In today’s briefing:
- HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications
- Nvidia Results Blow-Out: Multi-Year Growth Ahead; Wiwynn in Taiwan, Plus a Smallcap Wildcard AI Play
- FUJIFILM (4901.T) Loving The Setup Here
- Meituan (3690 HK): 1Q23, Real Operating Profit Turned Positive After Nine Quarters
- [Xiaomi (1810 HK, SELL, TP HK$8.2) Earnings Review]: Good Cost Control Could Be Transitory
- [Kanzhun Ltd. (BZ US, SELL) Earnings Review]: Weak Labour Market Adds Uncertainty to Recovery
HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications
- Media reports indicate that the HDFC Bank (HDFCB IN) merger with HDFC Limited (HDFC IN) is expected to complete in 4-5 weeks.
- There will be inclusions to the NIFTY Index, Nifty Next 50 Index and S&P BSE SENSEX Index and capping changes to the Nifty Bank Index apart from changes to global indices.
- While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.
Nvidia Results Blow-Out: Multi-Year Growth Ahead; Wiwynn in Taiwan, Plus a Smallcap Wildcard AI Play
- Nvidia’s results and guidance sparked a massive rally in the shares, marking one of the largest single-day increases in market cap in U.S. stock market history.
- The company sees a multi-year growth cycle of data center upgrades ahead. Key supply chain partners TSMC and ASML are rising as well.
- Wiwynn in Taiwan should be a key winner. We also highlight a potential wildcard smallcap AI play that we will investigate further.
FUJIFILM (4901.T) Loving The Setup Here
- Q1’23 revenues of ¥764 billion, up 15% YoY and 2.6% QoQ
- FY2022, revenues grew by 13.2% to ¥2,859 while net income grew by 3.9% to ¥219.4.
- Electronic Materials set to grow from ¥180 billion in ’22 to ¥500 billion by ’30
Meituan (3690 HK): 1Q23, Real Operating Profit Turned Positive After Nine Quarters
- In 1Q23, total revenues grew by 27% YoY with all business lines up by more than 10% YoY.
- The real operating profits turned positive after nine quarters’ losses.
- We believe the stock has an upside of 35% for yearend 2023. Buy.
[Xiaomi (1810 HK, SELL, TP HK$8.2) Earnings Review]: Good Cost Control Could Be Transitory
- Xiaomi reported C1Q23 top-line and non-IFRS net income (6.9%) and 20.7% vs. our est., and in-line and 39.9% vs. consensus;
- We suggest that higher margins are transitory, as (1) key IC component prices may have bottomed, (2) EV spend is likely to ramp up further.
- We maintain SELL and HK$ 8.2 TP, implying 26x FY23 PE.
[Kanzhun Ltd. (BZ US, SELL) Earnings Review]: Weak Labour Market Adds Uncertainty to Recovery
- BZ reported 1Q23 cash billing 2.9% higher than our est.; revenue in-line with our estimate and consensus; and non-GAAP NI 36.3%/35.3% higher than our est. and cons.
- As BZ approaching the proxy of China’s labour market, its primary hurdle is the slow recovery of labour demand and mismatch of supply and demand.
- We maintain SELL rating and TP at US$13.5., as we are still waiting for signal for the overturn of job seeking market in China.
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