In today’s briefing:
- TSMC. AI Tailwinds No Match For Macro Headwinds
- Shimano (7309) | Profit Recovery Derailed
- Keepers Holdings (KEEPR PM): What to Expect from Q2 2023
- Titagarh Rail Systems Ltd- Forensic Analysis
- Terumo Corp (4543 JP): Strong C&V Business Momentum Continues; Profitability to Improve in FY24
- Alphabet 2Q’23 Earnings Update
- Alphawave, TSMC and Lam Research Follow-up, DISCO and Lasertec
- Melco Resorts: Upcoming Earnings Release Next Month Could Beat Due to Macau, Manila, Cyprus Upsides
- APLD – 4Q Review
- CanSino Biologics (6185.HK/688185.CH) – The Story Has Changed
TSMC. AI Tailwinds No Match For Macro Headwinds
- Persistent fabless inventory issues dampen the slope of H2’23 recovery. FY’23 forecast further reduced to a 10% YoY decline
- AI-Related hardware will reach 6% of revenues in 2023, a welcome boost but insufficient to counter the negative impact of macro headwinds
- TSMC’s earnings provides an important read through on the likely results and outlook for the broader semi ecosystem in the coming weeks.
Shimano (7309) | Profit Recovery Derailed
- Shimano reported a 40% drop in operating profit for 2Q and revised down full year guidance
- Bike sales continue to be weak (-19% YoY) in Q2 and 2H outlook is even worse
- We expect the share price to sell-off following the guidance cut. The inventory overhang could take a while to resolve
Keepers Holdings (KEEPR PM): What to Expect from Q2 2023
- The Keepers Holdings (KEEPR PM) declares its Q2 2023 in the second week of August. We expect a 15-20% revenue growth and a similar profit growth.
- The stock trades at 9.3x/7.9x FY23e/24e, with structural growth drivers arising from rising imported spirit consumption and a monopolistic position with a >70% marketshare by volume.
- With healthy profit growth and a sound balance sheet ( 15% of the market cap in cash), Keepers can pay 50% of profits resulting in a 4.2% FY23e yield.
Titagarh Rail Systems Ltd- Forensic Analysis
- Titagarh Wagons (TWL IN) (now ‘Titagarh Rail Systems’) has seen an extraordinary momentum in its share price in last couple of years, especially after bagging crucial contracts for Indian Railways.
- The company was limping until F22 due to its Italian subsidiary (TFA). However, the recapitalization of TFA (including change in accounting) in F23 should make the balance sheet look better.
- Forensic analysis revealed several takeaways, ranging from write-offs and internal audit issues to heavy contingent liabilities.
Terumo Corp (4543 JP): Strong C&V Business Momentum Continues; Profitability to Improve in FY24
- Terumo Corp (4543 JP) recorded highest ever revenue and operating profit in FY23, driven by continued strong growth in C&V business globally, particularly the largest U.S. market.
- C&V business should continue to be the primary driver of Terumo’s growth in FY24 also. The company has guided for C&V revenue of ¥504B in FY24, up 5% YoY.
- Terumo aims to grow profit by double-digit percentage in FY24 and improve profitability through expansion of high-margin products, more assertive pricing policies, and cost reduction measures centered on manufacturing cost.
Alphabet 2Q’23 Earnings Update
- Topline grew +9% FXN. While Google Services revenue growth was flat in 1Q’23, it was 5.5% YoY in 2Q’23, with growth re-accelerating in every component of Google Services.
- Despite cost optimization efforts by customers, Google Cloud maintained its momentum with ~28% YoY growth (same as it was in 1Q’23).
- So, on an apple-to-apple basis, Google Services margin would be slightly lower this quarter than reported (say, ~$500 Mn opex for Google Brain).
Alphawave, TSMC and Lam Research Follow-up, DISCO and Lasertec
Alphawave reported last week.
The results were not good; they were great.
I actually am excited to see Tony and the team execute like this. Bookings are growing, and while revenue has not come out yet, it seems very likely they will hit their 2023 revenue estimates.
Melco Resorts: Upcoming Earnings Release Next Month Could Beat Due to Macau, Manila, Cyprus Upsides
- From 2022 loss in period, MLCO earnings could come in anywhere between a profit of $0.06 to $0.70 indicative of recovery in Macau, Manila and opening of Cyprus.
- Revenue could come in above $1.2b. This is a forerunner of a solid recovery year.
- MLCO has a global vision beyond Asia that makes it attractive at its current price.
APLD – 4Q Review
- APLD released 4Q earnings last night. The stock performed well, +14%.
- The key highlight was the huge guidance. In this post I will run through how the numbers make no sense.
Jamestown, North Dakota (JT) – 100MW – JT has been operating since 2022. It has ~100MW of capacity and has been running at full capacity over the past two quarters, according to comments made on the company’s 3Q and 4Q earnings calls. Here is a snip for the 3Q call.
CanSino Biologics (6185.HK/688185.CH) – The Story Has Changed
- Based on the current situation, sales of MCV4 in 2023 could still be unsatisfactory. We think MCV4 is hard to become the second growth curve of CanSino in post-COVID era.
- Whether CanSino’s zoster vaccine is able to become Best-In-Class would largely determine whether this product would truly become the next blockbuster vaccine to turn the situation around for CanSino.
- CanSino’s commercialized products cannot contribute large-scale revenue in time to prevent continuous deterioration of performance. Results in 2023 could be lower than expected, and investors are losing confidence in CanSino.
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