Daily Brief Equity Bottom-Up: Alibaba (9988 HK): It’s Raining AI at the Apsara Conference and more

• Alibaba (9988 HK) launched Qwen3-Max, its largest LLM to date, along with a suite of Qwen3 models and technical upgrades at its annual flagship conference, reinforcing its full-stack AI ambitions.
• The stock has surged nearly 50% month-to-date, fueled by investor optimism over AI-related upside, since the August 29 investor call.
• Investors now await proof that execution and performance will deliver on Alibaba’s bold technical claims and high market expectations.

• Copper earnings leverage: Equity-method stakes in Collahuasi and Anglo Sur mean every +10% copper move adds ~¥25–30 bn net income (~3% EPS), giving Mitsui underappreciated upside torque.
• LNG stability & cash flows: Long-term contracts in Mozambique, Cameron, Qatar, and Sakhalin underpin resilient earnings and support ¥400 bn annual buybacks (~5% equity).
• Valuation: P/B discount vs Itochu has closed (~1.1× each), but Berkshire’s ≥10% stake enforces capital discipline; TSR outlook is 6–9% CAGR through FY28, with copper strength providing double-digit upside.

• Shiga Bank is well-leveraged to Japan’s rate hike cycle and regional revitalization strategy, with higher market-rate loan exposure than peers, enabling stronger earnings sensitivity to rising rates.
• Core profitability is improving, driven by double-digit NII growth and rising NIMs. A CET1 ratio of 14.0% supports capital returns, selective M&A, and ¥700bn in planned loan growth through 2029.
• Despite a +63% YTD rally, shares remain undervalued at 0.7x P/B. Our target of ¥7,850/share implies ~+20% upside, supported by improving RoE, operational efficiencies, and capital deployment.

• Cycle turning: Q1 FY25 marked the trough; Q2 guidance implies +30% revenue and +46% OP rebound, with Q3 set to extend the recovery.
• Enterprise SSDs anchor profits: ~70–75% of EBITDA tied to AI/cloud workloads, cushioning volatility in PCs and smartphones.
• Even after a ~50% rally since September, Kioxia trades at ~5–6× EV/EBITDA vs. peers at 9–12×; sponsor selldowns and NAND ASP volatility could test the rally.

• Context: The Toyota Motor (7203 JP) vs. Suzuki Motor (7269 JP) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
• Highlights: Going long Suzuki and short Toyota targets a 9% return.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Tokai has sold its lossmaking German electrode unit, cut global electrode capacity by 25%, and acquired Bridgestone’s 180ktpa Thai carbon black plant — actions that remove EBIT drag 
• These moves could lift FY27 EPS from ~¥92 (base case) to ¥125–130 (+35–40%), with margins rising toward 9–10% versus 5.5% in FY24. Q1 FY25 already (OPM 8.9%).
• Shares remain flat at ~¥1,000 (0.8× P/B, 19.6× FY25E P/E falling to 8.8× FY28E), leaving room for re-rating if Tokai delivers sustained >8% margins over the next 2–3 quarters.

• AEM is a key solutions provider in the semiconductor back-end testing process, with a strong historical reliance on its main customer, Intel. The company is currently at a pivotal point, aiming to diversify its customer base and capitalize on the growing demand for advanced semiconductor testing, particularly in the AI and HPC sectors.
• Recent financial performance has been mixed, with a significant revenue and net income decline from a 2022 peak, but showing signs of recovery in the first half of 2025. The company’s ability to successfully ramp up production for new customers and manage its reliance on Intel will be critical for future growth.
• Leadership changes, including the recent appointment of a new CEO, introduce both opportunities for strategic shifts and risks related to management stability. Investor confidence will likely hinge on the new leadership’s ability to execute on the diversification strategy and deliver consistent financial results.

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• Big Tech is throwing hundreds of billions of dollars at the AI boom and neocloud providers, who are building AI data centers, are central players.
• I wrote a Research piece about Nebius two months ago. Since then, its stock has doubled, thanks in part to a $17.4 billion contract with Microsoft.
• I took a close look at the deal, ran some scenarios, and came across IREN, a promising but lesser-known company that’s trying to follow the same playbook

• LIC Housing Finance (LICHF) holds a strong position as one of India’s largest housing finance companies, benefiting significantly from the brand equity and extensive network of its parent, Life Insurance Corporation of India (LIC).
• The company has demonstrated robust growth in net income and operating cash flow over the past three years, driven by strong demand in the Indian housing market and a strategic focus on the salaried customer segment.
• While facing intense competition from banks and other housing finance companies, which puts pressure on margins, LICHF is strategically diversifying into higher-yielding segments like project finance and Loan Against Property (LAP) to support future profitability.

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• M Dias Branco is the undisputed market leader in Brazil’s cookies and pasta segments, possessing a vast portfolio of well-recognized brands and an extensive nationwide distribution network.
• The company is exposed to significant commodity price volatility, particularly wheat, and currency fluctuations, which can pressure margins. However, a vertical integration strategy, including its own mills, helps mitigate some of this risk.
• After a period of margin compression, recent financial performance shows signs of recovery driven by price adjustments and cost control measures. Future growth is expected to come from organic expansion in underpenetrated regions, product innovation, and potential acquisitions.

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