Equity Bottom-Up

• The market welcomed TEL’s 3Q results and new guidance, but sales, profits and margins continue to decline year-on-year.
• An optimistic consensus sees a new cyclical high in the second half of the decade, but avoids the question of disengagement from China.
• Inventories are at a record high. Valuations out to FY Mar-25 do not look attractive. 

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies.

We’ve decided to break this deep dive into two parts given its length.

Part 1 will build the foundation and covers the business, history, and a discussion of Berkshire’s investment.

• Bajaj Finance Ltd (BAF IN) reported decent profitability. Growth was somewhat muted due to competition, however, this seems temporary.
• The immediate focus of BAF to drive the next leg of growth is to deepen its product penetration across its existing branches. Currently, only 3% branches have 80%+ products.
• BAF revealed its long-term strategic plan wherein it plans to enter into newer categories like Auto, Agri, and CV which comprise 28% of the Indian retail credit market.

• The benefits of assisted reproduction being covered by medical insurance are limited. Its main role is still to delay not fundamentally reverse the decline of China’s birth rate.
• If the valuation collapse occurs collectively in one field, it basically reflects that Miss Market does not hold much hope for this field in the future, such as cell therapy. 
• We mainly analyzed some key points of the companies that investors may be interested in, such as iRay Technology (688301 CH) and Shanghai Medicilon Inc (688202 CH).

• Lululemon Athletica Inc.’s calendar year margin compression is due to variable costs that will probably adjust lower this year.
• Many analysts mistake’monetized costs’ such as excess amortization for cash costs.
• Lululemon Athletica Inc. (NASDAQ:LULU) stock has surged by nearly 2000% since its initial public offering in 2007.

• Electronic Arts delivered a mixed set of results in the last quarter.
• In the quarter more than 10 million new players entered into the community which drives strong engagement.
• The player network of EA also continues to grow and its flagship, EA SPORTS FIFA delivered strong engagement this quarter across the company’s entire ecosystem.

• Sysco delivered a mixed set of results for the last quarter and it was able to surpass the analyst consensus estimate in terms of revenues as result of double-digit sales growth.
• However, despite a decent earnings growth year-over-year and strong volume growth as well as market share gains, the company missed out on meeting earnings expectations.
• Sysco continues to advance its growth strategy with progress in its digital tools, merchandising initiatives, and supply chain investments in sales.

• Equinor rose 75% over the three-year period but has stalled.
• European gas prices may be nearing a bottom, according to the company.
• The company’s 10-year outlook looks good after record profits this quarter. It has been offered as an alternative to U.S.

• Bill.com generated decent second-quarter result with revenues beyond market expectations and narrower-than-expected losses.
• Its extensive and expanding partner and network ecosystem offered a competitive advantage by allowing them to access new firms efficiently.
• With the joint objective of generating additional value for SMBs, they collaborate with an SMB’s most reliable advisors, including their accounting firms and financial institutions.

• The company carried out some major acquisitions in the year including the $3.7 billion purchase of ChemoCentryx followed by the even bigger, $27.8 billion acquisition of Horizon Therapeutics.
• Their portfolio will also grow due to the addition of Horizon Therapeutics.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Bill Ackman’s analysis was good, but his timing was poor. Netflix subscriptions recover, but margins fall.
• The outlook for Netflix under a new leadership model is good, according to Ackman.
• Netflix stock bottomed as expected, but it was down for the first time since Ackman took over.

• The long, twisted trail of Universal Entertainment’s Okada Manila casino spinoff faces yet another legal obstacle announced last week.
• The extension of Universal’s/ 26 Capital Spac deal for one year could see the debut of the IPO during an increasingly higher growth industry revenue recovery arc.
• 26 Capital valuation of Okada at US$2.5 bill with a $10 per share offer price could run up quickly as market momentum turns positive sentiment higher.

• Barrick Gold Corporation’s stock is bearish on the premise of underwhelming operational performance and an overblown gold price outlook.
• However, ramp-ups of critical assets are yet to be realized, according to the company.
• Barrick is committed to a substantial share buyback program and promises solid dividends.

• Record high quarterly margins at Disney’s parks and experiences would not be the silver bullet to high shareholder returns.
• Higher future margins are already priced in and with that upside appears limited, even if management executes on its current strategy.
• Disney’s business model is shaken by yet another restructuring, according to the company.

• Abbvie Inc (ABBV US) reported 4Q22 results, with revenue increasing 2% to $15B, mainly driven by Skyrizi and Rinvoq. EPS grew 17% to $3.60, better than consensus and company guidance.
• The company has initiated 2023 EPS guidance at $10.70–11.10, representing a decline of 19–22% YoY, as Humira has started facing competition in the U.S.
• 2023 guidance contemplates the expected headwind from direct biosimilar competition, with the U.S. Humira sales declining ~37%, which is at the lower end of previous erosion projection of 35–55%.

• LiDAR works by emitting laser beams and measuring the time it takes for the beams to bounce back to the sensor.
• By using this information, LiDAR can create a 3D map of the surrounding environment, including the location and shape of objects, such as buildings, trees, pedestrians, and vehicles.
• One of the main advantages of LiDAR is its accuracy and range.

• Alteogen Inc (196170 KS) signed its fourth licensing deal for ALT-B4, a proprietary human recombinant hyaluronidase enzyme, with Sandoz. Given the strong demand more such deals are expected to follow.
• Alteogen is reportedly in talks with global pharmaceutical companies for a technology transfer deal for Herceptin SC biosimilar. If successful, Alteogen will be a re-rating candidate.
• Alteogen has established Altos Biologics to facilitate global phase 3 clinical trials and commercial development of Eylea biosimilar. Altos Biologics aims to be listed on the KOSDAQ in 2024.

• A flight to safety from the bank’s depositors and asset management clients has caused a maturity mismatch, which could affect the firm’s net interest income.
• The outcome of Credit Suisse’s investment banking unit pivot is near impossible to call, but a few key indicators provide an interesting juxtaposition.
• And there we have it, folks; Credit Suisse Group AG’s (NYSE:CS) stock is essentially a distressed asset.

Immix Biopharma has announced interim response rate data from its newly formed subsidiary, Nexcella, concerning the BCMA-targeting cell therapy NXC-201 in multiple myeloma and AL amyloidosis. The data, presented at the 5th European CAR T-cell Meeting, shows a 90% overall response rate (ORR) in 29 patients (of 42 total enrolled) treated with NXC-201 at the recommended Phase II dose (RP2D). This result is comparable to approved BCMA-targeting cell therapies. Importantly, cytokine release syndrome was manageable, and no neurotoxicity was observed at the RP2D (800m cells). In our view, NXC-201’s potential main point of differentiation is its favorable safety profile, which we believe the latest data supports. Immix will continue to investigate NXC-201 as the first potential outpatient CAR T-cell therapy. This announcement follows the recent initiation of patient enrolment in a new Phase Ib/IIa clinical trial, investigating the use of Immix’s lead asset, IMX-110, in combination with tislelizumab (BeiGene/Novartis’s anti-PD-1 antibody) for the treatment of advanced solid tumors.

paragon appears to be progressively de-risking its investment proposition. The agreed sale of Semvox crystallises an enterprise value (EV) that highlights the depressed market cap due to the debt burden. The accelerated redemption of the entire Swiss franc (CHF) bond issue and half the Eurobond reduces debt metrics to typical industrial levels, and we expect improving cash flows to facilitate final redemption in 2027. The result is an apparently anomalous rating for paragon compared to its estimated cash valuations and peers. Assuming the disposal completes and the bonds are redeemed as anticipated, the crushed equity value of recent years should finally be relieved.

• Playmates Toys (869 HK) has been listed since 2008 and makes TMNT toys. It has traded as high as 4 HKD/share on the back of successful TMNT movie launches
• Paramount is set to launch a highly anticipated Seth Rogen-produced, TMNT movie in August 2023. In 2013/2014 the stock went up 8x on the last successful TMNT movie launch
• Playmates Toys trades at negative enterprise value, hence giving a large margin of safety option to bet on the success of a TMNT revival

• TEL 3QF23 operating profit -26% YoY to Y115b, beating analyst estimates
• Full year operating profit guidance revised up Y546->Y580b, ahead of Street estimates
• MAGIC – Metaverse, Autonomous mobility, Greentech, IoT, Communication Services – to drive long-term semicon demand

• We estimate that Baidu’s 4Q22 top line/bottom line would miss cons. by (1.6%)/(3.1%), mostly driven by the temporal disturbance of increasing COVID cases after reopening in Dec. 2022. 
• However, we remain optimistic about 2023 outlook: 1) Baidu’s ads would be recovering quickly in 1H23 as macro improves, and 2) leading position in AIGC development gives Baidu more potential.
• Maintain BUY rating and raise TP to US$170, implying 17.2X PE in 2023

• Segment results for DoCoMo and NTT Data were impressive as NTT plans to restructure both businesses start to bear fruit
• DoCoMo is also leading MNOs in moving past the impact of regulatory driven price reductions with Q3 service revenue largely flat YoY supported by 5G upsell and subscriber wins
• Rising utility costs have had a material impact on profitability for NTT East and West but management believes upside in other areas and cost discipline provides some offset

• LVMH’s sales’ growth is supported by a rebound in China, resumption of Chinese outbound travel, resilient US demand and higher marketing investments in 2H22 which should bear fruit this year.
• The Company holds leading market positions in each of its brands, as it benefits from substantial financial backing to invest and innovate.
• The Company has a high-quality management with decades of experience!

• The cinema industry has been suffering from COVID-19 restrictions, in particular social distancing measures that have kept cinema operating rates low.
• Now that the release pipeline looks strong again, cinemas will be on a path to recovery. I doubt that the global box office will reach the 2019 level this year, but it will get closer to that number.
• Cinema operators worth mentioning include North America’s Cinemark, Cineplex and Marcus Corporation, China’s IMAX China and Thailand’s Major Cineplex.

• Bank Rakyat Indonesia (BBRI IJ) did not disappoint with a strong set of FY2022 results, which came in around  4% above expectations, driven by strong micro and expanding NIMS.
• The bank also saw improving credit costs and declining provisions, which helped to drive profits and returns close to pre-pandemic levels plus the bank continues its advance on digitalisation. 
• Bank Rakyat will drive growth through MSME lending, which now makes up 82.5% of loans, with micro and ultra-micro having significant upsides. Valuations are attractive on 2.1x FY2023 PBV.

• Blue Bird is an iconic brand in Indonesia, where consumers take a BlueBird not a taxi, much like taking a Gojek, and in taxi terms, it embodies trust and reliability. 
• The company had a tough time through COVID but is now firmly on a recovery track, with revenue per taxi in 4Q2022 20% above pre-pandemic levels, with more to come.
• Blue Bird (BIRD IJ) is a beneficiary of the tech winter in that ride-hailing companies are spending less on promotions, easing competition. Valuations are attractive in recovery.

• Pan Pacific International Holdings (7532 JP)’s 2QFY23 was a touch above consensus with revenue at ¥504.8bn (consensus: ¥497.6bn) and OP at ¥33.6bn (consensus: ¥30.3bn).
• With consensus cautious about personal brands potential, earnings have beaten consensus in each of the past five quarters.
• Having already proven the personal brands earnings potential, we think it is unwarranted for consensus to discount PPIH’s personal brands growth.

• Nayuki bears the most resemblance to Starbucks in that it owns its stores and provides drink, food and space, yet its appealed audience is the narrowest; 
• Shopping mall opening might hit an all-time low in 2023 and is saturated. Nayuki need to think new ways to broaden its targeted market;
• We downgrade Nayuki to SELL and lower TP from HK$13.9 to HK3.1

• The rapid adoption of cloud computing has led to China boasting the world’s second-largest cloud computing market.
• This migration to the cloud is in lock-step with global customer needs: scale, greater efficiency, and availability; together with a reduction in capex and infrastructure complexity.
• The big three PRC telcos are firmly in the mix, with each announcing 100%+ growth in revenue for their cloud businesses in 1H22. Expect that trend to continue.

• We expect that Kuaishou’s 4Q22 top line and bottom line would be 0.2%/3.7% vs cons, as major business lines are recovering with stimuli of CNY promotion campaigns. 
• However, we estimate that its 2023 top line/bottom line would miss cons. by (0.9%)/(14.2%) due to our concerns of increasing competition and internal restructuring.
• Maintain SELL rating but raise TP to HK$ 56 to reflect on-track recovering trend as the macro improves. 

• Naver plans to launch its own Korean version of ChatGPT in 1H 2023.
• We believe that this will act as an important catalyst that is likely to further fuel Naver’s share price higher. 
• Naver has been our high conviction call in 2023 and we continue to have a Positive view of Naver. 

• Fancl Corp (4921 JP) delivered 3QFY23 results yesterday, which saw revenue and operating profit decrease by 2.5% and 5.0% YoY respectively to ¥28.3bn (consensus ¥29.8bn) and ¥3.1bn (consensus ¥3.4bn).
• Cosmetics growth being the main reason for Fancl’s FY+2 EV/OP of 22.4x, recent trends look scary with cosmetics revenue and OP down 24% and 27% respectively from the pre-COVID level.
• Therefore, we would look to short Fancl expecting shares to fall around 25-30% in the short term.

• Bank Of Ayudhya (BAY TB), now branded as Krungsri, is a unique Thai bank with high-quality retail exposure, a low-risk corporate loan book, and a growing SME book. 
• The bank is growing its digital exposure through its KMB app, its GO app for auto customers plus its UChoose lifestyle app and it collaborates with Grab and Shopee.
• Krungsri’s move to acquire Nomura Thailand’s broking business and its acquisition of Home Credit in Indonesia and the Philippines provide an additional edge and ASEAN exposure. Valuations are inexpensive.

• Syngene International Ltd (SYNG IN) provides integrated services from early discovery to commercial supply across all major therapeutic areas and modalities. The company has 400+ active clients.
• To capitalize on the secular industry tailwind, the company has been investing to enhance capacity and capability, which has led to extension of existing client relations and engaging new clients.
• For FY23, the company expects high-teens revenue growth and EBITDA margin of ~30%. Operating leverage is expected to improve from next year onwards, and that should improve the overall profitability.

• FUJIFILM Holdings (4901 JP) delivered 3QFY03/2023 results today. Revenue and OP increased 13.5% and 4.1% YoY respectively to JPY744.4bn (consensus JPY717.1bn) and JPY81.8bn (consensus JPY80.0bn).
• Covid-19 related projects running its course had a slight impact on  healthcare segment but we would not be too worried as new product launches and markets will offset that decline.
• Market continues to value Fujifilm as an image company and not a healthcare stock and there is more than 30% upside to the current share price.

• IIJ delivered double-digit revenue growth for a third consecutive quarter as corporate demand for digitization remains robust
• In addition the expected expansion of cloud (+15%) and security service (+21%) sales, mobile sales grew 9% as IIJ moved clearly past the impact of industrywide rate reductions
• Quarterly EBITDA reached a record high even with modest margin contraction YoY

We have raised our near-term lithium price expectations to reflect the current supply/demand cycle and upgraded our long-run (post 2031) price forecasts (from US$17,000/t to US$22,500/t LCE) to reflect lithium’s high demand growth and highly concentrated supply fundamentals. On the back of this, our valuation of Lithium Power International (LPI) has increased from A$1.24/share to A$1.42/share assuming the full project equity dilution. We have also updated our model to reflect 100% consolidation of the Maricunga project as well as LPI’s (now somewhat more dilutive) lower share price.

• ATEN reported better than expected fourth quarter results, but it was the lack of quantitative revenue guidance that garnering all the attention
• We had highlighted increased macro risks in our January update leading to 2023 becoming dependent on the second half of the year.
• The first quarter is seasonally the slowest period of the year for ATEN, which could be the reason for management taking a conservative approach with 2023 guidance.

• Nintendo reported operating profit of 190b yen (-8% YoY), falling far short of Street expectations
• The Nintendo Switch is now a six-year old console and demand is exhausted. A normalization of chip/supply chain issues benefits the newer PS5
• Our thesis is that the hardware cycle has peaked and that the share price will head lower in tandem with the dwindling top line

• China’s swift and sudden abolishment of its Covid rules triggered across-the-board outperformance for Hong Kong stocks. The HSI is up ~13% since early December 2022. 
• A strong rebound of inbound tourism and the resumption of normalised travel between Hong Kong and the mainland should underpin the city’s recovery.
• The retail sector, notably the high street shop segment, should lead this post-Covid recovery in terms of both rents and prices. 

• Management pushed a conservative / defensive line for Q3 as markets remain uncertain and investment losses continue
• Revenue growth at ARM was better than expected as licensing revenues rebounded strongly. Guidance for the timing of an IPO (sometime in 2023) remains unchanged
• This was a slightly disappointing quarter but hopes were not high heading into the print with the discount hovering around 35%

• The market seems to be expecting quite a bit from Pinduoduo (PDD US) in upcoming earnings with consensus expecting the company to make around RMB 11.4bn OP in 4Q22.
• With CCP’s anti-monopoly drive on hold, Pinduoduo may need to persuade customers and merchants a bit more than usual via sales and marketing to further improve its market position.
• TEMU was anyway going to be a significant burden on profitability. With aggressive discounting and coupons, we think that burden has gotten significantly heavier.

• The potential high-priced acquisition proposed by Wepon failed. In fact, Wepon is in a vicious circle. So, terminating the acquisition is not a bad thing for Consun Pharmaceutical (1681 HK).
• Consun kept positive momentum and its performance was strong in 22H1. Such growth is expected to continue after China reopens as non-COVID related medical demand returns to normal.
• Considering its solid business performance and large cash balance, Consun is obviously undervalued. In our view, even without Wepon’s deal as the catalyst, Consun still has investment value.

• ZHD F3Q22 (C4Q22) net revenue slightly missed our est. and cons. by (2%) and (1%). Adjusted EBITDA margin was in line with our est. excluding impact from PayPay consolidation. 
• PayPay will continue to be the growth driver for ZHD with increase in unit spending supported by premium credit card offering and deepening integration with group’s other services.
• We upgrade ZHD to BUY and raise our TP to JPY 435 to reflect beat in profitability and upsides in PayPay

• Expectations of the new CEO Jonathan Akeroyd and the new creative director Daniel Lee uplifting the business and accelerating sales are priced in
• Resumption of Chinese outbound travel will surely happen, but it will take time
• No valuation upside at these levels. We are bearish on the stock

• China Balloon Incident — Negative news for China semiconductor restrictions; Up to 45nm may now be hobbled by Japan & Netherlands joining.
• Hon Hai — January sales results strong, could help market look forward to Hon Hai’s future growth.
• Mediatek Results & Upcoming Results — Signs of slight smartphone stablization, also we highlight key Auto & Industrial Semiconductor related results ahead.

• Since our Long Apple vs. Short Quanta & Pegatron piece, Apple has outperformed by 11.7% in USD-adjusted terms.
• Apple has reported results recently, thus the next major events could be Quanta and Pegatron results.
• Given Apple has outperformed by a significant amount, we believe the best of Apple’s relative outperformance is done for the near-term. One can thus look for levels to unwind.

• Varo bank published 4Q22 results that revealed lower quarterly cash burn through cost control, but revenue per client declined and the very high customer acquisition cost
• SoFi’s cost reduction success in 4Q22 seems, in contrast to Varo, to have limited revenue loss, thereby bringing SoFi closer to breakeven; it trades at a premium to peers
• These early 4Q22 results signals may provide some read across which we believe could be negative for Dave in particular, as well being a reality check for Inter’s US ambitions

• Tod’s founder Diego Della Valle is undoubtedly frustrated his bid to privatize Tod’s at 40 EUR failed in 4Q22
• It was the ideal time to privatize in order to maximize value for his family before selling to LVMH, the most logical buyer since 2017
• Our conviction that Tod’s ends up in the LVMH stable of brands is stronger than ever, an exit offer of 60 EUR per share would be a reasonable assumption

• Cement sector is witnessing a margin recovery and valuations are reasonable. 
• Ambuja Cements, the second largest in the sector provides a tactical opportunity for a valuation pop. 
• Avoid | as any inclusion amounts to adding to the risk rather than to the return of the portfolio. 

• Com2us Corp (078340 KS) is the most likely corporate activist target in Korea’s game industry.
• Our base case valuation of Com2uS suggests a target price of 97,321 won which is 49% higher than current price.
• Finally, the company is expected to launch at least 3-4 promising new games this year. All in all, we have a positive view of Com2uS Corp. 

• Shanghai Junshi Bioscience (688180 CH) did not receive FDA approval for toripalimab in US, as the agency could not conduct on-site inspection of the company’s manufacturing facility for the drug.
• Toripalimab (branded as TUOYI) is showing decelerated revenue growth rate in China. Besides being approved for small patient population, TUOYI has seen reduction in price after being included in NRDL.
• In May 2022, the company launched adalimumab biosimilar in China. It marks a late entry in a highly competitive market. COVID-19 oral drug should not bode well for the company.

• PICC P&C was a shelter for investors in 2022, as its earnings were largely shielded from the pandemic. However, momentum has shifted in favor of the rest of the sector.
• As the reopening story tails off, we expect the stock’s performance to recouple to the broader H-Financials index. 
• Valuation is undemanding, but the same can be said of almost any other stock in the space. If the HKD7.25/share resistance level breaks, we may see a major correction.

• Meta announced its Q4 earnings, exceeding expectations on the top line by 1.5%, but falling short on the bottom line by 20.8%.
• The key highlights from the announcement included an increase in share buybacks, reductions in capital expenditures, and a lowered outlook for operating expenses.
• Since the release of new earnings by Meta (NASDAQ:META), we have been following up on our last report, which got a very positive response.

• Under the new leadership led by CEO Daniel Grieder, Hugo Boss’s new refreshed brand has been gaining market share over the last few quarters
• Growth has been driven by strong marketing campaigns aimed at younger consumers and an improved execution.
• Hugo Boss is a self-help growth story with further margin expansion potential. Valuation remains appealing at these levels and should re-rate in line with the sector. Upside 15%

• AMD had a strong quarter and managed an all-around beat despite the fact that the company navigated quite a challenging macro environment.
• The company also launched the Ryzen 7000 mobile APUs, RX 7000 laptop GPUs, and V-cache chips.
• For the company’s Xilinx data center as well as networking products, AMD had strong sales in the quarter.

• We are initiating coverage of Immersion (IMMR) with a Buy Rating and $11 target
• IMMR is a haptics technology developer that has undergone a management change that could further result in a series of material developments
• IMMR naming Eric Singer as its CEO suggests there is more to come from IMMR than the cost cuts IMMR undertook two years ago when Mr. Singer joined the Board

• We initiated Luckin with a BUY with TP $40 because we believe Luckin is a rising challenger in a rising market, half way through a rising business model; 
• We see room for Luckin to expand transaction frequency and transacting customers before expanding ASP in order to drive same store sales;
• In the long run, we see coffee + western bakery to gain market share over tea house + Chinese dim sum in the snack + breakfast market. 

• M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
• In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
• Though m3 has made a large no. of M&A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.

• Lotus Pharmaceutical (1795 TT) ended 2022 on a strong note. Full-year 2022 revenue grew 15.7% YoY to NT$14.6B. 2022 was the third consecutive year that Lotus achieved double-digit annual growth.
• The export markets outside of Asia grew 28% YoY, largely contributed by the launch of multiple myeloma drug lenalidomide in a number of markets around the world, including the U.S.
• In December, Lotus took over the Eli Lily’s Alimta business in Taiwan for $62M. Alimta is a first-line treatment for NSCLC with high brand loyalty.

• Although the operating metrics are expected to be weak in 4Q22 due to the lingering of Covid effects, we expect the resumption of travel to stimulate hotel demands in 2023. 
• We expect Atour to report its 4Q22 revenue at RMB580mn and OPM at 8.2%, both in-line with consensus. We expect a strong revenue growth at 60% YoY in 2023.
• We rate the stock as BUY and maintain the TP at US$35.

• Minor International (MINT TB) is trading at 2.4x PBR, slightly higher than during the pre-COVID level at 2x.
• Most of its hotels are in Europe (77%) and only half of the food business is in Thailand. 
• Other Thai stocks have higher exposure to Thai tourism-related activities.

In the upcoming webinar, AIMS APAC REIT’s (“AA REIT”) CEO, Mr Russell Ng, 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.

AIMS APAC REIT (“AA REIT”) is a real estate investment trust listed on the Mainboard of the SGX-ST since 2007. The principal investment objective of AA REIT is to invest in a diversified portfolio of high quality income-producing logistics, business parks and industrial real estate throughout Asia Pacific. As at 30 September 2022, AA REIT’s portfolio consists of 29 properties, of which 26 properties are located throughout Singapore and 3 properties located in Australia (including a 49.0% interest in Optus Centre held through a joint venture), with assets under management of S$2.2 billion. AA REIT is also a constituent of the FTSE EPRA Nareit Global Developed Index and the MSCI Singapore Small Cap Index. 

AA REIT is managed by AIMS APAC REIT Management Limited, which is wholly-owned by AIMS Financial Group (“AIMS”). Headquartered in Sydney, AIMS is a diversified financial services and investment group, active in the areas of fund management, mortgage lending, investment banking and property investment. AIMS is also the owner of the Sydney Stock Exchange.

• Our Indian bank profitability and credit quality screens, in terms of credit quality metrics to end-December 2022, continued in a constructive trend
• This is reflected in NPA ratios and cost of risk trends; but Indian banks have to face increased NPA headwinds, especially if funding and liquidity tightens around Adani Group companies
• We remain negative on State Bank of India, especially given the concerns around the Adani Group, and also ICICI Bank; we remain positive on higher quality HDFC Bank

• Mismatch between blood products supply and demand is intensifying, but there’s little way to increase production capacity in short time, which offers a good time to invest blood products companies. 
• Investors should not be too greedy in front of every rally and rebound, but the proportion of medical expenditure and pension expenditure in China’s GDP would still increase.
• CanSino Biologics Inc (688185 CH) intends to IPO in Swiss. We think share price of CanSino would bounce back. It’s time to keep an eye on CanSino again. 

• Caterpillar delivered a mixed quarterly result as its revenues surpassed Wall Street expectations on account of a healthy demand over many end markets for the company’s products and services.
• Sales rose better than expected, and the adjusted operating profit margins also increased but the company failed to meet the earnings expectations of analysts.
• Despite the challenges of the supply chain, Caterpillar generated robust ME&T free cash flow and achieved double-digit top-line growth.

• McCormick delivered a disappointing result, failing to meet the analyst consensus with respect to revenues as well as earnings.
• The management claims that it is seeing an improved momentum given the changing consumer consumption patterns, Flavor Solutions demand, and steady service levels and supply.
• In Q4, their sales growth was decent in the Flavor Solutions area and kept up momentum across all geographies.

• Mondelez delivered a strong quarterly result and surpassed market expectations in terms of the revenues as well as earnings.
• The strong top-line performance of the company was driven by continued volume strength and pricing execution.
• Mondelez delivered robust top-line growth in both developed and emerging markets.

• Moody’s delivered a strong result in the quarter with an all-around beat and a major update with respect to the acquisition of SCRiesgo to expand its presence in Latin America.
• This quarter demonstrates the resilience and positive momentum of Moody’s Analytics (MA) and also reflects the impact of the challenging market situations on Moody’s Investor Services (MIS).
• Across MA, Moody’s enhanced several workflow offerings via analytics and data integration, creating new products to meet rising consumer needs.

• In C4Q22, We expect Grab to report total revenue 2% higher than cons., and non-IFRS net loss narrower than cons.. 
• With competitors cutting back on heavy incentives, Grab has gained share under easing competitive environment in food delivery market in 2022. We expect this trend to sustain in 2023.
• Mobility is expected to benefit from rebound of tourism and generate stable margin. Pullbacks from off-platform financial services continue to support improvement. Maintain BUY and raise TP to US$ 4.0.

• Q & M Dental Group (Singapore) (QNM SP) is the largest listed pure dental play in Southeast Asia. For the 9M2022, core healthcare revenue increased 3% to S$125.9M.
• Comparison of the numbers over five quarters to mitigate any impact of changes in the economic and business environment shows core healthcare revenue exhibits a secular uptrend.
• During 9M2022, Q&M added seven and four dental clinics in Singapore and Malaysia, respectively, bringing the company’s total number of clinics to 106 in Singapore and 45 in Malaysia.

• Era of the value stocks! Inflation feeds interest rates, raises cost of capital and risks equity multiples. Headwinds to earnings growth – risks sustenance of pricey valuations.  
• Key risks: Stocks face material headwinds on cost pressure, competition, valuations 
• Stocks covered: Crompton Greaves, Stove Kraft, Lemon Tree, Jubilant Ingrevia

• Consumer mobile revenue fell 7% but that partly reflects how sales were reported a year ago. Reported ARPU was down 5% whilst price cut erosion narrowed
• Operating income YTD is 94% of full-year targets leaving room for Softbank to achieve its goal even with increased investment spending
• This was a relatively uneventful quarter and we remain at Buy

• We believe that Jeju Air is in a sweet spot right now. Jeju Air is one of the major beneficiaries of the travel resurgence in Asia.
• Jeju Air is a potential inclusion candidate in the KOSPI 200 index in 2023. There are 42 companies in KOSPI 200 which have lower market cap than Jeju Air. 
• Outbound travel from Korea recovered strongly with 6.6 million outbound tourists from South Korea in 2022, up 436% YoY. However, this is still 77% lower than the figure in 2019. 

• SK Biopharmaceuticals Co Ltd (326030 KS) is reporting continued stellar performance of its flagship drug Xcopri (cenobamate) in the U.S., with 9M2022 sales rising 137% YoY to KRW119B.
• Since its launch, Xcopri maintained strong momentum in US in terms of prescription volume. Xcopri reported 1.8x higher launching TRx than recently launched competitive anti-epileptic drugs (AEDs).
• The company plans to launch cenobamate in the Middle East and Africa this year, following launches in the U.S., China, Japan, and major countries in Europe.

• Intel delivered a weak result, failing to meet Wall Street expectations in terms of revenues as well as earnings given the persisting macroeconomic headwinds in the semiconductor industry.
• Intel continues to integrate AXG into CCG and DCAI to deliver a more effective go-to-market capability, accelerating the scale of these businesses while further cutting costs.
• The management believes their first EUV-deploying modes, Intel 4 and 3, will significantly improve transistor performance per watt and density.

Picton Property Income’s (PCTN’s) Q323 report shows asset management and leasing activity continuing to grow rental income. This provided a partial offset to strong market-wide pressure on property valuations in response to higher interest rates, while moderate gearing mitigated the impact on NAV. Although the NAV total return was a negative 11.7%, PCTN appears to have delivered strong outperformance relative to MSCI indices and those immediate peers that have so far reported.

• Comcast achieved a strong result that surpassed Wall Street expectations in terms of revenues as well as earnings.
• The company is slowly growing its ARPU as it is working towards building its customer relationships by steadily introducing new capabilities, services, and benefits.
• In 2023, ARPU growth should continue to be the main factor influencing their residential broadband revenue growth.

• Amazon’s share price has fallen 25% since April of last year, sparking a fear of missing out.
• The pressure for cost-cutting measures will likely increase as profitability and free cash flow remain elusive, according to Amazon.
• Amazon has seen a 25% drop in its share price in January.

• Likely new 4G restrictions will delay Huawei’s ability to launch mid-range offerings at volume. Xiaomi stands to gain 1.2ppts of share in 2024 vs. our prior forecast. 
• However, new limits are long-term negative, as it (1) raises the chance for cascading limits on China 3Cs; (2)  triggers reduced 3C electronics demand; (3) weaker industry electronics demand.
• The impact of the latest set of restrictions will likely prove net negative, in our view, as a result we re-iterate our SELL rating and HK$7.3 TP.

• Sony’s Q3 operating profit fell 8% YoY to Y428b beating consensus estimates by around 15%
• The PS5 has now sold over 32m units, finally shaking off supply constraints. Will VR2 surprise?
• We remain bullish on the stock at 15x earnings. Sony is a core play on content creation and digitization.

• There is only one large, liquid, listed, internet bank in all of the Asia-Pacific markets
• Earnings have been strong, with uplift in NIM and loan balance to support this
• Regulatory change to provisioning not likely to affect this bank, but big peers

• Kyocera cut FY Mar-23 operating profit guidance by more than 30% while leaving sales guidance unchanged. Draw your own conclusions about the reliability of company forecasts.
• Sales began to decline in 3Q and the rate of decline is likely to increase in 4Q. There is a large inventory overhang.
• The shares dropped 3% today. Wait for capitulation as the reality of recession sinks in.

• Meta lowered 2023 expense guide by $5B (or 5%)  to $89bn-$95bn and capex guide by $4B (or 11%) to $30bn-$33bn
• Metaverse spending continues, META lost $4.3B on $700M in revenue this quarter and losses are expected to accelerate in 2023. 
• Zuck said the word efficiency 18x and AI 15x…Evidently, these are his priorities!

• Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker
• Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly
• The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration.  We are lowering our target price to ¥425

• Robust medium-term earnings growth, softness in commodities to ease margin pressure.
• Beneficiary of new energy capex, likely blending of Compressed Biogas with CNG furthers capex outlook.
• Stock has corrected 45% from peak, valuations turn more reasonable.

• Takeda Pharmaceutical (4502 JP)  reported 3QFY03/2023 results today. Reported revenue increased 11.2% YoY to JPY1,096.6bn (vs consensus JPY996bn) while OP increased 26.2% YoY to JPY147bn (vs consensus JPY180.1).
• The drop in OP vs consensus was mainly due to the depreciation of the Yen, nevertheless, OPM improved 30bps to 13.4% during the quarter.
• Takeda has not revised full-year forecast, however, we think the company will easily beat its own guidance as it pushes forward with its development pipeline further aided by M&A.

• Shineway released good turnover data in 22Q1-Q3. Due to large market demand for COVID-related TCM, 22Q4 performance would remain strong growth momentum, leading to positive outlook of 2022 annual report.
• With the peak of respiratory disease outbreak past and COVID-19 also begins to be under control, demand for related TCM would weaken. Accordingly, the pullback of share price could begin.
• Strong performance of Shineway’s share price may not be sustainable in long term. Shineway is no longer cheap at current valuation. While short-term catalysts remain, future upside may become limited. 

• Core mobile revenue fell 4% but that is an improvement from 7-8% declines over the last few quarters and including value-added sales (VAS), retail mobile spend is up
• Competitive challenges remain with elevated churn and visible declines in roaming revenue from Rakuten (although sequential change has been modest)
• KDDI has kept guidance for FY22 operating income growth unchanged despite unanticipated expenses for rising fuel costs and the July network failure