In today’s briefing:
- Eisai Co (4523 JP): Positive Trial Result For Alzheimer’s Disease Drug- A Step Closer to Approval
- Appier (4180) | Five Reasons to Remain Bullish
- Prodia (PRDA IJ) – Injecting Digital Health
- China Datang Renewable Power (1798): Ideal Name for ESG Fund.
- Key Market Technicals
- Selamat Sempurna (SMSM IJ) – Filter Me Please
- Delta Taiwan Vs. Thailand Pairs Monitor: SET50 Index Driver, But Taiwan Margins Always Higher
- Ad-Based Streaming: Are We Sure This Is Netflix’s Panacea (Or Disney?)
- AKR Corporindo (AKRA IJ) – Multiple Drivers Ahead
- Joinn Laboratories (6127.HK) 22H1 – It’s Time to Face Reality Before the Magic of Monkeys Disappears
Eisai Co (4523 JP): Positive Trial Result For Alzheimer’s Disease Drug- A Step Closer to Approval
- Eisai Co Ltd (4523 JP) has announced positive clinical trial results for its Alzheimer’s disease (AD) drug candidate, lecanemab. Lecanemab succeeded in slowing cognitive decline by 27%.
- Importantly, the study shows that removal of aggregated amyloid beta in the brain is associated with a slowing of disease in patients, thereby opening innovation pathway for new treatment options.
- Eisai aims to file for traditional approval in the U.S. and to submit marketing authorization applications in Japan and Europe by the end of FY23.
Appier (4180) | Five Reasons to Remain Bullish
- Appier provides AI software that helps large enterprises to grow and monetize their customer base.
- Using Appier’s AI analysis tools, brands can automate the way they interact with shoppers and create new business models more efficiently
- Business is booming, it is sheltered from macro headwinds and the TAM is expanding aggressively as Appier expands into key US/EMEA markets
Prodia (PRDA IJ) – Injecting Digital Health
- Prodia (PRDA IJ) remains the leading diagnostics company in Indonesia and was a huge beneficiary of the pandemic and hence has seen a recent slowdown.
- The number of tests per visit increased in 1H2022, as customers returned to more routine testing post COVID plus the company is increasingly employing a digital approach to its business.
- Prodia is forecast to return to growth over the next two years, with +11% EPS growth forecast for FY2023E and FY2024E, implying a forward PER of 8.6x.
China Datang Renewable Power (1798): Ideal Name for ESG Fund.
- Low valuation against peers in China albeit China Datang Corp Renewable Power (1798 HK) is one of the few pure-play wind farm operators in HK.
- Its free cash flow reached its highest in more than 10 years.
- The challenging equity market makes China Datang Renewable Power looks even more attractive.
Key Market Technicals
- This is certainly a macro development that will influence the direction of the markets.
- Essentially, what this means is that the markets are showing “signs of breaking” from the Federal Reserves aggressive tightening cycle.
- Today, we are going to be more focused on market technicals but I wanted to touch briefly on this and will go into more depth this weekend.
Selamat Sempurna (SMSM IJ) – Filter Me Please
- Selamat Sempurna (SMSM IJ) is one of the most interesting industrial companies in Indonesia but also the largest filter manufacturer in South-East Asia for heavy equipment and autos.
- The company mainly produces filters for the replacement market under its Sakura brand, with Indonesia being the major growth driver along with the US but it exports to 120 countries.
- The company has an almost second-to-none track record for growth in both profits and dividends, with current valuations looking attractive.
Delta Taiwan Vs. Thailand Pairs Monitor: SET50 Index Driver, But Taiwan Margins Always Higher
- Since 2Q22 results end-July, Delta Thailand has risen 31% compared to a 3% rise for Delta Taiwan and a 2% rise for Thailand’s SET Index.
- Delta Taiwan’s gross margin has historically been consistently higher than Delta Thailand’s. Delta Thailand is a significant licensor of IP from its parent, which could be one reason.
- Historical data shows that the relative valuation can swing back over time and the current divergence of Delta Thailand vs. Delta Taiwan is historically extreme.
Ad-Based Streaming: Are We Sure This Is Netflix’s Panacea (Or Disney?)
- Netflix has had a slew of upgrades recently on bullish estimates for its coming advertising supported tier…with the upgrades buying into Netflix’s exorbitant CPM demands.
- We think advertising supported is revenue accretive for the US and Canada, but question how this works out internationally.
- Disney is far better positioned for AVOD. It has a developed ad infrastructure, owns all its content, and has better brands to sell advertising against.
AKR Corporindo (AKRA IJ) – Multiple Drivers Ahead
- AKR Corporindo (AKRA IJ) continues to see strong sales momentum in July and August after releasing a strong set of 1H2022 results previously with strong momentum expected to year-end.
- Both petroleum distribution and chemical distribution are seeing strong tailwinds and its gas station business should be a beneficiary of the fuel price hike.
- AKR Corporindo‘s JIIPE estate booked a large 37-hectare plot sale in August with a potential for more smelter-related buyers to come. Valuations look fair but there are potential catalysts ahead.
Joinn Laboratories (6127.HK) 22H1 – It’s Time to Face Reality Before the Magic of Monkeys Disappears
- The monkeys have become Joinn Laboratories (H) (6127 HK)’s important profit growth point based on the logic chain of “monkey supply shortage – monkey price rise – Joinn’s performance increase”.
- Faced with doubts about the future prosperity of CXO, we don’t think Joinn is immune as a part of this industrial chain. Joinn is hard to achieve the V-shaped rebound.
- Valuations are hard to increase by when the industry is very mature.For investment logic, my favorite is the industry beta, followed by industry beta+alpha. The last is low P/E ratio.
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