In today’s briefing:
- Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer
- SONY (6758) | Going into Earnings
- Meta 1Q’25 Update
- Intel Foundry. Lowering 18A Expectations, Moving Away From Copy Exactly? What’s Going On?
- Qualcomm 2Q25 (March 25): Boring and Cheap
- Ebay’s Qoo10 Surges on K-Style Boom
- Tokyo Electron (8035 JP): Full-year FY03/25 flash update
- [Luckin (LKNCY US, BUY, TP US$39) TP Change]: Coffee Bean Price Hike Hurts Margin but Boosts Sales
- Hakuto Co Ltd (7433 JP): Full-year FY03/25 report update
- Ginebra San Miguel (GSMI PM) Q1 2025: Steady Pricing Led Growth
Hainan Meilan Intl Airport (357 HK): Possible Mandatory General Offer
- The change in controlling shareholder at Hainan Meilan International Airport (357 HK) will trigger a general offer. At HK$10.62, we do not see the proposed offer price attractive.
- The proposed price is only at 10.6% premium to the latest closing price, and equals to 1.15x 12-month forward P/B, way lower than the 5-year peak of 5.1x.
- The new parent Hainan Airport Infrastructure (600515 CH) can generate synergy, and the turn of Hainan into a Free Trade Port will attract visitors, boosting the long-term outlook.
SONY (6758) | Going into Earnings
- Content-Driven growth: Strong performance in music and gaming supports Sony’s shift toward high-margin content, insulating it from trade and macro headwinds.
- Upcoming catalysts: Spin-off of Sony Financial and potential restructuring could unlock value and address the long-standing conglomerate discount.
- Attractive valuation: Trading at 14x EV/EBIT with defensive sector exposure, Sony remains undervalued relative to global peers despite YTD outperformance.
Meta 1Q’25 Update
- Digital advertising has surpassed the days of “Mad Men” a while ago and thanks to AI, it seems even better positioned to unlock new markets and more opportunities.
- Meta is, of course, one of the companies leading this march.
- Here are my highlights from today’s call. Daily Active People (DAP) across its Family of Apps (FOA) accelerated to 80 mn QoQ in 1Q’25.
Intel Foundry. Lowering 18A Expectations, Moving Away From Copy Exactly? What’s Going On?
- On April 29, Intel hosted the latest in a series of “Direct Connect” events, this time focusing on the company’s Foundry progress and plans
- They talked about “ups and downs” with 18A, seeming to lower expectations for the process node which former CEO Gelsinger “bet the company on”. Lots of emphasis on 14A instead.
- Foundry chief Naga Chandrasekaran casually announced that the company was “walking away” from Copy Exactly and “democratizing innovation” at the fabs to fix yield, reliability, predictability and cost challenges. Wow!
Qualcomm 2Q25 (March 25): Boring and Cheap
- Qualcomm Inc (QCOM US) 2Q25 (March-25) spot inline with expectations, 4Q guidance inline with expectations. Revenue growth is slowing down sharply in June. Consensus expects further slowdown in 2H25.
- QCOM is losing iPhone modem, Android is not growing in units but chips become more expensive with AI, new revenue streams (AI PC, Auto, Industrial IoT) are not well understood.
- The result is Consensus forecasting basically no EPS growth in FY26-27 and the stock is trading at 12x EPS, almost -1 standard deviation below average PEx
Ebay’s Qoo10 Surges on K-Style Boom
- Qoo10 is tiny in comparison to Amazon, Rakuten and Yahoo but it punches well above its weight by specialisation.
- The online mall’s focus on Korean cosmetics and lifestyle has given it a depth of loyalty among young women that was once the preserve of Zozo.
- Along with its other platform Move, Ebay Japan has built a solid presence in the Japanese market which looks set to continue to expand.
Tokyo Electron (8035 JP): Full-year FY03/25 flash update
- In FY03/25, the company achieved revenue of JPY2.43tn, operating profit of JPY697.3bn, and net income of JPY544.1bn.
- For FY03/26, the company projects revenue of JPY2.6tn, operating profit of JPY727.0bn, and net income of JPY566.0bn.
- The company plans to increase R&D expenses to JPY300.0bn in FY03/26, up from JPY250.0bn in FY03/25.
[Luckin (LKNCY US, BUY, TP US$39) TP Change]: Coffee Bean Price Hike Hurts Margin but Boosts Sales
- Luckin reported C1Q25 revenue in-line/6% vs. our estimate/consensus, and non-GAAP operating profit 9%/75% higher than our estimate/consensus, thanks to warmer weather and constrained marketing spending;
- Despite Luckin pre-emptive lock-ins, rising coffee bean price shall still take its toll as Luckin’s biggest rival Starbucks should be equally capable of managing the commodity price risk.
- We keep Luckin as BUY rating but cut TP to US$39.
Hakuto Co Ltd (7433 JP): Full-year FY03/25 report update
- FY03/25 results: Sales JPY183.1bn (+0.6% YoY), Operating profit JPY7.9bn (+3.6% YoY), Net income JPY5.1bn (-0.9% YoY).
- FY03/25 forecast: Sales JPY186.0bn (+1.6% YoY), Operating profit JPY6.0bn (-24.2% YoY), Net income JPY4.9bn (-4.5% YoY).
- Hakuto’s medium-term plan targets sustainable growth by FY03/29, with Vision 2030 and Hakuto 2028 initiatives.
Ginebra San Miguel (GSMI PM) Q1 2025: Steady Pricing Led Growth
- Ginebra San Miguel (GSMI PM) reported steady growth in Q1 2025, with revenues and profits increasing by 7.6% and 10.8% YoY. Volume/Pricing grew 1%/6.6% YoY as company offset excise-duty increases.
- EBITDA margins were maintained at 16.2%, while the company saw a massive increase in cash and investments to 16.2 bn pesos from 12.8 bn pesos, led by working capital inflows.
- Trading at 10x PE with 20% of the market cap in cash and investments, and demonstrating pricing power/profit growth of 10-15% CAGR, this is a name to explore.
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