Equity Bottom-Up Archives | Page 67 of 222 | Smartkarma

• Today, after Hong Kong market close, the Ministry of Education issued a new draft regulation on K12 tutoring. 
• I have written before on New Oriental Education & Techn (EDU US) and China Beststudy that there is now a equilibrium reached between all parties on tutoring in China. 
• The new draft regulation basically puts it into concrete policy, which should alleviate investor concern on the sector. 

• Alibaba reported a largely in-line December quarter as lower take rate and widened loss from international commerce businesses resulted in pressured bottom line.
• The results also suggest a persisting pattern of China consumers trading down, which – along with the company’s ongoing internal overhaul – will continue to be headwind in 1H24.
• That said, we see increase of US$25 billion share repurchase program and dividend policy to well support share price at current valuation. 

• The 1Q24F outlook is still showing a decline, with a slightly increase in revenue of 2% QoQ. However, the GM is expected to decrease to 9-11% from 16.4% in 4Q23.
• Management predicts that there will be a double U-shaped recovery in 2024F. Revenue in 2024F is expected to grow annually by mid-single-digit.
• The main areas of growth for SMIC in 2024F will be in mobile phones, smart homes, IoT, and computing.

• We expect Meituan continue under pressure in the medium term due to the intensified competition with Douyin, and Meituan’s low price defending strategy in both food delivery and IHT businesses.
• Our non-IFRS net profit is roughly in-line with consensus in 4Q23 but 20%/25% lower than consensus in 2024/25.
• We downgrade the stock to SELL rating and cut TP to HK$57/share.

• Paytm Payments Bank faces regulatory scrutiny and compliance challenges, impacting its trajectory and profitability amid ongoing supervisory action by the RBI.
• With significant restrictions on operations and revenue streams, Paytm navigates a complex financial landscape, highlighting resilience amidst regulatory uncertainties and governance concerns.
• Despite proactive measures, including partnership diversification and service continuity, Paytm’s future hinges on addressing compliance lapses and fostering transparent governance to regain trust in the fintech sector.

• We retain Bank of Baroda as the value Indian bank, despite its strong share performance, for its modest valuations, healthy ROE and further improvements in delinquency metrics
• HDFC Bank remains out of favour with the market but we retain it as a buy, with its potential for medium term gains post-merger and its strong balance sheet
• Axis bank remains on our watchlist; we remain negative on State Bank of India for its delinquency risks, low core capital ratio and limited progress on returns

• For 1H24 we model EBITDAR of A$2,396m, ahead of Visible Alpha consensus of A$2,273m, which represents an EBITDAR/ASK 35% higher than 1H19.
• 1H24 will be important to help us better understand “normalised” unit cost levels, with inflation high to date, in part due to a 17% capacity deficit in 2H23.
• Qantas has seen comparable inflation to the US majors but considerably higher profitability. This should enable it to invest in product, operational and customer service improvements while protecting margins.

• In the fourth quarter of 2023, Teradyne, a provider of computer-controlled configurations, and collaborative robots, reported financial results in line with its guidance.
• The company highlighted strong performance in the Memory Test sector, which saw the double year-over-year revenue from DRAM testers due to HBM demand, and in the Industrial Automation marketplace.
• Additionally, Teradyne experienced robust growth sequentially in sales from its Robotics team, as it elevated shipments to meet the record backlog of its UR20 Cobot at Universal Robots.

• The world does not need another opinion on the Vision Pro, the Apple mixed reality device whose launch coincided with Meta earnings, but I will share mine so I can understand my thought process in the future.
• I have the right to be wrong. The revenue share of Meta’s FRL is so small it might seem redundant to give it so much limelight.
• But, directionally, it’s an important category for the company. With a launch of this scale, the hyperbole and sensationalism rhyme with things we’ve seen in decades past.

• Imagine a racetrack with 10 horses. The first two horses (NFLX and DIS) are peeling away from everyone else; with NFLX still having a sizeable lead over DIS.
• But the stage is set for DIS to start accelerating faster than NFLX.
• This is how I would describe the US Media sector today, and Disney’s Q1 results released yesterday only serves to bolster that narrative.

• Alibaba’s revenue grew by 5% YoY and its operating margin improved by 2 percentage points YoY in 3Q24.
• We believe the company turned its focus from margin improvement to revenue growth.
• We set the upside at 20% and the price target at HK$90 for March 2025. Buy.

• A company that is geared to Japan’s macro revival with additional micro catalysts. 
• Ownership of financial companies which are set to benefit from a normalisation of Japanese monetary policy.
• The low Price to Book means the company will need to keep up momentum on its capital management plans to  stay in the Prime Section of Topix.

• L’Oreal SA (OR FP) is the largest beauty company in the world, with a 15% global market share.  The second place in contrast has only around 5% market share. 
• The company has been excellently managed, and out-performed the overall global beauty industry growth by an average of 5% over the last 3 years.  However, growth could be slowing down.
• L’Oreal is now trading at 34x forward PE, which is a near 100% premium over the average of European consumer staples, and near a multi-decade high. 

• Bank Mandiri (BMRI IJ) stood out from its peers with higher loan growth and lower cost of credit with PPOP growth of +17.3% YoY and its ROE reaching 23%. 
• The bank experienced a slight decline in NIM in 4Q2023 but asset quality remains solid and its digital initiatives continue to reduce costs and attract new users.
• Bank Mandiri‘s guidance for 2024 is more positive than peers for loan growth, as it continues to push out its value chain lending strategy into higher-yielding segments. Valuations remain attractive.

• Not so long ago, Disney’s share price was nearing the $200 mark, despite the pandemic’s severe impact on its Parks and Resorts business.
• Fast forward to the present, and even with the parks posting record results, Disney’s share price has fallen to levels not seen in a decade, raising the question: what happened?
• Several factors are at play, including challenges within the studio arm, ongoing decline of its legacy media operations, and Big Tech’s incursion into sports media.

• Despite upping the FY24 guidance in the prior quarter (Q2FY24), KPIT is confident of beating even the raised guidance, led by strong Q3FY24 performance and an upbeat outlook.
• Despite accelerated revenue in H1FY24 from the Honda engagement, Q3FY24 saw robust revenue growth of 4.3% QoQ in CC terms. EBITDA margin expanded to 20.6% vs 20% QoQ. 
• KPIT’s new venture, Qorix, is coming along well and could prove to be transformative. This could enable KPIT to become a product company, alongside being a high-growth service company.

• The American Airlines Group reported adjusted pretax profit of $257 million for the fourth quarter and approximately $2.5 billion for the full year 2023.
• This result was driven by the strength of the network, demand for products, and execution by the team.
• Positive indications from the group include historically strong operation with the production of record free cash flow and a strengthened balance sheet through debt reduction.

Key points (machine generated)

• BV Financial recently completed its conversion from a mutual holding company to a full-converted stock company.
• The bank has consistently achieved a return on equity of 10-11% in recent years.
• Despite its significant growth, BV Financial’s securities represent only 5% of its total assets of $933 million.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• KLA Corporation saw a revenue of nearly $9.7 billion in 2023, marking a decrease of 8% compared to the previous year.
• Despite less leading-edge investment in both logic and memory, legacy node customers and the semiconductor infrastructure assisted in exceeding the initially projected revenue.
• Business segments such as automotive, specialty semiconductor process equipment, and infrastructure for wafer and mass manufactures experienced growth in 2023.

• Readthrough: Automotive Applications End-Demand — China Market Soft But Touch and Dimming Technology is Expanding
• Readthrough: Panel Makers Constraining Supply in 1Q24 to Protect Pricing
• Readthrough: Customers Are Restocking Notebooks in 1Q24E, PC Replacement Cycle is Coming

• Shiseido Company (4911 JP) relies heavily on Japan and China, each making up over one quarter of sales. 
• The long thesis is simple – I expect improvement in both regions in the near future, and the valuation is very attractive.
• Blackstone just announced a potential bid for L’Occitane (973 HK), which I have written extensively about.  We could potentially see a pickup in interest in the sector.

• Latest Performance: Taiwan AI Names Keep Flying; ASE & Mediatek Lose Steam After Reporting
• Largest Display Driver Maker in the World’s Guidance Implies Growth Reversal Coming in Feb & March
• TSMC and Samsung Will Keep Their Most Advanced Chipmaking at Home

• Water Oasis (1161 HK) just went ex-dividend on 6th Feb and is now trading at a 7.5x PE FY24e and a 10.7% dividend yield on trailing FY23 earnings.  
• The company has refurbished its flagship stores, and we believe it can perform 8-9% better year over year for FY24 than FY23.
• The company also has 230 mn HKD net cash (after netting dividends paid out), representing     26% of market capitalization.

• UMC’s Q423 results in line with expectations. Q124 guidance, down 2-3% QoQ, demonstrates ongoing headwinds for foundry
• Intel, UMC foundry partnership helps the latter overcome their 14nm issues while giving them bargain basement access to US manufacturing capacity 
• If Intel could have developed and deployed the proposed 12nm specialty process on their own, they would have….

• State Bank Of India (SBIN IN) has reported its 3Q24 (Dec-23) results with a one-off pension and wages revision charge which impacts the short-term earnings profile.
• Medium-Term ROE Forecast Intact (16% to 18%) with management confident of even touching 20% in next couple of years; loan growth forecast of 14% to 16% for FY25e-FY26e.
• We reiterate our view: P/BV is cheap at 1.3x FY25e. SBIN has the potential to re-rate to P/BV of ~1.6x FY25e in the near term (~40% upside). Opportunity to ADD.

• Novatek reported over 20% YoY growth for 4Q23 and slightly beat expectations but the latest guidance implies growth to reverse to a sales contraction in the latter part of 1Q24E.
• Gross and operating margins are guided to contract; nevertheless, inventory dropped to one of the lowest levels since COVID and is expected to remain healthy.
• Novatek’s latest results appear to signal that while inventory levels are healthy, the demand growth rebound for display drivers that started in June 2023E could lose steam in 1Q24E.

• 4Q23 surpassed the guidance for revenue, GM, and OPM. 4Q23 EPS reached NT$8.76, compared to NT$10.46 in 3Q23 and NT$6.64 in 4Q22.
• 1Q24F is typically the traditional low season for consumer electronics, and there are fewer working days during the Lunar New Year.
• It is expected that the dividend payout ratio this year will be similar to previous years, which has been higher than 80% in the past few years.

• GOL recently filed for CH11 bankruptcy protection as it was due to run out of readily available cash in mid-February. We assess the ramifications.
• We highlight that GOL may need to reduce aircraft ownership/financing costs by a third to achieve PBT margins of 5%+; difficult in a strong aircraft leasing market.
• We see the risk GOL loses scale. However, long-term, an increasingly competitive GOL is good for its parent Abra Group, and sister company Avianca.

• Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
• The company has reported a 33% year-on-year increase in Q2 FY24 revenue to $0.808m, in what is seasonally the weakest quarter for the group.
• Search portal revenue grew 11% on the previous corresponding period (pcp) but, not unexpectedly, dropped 7% on Q1 due to seasonal factors. 

• Just over 40 Singapore-listed stocks that posted price gains over the past year, maintain single-digit P/E ratios and double-digit ROEs.
• Aside from Singapore Airlines, the most traded stocks of the cohort over the past 5 weeks were Geo Energy Res, Golden Agri, Food Empire, TJ DaRenTang, Valuetronics, Marco Polo Marine, Ley Choon, Bumitama Agri and Stamford Land.
• Among these stocks, Golden Agri, Food Empire, TJ DaRenTang, Bumitama Agri are currently trading below their Consensus Estimate Target Prices.

• Pientzehuang’s 2023 results were well below expectations. The performance in 23Q4 was terrible. 2024 performance would continue to be under pressure, without any reversal signals to be seen.
• In the process of China’s de-financialization, growth potential of assets with strong financial attributes would weaken.Pientzehuang’s ability to raise prices won’t be as strong as rigid-demands such as telecommunications tariffs.
• Pientzehuang’s stock price performance doesn’t follow traditional TCM companies.It’s not surprising if Pientzehuang’s valuation drops to PE of 15x or even lower. We recommend investors not to rush to bottom-fish.

• December: strong volume growth, but worsening price declines for STO, Yunda
• Recent trends in X-border parcel volume growth & pricing moderated in December
• In 2024, look for SF to continue its outpeformance; STO, Yunda should still lag

• December was best reading from our momentum tracker since November 2022
• Improvement driven by rising spot rates, new fees, and stronger volume growth
• Even before Red Sea / Suez capacity squeeze, conditions were bottoming

• We expect Kuaishou to report C4Q23 revenue, IFRS op. profit and IFRS net income in-line, 34% and 29% vs. consensus, thanks to margin improvements;
• Playlet continued to generate significant organic traffic, leading to decreasing sales marketing cost and growth in advertising inventories. We further expect AI to drive playlet market expansions;
• E-Commerce GMV growth was robust. Kuaishou will likely increase take rate in the future. We maintain BUY and raise TP to HK$79, implying an 17x PE.

• We believe Hang Seng Index’s tumble was due to a comment in a governmental newspaper.
• BYD announced that it will sell three models of new energy vehicles in Indonesia.
• Trip.com began to sell tickets of scenic locations via the Kuaishou app.

• We identified Kato Sangyo (9869 JP) (Kato) as the most attractive Japanese laggard opportunity due to its net cash balance sheet, undemanding PER, and attractive PEG and P/FCF ratios  
• Management guides for 25% EPS growth in FY24 with only 15% net profit growth, implying a massive share buyback of ~JPY9 billion (5.4% shares in issue) with subsequent cancellation       
• The combination of impending share buybacks, cancellation of existing treasury shares, and dividends equates to 10% shareholder returns in FY24   

• In this insight, we discuss how Temu and AliExpress have been taking away meaningful market share away from Coupang (CPNG US) in Korea in the past year. 
• Temu’s MAU skyrocketed in the past year in Korea. Temu’s MAU surged from zero in January 2023 to 3.28 million as of December 2023.
• One could argue that Coupang’s valuations are overvalued relative to its Chinese competitors such as PDD Holdings (PDD US).

• Travelsky Technology Ltd H (696 HK) has been the predictable play for a rebound in domestic tourism in China.
• 1H23 result did not show anything that should alert investors to the changes in business practices.
• The recent profit warning disclosure has alerted investors that there is something else beyond the usual.

• A capitulation-type event for the Hong Kong market is ongoing.
• High-Dividend stocks will provide a safer return regardless of broader market moves.
• A false breakdown below Oct 2022 support will provide a signal for higher-beta exposure.

• A Smartkarma Corporate Webinar | Lendlease Global: Sustainable Returns Through High-Quality Assets revealed a global commercial REIT with high-quality retail and office properties in Singapore and Italy.
• LREIT saw rental reversions of +16.3% YoY in its 1Q2024 with a portfolio committed occupancy of 99.9% and a weighted average lease expiry of 8.0 years by NLA.
• Management remains optimistic about the coming year with a strong capital position, a high level of sustainably linked finance, a low cost of debt, and an eye on potential acquisitions.

• Due to the ongoing earnings season, for the next couple of weeks, we will temporarily deviate from our regular format and instead focus on reported earnings.
• HDFC Bank (HDFCB IN) – The core concerns that worry the street do warrant attention. While the management believes it is temporary, we anticipate some more incremental pain ahead. 
• Other interesting names highlighted include Delta Corp Ltd (DELTA IN), IndiaMart (INMART IN), Polycab India (POLYCAB IN), and Poonawalla Fincorp (POONAWAL IN). 

• Plummeting ASPs likely pushed STO and Yunda OpInc margins below 0% in Q423
• The companies’ operating cash flow may be insufficient to fund needed capex
• Reduced investment could lead to slower growth, consolidation pressure in ’24

Key points (machine generated)

• Apple’s focus on carbon-neutral products and use of titanium in iPhone 15 Pro is driving interest in titanium resources.
• Sovereign Metals’ discovery of the world’s largest undeveloped natural rutile deposit has attracted the attention of Rio Tinto, which recently became the largest shareholder in the company.
• Titanium is considered a critical material due to supply shortages and China-controlled supply chains, with its use in Apple products highlighting its growing importance. Investment in Sovereign Metals offers an interesting opportunity, especially given the lack of upcoming funding requirements and a discount to Rio Tinto’s entry price.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• In the world of 8-10% dividend-yielding commodities, Fortescue Metals (FMG AU) almost makes the cut. We would wait for a better entry point here despite iron ore strength.
• We are also mindful of the risks associated with capex in the green energy space to achieve zero emissions and ramp costs with the recent production increase.
• We believe numbers are at par, trading at 9.6x PE on the current spot price (130 USD/ton) with a 7% dividend yield ( assuming a 65% payout ratio). 

• HDFC Bank reported earnings last week. The next day the stock fell 8% followed by another 4% the day after.
• HDFC Bank is one of India’s bluest blue chip stocks with a reputation for being a high quality compounder.
• What happened and where do we go from here? First, some lessons from another life.

• Dickson Concepts Intl (113 HK) reported the best result in its last six semi-annuals in H1 FY24, with profits rising 42% YoY. 
• Net cash on the balance sheet was 9.6 HKD/share (vs. share price of 4.54 HKD/share). Gross cash was over 12 HKD/share. 
• The company increased its interim dividend by 25% to 10 cents for the first time after four years (the expected full-year dividend is 37-40 cents).

• State Gas Limited (ASX:GAS) is a junior energy producer and explorer with assets concentrated in the Bowen Basin, Queensland.
• The Rolleston West CNG Project in the Bowen Basin is now in the final stage with mechanical completion and tie-in of the Rougemont-2/3 well anticipated within the next week to be followed by pre-commissioning activities.
• Importantly, first production and shipments are tantalisingly close and whilst the rate will initially be modest, up to 0.75TJd, the project has intrinsic growth potential (up to 1.7TJd) which could fund modest appraisal and evaluation works, particularly converting contingent gas to bankable reserves.

• The previous week was packed with deals, IPOs, and other SPAC-related events.
• Four new deals were announced, including SPACs taking a conglomerate, an eVTOL company, and Korean and Chinese Biotech firms public.
• Also, a new SPAC priced its IPO, and SPAC rules could come under the microscope in the week ahead when the SEC meets. 

• While the 2H23 result of Lonking Holdings (3339 HK) may disappoint due to a plunge in sales volume, it is a yield play given the high historical payout ratio.
• Assuming a DPS of HK$0.10 for FY23-25 as in FY22, yielding 8.3%, the total dividend will amount to Rmb1.2bn. This only equals 22% of its net cash (including short-term investments).
• Its controlling shareholders bought 7.3m shares since 27 Dec, raising the stake by 0.13pp to 56.2%, demonstrating their positive view on the share’s value and long-term outlook. 

• MSFT’s new AI features for Windows will need computers with at least 16GB of DRAM to run effectively. MSFT is asking manufacturers for this as a minimum for AI models.
• MSFT announced Copilot Pro for individuals and small businesses last week. The desire to use generative AI and the minimum required DRAM will drive accelerated PC upgrades.
• We note relative strength in 16GB DRAM prices; In Memory space, we continue to see relative value in SK Hynix, however, Nanya has the opportunity to Outperform in Taiwan.

• Sam Goi adds to PSC, JB Foods and GSH stakes CapitaLand Investment again led the buyback consideration tally, buying back 13,197,700 shares at an average price of S$2.98 per share over the five sessions.
• The principal activities of GSH corporation are its property development business, hospitality business, in addition to its frozen food trading business.

• Schedule of S-Reits earnings or business update Lendlease Global Commercial REIT 1-Feb Frasers Centrepoint Trust (FCT) will kick off the current financial reporting season for S-Reits with the release of its first quarter (ended Dec 31, 2023) business update after the close of trading on Jan 22, 2024.

• 23Q3 revenue would increase by 15% QoQ/over 40% YoY. 23Q4 revenue would increase 8-10% QoQ/over 45% YoY. 2023 full-year revenue growth would be 42-43%.Profit growth is more optimistic than revenue.
• In the first week of January 2024, YoY high growth momentum continued from December 2023, without any impact of consumption downgrades so far.In 2024, Gushengtang would accelerate pace of M&A.
• Gushengtang’s business model has been successfully validated. Different from Aier, Gushengtang is still in a period of rapid expansion. The Company remains our top pick in China’s medical service sector.

• Minsheng Education (1569 HK) is a highly undervalued Chinese education stock with high dividend yields. Market cap of the company has declined by nearly 90% from Jun 2018 to today. 
• Minsheng Education’s dividend yield averaged 5.1% from 2020 to 2022. Estimated dividend yield is 14.6% in 2023.   
• Minsheng Education mainly provides educational services in China. The company is one of the leaders of China’s private higher education industry.

• Market leader positioning to consolidate – IBJ is a marriage consultancy service with strong brand equity, offering high-quality services delivered by human professionals.
• With an industry-leading membership base, affiliated marriage consulting firms within the IBJ network harness the economies of scale through the platform, ensuring a cost-effective approach to service delivery.
• It has a strong track record of sustainable free cash flow generation. 

• This is our first report on cyber exposure solutions provider, Tenable Networks.
• The company’ Q3 2023 earnings highlighted steady financial performance, strong contributions from its platform products like Tenable One, and overall business growth, particularly in the public sector.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• As more and more China’s drugs successfully obtained FDA approval, we analyzed the “style” of the US FDA, aiming to help investors understand the prospects of domestic companies’ internationalization strategies.
• For mature pharmaceutical companies, we analyzed the benchmarks for some key financial indicators in terms of both revenue and cost. On these basis, companies’ profit performance would be decent. 
• As a top pharmaceutical SOE, China Resources Pharmaceutical (CRP) wouldn’t go bankrupt.This is the bottom line.Together with stable dividends, CRP is a worthwhile investment target to hold in bear market.

• This is our first report on sensor technology player, Allegro MicroSystems.
• Sales in these strategic growth areas made up 56% of total sales, indicating a successful strategy execution focused on these specific sectors.
• The company’s automotive revenues grew 31% year-over-year, with the electrification of vehicles and Advanced Driver Assistance Systems adoption being the main growth drivers.

• This is our first report on IT services company, Kyndryl.
• This increase has been attributed to successful execution of its operations, demonstrating their ability to drive substantial profit growth in the company.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on sensor-based technology solutions provider, Sensata Technologies.
• The dip in revenue was cited due to factors like market outgrowth slowing over the last 12 months and unfavorable movements in foreign currency.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on hybrid cloud analytics software provider, Teradata Corporation.
• The company’s 2023 Q3 earnings were recently reported and the leading cloud analytics and data platform company had delivered another strong quarter and remained confident it would achieve its 2023 forecast.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on Varonis Systems, a company specializing in data security and analytics.
• The company is navigating a pivotal shift in its business model, transitioning from traditional software offerings to a Software as a Service (SaaS) model.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is our first report on Workiva Inc., a leading provider of solutions for enterprise productivity.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.