In today’s briefing:
- Seven & I (3382) | New Plan Falls Short
- Nitori: Low Valuation Multiples and A Strong Potential to an Earnings Beat
- [Meituan (3690 HK) Target Price Change]: Bracing for Douyin Impact with Limited War Chest
- CK Hutchison Holdings: Is a Retail IPO Coming?
- Zydus Lifesciences (ZYDUSLIF IN): Strong India and US Momentum to Improve Margin and Drive Growth
- Home First Finance (HOMEFIRS IN) | The Bounce Mystery & Way Forward
- Indosat (ISAT IJ) – The Telco Changeling
- Ping An: Reassuring New Business Pickup
- WIKA: Decent 1H18
- Taiwan Tech Weekly: Micron Earnings to Provide Memory Outlook; Taiwan Vs. SOX Divergence
Seven & I (3382) | New Plan Falls Short
- Seven & I has revamped its corporate board and announced an updated MTP that improves capital allocation. However…
- Activist investor ValueAct has turned hostile and is seeking to replace the President and three other directors
- The stock price has declined by 12% from its year high and we see substantial upside to our intrinsic valuation
Nitori: Low Valuation Multiples and A Strong Potential to an Earnings Beat
- Consensus estimates suggest that Nitori Holdings (9843 JP)‘s gross margin will experience a sudden change affecting profitability for a few quarters, before returning to 6-8% below the long-term trend.
- We see no apparent reason for a drastic change in Nitori’s profitability and expect it to remain slightly below trend, in line with guidance.
- Nitori is expected to reach ¥140bn and ¥150bn OP for FY24 and FY25, with valuation at 13.3x and 12.4x OP. This is reasonable given Nitori’s rare history of low multiples.
[Meituan (3690 HK) Target Price Change]: Bracing for Douyin Impact with Limited War Chest
- Meituan reported C4Q22 total revenue 4% higher than cons. Non-IFRS net margin beat cons. by 0.4ppt due to strong cost control during lockdowns.
- Meituan has limited options against Douyin’s fast expansion of new service categories and customized offerings. The competition against Douyin will continue to pressure the in-store business in the long run.
- Maintain SELL and cut TP to HK$125. Our TP implies 3x PS, 10x PE and 1x PS for on-demand delivery, in-store, and new initiatives, respectively.
CK Hutchison Holdings: Is a Retail IPO Coming?
- In-depth presentation of retail digitalization raises expectation of retail spin-off. Asset disposals and increased DPS potential 2H catalysts
- Limited impact from trade tensions; oil tailwind
- Following 2 years of single-digit earnings growth, growth is likely to accelerate to double digit as headwinds from strong euro/GBP and weak oil prices eases and global economy continues to rebound.
Zydus Lifesciences (ZYDUSLIF IN): Strong India and US Momentum to Improve Margin and Drive Growth
- Zydus Lifesciences Ltd (ZYDUSLIF IN) reported total revenue of INR43.6B, up by 20% YoY and 6% QoQ, in Q3FY23. Key markets, India and the U.S. continued to deliver robust performance.
- U.S. business is on track to register QoQ growth in near-term, with the launches of new products. Zydus plans to launch 2–3 transdermal products in U.S. in FY24.
- For its India business, the company aims to outperform the industry growth sustainably in the medium to long term. Lipaglyn is expected to be among top 25 products of India.
Home First Finance (HOMEFIRS IN) | The Bounce Mystery & Way Forward
- Home First Finance (HOMEFIRS IN) lends to a customer segment exposed to high income volatility.
- Soft bounces are used by customers to manage their cash flow, with bounce charge collection done on a best-effort basis, management attitude towards financial discipline warrants attention.
- While there may not be any immediate asset quality issues, caution is warranted.
Indosat (ISAT IJ) – The Telco Changeling
- Indosat (ISAT IJ) has come back from being the loss-making underdog amongst the Indonesian telcos and is now well and truly on the rebound, with significant potential upside.
- The acquisition of Hutchison’s “3” has propelled the company into the number two spot in terms of market share and enabled better quality coverage after a well-orchestrated merger.
- Indosat now has a 4G footprint in Java greater than Telkomsel and with significant potential to gain share ex-Java, which provides higher returns. Valuations remain attractive.
Ping An: Reassuring New Business Pickup
- Interim results beat with strong results across most business lines
- Life insurance new business value growth reversed to positive growth in 2Q and should accelerate
- Fair value trimmed to HKD98 but headwinds abating in 2H
WIKA: Decent 1H18
- Net profit up 19% YoY on strong revenue growth. New order flow remains decent.
- Maintain IDR 2,300 TP, valuations look attractive
- With a diversified portfolio of private construction and public infrastructure projects, WIKA offers broad exposure to Indonesia’s infrastructure investment growth
Taiwan Tech Weekly: Micron Earnings to Provide Memory Outlook; Taiwan Vs. SOX Divergence
- Micron earnings this week, will provide insight on the outlook for the memory chip space.
- The Taiwanese market has substantially lagged the surge in the Philadelphia Semiconductor Index.
- Chinese firms are trying to poach engineers from TSMC and UMC by offering 2-3x their salaries.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
