In today’s briefing:
- Oriental Watch Mgmt Call: Big Dividend Yet Again, 50% of Mkt Cap in Cash with >15% Yield Post Rally
- Light at the End of the Dark Tunnel for Korean Cosmetics?
- Intel Vs. TSMC Monitor: TSMC Soars on Buffett Investment, Why INTC Could Now Revert
- Travelsky (696): Beneficiary from Potential Reopening in China
- Home Depot Inc: Managing Labor Shortages & Other Developments
- Lowe’s Companies: Divestment Of Canadian Retail Operations & Other Drivers
- Cisco Systems Inc: Major Drivers
- Target Corporation: Partnership With Apple & Other Drivers
Oriental Watch Mgmt Call: Big Dividend Yet Again, 50% of Mkt Cap in Cash with >15% Yield Post Rally
- Oriental Watch (398 HK) paid a 31-cent dividend in its H1FY23 result on the 16th, equating to an annualized dividend yield of 15% on the current share price.
- The outlook for the rest of the year is much brighter, given the recovery in China and the inability of the Chinese to travel. October numbers were strong.
- The stock trades at a 6.7x PE, with more than 50% of the market capitalization in cash. In slightly better market conditions, this could be a 6 HKD stock.
Light at the End of the Dark Tunnel for Korean Cosmetics?
- We believe that there is finally some light showing at the end of the dark tunnel for the two leading Korean cosmetics companies LG H&H and Amorepacific Corp.
- These two stocks have underperformed the market in the past year but have started to outperform the market in the past three weeks.
- There are credible signs that indoor mask wearing in Korea will be eliminated in Korea on/near March 2023 and that the inbound visitors to Korea will continue to increase significantly.
Intel Vs. TSMC Monitor: TSMC Soars on Buffett Investment, Why INTC Could Now Revert
- TSMC has outperformed INTC by 23% in just two weeks, which is an extreme divergence in a short period of time by historical standards.
- Foreseeable company-specific events or news flow over the next 30 days appears limited.
- Valuation remains supportive for INTC and we believe it could recover part of its recent underperformance in the next month.
Travelsky (696): Beneficiary from Potential Reopening in China
- Travelsky Technology Ltd H (696 HK) is a system provider for airports in China that benefit from the reopening plan.
- The company is not sensitive to the oil price and it has low debt which makes it attractive compared to the airlines.
- The stock is trading at a 40% PBR discount to Shanghai International Airport. Historically, the company is trading at a 50% discount to its 5-year high on PBR.
Home Depot Inc: Managing Labor Shortages & Other Developments
- Home Depot delivered another good result and surpassed Wall Street expectations in terms of revenues as well as earnings.
- The company continued to observe high demand for home renovation projects throughout the third quarter.
- Sales growth for both Pro and DIY was good, with Pro surpassing DIY.
Lowe’s Companies: Divestment Of Canadian Retail Operations & Other Drivers
- Lowe’s delivered an impressive set of results this quarter and managed to surpass Wall Street expectations in terms of revenues as well as earnings.
- The company’s Pro business maintained its momentum, resulting from the success of its Pro efforts and the tenacity of the demand for home renovation.
- Their ongoing focus on productivity and solid sales growth contributed to improved operating performance which ensured the earnings beat.
Cisco Systems Inc: Major Drivers
- Cisco had a good start to fiscal 2023 and managed to deliver an all-around beat.
- The management continued their shift to greater software and subscription-based recurring revenue, even as they proactively manage through a developing and complicated market environment.
- Web-scale orders increased by double digits or more on a trailing 12-month basis for the ninth consecutive quarter.
Target Corporation: Partnership With Apple & Other Drivers
- Target’s third quarter results were a mixed bag as the company’s revenues surpassed Wall Street expectations but it missed out on meeting earnings expectations.
- Their top-line continues to profit from increases in guest visitation and unit share gains across all of their main categories.
- While their performance in the third quarter compared favorably with the previous one, the period’s tendencies were very different.
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