of Cases.
• FY24 is all set to be a defining year in terms of HCG’s financial performance across growth and profitability.

• Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.
• The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.
• On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.

• Cisco Systems delivered another strong quarter, exceeding the top and bottom line expectations of analysts.
• The company saw consecutive double-digit growth in its customer markets’ commercial and enterprise sectors, and the public sector performed better than usual.
• We give Cisco Systems a ‘Hold’ rating with a revised target price.

• Fortinet had a mixed set of fourth-quarter results with revenues failing to meet Wall Street expectations despite market share gains.
• The company succeeded in delivering an earnings beat and held on to its market positioning.
• Its 42% product revenue growth has made the company one of the top product revenue companies in the cybersecurity industry.

• Long Micron vs. Short Nanya – We remain biased to Long Micron vs. Nanya Technology based on multiple factors.
• Relative valuation and inventory management appears to favor Micron. Nanya Technology’s inventory days blow-out increases risk of write-downs impacting its next earnings.
• Potential news flow also appears to favor Micron as the US CHIPS Act rolls out.

• Shopify delivered an all-around beat in the previous quarter and ended 2022 on a positive note.
• The company introduced Shopify Audiences, Shopify Collabs, POS Go, Tap to Pay, integrated Twitter Shopping and YouTube channels, and continued to expand the Shop app to make it simpler for retailers to interact with and develop relationships with customers.
• They also introduced Shopify Markets and Markets Pro.

• Despite ongoing difficulties with the global economic environment, Akamai produced strong results in the fourth quarter, exceeding market expectations in terms of both, revenues as well as earnings.
• Their rapidly expanding Compute business, the sustained high demand for their security solutions, and higher-than-anticipated shipping traffic contributed to their revenue growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Kraft Heinz saw strong revenue momentum in the last quarter and managed to deliver an all-around beat with a good growth in base volumes.
• The management claims to be outperforming the competition in food service and emerging markets.
• In 2023, the management is looking towards expanding its marketing technology and personnel investments to propel the company’s growth.

• Biogen delivered an all-around beat in the last result.
• TECFIDERA generic competition, ongoing interferon declines and some pricing pressure mostly brought on this reduction.
• Based on these positive results, they started the Phase II/III AMETHYST investigation of litifilimab in CLE.

• Jehoshaphat’s short report has alleged that Techtronic Industries (669 HK)/TTI has been inflating its profits dramatically for over a decade with manipulative accounting.
• Our forensic analysis of the allegations suggests that some are credible red flags while others are essentially an exaggeration.
• TTI’s response to Jehoshaphat is pitiful. Valuation is meaningless until management adopts more conservative accounting or compelling disprove the allegations.

• Alibaba’s 3QFY23 results marginally topped consensus. With the share price dropping 0.65% cf. +0.35% for the index, both results and the price reaction were in line with our expectations.
• Yesterday’s results confirm that Alibaba (ADR) (BABA US)’s core businesses, Taobao and Tmall are in trouble and cost-cutting elsewhere is insufficient to offset the short-term weakness.
• Therefore, we do think that this is a good opportunity to profit on the short side with Alibaba shares having the potential to fall another 40-45% in the short term.

• Techtronic Industries (669 HK) was targeted by Jehoshaphat Research (JR) accusing that the company’s profits are inflated dramatically over a decade with manipulative accounting.
• As per the report, routine expenses incurred have been booked under various asset accounts such as deferred development costs thereby showing ever increasing margins for a cyclical business.
• We have assessed the merits of some of these claims using our forensic accounting framework and it appears that most of the claims are very difficult to refute.

• Grab reported 4Q2022 results yesterday. Q4 revenue more than quadrupled to $502m (vs consensus $403.48) while reported a negative adjusted EBITDA of $111m (vs consensus $137m) vs $305m in 4Q2021.
• Deliveries business went on to report positive adjusted EBITDA driven by improvement in take rate coupled with reduction in total incentives.
• Grab Holdings (GRAB US) share price dropped 8.29% at the end of yesterday’s trade despite the company accelerating its profit timeline to breakeven in 4Q2023 vs 2H2024 previously.

• After decades of industrial, urban focus, city-dwelling Japanese first began a tentative reengagement with nature through hiking two decades ago. 
• This has evolved into more extended trips that began to include camping and visits to wilder areas.
• These excursions are still a bit forbidding for many, so camping and outdoor activities in a park managed by a trusted brand have strong appeal, providing new revenue for brands.

• Nvidia’s risk-reward profile remains unattractive, according to the company’s recent earnings report.
• Nvidia’s stock-based compensation also highlights some problems related to inventory levels and the amount of stock- based compensation.
• The company’s share price has risen 14% following recent earnings, the report says.

• We explore Citibank’s upcoming Banamex disposal, which appears to have become a one horse race and question whether an IPO is completely off the cards
• Bank sector data trends to December remain robust, but headwinds are building; rising funding costs threaten credit spreads and worsening cost of credit trends, both set to erode 2023 returns
• BBVA Mexico generates consistent premium ROE of 25%+, investors can gain exposure through parent BBVA shares; we remain cautious on Banorte, due to the growing risks to returns and valuation

• Airbnb had a solid year in 2022 with revenues growing 40% year-over-year.
• Moreover, they saw that guest bookings for trips continued to rise, maintaining a robust backlog for Q1.
• Excluding all of the Mainland China listings, the team increased supply by 900,000 listings, or 16%, in comparison to a year ago.

• Coca-Cola had a successful year in 2022.
• In spite of the difficult macro environment, the company performed well and expanded by concentrating on broadening the scope of its offerings.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Zoetis delivered a decent set of results for the last quarter of 2022 meeting analyst expectations as well as the high end of its management guidance.
• Despite the economic challenges, ongoing pandemic recovery, and the political unpredictability brought on by the war in Ukraine, they delivered operational growth for the year in each of their top 13 markets.
• The company’s unique companion animal portfolio drove its 8% operational revenue increase for the year, growing 14% operationally.

• Revenue grew by 2% YoY in 3Q22, as the decrease of online sales offset the increase of physical stores.
• The operating margin began to improve, as the company cut sales and marketing expenses in minor businesses.
• We believe the stock has an upside of 78% for March 2024 and the price target will be HK$170.

• A correction in Perfect Medical Health’s (1830 HK) share price recently has led to it trading at a decent multiple of 15.2x/11.6x FY23e/24e PE(x) with a 6.9%/9.1% FY23e/24e dividend yield. 
• We estimate the lockdowns in China from Oct-Dec last year will impact the H2 FY23 result, leading to softer revenue growth of 4.8% for FY23 (profit 11% YoY). 
• We are optimistic about China re-opening and cross-border travel and believe that >20% revenue growth can materialize in FY24, led by a recovery in China/HK revenue. 

• Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.
• With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.
• Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.

• We’re now two-thirds through the Taiwan Semiconductor earnings season and about one-third through the Taiwan Hardware earnings season.
• Semiconductor gross margins declines have been relatively large, and we believe are tracking to be worse than what consensus expected going into the earnings season.
• There have been few examples of inventory situations improving for semicondcutor companies; results data released so far indicates a potentially deeper trough than previously expected.

• Aeon’s main GMS arm, Aeon Retail, is on track to post a net profit in FY2023 after a 4-fold increase in OP in 1H2022.
• This is largely thanks to stronger sales and footfall and the success of efficiency measures introduced over the past few years.
• The improvements look sustainable and should lead to improved results for Aeon longer-term adding to the already good results from the drugstore, real estate and overseas businesses.

• Guangzhou Automobile Group Co. Ltd. (GAC) (601238.SH -0.51%) is working to get more domestically produced microchips into its vehicles.
• It relies on overseas suppliers for about 90% of its automotive chips.
• GAC Capital Co. Ltd. sees plenty of opportunity to increase the share of domestic chips in the automaker’s cars.

• The three companies Nvidia, TSMC, and ASML are all key global leaders in the AI industry chain.
• Nvidia’s latest results indicate that the company could be returning to a period of multi-year growth and an inflection point for AI demand.
• One can consider going Long a basket of Nvidia, ASML, and TSMC based on a structural growth thesis for AI demand.

• We turn bullish on Kubota. Macro indicators point to stabilization 
• Management guidance for 2023 surprised the market, but we think it is realistic
• We think that quarterly results will be a catalyst to convince investors that profitability is improving

• Apollo Hospitals Enterprise (APHS IN) recorded 19% revenue growth in Q3. The largest segment, healthcare services, which contributed 51% of total revenue, grew 10%. However, net profit dropped 33%.
• The company’s bottom line bled mainly due to high operating cost of the digital healthcare services platform, Apollo 24/7. Excluding operating cost of Apollo 24/7 EBITDA would have grown 10%.
• The company believes that it is at the peak burn rate for Apollo 24/7 operating cost this quarter and expects losses to moderate from here on.

• U.S. Commerce Secretary gave a new speech providing additional public detail about the U.S. CHIPS Act aimed at re-shoring the manufacture of semiconductors in the U.S.
• Emphasis on national security means that financial cost is now secondary for the U.S. and we should not expect any loosening of chip restrictions for China.
• Taiwan companies are straddling a “sweet spot” given they are not restricted, can invest in the U.S. expansion, maintain local non-U.S. advantages, and have had their China-based competition weakened.

• Operating costs moved to USD8.9bn in 4Q22 from USD8.0bn in 3Q22
• Continued high growth in QoQ credit costs up 33% QoQ in 4Q22
• Net fee income seems to be shrinking about USD100m quarterly

• Although the sell-side has lowered their immediate and medium-term targets, our analysis points to another surprise to the downside for Sea Ltd (SE US) in 4Q22.
• Having exhausted pretty much all the cost-cutting in the past few quarters, we don’t see much room for Sea Ltd to further reduce its losses in the e-commerce business.
• With the sell-side optimistic once again expecting a narrower loss, a big miss in the fourth quarter could send Sea Ltd shares back towards their Nov 2022 lows.

In the upcoming webinar, Datuk William will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

About Audience Analytics

Audience Analytics is a well-established business enabler with a presence in Singapore,
Cambodia, China, Hong Kong, India, Indonesia, Macau, Malaysia, the Philippines, South Korea,
Sri Lanka, Taiwan, Thailand, United Arab Emirates and Vietnam. With products ranging from
printed publications and online portals to exhibitions and business award programs, Audience
Analytics partners with business owners to grow their businesses. The Group’s portfolio
includes SME Magazine, HR Asia, Capital Asia, Mega Career Fair, SME Solutions Expo,
Malaysia Career & Training Fair, Post Graduate Education Fair, ITX Asia, SME 100 Award,
Golden Bull Award, HR Asia Best Companies to Work for in Asia Award and CXP Best
Customer Experience Award.

• IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.
• Years of investments in original content production capabilities paid off and solidified IQ’s leadership in China’s long form video industry. 
• Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  

• GoTo (GOTO IJ)  announced last week that it is accelerating its profit targets and aims to achieve positive adjusted EBITDA by 4QFY2023, advanced by five quarters.
• The company also expects Group’s contribution margin to become positive within the first quarter of 2023 accelerated by four quarters compared to the company’s previous guidance.
• Having analyzed the company’s revenue and cost base, we think this is too much to ask for as aggressive cost cutting would lead to giving up future growth opportunities.

• Huge operating margin and FCF beat as PANW is maintaining efficiency with slower headcount growth and supply chain issues abating supporting gross margins. 
• Deal sizes continue to grow dramatically: $1M deals grew 20% YoY, and  transactions size grew nearly 60%. $5M+ deals grew 84% YoY and $10M+ deals grew 140%.
• Prisma’ Access’ SASE product continues to be the catalyst driving 2.5x revenue lift vs. legacy firewalls.

• Results have come out for both companies. Delta Thailand has delivered massive growth in 2022 however in 2023 consensus expects Delta Taiwan to grow faster.
• One way to outperform the Thailand SET Index in 2023E could be to simply hold the index stocks but exclude Delta Thailand.
• By essentially any fundamental metric, Delta Thailand is over-priced relative to Delta Taiwan and it’s hard to see what the next outperformance driver could be in 2023E.

• In 2022, Eubiologics (206650 KS) reported revenue growth of 41% YoY to KRW55.47B, driven by increased supply of cholera vaccine to UNICEF following the outbreak of cholera worldwide.
• In 2022, more than 29 countries reported cholera cases or outbreaks, up from 20 countries five year ago. Globally cholera vaccine is in short supply.
• Eubiologic’s vaccine manufacturing capacity is expected to go up to 90 million doses after completion of the expansion project this year, which will drive sustainable sales growth.

• FY 2022 earnings were above expectations, execution remains strong. Upgrades coming
• FY 2023 outlook: double-digit margins, positive FCF; announcement of a share buyback program of €1.5bn + €4.2 ordinary dividend
• We remain bullish on Stellantis, our top OEM pick for 2023. Valuation very supportive. 

• Despite a challenging quarter, Walt Disney managed to deliver an all-around beat and expanded internationally.
• The sequential improvement was driven by lower SG&A costs and higher revenue at DTC.
• At Domestic Parks and Experiences, significant operating income and revenue growth in the quarter was achieved.