In today’s briefing:
- Warren Buffett and the Japanese Trading Houses I
- Grab Holdings (GRAB US) – Solidifying Its Appeal
- Haw Par Corp (HPAR SP): $1 Special Dividend–Xie Xie, Let’s Make It Regular!
- Monthly Chinese Tourism Tracker | LNY Numbers Just OK | Airlines Filling Up | (February 2025)
- Airbnb Inc.: A $250 Million Bet To Make It the Amazon of Travel?
- China Retail Weekly (24 Feb 2025): BILI, SAIC, NIO, Mengniu, JD, IQiyi
- Applied Materials (AMAT): Is It The Ultimate Winner in Gate-All-Around Transistor Innovations?
- Hyatt Hotels Corporation: The Luxury Hotel Boom That’s Powering Its Revenue Growth!
- Tencent/Netease: One Game Approval for Netease in Feb
- Japan Hotel REIT: Interest Rate Hike Will Hurt Tourism, with More Hikes to Come. We Turn Bearish
Warren Buffett and the Japanese Trading Houses I
- The Berkshire Hathaway Annual Shareholder Letter for 2024 was released this weekend. Much was made in Japanese twitter-space of the comments he made on the Japanese trading houses.
- He said Berkshire Hathaway’s admiration of these companies “has consistently grown” and Berkshire likes their capital deployment, managements, and their attitude in respect to investors. They also pay themselves reasonably.
- He mentioned Berkshire will increase their stakes somewhat in the trading houses “over time.” That comment deserves some exploration, as does the comment about yen funding.
Grab Holdings (GRAB US) – Solidifying Its Appeal
- Grab Holdings (GRAB US) booked a strong finish to the year, beating its upwardly revised guidance, despite some decline in margins due to increased investment, partly due to competitive pressures.
- The company continues to expand its total addressable market through its Saver initiatives, whilst successfully increasing monetization through its high-value products, and improving retention and engagement through Grab Unlimited.
- Financial services and advertising are becoming increasingly important drivers for growth and profitability. Expect some seasonal slowdown in 1Q2025 but the outlook remains positive and valuations are attractive.
Haw Par Corp (HPAR SP): $1 Special Dividend–Xie Xie, Let’s Make It Regular!
- Haw Par Corp (HPAR SP) announced a special dividend of S$1.00 per share for 2024, alongside its regular S$0.40 dividend.
- Investors have long pushed for higher payouts and special dividends, given the company’s strong cash reserves and free cash flow.
- Based on our analysis of its financials, Haw Par could sustainably raise its regular dividend to S$1.00 per share without tapping into reserves.
Monthly Chinese Tourism Tracker | LNY Numbers Just OK | Airlines Filling Up | (February 2025)
- Late January timing of LNY holiday boosted last month’s travel and tourism statistics
- Chinese airlines are filling outbound flights, which should lift pricing & margins (eventually)
- Numbers suggest Chinese consumers eager to travel, but spending remains muted
Airbnb Inc.: A $250 Million Bet To Make It the Amazon of Travel?
- Airbnb’s latest earnings report sent its stock surging 12.6% as investors reacted to stronger-than expected financial performance and ambitious growth plans.
- Despite missing out on much of the recent travel boom, the company is now positioning itself as the “Amazon of travel” by expanding beyond its traditional short-term rental business.
- CEO Brian Chesky emphasized this strategic pivot, revealing plans to invest up to $250 million in new businesses set to launch in May.
China Retail Weekly (24 Feb 2025): BILI, SAIC, NIO, Mengniu, JD, IQiyi
- In 4Q24, Bilibili’s total revenue increased by 22% YoY and its largest business, value-added services, increased by 24% YoY.
- SAIC president, Mr. Jia, removed 63 mid-level managers in the passenger car department.
- Mengniu raised a profit warning that net profit will plunge by 95% – 99% in 2024.
Applied Materials (AMAT): Is It The Ultimate Winner in Gate-All-Around Transistor Innovations?
- In the first quarter of fiscal year 2025, Applied Materials demonstrated strong performance, achieving record revenue levels that surpassed previous highs.
- The company announced that advanced semiconductors are a significant driver of this growth, supported by trends in technology such as artificial intelligence (AI), which are reshaping the global economy.
- AI, identified as a major transformative technology, has supported approximately a 20% year-over-year growth in global semiconductor sales in 2024, with projections suggesting this market could exceed $1 trillion in annual revenue by 2030.
Hyatt Hotels Corporation: The Luxury Hotel Boom That’s Powering Its Revenue Growth!
- Hyatt faced a mixed financial landscape in its recent earnings report, revealing both strategic advancements and some challenges.
- On the positive side, Hyatt announced a significant acquisition of Playa Hotels & Resorts for approximately $2.6 billion.
- This move is expected to enhance Hyatt’s position in the luxury all-inclusive sector, particularly in Mexico and the Caribbean, by incorporating Playa’s assets into Hyatt’s distribution channels such as ALG Vacations and Unlimited Vacation Club.
Tencent/Netease: One Game Approval for Netease in Feb
- China announced game approval for the February batch. The number of games approved remained at a higher level than 2023.
- The pace of China game approval appears to have accelerated to the same level as pre-tightening.
- Of the companies that we are monitoring, Netease, Zengame got one approval each.
Japan Hotel REIT: Interest Rate Hike Will Hurt Tourism, with More Hikes to Come. We Turn Bearish
- In April 2024, we published a few notes on Japan REITs on the back of interest rate cut cycle and weaker Asian currencies
- Today, the macro environment has shifted, Japan has started a rate hike cycle.
- Japan Hotel REITs will suffer due to negative impact on tourism and higher cap rate assumptions
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