Bottom-Up EquitiesDaily Briefs

Equity Bottom-Up: ASICS Corp, Health And Happiness (H&H), Tokyo Electron, JHBP (Genor), CanSino Biologics Inc, Aisin Seiki, UniCredit SpA, Hut 8 Mining, MatsukiyoCocokara and more

In today’s briefing:

  • Asics (7936) | Stepn into the Metaverse
  • H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.
  • Tokyo Electron (8035) | Fundamentals Don’t Matter…for Now
  • Genor Biopharma (6998 HK): First Product Approved in China; Late-Stage Pipeline Entails Visibility
  • CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value
  • Aisin – Low Margins But Volume Is Key
  • Unicredit (UCG IM) – Attractive on Capital Distribution Potential Despite Russia
  • Hut 8 Mining: North Bay Mining Site Will Add 100MW Capacity in Ontario
  • MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism

Asics (7936) | Stepn into the Metaverse

By Mark Chadwick

  • Asics reports Q1 results on 11 May – we expect a beat to consensus numbers 
  • We are bullish on Asics for the long term market share opportunity in China and margin expansion driven by digital
  • The rather amazing tie-up with STEPN for NFTs highlights potential new ways to monetise Asics brand value

H&H (1112 HK): Near Term Gloom Not Bad Enough to Lead to Long Term Doom.

By Devi Subhakesan

  • Highly leveraged Balance sheet and a USD350 mn bridge loan that needs refinancing, amidst rising interest rates, have alarmed investors, thus driving Health And Happiness (H&H) (1112 HK) stock south.
  • With its core Baby nutrition segment sales declining and Adult, Pet nutrition still in ramp up phase, the going has been tough for H&H as operating margins weakened.
  • Even as its near term concerns seem daunting, long term prospects are good with a diversified premium-brand portfolio that can moderate long term risk to growth from declining birth rate.

Tokyo Electron (8035) | Fundamentals Don’t Matter…for Now

By Mark Chadwick

  • Tokyo Electron reports FY3/22 results on 12 May. We expect the company to meet guidance and analyst expectations  
  • But the outlook may disappoint. Management may guide FY3/23 more conservatively than analysts who are looking for operating profit to grow 20% to ¥700 bn 
  • Despite favorable industry conditions and strong outlook for WFE, we think that the stock could continue to de-rate

Genor Biopharma (6998 HK): First Product Approved in China; Late-Stage Pipeline Entails Visibility

By Tina Banerjee

  • JHBP (Genor) (6998 HK) received approval in China for its first commercial drug, GB242, a biosimilar to Remicade (infliximab). Approved indications have an addressable patient population of 10 million.
  • The company is also expected to obtain marketing approval for its drug candidate for the treatment of relapsed and refractory peripheral T-cell lymphoma (PTCL) in China this year.
  • In-Licensed GB491 (lerociclib) has entered in two phase 3 clinical trials for first and second-line treatments of breast cancer. NDA for GB491 is expected to be filed in 2023.

CanSino Biologics (688185.CH/6185.HK) -Difficulties in 2022 Cannot Mask Long-Term Investment Value

By Xinyao (Criss) Wang

  • We update our forecast on CanSino’s performance in 2022, which could be much lower than that in 2021 due to the concerns on commercialization outlook of COVID-19 vaccine and MCV2/MCV4.
  • However, due to strong R&D and technology platforms, the value of CanSino’s pipeline is higher and its products could become the ceiling of pricing power for other homogeneous competing products.
  • We still think CanSino has investment value in long term despite the headwinds in short term.The market value by May 6 of HK$18.1 billion (PE/TTM at 7.22) is also attractive.

Aisin – Low Margins But Volume Is Key

By Mio Kato

  • Aisin’s 4QFY22 was weak on margins with revenue of ¥1,049bn (+3.9% vs. consensus) and OP of ¥43bn (-33.4% vs. consensus). 
  • Guidance had a similar tone with the company projecting ¥4,450bn in revenue (+2.4% vs. consensus) but OP of ¥190bn (-29.6% vs. consensus) which we think is too conservative. 
  • While results were disappointing we expect volume growth to be the key catalyst next year and cheap valuations should support strong upside.

Unicredit (UCG IM) – Attractive on Capital Distribution Potential Despite Russia

By Victor Galliano

  • Unicredit, with its solid capital adequacy and improved credit quality metrics, is well positioned to deliver on capital distribution, despite the Russian challenges
  • We estimate that, even on a relatively conservative basis, capital distribution yield could reach 12% in 2022 and also be at the top end of the peer group post-2022
  • Unicredit has often been in the shadow of Intesa in capital distribution, but we believe that consensus estimates are currently under-estimating the potential for dividends and share buy-backs at Unicredit

Hut 8 Mining: North Bay Mining Site Will Add 100MW Capacity in Ontario

By Andrei Zakharov

  • Hut 8 Mining (HUT US)  is a cryptocurrency mining company headquartered in Toronto, Canada. Crypto miner has two facilities in operation: Drumheller and Medicine Hat in Alberta.
  • In 2017, Hut 8 Mining established a partnership with Bitfury Group to acquire, install, maintain and operate Bitcoin mining data centers in North America. 
  • We like the company’s solid balance sheet with 6,769 BTC held as of Apr-22, the opportunity to add an extra 100MW capacity in North Bay and the acquisition of TeraGo. 

MatsukiyoCocokara (3088) | Triple Booster of Merger Synergies, Domestic Recovery, & Tourism

By Mark Chadwick

  • Merger synergies such as integrated purchasing will result in higher gross margins. A more efficient cost structure and sales synergies will boost the bottom line 
  • We expect consumption to normalize in Japan as people get used to “living with covid.”  Higher foot traffic will drive a resumption of high margin cosmetics 
  • Inbound travel should be partially normalized this year and we believe the market will quickly price this in once borders reopen. We see 21% upside 

Related tickers: ASICS Corp (7936.T), Health And Happiness (H&H) (1112.HK), Tokyo Electron (8035.T), JHBP (Genor) (6998.HK), Aisin Seiki (7259.T), UniCredit SpA (UCG.MI), MatsukiyoCocokara (3088.T)

Before it’s here, it’s on Smartkarma