In today’s briefing:
- Matrimony.com (MATRIM IN) | Poor Quality Growth & Perplexing Operations
- People’s Insurance (PICC) (1339.HK) – The Rally (If Any) May Not Last Despite Undervalued
- Elan Microelectronics Event: Index Removal Selling Could Exacerbate Price Divergence
- Binjiang H1 2022: Management Soundbites
- Reneging on Job Offers Underscores Sea’s Retrenchment
- Toridoll – Bull Run Can Stretch Much Longer
- Bilibili (9626 HK): 2Q22, Game Fell, But to Reduce Expense
- Honda Sets Up New Venture to Procure Batteries From CATL
- Dongfang Electric (1072 HK): At Full Throttle
- Dr. Reddy’s Laboratories (DRRD IN): India Business Still the Brightest Spot; Slow Recovery in the US
Matrimony.com (MATRIM IN) | Poor Quality Growth & Perplexing Operations
- Matrimony.com (MATRIM IN) is a leading player with the highest market share in the Indian matchmaking market.
- A close examination of the marketing expenses and subscriber additions reveals poor quality growth.
- Employee remuneration is perplexing and so is the decision that leads to a reduction in PP&E.
People’s Insurance (PICC) (1339.HK) – The Rally (If Any) May Not Last Despite Undervalued
- People’s Insurance (PICC) (1339 HK)’s 2022H1 performance outpaced the industry peers, mainly driven by the improved performance of motor vehicle insurance business and non-vehicle insurance business.
- While non-life insurance business is the foundation/main driver of growth,life insurance business is the drag on performance, the successful transformation of which is an important factor to drive up valuation.
- PICC’s is undervalued. The major catalyst could be the upcoming 20th National Congress, expecting some rally during this period. Due to unfriendly macro, the rally may not last long.
Elan Microelectronics Event: Index Removal Selling Could Exacerbate Price Divergence
- Elan Microelectronics (2458 TT) will be removed from the FTSE Taiwan Mid Cap 100 Index on September 16th. As a result, it could see 12+ days of volume of selling.
- We had a call with management. Guidance and product performance implies the company has relative strength vs. its end-market demand weakness.
- The stock has already underperformed notebook-related peers by a wide margin, hence a further underperformance caused by passive selling could open up a rebound opportunity,
Binjiang H1 2022: Management Soundbites
- Binjiang Service Group (3316 HK) presents a unique opportunity for investment in the property management space trading at 11.6x/9.4x FY22/23 PE, with a dividend yield of 5.2% FY22e (60% payout).
- The company has >35% of its market capitalization in cash, and the parent so far has been a relatively safer investment option compared to the rest in the property space.
- If the company is willing to continue paying >60%, we believe it can rerate to multiples comparable with SOEs of 16-20x PE.
Reneging on Job Offers Underscores Sea’s Retrenchment
- Southeast Asian conglomerate Sea Ltd. has pumped the brakes on its e-commerce unit Shopee’s expansion, resorting to measures such as reneging on jobs offers to Chinese employees at the last minute.
- The strategy shift came as the Singaporean company backed by Chinese tech giant Tencent Holdings Ltd. tries to slash costs to shore up its bottom line amid widening losses.
- The red ink has followed several years of aggressive expansion by Shopee, which has piled pressure on its balance sheet this year, just as challenges raising money abroad mounted.
Toridoll – Bull Run Can Stretch Much Longer
- TORIDOLL Holdings Corporation (3397 JP) is trading near the historical peak of ¥3,000 per share which translates to a consensus FY+2 EV/OP of 30.9x.
- We think the stock has more room to run as its OP margin is expected to reach double digits for the first time since FY13.
- Meanwhile, there could be an upside to FY23 guidance as it is currently based on an exchange rate of ¥116 per $1.0.
Bilibili (9626 HK): 2Q22, Game Fell, But to Reduce Expense
- In 2Q22, the revenue growth rate was lower than we expected, especially in the game business.
- We believe the May layoff will reduce operating expenses in following quarters.
- We set an upside of 8.3% and a price target of HK$197.
Honda Sets Up New Venture to Procure Batteries From CATL
- Honda Motor Co. Ltd.’s Chinese unit will set up a new joint venture with two Chinese partners to procure electric vehicle batteries from battery giant Contemporary Amperex Technology Co. Ltd. (CATL)
- The joint venture will be 50% owned by Honda Motor (China) Investment Co. Ltd. and 25% each by Dongfeng Motor Corp. Ltd. and Guangzhou Automobile Group Co. Ltd. (GAC)
- Honda’s joint ventures with Dongfeng and Guangzhou Automobile already use CATL batteries in electric cars made in China
Dongfang Electric (1072 HK): At Full Throttle
- Strong new orders in 2H22 and FY23 are the drivers for Dongfang Electric (1072 HK) after it posted a 31.6% earnings growth and new orders of Rmb36.7bn in 1H22.
- Demand outlook for its major products including coal-fired, gas turbine, renewable, pumped storage and hydrogen energy are all very encouraging.
- We estimate order backlog will equal to 1.6x FY22F revenue by year-end. Despite solid outperformance, DEC is still cheap at 12.6x and 9.8x PERs for FY22 and FY23.
Dr. Reddy’s Laboratories (DRRD IN): India Business Still the Brightest Spot; Slow Recovery in the US
- Dr. Reddy’s Laboratories (DRRD IN) reported Q1FY23 results, with revenue growing 6% and 108% y/y, mainly driven by a 26% y/y growth in India business.
- Despite price erosion and increasing competition in some of the key products, North America revenue grew 2% y/y, driven by launch of new products and favorable forex rates.
- Bottom line got benefitted from one-off items including settlement income and non-core brand divestment proceeds. Net profit surged 108% y/y.
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