In today’s briefing:
- 2023 High Conviction: Zomato – Home Delivering Laziness
- Tencent/Netease: Breakthrough in November Batch of Game Approval
- Alibaba – OP Beat Driven By Cost Cutting Masks Dissapointments Everywhere Else
- Weimob (2013 HK): Strategic Patience Will Be Rewarded
- Edelweiss: At An Inflection Point
- Lotus Pharmaceutical (1795 TT): 3Q22 Review- Best-Ever Quarter, Aided by Oncology Drug Launch in US
- RPSG Ventures: FMCG Business Is Scaling Up; VC Business Is Germinating to the Next-Level
- Takeda Pharma ADR: Initiation of Coverage – Recent Drug Updates & Key Drivers
- Tyson Foods: Major Drivers
- Walmart Inc: The Walmart Creator Platform & Other Drivers
2023 High Conviction: Zomato – Home Delivering Laziness
- Zomato is one of the largest food delivery platforms in India. It was listed in Jul 21 and after initially doubling, its shares are now trading below its IPO price.
- It has grown its food delivery GOV by 3.5x over FY19-22 and growth remains strong, while profitablity has been improving.
- Its recent venture into quick commerce should allow for better fleet utilisation and hence, better longer term growth and profitability.
Tencent/Netease: Breakthrough in November Batch of Game Approval
- China just announced game approval for November batch after one month break. The number of games approved is inline with the previous three months.
- Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
- Both Tencent and Netease received approval for one game. It is more symbolic than financially material. Sentiments are turning slightly but it is not out of the wood yet.
Alibaba – OP Beat Driven By Cost Cutting Masks Dissapointments Everywhere Else
- Alibaba Group (9988 HK) bounced 7.8% yesterday following an OP beat of 24.4% through cost-controls but overall results were quite disappointing with revenue falling a touch below consensus at RMB 207.2bn.
- Alibaba’s cash cows are growing no more, Thus, the company is focusing on ways to improve its profitability.
- Meanwhile, the other growth avenues that Alibaba was proudly speaking of have pretty much disappeared with the company forced to cut down investments in these growing businesses.
Weimob (2013 HK): Strategic Patience Will Be Rewarded
- Weimob’s share price more than doubled in a month on encouraging 3Q preliminary data and improved sentiment towards China assets
- We explore socio-economic factors resulting in the slow ramp up of China SaaS sector , size Weimob’s TAM by drawing insights from Alibaba and determine its valuation in two-piece report
- In the first part, we argue that inadequate cost or efficiency competitiveness of SaaS solutions over existing labor-based or manual processes have been a key drag
Edelweiss: At An Inflection Point
- Credit business has seen decent recovery with asset quality stabilization and down-sizing of the wholesale loan book. Retail book is growing via co-lending and other asset-light models.
- Asset Management business is scaling up well and is poised to benefit significantly from operating leverage, particularly in the Alternatives business as the carry fee kicks in from FY24.
- Insurance businesses continue to scale up well. Edelweiss is seeking strategic partners for both the insurance businesses to take advantage of the new IRDA regulations.
Lotus Pharmaceutical (1795 TT): 3Q22 Review- Best-Ever Quarter, Aided by Oncology Drug Launch in US
- Lotus Pharmaceutical (1795 TT) reported record high quarterly revenue in 3Q22, majorly driven by the successful launch of oncology drug Lenalidomide in the US, which is its biggest ever launch.
- Gross margin expanded to 67.9% in Q3 2022 from 45.3% in Q3 2021 and 47.4% Q2 2022, driven by increasing contribution from high-margin export business.
- Exceeding the expectation, the company reported historic high third quarter EPS of NT$7.97 for Q3 2022, versus NT$1.34 in Q3 2021.
RPSG Ventures: FMCG Business Is Scaling Up; VC Business Is Germinating to the Next-Level
- Key highlight of RPSG Ventures’ (RPSGV) Q2FY23 results was the FMCG business which reported revenues of INR 125cr, suggesting an annualized run-rate of INR 500cr vs INR 430cr QoQ.
- RPSGV is doing all the right things to scale up its FMCG business. Its Sports venture also holds lot of promise.
- RPSGV’s Venture Capital (VC) Fund that focuses on investing in D2C startups made a lucrative exit in one of its investments which generated 7x MOIC in just 4 years.
Takeda Pharma ADR: Initiation of Coverage – Recent Drug Updates & Key Drivers
- This is our first report on Japanese pharma major, Takeda Pharma.
- A significant pipeline milestone was achieved by the company when TAK-003, the dengue vaccine candidate of the company, received approval.
- Dr.
Tyson Foods: Major Drivers
- Tyson Foods’ stock has been on a downward trajectory for a while and the recent results did not help the situation.
- Consumer demand for protein is largely stable in this difficult macroeconomic context with record-high inflation.
- Volume performance increased in the fourth quarter because of their investments in brands and merchandising, which raised portfolio market share.
Walmart Inc: The Walmart Creator Platform & Other Drivers
- Walmart’s stock has climbed to a new high after the company delivered strong results and surpassed Wall Street expectations in terms of revenues as well as earnings.
- In Q3, strong sales were achieved in each of its segments and its U.S. comparable sales increased sequentially by 8.2% thanks to higher average ticket sizes and more transactions.
- Walmart International experienced strong constant currency sales growth of 13.3%, driven primarily by Flipkart and Walmex, while Sam’s Club USA posted double-digit comps growth of 10.3%, excluding fuel and tobacco, for the 11th consecutive quarter.
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