Daily BriefsEquity Bottom-Up

Daily Brief Equity Bottom-Up: Meituan: Strong 1Q with Operating Profits; No Disclosure on User Numbers and Delivery Costs and more

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

By Shifara Samsudeen, ACMA, CGMA

  • 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

By Victor Galliano

  • 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

By Angus Mackintosh

  • 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

By Kevin George

  • 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

By Tina Banerjee

  • 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

By Shawn Yang

  • 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

By Baptista Research

  • 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

By Baptista Research

  • 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

By Baptista Research

  • 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

By Baptista Research

  • 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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