Daily BriefsEquity Bottom-Up

Daily Brief Equity Bottom-Up: Japan Banks: Markets Overreact to SVB’s Collapse and more

In today’s briefing:

  • Japan Banks: Markets Overreact to SVB’s Collapse
  • ASICS (7936) | Running Is Recession Proof
  • Kuaishou (1024 HK) 4Q22 Earnings Preview: Weak Growth, But Loss to Shrink Significantly
  • Smartkarma Corporate Webinar | Uni-Asia: Creating Alternative Investment Opportunities in Asia
  • Poya International: Key Catalysts
  • Tencent (700 HK): 4Q22, Stop Decreasing WeChat Ad Recovered Earlier
  • CSPC Pharmaceutical (1093 HK): Double-Digit Sales and Profit Growth in 2022; MRNA Vaccine Approval
  • Tencent: Gradual Recovery in Earnings; Domestic Gaming to Resume Growth
  • Tongcheng Travel (780 HK): Best for Capturing Lower-Tier Cities’ Growth
  • TME: Social Entertainment Losing Its Importance with Top Line Growth Keep Declining

Japan Banks: Markets Overreact to SVB’s Collapse

By Oshadhi Kumarasiri

  • Following the collapse of SVB and Signature Bank last week, Japan’s big four banks have fallen by around 15% due to their exposure to US government bonds.
  • However, the Japanese banks have managed the interest rate risk far better than the collapsed US banks and therefore, we feel the price drop is unwarranted.
  • With Japan likely to scrap its zero rates policy, we think this could be a rather intriguing opportunity to make generous gains on the long side in Japan’s banking sector.

ASICS (7936) | Running Is Recession Proof

By Mark Chadwick

  • Good news from Nike’s Q3 report, which bodes well for Asics March quarter
  • Why was Nike’s stock down? Margins were down 330bps on inventory mark downs
  • Running is recession proof according to the footwear makers themselves

Kuaishou (1024 HK) 4Q22 Earnings Preview: Weak Growth, But Loss to Shrink Significantly

By Ming Lu

  • We believe both 4Q22 and 1Q23 can be weak quarters.
  • However, we believe operating losses will shrink significantly in 4Q22 and 2023.
  • We believe the stock has an upside of 77% for year end 2023.

Smartkarma Corporate Webinar | Uni-Asia: Creating Alternative Investment Opportunities in Asia

By Smartkarma Research

For our next Corporate Webinar, in partnership with the SGX, we are glad to welcome Uni-Asia’s Group CFO, Lim Kai Ching.

In the upcoming webinar, Kai Ching will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Osbert Tang, CFA . The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 4 April 2023, 17:00 SGT.

About Uni-Asia

Uni-Asia Group Limited is an alternative investment group specialising in creating alternative investment opportunities and providing integrated services relating to such investments. The Group’s alternative investment targets mainly include dry bulk ships and properties. The Group also has extensive know-how and a network relating to such alternative investments and provides services relating to these investments. The two main alternative asset classes the Group focuses on are Shipping and Property.


Poya International: Key Catalysts

By Douglas Kim

  • Three major catalysts of Poya International include easing of mask mandates/COVID restrictions, strong growth in dividends and earnings, and market share gains from competitors. 
  • Poya International is the dominant supplier of cosmetics, health care products, personal care products and household products in Taiwan.
  • The company continues to execute its business strategy better than its competitors and this is evidenced in its strong growth in profits and dividends in the past year. 

Tencent (700 HK): 4Q22, Stop Decreasing WeChat Ad Recovered Earlier

By Ming Lu

  • As we expected in the preview, total revenue stopped decreasing in 4Q22.
  • WeChat advertising recovered in 4Q22 earlier than we expected in the preview.
  • We believe game-related revenues will grow by 8% in 2023 and 19% in 2024.

CSPC Pharmaceutical (1093 HK): Double-Digit Sales and Profit Growth in 2022; MRNA Vaccine Approval

By Tina Banerjee

  • CSPC Pharmaceutical Group (1093 HK) reported 11% YoY revenue growth in 2022. The finished drug business maintained steady growth in 2022, with a continued increase in contribution from new products.
  • Within the next 5 years, more than 40 innovative drugs are expected to be approved, which will provide continuous momentum for the company’s development.
  • In March 2023, CSPC’s COVID-19 mRNA vaccine SYS6006 has become the first independently developed mRNA vaccine product in China that has been granted for emergency use.

Tencent: Gradual Recovery in Earnings; Domestic Gaming to Resume Growth

By Shifara Samsudeen, ACMA, CGMA

  • Tencent (700 HK) reported 4Q2022 results yesterday. Revenue increased 0.5% YoY to RMB145bn (vs consensus RMB)143.5bn while adjusted OP increased 30.1% YoY to RMB28.4bn (vs consensus RMB37.2bn).
  • Online advertising revenues saw a 14.8% YoY increase during 4Q2022 after 4-consecutive quarters of decline with January and February showing sustained recovery.
  • Though Domestic gaming revenues declined in 4Q2022, with new gaming licenses and international expansion, we expect gaming revenues to start growing from 1Q2023.

Tongcheng Travel (780 HK): Best for Capturing Lower-Tier Cities’ Growth

By Osbert Tang, CFA

  • While adjusted net profit of Tongcheng Travel Holdings Ltd (780 HK) plummeted in 4Q22, the positive momentum in 1Q23 as revealed supports a sharp recovery in FY23.
  • Its huge exposure to lower-tier cities will fuel outlook while increase in monetisation will support profitability rebound. Success at Blackwhale membership program is another growth engine.  
  • Management is confident that revenue growth and better efficiency will lead the return of FY23 margin to pre-pandemic levels. Net cash position (12% of share price) is an added strength. 

TME: Social Entertainment Losing Its Importance with Top Line Growth Keep Declining

By Shifara Samsudeen, ACMA, CGMA

  • Tencent Music (TME US) reported 4Q2022 results yesterday. Revenue decreased 2.4% YoY to RMB7.4bn (vs consensus RMB7.3bn) while reported operating profit more than doubled to RMB1.4bn (vs consensus RMB1.3bn).
  • Online music revenues grew 24% YoY while social entertainment business continues to see decline in paying users and ARPU. Margin improvements were driven by spending cuts.
  • Social Entertainment is losing its importance and the segment continues to remain under pressure due to competition from other platforms.

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