In today’s briefing:
- BYD Company: Moves to Top Auto Holding in EM
- Pinduoduo (PDD US): Deciphering Massive 1Q Beat
- Kawasaki Heavy Ind (7012) | Building a Hydrogen Society
- Canon NanoImprint. EUV Slayer or Damp Squib?
- Medtronic Plc (MDT US): Strong Q4 Result; New Acquisition Announced; Fx Headwind to Impact FY24
- Golf Digest Online (3319 JP) – Follow-Up Q1 FY2023/12
- NFC Indonesia (NFCX IJ) – From O2O to Clean Energy on Two Wheels
- 10 in 10 with Keppel REIT – Driving Resilience & Sustainability
- Schrole Group Ltd – Setting a Goal for 25% Market-Share Medium Term
- LICHF: Q4FY23 Earnings Better than Expected; Asset Quality Worsened Optically But Nothing Worrisome
BYD Company: Moves to Top Auto Holding in EM
- Investment levels in BYD Company Limited H Shares have reached record highs among active Emerging Market funds.
- On a fund level, between 10/31/2022 and 04/30/2023, 22 funds opened new positions in BYD, led by Vontobel MTX Sustainable (+2.4%) and Putnam Emerging Markets (+1.95%).
- BYD has risen up the ranks to become the most widely held and largest weight in the autos sector, surpassing Kia Corp and Mahindra & Mahindra over the last 2-years.
Pinduoduo (PDD US): Deciphering Massive 1Q Beat
- 1Q massive beat was driven by TEMU, higher-than expected take rates and other income, in order of importance.
- We remain confident PDD’s China online marketplace business will face increasing growth headwinds, but also acknowledge that TEMU has been growing on track with lower-than-expected losses.
- Earnings growth from PDD’s domestic business will be largely offset by losses incurred by TEMU for 2023. Strong 1Q has not fundamentally changed deceleration trend of full-year bottom-line growth trajectory.
Kawasaki Heavy Ind (7012) | Building a Hydrogen Society
- We are bullish on KHI and see around 40% upside for the share price
- Over the next two years, we expect strong profit growth on recovery in aircraft parts, jet engines and military equipment
- KHI is likely to be a key beneficiary of the Hydrogen economy and is well placed to build a new earnings driver over the next decade
Canon NanoImprint. EUV Slayer or Damp Squib?
- Canon was late to market with its 193-nm immersion litho tool developed in 2007 causing it to cede the leading-edge litho race to ASML and, to a lesser extent, Nikon
- The company has been working on NanoImprint Lithography as an alternative to EUV since 2004 & was supposedly fast tracked by the acquisition of Molecular Imprints in 2014
- Commercial launch was originally slated for 2015. We’re still waiting. Why?
Medtronic Plc (MDT US): Strong Q4 Result; New Acquisition Announced; Fx Headwind to Impact FY24
- Medtronic Plc (MDT US) reported 6% YoY revenue growth to $8.5B, ahead of expectations, driven by procedure volume recovery, supply improvements, and innovative product introductions.
- Medtronic intends to acquire Korea-based Eoflow (294090 KS), manufacturer of a tubeless, wearable, full-disposable insulin delivery device, for $738M. The transaction is expected to close in 2H23.
- Medtronic guided for FY24 adjusted EPS of $5.00–5.10, including ~6% unfavorable impact from Fx. The company forecasts 4.0–4.5% organic revenue growth in FY24, accelerating from 2.1% in FY23.
Golf Digest Online (3319 JP) – Follow-Up Q1 FY2023/12
- On May 4, GOLFTEC announced the launch of “SkyTrak+,” a premium version of the award-winning and No.1 best-selling consumer launch monitor, now offering tour level accuracy and performance at a price that is still only a fraction of the top-ofthe-line commercial-use product.
- Having largely completed the integration of SkyTrak business during the 1Q, the GOLFTEC ANYWHERE initiative is now going into full swing.
- Since our 4Q FY22/12 Follow-up Report, GDO’s share price has declined another 12.7%, the decline from the peak now equal to the -64% seen in the case 1 shown below.
NFC Indonesia (NFCX IJ) – From O2O to Clean Energy on Two Wheels
- NFC Indonesia (NFCX IJ) provides exposure to Indonesia’s O2O ecosystem as a technology-driven digital product aggregator, FMCG supplier, and advertiser covering modern trade, general trade, and e-commerce.
- The company provides screen-based iCloud-enabled indoor advertising across mini-markets and increasingly for general trade. This provides a high-margin recurring income base which only currently covers 50% of mini-markets currently.
- NFCX is the current leader in the 2W EV market in Indonesia through its Volta brand, with the most extensive battery swapping buildout, and with further capacity expansion to come.
10 in 10 with Keppel REIT – Driving Resilience & Sustainability
10 in 10 with Keppel REIT – Driving Resilience & Sustainability
Schrole Group Ltd – Setting a Goal for 25% Market-Share Medium Term
- Schrole Group Ltd (ASX:SCL) is an Australian software company focused on providing human resource technology solutions to the international education and training sector.
- Schrole has developed a suite of five HR Software-as-a-Service (SaaS) offerings including the core product, Schrole Connect, a SaaS-based staff recruitment platform.
- Schrole Group has held its CY22 annual general meeting in Perth, noting that it has an ambition of reaching a 25% share of the international schools’ HR SaaS market in the medium term.
LICHF: Q4FY23 Earnings Better than Expected; Asset Quality Worsened Optically But Nothing Worrisome
- LICHF reported a strong Q4FY23 with a PAT of INR 1180cr. This takes the FY23 PAT to INR 2891cr, well above our estimate of INR 2700cr.
- Asset quality worsened as Stage 2 assets increased to 5.25% vs 3.92%. However, this is temporary due to one-off interest rate hike related technical issues in EMI payments.
- LICHF has guided for a strong FY24, led by margin expansion and AUM growth. As credit costs remain benign, profitability should jump significantly.
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