In today’s briefing:
- Hitachi Ltd. (6501 JP): Downside Risk in Recession
- Jiangsu Expressway (177 HK): A Simple yet Attractive Yield Play
Hitachi Ltd. (6501 JP): Downside Risk in Recession
- Diversified across sectors and regions, Hitachi Ltd. is a proxy for the global economy going into recession.
- Restructuring nearly complete, but little margin expansion so far. DX revenues growing rapidly, but more profit supporter than driver.
- Weak 1Q and worsening economic situation casts doubt on FY Mar-23 guidance.
Jiangsu Expressway (177 HK): A Simple yet Attractive Yield Play
- With share price of Jiangsu Expressway (H) (177 HK) now back to the 2013-2014 level, the stock is very attractive on secured yield of 8.6% based on its dividend record.
- Fundamentally, we expect sequential recovery in earnings in 2H22. Its diversification into clean energy will provide a quality earnings stream. Longer-term, new projects will add to earnings.
- It has a healthy gearing level and the Rmb denominated borrowings means it will benefit from lower interest rate and lack of exposure to Rmb depreciation.
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