Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: Alibaba Group, Horiba Ltd, Shanghai Junshi Bioscience, Square Enix Holdings and more

In today’s briefing:

  • 1H22 Obex Research Long Portfolio
  • Horiba (6856 JP): New Growth Opportunity in Hydrogen Energy
  • Shanghai Junshi Bioscience (1877.HK/688180.CH) – Behind the “break Up” with AstraZeneca
  • Square Enix – WAGMI

1H22 Obex Research Long Portfolio

By Aaron Gabin

  • With half of Nasdaq stocks down 50% from the top, is further meltdown ahead?  Valuation compression is already larger than recent big growth selloffs.  
  • We like a balance of highest quality high growth (CRWD, SNOW, RBLX) and attractive relative valuations (PANW, NOW, BABA)
  • Amazon is poised for a big 2022 as 1 day Prime shipping reaccelerates growth, and price increases hike profits.

Horiba (6856 JP): New Growth Opportunity in Hydrogen Energy

By Scott Foster

  • Measurement and analysis to qualify hydrogen fuel cells, vehicle engines and fueling stations, electrolysis and other hydrogen production processes should be a new growth driver for Horiba.
  • Semiconductor equipment demand losing momentum, but should hold up in 2022. Weak demand for auto emission measurement systems is a key risk.
  • Reasonably valued at 15x EPS guidance for FY Dec-21 and 1.45x book value, with a dividend yield of 2.0%.

Shanghai Junshi Bioscience (1877.HK/688180.CH) – Behind the “break Up” with AstraZeneca

By Xinyao (Criss) Wang

  • Shanghai Junshi Bioscience Co. Ltd. (1877 HK) announced that it has terminated its PD-1 commercialization partnership with AstraZeneca. Lower-than-expected sales performance is seen as the key reason.
  • Junshi’s commercialization team is the weakest among the domestic Top Four.As the FDA’s attitude may have changed, the logic of exporting innovative domestic drugs to foreign markets could be shaken.
  • Given the poor financing environment,it’s challenging for Junshi to afford large investment in R&D and licensing deals by just relying on cash in hand and cashflow generating from commercialized products.

Square Enix – WAGMI

By Mark Chadwick

  • Blockchain games are gaining popularity and traction with new players. There are now over 1.4m people playing blockchain games daily  
  • The economics of blockchain gaming and NFT is driving a flood of new investment into the space, with $4b committed by VCs in 2021. This year will be significantly higher  
  • Square Enix understands that blockchain games are here to stay despite opposition from “legacy fans.” We expect further announcements on blockchain gaming to drive the stock

Related tickers: Alibaba Group (BABA.N), Horiba Ltd (6856.T), Square Enix Holdings (9684.T)

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