Equity Bottom-Up Archives | Page 48 of 222 | Smartkarma

• Mixed June quarter results at first glance suggest corporate overhaul strategy is working, with clear evidence Taobao/Tmall is stabilizing in terms of market share and profitability.
• Better platform monetization and clear timetable for achieving break-even by non-e-commerce business segments mean double-digit earnings CAGR by FY26 in our view.
• We expect Alibaba’s upswing business cycle and moderating headwind of housing market slump are paving the way for the stock’s re-rating in the next 12-24 months. 

• Profitability of the business surprised on the upside, as the net profit margin of JD.com increased from 3% in 2Q23 to 5% in 2Q24.
• Share buyback accelerated in 2Q24, as the company bought USD2.1bn worth of stock in the quarter, up from USD1.2bn in 1Q24. 
• The stock is trading at 7x 2024 PE, with a yield of >10% through dividend and buyback.

• Ola Electric (OLAELEC IN)  launched its highly anticipated electric motorcycles, offering models from mass market to super premium.
• With entry-level e-bikes priced to compete directly with Hero Motocorp (HMCL IN)’s popular models, Ola could disrupt India’s high-volume, competitive motorcycle market.
• Ola’s ebike volumes could ramp up quickly if its performance meets expectations of the value conscious customer base in the mass-end of the market.

• Screen has rebounded from its recent low, but strong 1H results, the recent weakening of the Yen and reasonable valuation point to further short-term upside. 
• However, management is guiding for slightly lower operating profit in 2H, and Intel’s capex cuts also support a cautious outlook. 
• Screen expects slower growth in 2025 wafer fab equipment demand than SEMI, and neither appear to have factored in concern over insufficient return on investment in AI. 

• Prataap Snacks Ltd (DIAMOND IN)‘s acquisition of Avadh Snacks and recent manufacturing expansions, including new facilities in Kolkata, Jammu, and Rajkot, align with its growth strategy.
• PSL reported an 8.7% revenue increase in Q1 FY25, despite facing raw material cost inflation and rising overheads. The company has streamlined distribution and cost management to sustain margins.
• PSL’s focus on expanding high-margin segments and leveraging cost efficiencies positions it as a resilient and cheapest player in the snack industry.

• Alibaba logistics arm CaiNiao’s revenue growth slowed in the June quarter
• Our main takeaway is that Chinese X-border eComm continues to slow
• We believe all of the large X-border eComm platforms may be affected

• Caterpillar Inc.’s Second Quarter of 2024 earnings showcased a mixed set of results reflective of both the robust execution of the company’s strategic initiatives and some market-induced challenges.
• Jim Umpleby, Chairman and CEO, emphasized resilience through the diversified market presence and the sound execution of long-term growth strategies.
• Despite facing a slight decline in sales and revenues, which fell by 4% from the previous year, Caterpillar recorded an increase in its adjusted operating profit and a noteworthy improvement in operating profit margins.

• Coupang’s recent quarter highlights a strong performance driven by strategic initiatives and operational improvements, alongside a promising outlook tempered by certain challenges that need to be addressed for sustained growth.
• The company’s revenue grew by 30% year-over-year in constant currency, showcasing impressive sales momentum.
• This growth was partly fueled by the acquisition of Farfetch, which played a key role in the company’s multifaceted growth strategy.

• Nike Inc has long been a dominant player in the global sportswear industry, renowned for its innovation and strong brand presence.
• However, recent challenges, including macroeconomic headwinds and market dynamics, have led to a downslide in its stock performance.
• Enter Pershing Square Capital Management, led by billionaire investor Bill Ackman, which recently disclosed a $229 million stake in Nike.

Dentsu’s H124 figures show sequential quarterly improvements, with the group posting organic growth of 0.2% in Q2. Encouragingly, this is in part ascribed to improved pitch win rates in all four reporting regions, underpinning growth projections through H224 and into FY25, despite the persistent difficult macroeconomic backdrop. The One dentsu initiative is driving collaborative efforts across group capabilities and geographies and we expect this to be at the heart of the new medium-term strategy, to be unveiled in H2. In the meantime, the Business transformation (BX) offering is proving effective in Japan and is now to be rolled out more widely. The shares continue to be valued well below peers and we would expect this discount to narrow with improving operational performance.

• 7747 Asahi Intec announced FY06/25 OP guidance of Y25.2bn, close to street expectations, pointing to substantial upside. GPM guidance has increased and continuation of strong 4Q YoY sales is expected.
• Seven days of short interest outstanding could lead to a short squeeze; Earnings briefing tomorrow reinforcing these trends should be a further catalyst for upside.
• With short interest now low and limited potential for further gains after the recent rebound, 7733 Olympus appears to be losing momentum, especially with China sales continuing to flag.

• Alibaba’s revenue grew by 4% YoY in 1Q25 due to the stagnancy in e-commerce.
• However, many expansion plans follow, including overseas market, physical stores, and fresh food wholesale.
• We set an upside of 51% and a price target of HK$115 for March 2025.

• In this insight, we discuss how Warren Buffett’s recent investment in Ulta Beauty is likely to have a positive impact on CJ Corp’s valuation. 
• CJ Olive Young (largest shareholder is CJ Corp) is the dominant health & beauty cosmetics chain in Korea. CJ Olive Young has a similar business model to Ulta Beauty.
• Our NAV analysis suggests an implied market cap of 4.7 trillion won or implied price of 160,977 won per share for CJ Corp, representing a 38% upside from current levels.

• New CEO Suyog appointed in Q1 FY2025, who held leadership roles at Reliance Industries (RIL IN) and McKinsey & Company.
• Aarti Industries (ARTO IN) reported 28% revenue growth, 52% EBITDA growth and 95% PAT growth on YoY basis.
• Company become cautious about its FY25 EBITDA guidance of Rs. 1,450-1,700 crore, given global headwinds such as the Red Sea crisis and Chinese dumping.

• Sea Ltd‘s 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time increasing take rates and profitability.
• Its core focus on competitive pricing, content, logistics, and especially advertising will help to drive growth, retention, and profitability as unit economics improve, whilst it rolls out its lending products.
• Competitive intensity has stabilised which should allow for take rates to rise higher, whilst Shopee is well positioned to further increase its lead. Valuations look reasonable given Sea Ltd’s profitable status.

• Freee KK (4478 JP) reported 4QFY06/2024 and full-year results today. Earnings were in line with guidance, but operating losses have declined significantly beating consensus by a huge margin.
• The company has issued guidance which calls for a break-even or an adj. OPM of 3% for FY06/2025E suggesting freee’s investments in marketing and client acquisition have finally paid off.
• Freee’s share price has moved up slightly during the last few weeks, but still trading at a discount to its own multiples and at a steep discount to Money Forward.

• Our positive focus remains on smaller cap Indian banks, with buys on value plays Bandhan, Baroda and UBI; we are negative on richly valued ICICI Bank and Kotak Mahindra
• UBI shares have been poor performers, but its returns to 1QFYE25 have improved and it is a value stand-out; Baroda remains a favourite and Bandhan has delivered better profitability 
• Kotak Mahindra is the peer group’s highest return bank post credit costs, but returns are declining; ICICI also has attractive returns but we believe its credit costs are unsustainably low

• Asahi Intecc (7747 JP) reported strong FY24 result, with all key parameters beating estimates. FY24 revenue exceeds ¥100B, a significant milestone of the mid-term management plan.
• For FY25, Asahi Intecc has guided for revenue of ¥117B (up 9% YoY), operating profit of ¥25B (up 14% YoY), and net profit of ¥19B (up 19% YoY).
• Growth will be driven by increase in overseas revenue in medical division despite the impact of stronger yen. Positive environment and strong demand enhance conviction on the long-term growth prospect.

• Istyle Inc (3660 JP)’s share price surged 17% after strong FQ4 results, surpassing expectations and signaling a potential turnaround.
• Despite past challenges, iStyle’s ambitious mid-term plan promises increased monetization and stronger growth ahead.
• With mid-term revenue and profit far exceeding expectations, istyle’s future looks brighter, with it’s share price potentially rising by more than 200%.

• Aramco’s Q2 operating revenue grew 5.7% YoY but missed estimates by 0.3%. Meanwhile, net profit fell by 3.4% YoY but its EPS edged past estimates by 0.8%.
• Total hydrocarbon production fell 8.9% YoY to 12.3 mboepd while crude oil realisations rose 8.8% YoY.
• In Q2, Aramco declared dividends totalling USD 31.1 billion, despite an 18.1% YoY decline in free cash flow to USD 19 billion.

• Transformation of the company from Equity investment driven to Equity and stress business. 
• Complete restructuring of Reliance Capital and Reliance Home Finance into Authum and Focus on ARC and stressed assets.
• Recoveries in completely provided portfolios of Reliance Capital, Planned debt fundraise for further growth.

• Total revenue increased by 8% YoY in 2Q24, lightly higher than 1Q24 and 4Q23.
• The gross margins of all business lines Improved significantly YoY.
• We set the upside at 35% and the price target at HK$506 for the end of 2025. Buy.

• Appier achieved 32% YoY sales growth in Q2, driven by strong US market performance and balanced revenue from both new and existing customers.
• The company’s EBITDA margin improved to 13%, reflecting strong operating leverage despite ongoing investments in growth initiatives.
• Trading at a 2.9x EV/FY25 revenue multiple, Appier is undervalued relative to peers, with significant upside potential from sustained growth and strategic initiatives.

• According to our NAV analysis, it suggests a base case valuation of 122,473 won per share for HD Hyundai, representing a 50% upside from current levels.
• The combined value of HD Korea Shipbuilding & Offshore Engineering, HD Hyundai Electric & Energy, and HD Hyundai Marine Solution is 11.4 trillion won.
• We estimate HD Hyundai’s 73.85% stake in Hyundai Oilbank to be 7.0 trillion won. We also applied a 5x OP of its core business and a 50% holdco discount.

• Floor & Decor Holdings, Inc. navigated the fiscal second quarter of 2024 with outcomes that reflected the broader economic challenges impacting the retail and real estate sectors.
• In the quarter under review, the company reported a dip in both total sales and comparable store sales which fell slightly short of expectations.
• This mirrored the continuing pressures from taut monetary policies adversely affecting housing market activities and discretionary spending on major projects.

• Tencent (700 HK) reported 2Q2024 results today which beat consensus. Domestic gaming resumed growth driven by the successful launch of DnF Mobile which continues to dominate charts in China.
• All three business segments saw improvement in margins driven by Tencent’s high-margin businesses incl. mini-programs, video accounts, short-videos, etc.
• We expect continued recovery in Tencent’s earnings, however, remain cautious given slowdown in consumption spending and macroeconomic uncertainties.

• Taiwan Semiconductor (TSMC) (2330 TT) has significantly outperformed this year, driven by a global AI-driven tailwind resulting in substantial revenue growth acceleration and a significant earnings upgrade cycle.
• Record levels of FCF generation have supported dividend increases, and whilst future DPS expectations seem conservative, the current dividend yield suggests future increases have been priced in.
• TSMC trades just above its 5-year historic average trading levels and at a premium to its key competitors, other smaller listed foundries, its main customers, and large suppliers.

• On 14 August, Shift Up (462870 KS) reported its 2Q 2024 results, which was the first earnings report post its IPO. 
• Shift Up reported sales of 65.2 billion won (up 65.4% YoY and 19.5% below consensus) and OP of 45.1 billion won (up 49% YoY and 21.4% below consensus) in 2Q24. 
• The company is preparing for a PC release of Stellar Blade in the near future to continue its strong popularity and it expects better results on PC than on console.

• Occidental’s Q2 revenue grew 1.7% YoY but missed estimates by 1.7%. Net profit surged by 34.9% YoY and beat estimates by 32.5%.
• Total production rose by 3.3% YoY led by robust growth in the Permian and Gulf of Mexico. Production touched its highest in four years.
• Average crude oil realisations rose 8.6% YoY, and natural gas increased by 11.3%, while domestic gas realisations fell sharply by 60.3% YoY.

• According to the management, the performance of 24H1 should be better than that of 21H1, but Fu Shou Yuan’s performance in 2024 full year may still fall short of expectations.
• In the future, the development strategy of Fu Shou Yuan would rely more on endogenous growth. Without aggressive M&A, long-term revenue growth rate could fall to single digit.
• Special dividends will continue in the future. However, one major risk for Fu Shou Yuan is policy risk. The bottom line is the demand for the funeral industry always exists.

• The announcement of JPY500bn share buybacks is a positive for SoftBank group minority shareholders, and confirms the positive impact of the emergence of Elliott as an activist shareholder
• The combination of the big weighting of Arm Holdings in the group’s equity value and the impact of the appreciating JPY has driven the NAV discount to very high levels
• Much bad news seems priced in following the market turbulence; we remain positive on Softbank shares as they trade at a historically high 57%+ discount to the estimated NAV

• Our NAV analysis of SK Square suggests NAV of 15.6 trillion won or 115,605 won per share, representing 48% higher than current share price.
• SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix. SK Square’s share price has declined by 27% since reaching its recent peak on 11 July. 
• SK Square had excellent results in 2Q 2024, driven by improving results of its affiliates including SK Hynix. 

• Bearish sentiment in Hong Kong declined during the carry trade sell off.
• Low Volatility, High Dividend and Value factors have continue to be profitable strategies in Hong Kong.
• Pop Mart International Group L (9992 HK) , Techtronic Industries (669 HK) and Giant Biogene (2367 HK) all reported solid operating and financial news leading to BUY recommendations.

• Strong Q2 performance: Asics delivered impressive profit growth and margin improvement, exceeding expectations with operating profit surging 119% YoY to 25 billion yen.
• Market share gains: Asics continues outpacing Nike across key regions, with strong growth in Japan, Europe, China, and the US, driven by Sportstyle and Performance Running.
• Bullish outlook, limited upside: Recent guidance revision and current FX rates cap near-term gains; stock trades at 19x NTM EV/EBIT with 15% upside to fair value.

• Following our recent insight Shortlist of High Conviction Philippines Equity Ideas, two companies featured Ginebra San Miguel (GSMI PM), and DigiPlus Interactive (PLUS PM) reported stellar Q2FY24 earnings. 
• DigiPlus Interactive (PLUS PM) trades at 7x PE FY24, with a 5.8% dividend yield, >40% ROCE, and tremendous scope for growth after its 300%/400% Revenue/PAT growth Q2.
• Ginebra San Miguel (GSMI PM) trades at 9x FY24 PE, a 5% dividend yield, 19% of the market cap in cash, and 35% ROCE with teen growth in CAGR revenue/profits. 

• In this insight, we discuss the recent share cancellation at S.M. Entertainment, valuations, and the launch of a new British boy band in August 2024. 
• Dear Alice boy band will start its promotion with the broadcast of “Made in Korea: The K-Pop Experience” on BBC One and BBC iPlayer on 17 August.
• We are cautiously positive on Dear Alice band. Unlike most aspiring boy bands, Dear Alice has a HUGE advantage of launching the band on the BBC through a TV show.

• In H1 2024 Profits and cash flow grew year over year
• Overall, operations tracking in line with previous guidance with some cost savings
• The key is the copper price which is closer to bottoming

• Ball Corporation reported its second quarter 2024 earnings, depicting a strategic navigation through a mixed market landscape, facing both headwinds and tailwinds across its various regional operations.
• The company’s global beverage can shipments and aerosol shipments experienced growth rates of 2.8% and 5.6% respectively, indicating strong demand for sustainable aluminum packaging solutions—an area in which Ball continues to cement its leadership.
• This growth, however, came amidst varying regional dynamics, from exceeding expectations in North America and EMEA to confronting challenges in South America, particularly due to economic volatility in Argentina.

• GoTo (GOTO IJ)“‘s 2Q2024 reflected an ongoing focus on growth as the company invested in both its On Demand Services and its Fintech segments driven by its product-led initiatives.
• The company’s growth was driven by the mass market, subscription products, and premium offerings such as express deliveries, which helped to boost both frequency and retention on the platform. 
• GoTo will continue to benefit from the service fee from Tokopedia, which can be used to drive its core ODS and Fintech businesses. The stock overhang is a temporary drag.

• Red Five sold 412 million shares acquired through the process of merging with Silver Lake, making a tidy profit of 30 million
• The move gives Red Five nearly $500 million in cash and bullion with no debt, providing significant flexibility for the company
• Len’s discussion in the Diggers presentation indicated that this was a medium-term strategy with potential action by June 2025 for evaluating and dealing with the shares

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• TSMC’s July 2024 revenue reached NT$256.95 billion, up 23.6% MoM and 44.7% YoY. Year-to-date revenue grew by 30.5% to NT$1.52 trillion, driven by strong orders from Apple, Intel, and Nvidia. 
• TSMC forecasts Q3 revenue of $22.4-23.2 billion, anticipating over 25% full-year growth. July revenue already at 35% of Q3 estimates. Analysts advise against assuming these results for the entire quarter.
• TSMC is capitalizing on AI and mobile demand, with analysts maintaining an “Outperform” rating with average upside of 14%, noting potential growth from 5G, HPC, and automotive sectors.

• The epicenter of the Asian ETF selloff last week was Japan, recording an outflow of nearly $100B from equity funds taking the net flows back to breakeven for the YTD.
• Seazen (Formerly Future Land) (1030 HK) and Swire Properties (1972 HK) had positive announcements while New Oriental Education & Techn (9901 HK) and Yum China Holdings (9987 HK) announced earnings.
• China Unicom Hong Kong (762 HK) shares are under pressure as the telco sector goes through a price war in cloud services and investors take profits from high dividend names.

• We believe total revenue will grow by 9% YoY and game revenue began to rise in 2Q24.
• We believe the operating margin will continue to improve YoY in 2Q24 after the seven-year high in 1Q24.
• We set the upside at 35% and the price target at HK$496 for the end of 2025.

• Monopoly was originally created as a critique of capitalism but became a massively successful business itself.
• Hasbro has grossed over $3 billion in revenue from the app version of Monopoly.
• Hasbro CEO, Chris Cox, will be discussing the development of Monopoly and other games on the podcast.

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• Hindenburg Research released a report on SEBI Chief Madhabi Puri Buch, accusing her of conflicts of interest, particularly about the Adani Group.
• Analysis of Responses given by Madhabi & Dhaval Buch, SEBI, 360 One and Adani.
• Analysis of events and allegations made by Hindenburg on Madhabi and critical assessment on that.

• We believe revenue will increase by 8% YoY in 1Q25, as most business lines have been growing.
• We believe the operating margin will be stable, as cost cut plans came to an end.
• We set an upside of 94% for March 2025, as we believe the stock is overly impacted.

• The retail deliveries of NEV (new energy vehicle) increased by 37% YoY in July.
• One of Alibaba’s supermarket chains, Freshippo, will sell its OEM goods, on Lazada.
• Tencent will formally start the game, Arena Breakout: Infinite, in August.

• Recruit Holdings (6098 JP) ’s share price has been up more than 40% YTD driven by better-than-expected earnings and an announcement to buy back ¥600bn worth shares.
• The company’s 1Q earnings beat consensus and showed some recovery across all business segments, however, the labour markets are heading towards a decline.
• It seems that the company has run out of investment options, and we would not rush to make an entry as worst is not over yet for the company.

• SDC partners with Microsoft while VCs in India prioritize deep tech startups for innovation and growth.
• Polish startup SEEDiA leads in smart urban infrastructure as AI hype in smart manufacturing is questioned for realistic outcomes.
• Non-a-Si panels expected to dominate auto displays 2024-2029 as Indian opto-semiconductor maker acquires US-based IC equipment company.

• Nippon Paint Holdings (4612 JP)‘s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.
• Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).
• China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company. 

• TSMC: +16.1% Premium; Strong Spread Rebound, Potential Opportunity to Short the Spread
• UMC: +1.6% Premium; Consider Shorting the Spread at This Level
• ASE: +3.8% Premium; Uncertainty Remains on the Sustainability of the Recent Breakdown

• We summarized the varieties that would miss 2024 NRDL negotiation and have to wait until 2026 to enter medical insurance coverage. This however means competing products would have more advantages.
• As the NRDL negotiation becomes more transparent/reasonable, there will be a balance point among companies’ profits, patient affordability and medical insurance budget. So, there’s no need to be overly pessimistic.
• The approval process of CanSino’s PCV13i could be faster than expected. 2024 is the best time to bottom-fish this stock. Reasonable market value is at least RMB5 billion.

• Last Week — TSMC’s July Revenue Soared, Asustek Guided for PC Growth Acceleration, While KYEC, Mediatek, and UMC Rebounded
• Key Events — This Week Look to Hon Hai & Zhen Ding Earnings and Guidance for Servers, AI PCs/Mobiles, iPhone 16
• PC Monitor: Promising Uptake of Microsoft Copilot and AI Services; Remain Structurally Long 

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We provide updates on recent results for Plover Bay Technologies (1523 HK) and upcoming H1 results for the Philippines names. 

• BeiGene’s 24Q2 results far exceeded expectations. Sales of BRUKINSA may exceed that of Calquence for the first time next year. Breakeven in 2024 becomes possible if effective cost control continues.
• BeiGene’s 2024 revenue could exceed Hengrui, marking the official transition of China’s innovative pharmaceutical industry from the old generation to the new one. Reasonable market value for BeiGene is US$19-27.5bn.
• Current valuation cannot reflect strong fundamentals.As BeiGene has established a convincing profit model, the market turmoil actually provides investors with a good opportunity to buy the stock at low price.

• Pacific Basin Shipping (2343 HK) may realise at least US$60m of revenue, or around 10% higher total TCE, in 2H24, based on its solid forward vessel coverage.  
• Sustained re-routing of vessels due to Middle East tension and higher demand from China due to fixed asset spending are supportive of rates. FFA is now 3-4% higher than spot.
• The stock is inexpensive at 9.7x PER and 0.8x P/B, and its 7.6% dividend yield is attractive. A solid balance sheet also means an upside on the payout ratio. 

• Despite rising spot rates, Maersk Q224 revenue and EBITDA both fell Y/Y
• After lifting pessimistic guidance in June, Maersk upped FY24 targets again
• We believe Maersk probably moved to limit spot exposure a year ago

• Zylox is a beneficiary of VBP and it has turned losses into profits. 2024 full-year revenue could be up 40-50% YoY. Net profit could be close to RMB100 million.
• Whether in terms of the number of products on the market or the efficiency of R&D, Zylox’s performance is superior to peers.Its valuation is expected to be higher than peers.
• We’re in a bear market, together with weak liquidity, Zylox’s valuation doesn’t fully reflect its strong fundamentals. So, while this is a good company, investors may need to be patient.

• RaaS has published a flash comment on 3D spatial data solutions group Pointerra (ASX:3DP) after its announcement that it has been awarded US$0.8m in new contracts by existing US energy utility customer Florida Power & Light (FPL).
• The contracts will see Pointerra3D, the company’s AI-driven analytics platform, used to extract information and insights from 3D LiDAR and 2D imagery data.
• We view the contracts as a positive sign that the contract delays and deferrals experienced by Pointerra in FY24 in its dealings with the US energy utility sector are coming to an end.

• AGUIL is a sports/casino operator spun out of Televisa, with potential for earnings growth through expansion of casinos and broadcast rights for Club America soccer team
• Current market cap of $320 million and low valuation of 9x current PE make AGUIL an attractive investment opportunity
• Recent purchases of stock by Emilio Azcarraga Jean from Televisa US ADR holders further support long-term upside potential for AGUIL

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• Rs. 1,000 crores allocated for growth, with Rs. 350 crores deployed. 25,000 spindles added by May 2025.
• Shift towards value-added products, including knitting, weaving, and dyed fabrics, with plans to double revenue in 3-5 years.
• Despite expansion and potential opportunities, capacity constraints and global demand shifts temper expectations in the short term.

• Kiswire Ltd (002240 KS) is the number one player for steel wire and rope products in Korea. More than 85% of its sales are generated overseas. 
• The company has a consistent record of generating positive net profit. It is trading at low valuations (P/B of 0.3x and EV/EBITDA of 4.5x).
• Its average net profit from 2021 to 2023 are much higher than previous three years from 2018 to 2020, which is a testament of increasing demand for its products globally. 

• Strong Revenue Growth Signals Robust Demand in PC and Server Markets for Asustek and Acer
• Asus Management Continues to Describe Multi-Year PC Growth Cycle Ahead; 3Q24 Will Be Start of ‘New Product Lifecycle’
• Visit to Guang Hua Digital Plaza to Review New PC Models First-Hand. Remain Structurally Long PC Makers; Acer, Asus, Dell.

• On August 7th, Meituan’s on-demand order volume reached a historical high of 98mn on surging orders from street drinks. Meituan has connected to the backend systems of street drink vendors;
• Delivery order is a double-edged sword. It boosts volume at the expense of margin. Further, the ownership of the volume is questionable;
• With Pin-hao-fan, Meituan already atomized the small restaurants. Now Meituan is playing the same trick with street drinks. The result will be more dramatic to the benefit of Meituan.

• 1Q results supported management’s full-year sales and profit guidance, which remains unchanged. Operating profit was up 2.7x YoY on a 17% increase in sales.
• Total new orders received increased by only 4.2% YoY and fell short of sales, but Aerospace & Defense orders were up 35.5% and slightly exceeded sales.
• Our own forecast – above management’s guidance this year with further growth next year – and our share price target are unchanged. 21% potential upside.

• Toyota Motor Corporation has released its financial results for the fiscal year ended March 2024, providing a comprehensive overview that reflects both the company’s recent successes and its strategic investments towards future growth.
• In fiscal year 2024, Toyota reported robust financial performance with total vehicle sales reaching 9.443 million units, marking a 7.0% increase from the previous fiscal year.
• This growth was largely propelled by escalated sales outside Japan, counterbalancing the dip in domestic sales due to shipment suspensions from Daihatsu Motor Company and Toyota Industries Corporation.

• Booking Holdings, a prominent player in the global online travel market, reported its second quarter 2024 financial results, highlighting a performance that exceeded expectations in various key metrics including room nights, revenue, and adjusted EBITDA.
• Room nights booked during the quarter grew by 7% year-over-year, achieving a total of 287 million.
• Revenue and adjusted EBITDA both rose by 7% to $5.9 billion and $1.9 billion respectively, while adjusted earnings per share experienced an 11% increase.

• Consolidated financial results for 1H FY12/24: Sales JPY26.2bn (+54.1% YoY), Operating profit JPY5.8bn (+229.4% YoY), Net income JPY3.7bn (+222.4% YoY).
• Segment sales in Q2: Memory probe card sales JPY12.4bn (+124.1% YoY), Non-memory probe card sales JPY1.3bn (+66.8% YoY).
• Full-year FY12/24 forecast: Sales JPY55.0bn (+43.6% YoY), Operating profit JPY11.6bn (+118.4% YoY), Net income JPY8.3bn (+101.1% YoY).

• The second quarter earnings report for ConocoPhillips presented a mixed scenario, affirming the company’s continued operational strength along with areas that may trigger concern for prospective investors.
• On a positive note, ConocoPhillips announced a 34% increase in its ordinary dividend, signaling confidence in sustainable financial health and a strong commitment to returning value to shareholders.
• Furthermore, the acquisition of Marathon Oil was a highlight, poised to enhance ConocoPhillips’ operational scale and resource base, which could lead to improved efficiencies and broader market reach.

• MercadoLibre’s financial performance in the second quarter of 2024 highlighted robust growth and profitability, demonstrating strong execution across its primary business segments: commerce and fintech.
• Notably, Marcos Galperin, the company’s CEO, reiterated MercadoLibre’s commitment to enhancing the financial and operational accessibility for numerous small and medium-sized enterprises across Latin America, a principle that has been foundational since the company’s inception 25 years ago.
• From a financial perspective, the revenue reached $5.1 billion, marking a significant year-over-year growth of over 40%.

• Aarti Industries (ARTO IN)  is planning a huge capex of 2500 Cr, which will increase their PPE by more than 50% from current CWIP and new capex.
• Company is targeting 1450 to 1700Cr EBITDA in next year which is almost 1.5x to 2x of the existing EBITDA.
• Introducing new products in the value chain, which has high-value added and high margins.

• Chevron’s Q2 revenue grew 4.7% YoY but its net profit fell by 26.2%. Revenue beat estimates by 1% while EPS missed expectations by 13%.
• Production grew 11% YoY, driven by record output in the Permian, strong growth in the DJ Basin, and successful PDC Energy integration.
• Q2 capex rose 5.2% YoY to USD 4 billion from higher upstream investments and PDC asset spending. Free cash flow dropped 8% YoY to USD 2.3 billion.

• Siemens Energy is a spin-off from Siemens focused on gas, power, and renewables, positioning itself at the forefront of the energy transition.
• The company faces challenges, particularly in its renewables division, dealing with supply chain disruptions and technical issues.
• Mark Heiley, founder of The Analyst, discusses Siemens Energy’s history, impetus for demerger, and potential in addressing renewable energy challenges.

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• Tracy and Joe discuss their favorite chat GPT and Claude prompts and how they use them for both serious and fun purposes
• They acknowledge the limitations and risks of using AI in professional settings, especially in large companies like Goldman Sachs
• Marco Argenti, Chief Information Officer at Goldman Sachs, explains his role in ensuring the smooth operation of technology within the company and the evolving use of AI in the financial industry

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• Ace Hardware Indonesia (ACES IJ) reported an impressive set of 1H2024 results with continuing momentum behind SSSG driven by promotional campaigns but margins remained stable at the same time.
• The company continues to open new format stores and renovate existing ones. It has also introduced new private label brands to drive growth and will introduce 15% new SKUs. 
• The company will be renamed PT Aspirasi Hidup Indonesia to reflect the separation from ACE US but we see the impact as minimal. Valuations remain attractive on 12.6x FY2025E PER.

• We believe Yum China remains the best long-term China catering play. 2Q24 results highlight the resiliency and agility of its business model and management to navigate tough environment.
• While cost optimization drove bottom-line beat, we share management’s view that it is not one-off exercise but will strengthen the company’s operation efficiency moat and market leadership.
• Macro concerns are well known and fully priced in in our view. Otherwise investors won’t have the opportunity to own the name for low double-digit P/E.

• TSMC achieves record-breaking performance in July thanks to high demand from key clients like Apple, Intel, and Nvidia.
• Chang Wah Electromaterials appoints new CEO and plans a major US$100M expansion in Malaysia through CWTC.
• South Korean micro LED component makers target the backplane market with AI-driven AR and VR technologies gaining popularity, while Taiwan’s PCB sector faces sustainability challenges in Southeast Asia.

• FY03/25 forecast: Revenue JPY2.30tn (+25.6% YoY), Operating profit JPY627.0bn (+37.4% YoY), Recurring profit JPY630.0bn (+36.0% YoY).
• R&D investment plan: JPY1.5tn over FY03/25–FY03/29, with JPY253.0bn in FY03/25 for new development buildings and equipment.
• Shareholder returns: JPY319.8bn total, including JPY79.9bn for share buybacks and JPY239.8bn for dividends.

• Astra International (ASII IJ) saw a slight decline in its core earnings in 1H2024, which was an admirable performance given the weakness in the auto market and commodities divisions.
• Offsetting the weakness in autos, Astra saw strong performances from its financing businesses for 4W, 2W, heavy equipment, and consumer finance, which booked +8% YoY growth in 1H2024. 
• Astra remains a key proxy for the overall Indonesian economy, with the diversity of its earnings exposure underpinning its resilience. Valuations are attractive, supported by a 9% FY2024E dividend yield. 

• Uniqlo Co. Ltd.’s strategy of raising prices in the face of rising costs has taken a toll on the Japanese clothing retailer’s bottom line in China due to growing competition and thriftier consumers.
• The fast-fashion chain’s Greater China profit and revenue both fell in local currency terms during the March-May period, dragged down by poor performance on the Chinese mainland and in Hong Kong, according to earnings results released last month by its parent company, Fast Retailing Co. Ltd. The results did not provide specific earnings figures for the period.
• Fast Retailing attributed the poor performance to lackluster consumer appetite, unseasonal weather and an insufficient product lineup to satisfy local customer needs.

• Amidst the volatility in the Japanese yen, companies like Money Forward, with a strong domestic revenue base and minimal exposure to forex risk, present an attractive investment opportunity.
• Despite broader market uncertainties, Money Forward continues to demonstrate impressive growth, with its corporate ARR surging by 38% YoY in the most recent quarter, signaling sustained momentum.
• The recent agreement to divest 49% of its non-core B2C segment, Money Forward ME, underscores the significant undervaluation of its core operations. 

• TSMC’s new plants will increase its production capacity for 3-nm chips, aiming to triple output this year. Global market share stands at 18%.
• Major tech companies’ increased AI investments are driving demand for TSMC’s advanced semiconductors, crucial for AI and machine learning applications. 
• TSMC’s automotive solutions output is expected to grow at a 50% CAGR through 2024, addressing global chip shortages in the auto industry.

• On 7 August, Korea Zinc (010130 KS) announced several impressive capital return plan that should help to increase shareholder value.
• The separation of Korea Zinc between the Choi and Jang families has been in progress in the past several years. The exact timing of when this occurs remains uncertain. 
• Our NAV Analysis of Young Poong is NAV per share of 470,065 won, representing a 52% upside from current levels. 

• Super Micro Computer, Inc. has garnered attention with its strong financial performance in Q4 2024, reporting record revenue growth driven by its AI server and data center infrastructure solutions.
• The company’s transition to direct liquid cooling (DLC) technology and AI-focused strategies have positioned it as a key player in the rapidly evolving technology landscape.
• With a 143% year-over-year revenue growth to $5.31 billion, SMCI has demonstrated its capability to scale and meet the increasing demand for AI infrastructure.

• Terumo Corp (4543 JP) has reported record high quarterly revenue and profit in Q1FY25, thanks to strong demand across all the business segments, effects of pricing measures, and favorable Fx.
• With the steady progress in profit improvement measures, Q1FY25 gross profit margin (53.3%) reached to its highest level since Q2FY22. Operating and net profit growth outpaced that of revenue.
• Amid currency uncertainties and inflation, Terumo has maintained its full-year FY25 guidance issued in May. Growth will be driven by US and Europe owing to the sustained increase in demand.

• Exxon Mobil’s Q2 revenue grew 12.2% YoY and net profit increased by 17.3%. Revenue missed estimates by 0.4% while net profit exceeded expectations by 6.2%. v
• Exxon Mobil’s Q2 oil production hit a record high since the 1999 merger, driven by strong output in Guyana and the Permian basin.
• Exxon Mobil expects full-year expenditures to total USD 28 billion, including USD 25 billion for ExxonMobil and USD 3 billion for Pioneer.

• Acer’s subsidiaries are driving growth, providing resilience and optimism in the face of shifts in the PC market.
• China’s smartphone industry is experiencing a boom in the second quarter of 2024, indicating strong potential for growth.
• A potential US ban on Chinese vehicle technology could deepen the technology rift with lasting effects, impacting various industries.

• King Yuan Electronics Co, Ltd. (2449 TT)‘s 2Q24 revenue/GM/OPM/EPS were NTD$9,035mn/40.5%/29.8%/NTD$2.2.
• The main reasons of revenue growth shall be the AI aspects, especially the contribution from NVIDIA Corp (NVDA US).
• For the upcoming 3Q24, we are keeping a relatively strong confidence of 5-10% growth rate for KYEC.

• A focus on innovation and adaptability has enabled Oiltek, a vegetable and edible oil process engineering company, to grow steadily, even amid global crises.
• When Henry Yong joined Malaysia-based Oiltek in 2008 as its managing director, his priority was to hone its innovation. “We have diversified into refinery processes and engineering solutions for a wide variety of edible oils, including palm, sunflower and soybean oil, non-edible oils, renewable energy, such as biogas, biodiesel and feedstock for sustainable aviation fuel, and animal feed.

• PAR had previously issued its quarterly sales update making the second quarter results more of an update on how the business is shaping out for the remainder of the year. 
• IPAR used the Q2 earnings call to disclose its intention to enter the luxury fragrance market with its own brand in 2025. Owning a brand is not new for IPAR.
• The consumer continuing to purchase fragrances undisturbed should create the opportunity to grow sales in the second half of the year ahead of new launches scheduled for 2025.

• Low Volatility and High Dividend yield stocks in Hong Kong outperformed the region during recent global market sell off.
• MGM China Holdings (2282 HK) is outperforming its peers with revenue now exceeding pre-COVID levels.
• Weibo (9898 HK) maintains a high cash flow and dividend yield in China’s tech sector.  Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK) benefits from China’s new large-scale maintenance cycle.

• Palantir Technologies continues to establish itself as a leading force in the world of data analytics and artificial intelligence.
• The company’s recent financial results reveal a mixed but overall positive picture, showcasing strong revenue growth and solidifying its position as a key player in both the government and commercial sectors.
• Palantir’s focus on leveraging AI to solve complex problems at scale is clearly paying off, with impressive strides in revenue and customer acquisition.

• The acquisition of Filo (FIL CN) by Lundin Mining (LUN CN) and BHP Group Ltd (BHP LN) could be the start of a much larger M&A wave.
• Many juniors trade at 0.1x to 0.2x NAV while transactions typically happen at 0.8x-1x NAV. Filo was acquired at 0.81x NAV so right within this range.
• We continue to like a basket of junior copper mines to get exposure to M&A copper dynamics

• The sharp Japanese market correction has hit the banks hard, and heightened market volatility is likely to remain a feature, at least in the very near term
• Nonetheless, the big five’s results in the first quarter to June-end paint a reassuring picture, and we see that BoJ is pausing on rate rises in these unsettled markets
• Among the big five Japanese bank shares, we highlight Resona and Mizuho in particular for their strong gearing to higher interest rates; we are also positive on SMFG and Concordia

• Yum China Holdings (9987 HK) reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.
• Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.
• Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China’s revenue and profit growth potential.

• Given market concerns that AI is overhyped and not yet delivering sufficient value, we analyze Microsoft’s Copilot disclosures and examine signs of AI services traction among corporate clients.
• Signs indicate that Copilot is gaining substantial traction with corporate clients, adding value to software development, business operations, and healthcare documentation functions.
• The number of organizations paying for MSFT’s AI services is expanding rapidly. We view this as a promising indicator of increased AI adoption and substantial value creation.

• Apple achieved a record $85.78B in Q3 revenue, up 5% YoY, and earnings per share rose 11% to $1.40, exceeding expectations and reflecting strong financial health. 
• IPhone revenue was $39.3B, surpassing the $38.81B estimate. Despite a 1% YoY decline, iPhone sales showed growth on a constant currency basis, contributing significantly to overall revenue.
• Services revenue reached a record $24.2B, growing 14% YoY. The gross margin was 46.3%, slightly above estimates, despite challenges from foreign exchange and product mix changes.

• Airtel Africa is undervalued and has potential for upside growth
• Company has shown strong performance in revenue and EBITDA growth despite challenges
• Potential IPO of mobile money business could unlock more value for shareholders

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• IGT announced split with slot machine operator merging with EVRI
• Lottery business retains ownership, manages lotteries for 92 customers worldwide
• EVRI to borrow $3.7bn for debt refinance, distribute $2.2Bn to Lottery business; estimated tax leakage of $100m for taxable accounts

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• GMV increased 21.4% YoY to JPY85.7bn, while revenue decreased 7.7% YoY to JPY20.4bn, and operating profit fell 46.6% YoY to JPY1.4bn.
• In Q3 FY09/24, GMV grew 21.4% YoY, with Global Commerce revenue up 21.3% YoY and Entertainment revenue up 6.8% YoY.
• The company recorded an extraordinary gain of JPY1.0bn from the Value Cycle segment share transfer, impacting FY09/24 results.