Equity Bottom-Up Archives | Page 80 of 222 | Smartkarma

• QBE Insurance is seeing a deteriorating combined operating ratio, in part due to CAT events and it unclear to us how underwriting, exposures will immediately improve
• Net profit is nearly static, USD750m in FY21, USD770m in FY22. USD400m profit in 1H23 may note repeat in 2H23, due in part to USD700m more debt in interim.
• North America net earned premiums are seeing far more distribution toward Commercial, where the COR is especially poor at 109% in 1H23

• The sector sees dramatic improvement in profitability and cashflow thanks to cutback on marketing expenses and headcount reduction.
• Topline growth is recovering but still clouded by sluggish macro conditions. It is understandable that investors treat these China proxies – one way or another – with caution.
• The sector’s valuation will remain pressured before the property market stabilizes and key macro indicators show concrete signs of improvement, in our view.

• Vinfast (VFS US) reported 2Q2023 results yesterday. Revenues saw significant increase driven by strong YoY growth in EV sales volume which reached 9,535 units during the quarter.
• More than 50% of EV volume during 1H2023 were to a related company while US volume was less than 200 units raising serious concerns over demand for Vinfast’s EVs.
• It seems unlikely for Vinfast to meet its 50K EV target for 2023 and our revised forecast suggests there is further downside despite shares dropping more than 50% vs IPO.

Immix has announced that the FDA has granted orphan drug designation (ODD) to CAR-T asset NXC-201 for amyloid light chain amyloidosis (ALA). This occurred approximately a month after the announced ODD for multiple myeloma (MM), the other indication that Immix is pursuing with NXC-201. The benefits of ODD include seven years of US market exclusivity post approval, tax credits for qualified clinical trials and exemption from the Prescription Drug User Fee (c $3m for a new drug). ODD is issued to drugs/biologics intended for the safe and effective treatment, diagnosis or prevention of rare diseases/conditions that affect fewer than 200k people in the US. Achieving ODD in both MM and ALA marks an important development for the progress of NXC-201, which has shown encouraging signs on both the clinical and regulatory fronts. We believe that the next readout (expected in September 2023) from the ongoing NEXICART-1 trial could be a significant catalyst for the company.

• In Q1FY24, Paramount Bed Holdings Co Lt (7817 JP) reported 7% YoY revenue growth to ¥24B, due to solid performance in the medical care and the nursing care businesses.
• Due to higher SG&A expenses, operating profit grew just 2% YoY to ¥3.3B. Net profit rose 7% YoY to ¥2.9B, mainly due to 13% YoY increase in foreign exchange gains.
• Paramount has reiterated FY24 guidance, which calls for 6% YoY revenue growth, 4% YoY operating profit growth, and 6% YoY growth in net profit.

• Our base case valuation of SK Inc is NAV of 17.5 trillion won (NAV per share of 239,095 won), representing a 60% upside from current levels.
• SK Inc has underperformed most other SK Group related companies YTD but this underperformance may be excessive and SK Inc could outperform as more value investors seek deeply discounted companies.
• SK Inc’s dividend yield is 3.3%, which is higher than the dividend yields of most other major SK Group companies excluding SK Telecom which has a dividend yield of 6.5%.

The Brunner Investment Trust’s (BUT’s) two co-managers, Christian Schneider (deputy CIO global growth) and Julian Bishop (global equity specialist) are supported by deputy managers Marcus Morris-Eyton (European equity specialist) and Simon Gergel (CIO UK equities). BUT can be considered as a global equity fund for all seasons given its steady trend of outperformance in recent years despite volatile share prices and changes in stock market leadership. The trust stacks up well in both absolute and relative terms with double-digit annual NAV total returns over the last decade and above-average returns within the AIC Global sector over the last one, three and five years. BUT’s dual mandate of income and capital growth means it should appeal to a broad range of investors.

• Our NAV analysis of LG Corp suggests an implied market cap of 16.9 trillion won or 107,217 won per share which is 28.4% higher than current share price. 
• We believe that LG Corp could announce another share buybacks representing 2-3% of outstanding shares in the next 6-12 months. 
• Another reason that could result in LG Corp’s shares outperforming other major LG related shares is due to the value investors increasing capital allocation to higher dividend paying LG Corp.

• Champion REIT is facing multiple headwinds, including weakness in its office building due to upcoming office supply
• Its retail asset Langham is doing better post COVID, but not enough to offset the weakness in office
• DPU may continue to decline over time. Therefore we stay bearish until we see turn-around signal

• Bank Mandiri (BMRI IJ) continues to positively surprise on loans, NIMs, and credit costs, with a consequential improvement in returns, only non-interest income seeing a slowdown but likely temporary.
• Digital banking initiatives through Livin’ and KOPRA continue to grow and help the bank drive higher CASA and fee income whilst reducing costs, with smart branches also improving returns.
• Bank Mandiri remains a core holding as a proxy to the Indonesian economy with its digital initiatives driving higher returns. Valuations remain attractive on 2.2x FY2023 PBV with 20% ROE.

• The bank expects its 2 new for 1 old stock split to be done on 10 October
• Total shares should move from 18.6tr to 37.3tr after the stock split
• Compared with peers, BBNI has low market cap/assets, good ROA

• Our index suggests pricing momentum remains depressed, but stable in Q3; fuel prices have begun to rise from Q2 lows, but probably don’t offer much lift to earnings now
• We looked at intra-Asian carrier TS Lines (which applied to list its shares in Hong Kong in April) and provided a quick update on market conditions in the Intra-Asian trade
• Shares of a few container shipping companies — including Evergreen Marine of Taiwan — have performed well YTD in 2023; we remain positive on the sector’s medium-term outlook

• Caterpillar managed to exceed analyst expectations in terms of revenue as well as earnings, with sales and revenues soaring by 22%, primarily driven by increased sales volume and price realization.
• This remarkable growth extended across all three primary segments: Construction Industries, Resource Industries, and Energy & Transportation, with sales to users registering a substantial 16% increase year-over-year.
• Energy & Transportation also witnessed a remarkable increase in sales to users across all applications, including oil and gas, power generation, industrial, and transportation.

• F5 Networks Inc. delivered an all-around beat in the most recent quarterly result.
• F5 also continues to observe increased maintenance attach rates on older deployments due to customers worrying about their existing assets.
• Their product revenue increased by 1%, their systems revenue increased by 5%, and their software revenue decreased by 3%.

• Advanced Micro Devices Inc. (AMD) delivered mixed results for the previous quarter, with revenues above analyst expectations but below-par earnings, showcasing strategic execution and notable achievements.
• Despite a year-over-year decline in revenue, the company reported steady performance compared to the previous quarter.
• The data center segment experienced sequential growth, primarily attributed to cloud providers’ accelerated adoption of the fourth-gen EPYC CPUs.

• ANSYS Inc. delivered a solid result and managed an all-around beat in the last quarter, surpassing its financial guidance across all key metrics.
• During Q2, the company reported reliable performance, beating its ACV, revenue, operating margin, and EPS guidance.
• Total revenue for the quarter exceeded expectations, reflecting the positive impact of ACV outperformance and the mix of license types sold.

• Constellation Brands, Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
• The company’s beer business generated significant growth for the quarter while steadily moving forward with all 4 of its strategic projects.
• Their larger premium and luxury brands in the higher-end wine area of their portfolio experienced weaker segment demand in April.

• Coinbase sees the looming opportunity in the global crypto futures & derivatives market. It’s positioning itself to capitalize on a market that’s been hollowed out over last 12-18 months.
• We explore 3 key areas of Coinbase’s business that we believe Wall Street is overlooking. These include: Coinbase International, ETF Spot approvals, and Base Chain
• We estimate Coinbase has the potential to realize additional top-line revenue in the range of 15-20% on the low-end to +150% increase on the high-end over the next few years.

• From 200 properties, the Cambodian government now only allows 87 shrinking capacity but increasing footfall for existing properties like Nagaworld in Phnom Penh.
• Nagaworld enjoys a moat in metro Phnom Penh–this supply reduction expands its base.
• H1 performance strong, reduced national capacity will contribute to revenue gains from a wider geography for the largest single integrated luxury resort in Cambodia.

• Global Digital Niaga (BliBli) continues to stand out from peers given a differentiated omnichannel model plus a greater portion of 1P but 3P sales are growing driven by Tiket.com.
• TPV growth surpassed revenue growth in 1H2023 driven by Tiket.com but take rates and gross margins improved, as the company cut back on promotional spending and improved cost efficiencies. 
• BliBli booked organic growth with more users and a significant pick-up in the average order value, partially driven by Tiket.com. 

• Visa-Free travel for Chinese tourists is certainly a boost for the Airports of Thailand (AOT TB) .
• Compared to 2019 operational numbers, the 2023 number is still very low despite the large YoY gain thanks to the low base in 2022. 
• The valuation is still high as the share price has run ahead of its fundamentals.

• Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada. 
• Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23
• Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY

• Novartis’ return of PD-1 to BeiGene may actually have nothing to do with TIGIT project. Long-term strategic adjustment and decreasing value of tislelizumab to Novartis could be the core reasons.
• Abandoning PD-1 is a simple decision for Novartis, but not for BeiGene, who will do its best to promote FDA approval for tislelizumab, aiming to expand internationalization and stabilize valuation.
• We advise investors not to focus too much on whether or not tislelizumab will eventually get FDA approval,because the actual peak sales tislelizumab can contribute to BeiGene could be disappointing.

• The upcoming demand is expected to reduce in 4Q23F, with the most obvious decline in 40nm and 8″ demand.
• Wafer ASP is expected to remain relatively stable until 4Q22F, even though revenue is not anticipated to pick up in 1H24F.
• We expect the market to reach its lowest point in the first half of 2024F. The most likely scenario indicates a potential recovery around the third quarter of 2024F.

• While Yamazaki Baking (2212 JP)‘s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.
• From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.
• Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.

• Despite the absence of special demand related to COVID-19, PHC Holdings (6523 JP)’s Q1FY24 revenue of ¥81.3B was at the same level as Q1FY23 due to favorable Fx impact.
• Operating profit declined 16% YoY to ¥1.7B, due to lower profit in the diabetes management business and a drop in the volume of PCR testing.
• PHC guided for FY24 revenue of ¥355.5B and operating profit of ¥29.3B (+47% YoY). The company expects FY24 net profit of ¥15.6B from a net loss of ¥3.2B in FY23.

• British chip designer Arm Holdings Plc remains committed to China and to working closely with its mainland-based partner following its $4.87 billion IPO, according to chief executive Rene Haas.

• The Softbank-backed firm floated in New York last week via the world’s largest public offering year-to-date. But that has not affected its strategy globally.

• Shanghai-headquartered Arm Technology (China) Co. Ltd., also known as Arm China, operates independently and is the exclusive licensing platform of Arm’s global intellectual property in China

• The pivot in capital allocation plans of Whitehaven Coal (WHC AU) by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us. 
• We think the increase in capex spending in a frothy pricing environment and focus on M&A for spending the 2.6 bn of cash is a coin toss on capital allocation. 
• We prefer names that keep their capital allocation plans consistent, e.g., Indo Tambangraya Megah (ITMG IJ), and would take money off the table here.

• Himax shares have been in downtrend recently, falling 20% since the end of June vs. Novatek up 12%. We met with the Himax for an update.
• Himax at historically very cheap level relative to Novatek, both are exposed to similar display end-markets. Himax trades at just 1x sales on an absolute basis.
• We have a Structural Long view for both stocks, however from an arb perspective see a Long Himax vs. Short Novatek trade opportunity given the large share price divergence.

• Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction
• Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23
• Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.

• Intel kicked off its Innovation conference and announced that its new PC processors with built-in AI coprocessors would launch December 14th. This is positive for the PC supply chain.
• Many types of existing software that used to require expert users can become more valuable with AI capabilities; we believe tomorrow’s AI PC killer apps could be in plain sight.
• Himax Long vs. Novatek Short. Himax is at historically very cheap level relative to Novatek, yet both are exposed to similar display end-markets.

• We reiterate our buy case on Infineon.  The investment case just gets more exiting at these levels
• Infineon is in an excellent position to capture growth in silicon carbide, now expanding in Kulin with Phase II. 
• The Company could generated €7bn in revenues by the end of the decade (up from €3bn) from Silicon Carbide.

• Gilead Sciences Inc. delivered mixed results for the previous quarter, with revenues above the analyst consensus.
• Total product sales, excluding Veklury, displayed significant growth, extending the company’s streak of seven consecutive quarters with year-over-year growth in its base business.
• Despite an anticipated decrease in Veklury sales due to reduced hospitalizations, the total product sales, including Veklury, also showed a substantial year-over-year increase.

• Amazon.com, Inc. delivered positive results and managed an all-around beat last quarter.
• The company has reported revenue of $134.4 billion and operating income of $7.7 billion.
• These are significant contributing causes to AWS’s recent growth and the over twofold increase in revenue over other service providers.

• Paramount Global managed to exceed analyst expectations in terms of revenue and earnings, demonstrating sustained focus on corporate spending containment and good momentum in its D2C sector.
• Affiliate and subscription revenue increased by a healthy 12% in Q2 and again showed how the combination of traditional and streaming led to net growth for the business.
• Paramount’s 47% increase in D2C subscription revenue was mostly attributable to Paramount+, where the company saw subscriber growth, increased ARPU, and lower churn rates.

• Cloudflare, Inc. delivered an all-around beat in the previous quarter.
• The second quarter’s total revenue reached 32% year over year to $308.5 million.
• In the quarter, Cloudflare received 10 million active worker applications, a 250% increase since December and a 490% increase year over year.

• TSMC’s ADR premium/discount appears to have shown a clear decline in trading range recently, down from the 10% level.
• UMC & ASE joined corporate days today in Taipei, which could be supportive of their premiums in the near-term.
• We provide spread levels we view as compelling from a risk/reward perspective.

• Activist investor, Strategic Capital, has taken a significant 5% stake in the underperforming steel company
• Yodogawa stacks up in line with the sector on operating metrics but its under leveraged balance sheet has crimped Returns on Equity and valuations
• We expect that the activist will seek to improve the company’s ROE through an improvement in capital allocation. That is bullish

• Seven & I Holdings (3382 JP)‘s share price has remained below ¥6,600 since the end of its bull run in March 2023.
• Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
• Seven & I faces valuation risks, trading near peak multiples with diminishing growth prospects.

• In this insight, we conducted fundamental analysis on Longfor, which has always been perceived as the best Chinese developer among all private players
• However, since Chairlady resigns due to personal reasons, and given the policy clamp down, we think Longfor may not be able to sustain its competitive advantages over time
• Longfor was trading at a premium to CRL and COLI, we believe the valuation premium should narrow over time.  On a relative basis we are not positive on Longfor

• Booking Holdings Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
• The 268 million hotel nights booked in the second quarter increased by 9% year over year, and the $39.7 billion in gross bookings, the largest quarterly total ever, surged by 15% year over year.
• The positive demand environment caused hotel nights and revenue bookings to surpass the company’s previous projections.

• During 1H24 CGF expects to sell its bank for ~AUD36m which could include a AUD11m gain and allow to free-up bank capital of around AUD40-50m.
• Return on capital is now at the highest it has been since FY10 at 6.2% with a substantial 160bps increase in normalized ROE in 2H23 YoY to 13.1%
• 85% market share of annuity FUM from 50% about 10 years ago, operating in system with strong forced savings in superannution funds now at AUD3.5tr up 91% over 10 yrs.

• Last week, the trio of DBS, UOB and OCBC averaged 3.4% gains, bringing their average 3Q23-to-date total return to 8.7%.
• The 3Q23-to-date has seen the trio of DBS, UOB & OCBC report combined 2Q23 Net Interest Income (NII) of S$8.26 billion, marking the third-consecutive quarter that combined quarterly NII has been above the S$8.0 billion mark.
• DBS Group Holdings (DBS), United Overseas Bank (UOB) and Oversea-Chinese Banking Corporation (OCBC) also moved in tandem averaging a 4% gain on the week.

• Dropbox, Inc. delivered a positive result and managed an all-around beat in the last quarter, driven by FormSwift’s revenue growth and some improvement in the company’s SKUs, as the development it observed in late Q1 carried over into Q2.
• In the quarter, the company launched Dropbox AI.
• Furthermore, Dropbox introduced a new activation homepage to simplify admins setting up their teams and becoming familiar with the product.

• Bank Negara Indonesia (BBNI IJ)continues to focus on growing the quality end of its corporate loan book, and de-risking its smaller sized commercial loans, whilst growing consumer exposure.
• The bank’s digital initiatives remain core, with strong growth in mobile transactions by value as well as the number of users, whilst BNI Direct is driving digitisation of business customers.
• Hibank has launched, growing FMCG related loans fast, with the help of Mayora Indah. BNI valuations remain attractive, with the bank trading on 1.2x FY2023E PBV with 15% ROE.

In H123 Esker reported strong growth in revenue (+16% y-o-y in constant currency (cc)) and bookings (+18% y-o-y cc) but this was outweighed by increases in costs, resulting in an operating margin decline. The company is taking measures to counter this, both in its contract pricing and by slowing the pace of hiring. While FY23 revenue outlook is unchanged, management reduced the mid-point of operating margin guidance by 1% to 12%. We have conservatively reduced our operating profit forecasts, which for FY23 were at the upper end of the new guidance range.

• Year to date, Intel’s data center revenues are down 28% YoY. 
• By comparison, AMD’s year-to-date revenues are down just 6% YoY
• Why is AMD performing so much better than Intel in the data center and will their market share growth continue?

• AviChina Industry & Technology H (2357 HK) is expected to see sustained profit upturn in 2H23 following a 26.8% growth in 1H23. Continued geopolitical turmoil will still benefit it.  
• All its listed A-share subsidiaries recorded a pick-up in earnings momentum in 2Q23, and this indicates solid underlying demand as well as the impact of product developments.
• Avicopter PLC (600038 CH) has seen volume and price recovery after product portfolio refinement while new products have stimulated the ancillary system and related business.

• LIC Housing Finance (LICHF IN) posted a strong Q1FY24, despite an adverse one-off reversible impact. Q1FY24 PAT came in at INR 1319cr vs INR 1191cr QoQ and INR 927cr YoY.  
• With the interest rates stabilizing, housing demand has been improving. LICHF’s asset quality has been also improving, adjusted for one-off technical glitch related deterioration.  
• At around 6x P/E based on our projected FY24E PAT, LICHF is available quite cheap and has potential to more than double from the current levels. 

• INSTITUTIONS were net buyers of Singapore stocks over the five trading sessions through to Sep 14, with S$18.4 million of net institutional inflow, while 24 primary-listed companies conducted buybacks with a total consideration of S$25.9 million. led the share buyback consideration tally, buying back 1.2 million shares at an average price of S$12.58 per share, followed by which bought back 5.36 million shares at an average price of S$1.13 per share.
• The five trading sessions saw 60 changes to director interests and substantial shareholdings filed for close to 30 primary-listed stocks.

• The National Health Commission and The People’s Daily made “mild” statements about anti-corruption in China healthcare, bringing investors “new hope”. However, there could be a “misconception” regarding the anti-corruption movement. 
• There was news that some type 2 vaccines could be converted to type 1 vaccines. Even though some vaccines will be affected by this policy, others will not.
• Kangtai’s had strong 23H1 net profit, but it has little investment value due to lack of core R&D strength.Kangtai’s vaccines face the risk of being included in national immunization program.

• We foresee a potentially higher rebound in the near future, resulting in higher growth rate in 2023F for TSMC.
• Due to the ramping up of production for 3nm, the GM is expected to decrease by 2-3%. However, there is an policy to add up at least 2% for TSMC. 
• The CoWoS is still being closely watched because of NVDA’s demand, and it will take time to get TSMC ready to satisfy the likely demand for CoWoS.

• CSL Ltd (CSL AU) expects strong growth in immunoglobulin franchise to continue following record plasma collections. Optimizing plasma collection costs, improving yields, and new products launches should support margin recovery.
• In June 2023, first patient has received Hemgenix in the U.S. With global annual peak sales estimate of $2.4B in 2030, Hemgenix is a compelling opportunity for CSL.
• CSL Seqirus is anticipated to deliver another strong year driven by demand for its differentiated products. The company began influenza vaccine shipment across the U.S. for 2023–24 influenza season.

• Nine months ago I first wrote on Anycolor (5032 JP). I thought the guidance growth pattern and valuations remarkable. Results handily beat guidance. Now we’re in Year 2 of guidance.
• After the first full year listed, FY2024 guidance was for +30% in revenue to ¥33bn, and +35% growth in OP. For Q1, reported yesterday, actual results were +51% and +91%.
• The stock is popping this AM, but it is still cheap vs growth rates and margins. There are, notably, still “context issues” here. They merit some consideration (and investigation).

• XL Axiata (EXCL IJ) continues to impress with its growth in revenues and data, driven by its 4G focus and high-quality network, with improving margins at the same time.
• The XL convergence story continues to build, with convergence penetration increasing but the real kicker wILL come once the restructuring with Link Net completes but benefits are already accruing. 
• XL Axiata remains the purest data player in Indonesia, with convergence set to be the next driver. Valuations are attractive on 4.4x FY2024E EV/EBITDA with strong growth ahead. 

• Since the inclusion in the Southbound Stock Connect 7 trading days ago, ZJLD Group (6979 HK)’s stock price is up 16%, suggesting strong interest from the southbound investors.
• ZJLD has one of the best channel inventory and distributor perception among all the sauce aroma baijiu brands currently.
• Expect further share price upside mainly from southbound buy, as the baijiu sector is one of the most followed sectors in A-share.     

• In the face of mounting American political and regulatory pressure, the Chinese video app TikTok officially launched an online shopping feature in the U.S., aiming to cash in on its popularity among 150 million American users.
• TikTok Shop will give brands, merchants, and creators the tools to sell directly through content on the app, the ByteDance Ltd.-owned enterprise said in a press release.
• Users will now find a “Shop” button prominently displayed in certain videos and can buy tagged products directly from videos and livestreaming.

• Huawei Technologies Co. Ltd. and its auto partner Seres Group Co. Ltd. (601127.SH +10.01%) launched an upgraded version of the Aito M7 electric SUV on Tuesday, marking the latest push by the tech giant into China’s highly competitive auto market.
• With a starting price of 249,800 yuan ($34,280), deliveries of the luxury electric vehicle (EV) will begin immediately, Huawei said in a press release. The company is also offering a discount of 33,000 yuan to customers who place their orders before Oct. 7.
• The model, which comes in five variants, is also equipped with Huawei ADS 2.0, the latest generation of its automated driving software and a digital cockpit powered by its Harmony operating system, the company said.

• Mitsubishi UFJ Financial Group Inc. delivered a solid result and managed an all-around beat last quarter.
• Despite increased G&A expenses, the company managed to rebound in terms of NOP, reaching a level before the introduction of negative interest rates.
• We give Mitsubishi UFJ Financial Group Inc. a ‘Hold’ rating with a revised target price.

• JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street.
• Service revenues grew, of which marketing and marketplace revenues were up.
• During the quarter, JD.com noticed strong user engagement trends, including higher purchase rates and ARPU on its app.

• Pegasystems delivered disappointing results as the company could not meet Wall Street’s revenue and earnings expectations.
• Pega achieved a remarkable feat in the first half of 2023 by producing $114 million in cash flow from operations and $123 million in free cash flow.
• The free cash flow dollars produced in the first half of the year was $123 million.

The managers of Baillie Gifford US Growth Trust (USA), Gary Robinson and Kirsty Gibson, aim to invest in exceptional US businesses with the potential to grow substantially faster than the market and deliver exceptional returns over the long term. Businesses capable of such growth tend to operate at the cutting edge of technology-led change, and USA has exposure to companies focused on artificial intelligence, space travel and drone delivery. The fluctuating fortunes of growth stocks over the past couple of years, combined with some de-rating of USA’s unlisted holdings, mean that USA’s performance has undershot market returns during the first five years since inception. Cumulative returns over the five years ended August 2023 totalled 49.1% in NAV terms, lagging the market return of 73.8%. However, the managers believe the ‘phenomenal’ fundamental performance of many portfolio holdings, combined with their very good growth prospects, augur well for the company’s ability to realise its return target over the longer term.

• We retain Bank Negara as our top pick for its deep value attributes of low PE multiples and its attractive PEG ratio relative to sound returns and strong liquidity metrics
• We also stick with our positive call on Bank Mandiri, for its premium returns and undemanding PE multiples; Bank Central Asia, albeit fully valued, has impressive liquidity and return metrics
• Bank Rakyat again registered worsening pre-provision returns in 2Q23, even if there was QoQ cost of risk relief; its loan mix implies a high structural cost of risk going forward

• Toyota Group autoparts maker Aisin Seiki (7259 JP) today announced a new Medium-Term Plan. They plan to shift their business away from “entrusted” business, towards BEV, Brakes, and “Safe/Comfort Entry”
• They aim to grow revenues 25% from 2021 to 2025 and an additional 10-20% by 2030. 
• They also aim to improve investment and capital efficiency, and that’s where we can look at the interesting possibilities.

• Aisin’s stock price rose by +8% today after the company held its MTP strategy briefing
• Aisin to restructure its business portfolio and focus on new growth areas for EV’s – eAxle, battery frames, and braking technologies
• Aisin aims to generate ¥400b from balance sheet reform – asset sales, inventory management and sale of cross-shareholding.

• Ryohin Keikaku (7453 JP) experienced a 45% leap in its share price since its last earnings announcement, primarily fueled by a positive OP surprise of nearly ¥3.0bn.
• Our analysis indicates the potential for another big earnings beat in FQ4, primarily because the consensus remains conservative in its cost assumptions.
• Additionally, we anticipate that the company will provide FY24 OP guidance in the range of ¥45-50bn. This would constitute a significant upside surprise compared to the current FY24 consensus.

• Perfect Medical Health (1830 HK) will report its H1 2024 results in late November 2023. We expect slow China growth to result in revenue/profit growth of 10%/15% YoY. 
• The company will continue to open outlets in HK, and the plan is to open ten by the end of FY24 (3-4 at the end of H1FY24e).  
• The stock trades at 12.7x PE FY24e, with an 8.7% dividend yield and around 16% of the market capitalization in net cash and investments (~800 mn HKD). 

• Health And Happiness (H&H) (1112 HK) has transformed from an infant formula company to a nutritional supplements company.
• The company currently trades at 5.3x 2024E PE – still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.
• As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually. 

• NEC’ is up almost 90% year-to-date to 16X EPS guidance for this fiscal year and 12x targeted EPS three years out. It now looks fairly valued.
• Profit growth is led by IT Services for the private and public sectors, with strength in finance and system integration. 
• Social Infrastructure is growing, but in the red. Aerospace and national security are profitable, but margins are low.

• Snap-on Incorporated achieved decent growth in both sales and profitability in its most recent result.
• Moreover, Snap-on’s success in the Tools Group highlighted its ability to innovate and cater to customer needs effectively.
• Snap-on’s customization and profitability, particularly in low-volume production, have been a driving force behind its growth.

• Our estimations for FY 2023 annual revenue range at around $8,023 million and for 2024 at around $9,219 million.
• The company’s annual revenue reached $6,622 million in 2022 compared to $5,106 million in 2021, post- ing an increase by 29.69%.
• Constellation Software’s gross profit for FY 2022 was $2,271 million, increased by 44.74% compared to $1,569 million for the corresponding period of 2021.

• Japan has a solid if stagnant footwear market, yet it only has one compelling nationwide footwear retailer.
• ABC Mart continues to outperform its smaller rivals, with little competition as its main rivals decline further.
• The real competition is coming from brands selling directly to customers via their own stores and online – and low-cost retailers nipping at its heels from below.

• After Sun Hung Kai Properties (16 HK) released its interim results, shares declined 12.7% intra-day this past Monday, touching a 14-year low, before closing down 9.5%. 
• The same day, the Kwok family increased their stake in the company, purchasing ~2.2mn shares for ~HK$175mn.  
• SHKP is currently trading a trailing P/B of 0.36x versus its five-year average of 0.54x, and the five-year average preceding Covid of 0.68x.

• GTVs for Yahoo’s shopping division fell by 8% in 1Q2023. 
• Although this was expected and gross profits did improve, the downturn reflects deeper concerns.
• Even the group’s Zozo fashion platform are much more slowly.

• SMFG can benefit like peer banks from BOJ policy change, but less so than MUFG, while at the same time, there does not appear to be a strong alpha story
• ROE and ROA for SMFG show now expansion over the years, and this is stark contrast to MUFG, part of this appears to be due many weak subsidiaries
• Credit costs are now averaging 23bps over the past four quarters vs 13bps during 1Q18 to 4Q19, not improving credit metrics like many others, with high write-offs.

• Mediatek shares rallied recently on high volume and are approaching their 52-week highs. We however warn investors to beware emerging news of Huawei/SMIC’s chip capabilities.
• Mediatek announced last week its flagship mobile phone chip was preparing for high volume manufacturing with TSMC’s most advanced 3-nanometer process node.
• However, we believe Huawei’s recent Mate 60 chip development could pose a threat to Mediatek’s market share outlook. We downgrade our rating from Structural Long to Neutral, target price NT$815.

• Shougang Fushan Resources (639 HK) experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates. 
• Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing. 
• We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents  FY22: 43 cents).

• In 1H23, Otsuka Holdings (4578 JP) reported revenue growth of 16% YoY to ¥947.5B, ahead of the guidance of ¥867B, as all operating segments recorded increased revenue.
• In 1H23, revenue from pharmaceutical segment grew 21% YoY to ¥637.9B, mainly driven by the growth of the four global products, which contributed 49% of segment revenue.
• Encouraged by a better-than-expected 1H23 result, Otsuka has raised 2023 guidance. The company has increased revenue, operating profit, and net profit guidance by 6%, 17%, and 19%, respectively.

• The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. 
• We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
• Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. 

• India Supply Chain Rising — Hon Hai is helping Apple launch with India-made iPhone 15’s on Day 1. These days, Apple likely wants to diversify away from China even faster.
• ARM IPO prices at high end of range, is backed by TSMC, Apple, Nvidia, Samsung, Intel.
• We downgrade Mediatek: After rally, beware of Huawei/SMIC chip capabilities causing market to realize Mediatek could lose market share.

• Longboat is acquiring Topaz Number One, its partner in Malaysia for an initial consideration of US$0.1 mm in shares in Longboat.
• The transaction will boost Longboat’s WI in the Production Sharing Contract over Block 2A offshore Sarawak from 36.75% to 52.5%.
• The 15.75% WI in the block is the only asset of Topaz Number One.