Equity Bottom-Up Archives | Page 71 of 222 | Smartkarma

• Regulatory Tangles:Promoters faced cricket betting allegations, SEBI penalties, debarment from financial markets and a litany of investigations. Legal and financial risks loom due to regulatory delays and unresolved litigations.
• Operational and Financial Hurdles:Excessive inventory, delayed payments, and opaque related-party transactions.Weaker margins, ROE, and underutilized manufacturing hint at broader governance frailty.
• Debt Dilemmas and Transparency Concerns: Heavy reliance on high-interest promoter loans. Governance lapses are reflected in financial metrics, raising questions about transparency and conflicts of interest.

• We view both Weixin Video Account (WVA) and Douyin China as secondary assets to their respective parents, which in our view, may lead to them forming…(TBC)
• However, rising competition in the short-play (短剧) market may put the two businesses in more direct confrontation, which may delay or diminish the chance for two to work together;
• We view Tencent as the likely winner in the continuing evolution of short video as it considers various options to maximize the value of WVA traffic.

• Local news reported an unnamed expert suggesting ByteDance might be buying Eleme for US$7bn, leading to share of Meituan to fall;
• While we believe (1) buying a food delivery business to complement Douyin’s in-store business makes some sense and…
• (2) ByteDance has been aggressive in pushing the boundary of its businesses, an entry into domestic food delivery is a daunting challenge that yields very little benefits for ByteDance;

• Singapore Airlines (SIA SP) (SIA) November operating statistics were good, passenger load factor rose by 1.9ppt YoY to 87.8%, and cargo load factor rose by a similar quantum  
• Market observations suggest yields should remain at high levels and cost items such as fuel and USD-denominated items on a favorable downtrend 
• If this performance continues, SIA will beat consensus easily. We recommend BUY with a TP of SGD8.07 – pegged to 10x FY24 PE. (+26% UPSIDE)  

• Driven by stronger PC/networking DRAM sales, Micron reports 5% stronger 4Q23 sales, 10-13ppts q/q margin improvement and 34% y/y decline in MOI to 5.2 months;
• Micron guides 1Q24 sales growth 8-16% q/q and 38-49% y/y and gross margin of 12%, beating Bloomberg consensus estimates by 6ppts;
• Rooms to raise: 1. 1Q24 sales of 18% q/q likely; 2. Turning profits sooner than expected; 3. +Free cash flow in 2024; 4. HBM3E for GH200/H200 to improve mix, margin. 

• Q3 2023 results for the Philippine Stock Exchange / (PSE PM) were uneventful. EBITDA margins were rock solid at>60%, and net margins were>40%. Revenues and profits were up 1.3%/51% YoY.
• Cash and Investments at 4.8 bn pesos account for 32% of the market capitalization. The cash will aid in acquiring the remaining 79% stake in PDS.
• Trading at 19x/17x FY23e/24e and a dividend yield of 5.3%/5.9%, there are several catalysts to drive earnings over the next few years (and investors are paid to wait). 

• LIFULL runs the LIFULL Home’s real estate website. Compared to its main rival, whose strategy is focused mainly on the quantity of listings, LIFULL’s aim is to achieve greater quality, as measured by the percentage of inquiries that lead to sales for professional real estate clients.
• While others primarily charge a fixed fee for listings, LIFULL charges a combination of fixed fees and incentive fees based on the number of inquiries received for a listing.
• Compared to its main rival LIFULL tends to invest more heavily in software development and considerably less on advertising. 

• Pfizer seems to be the worst-performing large pharma stock of 2023 after it lowered 2024 forecast. The Company continues to grapple with plummeting demand for its COVID products
• The acquisition of Seagen can’t turn things around. Except a few products that are still able to maintain growth, sales of vast majority products that we’re familiar with are declining. 
• The growth engine of Pfizer in post-pandemic era is still uncertain. Even though Pfizer’s share price has fallen sharply, this may still not be the time for bottom fishing.

Pan American Silver (PAAS) released a preliminary economic assessment (PEA) of the La Colorada Skarn project, confirming its potential to become a large-scale operation producing an average 17.2Moz of silver per annum over the first 10 years of its 17-year mine life. At a base case throughput rate of 50ktpd, the company estimates the project’s post-tax NPV8 at US$1.1bn, with an IRR of 14% and a payback period of 4.3 years. We intend to update our valuation shortly to incorporate the PEA and the prevailing stronger than expected gold and silver prices.

• MillerKnoll reports 2QFY24 earnings after market close on Wednesday, December 20, and will host its management conference call at 5:00 pm ET.
• WTR is modeling EPS of $0.55, the midpoint of guidance, on revenue of $987 million. Consensus is $0.54, with an estimate range of $0.52-0.56.
• Order trends. We are modeling orders in the Americas at +13.9% versus a poor year-ago quarter of -17.3%.

• Chairman 69 years old Dr. Liu will retire and 70 years old CEO Dr. Wei will step up. What story do we believe? Will TSMC to regain its strong outperperformance?
• Positive impacts: we expect Arizona fab equipment move-in and ramp up might be further delayed if no subsidies are granted; two teams competing to one voice/team/direction.
• Three risks: 1. Dr. Wei at his age of 70 without a strong management backup; 2. Dr. Wei might make a wrong decision deeply; 3. absolute power corrupts.

• Google Search trends for Tokyo Disneyland and DisneySea in recent months point to potential vulnerabilities in Oriental Land’s FQ3 performance.
• Tokyo Disneyland’s rising ticket prices have narrowed the cost gap with Shanghai and Hong Kong Disneyland, potentially leading to a loss of customers to its counterparts.
• Should Oriental Land (4661 JP) shares fail to surpass its recent peak in January next year, we think shares could undergo a rather substantial correction.

• Asagami Corporation (TYO 9311) owns 3 warehouses on Tokyo Harbor with land carried on its books at ¥7.9 billion.
• These properties alone are likely worth closer to ¥29.5 billion.
• These assets account for less than half of the company’s land assets, but are worth multiples of the current market cap of just ¥7.16B.

• We see Ueda’s pause on lifting its negative rates policy as temporary, and we expect that this policy change could occur as early as January
• Despite this monetary pause in tightening and the fall in 10Y JGB yields, we are encouraged by the rise in long term loan yields in the BoJ data to October-end
• We reiterate our positive views on Resona, Mizuho, MUFG and Concordia

• China East Education (667 HK) is interesting as it is probably the only education company with no debt. Net cash amounted to Rmb2.1bn, or 42% of its market capitalisation. 
• Earnings have bottomed out and the marginal YoY decline in 1H23 is due to upfront costs for staff recruitment. Its vocational education focus also faces fewer regulatory risks.
• We consider it a potential privatisation candidate at 0.8x P/B. Its major shareholders owned 75% of the company, leaving a free float of less than HK$1.4bn.

• While the profitability of Stylam Industries (SYIL IN) is growing healthily (>30% YoY) in H1 FY24 due to margin expansion, revenues are trending at -4.5% YoY.
• The company became net cash in H1 FY24 (73 crore INR)  and zero gross debt. A strong balance sheet would aid in the company’s expansion plans. 
• Trading at 23x/18x FY24e/25e, we see strong growth ahead for the company as it cements its position as one of India’s top laminate export players. 

Games Workshop Group (GAW) has signed an agreement with Amazon Content Services, a subsidiary of Amazon.com, to prospectively develop GAW’s intellectual property (IP) into film and television content and to grant associated merchandising rights, initially focused on the Warhammer 40k universe. The partnership follows the announcement in December 2022 when management said an agreement had been reached in principle. Although the content will mainly be focused on GAW’s Warhammer 40k, Amazon has the option to develop other IP within GAW’s fantasy universe following the initial release. The first year has been set out as a period for creative discussions, after which the agreement will go ahead if both GAW and Amazon sign off on the creative guidelines.

• Ricegrowers Limited, trading as SunRice (ASX:SGLLV), has released its H1 FY24 results, delivering RaaS adjusted EBITDA of $69m (+68%) and adjusted NPAT of $33.3m (+107%), both well above RaaS estimates of $57.6m and $25m respectively.
• Divisionally the key surprise was International, delivering adjusted EBITDA of $33m, 125% above the PCP and 57% above RaaS estimates on the back of increases scale and reach, price increases and lower freight costs.
• Operating cash flow was the strongest since H2 FY18 despite a high tax payment as working capital improved from lower receivables and inventory reductions. 

• We recently caught up with management to congratulate James Colquhoun on his promotion to CEO.
• We also got a good update on the business as well as some early indications of trends and management focus for 2024.
• As indicated on the 3Q23 earnings call, new member growth is continuing at a healthy clip and management expects to close 2023 at around 800k members.

• The market seems “not excited” with fruquintinib’s FDA approval.We analyzed the potential reasons behind.Beyond boosting market sentiment when license-out deal is announced initially,its practical impact on valuation could be limited.
• HUTCHMED’s financial performance is good. The deal with Takeda helps to relieve cash-flow pressure. We think HUTCHMED is a relatively safe bet for investors as eventual breakeven is drawing near.
• If based on conservative calculation, market value of about US$1,455-2,055 million is a good place to long.When market value is higher than US$3,500 million, it’s time to consider taking profits.

• East Buy’s stock price plunged after a conflict broke out between the top broadcaster and the management team.
• NIO will launch another brand for low price products, following BYD’s low price and Li Auto’s price reduction.
• Tencent will move its unimportant assets to China Literature again.

• Newcastle coal prices have normalized from the highs of USD 450/ton (in September 2022) to current levels of USD 145/ton (a 68% correction from the peak). 
• From profits of 100 mn USD/month, we are now down to 90-100 mn USD/quarter. Despite this, the stock trades at 4.5x PE with a 15% dividend yield. 
• An added buffer of 850 mn USD of net cash represents 50% of the market capitalization. 

• The Indian Market (~$4 trillion) has now overtaken Hong Kong as the 4th most-valued stock market after the US, China, and Japan. 
• We recently concluded an exploratory trip to Patna, the capital, and also the largest city of the state of Bihar, Summarized thoughts on companies focused in this insight. 
• Multiple stocks covered in the Insight. The future of Easy Trip Planners (EASEMYTR IN), especially if it’s banking on franchisee expansion, could go the other way around.

In its update for the August to December period, S&U posted good growth in its net receivables balances in both Advantage and Aspen. Advantage reported a drop in live collections to 91% (H123: 94%), but bad debts and voluntary terminations remain below budget. Aspen continues to experience good volume with transactions improving in the quarter, while repayments remain above budget. Additionally, group borrowings reached £209m as S&U continues to fund its growth initiatives. Management announced that following a review by the Financial Conduct Authority (FCA), it has appointed a Skilled Person to help further align Advantage Finance’s processes with the FCA’s standards including the new Consumer Duty requirements.

• Gaining sufficient scale to get out of the shadow of the Big 3 online malls in Japan is providing tough for Jade Group (3558 JP)’s Locondo.
• The number of active users on Locondo has fallen in recent quarters, causing concern for merchants and investors alike. 
• Jade Group, is hoping that sales of major brands like Reebok will attract more users while also bringing higher levels of growth.

• As we begin lapping easy comps, our momentum index looks “less bad”
• Red Sea re-routes, interest rate moves, fuel all helped lift shares recently
• We think lots of bad news has been priced into shares at current levels

In H124, Custodian Property Income REIT (CREI) continued to benefit from robust occupier demand, underpinning earnings and dividends. Rents continued to grow and occupancy increased, with further near-term progress in sight, reflected in our increased EPRA earnings forecast. Asset management is also supporting capital values, although overall, following market trends, these continue to drift and NAV is modestly lower.

• 2022 was an exceptional year for Stora Enso. The Company drove financial performance to an all-time high, strengthened its BS and delivered on strategic initiatives
• Ince then, the market environment has deteriorated further and has shaken the Company’s fundamentals. To that end, Stora is embarking on a restructuration program.
• The Company’s own actions will improve competitiveness. The self-help improvements focus on profitability turnaround and capital release.

• After inputting data from the Culp 2QFY24 Form 10Q filing, FY24 estimates are unchanged. We moderated FY25 and FY26 revenue and profit expectations.
• This note incorporates that filing and introduces our reformatted earnings model. We hope the revised model and reformatting will be easier to read and understand.
• As is our custom, our working excel models are available to our readers on request. 

• Standard Lithium (SLI) is advancing lithium extraction projects in Southern Arkansas and East Texas, which could position the company as a major domestic lithium supplier.
• A definitive feasibility study (DFS) or the company’s Phase 1A Project indicates a pre- tax NPV of US$772 million and a pre-tax IRR of 29.5%.
• A preliminary feasibility study (PFS) for the company’s South West Arkansas Project indicates a pre-tax NPV of US$4.5 billion and a pre-tax IRR of 41.3%.

• We don’t consider Douyin an existential threat to Meituan, but we see the company’s growth increasingly be constrained by its business model itself.
• We believe Meituan will disappoint the market with regard to its bottom line growth in 2024, barring major overhaul of its new initiative businesses.
• Meituan will have to make tough choice between growth and profitability and either scenario won’t bode well for its valuation. We value the company at RMB410 billion, meaning 18% downside.

• Water Oasis (1161 HK) reported 16%/65% YoY revenue/PAT growth for FY23. For H2 FY23 revenue/PAT decelerated to 7% YoY/31% YoY. The company guided a positive outlook for FY24.
• Net cash increased to 271 mn HKD, representing 28% of market capitalization (990 mn HKD), as the company benefitted from positive working capital cycle changes. 
• Water Oasis (1161 HK) declared a 7-cent dividend for H2 FY23, bringing the overall dividend for FY23 to 14 cents (9.6% div yield). 

• Haier Smart Home (6690 HK)‘s acquisition of Carrier commercial refrigeration business is earnings accretive. It will also be strategically positive to its growth outlook. 
• With net cash of Rmb17.3bn, HSH has no problem funding the deal internally. Instead of earning a single-digit return on cash, the business’ 9% earnings yield is attractive. 
• The transaction will extend HSH’s application scenarios from household to commercial while elevating its competitiveness in Europe and allowing it to capture the B-end customers. 

• Recent business updates of WuXi Bio led to a decline in WuXi AppTec’s share price and changed investors’ expectations for CXO. Now is the time to adjust forecasts.
• We analyzed the growth rate of various business of WuXi AppTec in 2024. In a neutral scenario, growth next year could fall short of management’s guidance.Reversal in 2025 is uncertain.
• If WuXi AppTec “unexpectedly” receives blockbuster orders, which are large enough to hedge against the downward trend of WuXi AppTec’s other businesses, then it will help to change performance expectations.

• LICHF reported a decent Q2FY24 led by a strong NIM (3.04%). Growth has been somewhat subdued due to technical issues, however, these have been resolved and October is tracking well.
• LICHF reiterated its full-year FY24 NIM guidance at 2.6-2.8%. Credit cost, except for one-off item of INR 104cr in Q2FY24, continues to be below 50bp annualized.
• Despite a subdued H1FY24, LICHF has maintained its FY24 AUM growth guidance to 10%+. This implies that LICHF can grow AUM at 5%+ QoQ over the next two quarters.

• Marvell reported earnings recently, and I wanted to mention that at least before I continued onwards because that is a good context-setting event for the industry day.

• Revenue exceeded expectations, but the mix beneath the results was illustrative.

• Datacenter revenue grew 20% QoQ, cloud over 30% QoQ; while networking was strong, they guided for a 40% QoQ decline, consistent with networking OEM results.

• 2023 NRDL negotiation results were released. We’re seeing the rules of NRDL renewal negotiations tilt toward innovative drugs, leading to lower price reduction, but there has been no fundamental change.
• The record-breaking US$8.4 billion deal involving BMS and Sichuan Biokin Pharmaceutical (688506 CH) (SystImmune) is not without risk, though. We still recommend to remain rational.
• The issue facing Shanghai Haoyuan Chemexpress (688131 CH) is higher revenue but lower margins. Valuation will likely experience further declines due to lock-up expiry and share reduction.

• Beijing and Shanghai laid out long waited stimulus policies on property market, include 1) lower property down payments ratio;2) lower mortgage loan rate;
• 3) lower recognition standard for ordinary home. The key is to encourage households to add leverage.
• We treat the financial stimulus as one-off positive shock to the home transaction markets in the two cities,  especially benefiting 1Q24 sales for Beike due to…

• Overall, it was a strong week for Taiwan Tech. TSMC and Mediatek showed strong performances, as well as key names we like such as Yageo and Himax.
• AI-Related Taiwan plays showed relative weakness. This weakness interestingly happened during a week when NVIDIA Corp (NVDA US) performed well.
• According to insight provider Patrick Liao, MediaTek WiFi 7 chip competition is likely to become fierce in 2024.

• InterGlobe Aviation Ltd (INDIGO IN) (Indigo) has turnaround and is on path to achieve record profits in FY2024 on strong demand, stable FX and lower jet fuel prices 
• However, engine problems will hurt capacity deployment in 4QFY24 and FY2025, and the engine manufacturer has been very vague and unreliable in presenting its remedial plans 
• Share price near all-time high and valuations (PE, EV/EBITDAR) are expensive compared to global LCCs. TP of INR2,513 (14% DOWNSIDE) pegged to 15x FY2025 PE (top-end LCC cycle)  

• In 3Q23, Boryung Pharmaceutical (003850 KS) reported 15% YoY growth in revenue to KRW208B, driven by 7% YoY growth in prescription drugs, the slowest growth in the last three years.
• Prescription drug revenue growth slowed due to the huge shortfall in revenue from the diabetes drug Trulicity caused by supply shortage. We expect slowdown in Trulicity revenue is temporary.  
• Despite losing patent protection in February 2023 on ARB monotherapy, Kanarb drug family is showing no fatigue due to increasing preference for combination drugs in the market.  

• Olympic Industries (OLYMPI BD) sustained and improved profitability despite the revenue drop. 
• Square Textiles (SQTT BD) faced challenges in FY23 but now seems to be turning around. 
• Bashundhara Paper Mills (BPML BD) saw a weak performance driven by lower profitability due higher interest rates on borrowings.

• FedEx Corp (FDX US) (FedEx) will release its 2QFY24 results on 19 Dec after market close. Closely watched as it is the bellwether for global trade and commerce  
• Cost reduction initiatives has delivered, and resurgence in e-commerce activities across Asia Pacific could potentially provide positive earnings surprise    
• Target price US$299 (7% UPSIDE) based on 15x CY2024 PE (FedEx’s historical mean). Our recommendation is to give FedEx a miss, too little upside for the risk 

• We rate Japan Exchange as our 2024 high conviction buy in exchanges, for its attractive valuations, as well as its potential for increased market activity and big data revenue growth
• We believe that Japan Exchange is the exception to the rule that DM exchanges need to diversify their revenue bases, as it is under less de-regulatory pressure
• We also stick with Hong Kong Exchange as the deep value pick, as well as Deutsche Borse; we remain negative on Coinbase

• HCG reported a strong Q2FY4 with revenue growth of 16% YoY and 5.7% QoQ. EBITDA margin expanded 120bp QoQ to reach 17.8%.
• Emerging centers are scaling up well with revenue growing at 29% YoY in Q2FY24. Matured centers’ revenue also grew at a healthy pace of 13% YoY.
• HCG is continuing to upgrade infrastructure of existing hospitals. It added 3 robotic surgery machines across 3 centers. It operationalized 4 new LINACs and plans to install six more LINACs. 

• XPER is streamlining its operations by divesting its AutoSense and image sensing product lines to strategically refocus on the burgeoning entertainment sector
• XPER is selling AutoSense and the image sensor business to Tobii for $42.7 million plus a performance fee
• XPER estimates revenue loss from the divesture would be approximately $30 million with adjusted EBITDA moving up

The Brunner Investment Trust (BUT) has two co-managers, Christian Schneider (CIO global growth) and Julian Bishop (global growth specialist), who are supported by deputy managers Simon Gergel (CIO UK equities, UK dividend and value specialist) and James Ashworth (global growth specialist). BUT may be considered as a ‘fund for all seasons’ given its steady outperformance in recent years in widely different market environments. The trust’s NAV performance also stands out positively compared with its 12 peers in the AIC Global sector, ranking first over the last three years, second over the last five and fourth over one year. BUT’s dual mandate of both income and capital growth and its straightforward portfolio of listed global equities may be an ideal way for investors to gain exposure to overseas companies.

The Merchants Trust (MRCH) manager, Simon Gergel at Allianz Global Investors, has been at the helm for the last 17 years during a variety of market environments. He has remained true to his investment process, seeking high-quality companies with solid fundamentals that are trading on reasonable valuations. The manager is very encouraged by the current valuation backdrop as, in aggregate, the UK market is trading at the low end of its 20-year range and within the market there is a wide dispersion of valuation multiples. A large proportion of UK stocks, including those of quality businesses, are trading on forward P/E multiples of less than 10x, providing Gergel with a large pond in which to fish. His approach has proved successful with mid- and long-term outperformance of MRCH’s broad UK market benchmark. With the trust’s dual mandate of income and capital growth, it offers an attractive 5.2% dividend yield and has grown its annual dividends for the last 41 consecutive years.

• Ocean Power Technologies reported 2QFY24 revenue of $0.9 million, up 193% Y/Y from $0.3 million in 2QFY23, driven by sales of WAM-V autonomous vehicles, the contract with the Department of Energy (DOE), and an increase in strategic consulting services.
• The previous quarter had revenue of $0.2 million from leased boats.
• The company reported 2QFY24 gross profit of $0.5 million, compared with a profit of $39,000 in 2QFY23.

• There have been several developments in the Southeast Asian e-commerce space over the past few days that we believe will have a negative impact on Sea (SE US)’s financial performance.
• A few days ago, TikTok, owned by ByteDance (1439927D CH), announced a $1.5bn investment in Tokopedia.
• Today, Nikkei reported that Alibaba (ADR) (BABA US) has infused an additional $634m into Lazada, its Southeast Asia e-commerce unit, to enhance its competitive position in the face of escalating competition.

• TSMC: 10.4% Premium — Decent Level to Short the Spread At
• ASE: 6.2% Premium — Wait for 5% as the Level to Go Long the Spread
• UMC: Trading at 0.8% — Wait for 1.5% or Higher

For our next Corporate Webinar we are glad to welcome Lendlease Global Commercial REIT’s CEO, Mr Kelvin Chow.

In the upcoming webinar, Kelvin will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. Angus will also be providing an industry overview, featuring landscape commentary and returns analysis. The Corporate Webinar will include a live Q&A session.

In the spirit of the festive season, one of the attendees will also be awarded an Amazon Kindle as part of our lucky draw.

The Corporate Webinar will be hosted on Tuesday, 9 January 2024, 19:00 SGT.

About Lendlease Global Commercial REIT

Lendlease Global Commercial REIT’s portfolio comprises two leasehold properties in Singapore, Jem (office and retail property) and 313@somerset (retail property), and three freehold Grade A office buildings, Sky Complex, in Milan. It has a total net lettable area of approximately 2.1 million square feet, with an appraised value of S$3.65 billion. Other investments include a stake in Parkway Parade and the development of a multifunctional event space on a site adjacent to 313@somerset.

• Bajaj Finance Ltd (BAF) reported a decent Q2FY24. AUM growth came in at 33% YoY. Profitability was also strong with ROA and ROE at 5%+ and 24%+, respectively.
• While, the overall outlook remains robust, BAF may see some NIM pressure due to rising cost of funds. However, majority of this is likely to be offset by operating leverage.
• BAF’s initiative to enter into new segments like microfinance and new car financing is progressing well. New car financing expansion is already ahead of plan with presence in 85 locations.

• AMD’s resurgence against a dominant Intel saw the company grow annual revenues >4x between 2017 and 2022
• FY 2023 revenue is likely to be down roughly $1 billion or ~4% YoY.
• We expect a combination of renewed Data Center market share growth plus a grand entrance into the AI acceleration segment will restart the party all over again in 2024. 

• Local news reported two positive developments for Zai Lab’s FcRn inhibitor Efgartigimod: (1) Rival CSPC/HarbourBio withdrew BLA for competing drug Batoclimab (HBM9161), (2) Efgartigimod was included in 2024 NDRL;
• We raise Zai Lab’s 2024 top line by 8.8% but keep non-GAAP operating loss largely unchanged；
• We raise TP by US$2 to US$20 and maintain SELL.

• The stock of Poly Development and Holdings Group Co. Ltd. jumped 7.6% Tuesday after the leading developer unveiled an up to 2-billion-yuan ($279 million) share buyback aimed at arresting its sliding equity price.
• Shares of Poly Development closed at 10.34 yuan in Shanghai Tuesday, compared with 9.61 yuan at Monday’s closing. The stock has nearly halved from the 18.59-yuan peak in April 2022 after the persistent downturn in the property market.
• Poly Development, China’s largest developer by sales this year, said late Monday that it plans to buy back 1 billion yuan to 2 billion yuan of its own shares in the next three months.

• A meeting with Ace Hardware Indonesia revealed a newfound enthusiasm and confidence in the outlook for growth with new store formats and an omnichannel approach as key future drivers. 
• The company will accelerate its store buildout in 2024 with plans for 20 new stores versus 13 in 2023 with new format stores taking the lead, with an emphasis ex-Java.
• Ace Hardware Indonesia (ACES IJ) will also accelerate the buildout of smaller-sized Ace Express stores with a pilot started this year.  Recent share price weakness looks unjustified.

• Strong execution on multiple fronts – Q1-2 FY4/2024 results were ahead of expectations, with sales growth of 205.2% YoY and operating profit growth of 572.1% YoY.
• Whilst acquisitive growth was to be expected, HEROZ has also demonstrated 1) organic growth in its AI/DX Service with underlying sales growth of 14.6% YoY,
• 2) increased the proportion of recurring revenue to 62.4% of total sales and thereby continuing to improve earnings visibility

• Cash-strapped developer Dalian Wanda Group Co. Ltd. can breathe a temporary sigh of relief having reached an agreement with investors to avoid an immediate repayment of more than 40 billion yuan ($5.6 billion) for an unfulfilled flotation of its property management unit.
• Wanda faced having to repay a group of investors their 38-billion-yuan investments plus interest under a 2021 agreement if the developer failed to list its light-asset unit, Zhuhai Wanda Commercial Management Group Co. Ltd., by the end of this year.
• As Zhuhai Wanda’s listing plan failed despite four attempts, the repayment obligation became a ticking time bomb hanging over the company, which is struggling with capital drains amid plunging sales.

• China Tourism Group Duty Free Corp Ltd (601888 CH)  (CTG) share price has plunged by 63% despite solid 9M23 profits growth and cash flushed balance sheet 
• Underlying fundamentals is solid, Chinese people still buying duty free goods, albeit tilting towards value than decadence purchases 
• CTG is cheap relative to its own history on all valuation metrics (PE, P/Book, P/FCF) and many technical indicators suggest it is in OVERSOLD territory 

• Li Auto’s deliveries and revenues surged by three digits since 3Q23.
• The company is building new factories in Changzhou and Beijing. 
• However, we believe the stock is overvalued apart from comparing with Tesla.

• AKR Corporindo (AKRA IJ) recently hosted an analyst meeting where it provided some positive guidance for FY2024, with projections of double digit net profit growth with growth across all segments.
• The core trading and distribution business is expected to see positive growth in 2024 with  the real kicker to come from its JIIPE industrial Estate plus recurrent income from utilities.
• AKR Corporindo (AKRA IJ) is an increasingly holistic play on Indonesia’s growth through its fuel and chemical distribution, which is being hosted by smelters and the EV battery complex.

• Adelson family interests have sold 10% of their LVS equity to acquire a pro basketball franchise. This triggered am 8.5% decline in the stock when it was actually  bullish.
• The market has not yet grasped the magnitude of  the Asian  gaming  recovery arc which points to 2024 reaching baseline 2019 arrivals and GRR pace by mid-2024.
• LVS has the scale and amenities to outperform peers but this  is  not  yet reflected in its trading  range dead pooled in  the $40s.

• JWD Acquisition: Infroneer acquires Japan Wind Development for ¥200 billion, sparking a ¥75 billion market cap dip and concerns about potential overpayment.
• Valuation Analysis: Using DCF and comparable transaction values, estimates suggest JWD’s equity value may be far lower than the agreed-upon ¥200 billion.
• Need for Transparency: Infroneer’s claim of fair value requires scrutiny. Market suggests an estimated fair value of ¥125 billion, emphasizing the need for detailed information on the acquisition.

• Consumption of used products is rising fast as exemplified by the rise of 2nd Street. 
• Operated by Geo Holdings (2681 JP), once just a DVD rental business, it is now Japan’s largest used goods retailer.
• Sales are booming in a market increasingly focused on thrift and re-use, allowing 2nd Street to even take on the might of Mercari.

• IDFC First Bank Limited (IDFCBK IN)  has built a banking franchise that holds the best promise among the mid-sized banks in India for long-run outperformance.
• A high-yielding and retail-oriented loan book, track record of pristine asset quality, superior funding profile boosting best-in-class retail deposit base, and incrementally improving unit economics.
• We value the stock as a long-term Buy, with 35% upside in near-term, as the bank continues to realize the benefits of its increasing scale on its earnings profile.

Templeton Emerging Markets Investment Trust’s (TEMIT’s) co-managers Chetan Sehgal (lead manager) and Andrew Ness consider that the case for emerging markets is not well understood. Hence, they believe that the regions remain under-owned, undervalued and under-appreciated, which provides an interesting opportunity for global investors. There are several powerful trends supporting the superior economic growth prospects of emerging markets versus those in developed regions, including demographics, urbanisation, higher consumption and technological innovation. Emerging markets also remain relatively attractively valued. TEMIT’s performance versus the MSCI Emerging Markets Index troughed in April 2022 and is in a steadily improving trend. The trust’s results tend to be better when investors focus on company fundamentals, which drive equity returns over the long term, rather than considering near-term macroeconomic events.

• Takachiho Koheki is a trading company highly specialized in electronics technology, introducing the world’s cutting-edge electronics products to Japan ahead of competitors, positioned as a specialized technical group with engineering employees accounting for 42.2% of its workforce.
• The company’s electronics products and IT solution services help solve modern social issues of great concern such as crime control and prevention, labor shortages and labor savings, and climate change and disasters.
• In 1H FY24/3, the company reported consolidated net sales of ¥12,729 mn (+14.5% YoY), operating profit of ¥713 mn (+22.2% YoY), ordinary profit of ¥1,057 mn (+18.2% YoY), and profit attributable to owners of parent (hereinafter, net profit) of ¥717 mn (+9.2% YoY).

• So there we were today, scanning the latest corporate filings to the Securities and Exchange Commission , when we noticed that Johnson Controls ($JCI) had filed its latest earnings report .
• We started reading, and were immediately stopped short by this earnings adjustment, right there in the second bullet point: Fiscal Q4 GAAP EPS of $0.80; Q4 Adjusted EPS of $1.
• Hold up — what cybersecurity incident? When did that happen, and what has Johnson Controls said about it so far? 

• Money Forward’s stock price has declined by 2% YTD versus a 23% gain for the overall market. Technically, the stock is approaching oversold levels
• We see 38% upside for Money Forward’s stock price. At 5.5x EV/revenue, the stock is trading at a 50% discount to global peer, Intuit
• We believe that investors are under pricing the size of the Japanese market for cloud accounting and operating leverage from penetration into mid-cap corporate market

• Revenue for November 2023 was NT$206.03 billion, a decrease of 15.3% MoM, and down 7.5% compared to the year ago period.
• Based on the guided midpoint, December revenue will show a further 20% MoM decline
• We estimate FY2023 revenues of $68.8 billion, down 9.4% YoY. 

• China announced game approval for November batch. The number of games approved is in-line with the pace of approval in recent months.
• The Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Netease scored one approval while Tencent has been zeroed for five rounds.

• The WiFi technology was dominated by Broadcom Corp Cl A (BRCM US), but Mediatek Inc (2454 TT) has to break into the PC and smartphone markets in 2024F.
• There are speculations that Apple might use MediaTek’s WiFi 7 solution in 2024F or consider MediaTek as a potential chip provider.
• MediaTek will be using 6nm technology for WiFi 7, replacing the current 28nm technology used for WiFi 6.

• CPMC Holdings (906 HK) may potentially receive another takeover proposal from ORG Technology Co., Ltd. A (002701 CH) which has a 22% market share in the industry.
• ORG has every reason to launch such a proposal and given its operational and financial performance, it looks to have the capability to realise good synergy.
• CPMC still looks inexpensive relative to the industry based on its PER valuations. No matter what, the 4th largest player Sunrise Group (002752 CH) will now become interesting.

• OUE Commercial REIT (OUECT SP) is one of Singapore’s best-quality commercial REITs, with a well-diversified and high-quality portfolio of assets across office, hospitality, and retail.
• A recent Smartkarma webinar with the management revealed a positive outlook for the company’s portfolio across the office, retail, and especially hospitality with some well-times asset enhancement initiatives bearing fruit.
• OUE Commercial REIT has strong sustainability credentials, both through its green-certified buildings, and an increasing portion of sustainable finance, with some well-timed recent financing. 

• KT&G is a high conviction pick in 2024.We believe KT&G Corporation (033780 KS) is likely to announce cigarette price hikes in 2H 2024.
• Three major reasons include a) no cigarette price hikes in nearly 9 years, b) Korean legislative election will be in April 2024, and c) reduce government tax revenue shortfall.
• We believe that the Korean government could raise cigarette prices to about 7,000 won to 8,000 won per pack from current price of 4,500 won. 

• RPSGV’s BPO business, Firstsource Solutions, is stabilizing and reported flattish QoQ revenue growth. EBIT margin has also bottomed out and is now at around 11%, an expansion of 300bp YoY.
• FMCG Business continues to maintain an annualized revenue run-rate of INR 400cr+. The Sports business generated revenues of INR 50cr+ vs INR 15cr YoY. 
• The FMCG and the Sports businesses hold tremendous scalability potential going forward. The IPL Lucknow franchise also owns a team named Durban in the South Africa T20 league.

Baillie Gifford China Growth Trust (BGCG) invests in China, focusing on innovative, rapidly growing companies best positioned to benefit from China’s still favourable long-term economic outlook and the structural trends that should drive equity markets for years to come. Key portfolio themes include e-commerce, food delivery, domestic brands, semiconductors, robotics and automation, and renewable energy. The trust’s relaunch in September 2020 coincided with a series of challenges for the Chinese economy, investor confidence and the growth companies BGCG favours, so performance has lagged the benchmark. However, the operational performance of most of BGCG’s holdings is strong, their prospects are very positive, and the trust’s managers believe that it is only a matter of time until confidence returns and share prices more accurately reflect these robust fundamentals.

• Alkem Laboratories Ltd (ALKEM IN) is flying high on strong Q2 numbers. The shares rallied 23% since the company announced Q2FY24 result in early November, widely outperforming Nifty Pharma index.
• In Q2FY24, revenue grew 12% YoY, and gross margin expanded 380bps to 61.4% backed by lower raw material cost and lower intensity of price erosion in US market.
• For the U.S. business, Alkem is looking at high-single-digit growth in dollar terms for FY24. The company has reiterated FY24 gross margin guidance at 59.0–59.5%.

• Li Ning (2331 HK) announced yesterday that the company has acquired a HK office project, the Harbour East, from Henderson Land, for a total consideration of HKD2.2bn. 
• The acquisition is quite unexpected given that Li Ning has had a clean corporate governance track record.
• The company now trades at 11x foward PE, assuming no growth in 2023 and 2024 earnings.  It is now a value stock, though the visibility is very low. 

• On Monday after the close, trading house Yamazen Corp (8051 JP) announced a secondary offering where five bank shareholders would sell ~6.7mm shares (including greenshoe). 
• It appears as if most of the banks are selling everything, making it about US$50mm, 50 days of ADV, and about 7% of  shares out. 
• But this should get swallowed pretty easily. The stock is DIRT CHEAP. The caveat? Crossholders and insiders will still own 45-48% post-offer. 

• GoTo Gojek Tokopedia (GOTO IJ) has announced that it will sell a controlling 75.01% stake in Tokopedia to TikTok in order to create Indonesia’s leading e-commerce platform.
• There had been earlier indications that a deal was in the offing but the size of TikTok’s stake was surprising plus it has committed to invest US$1.5bn in Tokopedia. 
• GoTo will retain a 24.99% non-dilutive stake and will receive an ongoing revenue stream from Tokopedia in line with its scale and growth contributing directly to its EBITDA. 

• Multiple signs are flashing that the reset phase of the silicon cycle is beginning to rebound.
• On November 28, WSTS (World Semiconductor Trade Statistics) announced its Fall forecast for 2023 and 2024, marking the first upward revision in the current down cycle, revising up both 2023 to a single-digit decline, and revising up 2024 growth to +13.1%, due to better-than-expected demand in Apr-Jun and Jul-Sep.
• Quarterly worldwide billings data shows the YoY percentage decline marked the bottom in Jan- Mar at -21.3% YoY, shrinking to only -4.5% in the Jul-Sep quarter. 

• News came out today that Hollysys (HOLI) is being acquired by Ascendant for $26.5/share . So I sold my shares for $24.74 today.
• And closing this at $24.88. Only a 7% spread, and there could be some delays before this closes.
• Was a nice trade and a 43% gain since dedicating a full write-up to it in July this year.

• Among priority measures for FY24/9, JBS management is particularly focused on rolling out global licensing business for major enterprise customers, as well as strengthening cloud AI proposal capabilities.
• The strategic business alliance concluded with Crayon Group at the end of August enables JBS to offer global support services to customers outside the coverage of JBS overseas offices.
• The two partners will also collaborate on developing AI and security solutions mainly for Microsoft Products.

• Pharmaron’s performance has shown a clear downward trend this year, and the growth in 23Q4 may be even lower. That means this year’s results could fall short of management’s expectations.
• The essence of unsatisfactory profit margin is due to low capacity utilization/management efficiency.The underlying reason is the sharp decline in drug R&D demand due to the deterioration of financing environment.
• Pharmaron seems ill-prepared in peptide CDMO, and its performance would further lag behind Wuxi AppTec in the future. Pharmaron may not be able to contribute alpha during industry downturns.

• The investment case revolves around the Company’s strong long-term fundamentals
• An attractive and complementary skincare-focused brand portfolio centred on flagship Nivea brand in the mass segment, Eucerin in the growing dermocosmetics category and La Prairie in the higher-margin luxury segment.
• Less expensive option than L’Oréal to gain exposure to an attractive skincare portfolio. The Company’s business model should prove resilient in a more challenging marker environment

• The broader sentiment remains positive, with markets primarily driven by participation from foreign investors, wise to increase the trailing stop at 20,600 for any possible change in trend.
• We have already highlighted the weak operational performance of Whirlpool of India (WHIRL IN) , the company’s tax woes continue. 
• Names covered in this insight include Whirlpool of India (WHIRL IN) , Thyrocare Technologies (THYROCAR IN), Paytm (PAYTM IN) and Flywire Corp (FLYW US) 

• Recently, Yunda Holding has lost volume share to rival STO Express 
• One reason could be Alibaba’s transfer of its 25% stake in STO to CaiNiao
• For Yunda, this dynamic adds to intense near-term pressure on margins