Equity Bottom-Up

• Nine months have passed since Aisin announced a transformative MTP. Investors remain sceptical that it will deliver higher returns. 
• Improving margins on hybrid transmissions, new products for BEVs and better capital allocation could deliver 70% upside for investors.
• The key risk is the assumption that operating margins can rise above 8% versus the historical average of 5%. 

• In this insight, we highlight the recent pricing gap divergences of the major Korean holdcos and opcos which could provide trading opportunities in 3Q 2024.
• Of the 38 pair trades, 21 of them involved holdcos outperforming opcos in the past six months, suggesting increased capital allocation to Korean holdcos relative to their opcos.
• These pairs could generate trading opportunities in terms of their pricing gaps closing reversal (Doosan Corp vs. Doosan Enerbility; Hyundai Mobis vs Hyundai Motor).

• Niche Player in Cotton yarn spinning and Technical Textile with decadal experience.
• Expansion in Technical Textile during FY24 will significantly improve the margin profile and revenue for the company.
• Peer Comparison and assessment at multiple metrics to assess the suitability of investment.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2024.
• The recent push for Korea Value Up program has helped to push up prices of numerous Korean preferred stocks including Hyundai Motor (005385 KS). 
• On a longer timeframe (3-4 years), we believe this discount could narrow further to the 20-25% range, which provides additional opportunities for the Korean preferred shares to further make gains.

• Despite achieving significant milestones, Elon Musk’s $56 billion compensation package was voided in January 2024 due to a flawed approval process, ruled a Delaware judge.
• Tesla’s shareholders voted to reinstate Musk’s package in June 2024, but the lawsuit continues, and the contract’s future remains uncertain.
• Tesla faces challenges with slow EV sales growth, rising competition, and the need for lower-cost models, which may impact stock performance despite Musk’s ongoing leadership.

• Toyo Corporation is a trading company specializing in measurement technologies.
• With several initiatives and strong structural demand in the electric vehicles space in particular, we expect the company to achieve higher revenue and profitability.
• Higher recurring revenue and proprietary product ratios will support a margin improvement in the future. 

• Indian smartphone exports boosted by iPhone makers as Xiphera introduces quantum security improvements in crypto solutions
• Ola Electric pioneers solid-state batteries for electric vehicles, while SK Hynix invests $75 billion to dominate HBM Market for AI Chips
• China nationalizes rare earth resources as airlines struggle with high costs to achieve sustainable fuel goals, Foxconn denies mistreating married women in India

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• Despite weak data, HK stock earnings and dividend payouts in the results have been resilient, resulting in solid dividend yields of over 10%.

• Operating profit for 1Q (Jan-Mar) FY2024/12 was ¥985 mn, already achieving 65.7% of progress in 1Q against the full-year target.
• Reason: a steady growth in programmatic advertising business including the collaboration business with Dentsu and the drastic cost reduction implemented in 2023 helped, while the bottoming out of reservation-based advertising business was not yet recognized in 1Q FY2024/12.
• In addition, the phasing out of the use of third-party Cookies in Google Chrome, which was included in the initial performance plan as a downside risk, has been postponed to 2025 or later. 

Target Healthcare REIT has sold four of its care homes for £44.5m to the incumbent tenant, modestly ahead of the carried value. The homes have performed well since being acquired as part of the significant portfolio transaction in late 2021, but their sale enhances key portfolio average metrics such as age, floor space and unexpired lease term, has been completed at a lower yield than the portfolio average and enables the company to reduce exposure to more expensive debt.

• TSMC: +16.7% Premium, Has Remained Rangebound; Watching for Over 20% or Under 15%
• UMC: +2% Premium, Upper End of Trading Range, Can Consider Shorting
• ASE: +9.9% Premium; Spread Could Have Further Room to Bounce Higher

• Investors should be aware of the increasing prices of TCM raw materials, which could lead to fluctuations in profit margins of TCM companies. Investors should prepare for these potential impacts.
• After years of “fast-follow”, we’ve finally seen products from Chinese pharmaceutical companies stand at the center of the stage for the first time in the new generation of ADC.
• China Resources Medical’s profitability outlook is not promising due to issues within the Chinese healthcare system. The bottom line is P/B above 1 and P/E above 10x.

• Selamat Sempurna is one of the most interesting industrial companies in Indonesia, with a leading market share in filters for auto and heavy equipment markets in Indonesia and overseas.
• 1Q2024 was impacted by a seasonal slowdow ahead of Lebaran and a decline in sales to Russia, offset by strong US sales. Management remains confident in the outlook for FY2024.
• Selamat Sempurna will continue to benefit from growth in the filter replacement market for both auto and heavy equipment markets and already has exposure to EVs. Valuations are attractive. 

• While the street is getting excited about Bandhan Bank (assuming a change in management, end of a bad asset cycle, and lower valuations), we are not.
• We believe the next set of problems for the bank are yet to be unleashed, and a change in management will only intensify the challenges ahead.
• We believe the worst is yet to come for the bank. 

• Nuvama Wealth Management (“Nuvama”)  continues to report strong growth with Q4FY24 revenue at INR 596cr, a growth of 35% YoY. Q4FY24 PAT grew 57% YoY to reach INR 181cr. 
• Overall, FY24 revenue and PAT ended strong at INR 2063cr (YoY growth of 31%) and INR 597cr (YoY growth of 62%), respectively.
• FY24 growth was led by the capital markets (revenue grew 64% YoY) segment, aided by favorable cycle and market-share gains. Wealth and asset management segments are also scaling up well.

• PC & Server solutions names have fallen moderately from highs in June, however enterprise server company HPE soared 20% on AI strength.
• Despite the market pullback from highs, we note that 2025E forward growth expectations have generally increased for the universe over the last month.
• Latest Taiwan PC company revenues indicate healthy growth and HPE’s management guided for Enterprise AI orders to accelerate.

• Douyin’ GMV increased by 300% YoY in the “June 18” sales season.
• The revenue of a pre-IPO restaurant chain, Green Tea, increased by 55% in 2023.
• Alibaba’s supermarket chain, Freshippo, opened 12 new stores in June.

• Perfect Medical Health (1830 HK) reported flat revenue/profit growth for FY24 due to a weak Q4 that plagued the entire HK consumer space. H2FY24  revenue/profit growth was -6.3%/-12.5%
• The company paid a generous dividend of 31.5 cents for FY24 (vs. 30.0 cents), resulting in a 12.5% dividend yield.
• We will follow up with more details after the earnings call and presentation. 

Key points

• Delfi, the leading chocolate company in Indonesia, is experiencing challenges due to rising cocoa prices
• Despite a decrease in share price, analysts remain optimistic about Delfi’s future prospects
• The company’s management team is implementing strategic measures to protect profit margins and improve financial performance, with initiatives planned for 2024 expected to mitigate the impact of cocoa price increases

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

• Moody’s Ratings downgraded Grifols’ corporate family rating to B3 from B2, with a stable outlook, due to high leverage, and complex, opaque corporate governance involving related-party transactions.
• Moody’s considers Grifols’s liquidity to still be “fragile,” noting that “while adequate for the next 12 months, beyond that, maintaining adequate liquidity will depend on returning to positive FCF generation.
• For risk-tolerant investors, the current low share price could present a long-term buying opportunity if Grifols successfully executes its strategic initiatives.

• Client-Driven innovation fosters R&D via proactive, marketable solutions and an SDE framework for excellence
• In-Depth understanding of sectors and data-driven innovation drives strategic growth
• Comprehensive data analytics solutions from start to finish for business success

• PT Metrodata Electronics (MTDL IJ) saw a strong rebound in 1Q2024 for its distribution business, especially for telco products, which partially offset the slower growth in solutions & consulting. 
• Solutions&consulting saw slow growth due to some delays over projects due to political uncertainty ahead of the election but it did have the support of recurrent income from software.
• PT Metrodata Electronics should see a recovery in solutions & consulting in 2H2024, with increasing demand from AI-related projects, which will further drive future growth. Valuations remain attractive.

• Polestar presented a mixed but broadly positive financial picture in the third quarter of 2023.
• The company, known for its focus on electric vehicles, reported record third-quarter deliveries of 13,976 units, marking a significant 51% increase from the previous year.
• This robust performance can be attributed to a positive product and channel mix and the initial rollout of the Polestar 2’s model year ’24, illustrating a strong consumer demand for Polestar’s offerings.

• Tencent Music Entertainment Group, a leading player in China’s music streaming industry, started the year 2024 with some substantial financial and operational achievements, reflecting its continued emphasis on a dual-engine strategy of content richness and platform optimization.
• However, not all indicators were uniformly positive, revealing certain challenges and strategic pivots.
• On the upside, Tencent Music reported a marked increase in its subscriber base, adding a record 6.8 million net subscribers during the quarter, which pushes the total count to 113.5 million music-paying users.

• Occidental Petroleum is a quality oil and gas operator focusing on the Permian Basin, available at a discounted price for investors
• The company has undergone strategic changes, selling off non-core operations and refocusing on core assets in the Permian Basin
• Occidental Petroleum has improved management and technological advancements in the Permian Basin, leading to a projected value of $100 per share by 2026

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

• We hosted a conference call with Global Unichip (GUC); GUC is 34.8% held by TSMC and a key provider of semiconductor design services to companies aiming to manufacture with TSMC.
• GUC’s Revenue Prospects are Linked to TSMC’s Growth, However the Success of Its Customers’ Chips Also a Factor — Lagged Strong Revenue Growth Likely
• Conclusion: GUC a Second-Derivative Play on TSMC’s Structural Drivers with Potential to Surprise the Market and Catch Up to TSMC’s Share Performance

• We visited some paint dealers representing Asian Paints (APNT IN) and Akzo Nobel India (AKZO IN)  to understand the current competitive intensity in the industry.
• While three months is too short of a time frame to observe a significant change in industry structure, current signals seem to favor the incumbent. 
• Opus may influence dealers and painters, but what if consumers simply prefer APNT?

Actinogen Medical announced that the prespecified biomarker subset analyses on stored plasma samples (n=72) from its previous Phase IIa XanADu study (n=185) in patients with mild Alzheimer’s disease (AD) has been published in the peer-reviewed Journal of Alzheimer’s Disease (JAD). As reported in Q422, patients with elevated baseline phosphorylated Tau-181 (pTau-181) protein (at least 6.74pg/mL), representing 34 patients (16 on Xanamem 10mg daily, 18 on placebo), showed a 0.6 mean difference (effect size) on the CDR-SB scale at 12 weeks between the placebo and treatment arms, representing a 60% relative reduction in progression. This suggests that Xanamem’s potential cognitive or disease-slowing effects may be sensitively detected by the CDR-SB endpoint, which is one of the critical endpoints in the ongoing XanaMIA Phase IIb trial (planned n=220) enrolling participants with cognitive impairment (CI) in mild to moderate AD as confirmed through elevated baseline p-Tau181. Actinogen’s next milestone will be results, expected in early Q3 CY24, from its Phase IIa XanaCIDD study of Xanamem in patients with CI and major depressive disorder.

MoneyHero has made a promising start to FY24, with robust levels of revenue growth in Q124 across several core markets and all product verticals. Investment in the platform has resulted in improved application conversion rates, while several senior hires have been made, including the new CFO, Hao Qian, and a head of AI. Although the EBITDA loss widened in the quarter, management expects profitability to improve to a break-even run rate by end FY24. Our estimates are unchanged, anticipating sequential quarterly revenue growth as management accelerates investment in its user base and benefits from operational leverage.

• CAVA’s first quarter of 2024 financial results depict a mixed yet optimistic scenario for the Mediterranean cuisine leader.
• The company reported solid revenue growth of 30.3% year-over-year reaching $256.3 million and a notable addition of 14 new restaurants, indicating aggressive expansion strategies into both existing and new markets.
• The same-restaurant sales experienced a moderate increase of 2.3% or 30.7% on a 2-year basis which, while positive, might suggest a deceleration in same-restaurant sales growth momentum when compared to historical data.

• Broadcom’s Strong Q2 Performance: Broadcom’s Q2 revenue surged 43% year-over-year to USD 12.5 billion, driven by AI demand and VMware contributions.
• Dominance in AI ASIC Market: Broadcom holds a 60% market share in AI-specific integrated circuits, serving major clients like Alphabet and Meta.
• Lead up to Stock Split Upside Potential: Mega caps have seen an average 17% outperformance relative to S&P 500 from announcement to actual stock split, signaling sharp upside for Broadcom.

• Bank Rakyat Indonesia (BBRI IJ) have seen a significant correction on the back of concerns over credit quality, as provisions increased in 1Q2024, the bank addressed its problem micro-loans
• The bank is addressing these loans with some further provisions likely over the coming quarter but special mention loans should plateau in July signifying a turn. 
• Bank Rakyat Indonesia will slow micro-lending and grow corporate loans this year to address the cost of credit. Profits will likely be flat and dividend payout up. Valuations are attractive.

• Recently listed Ecocare Indo Pasifik (HYGN IJ) is a small-cap with significant potential as a leader in hygiene services in Indonesia, which is a segment with a secular growth story.
• The company operates a rental model which means recurrent revenues with a high retention rate and annual price increases in a market with high barriers to entry. 
• Ecocare Indo Pasifik (HYGN IJ) has entered the pest control market with services that can be offered to its existing 13,000 corporate customers, with cleaning services as an additional add-on. 

• Rising exports, as it has higher margins and Growth in Non-Auto sectors
• Acquisition of ACIL, JMT auto, TSUYO, and Multitech Auto will drive revenue
• Reducing dependency on a single product or categories and single customer

• South Korean battery makers stand to benefit from Tesla’s production issues with 46800 cells, boosting profitability in May 2024.
• STMicro and Panasonic Cycle Tech team up to introduce AI technology in e-bikes, making safety enhancements more affordable and accessible.
• Axelera AI secures US$68 million for global expansion in AI, recognizing computing as the new currency and focusing on growth in the tech industry.

• Grab Holdings (GRAB US) continues to face off the competition with product-led initiatives which continue to gain traction, improving retention rates, and increasing user spend and frequency.
• Competition from new players in Singapore is evident but given Grab’s market position, which allows it to virtually guarantee driver’s daily income, whilst competition often affects smaller players more.
• Grab Holdings (GRAB US) continues to reinvest excess margins in growth but the real kicker will come next year once new product initiatives fully take hold. 

• RPPL executed well in FY24 with sales volume growth at 18% YoY. However, sudden and significant contraction in raw material prices dampened FY24 sales value growth to just 9% YoY.
• Exports sustained its quarterly run-rate of INR 10cr+ in Q4FY24, resulting in FY24 aggregate exports sales at INR 42cr. Exports contributed 15% of revenues in FY24 vs 5% in FY23.
• RPPL is also making good progress with its new initiatives. Its Olive Ecopak venture began commercial production in Mar 2024. Its injection molding segment is also scaling up well.

• Jyoti Resins and Adhesives (JRA IN) engages in manufacturing of synthetic wood adhesives under ‘Euro’ brand and claims to be the second largest player in its respective market.
• While on ground, Euro has gained good traction and has received positive feedbacks, there are however several takeaways noticed on the forensic end.
• These include Lack of clarity on revenue figures, low FA base, lack of disclosures of important accounting policies such as leases and customer rewards, etc.

• Mattel Inc.’s first quarter 2024 financial results reflected a mixed performance, demonstrating resilience in some areas while facing challenges in others.
• The company reported a slight decline in net sales, down 1% both as reported and in constant currency, totaling $810 million for the quarter.
• Despite the dip in sales, Mattel showed considerable strength in profitability metrics.

• Rani is a clinical-stage biotherapeutics company developing the ingestible robotic RaniPill (RP) that enables oral delivery of biologics & other large molecules.
• Its pipeline features clinical assets RT-102 (teriparatide for osteoporosis) & RT-111 (ustekinumab for psoriasis).
• Both programs have completed Ph1 trials characterizing safety tolerability & pharmaco-kinetics.

• Nvidia surpasses $3 trillion valuation, a first in semiconductor industry
• Company’s rapid growth raises concerns about stock market dynamics
• Debate on Nvidia’s dominance in AI computing and comparisons to past tech industry booms.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• The new excitement of the MS&AD story is the company’s commitment to sell down all of its cross-shareholdings and to use proceeds to fund growth and dividends.
• ROE is already far higher now than in recent years, and this can continue with rising dividends.
• Monthly insurance sales figures give a good window on the core business, with growth rates in May YoY and YTD accelerating.

• Oriental Watch (398 HK) reported revenue/profits down 2%/15% YoY for the full year (vs our expectation of 10%). H2 revenue/profitability fell 12%/22% YoY due to a weak Q4. 
• Cash and investments fell from 1.1 bn to 920 mn HKD, owing to dividend payments, increased inventories, and reduced payables.  Cash represents 55% of market capitalization. 
• The company maintains a 100% dividend payout, but dividends declined in line with earnings to 51.5 cents (FY23: 60 cents), representing a 15% dividend yield. 

• Delta Taiwan has outperformed Delta Taiwan recently. The parent vs. subsidiary market cap ratio is now trading consistently over 1.0x. and can go higher in our view.
• Nvidia opportunities and other similar cutting edge technologies will first go to Delta Electronics Taiwan (2308 TT) and not to Delta Electronics Thailand (DELTA TB).
• Conclusion — Expect further Delta Taiwan outperformance over the long-term vs. Delta Thailand.

• Data Centers — Traditional Data Center Recovery Starting; In Addition to HBM Demand, SSD Memory Seeing Strength for AI Applications
• PCs — Upcycle to Accelerate “Late CY2024E”, Driven by Windows 12 and End of Windows 10
• Mobile Devices — Moderate Growth in CY2024E; Potential for Smartphone Upgrade Cycle Acceleration

• Japan’s rising defense budget and military collaboration with the US and Europe should support a high level of orders for the foreseeable future.
• Defense is the growth driver, but other divisions should hold up well due to the ongoing rationalization of operations.
• Profits should rebound this year and rise further in FY Mar-26, bringing the P/E down to 9X or less. The weak yen is a large positive. 

• Tesla Tops Storage: Tesla dominates North American battery storage (25% market share) as renewables rise, deploying a record 4,053 MWh in Q1 2024.
• Explosive Industry Growth: U.S. battery storage market projected for a staggering 30.5% CAGR until 2030, driven by clean energy transition.
• Forefront of Innovation: CATL revealed TENER, a mass-producible energy storage system with zero degradation for five years achieving 430Wh/L density. Innovation to continue fueling growth.

• The company’s targets are underwhelming given the opportunity but low expectations built in
• A revamped strategy to increase profitability and shareholder returns is “radical” for this old-school company
• Execution is key for certain parts of the plan, but the market can do the rest

• Humanoid robot development is rapidly advancing with improvements in AI, mobility, and interaction capabilities, exciting progress being made.
• China’s cloud service spending expected to surge 20% by 2024, with the country leading the hydrogen race through policies and demand.
• Former TSMC R&D director sheds light on Taiwan chip industry facing geopolitical shifts, reaching a crucial crossroads amidst declining semiconductor market.

• ASX is seeing the number of listed companies in decline, although there are some positives with average daily turnover and secondary listings.
• Higher costs are keeping positives from reaching the bottom line fully, with costs to revenue are now 40% in 1H24 where this was 29% in recent interim periods.
• Capex plans for ASX and sticky inflationary figures on staff costs, the current year and following year net profit can see reasonable pressure.

• China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
• Of companies that we are monitoring, Tencent and iDreamSky clinched one approval each.

• Shankara Building Products L (SHANKARA IN) is seeing a healthy topline growth in the last three years but this is accompanied with margin contractions.  
• As far as the forensics are concerned, the company does not have grave auditor red flags like earlier but there are still some eye-catching checks.
• Caution must be given to the finance costs of the company which look on a higher side vis-a-vis the borrowings. Moreover, inadequate provisioning might also expose out some receivables.

• Generative AI is driving hardware advancements and creating new industrial prospects, with Synopsys offering automation and analytics tools for chipmaking facilities in India.
• Cultivating global cash cows like CHPT and Chief Telecom to enhance revenue streams, Volkswagen is investing $5 billion in Rivian to create an EV software joint venture, while Poland’s CEZAMAT boosts photonics and chip goals in Europe.
• Indian electronic component production value is set to increase 5x by 2030, but slow data center expansion may affect chip sales, according to Nvidia CEO. SiFive also unveils 4th-gen essential product line to drive innovation in embedded applications.

• Otsuka Holdings (4578 JP) announced FDA acceptance of indication expansion filing for Rexulti for the treatment of post-traumatic stress disorder. The FDA action date is February 8, 2025.
• Due to impairment loss associated with termination of a pipeline asset, the company has reduced operating and net profit guidance for 1H24. However, 1H24 revenue guidance has been raised.
• 2028 revenue is expected to reach ¥2.5T, an increase of ¥480B from 2023 results, that too after absorbing the negative impact of ~¥310B for loss of exclusivity of core drugs.

• Broadcom Inc. presented its second quarter fiscal year 2024 financial results, underscoring notable growth and strategic advancements, particularly through its semiconductor and software segments.
• The revenue recorded was $12.5 billion, a substantial 43% increase year-on-year, buoyed significantly by the inclusion of a full quarter’s financial contribution from VMware.
• Excluding this factor, revenue was up 12% from the previous year.

• Warner Bros. Discovery commenced the first quarter of 2024 with a focus on adjusting its operations for future sustainability in an industry marked by rapid disruption due to technological advancements.
• The company acknowledges the transformative necessities dictated by changing consumer behaviors and the technological landscape.
• On a positive note, Warner Bros. Discovery reported an encouraging increase in subscriber growth for its streaming service, Max, which saw an addition of 2 million subscribers across various regions, pushing its total Direct-to-Consumer (D2C) subscriber count towards 100 million.

• Revenue: JPY3.9bn (-4.1% YoY); Operating loss: JPY133mn; Recurring loss: JPY39mn; Net loss: JPY759mn.
• Revenue by product type: Adult diaper machinery JPY887mn (-48.8% YoY), Sanitary napkin machinery JPY1.1bn (+82.7% YoY).
• Gross profit margin rose to 18.0% from 12.9%; Net income improved due to JPY534mn gain on sale of securities.

• Coupang has commenced 2024 with a notable performance that underscores both strengths and areas in need of meticulous attention.
• During the first quarter, Coupang reported a robust 28% year-over-year growth in revenues in constant currency terms, attributed primarily to increased spending across customer cohorts, including its longest-standing customers.
• This points to successful customer retention and the appealing nature of its offerings.

• Clean Harbors reported a firm start to 2024, with various elements of the business performing strongly, though challenges linger primarily in pricing environments affecting some segments.
• The Environment Services (ES) division, a pivotal part of the company’s operations, showcased an impressive 10% revenue increase, bolstered by both organic growth and strategic mergers, including recent acquisitions like Thompson and HEPACO.
• With a particular strength displayed in technical services which saw an 11% spike driven by high operation volumes, ES stands out as a robust contributor to Clean Harbors’ overall financial health.

In our last BB Biotech (BION) review note, published in May 2024, we noted that the biotech sector was eagerly awaiting some key milestones, the most important being Alnylam Pharmaceuticals’ late-stage clinical trial of vutrisiran for patients with ATTR cardiomyopathy, a deadly heart disease. Alnylam, which comprised 4.3% of BION’s portfolio at end March 2024, released very positive, statistically significant, Phase III trial results this week. Assuming regulatory clearance, Alnylam expects that vutrisiran has the potential to become the new standard of care for the treatment of this disease, driving substantial future growth for the company. These results may have favourable implications for sentiment across the broader global biotech sector, and for Ionis Pharmaceuticals, BION’s largest portfolio position, which is also developing gene-silencing technology.

• Cover Corp, a leading talent management company in the rapidly growing VTuber industry.
• They’re considered the most prestigious agency and should attract the best talent.
• Superior Underlying Performance Metrics: Cover boasts superior key performance indicators (KPIs) compared to their main competitor Anycolor, including higher engagement metrics like subscribers, hours watched, and viewership.

• Taiwan Shares Fall With Nvidia… SK Hynix HBM DRAM with Global Unichip? Taiwan’s Vietnam Shift Continues… Broadcom Developing an AI Chip with Bytedance
• TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing 
• UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ. 

• With emerging centers scaling up and established centers growing steadily, HCG’s profitability is growing strong. HCG’s Q4FY24 PBT grew to INR 28cr vs INR 13cr YoY and INR 3cr QoQ. 
• With the patient mix improving for emerging centers with growing vintage, ARPOB for emerging centers has crossed INR 40000, a rise of 12.2% YoY.
• We estimate that by FY26, HCG’s PAT could exceed INR 260cr, leading us to value HCG at a market cap of around INR 10000cr at 38x+ FY26 exit P/E.

• We interact with a few business partners of Eureka Forbes (EUREKAFO IN)  to understand the latest on-ground business developments.
• Key areas that are probed include feedback on product quality and innovation, attachment rates for AMC services, key drivers of volume, improvements in service quality, and product premiumization.
• Based on our interactions, it is quite evident that the company is not interested in developing its offline sales channels, i.e., the franchises.

• The FMCG business has been now sustaining an annualized revenue run-rate of INR 500cr+. Q4FY24 FMCG revenue was INR 135cr+, similar to Q3FY24 and a growth of 30%+ YoY.
• Firstsource Solutions (“Firstsource”) , the BPO business, has been sustaining its recovery after a lull period for two years. Its revenue grew 4.2% QoQ and 4.5% YoY in constant currency.
• The Sports business revenue continue to be dominated by IPL. Having played three seasons now, RPSGV’s IPL franchise, Lucknow Super Giants (LSG), has made its place and holds significant value.

• Taiwan is utilizing AI supercomputers for medical and life science innovations, showcasing a commitment to technological advancement in those fields.
• Wistron is making a significant investment of $24.5M for a new factory in Vietnam, indicating a desire to expand production capabilities in the region for potential economic growth.
• Samsung is poised to overtake Apple in Taiwan’s mobile market by June, highlighting the company’s competitive edge and potential dominance in the industry.

• Expect Micron to report strength in AI, highlight the company’s HBM efforts, and quote McKinsey’s trillion-dollar forecast in their earnings call tomorrow
• Although Nvidia’s growth has really helped the DRAM market, along with 2023 CapEx cuts, there are important concerns of double-ordering which could lead to a collapse soon
• Semiconductor market revenues have leveled off since December 2023, hinting a return to more normal growth for the rest of the year

• Exceeding our upgraded FY24 PAT estimate of INR 350cr+, Nesco reported PAT of INR 363cr, led by Q4Y24 PAT of INR 105cr, a rise of 24% YoY and 12%+ QoQ.
• Q4FY24 revenues grew 6%+ QoQ and 20%+ YoY. Growth was driven by BEC where revenues grew 6% QoQ and 31%+ YoY. IT Park revenue grew 2% QoQ and 13% YoY.
• For FY25, we estimate that Nesco could post a PAT of INR 420cr+. Per our FY25 exit P/E of 26x+, Nesco could be valued at around INR 11000cr.

• ZJLD Group (6979 HK) held its annual general meeting last Friday (June 21). 
• The share price is down 21% in the last 30 days, mainly due to a major sector pullback.
• I continue to expect 20% net profit growth for the company in 2024E.  The company is trading at 13x 2024E PE which I believe is attractive. 

• Pharmaessentia Corp (6446 TT) reported strong 1Q24 result, with increasing revenue and declining operating expenses. Revenue increased 86% YoY, gross margin (88%) improved, and operating expenses declined 3% YoY.
• The company achieved operating profit (NT$18M) for the first time in 1Q24. Net profit reached NT$330M in 1Q24, versus net profit of NT$315M for 1H23.
• Approval of Besremi in additional countries, especially China, data readouts from late-stage ET trials, and accelerating  revenue as well as improving profitability remain the near-term catalysts.

• Trading comfortably through the Partial Offer terms, Sun Corp (6736 JP) may still do nothing with its Cellebrite DI (CLBT US) holding towards narrowing the NAV discount.
• Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Mega cap stocks like Nvidia, Alphabet, and Microsoft surpass lofty market expectations, in the latest earnings season leading to continued rallies. 
• Profits from AI innovations are accumulating predominantly at the bottom of the supply chain, benefiting large hardware and cloud service providers. 
• Smaller tech companies, including Salesforce, MongoDB, and Dell, have experienced sharp corrections due to lofty expectations and their limited capacity to generate significant AI revenue.

• Kama Holdings (KHL IN)is available at 80% discount to its NAV.
• Kama Holdings (KHL IN) is Holding company of SRF Ltd (SRF IN), which has tailwind across segments.
• If the discount were to narrow from 81% to 56%, the price of Kama Holdings (KHL IN) could potentially double, assuming all other factors remain constant.

• Asics has demonstrated impressive growth in gross profit margins, as evidenced by 4.3ppt YoY improvement in Q1 to 54.5%
• Asics has been successful in growing market share and enhancing its brand strength
• For FY2024, we now forecast a 10% YoY increase in sales to ¥628 billion and a 46% rise in OP to ¥79 billion (prev: ¥ 71b)

• Midea Real Estate Holding (3990 HK) announced last night a proposal for distribution in specie of the property development business to shareholders.
• The proposal allows shareholders to select between receiving pro rata shares in the PrivateCo, or the cash alternative at HKD5.90 per share, a 57% premium to last close at HKD3.75. 
• I believe this is a good deal for minority shareholders.  The company (ex. property development business) will continue to be listed on the HKSE after the distribution. 

• Former TSMC R&D director Konrad Young advocates for a partnership between Taiwan and the UK in quantum technology.
• Chinese car brands attract young Thai consumers with innovative smart cockpit features, winning over the market.
• Xiaomi implements strategic changes in India after a decade of entering the market, adapting to new trends and demands.

• While current underlying demand has yet to show signs of a strong recovery, progress has been made in inventory adjustments in the distribution supply chain, and TOREX expects a recovery in sales from the 2H of 2024, and the top priority for this term is strengthening sales expansion initiatives.
• Regarding the initial FY25/3 consolidated OP forecast, in addition to a contribution of ¥1,150mn from the +8.7% YoY increase in net sales, the decrease of ¥2,370mn in inventory write-downs in manufacturing cost of sales will drive a strong recovery in OP.
• Although capex is set to decline -31.9% YoY to ¥3,600mn (mainly for equipment being installed in the new Phenitec Kagoshima Fab clean room), having peaked out last term, depreciation will increase +27.7% YoY to ¥3,000mn as the new clean room has started operations. 

• China Gas Holdings (384 HK)‘s FY24 result is distorted by non-recurring items and provisions. Adjusted net profit, however, has declined by only 4.3%, and is only 2.6% below consensus. 
• FY25 guidance looks positive as a 6% increase in dollar margin and a 5% increase in gas volume are expected. The Apr-May operating figures support such projections.
• China Gas maintained its DPS despite a drop in reported profit, showcasing its confidence. Assuming the same dividend in FY25 and FY26, it will sit on a yield of 7%. 

• Nu Ride is a SPAC with $2.5 per share in cash and $1 billion in net operating losses
• Company has $2.9 per share of net cash and $2.0 per share of perpetual preferred held by Foxconn
• Ongoing litigation actions against Foxconn and former executives could result in potential increase in net cash value to $4.5 per share

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

• LNC is poised for growth in the U.S. life insurance market due to improving fundamentals, positive earnings per share revisions, and an attractive valuation
• Despite past challenges with capital and credibility, management has successfully addressed issues and reshaped the business, leading to a clear roadmap for future growth
• With potential catalysts on the horizon, LNC has significant upside potential and the possibility of a shift in investor sentiment in the near future.

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

• TSMC: +16.1% Premium, After Sharp Drop, Will Be Interesting to See If Spread Will Remain Within the Recent ~15-25% Range
• ASE: +7.4% Premium; Can Consider Going Long the Spread Given Recent Trading Range
• ChipMOS: -2.4% Discount Repesents Extreme Low of End of Range; Can Consider Going Long the Spread

• With more foreign countries being granted visa-free visits to China, Cathay Pacific Airways (293 HK) will benefit from more transfer traffic via Hong Kong.
• Recovery is decent with passenger traffic rising 37.5% in 5M24. CX’s capacity already returned to 80% of pre-pandemic in 2Q24, and this will reach 100% in 1Q25. 
• YTD, CX is still a laggard relative to many global airlines. Its P/B valuation is not stretched at 0.8x, given ROE of 11% over the next 3 years.  

• Retail pharmacies experienced performance decline in April and May. Due to negative policies, retail pharmacies will experience industry clearance. Therefore, we do not recommend investors to bottom-fish related stocks now.
• There is a logic to biotech’s performance from 2023 to present.The clearer the path of sustainable development, the better the stock price performance. They can be divided into three types.
• YSB faces big risks and the outlook is not optimistic. If the final valuation of the Company is lower than China Resources Pharmaceutical and Shanghai Pharmaceuticals, we wouldn’t be too surprised.

• Kuaishou and Bilibili’s GMV surged YoY during “June 18” sales.
• World of Warcraft: Wrath of the Lich King, will formally start on June 27.
• GAC Honda Automobile Ltd planned to dismiss 1700 employees, about 14% of total.

• Everest Group has sustainable and improving 15-20% ROEs
• Stock trades at a valuation of 1.2x book and 6x P/E
• Poised for future success with accelerating casualty pricing, stable property-cat rates, and potential for hitting 90 combined ratio target

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

• Acotec’s 2023 performance was unsatisfactory. Core products suffered weak growth. Positive trend of continuing to optimize revenue structure was broken. Sales of latecomers’ competing products would expand rapidly in 2024/2025. 
• Revenue proportion in overseas markets was still below 5% in 2023. If no highlights in Acotec’s cooperation with Boston Scientific in 2024, this collaboration could be considered a failure.
• Due to VBP, margin could further decline. If it’s just the current situation, then Acotec is not as good as Zylox-Tonbridge. So, its valuation should also be lower than Zylox-Tonbridge.

• ACRC is a biotech pharma micro-cap company trading below its net cash value
• Downsized workforce after a failed phase 2 trial, CEO and CMO left prompting strategic evaluation
• Activist investors involved, potential for monetization of stakes to benefit shareholders.

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

• Erajaya Swasembada (ERAA IJ) is back on track with its handset business, with stronger volume growth driven by more affordable models from Infinix and Techno brands.
• The company’s buildout of its electrical retailer Erablue, a JV with Mobile World, is gaining momentum and should become a significant growth driver along with Grand Lucky supermarket.
• Erajaya will slow its store buildout this year as it focuses on productivity ny it still expected to add 200 new stores over in Indonesia. Valuation is attractive.

• Never a pioneer, instead a perfectionist in delivering mind bending experience. That’s what Apple has stood for traditionally. Can it repeat the act in the Gen AI era? 
• Siri to have advanced language comprehension and Writing Tools to deliver useful features to drive convenience and productivity. 
• Private Cloud Compute ensures user data remains encrypted and secure. Reflects Apple’s commitment to privacy amidst growing concerns surrounding data misuse.

• We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
• Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.  
• Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.  

• United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
• We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
• UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

• We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.
• Semiconductor Manufacturing International Corp (SMIC) (981 HK) and HLMC are capable of producing DDICs at 40nm and below.
• Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.

• Growth of outbound Chinese travel demand strong in May as HK, Macau slow
• Domestic travel demand also showed solid growth in May and early June
• Trip.com appears reasonably cheap now that it’s dipped below US$50, BUY

• Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
• We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
• IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

• As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
• In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
• We highlight that ITA’s problems are in revenue generation rather than operational efficiency.