Daily Brief Equity Bottom-Up: Tokyo Electron. Betting Big On MAGIC Despite The Downturn and more

In today’s briefing:

Tokyo Electron. Betting Big On MAGIC Despite The Downturn
KPIT Tech: Strong Q4FY23 and Upbeat FY24 Guidance
Kazatomprom (KAP LI): Revelation Of A Silent Uranium Deal
Krafton: India & Improving Shareholder Return Policy Likely to Lead to Further Outperformance
China Healthcare Weekly (May.19) – “Hedge Logic” Of CXO, Beijing’s DRG+VBP Policy, Zylox-Tonbridge

Tokyo Electron. Betting Big On MAGIC Despite The Downturn

Q1’23 revenues of ¥558.2 billion, up 19% sequentially and up 1% YoY
FY24 outlook down 23% YoY with H2 showing a modest improvement compared to H1
R&D & CapEx investment increasing significantly while YoY revenue set to decline by 23%

KPIT reported a strong Q4FY23 with 8.5% QoQ growth in CC (Constant Currency) terms. Q4FY23 EBITDA margin at 19.1% came in higher than 18.5%+ expected.
Deal TCV came in highest ever helped by a mega deal of INR $250mm. Even excluding the mega deal, the deal TCV was healthy at $173mm vs $150mm+ typically.
KPIT has guided for an upbeat FY24. FY24 revenue growth is guided to be 27-30% in CC terms. FY24 EBITDA margin is guided at 19-20% vs 18.9% in FY23.

The Kazakh government silently allowed Russia to buy 49% stake in JV Budenovskoye sometime in 2021-H2.
Kazatomprom owned 51% in the JV, but the deal was not properly disclosed in Kazatomprom reports.
Many company officials resigned since the deal fearing breach of legal duty on disclosure.

There is a high likelihood of the Indian authorities fully approving the BGMI game after three months of trial. Plus, it has a solid pipeline of new games under development.
Krafton is improving its shareholder return policy. In addition, the consensus is likely to raise the company’s earnings estimates post its excellent results in 1Q 2023.
We maintain our Positive view of Krafton and its shares are likely to continue to outperform the market this year.

The Beijing Medical Insurance Bureau issued a notice soliciting opinions on the linkage program of DRG payment and VBP policy in the city, involving sports medicine, neuro-intervention, and electrophysiology.
The basic logic of CXO is that there should be no significant fluctuations with the success or failure of a specific drug, unless this drug significantly increases total medical expenditure.
Zylox-Tonbridge Medical Technology (2190 HK) achieved high performance growth in 2022, and is a beneficiary of centralized procurement policy at the current stage.However, it still has to face some challenges.

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