In today’s briefing:
- GoTo (GOTO IJ) – A Transient State
- Oisix Hit as People Return to Work
- XPeng Predicts Revenue, Deliveries to Nosedive in the First Quarter
- China Huarong Expects to Post $4 Billion Loss for 2022
- Samantha Thavasa Attempts Rebirth but Losses Continue
- Taiwan Short Squeeze Ahead? Taiwan Market Significantly Lagging Philly SOX Index
- UOB: Better Relative Value
- WuXi AppTec (2359.HK/603259.CH) 2022 Results- Say Goodbye to High Growth and Get Used to True Colors
- China Clears First Homegrown MRNA Covid Vaccine
- [Tencent (700 HK) Target Price Change]: Recovery Aided by Strong Advertising & In Line Game
GoTo (GOTO IJ) – A Transient State
- Headlines for GoTo 4Q2022 and FY2022 headlines do not tell the whole story, given large one-off charges for goodwill write-downs, without which significant progress has been made towards profitability.
- GoTo significantly reduced incentive&product marketing spending in 4Q but also posted decent growth, albeit at a slower pace, with an increasing emphasis on building foundational products to drive future profitability.
- 1H2023 will see slower headline growth from a COVID base but 1Q2023 should see improving take rates and CM breakeven. This is the transient stage of the long-term GoTo story.
Oisix Hit as People Return to Work
- Oisix is Japan’s largest online food retailer but sales were flat in 1Q-3Q2022 as people returned to work and cooked less, and profits suffered as inflation brought increases in costs.
- The company’s US operation also shrank as fewer people bought food online now that many Japanese are back to normal working patterns again.
- But other international subsidiaries and its expanded wholesale businesses at home all grew strongly.
XPeng Predicts Revenue, Deliveries to Nosedive in the First Quarter
- XPeng Inc. has predicted that revenue and vehicle deliveries will nosedive in the current quarter after the Chinese electric-vehicle (EV) upstart reported slowing sales growth and a loss that nearly doubled in 2022.
- The company’s revenue will likely plunge 43.7% to 46.3% year-on-year to between 4 billion yuan ($581 million) and 4.2 billion yuan in the first quarter of 2023.
- The outlook is based on an estimate that its deliveries will plummet 45% to 47.9% year-on-year in the same quarter to around 18,000 to 19,000 vehicles.
China Huarong Expects to Post $4 Billion Loss for 2022
- China Huarong Asset Management Co. Ltd. expects to post a net loss of 27.6 billion yuan ($4 billion) for 2022.
- Citing factors including volatility in the capital markets leading to declines in the value of some assets, business transition and the real estate industry slump.
- The bad-debt manager said it adjusted its business structure last year, resulting in less nonperforming asset acquisition and restructuring and less revenue.
Samantha Thavasa Attempts Rebirth but Losses Continue
- Once a major hit with young women, Samantha Thavasa has struggled to find relevance in the past five years.
- Despite an injection of capital and management from new parent, Konaka, the business has continued to close stores.
- While Konaka is restructuring the business, the brand’s low levels of recognition with the younger generation will likely mean further retreat.
Taiwan Short Squeeze Ahead? Taiwan Market Significantly Lagging Philly SOX Index
- There’s been a major disconnect between performance of the Philly Semiconductor Index and the Taiwan market recently.
- Semi optimism has picked up substantially in U.S. markets and institutional favor towards the Taiwan market could improve as a result.
- We indentify US$1bn+ market cap stocks most under-held by institutions, as well as those who may be most at risk of a short squeeze.
UOB: Better Relative Value
- 4Q22 results release on 23rd February 2023.
- Expect NIM expansion of ~20bps quarter-on-quarter (QoQ) for 4Q22E, while FY23’s NIM guidance and updates on its Citi consumer business integration would be of focus.
- Citi acquisition to add to full year NIMs and growth prospects from FY23, despite potential uptick in asset quality risks, which should be manageable.
WuXi AppTec (2359.HK/603259.CH) 2022 Results- Say Goodbye to High Growth and Get Used to True Colors
- If WuXi Chemistry’s performance shows downward trend, the overall performance growth won’t be satisfactory. The negative growth of WuXi DDSU means that ineffective competition for domestic innovative drugs is decreasing.
- The asset structure is shifting from light asset to heavy asset.It’s particularly crucial whether business model of “one-stop end-to-end service+royalty income” can enable WuXi AppTec to explore new growth points.
- The current sentiment on CXO is “fragile” because CXO doesn’t have performance sustainability and stability, with “risk discount” problem. Its valuation haven’t reached inflection point. Without industry beta,alpha is useless.
China Clears First Homegrown MRNA Covid Vaccine
- China approved its first homegrown Covid-19 vaccine using the advanced mRNA technology, months after the country pivoted from its “zero-Covid” strategy toward living with the virus.
- The vaccine, developed by CSPC Pharmaceutical Group Ltd., was approved for emergency use by the National Medical Products Administration.
- The shot, known as SYS6006, primarily targets the omicron variant BA.5 and can be stored at 2 to 8 degrees Celsius (36 to 46 degrees Fahrenheit) “for a long time,”.
[Tencent (700 HK) Target Price Change]: Recovery Aided by Strong Advertising & In Line Game
- Tencent reported 4Q22 top line/ bottom line of 0.3%/(3.7%) vs cons. Online ads is stronger, while gaming and G&A slightly missed our est.
- We expect that ads will be the main driver, thanks to video accounts. Gaming will have better performance after more approved game codes.
- We raise 2023 ads growth from 12% YoY to 15% YoY. Raise TP to HK$ 433. Maintain Tencent as one of the top picks in China Internet
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