Equity Bottom-Up

• TSMC: Premium Breaks Back Down to +8.3%; 5-15% Could Now Be the Key Range
• UMC: -2.2% Discount; Good Level to Go Long the Premium
• ASE: Premium Breaks Down Again, Now Only +1.5%; Consider Going Long

• In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears. 
• We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
• The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026. 

• UMC’s latest results indicate a mild recovery for consumer, communications, and computing industries. UMC’s capacity utilization to continue improving but industry inventory correction could last until end-2024E.
• UMC maintained 2024E capex guidance however it’s increasingly clear UMC can’t keep up the capex arms race alone. Hence we see UMC & Intel becoming closer and closer partners.
• We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.

• Q2 revenue of $64.73 billion and EPS of $2.95 surpassed expectations of $64.39 billion and $2.93, respectively. Intelligent Cloud revenue reached $28.52 billion but below analysts’ $28.68 billion expectation. 
• Activision acquisition boosted revenue by 3 points but cut EPS by $0.06 due to lower operating income.
• While Microsoft’s core cloud business slowed, it increased capex significantly. Uncertain GenAI monetization might shift wealth from Microsoft shareholders to Nvidia shareholders.

• Tough Start to the Week — Negative News for Nvidia and Apple Supply Chains
• Key Events: Asustek & Novatek Results; Mediatek & TSMC July Sales Data
• UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important 

• Strong recovery in 1H2024 profit growth YoY was driven by margin improvements in the food and convenience segments.
• Double-Digit sales growth in the Ready-to-Eat (RTE) foods segment boosted margins, offsetting reduced cigarette volumes from last year’s tax increases in Hong Kong.
• While weak consumer confidence in North Asia impacted sales, good growth in the expanding Southeast Asia business provided a positive offset.

• ADM’s Q2 results underperformed analyst expectations with both EPS and revenue missing analyst estimates.
• Operating profit declined for Ag Services & Oilseeds (ASO) and Nutrition, while Carbohydrate Solutions saw an uptick, driven by margin and volume expansion in Starches and Sweeteners.
• ADM expects weak Q3 for AS&O and Carbohydrate Solutions, with improvements expected in H2 2024. Nutrition is expected to perform strongly due to cost efficiency and volume expansion.

• Ferrari N.V. (RACE US) reported another strong Q2 2024, with revenues up 16% and profits up 25% YoY. EBITDA margins expanded to 39% due to pricing/personalization(20%). 
• The company raised its guidance on revenue/EPS by 2.3%/5%, flagging Q3 would be weak as it transitions to its new ERP, but we believe the company is being conservative. 
• Trading at 48.7x FY24e, the stock seems a tad expensive, but it’s up 28% YTD because of upgrades, which we believe will continue. 

• In a shocking turn of events, Intel Corporation, a long-standing leader in the semiconductor industry, witnessed one of its worst days on Wall Street, losing over a quarter of its market value in a single trading session.
• The drastic drop followed the company’s announcement of a $1.6 billion net loss for the second quarter of 2024, a stark contrast to the $1.47 billion profit reported in the same period the previous year.
• Intel’s share price plummeted by 27%, marking its steepest decline since 1974, as the company grappled with disappointing earnings, a bleak forecast, and a massive restructuring plan.

• After a warm-up week of swimming, rowing and archery, the Olympics now kicks into top gear with the athletics.
• Among the hottest of track and field gold medal prospects is Armand ‘Mondo’ Duplantis of Sweden.
• On Monday evening, the 24-year-old will contest the men’s pole vault final as the defending champion from Tokyo. 

• During 1H24 Otsuka Holdings (4578 JP) reported 18% YoY growth in revenue from pharmaceuticals segment to ¥767B, mainly driven by a 27% YoY growth in Rexulti revenue to ¥122B.
• The company has revised upward 2024 revenue and business profit, while reduced 2024 operating and net profit guidance due to the recording of an impairment loss.
• Otsuka is acquiring Jnana Therapeutics for $800M. The transaction includes JNT-517, a potential first-in-class oral treatment for Phenylketonuria, a rare inherited metabolic disorder. The acquisition will close in 3Q24.

• BP’s operating revenue declined by 2.55% YoY, falling short of estimates by 9.78%, while underlying net profit increased by 6.45% YoY, exceeding EPS estimates by 8.75%.
• Strong performance from the Oil Production & Operations and Customers & Products segments drove underlying net profit growth.
• BP announced a 10% increase in its interim dividend to 8 cents/share and completed USD 1.75 billion in share buybacks in Q2.

• Nintendo missed Q1 with Operating income coming in at Y54.5b (-71% YoY) vs our estimate Y116b and the street at Y94b
• Switch 2 hardware and software units sold are now suffering from buyer fatigue as consumers await the next-gen console
• The stock will likely fall quite sharply over the next week. Looking for good buying opportunity in anticipation of the next console cycle

• Q224 revenues of $12.8 billion, in line with their updated May outlook, ~flat QoQ and down 1% YoY.
• Gross margin (non-GAAP) was 38.7%, down 1.1 points YoY but down a whopping 4.8 points from the April outlook.
• Shares tanked >24% in after hours trading. What’s really going on at Intel? 

• We have a Positive view of KT Corp (030200 KS) due to three main reasons.
• First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.
• KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp’s shares are up 27.9% in the past one year.

• Waste Connections demonstrated strong financial performance in the latest quarter, driven by solid waste pricing and effective cost management.
• The company’s revenue grew by over 11%, with core solid waste pricing contributing significantly to this growth.
• Despite a slight decline in volumes, the company’s strategic approach to pricing and contract renewals has maintained revenue quality, offsetting the negative impact of lower special waste volumes and other cyclical challenges.

• United Rentals recently discussed its financial performance and strategic direction, presenting a mixed but robust picture of its operational and financial health.
• The company reported a notable increase in total revenue, which rose by 6% year-over-year to $3.8 billion in the second quarter, with rental revenue climbing 8% to $3.2 billion.
• This growth was bolstered by fleet productivity, which also saw an improvement of 4.6%.

• Ford Motor Company’s second quarter 2024 performance offers a comprehensive snapshot of a transitional phase in the company’s long-standing history.
• The quarter reflects their advancing Ford+ strategic plan which aims to refine operational efficiencies and bolster profit margins through structural adaptations and technological advancements.
• 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.

• Delinquency ratios continued to worsen into 2Q24, with a couple of the South Korean banks seeing accelerating growth in NPL ratios; despite this, there are buy opportunities
• Our bigger cap pick is Hana Financial for its very attractive valuations, PEG and equity risk premia, as well as its solid core capital ratio and strong credit quality credentials
• Among the smaller caps, Woori stands out in terms of valuation, PEG ratio, credit quality and it has registered improving post-provision returns

• O’Reilly Automotive, Inc. faced a challenging second quarter in 2024, with performance below expectations due to broader industry demand headwinds.
• Despite these challenges, the company reported a 2.3% increase in comparable store sales, continuing to outperform the industry.
• Adjustments in full-year outlook for operating profit and earnings per share were made following these results.

• Fortive Corporation’s recent earnings report underscores its strategic focus and financial agility in today’s economic environment.
• The firm showcased a robust display of financial discipline and strategic execution, achieving earnings and free cash flow at the high end of expectations.
• Despite facing a low growth environment, Fortive demonstrated a remarkable 90 basis points of adjusted operating margin expansion and a 9% growth in adjusted earnings, which highlights its operational efficacy and resilience.

• Newmont Corporation reported strong second quarter results, keeping the company well-aligned with its 2024 guidance and reinforcing its position to improve financial performance as the year progresses.
• In the quarter under review, Newmont achieved a production of 1.6 million ounces of gold, alongside 477,000 gold equivalent ounces from other minerals including copper, leading to a solid cash flow generation of $1.4 billion from operations and $594 million in free cash flow.
• These figures underscore the company’s robust operational achievements despite the usual challenges faced in the mining sector.

• CyberAgent Inc (4751 JP)  reported 3QFY09/24 results yesterday. Both revenue and OP grew YoY, while revenue beat consensus marginally, OP beat consensus by a huge margin.
• All three business segments showed strong recovery with notable improvement in gaming business as newly released titles perform well including the newly released UMA MUSUME: Pretty Derby movie.
• Media business reported OP for the second consecutive quarter and the company has plans to further strengthen monetisation around AbemaTV.

• Budweiser Brewing APAC (1876 HK)‘s  performance could improve from 2H2024, driven by a likely recovery in China’s premium beer market and favourable commodity prices.
• Stock’s upside potential from current price levels seem to outweigh downside risk.
• With a high dividend payout and strong free cash flow generation, Budweiser trades at a 5% dividend yield and an 11% FCF yield.

• Amazon anticipates a 13% YoY rise in Q2 2024 revenue to $148.67 billion and a 58% YoY jump in EPS to $1.03, highlighting robust earnings.
• AWS is expected to see a $1 billion increase in quarterly revenue, reflecting an 18% year-over-year growth, driven by custom AI chips and model training services.
• Analysts have reaffirmed buy ratings for Amazon, with an average target price of $228, reflecting strong confidence in the company’s growth prospects.

• Company issued 1H24 profit alert after market yesterday which significantly beat even the high-end sell-side expectations. 
• Impressive SSSG and store-level unit economics imply sizable potential for operating leverage and earnings growth in the mid to long term.
• The profit alert, along with 2Q operating data released earlier, reinforced our confidence in earnings estimates of RMB130 million/RMB300 million for FY24/25 respectively. 

• ExxonMobil anticipates a USD 1.1 billion to USD 1.5 billion dent on its Q2 earnings due to the industry-wide contraction in refining margins.
• Exxon Mobil anticipates the USD 300 million to USD 700 million negative impact on earnings from lower gas prices to be offset by gains from higher oil prices.
• Since acquiring Pioneer, Exxon more than doubled production to 1.3 mboepd from 2023. Full merger effects are expected in Q3.

• Meta’s Q2 revenue of $39.1B surpassed expectations, up 22% YoY. EPS jumped 73% YoY to $5.16, beating estimates.
• Ad revenue within the Family of Apps rose 22% YoY, driven by online commerce and strong performance in Europe and the Rest of the World.
• Q3 revenue forecasted between $38.5B and $41B. Meta’s AI investments are set to enhance ad delivery and support long-term growth, despite increasing CapEx.

• E Ink and Himax introduce new color e-paper controller to enhance display technology, offering improved visual experience.
• Taiwan’s Economic Minister outlines plans to boost global competitiveness, focusing on strategic initiatives to strengthen economy.
• Shanghai commits $13.7 billion investment in IC, AI, and biopharma industries, driving growth in technology sectors.

• DigiPlus Interactive (PLUS PM) is the Philippines platform for Bingo Plus and other e-casino games, trading at 7x in the midst of >100% growth in revenue/profitability in 2024. 
• The company is net cash with a >50% ROE and is in an industry forecast by PAGCOR (regulator) to grow at least 15% CAGR in the future years.
• We expect explosive Q2 revenue/profit growth of 226%/298% YoY which would act as a share price catalyst. We calculate a dividend of 0.80-1 peso/share (30-40% payout ratio), equating to a 4-5% yield.

Freelancer reported a mixed performance in H124, with Escrow.com volumes down significantly after a very strong Q123, while the Freelancer platform benefited from growth in the Loadshift business. There are several promising opportunities in the enterprise business, including providing AI model training services and integration into new verticals within Escrow.com, that could reinvigorate growth from H224. Management is focused on making incremental improvements to the core marketplace platform with the aim of encouraging clients to become regular users of the platform and expanding the size of projects.

• Luckin’s SSSG declined 20.9%YoY in the peak season, indicating diseconomies of scale for Luckin and a deteriorated competitive environment. We do not expect a quick turnaround in the near term.
• We think Luckin has limited capability to further raise its prices in 3Q24, and expect its NPM to be 11.9%/7.1% in 3Q24/4Q24 as the new norm.
• We keep SELL rating and lower TP to US$16.5/ADS. The stock trading at 20x/16x PE in 2024/2025, and we expect the NI to increase 15%CAGR in the next 2 years.

• Nvidia’s H20 and upcoming B20 were launched to comply with China export controls, and have remained successful due to deficiencies and supply issues for Huawei’s Ascend AI accelerators.
• However, Nvidia’s China success will be short-lived due to increasing LLM compute requirements and no method for it to offer a more performance dense offering due to export controls.
• Not only will Huawei’s upcoming Ascend AI accelerator mitigate this issue, but it will likely also aim to address some of the other deficiencies of the Ascend platform too.

• The Bank of Japan has raised its short-term interest rate to 0.25% from 0.1% ahead of the core of consensus expectations, and BoJ plans to pare back purchases of JGBs
• We focus on those big-cap Japanese banks that are well geared into higher domestic rates through loan books and BoJ deposits, that also have lesser exposure to rising JGB yields
• We stay broadly positive on Japanese bank shares, despite their performance; we add Chiba to the buy list of Resona, Mizuho, SMFG and Concordia, whilst keeping Kyoto as a sell

• Samsonite is a global luggage leader with three major brands: Samsonite, Tumi, and American Tourister
• Despite challenges during COVID, Samsonite has successfully executed a turnaround by closing stores and improving sales and margins
• The stock is undervalued in Hong Kong, with plans for a secondary US or European listing in the near future, potentially offering a 100% upside opportunity.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Q224 revenues of $5.8 billion, +5.5% QoQ, +9% YoY and $100 million above the guided midpoint
• AMD forecasted current quarter revenues of $6.7 billion at the midpoint, up 15% QoQ and about the same YoY.
• AMD shares are up 9% in premarket trading, hardly the response one expected from a good but not amazing report. But why?

• One of the biggest stories in the Korean e-commerce sector this week has been TMON and WeMakePrice filing for court receivership due to liquidity crisis. 
• Singapore’s Qoo10 is the controlling shareholder of TMON and WeMakePrice. Young-Bae Ku is the largest shareholder of Qoo10 with a 42.77% stake, followed by KKR with a 25.65% stake. 
• Competitors such as E-Mart and Coupang are most to benefit. PG companies such as KG Inicis and NHP KCP are negatively impacted. 

• Welcome back to the portfolio updates series!
• This month, I am a few days early with the update. The reason is that my wife and I are celebrating our wedding next weekend, followed by an extended vacation, during which I will be disconnected for a couple of weeks.
• As a result, the next stock deep dive will not be released until the last week of August.

• Mediatek 2Q24 Earnings Beat Expectations; Strong Mid-Term Revenue Guidance Maintained
• 2Q24 Global Smartphone Market Witnessed Best Growth in Three Years
• Repeats Strong Mid-Term Guidance; Continues to Signal Revenue Strength for 2025E & 2026E. Maintain Structural Long Rating.

• Shell forecasts a decline in upstream production, gas price realisations, and refining margins. Its QoQ Revenue & EPS are expected to drop 4.3% and 21.7%, respectively.
• Shell anticipates Q2 post-tax impairments of USD 1.5 to USD 2 billion due to halting a biofuels plant in Rotterdam and divesting its Singapore refinery.
• On a brighter note, Shell anticipates higher chemical margins, increased marketing sales volume, and improved refinery utilisation rates in Q2.

• Bank Central Asia (BBCA IJ) booked another set of impressive results in 2Q2024, with continuing momentum behind loan growth driven by corporate and consumer loans, with credit quality under control.
• The bank continued to grow its deposits with CASA growth outpacing overall deposits, which helped underpin an increase in net interest margin to 5.8%, with credit costs at 0.2%
• BCA remains a top pick amongst Indonesian banks, with a long-term track record of producing sector returns, with a strong risk management but dynamic management culture. 

• China Communications Construction (1800 HK)‘s overseas contracts surged sharply in 2Q24 as market share gained. Slow domestic contracts are transient as bond issues will accelerate.
• Its backlog continued to grow to 4.7x 12-month forward revenue, which is higher than the 5-year average of 4.1x. Improving margin trend in 1Q24 will sustain into 2H24.
• With a projected ROE of 8.4% for the next two years, its 0.2x P/B is inexpensive. It is also attractive based on dividend yields of 7.7% and 8.4%, respectively.

• We screen for stocks at the extreme ends of their positioning or momentum ranges among active Asia Ex-Japan equity funds.
• High Positioning, Negative Momentum: AIA Group Limited, Shenzhen Inovance Technology 
• Low Positioning, Positive Momentum: New Oriental Education & Technology Group, Shinhan Financial Group

• We screen for stocks at the extreme ends of their positioning or momentum ranges among active Emerging Market equity funds.
• High Positioning, Negative Momentum: BYD Company Limited Class H, Novatek Microelectronics Corp.
• Low Positioning, Negative Momentum: Banco Bradesco SA Pfd, LG Chem Ltd.    

• Shimano’s Q2 results exceeded expectations with revenue and operating profit significantly beating estimates despite a YoY decline.
• Full-Year revenue and operating profit guidance were revised upward, reflecting improved performance and aligning with analyst consensus.
• Our estimate for FY25 was significantly raised; despite full valuations, further recovery and potential shareholder returns offer continued bullish outlook.

• Inflation is encouraging customers to seek out discount chains, led by PPI’s Don Quijote. 
• Backed by expansion of private brand lines and more food lines, as well as higher sales to tourists, PPI has been posting record results.
• There continues to be high expectations for further growth at home and abroad.

• PC Maker Shares Under Pressure — PC makers’ share prices fell by mid-to-high single digits during July. However, pure PC exposure outperformed as shown by HPQ’s gain during the month.
• Latest PC Industry Data is Promising — Latest IDC data shows that global PC shipments increased 3% YoY in 2Q24, and are up 5% YoY ex-China.
• Microsoft & Taiwan PC Maker Earnings Ahead — Microsoft reports July 30th U.S. time. We expect Taiwan PC makers to report earnings within the first two weeks of August.

• TotalEnergies missed Q2 revenue and EPS estimates by 7.3% and 7.2%, respectively, with a 7.4% YoY drop in net profit due to contracting refining margins.
• TotalEnergies’ hydrocarbon production hit 2.44 mboe/d in Q2, near the top of its guidance. Projects production in Q3 at 2.4-2.49 mboe/d.
• In Q2, TotalEnergies generated USD 7.8 billion in cash flow and completed USD 2 billion in buybacks. Authorized up to USD 2 billion in buybacks for Q3.

• SYM had an increase in system costs. SYM’s management highlighted delays in construction of systems in the quarter resulting in the Company to taking back EPC work.   
• SYM suggests bringing the EPC work in-house would be more efficient. We do not agree. This creates additional headwinds as to timing and could create a new risk for SYM.  
• During the earnings call, SYM’s management referred to delays in permits and product delivery resulting in people not having anything to do. This is a characterization of a construction/contracting company.

• Tesla is a polarizing company with both enthusiastic supporters and skeptical critics.
• The company has the potential to become the most valuable in the world if it solves autonomous transportation.
• The debate around Tesla is focused on its Full Self Driving software, which has recently transitioned to a neural net architecture and is best experienced firsthand at a Tesla delivery center.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Ador Welding (AWL IN) is a renowned player in the business of manufacturing and trading of welding and related products.  
• The company sells welding consumables, equipments and also does preoject-engineering. While the company has seen recent growth in topline, there are few forensic checks that one must be cautious about.
• This relates to accounting policy relating to Flares segment, lack of conservatism relating to ECL provisioning and depreciation, troubles in generating cash, etc.

• Net operating revenue: JPY9.4bn (+14.8% YoY; -5.0% QoQ), Operating profit: JPY4.2bn (+17.8% YoY; -2.8% QoQ).
• Total commissions: JPY5.2bn (+7.6% YoY; -16.7% QoQ), Brokerage commissions: JPY4.9bn (+7.2% YoY; -17.4% QoQ).
• SG&A expenses: JPY5.2bn (+12.4% YoY; -6.7% QoQ), Personnel expenses: JPY976mn (+12.2% YoY; +4.8% QoQ).

• One of the important factors of big changes at the Korean chaebols is the age factor of the chairman/honorary chairman of each of these conglomerates.
• In this insight, we provide the shareholding ownerships and ages of the top 10 Korean conglomerates where age could become a major factor in impacting big changes that could occur.
• Among the 10 conglomerates listed below, Hyundai Motor Group, Celltrion Group, and SK Group have shown greater willingness to improve their shareholder return policies.

• We visited convenience stores to look for China Resources Beverage products.
• The company is in a price war with Nongfu Spring, for both drinkable water and beverages.
• Some CRB products, such as plum syrup, do not have any competitors in physical stores.

• Tesla’s stock dropped 12% post Q2 earnings, due to a 7% decrease in auto revenue, reflecting broader financial struggles despite a 15% rise in quarterly EV deliveries.
• Trump’s potential repeal of EV subsidies could reduce EV sales by 27% by 2030, but Tesla’s lower reliance on imports may mitigate the effect of increased tariffs.
• Elon Musk’s $5 billion investment in his AI startup xAI raises concerns about potential distractions from Tesla, even as he leverages political shifts to benefit Tesla.

• Low volatility investing has taken the mantle from Dividend yield as the top strategy during July
• BYD Electronics (285 HK) and Alibaba Group Holding (9988 HK) are rated BUYs as their businesses show improvement. 
• Kingdee International Software (268 HK) is seeing a softening in its SME business, however there is  potential to gain market share from foreign ERP companies given the pledged government’s policies.

• Shares of Nazara Technologies (NAZARA IN) were rattled last week after the company had received show cause notice from the GST Department on 16th July.
• The GST liability pertained to two of its subsidiaries and summed up to INR 11.2 bn, which represents under 50% of consolidated net-worth.
• However because the GST for the industry is a delicate and debatable matter, the actual impact on the financials cannot be ascertained now, but company faces a high legal risk.

• Earnings Miss: Tesla’s Q2 revenue increased by 2% to $25.5 billion, but earnings per share were 52 cents, missing the forecast of 62 cents.
• Record Revenue in Energy: Tesla achieved record revenues and profits in its energy sector, with 130% QoQ growth in energy storage deployments and regulatory credit revenues.
• Stock Reaction & Competition: Tesla’s stock dropped over 8% after-hours, influenced by increased competition, production challenges, and a notable decline in auto revenue by 7% to $19.9 billion.

• Fanuc reported slightly better-than-expected Q1 sales and OP forecasts, mainly due to a recovery in sales of FA equipment
• Fanuc’s results are consistent with a bottoming out of Japan’s machine tool orders in the first half of the year
• We turn bullish on the stock given the cyclical bottoming out of orders and margins. However, the stock is still not “cheap” and the company faces a number of challenges

• M3 Inc (2413 JP) reported 1QFY03/2025 results on Friday. Both revenue and OP for the quarter beat consensus estimates by 3.5% and 11.0% respectively despite earnings continue to decline.
• Medical Platform segment’s earnings have continued to decline as a result of pharma marketing whose revenues are impacted due to spending cuts by pharmaceutical companies.
• M3’s share price has declined by more than 35% YTD and we don’t see any tangible recovery in the company’s earnings as overseas and other businesses face challenges.

• Dr. Reddy’s Laboratories (DRRD IN) had a good start to FY25, with a record high quarterly revenue of INR77B in Q1FY25, beating estimates.
• Increase in base business volume in the U.S. and revenue from Sanofi’s vaccine portfolio in India drove the revenue growth. Higher opex and effective tax rate impacted bottom line.
• The company will split its shares in the ratio of 1:5. This will be first time in last 20 years the company will be splitting its stocks.  

• PT Nippon Indosari Corpindo (ROTI IJ) booked a strong set of numbers for 1H2024 as it benefitted from a pick up outside Java plus a good showing from modern trade. 
• ROTI launched several new products in IH2024 both at the premium as well as at the more affordable level. It is also targeting a younger demographic with revamped packaging. 
• Management points towards a more positive 2H2024 with stronger growth outside Java and a lower return rate as new products gain traction with lower costs. Valuations are attractive versus history. 

• Top Gainers/Loser: Taiwan Tech Stocks Hit Hard Last Week By Global AI/Tech Pullback
• Key Events This Week: Major Earnings Week Including UMC, Mediatek, Realtek, AMD, Microsoft
• TechChain Insights: Call with Silicon Motion; QLC NAND Emerging as Key Enabler for AI Devices 

• We noticed some positive updates about Ascentage as competitors’ products have encountered varying degrees of challenges. However, the top priority for Ascentage is to get the approval of APG-2575 first.
• China Resources Boya has agreed to buy Green Cross for RMB1.82 billion, with premium of 160%.We think this is the right strategy considering the high barriers in blood products industry. 
• Weigao’s performance was negatively affected by VBP and anti-corruption campaign. The unsatisfactory share price performance is closely related to its business model. 2x P/S is reasonable for Weigao.

• The Texas Instruments had a mixed Q2, reporting revenue of $3.8 billion, a 4% sequential increase but 16% YoY decline.
• This contrasted with their optimistic revenue predictions for Q3, forecasting in the range of $3.94 billion to $4.26 billion.
• This could have been due to the decline in Analog revenue by 11% YoY, Embedded Processing by 31%, and its Other segment by 22% from YoY quarter.

• In Q1FY25, Cipla Ltd (CIPLA IN) posted 7% YoY revenue growth to INR66.9B. Despite surging R&D expenditure, EBITDA increased 26% YoY to INR17.2B, leading to 154bps margin expansion to 25.6%.
• Record high quarterly revenue in the U.S. market, double-digit revenue growth in India branded prescription business, and continued strong momentum in South Africa drove overall performance.
• Cipla is well-positioned for mid-to-high single-digit revenue growth through FY27. Sitting on a robust cash balance of INR90B, Cipla is eyeing on M&A. Valuation still looks reasonable.

• Credit metrics continue to improve, with NPLs down to INR404bn in 1Q25 from INR458bn YoY and from INR407bn QoQ
• Net loan growth continues to rise by about INR1tr each quarter, with net loans at INR9,465bn in 1Q25 up from INR8,554bn YoY and INR9,318bn QoQ
• There are pressures on costs and margins, so the story is not all perfect, with NIM pressure potentially to reverse as LDR expands

• Lonking Holdings (3339 HK)‘s positive profit alert for 33-50% YoY increase in 1H24 earnings suggests that market consensus of just 10% full-year growth is way too conservative.  
• Industry sales momentum for excavators and wheel loaders has accelerated in the last three months. A low base in 2H24 will mean an even stronger recovery.
• Government supportive measures for equipment renewal and faster special purpose bond issuance will fuel demand too. We estimate net cash equals 90% of the share price. 

• Xiaomi’s shipments increased by double digits, but Apple’s shipments decreased in China in 2Q24.
• Alibaba’s Taobao and Tmall platforms have waived the AliPay fee for retailers.
• Amazon will open a store on JD.com next Black Friday.

• Prosus has become more shareholder-friendly and responsive, driven by management remuneration incentives
• The drop in discount from 2022 to 2023 was influenced by these incentives, but the lack of their extension for 2024 has led to an increase in the discount to over 40%
• Investors have an asymmetrical opportunity to benefit from Prosus’ discounted value, especially with its valuable stake in Tencent

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Due to the low base in 2023, net profit in 2024 would show restorative growth, with net profit attributable to owners of the company reaching RMB5+ billion, up 33% YoY.
• Different from Sinopharm/CRP whose assets are scattered in different listed companies, pharmaceutical assets/resources of SH Pharma are integrated within the Company, so the intrinsic value of this model is greater.
• SH Pharma is undervalued. Interim dividend will be added in 2024.Future dividend ratio would remain 30+%.SH Pharma as a SOE takes the lead in responding to policies to increase dividends.

• The updated business analysis of Kimberly-Clark reveals a mixed financial landscape rooted in strategic endeavors and market-specific challenges, which calls for a calculated evaluation for potential investors.
• During the second quarter of 2024, Kimberly-Clark underscored a strategic focus on driving volume and mix-driven gains, particularly evident in significant geographies such as the U.S., China, and the U.K. This initiative aligns with their innovation-led growth strategy aiming at revitalizing their “Powerhouse” categories, which is indicative of their proactive response to market demands and consumer preferences.
• 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.

• If further restructuring can be avoided, profitability should return to an acceptable level while sales growth continues. 
• The decline of EV prices has probably run its course and global demand for factory automation continues to rise despite weakness in China.
• Projected valuations are at a 10-year low. Investor attention can now shift to economic and operating risks.

• TSMC: Crashed Then Rebounded to +15.1% Premium; Likely to Break Down Again
• UMC: -0.2% Discount; Earnings Imminent; Notable Decrease in ADR Headroom
• ASE: Rebounded to +9.2 Premium After Major Breakdown; Likely to Drop Again

• A TALE OF TWO SEMI INDUSTRIES: ASE’s latest earnings commentary indicates that the performance gap between “leading-edge” technologies and “traditional/mature” semiconductor technologies may be widening.
• CAPITAL REQUIREMENT TO KEEP PACE IS RISING: Capacity utilization is starkly different for traditional vs. leading-edge capacity; and capital requirements to keep up in terms of advanced capacity is rising.
• ENTRY BARRIERS RISING: We suspect that smaller players could face significant challenges in keeping up with the investments necessary for leading-edge packaging and testing capacity. ASE needs to invest heavily.

Molten Ventures has recently completed the exits from Perkbox, Endomag and Graphcore. This translates into more than £70m realisation proceeds, which means Molten is on track to reach the £100m that management expects for FY25. As a result, Molten has announced a £10m buyback programme (starting on 26 July), in line with its recently updated capital allocation policy of earmarking at least 10% of realisation proceeds for share repurchases. Molten has also agreed a new £180m debt facility that replaces the previous £150m facility maturing in September 2024.

OSE Immunotherapeutics’ run of positive news continues with the announcement of encouraging data from the Phase II proof-of-concept CoTikiS study, evaluating Lusvertikimab as a novel treatment for ulcerative colitis (UC). The randomised, double-blind trial (n=136) has reported encouraging, statistically significant benefits, reflected in material improvements on the Modified Mayo Score (MMS). The full data set will be presented in due course, and we expect the next stage of development to be undertaken in partnership, which we estimate will be in place in 2025. Lusvertikimab is a potentially first-in-class IL-7R antagonist, offering a differentiated mechanism of action to other available biologics that currently dominate the UC market. We expect the next major catalyst for OSE to be the initiation of the Phase III trial for lead asset Tedopi, anticipated to commence imminently (previous guided timeline was Q224).

• Tesla remains a polarizing entity in the stock market, consistently capturing the imagination of investors with its bold vision and ambitious projects.
• The company’s latest earnings highlighted both its impressive achievements and notable challenges, leaving a mixed bag for potential investors, resulting in the stock going down.
• On the positive side, Tesla continues to lead the electric vehicle (EV) market with record revenues and promising advancements in autonomous driving technology.

• Verizon Communications Inc. had a successful second quarter of 2024 as the company reports strong results, with wireless service revenue climbing 3.5% year-over-year, adjusted EBITDA rise by 2.8%, and free cash flow increasing by 3% compared to last year.
• In addition, the company’s customer-centric measures such as myPlan and Verizon Business Complete are resonating with its consumers, leading to further growth and stronger customer relationships.
• The company’s impressive results follow its commitment to innovation and the implementation of a brand refresh, signifying its evolution and future visions for connectivity.

• Visa Inc.’s fiscal third quarter of 2024 reveals a strong financial position, but also indicates room for improvement.
• Net revenue was $8.9B, notching a 10% YoY increase and included a 12% YoY rise for EPS, indicating an increased level of profitability.
• One of Visa’s strongest areas this past quarter has been its focus on global client engagement, resulting in a 3-pt increase in their global Net Promoter Score (NPS) to 76.

• Cadence Design Systems, Inc. reported strong results and exceeded expectations for their second quarter of 2024, with broad-based momentum seen across their product portfolio.
• The company also posted stronger bookings than anticipated, leading to a strong backlog, demonstrating the robust demand for their innovative products.
• Cadence updated its revenue guidance for the year to over 13% year-over-year growth, reflecting its strong performance.

discoverIE’s Q125 trading update confirmed that underlying earnings expectations for FY25 are unchanged. While the Q125 revenue decline reflects the lower bookings environment in previous quarters, book-to-bill was above one and bookings increased organically year-on-year despite ongoing destocking by customers in the industrial market. Robust gross margins and a well-controlled cost base support the company’s 13.5% target operating margin for FY25 and we maintain our forecasts.

• China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening. Of companies that we are monitoring, none got any approval.
• China’s CADPA published a semi-annual report pointing to flattish growth of gaming revenue in the first half. 

• China’s National Team was steadily buying ETF’s during and after the Third Plenum.  Southbound Connect Flows continue to be positive during July.
• Smoore International Holdings (6969 HK) , Xinjiang Goldwind Science & Technology (2208 HK) and Hisense Home Appliances Group Co., Ltd. H (921 HK)  benefited from positive news sentiment this week.
• Chow Tai Fook Jewellery (1929 HK) and ASM Pacific Technology (522 HK) suffered on negative news, while Meituan (3690 HK) continued its pullback in concert with the retail food sector.

• Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
• An interesting comparison between China and India smart phone markets in 2Q 2024 – highlighting differences in market size and the dominance of leading players.
• Xiaomi Corp(1810 HK)  made a strong come back in 2Q24 in terms of sales in both the markets. In China, it saw a 17% year-on-year increase, shipping 10 million units.

• We expect Meituan’s C2Q24 rev. and non-IFRS NI to be 0.7% and 12.3% higher than cons, driven by resilient catering demand and eased competition.
• We expect Meituan in-store OPM improve to 33%/35% in 2Q24/2H24 supported by increasing commission rate and cutting BD cost.
• We maintain the stock as BUY rating and raise TP by HK$4 to HK$160/share to factor in the better profitability.

• Taiwan Semiconductor Manufacturing Company’s (TSMC) second quarter 2024 results reveal a mixed picture of advances and challenges.
• The revenue for the quarter was notably strong, increasing by 13.6% sequentially in NT or 10.3% in U.S. dollars.
• This substantial growth was fueled by robust demand for the cutting-edge 3- and 5- nanometer technologies, although somewhat offset by smartphone seasonality.

• AST SpaceMobile has recently made headlines with a significant leap in its ambitious mission to build the world’s first space-based cellular broadband network.
• The company has announced the successful completion and upcoming shipment of its first five commercial satellites, marking a pivotal milestone that has already caused its stock to surge by nearly 25%.
• These satellites, known as Bluebirds, are set to provide unprecedented global connectivity directly to standard mobile devices, bridging the digital divide and offering broadband services in previously unreachable areas.

• Due to weakening hiring demand from both manufacturing and service, we expect BZ’s cash billing to decline 5% QoQ in 2Q24, 9% below consensus. 
• We believe BZ’s user matrices still growing and leading. The weakness is mainly attributable to the employer/hiring side;
• We cut TP by US$3 to US$19/ADS while keep the BUY rating.

• BP expects lower realised refining margins and weak oil trading to hurt earnings, with a refining margin contraction to reduce earnings by USD 500-700 million.
• The company anticipates impairments ranging from USD 1-2 billion in Q2, including charges related to the ongoing review of its Gelsenkirchen refinery in Germany.
• BP projects its upstream production to remain broadly flat sequentially, with stable oil output and a slight decrease in gas and low-carbon energy production.

• ST reduces 2024 outlook amid industrial and automotive slowdown, impacting company’s future projections.
• VCs discuss Taiwan startups in AI industry, highlighting challenge of staying competitive in fast-evolving sector.
• Global regulators collaborate to address market dominance of AI giants, emphasizing need for fair competition and consumer protection.

• Netflix reported its financial performance for the second quarter, highlighting key metrics that provide insights into its current standing and future direction.
• The company reported earnings per share of $4.88, exceeding Wall Street’s expectation of $4.74.
• Revenue for the quarter stood at $9.56 billion, slightly above the anticipated $9.53 billion.