In today’s briefing:
- Tech Supply Chain Tracker (01-Jan-2025): Trump could bring back Huawei sanctions 2.0
- Life Time Group Holdings: The Expansion of MIORA Services & Other Major Drivers
- Silicon Motion: NAND Controller Leader; Positioned for a Transformative 2025E; Structural Long
- Meituan (3690 HK): Online Drug Sales Is the First Sweet Spot of O2O Vs. E-Commerce
- Elanco Animal Health: Innovation-Led Portfolio Expansion Fueling Our ‘Buy’ Rating! – Major Drivers
- Element Solutions Inc.: Will Its Power Electronics Expansion Be A Potential Game Changer? – Major Drivers
- Fox Factory Holding Corporation: An Insight Into Its Adaptation To Macroeconomic Conditions! – Major Drivers
- Fresenius Medical Care’s Bold Turnaround: How Care Delivery & Enablement Are Redefining Profitability! – Major Drivers
- GMS Inc.’s Winning Play: The Secret to Margin Expansion in Competitive Construction Markets! – Major Drivers
- GNA Axles – A Positive Shift in the Business Cycle Could Be Approaching
Tech Supply Chain Tracker (01-Jan-2025): Trump could bring back Huawei sanctions 2.0
- Potential Huawei sanctions under a reelected Trump administration could spell trouble for Chinese tech companies.
- Luxshare’s acquisition of nine Wingtech ODM subsidiaries indicates a consolidation trend in the tech manufacturing industry.
- The 2025 semiconductor boom is expected to be fueled by AI technology, but could face volatility due to Trump-era policies.
Life Time Group Holdings: The Expansion of MIORA Services & Other Major Drivers
- Life Time Group Holdings, Inc. reported robust financial performance for the third quarter of 2024, with revenue increasing by 18% to $693 million.
- Membership revenue saw a 20% uptick, while in center revenue grew 16%, contributing to a net income of $41.4 million compared to $7.9 million in the same quarter in 2023.
- The adjusted net income reached $56.3 million, highlighting a substantial increase of $29.6 million from the prior year.
Silicon Motion: NAND Controller Leader; Positioned for a Transformative 2025E; Structural Long
- We engaged with the company recently — SIMO remains in a strong position to capitalize on global increased need for high-end NAND memory controllers across mobiles, PCs, and enterprise AI.
- SIMO’s strong positioning in the Client SSD market and its technology leadership in PCIe 5 SSD and MonTitan solutions provide significant growth opportunities into 2025E and beyond.
- Reiterate Structural Long. Given the company’s net cash balance sheet, depressed market price, and multi-year growth outlook, in our view a share buyback program would be accretive to shareholder value.
Meituan (3690 HK): Online Drug Sales Is the First Sweet Spot of O2O Vs. E-Commerce
- O2O has made a huge impact on China’s e-commerce scene in 2024. The Coupang-invented model suits mega cities with dense population and order volumes;
- Online drug O2O, in particular, has gained momentum because drugs, prescription and non-prescription have robust storage and distribution needs on the ground for O2O use;
- Meituan’s drug sales has grown its overall market share from 3.6% in 2022 to 7.1% in 2024. We project it to grow to 12.3% by 2030.
Elanco Animal Health: Innovation-Led Portfolio Expansion Fueling Our ‘Buy’ Rating! – Major Drivers
- Elanco Animal Health’s third-quarter 2024 performance presents a mix of achievements and challenges that form the basis of an investment perspective.
- The company reported a modest 1% organic constant currency revenue growth, driven by contributions from new products like Experior, Adtab, Credelio Plus, and Zenrelia.
- This quarter marked the fifth consecutive one that Elanco has demonstrated growth in its underlying business.
Element Solutions Inc.: Will Its Power Electronics Expansion Be A Potential Game Changer? – Major Drivers
- Element Solutions Inc. reported its financial results for the third quarter of 2024, showcasing notable growth and strategic initiatives that both bolster and challenge the company’s outlook.
- On the positive side, the company demonstrated a consistent strategic execution by targeting high value segments within the electronics supply chain.
- This focus has allowed it to benefit from trends like advanced packaging and power electronics, especially in sectors like high-performance computing, electric vehicles (EVs), and semiconductor assembly.
Fox Factory Holding Corporation: An Insight Into Its Adaptation To Macroeconomic Conditions! – Major Drivers
- Fox Factory Holding Corp.’s third-quarter fiscal 2024 earnings revealed both challenges and areas of potential growth.
- The company reported a sequential and year-over-year revenue increase, reaching $359 million.
- The bike segment performed well, demonstrating double-digit growth, aided by strategic moves into new market segments.
Fresenius Medical Care’s Bold Turnaround: How Care Delivery & Enablement Are Redefining Profitability! – Major Drivers
- Fresenius Medical Care demonstrated steady progress in its operational and financial performance during the third quarter, reflecting a focused transformation strategy and resilience amid external challenges.
- The company reported organic revenue growth of 2%, with positive contributions from both Care Delivery and Care Enablement segments.
- Notably, the U.S. same-market treatment growth turned marginally positive at 0.2%, marking a significant milestone, though still tempered by elevated mortality rates.
GMS Inc.’s Winning Play: The Secret to Margin Expansion in Competitive Construction Markets! – Major Drivers
- GMS Inc.’s recent earnings results provide a snapshot of both challenges and opportunities faced by the company in its second quarter of fiscal 2025.
- The company reported a modest 3.5% increase in net sales, amounting to $1.47 billion, which can be chiefly attributed to recent acquisitions, including the new addition of R.S. Elliott in Florida.
- This reflects a strategic expansion into Complementary Products, including Tools & Fasteners, EIFS, and insulation, which have shown steady growth.
GNA Axles – A Positive Shift in the Business Cycle Could Be Approaching
- GNA Axles is a cyclical play driven by revival of the tractor industry in India and pre-buying in commercial vehicles(trucks) in the U.S. market.
- A good monsoon in India in 2024 is expected to revive domestic tractor demand, while changes in emission regulations in the U.S. are likely to increase truck sales.
- The company is currently valued at a comfortable 18x trailing P/E, with a 15% RoE and RoCE.
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