In today’s briefing:
- Implication of Deepseek on China Data Centers: Buy GDS and VNET, Not Too Late to Chase the Rally!
- High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance
- Thai Beverage: In Low Spirits. Now a Low- Risk Dividend Play
- Shortlist of High Conviction Philippines Equity Ideas – February 2025
- Kokuyo Co Ltd (7984 JP): Full-year FY12/24 flash update
- J Trust Co Ltd (8508 JP): Full-year FY12/24 flash update
- Soliton Systems Kk (3040 JP): Full-year FY12/24 flash update
Implication of Deepseek on China Data Centers: Buy GDS and VNET, Not Too Late to Chase the Rally!
- We believe the recent launches of AI Model will challenge the assumptions of AI training costs, and we are still in early stages of AI revolution
- It will maintain a sustainable growth of AI infrastructure like data centers, instead of reducing the demand. GDS and VNET are well positioned to capture this tailwind
- VNET and GDS were up 303% and 268% for last 12 months, we think it is not too late to chase the rally
High Conviction 2025 – Freee: Earnings Beat with Upward Revision to Profit Guidance
- Freee KK (4478 JP) reported 2QFY06/2025 results on Friday which beat consensus estimates. The company also reported a second consecutive quarter of operating profits in 2Q.
- Despite cutting down significantly on selling and marketing, freee has managed to maintain growth. The company also has revised upwards its OP guidance and expects positive adj. free cashflows.
- Though freee’s share price has moved up 35% YTD, strengthening profitability and its solid business model vs Money Forward (3994 JP) should further drive share price up.
Thai Beverage: In Low Spirits. Now a Low- Risk Dividend Play
- Thai Beverage (THBEV SP) reported marginal revenue growth and a slight decline in EBITDA for the December quarter (1QFY25), even as its spirits segment experienced a sharper drop in both.
- With its primarily Thailand-based spirits segment seemingly in a structural decline, growth in other segments must offset the impact on overall sales.
- With limited potential to unlock value from its beer division, particularly amid the sharp decline in BeerCo’s valuations, Thai Bev seems increasingly off investors’ radar.
Shortlist of High Conviction Philippines Equity Ideas – February 2025
- We are gradually building a high-conviction coverage of ideas for the mid and small-caps in the Philippines.
- We set criteria for high ROCE, reasonable growth (10-15% YoY), strong balance sheets, and reasonable capital allocation (dividend yields), all ingredients for being multi-baggers.
- Figaro Coffee (FCG PM) has been added due to its >20% ROCE, 7x PE, and strong growth potential. We will initiate coverage on it shortly with an insight.
Kokuyo Co Ltd (7984 JP): Full-year FY12/24 flash update
- Revenue increased by 2.9% YoY to JPY338.2bn, with net income rising 14.3% YoY to JPY21.8bn.
- The FY12/25 forecast predicts revenue of JPY366.0bn (+8.2% YoY) and operating profit of JPY24.0bn (+9.0% YoY).
- The company plans an annual dividend per share of JPY91.0, targeting a consolidated payout ratio of 50.1%.
J Trust Co Ltd (8508 JP): Full-year FY12/24 flash update
- Operating revenue reached JPY128.2bn, a 12.2% YoY increase, driven by growth in financial and real estate businesses.
- Profit attributable to owners decreased 63.0% YoY to JPY6.0bn, impacted by deferred tax liabilities reversal from a merger.
- FY12/25 forecasts JPY135.1bn operating revenue, JPY11.1bn operating profit, and JPY6.5bn profit attributable to owners.
Soliton Systems Kk (3040 JP): Full-year FY12/24 flash update
- In FY12/24, Soliton’s revenue was JPY18.6bn (-2.4% YoY), with operating profit at JPY2.0bn (-21.7% YoY).
- Soliton forecasts FY12/25 revenue of JPY19.5bn (+4.8% YoY) and operating profit of JPY2.2bn (+7.7% YoY).
- Personnel expenses are expected to rise, with JPY50mn planned for office improvements, including SG&A and fixed assets.
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