In today’s briefing:
- Asics (7936) | Stepping Ahead with New MTP
- [Week 11] Namaste India 🙏 | Honasa’s Innovation or Innovative Narrative?
- PDD (PDD US): 3Q23, Grew Dramatically Overseas, Still Upside After Reaching Our Last Target
- Kaken Pharmaceutical (4521 JP): Key Operating Parameters Weakened in H1; H2 Not Seem to Be Better
- PT Nippon Indosari Corpindo (ROTI IJ) – Baking in Rising Expectations
- Bosideng (3998 HK): Never Fail to Deliver
- Dong E E Jiao Co Ltd (000423.CH) – The Situation Is Getting Better and Better
- [Blue Lotus Transportation Sector Update]: Huawei’s R&D & Marketing Alignment Makes It Stronger
- Aspira Women’s Health, Inc. – Secures Important Reimbursements
- AViC (9554 JP) – Moving To Achieve Mission With a Better Hand
Asics (7936) | Stepping Ahead with New MTP
- Asics unveils MTP with focus on financial milestones: 7-10% Sales CAGR to 660 billion yen and Operating profit of 80 billion yen by 2026.
- The biggest risk to the MTP looks to be market share goals in the US. However, we think overall sales and margin targets are achievable.
- The share price is up 80% YTD and stock is no longer cheap. However, plugging in the MTP assumptions into a DCF reveals further 17% upside
[Week 11] Namaste India 🙏 | Honasa’s Innovation or Innovative Narrative?
- We are back with our regular weekly updates after taking an earnings break and a Diwali vacation.
- Ishares Msci India Small-Cap (SMIN US) appears to be where the most market action is currently. We also maintain a long bias on the NIFTY Index (NIFTY INDEX).
- Honasa Consumer (HONASA IN) is the star of the week that is playing an innovative narrative that which street seems to like, but warrants attention.
PDD (PDD US): 3Q23, Grew Dramatically Overseas, Still Upside After Reaching Our Last Target
- In 3Q23, total revenue surged by 94% YoY, as Temu started operations in nine European countries in August.
- Operating profits increased by 60% YoY in 3Q23, so we believe overseas businesses have made profits.
- The stock price reached our last target, but we believe there is still an upside of 40% for 2024.
Kaken Pharmaceutical (4521 JP): Key Operating Parameters Weakened in H1; H2 Not Seem to Be Better
- Kaken Pharmaceutical (4521 JP) reported 2% YoY decline in revenue H1FY24, while operating profit decreased 33% YoY. Top selling products are impacted by NHI drug price revision and increasing competition.
- The company has reiterated FY24 guidance of flat revenue, 5% YoY decline in operating profit, and 23% YoY growth in net profit. Profitability is expected to deteriorate in H2.
- Kaken is not expected to see any immediate respite as the small contribution from the new products will not compensate for the revenue loss from its top selling products.
PT Nippon Indosari Corpindo (ROTI IJ) – Baking in Rising Expectations
- PT Nippon Indosari Corpindo (ROTI IJ) saw a strong QoQ recovery in sales in 3Q2023 but its return rate also increased as it adjusted to distributing new products.
- Raw material & packaging costs have abated and A&P spending stabilised, giving the company a strong base for recovery, as it expands its distribution in modern and general trade.
- The outlook for ROTI in 4Q and into FY2024 looks positive given a wider footprint and the potential for improvements in its return rate. Valuations are well below historical averages.
Bosideng (3998 HK): Never Fail to Deliver
- Even China’s consumption market is tough, Bosideng Intl Holdings (3998 HK) has still achieved a 25.1% profit growth. Revenue maintained a healthy trend while gross margin was stable.
- Sales trend stayed solid in 2H FY24, and it ranked first in major online channels in various categories of apparel sales during the “double-11” shopping festival.
- Store efficiency improved as revenue saw double-digit growth despite a 9.7% YoY fewer retail network. It is encouraging to see its 3-year target is to outperform the last 5 years.
Dong E E Jiao Co Ltd (000423.CH) – The Situation Is Getting Better and Better
- Some investors are disappointed with 23Q3 performance, but we think Dong-E-E-Jiao is getting back on track. The de-stocking has achieved great results and pressure on distribution channels has been alleviated.
- Since Dong-E-E-Jiao’s contract liabilities hit a record high, we are optimistic about the performance in 23Q4 and 24Q1. China Resources could further improve Dong-E-E-Jiao’s dividend rate, making it more attractive.
- Since Dong-E-E-Jiao’s performance is continuously improving, valuation still has room to grow. A significant increase in valuation in the short term depends on whether there would be M&A deal emerges.
[Blue Lotus Transportation Sector Update]: Huawei’s R&D & Marketing Alignment Makes It Stronger
- Huawei’s decision to accept investments to its Intelligent Automotive Solution (HI) has no impact on its Harmony Intelligent Mobility Alliance (HIMA). It might actually strengthen it, in our view;
- We also believe it concludes Huawei’s internal battle of visions.
- The newly integrated business has short term impacts on Li, Nio and XPeng and long-term impact on Baidu and Xiaomi.
Aspira Women’s Health, Inc. – Secures Important Reimbursements
- Aspira Women’s Health made two reimbursement announcements this week.
- On November 27, Aspira announced that the Centers for Medicare and Medicaid Services (CMS) approved the crosswalk of the fee to be paid to the company for OvaWatch to the fee paid historically for Ova1.
- Aspira will be reimbursed at a rate of $897 for all OvaWatch and Ova1 tests processed for Medicare patients meeting applicable coverage requirements beginning on January 1, 2024.
AViC (9554 JP) – Moving To Achieve Mission With a Better Hand
- Touting a mission of “improving people, companies, and society through marketing,” AViC is involved in the commissioned handling of internet advertising and provision of SEO (search engine optimization) consulting services with the goal of providing high quality digital marketing services to clients with small- to medium-sized advertising budgets.
- Having transformed FACT Inc., which offers support services for EC mall sales promotion optimization, into a wholly-owned subsidiary in October 2023, the company is also moving forward with mutually supplementing its lineup of services and conducting cross-sales to clients.
The company’s competitiveness comes from (1) the deep understanding of various media algorithms possessed by its management team, particularly the company’s representative who was the chief executive of the internet advertisement business at CyberAgent, and content backed by experience and a track record
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