In today’s briefing:
- Unloved Japan Round-Up: Some Massive Results Surprises
- Fosun Tourism (1992 HK): Affirming Our Support for the Buyback
- SCREEN: Moderate ~teens Growth Outlook but the Stock Is Cheap
- HONG KONG ALPHA PORTFOLIO (January 2025)
- Empire Energy Group Ltd – Beetaloo catalysts coming in a rush
- Seria Co Ltd (2782 JP): Q3 FY03/25 flash update
- Yellow Hat Ltd (9882 JP): Q3 FY03/25 flash update
Unloved Japan Round-Up: Some Massive Results Surprises
- Lixil increased operating profit by 15.7% YoY, to ¥20.6bn, compared to consensus estimates for an 18% decline. The stock trades at 80% of book value.
- TEPCO earned ¥112bn compared to a consensus forecast of a ¥3bn loss. It trades at 35% of book value.
- Lasertec increased EBIT by 122% to ¥47.7bn compared to consensus estimates for ¥27bn, and the stock trading at the lowest multiples relative to Topix in seven years.
Fosun Tourism (1992 HK): Affirming Our Support for the Buyback
- Fosun Tourism (1992 HK)‘s profit warning suggested a significant deterioration in profitability in 2H24, fading any near-term recovery hope.
- With losses enlarged 89-126% YoY in 2H24, it is more difficult to return to its peak and IPO share prices. This makes the buyback proposal even more attractive.
- We take the inability to introduce the Potential Share Alternative Option as a lack of confidence by the existing shareholders in Fosun Tourism’s medium-term outlook.
SCREEN: Moderate ~teens Growth Outlook but the Stock Is Cheap
- Big Dec-24 due to China. Mar-25 will be weaker. FY26 growth will come only from TSMC and HBM. After a strong FY25 (~30% growth), FY26 should see growth at 10-15%.
- Accounting concerns should be over after the publication of the audit report on Jan 14 2025. The stock has started appreciating since early Jan 2025.
- Valuations are low. The stock is trading at ~11x FY26 EPS. A muted Mar-25 could limit the upside short-term, let’s wait.
HONG KONG ALPHA PORTFOLIO (January 2025)
- HK Alpha Portfolio returned -1.29% in December and outperformed the benchmark by 0.34%. The portfolio has outperformed Hong Kong indexes by 7.93% to 9.64% since its inception on 10/01/24.
- About 75% of the portfolio’s excess returns have been from alpha generation. The portfolio had no exposure to Real Estate, Energy or Materials.
- At month-end we sold China Cinda Asset Management (1359 HK) , Citic Ltd (267 HK) , China Galaxy Securities (H) (6881 HK) and GDS Holdings (9698 HK) .
Empire Energy Group Ltd – Beetaloo catalysts coming in a rush
- RaaS has published an update report on NT-focused gas explorer/producer Empire Energy Group (ASX:EEG) following its recent quarterly report and operational update.
- The company is poised to commence the last phases of activity on the path to project startup.
- Having successfully cased and cemented the Carpentaria-5H (C-5H) well above expectation on time and horizontal section, securing debt financing and NT environmental approvals, we await the commencement of testing post the wet season and the granting of the ‘Beneficial Use of Test Gas’ agreement, with the traditional owners, which formally approves commercial gas sales.
Seria Co Ltd (2782 JP): Q3 FY03/25 flash update
- Sales reached JPY178.0bn, a 7.0% YoY increase, with directly managed stores contributing 98.9% of total sales.
- Operating profit rose 16.9% YoY to JPY13.2bn, while net income increased 18.3% YoY to JPY8.9bn.
- The company opened 84 directly managed stores and closed 49, totaling 2,056 stores by end-Q3 FY03/25.
Yellow Hat Ltd (9882 JP): Q3 FY03/25 flash update
- Yellow Hat’s cumulative Q3 FY03/25 sales increased 4.9% YoY to JPY119.1bn, with operating profit up 9.6% YoY.
- The medium-term plan targets FY03/28 revenue of JPY180.0bn, operating profit of JPY16.8bn, and net income of JPY11.8bn.
- Planned investment of JPY33.0bn from FY03/26 to FY03/28 includes JPY28.0bn in capex and JPY5.0bn for M&A.
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