Daily BriefsEquity Bottom-Up

Daily Brief Equity Bottom-Up: NVIDIA. Yikes! Have We Missed The Boat? and more

In today’s briefing:

  • NVIDIA. Yikes! Have We Missed The Boat?
  • Cathay Pacific (293 HK): Hard Landing
  • Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’
  • COLI 688 HK – Value Emerging, the Only Pure Play in China Prop to Gain Mkt Share and Back to Growth
  • New Horizon Health (6606.HK) – What Makes a Really Good Story? Definitely Not Just Breakeven
  • The Future of Insurance

NVIDIA. Yikes! Have We Missed The Boat?

By William Keating

  • Q1’23 revenues of $7.19 billion, down 13% from a year ago but up 19% sequentially and ~10% higher than the guided midpoint.
  • Current quarter outlook for revenues of $11 billion, a ~55% sequential increase, sparked mayhem in the markets and sent NVIDIA’s stock soaring over 24% in after hours trading
  • Don’t go chasing waterfalls, there are many other ways to rise with the tide

Cathay Pacific (293 HK): Hard Landing

By Osbert Tang, CFA

  • The recent discrimination incident will likely affect traffic recovery pace of Cathay Pacific Airways (293 HK) negatively if it turns into a full-scale boycott by mainland passengers.
  • The scenario of CX becoming majority-owned by Air China Ltd (H) (753 HK) is getting increasingly possible. This may not be totally positive to CX given CA’s weaker service ranking.
  • Consensus forecasts now look somewhat bullish following the incident, and the stock’s 0.7x P/B does not stand out as attractive relative to history or ROE (7% in FY25F).

Taiwan Dual-Listings: ADR Premiums Surge to Near All-Time Highs on ‘Nvidia-Rally’

By Vincent Fernando, CFA

  • The semiconductor stock rally in the U.S. caused by Nvidia’s monster results and guidance last week has caused multiple ADR premiums to surge to near all-time highs.
  • TSMC and UMC’s ADR premiums don’t appear sustainable given their trading history.
  • Telecom CHT wasn’t affected by the Nvidia rally and now has one of the lowest ADR discounts in its history.

COLI 688 HK – Value Emerging, the Only Pure Play in China Prop to Gain Mkt Share and Back to Growth

By Jacob Cheng

  • In this insight, we explore the investment thesis and major share price drivers for 688 HK
  • COLI saw share price weakness, and is trading at 0.46x P/B.  Potential risks are 1) fail to meet 20% growth target 2) slower than expected land acquisition
  • We see value emerging from the stock, and recommend BUY as long as the stock trades below HKD20 (as a technical indicator)

New Horizon Health (6606.HK) – What Makes a Really Good Story? Definitely Not Just Breakeven

By Xinyao (Criss) Wang

  • New Horizon Health (NHH) achieved high performance growth last year. However, we recommend investors take a calm and objective view of NHH’s current high growth rate if they see the real story.
  • NHH’s dual attributes of medical+consumption means large growth potential/strong profitability. Thus, the real expectation for NHH is not just about achieving breakeven, but more about how to achieve high profitablity.
  • If market education level falls short of expectations in the future, it’s difficult for NHH to achieve expected scale/profit margin. There would be greater valuation downward risk at that time.

The Future of Insurance

By subSPAC

  • SPACs are often synonymous with high-risk, cash-intensive early-stage companies making their public debut, but occasionally, a SPAC deal like CCC Intelligent Solutions emerges and shifts the narrative.
  • CCC is a SaaS business with four decades of operational history in the property and casualty insurance sector that went public through a SPAC in 2021.
  • Over the company’s history, it has processed over $1 trillion in transactions for 30,000 businesses.

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