In today’s briefing:
- ASMP (522.HK): Hang Seng Tech Index (HSTECH INDEX) Took Out ASMP with NIO Inc (9866 HK).
- Rohm (6963 JP): Short-Term Caution, Long-Term Buy
- WuXi AppTec (603259.CH/2359.HK)- The Private Placement and Shanghai Yingyi’s Illegal Share Reduction
- Orient Overseas Intl (316 HK): Cursed by Index Inclusion?
- Dr. Reddy’s Laboratories (DRRD IN) 4QFY22: Double-Digit Sales Growth; One-Off Charge Impacted Profit
ASMP (522.HK): Hang Seng Tech Index (HSTECH INDEX) Took Out ASMP with NIO Inc (9866 HK).
- On May 20, Hang Seng Tech Index (HSTECH INDEX) took out ASMP (522.HK) and replaced by NIO Inc (9866 HK).
- Apparently, the EV has a better future outlook, and NIO is riding on the right wind even it’s still lost making.
- Meanwhile, we think ASMP’s should see another hike in 3Q22, and its revenue was forecasted between US$670 million and US$740 million in 2Q22.
Rohm (6963 JP): Short-Term Caution, Long-Term Buy
- FY Mar-22 sales and profits were well ahead of guidance. Management is forecasting further growth this year, but mostly in 1H.
- Margins are under pressure from rising production costs and depreciation, but cash flow and the balance sheet are strong.
- Gearing to vehicle electrification and should provide protection on the downside and support long-term growth.
WuXi AppTec (603259.CH/2359.HK)- The Private Placement and Shanghai Yingyi’s Illegal Share Reduction
- It’s understandable to take advantage of current market value and reserve capital in advance.Considering potential risks, how low the price of proposed issuance has to be to feel “safe enough”?
- Yingyi’s illegally reducing its holdings of WuXi AppTec could be a signal– Yingyi and other shareholders/executives are not confident in WuXi AppTec’s outlook, who may not regain its glory days.
- We recommend investors to view this proposed issuance rationally. If investors want to trade, a good strategy is to catch rebound after plunge, although the temporary rebound does not last.
Orient Overseas Intl (316 HK): Cursed by Index Inclusion?
- While Orient Overseas International (316 HK) will welcome its inclusion in Hang Seng Index, there is risk that it will follow the pattern that new inclusions performed badly post entry.
- Globally, many container shipping stocks have retreated from their peaks in Mar this year, but OOIL is still hovering around its peak level, making is susceptible to a correction.
- Challenging factors include softening sequential momentum, peaking out of spot rates, weaker demand picture, increase in supply pressure and declining earnings trend are weighing on the industry and the company.
Dr. Reddy’s Laboratories (DRRD IN) 4QFY22: Double-Digit Sales Growth; One-Off Charge Impacted Profit
- Dr. Reddy’s Laboratories (DRRD IN) reported 15% y/y growth in revenue in Q4, driven by strong performance across all the markets. Adjusted for one-offs, net profit grew 54% y/y.
- Despite pricing pressure, the U.S. business should continue its growth momentum with better traction in key products launched in FY22 and upcoming new launches, including generic version of Revlimid.
- Inflationary pressure (raw material, freight), lower offtake of COVID-related products in India, and currency headwinds in emerging markets are some downside risks for the company.
Related tickers: ASM Pacific Technology (0522.HK), ROHM Co Ltd (6963.T), WuXi AppTec Co. Ltd. (2359.HK), Orient Overseas International (0316.HK), Dr. Reddy’s Laboratories (REDY.NS)
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