Equity Bottom-Up

• Macro trends for restaurant chains are all negative: Food prices rising faster than restaurant unit prices, part-time wages rising faster than full-time.
• Toridoll’s same store sales resuming long-term underperformance trend that was broken only briefly during the pandemic.
• Stock trades at 3x the market average PBR, despite merely average RoE. Technical support has broken down.

• Q124 revenues of $3.79 billion, pretty much flat sequentially both QoQ and YoY, and also marginally better than guidance.
• Looking ahead, the company forecasted Q224 revenues $3.8 billion, i.e. flat QoQ. Still no full year 2024 outlook
• Technology transitions such as GAA, Backside Power, molybdenum replacing tungsten & the rise of generative AI will all be growth drivers in 2025 & beyond 

• In 1Q24, it was reported that the revenue growth was -3.35% QoQ, slightly exceeding our expectation of a 5% QoQ decline.
• For 2Q24, revenue is expected to grow, but the increase is projected to be less than 5% QoQ.  
• NVIDIA revenue in KYEC is forecasted to reach 15% by the end of 2024F, up from about 2% in 2023, driven by the increasing demand for AI.

• Due to the overvaluation of pharmaceutical companies in the primary market, only foreign markets are able to “digest” such high valuation. So, various promising drugs are acquired by foreign investors.
• The field of RDC/RLT has attracted our attention, which could become the next hot area. Since nuclides are the most important bottleneck, domestic related enterprises will usher in opportunities.
• Shijiazhuang Yiling Pharmaceutical’s performance would continue to be under pressure in 24H1 but would rebound in 24H2 after “destocking”. Valuation/share price have not yet bottomed out. Don’t rush to bottom-fish.

• Ginebra San Miguel (GSMI PM) is a monopoly in the gin business in the Philippines with a 97% marketshare trading at 7x PE FY24 ( 10-Yr Revenue CAGR 15% YoY).
• After its Q1 results, it has 32% of the market cap in net cash and investments, a dividend yield of>7%, and a 5/10 Yr average ROCE of 37%/22%.
• We summarize what we learned from the annual report released on April 15th. We saw a long-term trend of increasing prices, consistent margin growth, balance sheet improvement, etc. 

• Fluence Corporation (ASX:FLC) specialises in the delivery of water and wastewater solutions in industrial, municipal and commercial industries across the globe.
• The company released an update on Q1 performance (note: FLC has a December balance date), that clearly validates the change in group strategy away from large construction and engineering projects, and towards smaller, higher margin, proprietary solutions, with a clear push into North America.
• The company has maintained full year guidance of US$90m-$100m of revenue and EBITDA of US$3.5m-$4.0m, a positive turnaround from the EBITDA breakeven position of FY23.

• Gravita India (GRAV IN) faced a Qualified Audit Opinion over share sale proceeds’ reporting by its Employee Welfare Trust.
• The dispute centers on whether to record these proceeds in the P&L or Balance Sheet, impacting transparency and financial metrics.
• This dispute reduced the PBT by 7.54% and EPS  by 8.66% decrease in Q4 FY24.

• Altria Group recent 2024 first quarter earnings highlighted numerous key insights into the company’s performance and future prospects.
• Altria’s CEO, Billy Gifford, highlighted that the company made significant progress despite the challenging business environment.
• The company is also committed to investment returns, as demonstrated by its sale of a portion of its investment in ABI and the subsequent expansion of its share repurchase program.

• Comcast Corporation reported Q1 earnings recently highlighted by a strategic execution where the company maintained dominance in a competitive and evolving market.
• The company’s resilient capital allocation strategy and strong balance sheet place it in a favorable position, allowing it to invest aggressively in its six diverse growth businesses- Residential Broadband, Wireless, Business Services, Theme Parks, Studios, and Streaming.
• These sectors made up more than 55% of the company’s total revenue in Q1, and this proportion is set to grow.

• It is clear from Bristol-Myers Squibb’s first quarter 2024 earnings that the company has had a strong start to the year, even as it navigates some challenges.
• The firm’s performance during this time showcased the strength and potential of its commercial portfolio and the progress it has made in advancing its pipeline.
• Key brands such as Eliquis, Opdualag, Reblozyl, Yervoy, and Breyanzi have demonstrated significant strength, contributing to the company’s overall performance.

• Carrier Global Corporation’s Q1 2024 results showed a robust start to the year with adjusted EPS growth of 19% on low-single-digit organic sales growth and 280 basis points of adjusted margin expansion.
• With the addition of 12,000 new members from Viessmann Climate Solutions, the company is poised for another year of significant margin expansion and solid growth.
• Its lean journey and sustained productivity have contributed greatly to these results.

• Caterpillar’s earnings for the first quarter of 2024 highlighted a strong quarter with sales and revenues maintaining levels consistent with the last year, largely meeting the company’s expectations.
• A key aspect was the continuation of healthy demand for its products and services across major end markets.
• Thanks to its robust balance sheet and free cash flow, the company was able to allocate a remarkable $5.1 billion for share repurchases and dividends during the quarter.

• Based on the Q1 2024 results earnings call for AstraZeneca, the British multinational pharmaceutical and biopharmaceutical company seems to be on a steady growth trajectory, but like all corporations, it’s not without its risks.
• In terms of its achievements, AstraZeneca reported its first quarter of 2024 with a 19% growth in total revenue, reflecting high demand for its products.
• Core earnings per share rose by 13%.

• Dexcom, Inc., particularly known for its continuous glucose monitoring (CGM) technology, consistently showcased strong performance in the first quarter of 2024 with an organic revenue growth of 25% compared to the first quarter of 2023.
• This noteworthy surge is credited to the substantial demand for Dexcom CGM, seen as customers increasingly value its leading product performance and unique user experience.
• The shift towards Dexcom’s CGM technology has been significant, especially since the launch of G7 in the U.S., which enabled Dexcom to attract a broad range of new prescribers and improve its impact within primary care, resulting in growing demand from people with diabetes.

• Edwards Lifesciences Corporation recorded robust first quarter 2024 results, demonstrating growth on numerous fronts.
• The company’s total sales rose by 10% to $1.6 billion against the same period last year, leading Edwards to raise its 2024 sales guidance to the high end of 8% to 10%.
• This highlights the company’s successful strategic direction, underscored by its substantial investments across transcatheter platforms which are addressing patient needs associated with aortic, mitral, and tricuspid diseases.

• Alphabet Inc. reported a strong first quarter in 2024, fueled by robust performance from its search engine, YouTube, and cloud businesses.
• The company’s annual revenue grew from $100 billion to over $300 billion in six years.
• It predicts that YouTube and Cloud will reach a combined annual run rate of more than $100 billion by the end of 2024.

• People’s Insurance (PICC) (1339 HK) has bounced off its lifetime low implied stub and simple ratio (PICC/PICC Property & Casualty (2328 HK)); but still trades below its historical trailing/forward metrics.
• Preceding my comments on PICC 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%.

• Multi Bintang Indonesia (MLBI IJ) showed a weak print, with sales down 10% YoY and profitability flat for Q1 FY24. Consumption was weak locally despite strong Bali tourism. 
• On the positive side, the company improved its net cash position to substantially to 900 bn Rph ( or 6% of Mkt Cap) and expanded margins by 400 bps YoY. 
• Trading at 13x FY23 PE (with a 7% dividend yield assuming a 100% payout), there is great value in this market leader (60% Mkt share) of beer consumption in Indonesia.

• Darktrace shares rallied ~64% in 2024 after the company raised FY24 revenue, adj. EBITDA guidance and Thoma Bravo offered 620 pence/share in cash to take Darktrace private.
• The acquisition is expected to complete during 3Q or 4Q of 2024. The cybersecurity unicorn has delivered revenue growth at scale coupled with solid profitability and cash flow generation.
• I maintained a bullish view on the undervalued stock and initiated coverage of Darktrace on January 11, 2023, with a 497p price target as steep discount was unjustified.

• Bumrungrad Hospital Pub Co (BH TB) reported strong 1Q24 results, with revenue growing 8% YoY to THB6,576M, EBITDA climbing 22% to THB2,676M, and net profit increasing 25% to THB1,985M.
• International patients revenue increased 6% YoY. Slow growth in the revenue from international patients can be attributable to high base, as it grew by a whopping 105% YoY in 1Q23.
• With tight control on cost, the company has reported record high margins in 1Q24, with gross, EBITDA, and net margin reaching 51.7%, 40.7%, and 30.2%, respectively.

• Teledyne Technologies, a prominent industrial conglomerate focused on aerospace and defense, instrumentation, digital imaging, and engineered systems, reported its Q1 2024 earnings.
• In the call, management touted robust results including record first quarter non-GAAP operating margin, record adjusted earnings per share, and record free cash flow.
• The company’s strong performance was driven by growth in its marine, aviation, and select defense businesses which offset sales declines in other areas.

• Waste Connections, Inc. reported a strong start to 2024, delivering better-than-expected operating and financial results, including adjusted EBITDA margin expansion of 160 basis points to 31.4% in Q1.
• The company’s earnings exceeded projections due to improvements in employee retention and safety trends, along with rising commodity values.
• Waste Connections management highlighted several notable trends impacting its business, including continued improvement in employee turnover rates and safety incidents, suggesting an effective culture of accountability within the company.

• Hilton has reported its first-quarter results for 2024, which the company states have continued to demonstrate the strength of Hilton’s business along with its development story.
• Although the company’s RevPAR growth found itself at the lower end of its guidance, both adjusted EBITDA and adjusted EPS exceeded predictions significantly.
• Some of Hilton’s newly announced partnerships and portfolio additions have solidified its confidence in future growth.

• Teradyne, Inc delivered first quarter 2024 financial results that exceeded its revenue, gross margin and earnings guidance ranges, led by stronger than projected performance in Memory and System on a Chip (SOC) driven primarily by AI applications.
• Teradyne capitalized on the impact of AI in networking as well as in Edge AI applications like Advanced Driver Assistance Systems (ADAS), with AI applications driving over 40% of memory shipments in Q1.
• Nonetheless, the mobile sector was weaker than expected for the same period, but the company’s Robotics business met its plan for a third consecutive quarter.

• In the first quarter of 2024, O’Reilly Automotive, Inc., had a 3.4% comparable store sales growth, which was primarily driven by mid-single-digit comps in Professional.
• This marked continuous strong top line sales results and was a testament to consistent execution across all 6,200+ stores.
• The company noted that its store volumes continued to grow despite the company’s size and market share gains over the years.

• Xiao-I (NASDAQ: AIXI) is leveraging its experience as a chatbot provider to establish itself as a provider of AI models, principally in China.
• The company is focused on commercializing products in the consumer, marketing, and banking sectors in 2024 and exploring international expansion opportunities.
• The company is competing with some of the most successful companies in China for mindshare in AI markets.

• Bukalapak released its 1Q2024 results this week with some palpable relief as it booked its first adjusted EBITDA but underlying revenue growth remains strong, especially for its O2O business. 
• The company saw take rates improve for both its Mitra O2O business and its marketplace businesses, helping to drive revenue growth. Costs were also reduced allowing for positive contribution margins. 
• Bukalapak is expected to see sustainable profitability accompanied by revenue growth, with the marketplace recovering with improving product mix. BUKA’S “orphan” cash pile remains an issue but valuations are attractive.

• As we step into the earnings season focus on highlighting key earnings and what catches our attention analyzing companies part of the same sector or industry.
• Companies highlighted include Bajaj Finance Ltd (BAF IN); Shriram Finance (SHFL IN); L&T Finance Holdings (LTFH IN) ; Poonawalla Fincorp (POONAWAL IN) & Aavas Financiers Ltd (AAVAS IN) .
• BAF’s negative commentary around rural B2C business is surprising and an area that warrants further investigation.

• Weibo (9898 HK) is an inexpensive profitable large social media company in China
• Weibo generates a large cash flow which it uses to pay a 9% dividend yield
• Weibo has synergies with Alibaba’s core e-commerce business and fits well within its other media company ecosystem

• Qualcomm’s latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results’ key implications for Mediatek.
• Qualcomm’s 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.
• Qualcomm confirmed Mediatek’s view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.

• Geopolitical shifts are impacting Taiwanese businesses in China, leading to strategic adjustments and shifts in orders to specialty IC foundries.
• CHPT anticipates a surge in probe card orders in the second half of 2024, while SK Hynix expects high demand for HBM in 2025 with production nearly sold out.
• Meredot’s technology allows for micromobility vehicles and robots to charge wirelessly simultaneously, while Taiwan’s Compal will have its first foreign CEO in the electronics industry.

• Cancer is the most common cause of death in Japan, and at 282.9 cases per 100 000 people, it ranks at the upper end of the global recorded range.
• In 2020, Daiichi Sankyo embarked on transforming to a leading oncology specialist in terms of new drug development.
• Daiichi Sankyo’s ADC pipeline comprises of six higher level drugs with a number of indications (sub-categories). This pipeline is part of a universe of 2499 oncology drugs in development.

• Lam Research Corporation delivered a strong start to 2024, with the Q1 earnings surpassing the midpoint of their guidance.
• Although the business environment prospers as predicted, the company acknowledges ongoing risks and uncertainties reflected in SEC public filings.
• The quarter witnessed stability in Lam’s overcall 2024 revenue profile, with spending mainly driven by lithography shipments into China and enduring investment in domestic China.

• Meta Platforms Inc.’s Q1 shows strong headway with an increase in both product momentum and business performance reaching an estimated 3.2 billion active users per day, showcasing healthy growth particularly in the US market.
• The performance of the associated messaging app, WhatsApp, has been highlighted, reporting a steady increase in daily active users and message sends in the US. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Enphase Energy, a leading provider of energy management solutions, reported its first quarter 2024 financial results.
• For the quarter ending March 31, 2024, the company reported a total revenue of $263.3 million, a slight decrease compared with the previous quarter.
• The company also managed to ship approximately 1.4 million microinverters and 75.5 megawatt hours of batteries during this period, leading to a free cash flow of $41.8 million.

• The share price has bounced back on strong 3Q orders and long-term optimism, but weak 4Q guidance calls the growth trajectory into question.
• Guidance, which has sales dropping to about half what they were a year earlier, is based on the expected timing of customer acceptance of delivered equipment. It could be conservative.
• At 75X EPS guidance for FY Jun-24, a rate of growth not visible in current trends has already been discounted. Current orders should translate into sales in 2026.

• Q124 revenues of $5.5 billion, $100 million above the guided midpoint, down 11% QoQ but up 2% YoY.
• Looking ahead, AMD forecasted the current quarter revenues of $5.7 billion, up 3.6% sequentially.
• Share price down 7% in AH and down 35% from its recent 52 week high. We could see it retest the $100 level in the coming months

• Now that Meta, Alphabet, Microsoft, and Amazon all reported their quarters, we now have better context to how their quarters went.
• So, while I will mostly discuss Amazon’s earnings in this update, I will briefly touch on some broader themes as well.
• Overall revenue was slightly below the high end of Amazon’s guidance.

• Peptidream Inc (4587 JP) has obtained first-in-human imaging studies approval for its first in-house peptide radiopharmaceutical therapeutic program, PD-32766 targeting patients with clear cell renal cell carcinoma.
• Novartis (NOVN SW) has expanded peptide discovery collaboration with Peptidream. The expanded partnership could bring up to $2.7B in milestone payments plus royalties to Peptidream.
• In 2023, Peptidream reported revenue of ¥29B, up 7% YoY, with radiopharmaceutical revenue growing 40% YoY to ¥16B. For 2024, the company guided for revenue of ¥35B, up 22% YoY.  

• Spectur Limited (ASX:SP3) is a surveillance technology company providing security, safety, environmental monitoring and visual AI solutions to watch and act on assets managed by its platform.
• The company develops, manufactures and sells solar- and battery-powered, remotely-connected hardware, which is driven by SP3’s firmware, software, cloud and web-apps, providing data and solutions to its customers.
• Spectur has reported a 35% increase in Q3 sales revenue to $1.261m on the previous corresponding period (pcp) (ASX release 26 April).

• TRS reported first quarter results confirming a turnaround in the packaging segment could be underway
• Packaging is TRS’s largest business segment and had undergone a restructuring last year. The increase in sales has done little to impress investors
• TRS reported first quarter sales of $227.1 million compared to our estimate of $216.2 million. The biggest driver for the outperformance was the packaging segment

• We are reiterating our Buy rating, projections and price target for a.k.a. Brands with the company announcing 1Q24 (March) results after the close on Wednesday.
• We believe 1Q will be another period of rebuilding momentum and credibility, with the cleanup continuing at Culture Kings, Princess Polly adding new retail stores to the mix and rolling out new categories to become even more of a lifestyle brand and Petal & Pup leveraging new digital marketplace relationships and continued dress-driven expansion.
• Further, we believe management remains laser focused on reducing both inventory exposure and net debt.

• Sai Gon Cargo Service (SCS VN) reported revenues/profits up 31%/30% YoY. Net cash on the balance sheet ended the quarter at 15% of market capitalization (approximately 300 mn USD). 
• Catalysts we cited in our insight Sai Gon Cargo Services (SCS VN) Update: Price Hikes, Strong Q1 2024 Operational Numbers are playing out, resulting in earnings upside in the future.
• Trading at 12.5x FY24 PE and 6.8% dividend yield, this is an excellent micro-cap worth exploring for exposure to the Vietnam market. 

Esker reported FY23 results in line with our expectations. Revenue grew 12% (14% constant currency) while inflationary effects and sales commissions on bookings outperformance in H223 resulted in operating profit declining 16% y-o-y. The high level of contracts signed towards the end of FY23 provide good support for revenue growth in FY24 and FY25 and measures taken by management to improve productivity should drive margin expansion over our forecast period back into the company’s target range of 12–15%.

• • The work-over programme has started with the first two work-overs having added a total of ~40 bbl/d.
• The third work-over was not completed as damaged equipment was encountered downhole.
• • The second tranche of work-overs will start in May.

MotorK’s FY23 revenue growth was robust across most regions, with slow growth regions gaining momentum. Q124 revenue fell slightly year-on-year due to delayed delivery contracts, but these are expected to contribute to Q2 sales. Revenue quality improved, with software-as-a-service (SaaS) recurring revenue rising as a share of group revenue in FY23. M&A continues to play a pivotal role in unlocking opportunities across MotorK’s markets, providing potential average contract value (ACV) expansion from customers migrating to the platform. While personnel investments for growth swung EBITDA to a loss, MotorK’s holistic SparK platform remains well-positioned to capitalise on the automotive industry’s digital shift and technological innovation.

• The activist investor is back and has demanded further action to unlock value from Keisei Electric Railway Co (9009 JP)  management.
• Operational numbers are still healthy, but growth is not as large due to the high base.
• Immediate pressure to divest Oriental Land thus short Oriental Land (4661 JP)  and long Keisei.

• While HDFCB’s results have been somewhat lackluster over the past couple of quarters, this has been largely due to merger-related drags, tight liquidity and irrational competition in the marketplace.
• From a medium-to-long-term perspective, the growth prospects for HDFCB remain tremendously attractive despite its large size, as evident from its consistent market share gains in deposits.
• Q4FY24 earnings came largely in line with the expectation in terms of core earnings, except for one-off gain from an asset sale that was more than offset by floating provisions.

• Sumitomo issued new guidance for the year to 3/25 that was 40% higher than consensus estimates, but the stock cratered almost 5%.
• We were able to think of at least 6 explanations for this odd reaction – all of them irrational.  
• A reasonable person listening to the call should have been pleased by almost all that was new information. 

• Astra International (ASII IJ) just released 1Q2024 results, which reflected the softer auto and heavy equipment markets, although buoyed by better earnings for its finance arm, 
• The company’s headline net profit was down -14% YoY but stripping out value adjustments was only down -5% YoY, with management optimistic over the longer term. 
• Astra continues to mirror the Indonesian economy, with its latest investment in geothermal but its nickel businesses also growing. Valuations attractive on 6.6x FY2024E PER and a 7.2% dividend yield. 

• On April 24, Shin-Etsu (4063) posted its fifth consecutive OP decline and guided for a sixth, but the stock has outperformed Topix by 22% in the past 12 months. 
• OP for the year ended March 2024 was JPY141.5bn, vs. consensus estimates of JPY168.9bn. This was the fifth consecutive miss, and the fourth of more than 10%. 
• The Chinese economy is killing the company’s core core Polyvinyl Chloride Resins business and seemingly interminable inventory issues are holding back a recovery in the semiconductor materials business. 

• AI server cooling options include liquid & air solutions to improve efficiency and performance.
• India is set to introduce a new chip incentive package to boost its semiconductor industry.
• Apple’s supply chain expansion in Southeast Asia, especially Vietnam, has been significant, while MediaTek aims for 30% market share in China with upcoming flagship SoC.

• Samsung 1Q24 results beat consensus by a wide margin and the company gave strong guidance for its Memory segment, guiding for further strength driven by servers, PCs, & phones needs.
• Guided strong demand for PC/Mobile Memory in 2H24E driven by on-device AI, which supports the case of edge AI hardware beginning to drive demand in addition to cloud/server-based AI hardware.
• Foundry segment’s losses reduced, but still loss-making? Samsung’s order backlog is at an all-time high but Samsung Foundry results suggest manufacturing yield performance likely well behind TSMC.

• Branded PC makers’ shares have been mostly lower in April, however Intel and Microsoft developments are providing strong signals for a future PC upgrade cycle into AI PCs.
• Over 60% of Fortune 500 companies are now using Microsoft’s CoPilot AI assistant; Intel expects the industry to exceed its prior forecast for AI PC shipments in 2024E.
• CoPilot is the killer app that will trigger a global enterprise PC upgrade cycle; The next generation of CoPilot will be an edge AI app that will require powerful hardware.

• Under Mohit Joshi’s leadership, Tech Mahindra (TECHM IN) targets a 15%+ EBIT margin and revenue growth surpassing industry averages by FY2027, with a focus on operational reform and portfolio integration.
• Project Fortius aims to achieve $250 million annual cost savings over 3 years, emphasizing high-margin services and organic growth, signaling a departure from  reliance on traditional acquisitions.
• This strategic shift towards operational efficiency and organic growth alters the company’s outlook, positioning Tech Mahindra for sustainable growth and shareholder returns, underlining a commitment to long-term value creation.

• Tesla Inc.’s first-quarter earnings for 2024 offered a critical and insightful update on the electric vehicle manufacturer’s strategy and financial performance.
• Tesla appears committed to its strategic focus on vehicle autonomy and digitisation, with CEO Elon Musk stating that the company should be viewed primarily as an AI (Artificial Intelligence) and robotics firm, underlining its commitment to Full Self-Driving (FSD) as a key future revenue stream.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Fuyao Glass Industry Group (3606 HK) is the largest auto glass producer in the world, with an estimated 40% market share globally, and a dominant 65% market share in China.
• The investment case for Fuyao include:  ASP increase from product mix upgrade; increasing sales volume due to more auto glasses needed per car; and improving margins.
• The company has production bases in China with annual production volume of around 32.5 million units, and in US with annual production volume of around 5.5 million units.

• Outbound continues to improve, March load factor matched pre-Covid level
• Appears Chinese tourists are “spreading their wings”, travelling farther afield
• Trip.com has been best YTD performer in the space; can airlines catch up?

• SEBI has asked BSE to pay regulatory fees on options trading based on notional turnover instead of premium turnover
• The impact of this would 10-20% on earnings in short term
• The bigger question lies ahead what BSE will do to offset the impact and grow its market share in derivative trading

• Apple diversifies supply chain, focusing on Southeast Asia, led by Vietnam, while also shifting suppliers in India.
• MediaTek plans to boost market presence and R&D in India, targeting 30% market share in China by 2H24 with Dimensity 9400 SoC.
• US probe into China’s RISC-V role could impact Samsung’s AI chip ambitions, while STMicroelectronics aims for 100% renewable electricity by 2027.

• The top five smartphone producers’ market shares got closer in the first quarter.
• The China Immigration Office announced that entry and exit of people increased by 305% YoY in 1Q24.
• China Passenger Car Association expected that new energy vehicle sales volume will grow by 37% YoY in April.

• BYD’s revenue growth is lower than the estimate in our preview note.
• However, the recovery of sales volume in March suggests a strong year.
• We believe BYD will win the price war due to its homemade batteries.

• BFI Finance Indonesia (BFIN IJ) booked a solid set of 1Q2024 numbers with improved QoQ bookings, although with some concerns over challenging market conditions slowing the recovery.
• The NPF ratio saw an ongoing improvement, although the cost of capital increased due to higher write-offs from last year’s bookings. Revenue declined due to a shift to lower-risk products. 
• The outlook for BFIN in 2H2024 looks more positive, with the company shifting back to higher-return products and with lower expected credit costs. Valuations are appealing on 1.5x PBV.

• Taiwan Semiconductor Manufacturing Company’s (TSMC) Q1 2024 earnings presented several key details about the firm’s current market standing and future performance.
• For Q1 2024, they reported a 5.3% sequential decrease in revenue due to the impact of smartphone seasonality despite strong demand in high-performance computing (HPC).
• Gross margin was also up to 53.1%, reflecting product mix changes, and the firm’s operating margin increased to 42%.

• Waaree Renewable Technologies (WAREERTL IN) or (WRTL) is into Solar EPC and is a subsidiary of Waaree Energies Ltd. 
• Revenues and order book have increased exponentially in the last few years.
• While the business has certainly picked up, there are few forensic checks that need attention; most important being the auditor’s comment on the need to increase strength of internal controls.

• China Communications Construction (1800 HK) maintained healthy earnings growth at 10% in 1Q24, ahead of the consensus expectation of 7.3% for full-year FY24.
• A 0.2pp gross margin expansion and positive swing in credit and asset impairments are the drivers, though higher finance costs have offset some of their benefits.
• 1Q24 new contracts were up 10.8%, and we estimate backlog equals 4.5x FY24F revenue. Despite YTD outperformance, it is still cheap at 2.4x PER and 0.2x P/B.

• Sumitomo Chemicals aims to transform from a cyclical company with low market share in declining markets into a focused entity with high market share in secular growth markets.
• We estimate that the stock’s fair value is about 140% above the current price.
• Results meeting on April 30 should confirm that company is on track in returning to positive cash flow and selling off core assets. 

• TSMC: Premium Soars to +15.2%, Good Level to Consider Shorting the Spread
• UMC: Spread Bounces from Lows to Relatively Extreme High of +1.9%; Good Level to Short
• ASE: Spread Soars to Near All-Time High of +15.5%; Consider Shorting the Spread

• Mediatek Enjoying a Massive Rebound for its Mobile Phone Segment; Most Optimistic About High-End Smartphone Demand
• New AI Data Center Growth Driver on the Horizon; Recent Investment in U.S. AI Server Chip Startup
• Recent Share Price Dip is an Accumulation Opportunity; We Rate Mediatek as a Structural Long

• Taiwan Tech Rebounds Sharply Alongside Major Nvidia/U.S. Tech Rebound Last Week. Wave of Major Earnings Releases This Week — See Our Key Events Section.
• Apple’s Latest Supplier List Released Last Week — Nanya Tech, Lotes, and Novatek Dropped. New List Shows Apple Struggling to Diversify from China.
• Apple iOS 18 Will Heavily Feature Edge AI Running Locally on the iPhone for User’ Privacy and Security — We Believe This Could Be a Major Driver of Phone Upgrades

• China announced game approval for the April 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.
• While Tencent scored zero, Netease got approval for one game.

• The performance of most TCM formula granule enterprises showed slow growth or even decline due to VBP in 2023. Although VBP will continue, it also brings opportunities for related companies. 
• Customized production, expensive upstream raw materials/production equipment, complex supply chain systems, etc. are all major reasons for the high prices of CAR-T therapy, but we see hope for changes.
• Gan & Lee Pharmaceuticals (603087 CH)’s core insulin business will continue to have decent growth based on positive VBP renewal results. It’s expected that in 2024, performance would further rebound.

• Hesai Group, one of the global leaders in the LiDAR and perception solutions market, completed its IPO in February 2023 and listed ADSs on the Nasdaq Global Select Market.
• The stock peaked at $30+ during the first trading day and fell ~67% over the following 8 months as selling pressure intensified and investor sentiment worsened.
• The stock has taken another leg down following U.S. DoD’s decision to include Hesai Group in 1260H list of Chinese military-linked companies. Hesai believes this inclusion is unjust and meritless.

• China Education Group (839 HK) has turned more attractive after a valuation retreat and the return of reported and adjusted net profit to a positive trend in its 1H24 result.
• Increase in the proportion of undergraduate studies, a better subject specialisation mix, higher accommodation revenue, and a rise in international education will drive unit student revenue.
• More capacity upgrades will allow for a steady increase in student enrollment. Management expects adjusted EBITDA margin to stay stable in the next few years.

• Losses at Air China Ltd (H) (753 HK) narrowed by 42.8% YoY to Rmb1.67bn in 1Q24. If not for the exchange losses, it will be reduced to below Rmb1bn.
• Higher jet fuel prices have dragged result despite record 1Q revenue. However, an 8.3pp YoY margin expansion and a 4% decline in unit costs indicated profitability is climbing. 
• Valuations are too depressed as the share price is still lacklustre but quarterly losses and gross margin have already trimmed from the troughs of Rmb10.5bn and -98%, respectively.

• Decline in TPR’s stock price after acquisition announcement
• Author believes acquisition will benefit Tapestry Inc financially and strategically
• Author sees dip in stock price as buying opportunity and remains bullish on TPR’s long-term prospects

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• SK Reports Massive Margin Rebound; Nanya Tech’s Financial Performance Appears Relatively Weak in Perspective
• AI Applications Now Translating Into Rising Solid-State Memory (SSD) Demand
• SK Povided Positive Color for Taiwan PC Names; New TSMC Collaboration Highlights TSMC Strength vs. Samsung

• Performance of SU7 so far, margin of EV biz and globalization potential prompted us to take another look at Xiaomi and we like what we saw;
• Xiaomi surprised during the Investor Day by guiding SU7 gross margin of 5-10%. Delivery guidance also surprised to ship 100k units in 2024. 
• We raise EV profitability estimates on margin guidance and expect market share to expand as it expands to SUVs.

• Bank Central Asia (BBCA IJ) surprised with a strong set of 1Q2024 numbers driven by unseasonably strong loan growth coupled with continuing growth in CASA, helping to underpin NIMs. 
• Loan growth was driven by corporate loans with investment loans outpacing working capital loans together with SME loans and consumer loans, especially mortgages, autos, and personal loans. 
• Digital banking initiatives drove customer numbers and transactions, whilst improving operating efficiencies. Credit costs continue to come down with falling loans at risk. Valuations remain high but credentials remain intact. 

• Eagle Nice International Holdings’ dividend yield averaged 9.2% from FY 2019 to FY 2023. Its annual dividend payout averaged 72.2% in the same period.
• Eagle Nice (Intl) Hldgs is mainly engaged in the design and manufacture of sportswear for adults and children on an OEM basis. Yue Yuen Industrial Holdings is the largest shareholder.
• Eagle Nice Holdings also has attractive valuations and consistent growth in sales and profits. 

• GBL was touted as a turnaround story as few investors have shown faith by infusing the funds for further expansion
• In a rare instance, one of the promoter member fraudlently took the loan of 45 crores in the name of the company
• What lies ahead is the case possible fund diversion and promoter family feud

• Q124 revenue was $12.7 billion, down 17.5% QoQ but up 9% YoY.
• Q224 revenue forecast of just $13 billion & vague promise of full year YoY growth disappoints
• Capacity constraints on wafer level assembly limited Meteor Lake shipments. So much for a maniacal focus on execution.

• Corporations need to adapt to smarter AI as 6G, the next evolution in mobile communication, is coming soon, bringing faster speeds and advanced technology.
• Taiwan’s AI startups showcase cutting-edge B2B solutions at 2024 AI Expo, while Microsoft’s third-quarter revenue reaches a record high with the help of AI technology.
• Despite record high SiPh shipments, LMOC had a net loss in 1Q24. Taiwan’s biggest curved interactive MiniLED display, ‘Wishing Tree,’ steals the show at Touch Taiwan 2024.

• In 2Q24F, customer demand has slowed down in the traditional low season, as inventory levels normalize.  
• In summary, sales in USD are expected to grow in the mid-teens YoY in 2024F. Smartphone growth will be the strongest driver of this growth. 
• MediaTek is a leader in the Wi-Fi 7 market and aims to gain significant market share with its diverse product portfolio this year.

• Despite following Big Tech closely for the last 5 years, this sentence from today’s call still somewhat surprised me!
• The scale and the height of success of Google truly boggles my mind.
• Over the last year or so, Google has had its fair share of skeptics, including yours truly. 

• Regulatory risks could derail TikTok’s drive to become Vietnam’s No. 1 online marketplace, an industry expert said.

• The ByteDance-owned short-video app launched TikTok Shop in Vietnam in April 2022 as part of its broader ambition to control 35% of Southeast Asia’s e-commerce market.

• Since then, it has surpassed Alibaba-backed Lazada to become Vietnam’s second-largest online marketplace by gross merchandise volume — TikTok’s vendors sold about $1.3 billion worth of goods in the past six months, according to local media which cited data from local analytics firm Metric. Now, only Singapore-based Shopee stands between TikTok and the top spot.

• Fanuc was up 4.7% this past week as the market reacted to a slight uptick in orders and transparently conservative guidance.
• The book-to-bill ratio remained below 1.0 in 4Q of FY Mar-24, but was up from 3Q, which appears to have been the low point in the cycle.
• Inflation and ongoing inventory adjustments indicate a slow recovery, but demand for automation  from traditional markets and new opportunities in aerospace and other industries should support long-term growth.

• Astellas Pharma (4503 JP) reported ¥85B revenue increase in FY24 over FY23, while Fx impacted the revenue positively by ¥96B. In local currency terms, the U.S. revenue declined 5% YoY.
• FY24 operating and net profit declined 80%+, due to amortization and impairment loss of intangible assets. Astellas is changing accounting policy to smoothen core operating and net profits in FY25.
• For FY25, Astellas guided for just 3% revenue growth. Core operating profit is expected to decline 10%, while net profit is anticipated to take a bigger hit and decrease 17%.

• 4Q23 production of 2,793 boe/d and YE23 net debt of US$26.7 mm were in line with forecasts.
• The GH 14-06 #3 Upper Selma Chalk well delivered an IP30 rate of 5.2 mmcf/d.
• This is a good rate compared to the other Upper Selma Chalk wells of 2022-2023 which had IP30 rates of 3.3-6.5 mmcf/d.