In today’s briefing:
- Renesas – Like We Said… Accelerating
- Keyence – Just Built Different
- HCM – Obvious Blowout Is Obvious… Just Not to the Sell Side
- Tesla Motors: Record Exposure, But Still Under-Owned
- Zozo – Q4 21 Results Reaction: Mixed but Underlying Consumer Growth Remains Solid
- Shin-Etsu – FY23 Could Put Shin-Etsu Within a Step of ¥1trn in OP
- Zozo – Operating Leverage Apparently Less Fun On The Downside
- Xinjiang Goldwind (2208 HK): Key Takeaways from 1Q22 Call
- Asahi Raises Domestic Beverage Prices: Elastic “Beer” Demand Makes the Price Hike Unfavourable
- Advantest – That Time in the Cycle When Orders Apparently Stop Being Important
Renesas – Like We Said… Accelerating
- Renesas’ 1Q numbers blew away guidance and consensus as revenue beat by 3.4% and adjusted OP beat by 16%.
- Revenue growth was strong for both Auto and Industrial with Industrial margins also improving noticeably vs. last Q.
- Renesas also announced a rather large buyback which is effectively a repurchase of the INCJ’s stake.
Keyence – Just Built Different
- Another quarter another Keyence beat as revenue beat by 5.3% and OP beat by a more modest 4.7% due to high SG&A costs.
- Sell side analysts on the conference call remain confused by the outperformance vs. peers because they fail to realise that Keyence gonna Keyence.
- Despite this strength we remain cautious as Keyence is now a truly exceptional company that is being priced like a magical one.
HCM – Obvious Blowout Is Obvious… Just Not to the Sell Side
- HCM reported FY revenue of ¥1,025bn, just above our ¥1,010bn estimate and blowing away clueless consensus’ ¥963bn.
- OP was ¥93.5bn despite the trouble in Ukraine/Russia, just below our ¥95bn estimate and significantly above consensus at ¥86.8bn and guidance of ¥84bn.
- Guidance for a YoY OP decline is silly in our view and we suspect there will be a double digit increase.
Tesla Motors: Record Exposure, But Still Under-Owned
- Ownership in Tesla hits record levels among Global managers. Of the 371 Global equity funds in our analysis, a record 15.1% now have exposure to the stock.
- GARP managers are the most aggressively allocated, with a 0.42% holding on average, though the larger individual positions are held by Growth and Aggressive Growth strategies.
- Despite this record, Tesla remains under-owned by Global active managers compared to large cap peers, and is the second largest underweight in the World
Zozo – Q4 21 Results Reaction: Mixed but Underlying Consumer Growth Remains Solid
- Results for Q4 and FY22 guidance were mixed with platform sales and revenue largely in-line but margins slightly weaker
- The loss of a major B2B customer wipes out almost all the growth in that segment but core consumer growth remains solid (10%+) as do operating KPIs
- The read across to parent Z Holdings is limited as the difference in company guidance and consensus operating profit is less than 1% of ZHD consolidated
Shin-Etsu – FY23 Could Put Shin-Etsu Within a Step of ¥1trn in OP
- Shin-Etsu results were mostly in-line with revenue beating by 5% and OP both within 1% of consensus and just a touch above guidance.
- OP was about 6% weaker than our estimate however driven by the Electronic Materials business.
- The lack of guidance may worry some investors but trends look positive enough that results should end up materially above consensus.
Zozo – Operating Leverage Apparently Less Fun On The Downside
- Zozo reported yesterday missing slightly across the board with OP missing consensus by 6.7% on a 0.7% miss at the top line.
- GMV was reasonable due to apparent generosity on reward points and strong promotional spending.
- OP guidance of ¥51.5bn was noticeably below consensus and while Zozo is considered conservative we expect a miss and long-term stagnation.
Xinjiang Goldwind (2208 HK): Key Takeaways from 1Q22 Call
- Xinjiang Goldwind Science & Technology (2208 HK) sees recent recovery in WTG price to be positive; and the increase in average unit size should be good to unit costs.
- Gross margin contracted 3.1pp YoY in 1Q22 and it has put in place many cost reduction initiatives to contain cost inflation. It expects more impacts can be realised in 2H22.
- External order backlog up 6.3% YoY to 16.97GW, with an encouraging 37.7% growth for overseas contracts. We think its 9.9x FY22F PER is inexpensive relative to the clean energy plays.
Asahi Raises Domestic Beverage Prices: Elastic “Beer” Demand Makes the Price Hike Unfavourable
- Asahi Group Holdings (2502 JP) announced yesterday that it will raise the prices of a majority of its domestic beverage brands to pass the rising cost of raw materials to customers.
- Although beers as a whole has a relatively inelastic demand, the price elasticity in different categories of beer varies quite a bit with high malt beers having highly elastic demand.
- We think the price hike could be more detrimental to Asahi than its competitors as the company generates most of its domestic revenue from the price-sensitive high malt beer segment.
Advantest – That Time in the Cycle When Orders Apparently Stop Being Important
- Advantest results were relatively uneventful with a marginal beat at the top line and a marginal miss at the OP level.
- Guidance was decent however with both revenue and OP above consensus and some lowballing on margins suggesting some upside to guidance.
- The company also said that it would no longer disclose orders because changing lead times made them less comparable because of course they do…
Related tickers: Renesas Electronics (6723.T), Keyence Corp (6861.T), Hitachi Construction Machinery (6305.T), Tesla Motors (TSLA.OQ), ZOZO Inc (3092.T), Shin Etsu Chemical (4063.T), ZOZO Inc (3092.T), Xinjiang Goldwind Science & Technology H (2208.HK), Asahi Group Holdings (2502.T), Advantest Corp (6857.T)
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