In today’s briefing:
- Meituan: Strong 1Q with Operating Profits; No Disclosure on User Numbers and Delivery Costs
- Indian Banks Screener: Adding Value Pick Bank of Baroda, Stick with HDFC Bank for Quality
- GoTo (GOTO IJ) – Key Initiatives and Foundations
- Intel Has Big Problems Ahead
- Classys (214150 KS): Strong 1Q23 Result Lifted by Overseas Performance and Consumables Sales
- NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst
- The Mosaic Company: A Structural Transition Away from Exports in Phosphates – Key Drivers
- Eli Lilly and Company: Can Rezvoglar Destroy Sanofi’s Insulin Market Share? – Key Drivers
- Domino’s Pizza Inc.: Store Additions Continue To Drive Growth – Key Drivers
- DexCom Inc.: Launch of G6 Glucose Monitoring System & Other Drivers
Meituan: Strong 1Q with Operating Profits; No Disclosure on User Numbers and Delivery Costs
- Meituan (3690 HK) ’s 1Q2023 earnings beat consensus estimates and the key highlight was the company turning into adjusted operating profits after two years.
- Revenue from Core local commerce continued to see strong growth in earnings though we expected growth rates to decline with pandemic conditions easing off.
- Meituan has launched its food delivery app “KeeTa” in Hong Kong which is dominated by Foodpanda and Deliveroo.
Indian Banks Screener: Adding Value Pick Bank of Baroda, Stick with HDFC Bank for Quality
- We add value play Bank of Baroda to the peer group, and to our buy list; we also add liquidity and funding screens and a PEG ratio valuation metric
- We keep HDFC Bank as our higher quality bank, with its strong balance sheet, especially on NPA coverage, and further positive momentum from the upcoming HDFC merger
- We remain negative on State Bank of India, and we are also cautious on ICICI Bank; Axis bank remains a name to watch, although valuations are far from compelling
GoTo (GOTO IJ) – Key Initiatives and Foundations
- GoTo released a Newsletter for May which reiterated its progress toward profitability as well as some key initiatives including increasing service fees and expanding use cases for GoPay Coins rewards.
- The newsletter also highlighted the release of the Annual Report and its Sustainability report, which are both important documents for longer-term and increasingly ESG-focused investors.
- GoTo also highlights a report from the University of Indonesia regarding the company’s socioeconomic impact in the country, which remains huge given its socio-economic reach through ODS and Tokopedia.
Intel Has Big Problems Ahead
- The chip industry is seeing two “transitions” Intel is being phased out with the GPU shift, according to the company.
- The company is also expected to be phased out of the chip industry with the next generation of processors.
- The chip company is expected to have a new generation of chips in the coming years.
Classys (214150 KS): Strong 1Q23 Result Lifted by Overseas Performance and Consumables Sales
- Classys (214150 KS) reported solid performance in 1Q23, with double-digit revenue growth, driven by expansion of domestic consumables sales for Shrink Universe and growth in overseas device and consumables sales.
- Operating profit increased 19% YoY to KRW 19.9 billion, leading to 380 basis point margin expansion to 51%. Net profit increased 46% YoY to KRW 18.8 billion.
- Classys continues to strengthen its competitiveness through product line and geography expansion. The company has reiterated 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.
NetEase (NTES US, BUY, TP US$106) Earnings Review: Justice Mobile Is the Next Catalyst
- NetEase reported in-line revenue for 1Q23, while non-GAAP net income exceeded our estimate by 22%.
- <Justice Mobile> is set to launch by the end of June. We anticipate that investors may need to wait for some time after June for NetEase’s next potential hit title.
- Maintain a BUY with TP unchanged, implying 18X PE in 2023.
The Mosaic Company: A Structural Transition Away from Exports in Phosphates – Key Drivers
- The Mosaic Company had a mixed quarter with revenues of $3.6 billion that were above Wall Street expectations but the company missed out on earnings.
- While supply issues are still a worry, this is drawing growers back to the market.
- We give The Mosaic Company a ‘Buy’ rating with a revised target price.
Eli Lilly and Company: Can Rezvoglar Destroy Sanofi’s Insulin Market Share? – Key Drivers
- Eli Lilly is off to a mixed start in 2023, with volume-driven revenue growth led by its incretin portfolio, Verzenio and Jardiance.
- The new product category delivered $574 million in sales, while the new product and growth product categories together contributed 20 percentage points to volume increase.
- We give Eli Lilly and Company a ‘Hold’ rating with a revised target price.
Domino’s Pizza Inc.: Store Additions Continue To Drive Growth – Key Drivers
- Domino’s Pizza had a mixed quarter.
- The company’s revenues were below Wall Street expectations but its operating income margin increased by 100 basis points year-over-year resulting in an earnings beat.
- In the first quarter, Domino’s international company opened 143 new stores while closing 37 others, totaling 106 net new stores.
DexCom Inc.: Launch of G6 Glucose Monitoring System & Other Drivers
- DexCom had a strong quarter and managed an all-around beat with strong organic revenue growth of 19% compared to last year.
- The company’s momentum in global CGM adoption remains high, driven by the growing recognition of the unique experience DexCom provides.
- The launch of their G7 system has been met with enthusiasm, supported by a successful Super Bowl commercial that generated significant engagement and awareness.
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