In today’s briefing:
- Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy
- Softbank Corp (Buy) – Q1 22 Results Reaction: Largely In-Line with Reduced Expectations
- Toyota’s Q1 EBIT Missed by 28%; FY3/23 Guidance Effectively Lowered
- Bukalapak (BUKA IJ) – Onwards and Upwards on Higher Take Rates
- Yamaha Corporation: Guidance Seems Optimistic With Inflation Starting to Affect Demand Conditions
- Nextage (3186 JP): Long-Term Potential Not Yet Discounted
- Moderna (MRNA US): Better-Than-Expected Q2 Result; Guidance Reiterated; $3B Share Buyback Announced
- General Electric Company: New Product Lines
- Opthea Ltd (OPT AU): Lead Asset for Highly Prevalent Retinal Disease Moving Toward Commercialization
- The Coca-Cola Co: The Jack & Coke Launch
Alibaba (9988 HK): Zero Growth for First Time, But Overly Sold, Buy
- Alibaba’s revenue stopped growing for the first time on record.
- We still believe the revenue growth rate will recover in the December quarter.
- We believe the stock price will have at least an upside of 29% after a significant plunge.
Softbank Corp (Buy) – Q1 22 Results Reaction: Largely In-Line with Reduced Expectations
- Softbank Corp (9434 JP) results were weak as expected as mobile price reductions carved into the consumer revenue base
- Management released some further details on PayPay including a revenue number that implies continued improvement in take rates and plans to carve out a new segment for financial services
- Both KDDI and Softbank net adds were weaker sequentially v Q4 which bodes well for NTT and possibly Rakuten
Toyota’s Q1 EBIT Missed by 28%; FY3/23 Guidance Effectively Lowered
- Toyota’s Q1 operating profit was 28% below consensus estimates, while pretax profit only undershot by 4%. Support for 2nd & 3rd-tier suppliers was the main cause.
- While full-year operating profit target was maintained & EPS slightly raised, this was due to bigger forex tailwinds. Ex-forex, FY3/23 operating profit was lowered by 28%.
- Much of FY3/23’s negatives are one-off, which paves the way for higher profits in FY3/24. But support for suppliers while rivals grow earnings is somewhat of a concern.
Bukalapak (BUKA IJ) – Onwards and Upwards on Higher Take Rates
- Bukalapak‘s recent 1Q2022 results provided further evidence that the company is moving along the road to profitability with growth in TPV being outpaced significantly by revenue growth.
- The company saw very significant improvements in take-rates for its marketplace and Mitra businesses plus a better contribution margin and we expect this to continue into the 3Q.
- Bukalapak (BUKA IJ) looks cheap, especially when considering its stake in Allo Bank Indonesia and its IDR20tn cash pile, which means you are paying only US$50m for its core businesses.
Yamaha Corporation: Guidance Seems Optimistic With Inflation Starting to Affect Demand Conditions
- Even though Q1 topped consensus through favourable FX movements, it seems inflationary pressure is starting to affect all business units of Yamaha Corp (7951 JP).
- The company raised revenue guidance due to favourable FX movements but maintained the OP at the previous level due to rising procurement and energy costs.
- However, with inflation starting to affect demand, these estimates are likely to be revised down over the next few quarters.
Nextage (3186 JP): Long-Term Potential Not Yet Discounted
- The July 4 upward revision to FY Nov-22 sales and profit guidance appears to have been discounted, but the company’s long-term growth potential has not.
- Sales could more than double over the next several years as Nextage takes share in Japan’s highly fragmented and consolidating used car market. Margins also have room to expand.
- Prospective P/E ratio headed down from 18x this fiscal year to 12x and below on a medium-term view.
Moderna (MRNA US): Better-Than-Expected Q2 Result; Guidance Reiterated; $3B Share Buyback Announced
- Moderna Inc (MRNA US) reported strong Q2 results, with both revenue and EPS surpassing consensus. Profitability was negatively impacted by one-off inventory write-down charge.
- Management has reiterated advance purchase agreements for expected delivery of ~$21 billion in 2022. Assuming an endemic situation, Moderna’s commercial infrastructure is prepared for a 2023 commercial market.
- The Board of Directors has approved a new share repurchase program for $3 billion in August 2022, with no expiry. Moderna shares have gained 27% in last three months.
General Electric Company: New Product Lines
- General Electric has started seeing a solid recovery in its aerospeace business which has become an important growth driver for the company.
- Macro pressures and supply chain have affected the revenue adversely by approximately 5%.
- The company has recently unveiled the innovative branding of its new companies, GE Vernova, GE Healthcare, and GE Aerospace.
Opthea Ltd (OPT AU): Lead Asset for Highly Prevalent Retinal Disease Moving Toward Commercialization
- Opthea Ltd (OPT AU) is developing OPT-302, a first-in-class investigational drug. With improved efficacy, OPT-302 has the potential to be the next transformative step in the treatment of wet AMD.
- Pivotal phase 3 trials are ongoing for OPT-302, with topline data expected in mid-2024. OTP-302 is expected to be launched in 2025. OPT-302 represents a multi-billion-dollar peak sales opportunity.
- As of December 2021, Opthea had cash balance of A$88 million and no debt. Over the trailing 12 months, the company had cash burn of A$56 million.
The Coca-Cola Co: The Jack & Coke Launch
- Coca-Cola has been implementing various growth initiatives off-late to continue expanding its top-line.
- The company had a good quarter and delivered an all-around beat and increased its volume and value share during the quarter.
- Coca-Cola continued its strong marketing efforts and launched end-to-end digital-first brand campaigns for smartwater and vitaminwater.
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