In today’s briefing:
- Vicom : Well Run Company with High ROE
- India & China – Rekindling Brotherhood
- Kyoto Financial Group (5844 JP): Disposals Plan for Equity Holdings Warrants More Ambitious Target
- Xiaomi (1810 HK): In 2Q25, Not Just Cars, But Fast Home Appliance
- Shimano (7309 JP) — Q2 Miss Resets Expectations; China Drag Masks EU Recovery
- Mitra Adiperkasa (MAPI IJ) – Retail Therapy
- Weak Steel Margins Undermine Fortescue’s Higher-Grade Iron Ore Push
- The Philippines’ BPO-Driven Office Recovery: Resurgence and Resilience. LONG Ayala Land.
- ISOTeam Ltd – Short-Term Miss, Long-Term Momentum
- James Hardie Industries Plc – Stockland Firing On All Cylinders
Vicom : Well Run Company with High ROE
- Number 1 service provider in inspection and technical testing services in Singapore
- Very high net profit margin of 20% and 20%+ ROE
- Consistently makes free cash flow but earnings growth is limited
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India & China – Rekindling Brotherhood
- The past month has witnessed a remarkable shift in India-China relations, with multiple high-profile developments signaling the most significant thaw in bilateral ties since 2020.
- Despite the expansion in bilateral commerce, India continues to face a significant trade deficit, especially in pharmaceuticals, where dependence on Chinese imports remains high.
- At present, the revived engagement seems to offer greater advantages to Chinese companies than to their Indian counterparts.
Kyoto Financial Group (5844 JP): Disposals Plan for Equity Holdings Warrants More Ambitious Target
- Kyoto Financial has equity holdings relative to market cap of 135%, well above its larger cap Japanese peer banks, and amounting to a market value of over JPY1.1trillion
- Management has stated that it is targeting JPY100bn+ of disposals in terms of market value by March 2029, but we believe that the market expected more
- Sizeable disposals of equity holdings is Kyoto’s primary source of prospective shareholder value creation; aside from this, its fundamental attractions are limited and so we downgrade Kyoto to a neutral
Xiaomi (1810 HK): In 2Q25, Not Just Cars, But Fast Home Appliance
- In 2Q25, total revenue grew strongly by 30% YoY and the operating margin continued to improve.
- The market focuses on car deliveries, but IoT is the largest contributor to gross profits.
- We believe the stock has an upside of 45% for the year end 2026. Buy.
Shimano (7309 JP) — Q2 Miss Resets Expectations; China Drag Masks EU Recovery
- Q2 saw sales growth slow sharply (+8% yoy vs +16% in Q1) with OPM collapsing 600bps qoq; OP cut 34% sequentially.
- China sales reset to long-term average, but FY25 outlook slashed to ¥58b (-42% vs prior) with limited disclosure on margin impact.
- Stock down 25% post-results; buyback expansion (¥50b cap maintained) and long-only accumulation (First Eagle to 9.4%) provide near-term support.
Mitra Adiperkasa (MAPI IJ) – Retail Therapy
- Indonesia’s leading retailer, Mitra Adiperkasa (MAPI IJ), dominates the country’s major malls with 150 brands. It booked a solid 2Q2025 despite the seasonal impact from Lebaran.
- The company’s growth was led by active wear and fashion, with luxury brands outperforming in 2Q2025, although the Inditex brands continued to dominate fashion, with digital business also rebounding.
- MAPI’s expansion into Southeast Asia has slowed, as it focuses on Indonesia. Valuations attractive, with a forecast recovery in 2H2025, with recent troubles providing a buying opportunity.
Weak Steel Margins Undermine Fortescue’s Higher-Grade Iron Ore Push
- FMG’s FY25 earnings slumped, with net profit hitting a five-year low as weak Chinese demand and global oversupply pressured prices.
- Heavy reliance on iron ore and limited diversification keep Fortescue lagging peers Rio Tinto and BHP, amplifying downside risks ahead.
- Fragile share price recovery faces technical headwinds, while narrowing steel mill margins undermine near-term prospects for premium ore demand.
The Philippines’ BPO-Driven Office Recovery: Resurgence and Resilience. LONG Ayala Land.
- The Philippines is on a strong economic recovery, supported by supportive macroeconomic landscape and expansion of Business Processing Outsourcing (BPO)
- The office market is also recovering strongly, supported by BPO demand. We think it is a structural fundamental improvement, not a simple cyclical recovery
- We LONG Ayala Land. It is currently at 9.7x PE, versus 10-year average of 20.4x.
ISOTeam Ltd – Short-Term Miss, Long-Term Momentum
- ISOTeam’s FY2025 results fell short of our expectations, with revenue declining 8.4% yoy to S$119.2m (11.7% below our forecast) and net profit attributable to shareholders dropping 21.2% yoy to S$5.1m (29.2% below forecast).
- The weaker performance was primarily driven by delayed project commencements in Repairs & Redecoration (–42.9% yoy) and Coating & Painting (–14.4%) segments, partially offset by strong growth in Addition & Alteration (25.0% yoy) and Others (10.4% yoy) segments.
- Gross margin improved modestly on better project mix and pricing, but earnings was further weighed down by lower other income and a higher effective tax rate.
James Hardie Industries Plc – Stockland Firing On All Cylinders
- Stockland posted a strong FY25 result and guidance, highlighting growth potential in residential and commercial property, while addressing funding concerns.
- -Stockland posts FY25 and FY26 guidance beats -Master-planned communities growth a highlight in residential -Data centre partnerships to drive commercial -Analysts praise a reduced dividend payout
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