Equity Bottom-Up

• Capitalizing on growth opportunities – Q1-2 FY3/2024 results were ahead of company guidance, driven by the Funeral Services segment, as attendee numbers and refreshment sales grew, and new funeral hall openings saw higher than expected utilization rates.
• We believe this indicates the strong competitive positioning the company has as the market-leading funeral services operator in the Tokyo metropolitan area.
• With effective cost control in the Information and HR segments, the company has high earnings visibility and raised FY3/2024 company guidance, as well as increasing the planned dividend payout ratio to 32.5% from 30%.

• ~$900 million supercomputer deal is off the charts compared to all previous deals
• Without the deal, Cerebras would likely soon have run out of cash. With the deal, Cerebras is effectively working as a supercomputer contractor for G42 for the next several years
• Three supercomputers to be built in the US, we suspect the remaining six to be built in the UAE. That’s likely to raise some eyebrows. 

• The shares are down 27% from their May high, largely discounting excessive inventory and a decline in profits that is likely to continue through next March or June.
• Inventory adjustment, the revival of semiconductor, factory automation and medical related demand, plus the leveling off of depreciation, should enable a return to growth after that. 
• Projected valuations are at the low end of their 10-year ranges. Buy into the current weakness, keeping in mind that 1Q results are likely to be weak.

• In Q2FY24, Ipca Laboratories (IPCA IN) reported 10% growth in domestic formulation business, driven by 12% growth in pain management. In FY24, domestic formulation is expected to growth 12–14%.  
• Ipca now holds 52.67% stake in Unichem Laboratories (UL IN). Ipca is confident to clock revenue of INR1.7–1.8B and EBITDA of INR300M from Unichem within two years of acquisition.
• As facilities are back onstream, Ipca is augmenting the supply chain and revalidating of all the formulations and updating them. Shipment to the U.S. may begin in Q1FY25.

• In Q2FY24, Avid Bioservices (CDMO US) reported 27% YoY and 33% QoQ revenue decline to $25.4M, due to annual maintenance shutdown and reduction in process development services from early-stage customers.
• During Q2FY24, Avid Bioservices signed $35M in net new business orders from both new and existing customers, resulting in a record high backlog of $199M, up 35% YoY.
• Avid Bioservices has lowered FY24 revenue guidance to $137–147 million from $145–165 million. For reference, the company reported revenue of $149 million in FY23.

• IBA (leading airline intelligence and appraisers) analysis suggests aircraft shortage will persist over the mid-term, pushing rates for newbuilds and especially mid-life assets much higher
• Our TP of US$81.45 is premised on 0.94x 2024 P/BV, but it is evident that accounting book value is significantly below current market values, implying a higher fair value 
• Stay invested, the upcoming 4Q23 results will uncover earnings boost from off-hire aircraft extension at premium rates, elevating Aercap’s attractiveness 

Shield Therapeutics’ US commercialisation efforts continue to gather steam, with prescription volumes gearing up in Q323 (27,750 prescriptions, a 76% sequential growth over Q2 and higher than the combined H123 figure of 26,284) and net selling price making a strong recovery after dipping in H123 (+24% to $148/prescription). US revenues grew to $4.1m, higher than the combined H1 figure of $3.7m. First-time prescribers grew 27% q-o-q and new prescriptions were up by 87%. More encouragingly, the clinical utility of Accrufer continues to be considered favourably by prescribers, reflected in the 77% repeat writers from Q223. Management has guided for FY23 total prescriptions to be between 100k and 130k, requiring a sequential growth of 65.6% at the lower end, which we see as undemanding given the Q3 run rate and growing momentum (as the expanded salesforce gets more entrenched). We maintain our full-year estimates and continue to value the company at £390.4m.

• Strong Insurance Revenue growth by 11.71% for 2023 (FH 2023: EUR 42,305,397 vs FH 2022: EUR 37,869,728) and robust Investments and Miscellaneous Income growth by 176.62% for 2023 (FH 2023: EUR 12,189,980 vs FH 2022: EUR (15,910,269)) were the key factors for INTERLIFE to return to profitability, posting an EBIT of 13,535,165 EUR, 223.83% increase compared to FY 2022 and an EPS at 0.591 EUR, +221.38% from the FH 2022.
• INTERLIFE holds twice the capital needed for severe disasters, with a Solvency Capital Requirement (SCR=Total eligible own funds / Solvency Capital Requirement) Ratio adequacy of 201.44%, surpassing the 180% Greek benchmark of 2022 and with a Minimum Capital Requirement (MCR= Total eligible own funds / Minimum Capital Requirement) Ratio of 707.87%.
• INTERLIFE does not possess proportional contracts but reinsurance contracts that can reach up to 1 million.

MGI – Media and Games Invest (MGI) continues to steadily gain market share in a difficult trading environment. It is the leading mobile open web supply-side platform on both Android and iOS in North America, and second on Android and fifth on iOS in EMEA. Q323 organic net revenue was 1% up on Q322, with early benefits from the €10m annualised cost savings plan helping to lift the adjusted EBITDA margin to 29% (Q322: 26%). The fundamentals for MGI are positive, with its vertical integration giving an efficient market proposition and earlier acquisitions providing a sound basis for its connected TV offering. The withdrawal of personal identifiers on Google should give further impetus, which we feel is not yet reflected in the rating.

• NTGR has brought back the goal of achieving double digit operating margin after three years of underperformance while turning the business around.
• Unlike prior years where NTGR was relying on unit volume growth to drive operating leverage, NTGR now has a growing base of subscription revenue that is contributing to earnings
• NTGR’s annual investor day highlighted the expectation of exiting 2023 with annual recurring revenue (“ARR”) of $40 million and $50 million in 2024

For our next Corporate Webinar, we are glad to welcome Kuaishou Technology’s Head of Capital Market and Investor Relations, Matthew Huaxia Zhao.

In the upcoming webinar, Matthew will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Eric Wen . The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 12 December 2023, 17:00 SGT.

About Kuaishou Technology

Kuaishou is a leading content community and social platform with its mission to be the most customer-obsessed company in the world. Kuaishou has relentlessly been focusing on serving its customers and creating value for them through the continual innovation and optimization of its products and services. At Kuaishou, any user can chronicle and share their life experiences through short videos and live streams and showcase their talents. Working closely with content creators and businesses together, Kuaishou provides product and service offerings that address various user needs that arise naturally, including entertainment, online marketing services, e-commerce, online games, online knowledge-sharing, and more.

• Electric-vehicle (EV) startup Nio Inc. looks set to begin building its cars independently, announcing plans to acquire two manufacturing assets shortly after a subsidiary was added to a government database for companies approved to produce vehicles.
• Nio on Tuesday entered into “definitive agreements” to buy equipment and assets from two “advanced manufacturing” bases from state-owned automaker Anhui Jianghuai Automobile Group Corp. Ltd. (JAC) (600418.SH +1.67%) for approximately 3.16 billion yuan ($443 million), excluding tax, according to a Hong Kong Stock Exchange filing accompanying its third quarter results the same day.
• JAC has been producing all of Nio’s cars on a contract basis since 2018.

• Is TSMC Leaving Samsung in the Dust with its New 3nm Process Technology?
• Our Pick Himax a Top Loser… Apple Lens Supplier, Yageo Peer, and Taiwan AI Chip Designer Top Winners
• Positive Sign for Apple Revenue — Hon Hai November Revenue Higher Than Expected, Guides for Better December

• Buoyed by strong post-pandemic domestic consumption and the return of inbound visitors to Japan, Sapporo Holdings (2501 JP) has been firing on all cylinders in recent quarters.
• Business fundamentals for next year look strong, with the company positioned to benefit the most from Japan’s liquor tax revisions.
• Additionally, activist investor 3D Investment Partners could successfully advance their proposals to divest the Real Estate business.

• The European Commission has confirmed it aims to make a preliminary decision on the proposed Korean Air/Asiana merger by 14 February.
• Plans to sell Asiana Cargo may struggle to find a buyer, while the US has also highlighted concerns regarding the merger, and Japan has yet to provide approval.
• We continue to highlight there is a strong argument for Korean Air continuing alone, as Asiana continues to struggle to achieve profitability, with a stretched balance sheet.

• Of the six Malaysian banks screened, we keep value play RHB Bank on the buy list and switch our prior CIMB for Maybank
• RHB Bank is our top pick for its undemanding PE and PBV whilst being second from top in post-provision profitability; its high CET1 ratio has not held back its ROE
• We drop CIMB from the buy list for its weaker credit quality and low NPL coverage; we upgrade quality pick Maybank to buy for its attractive valuations

Deliveroo’s (ROO’s) November capital markets day (CMD) saw its leadership team present initiatives aimed at progressing the customer value proposition (CVP) to drive revenue growth and improve profitability. ROO’s strategy is to unlock growth through greater market penetration and by growing customer loyalty via a hyperlocal approach, hosting both national and local brands on its platform. The shares are down 65% since the IPO in 2021, with trading affected by the weaker consumer environment amongst other factors. ROO trades at a discount to its peers, although delivery on financial targets and the tailwind of an improving consumer environment could enable the discount to narrow.

While we believe H223 represents a pause in growth at paragon’s ongoing automotive operations, we are cutting our near-term EBITDA margin contribution from the Electronics segment. As a result, we lower our FY23e and FY24e sales estimates by 2% and 3% and EBITDA by 25% and 17% respectively, reducing our DCF valuation to €9.4/share.

• Aspira Women’s Health announced today that it has completed the design of the EndoCheck test based on the analysis of samples received from The University of Oxford in October.
• This data shows EndoCheck to be a high-performing blood test for localized endometriosis, including ovarian endometriosis masses known as endometrioma.
• Endometrioma is a localized form of endometriosis that has formed an ovarian mass. It is one of the most common types of endometriosis.

• A positive surprise – Q1-3 FY12/2023 results highlighted the positive demand environment for AZN’s services, with Inheritance consulting sales growing 47.1% YoY driven by new customer acquisitions.
• The company’s aim to improve the quality of earnings is demonstrated by improvements in underlying profitability with the sales mix shifting towards Wealth Consulting, while Real Estate Solutions provides cross-selling opportunities and strong access to engage with new customers.
• The company has revised its FY12/2023 earnings estimates and on track to book record-high earnings, and has currently maintained its FY dividend forecast of ¥41 per share.

• We prepared high beta and low risk recommendations for 2024:
• With 2024 YE as horizon, we recommend JD.com, JD Logistics, JDHealth, Tencent and Luckin.
• With 1H24 as horizon, we recommend KE Holdings, NetEase and Kuaishou.

• China NEV market grew by 35% YoY in first ten months and by 39% YoY in October 2023.
• BYD’s production is significantly larger than other NEV producers in China.
• We believe the stock has an upside of 80% and a price target of HKD387. Buy.

• SenseTime Group Inc. shares plummeted nearly 5% Tuesday after U.S.-based short-seller Grizzly Research released a report accusing the Chinese AI software developer of inflating its revenues.
• Grizzly’s report, citing court documents and social media posts, alleged that SenseTime engaged in what it called round-tripping, where it provided funds to customers who in turn used the money to purchase products from SenseTime that might never have been delivered.
• Its Hong Kong-listed stock tumbled as much as 9.7% before closing 4.86% lower to HK$1.37 ($0.18), down 64% from its IPO price of HK$3.85.

• TPL has gone through a series of changes within its Board of Directors but that has not been enough to squash investor concerns
• The Delaware Court deciding in favor of TPL in a shareholder lawsuit would allow the Board to increase the number of authorized shares of common stock
• TPL’s Board now has ten members instead of nine last year. The Board has also seen three members turnover giving the Board a total of four fresh members

• Japan Airlines (9201 JP) (JAL) is making a positive recovery on strong domestic and international demand
• Weak JPY is a big headwind and so is its 40% fuel hedge cover locked in at higher than-market price. These factors should reverse and unwind next year 
• Target price JPY3,150 based on 1.65x FY24 P/BV – one standard deviation above its mean. Borderline attractive with 12% UPSIDE, and 2.3% dividend yield  

• MNSO management hosted a conference call today which reiterated normal operation of business, guided C4Q23 revenue above consensus, gross margin up QoQ, and non-GAAP net profit margin stable;
• MNSO management refuted short seller’s thesis, commented distributor inventory levels at healthy levels and provided backgrounds on disclosed insider share sales;
• We welcome MNSO management’s timely communication and believe its business model to be solid. We reiterate BUY and TP.

• Shanghai Jinjiang Shipping Group Co. Ltd., the shipping business unit of Shanghai International Port Group, gained 58.6% in its trading debut in Shanghai after a 2.18 billion yuan ($306 million) initial public offering.
• The container shipping service provider finished its first day of trading at 17.84 yuan a share, giving it a market cap of 23.1 billion yuan.
• Jinjiang Shipping was spun off from the world’s largest container port operator for a separate listing on the mainboard of Shanghai stock exchange.

• Torrent Pharmaceuticals (TRP IN) reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.
• EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.
• Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.

• Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
• EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
• The investment case is building further with the acquisition of the Rosalind Park Gas Plant to provide an immediate, low-capital and operating-cost processing option with nameplate capacity above the Carpentaria Stage I development model. 

• 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: Perfect Medical Health (1830 HK) , Water Oasis (1161 HK) , Taste Gourmet (8371 HK) , Uchi Technologies (UCHI MK) , and The Keepers Holdings (KEEPR PM) .
• We have included Sitoy Group Holdings (1023 HK) in our library. Given the low ROIC nature of the business, it’s more of a value trade with dividends. 

• In our view, China growth equity faces high geopolitical uncertainty in C3Q24 ahead of the US election, but can experience a relief rally in C1Q24.
• We prepared high beta and low risk recommendations for 2024
• For low-risk, we recommend JD/JDL/JDH, Tencent and Luckin. For high beta, we recommend BEKE, LI Auto and Kuaishou.

• TSMC looks set for a significant recovery in top-line growth in 2024F, driven by continued faster-than-expected demand for its 3nm volume production leading to significantly improved overall ASP.
• This should be supported by a concurrent improvement in the inventory cycle at major clients, helping recover TSMC’s utilisation back to historic norms.
• Lower capital intensity, improving internal inventory levels, and accelerating top-line growth should all combine to drive record levels of Free Cash Flow generation during 2024F.

• China Airlines (2610 TT) will deliver record profit in 2023 on strong passenger and rising cargo rates
• Beyond 2023, hard to forecast due to high exposure (~30%) to volatile cargo, and it lacks brand recognition and customer loyalty evidenced by its weaker yields to local rival   
• Target price of TWD23 based on 1.71x FY2024 P/BV ratio – one SD above mean. Limited 6% UPSIDE, with 3,9% dividend yield. Prefer Eva Airways (2618 TT) 

• Several catalysts on the horizon support the case for a re-rating of Eicher Motors (EIM IN). 
• The recent launch of the 450cc platform is positioned as a significant launch pad, propelling EIM’s aspirations to establish global leadership in the middleweight segment.
• We anticipate EIM to deliver higher-than-anticipated revenue growth with the possibility of a multiple re-rating for the company.

• Market sentiment remains optimistic, we anticipate the rally to continue with 20,200 on the NIFTY Index (NIFTY INDEX) as a trend check level. 
• There are concerns about Paytm (PAYTM IN) growth in personal loans in the near term, but the merchant side provides a large enough opportunity.  
• Other names discussed include Eicher Motors (EIM IN), Poonawalla Fincorp (POONAWAL IN), and Five Star Business Finance (FIVESTAR IN) 

• In November, Orthofix International Nv (OFIX US) named Massimo Calafiore as incoming President and CEO. Mr. Calafiore has extensive knowledge in orthopedics and spine, and M&A integration expertise.
• Orthofix has performed well and operated smoothly following management transition. In 3Q23, revenue increased 61% YoY on a reported basis and 1% YoY on a pro forma basis to $184M.
• The company expects to deliver much higher adjusted profits next year and to exit 2024 cash-flow positive from an estimated $100 million outflow for 2023.

• Against the backdrop of China’s reopen after the pandemic is under control, the performance comparison of the four major ophthalmic hospitals in the A-share market has attracted investors’ attention.
• Aier Eye Hospital is already going downhill. Bright Eye Hospital leads Huaxia Eye Hospital in national layout/growth rate. He Eye Hospital has a big gap compared to the rest three.
• The “weaknesses” of Huaxia and He Eye Hospital in business layout isn’t obvious currently.But in good times, the impact of businesses with strong consumption attributes on performance would be amplified.

• MariMed has begun manufacturing and processing cannabis products in its new kitchen in Mount Vernon, Illinois.
• As often happens in cannabis, there were construction and regulatory delays, but the company expects to have its award-winning edibles in Illinois stores in time for the holidays.
• Illinois is the sixth-most populated state with 12.7 million residents.

Information Services Corporation’s (ISC’s) strong track record of acquiring and innovating registries, and related information services, was highlighted by yesterday’s five-year contract win with the Bank of Canada. This awards ISC with the role of operator and technology solutions provider for the Bank Act Security Registry, a clear testament to the company’s expertise. The operation is expected to commence in the summer of 2024, utilising ISC’s RegSys platform. We estimate that revenue for this contract, akin to the company’s other contracts, will amount to c C$5–15m over the five-year period. We maintain our forecasts and valuation of C$37 per share, implying a 74% upside.

• According to China state media reports, a record number of more than 3 million people attended China’s annual civil service exam last weekend, up from 2.6 million last year. 
• A civil servant job is viewed in China as highly stable.  In the current weak macro environment where youth unemployment is high, job security is increasingly vital.
• The company now trades at 18x forward earnings, with around 30% expected earnings growth. 

• PDD’s market cap has exceeded Alibaba’s due to PDD’s overseas performance and price sensitive consumers.
• Great Wall Motor plans to enter eight countries in Europe to bypass the investigation on Chinese export subsidies.
• ByteDance plans to close its game subsidy and, 2,000 employees may lose their jobs.

• Stock price starting to recognise the increase in  Chinese demand for Gold.
• Helped by a bottoming and a revival in Hong Kong retail sales and tourist arrivals.
• SPDR Gold Shares (GLD US) close to a new all time high

• Wuxi Biologics (2269 HK) has guided for weaker-than-expected revenue and lower profit in 2023, as the operating industry is facing near-term challenges due to biotech funding slowdown.
• $300 million lesser revenue in development business due to reduced number of projects and manufacturing revenue deficit of $100 million due to CMO deferral contributed to the miss.
• Following the announcement, Wuxi Biologics shares nosedived 24% on HK stock exchanges, marking its biggest one-day slide since listing in 2017.

• In this insight, we discuss the alpha generation through companies that announced share buybacks in Korea in October and November 2023.
• We provide a list of 24 stocks in the Korean stock market that have announced share buyback programs in October and November 2023.
• The top five market cap stocks that have announced share repurchases include Celltrion Inc, Celltrion Healthcare, Shinhan Financial, Amore Pacific Corp, and Mirae Asset Securities. 

• Mediatek Inc (2454 TT) has rebounded from the bottom of the cycle, and it will be able to reach more than 20% YoY in 2024F.
• The demand for 4G and 5G Smartphone SoC will be split around 55/45 by shipment volume, with Taiwan Semiconductor (TSMC) (2330 TT) being the primary supplier for MediaTek.
• The MediaTek Dimensity 6000 series will be the new flagship product line in 2024F.

• Taiwanese air cargo rates soared during the pandemic, and remain high today
• Taiwan’s carriers also benefited from an early recovery in outbound tourism
• Investors seem to be pricing in a ’24 earnings collapse that probably won’t happen

• Eva Airways (2618 TT) (EVA) is enjoying the perfect tailwind of strong demand from both inbound and outbound, capacity deficit, a resurgence in corporate travel, and rising cargo rates   
• Consensus believes FY2023 will be peak earnings as 2024 capacity rollout will balance the demand-supply, but our observations suggest things will likely remain the same until the end of 1H24
• Target price of TWD34.90 based on 13.4x FY2024 PE ratio – its long-term mean. Borderline attractive with a modest 11% UPSIDE, but 5.9% dividend yield is a sweetener  

• Global Digital Niaga (BELI IJ) 3Q2023 represented the progress along the road to profitability with some intentional slowdown in growth as the shape of the 1P business changed composition.
• The platform’s 3P business booked vibrant growth driven by ongoing recovery from its OTA business under tiket.com, with the company’s omnichannel business continuing to grow its physical presence. 
• Global Digital Niaga Tbk PT (BELI IJ) remains a differentiated player in the e-commerce space boosted by tiket.com and its offline presence brought together through its blibli tiket rewards scheme. 

• It seems that investors have completely lost patience with WuXi Bio after the Company made new business updates. WuXi Bio’s transparency, communication strategy and expectation management need to be improved.
• Although the decline in performance is an important reason for the sharp drop in stock price, we think there’re still some deep-seated reasons that investors should pay extra attention to.
• Fed’s interest rate cut doesn’t necessarily mean immediate improvement in financing environment. In the CXO industry downcycle, whether WuXi Bio can achieve positive turnaround in 24H2 remains to be seen.  

• Want Want (151 HK) and China Mengniu Dairy Co (2319 HK) are both fairly liquid names in the China consumer staples sector. 
• Both companies trade at virtually the same forward PE of 14x.  However, I expect Want Want’s near term sales growth to be lower than market expectations.  
• The upside risk for Want Want could be its overseas expansion efforts, as overseas sales now account for mid to high-single-digit of sales and grew high-teens yoy in FY1H24. 

• The high growth in 23H1 is unsustainable. 23H2 YoY revenue growth would be single-digit. Due to 23H1’s high base, we cannot rule out the possibility of negative growth in 24H1.
• In the case of lower-than-expected external M&A activities, Fu Shou Yuan has accumulated a large amount of cash, which would drag down ROE. So, current dividend policy still needs improvement. 
• Fu Shou Yuan’s expansion would be relatively moderate. Double-digit revenue growth can still be expected in the long term. The market value of above RMB15 billion is more reasonable. 

• H World Group (1179 HK) has been over-penalised by market weakness as its share price was off 16.8% YTD. It turned around in 3Q23 and guidance for 4Q23 is solid.
• Surge in operating and adjusted EBITDA margins indicated high operating leverage. Occupancy has not returned to 2019 level, but there will be more margin expansion when this happens.
• 55% of rooms in China are of economy type, and 82% are in tier-2 and below cities. Such characteristics allow it to benefit from the prevailing consumption downgrade. 

• Elastic NV (ESTC US) reported a solid quarter, reflecting strong cloud revenue growth, ~13% non-GAAP operating margin and rapid adoption of ESRE.
• Elastic NV (ESTC US) shares rallied 35%+ during regular trading session and closed up ~37% on Friday at $110.20. I raised PT to $121 from $112.
• However, I downgrade Elastic NV (ESTC US) to Equal-weight from Overweight on valuation and expect the stock to trade in-line with peers.

• IHH Healthcare (IHH MK) reported stellar performance in 3Q23 exceeding expectations, with double-digit revenue and EBITDA growth, while PAT more than doubles on higher patient volumes and improved case mix.
• To deliver profitable growth, IHH will continue its organic expansion, including adding close to 4,000 beds in the next five years to its existing 12,000 operational beds.
• Notwithstanding the strong underlying demand for quality healthcare services driving operational and financial growth, IHH expects cost pressures from elevated inflation, and rising interest rates.

• China stock market despair has brought down  China Tourism Group Duty Free Corp Ltd (601888 CH) to its lowest forward valuation in the past ten years   
• Poised for long-term growth, Chinese are buying albeit more prudently, government supportive on promoting domestic consumption, efficiency enhancements will lower cost and boost margins 
• Using the company’s lowest recorded PE ratio in the past 10 years of 23.2x into FY24, we derive a target price of CNY106 (+21% UPSIDE)  

• Meituan reported C3Q23 top line (1.0%)/0.6% vs. our estimate/consensus, non-GAAP net income (9.7%)/8.3% vs our estimate/consensus. Subsidies and investment in in-store business is the main reason for bottom-line miss.
• Meituan in-store GTV increased 90% YoY in 3Q23, effectively counteracted Douyin’s attack and maintained size ratio at 3:1 vs. Douyin in-store, which scarified profit.
• Meituan OPM lowered 2.5ppt QoQ to 4.4% in 3Q23, and we expect it decline to 2.4% in 4Q23.

• Fufeng (546 HK)’s core businesses include food additives such as MSG, animal nutrition, high-end amino acids, and colloid such as xanthan gum. 
• Xantham gum is increasingly becoming popular as millions of people around the world purchase gluten free foods.
• Fufeng’s dividend yield averaged 7.5% annually from 2018 to 2022. Its current dividend yield is about 11-12%. Fufeng is trading at P/E of 2.9x and EV/EBITDA of 1.8x in 2024. 

• The national centralized procurement of high-value medical consumables for intraocular lens (IOL) and medical consumables related to sports medicine released results, with lower than expected price reductions. 
• Despite anti-corruption campaign, the business/profit model validation process of Chinese Biotech has not slowed down. There’s a chance to see Chinese Biotech turn losses into profits in 2024-2025.
• Zhejiang Orient Gene Biotech (688298 CH) once brought considerable returns to investors, but now the beautiful story is over.After deletion from CSI Medical Service Index, share price could remain weak.

• Major milestones with high expectations coming in the next 2-3 years: 1) Phase IIb US trials for H-1337 as “first choice as a second-line Glaucoma drug” for patients who do not respond to PGs
• 2) 2023 application, 2024 approval and 2025 launch of DW-1002 in Japan, 2023 application/approval/launch in China, as well as expedited development of combination formula MembraneBlue-DualR (DW-1002 + trypan blue) in the US [NEW]
• 3) clinical trials in 2024 in Japan and application for approval in 2025 of regenerative cell medicine DWR-2206 

• Bilibili reported  C3Q23 revenue, operating profit, and GAAP net income inline, 4.37%, (21.6%) vs. consensus. The miss was primarily due to ineffective investment in game studio and related costs.
• We are bearish on BILI’s game pipeline as ACGN is already a crowded market with well-entrenched competitors
• We maintain our SELL rating and cut the TP from US$ 12.3 to US$ 9.04, and consider that it is unlikely for them to breakeven in 2024

• In any economy with persistently high interest rates, high living costs and decelerating loan growth, the risk is generally greater for bad corporate loans, not mortgage loans.
• BEN is nearly only residential mortgage loans, highly different to CBA, NAB, WBC, ANZ and MQG. This is also clear in long-term low levels of credit costs.
• NIM has moved up for BEN in FY23. There is limited risk of maturing debt to hurt its NIM in FY24, very much unlike large peer banks, especially NAB, MQG.

• PDD reported C3Q23 top-line, non-GAAP EBIT, and GAAP net profit 9%, (4%) and in-line vs. our estimate, and 28%, 29%, and 42%, vs. consensus respectively.
• We estimate that Temu reached positive gross profit for the first time in 3Q, one quarter ahead of our prior estimate.
• We believe increased prices on its US platform was the main driver, while it was able to maintain supply prices.

• We focus on five key factors, namely capital adequacy, credit quality, exposure to government securities, interest rate gearing and valuation with growth metrics for our Japanese banks universe
• It is important to note that the relaxation of yield curve control is translating into rising loan yields generally in the BoJ data to September-end 2023
• We stick with our positive views on Resona, Mizuho and Concordia; we remove Hachijuni from the buy list and SMFG, replacing the latter with MUFG in the large cap banks

• Kolte Patil reported a steady Q2FY24 led by continued momentum across sales, business development and deliveries.
• Sales volume grew by 5%+ QoQ to 0.98mm sq ft in Q2FY24, led by strong sales in the Life Republic projects. This brings the H1FY24 total sales volume to 1.91mm. 
• With 4.94mm sq ft slated to be launched in H2FY24 vs 2.73mm launched in H1FY24, Kolte Patil is on track to achieve its FY24 sales guidance of 3.9mm+ sq ft.

Immix hosted a key opinion leader (KOL) event highlighting the long-term potential for NXC-201, the company’s B-cell maturation antigen (BCMA) targeting CAR-T therapy to address the fragile amyloid light chain amyloidosis (ALA) patient population. This is the only CAR-T therapy in development for the treatment of relapsed/refractory ALA to our knowledge and represents a significant unmet medical need as there are only limited treatment options and no standard of care. Relapse remains a common issue and, although still in the very early stages, the KOLs had optimism in the positive response rates shown thus far in the NEXICART-1 study. We anticipate rolling readouts for the NXC-201 ALA studies (particularly NEXICART-2) as the data become available.

On 22 November, Pan African Resources (PAF) announced that operations to date in FY24 had performed in line with, or better than, expected, with gold production for H124 anticipated to be in the range 94,000–98,000oz (cf 92,307oz in H123). As a result, it increased its production guidance for FY24 to 180,000–190,000oz, which caused us to increase our production estimate in turn by 1.9% (or 3,575oz) to 189,725oz. The change made only a modest difference to our EPS forecasts for FY24 (see Exhibit 2). However, it increases our confidence in those estimates, which are already at the top of a relatively wide range of expectations.

• Concord Biotech Ltd (658823Z IN) reported robust performance in Q2FY24. Revenue grew 65% YoY to INR2.6 billion, while EBITDA and PAT jumped more than 3x compared to year-ago quarter.
• The company has increased capacity utilization at all the three manufacturing facilities. Operational efficiencies have helped the bottom line to achieve faster growth than the top line.
• With a high runway for growth and improving market scenario, especially for Indian pharma companies, the company remains highly optimistic to surpass its historical 18% revenue CAGR this year.

• The trend of governance reform in Japan continues with Toyota, Toyota Industries and Aisin selling shares of Denso. 
• Denso is buffering some of the flow impact by repurchasing roughly half of the shares to be sold. 
• While the size of these moves is relatively large we believe their impact could be disproportionately large for the market as a whole.

• We recently visited a BYD (1211 HK)  showroom in Ahmedabad, with the objective of understanding the preference for Electric Vehicles in India.
• Pitched as the “Tata” of China, BYD offers 2 models ATTO 3 and e6 in India. 
• Considering Tesla Motors (TSLA US) India interest, and Mahindra & Mahindra (MM IN) big bet on EV, BYD’s current operations in India seem to be minuscule and may find little success.

• Sam returned as the CEO of OpenAI days after his surprise removal. Its board was overhauled with new members – Larry Summers and Bret Taylor.
• The surprise removal of Sam was driven by philosophical differences over AI safety. Fears of employee exodus to Microsoft is the primary driver of his return to OpenAI leadership.
• Recent events have solidified Microsoft’s partnership with OpenAI and Sam. Outcome from fallout suggests Microsoft will have a larger role in shaping OpenAI’s future.

• Stock rally on strong revenue growth suggests TEMU will be at center stage of the investment thesis for PDD down the road. 
• Besides soaring GMV, TEMU achieved blowout performance likely due to much higher-than-expected take-rate and disciplined marketing, resulting in narrower-than-expected losses.
• We expect the company’s growth will even accelerate in 4Q23 and generate adjusted net profit of US$12 bn for FY24, with a target market cap of US$240 bn (20xPE).

• The stock has been declining for about three years and plummeted after the 3Q23 results.
• However, we believe MT and its corporate clients have been recovering and MT’s profits will rise by 129% in 2024.
• We set an upside of 132% and a price target of HK$209 for 2024. Buy.

• Memory names have rallied strongly, with Nanya Tech outperforming since the start of November.
• DRAM bottomed and NAND flash prices have jumped. Micron says that 2025E could be a record year for the Memory industry.
• High valuations make near-term upside for Memory names uncertain. For Long/Shorts one can consider Long Micron vs. Short SK Hynix or Long Micron vs. Short Nanya Tech.

• We believe TSMC represents defensive exposure to AI for investors concerned that many other AI-related stocks’ valuations may be too high.
• While one may think TSMC seems too obvious as a play, we note that the stock is up only 4.5% over the last six months.
• We view TSMC as trading at an inexpensive valuation; even a cheap valuation should our hypothesis that the stock is structurally re-rating upwards turn out to be true.

• We think FUTU is stepping into a stagnant phase in 2024. Japan is not a game changer.
• Client asset inflow from overseas is not meaningful, and growth from mainland is frozen by regulation.
• We downgrade the stock into SELL rating and cut TP to US$46/ADS, mainly due to slow progress in overseas expansion and difficulty in monetization.

• OCBC has seen its mkt cap RISE by ~4% YTD. This is stark contrast to the ~6.5% lower mkt cap at DBS and around 10% lower mkt cap at UOB.
• Net interest income had been strong, and this likely slows, a lot. Other areas are far from strong. Credit costs are up 103% YoY at 9M23.
• Profit from insurance is down 12% YoY and down 16% QoQ, in 3Q23 (Great Eastern). Profit from associates is -1% YoY in the quarter and only +1% YoY

• CyberAgent Inc (4751 JP) (CA) is a Japan-based media and entertainment company offering media, internet advertising, smart games and investment development businesses in Japan.
• The gaming business of the company has collapsed with the slowdown of hit title UMA MUSUME while titles released after UMA MUSUME have failed to perform satisfactorily.
• Profitability of Internet advertising and media are expected recover and seems that worst is over for the games business as several titles are slated for release in the near future.

• L’Occitane (973 HK) reported FY1H24 (fiscal year ending March 31) results yesterday after market, with net profit down 45% yoy. 
• The sharp drop in earnings is mainly due to a 48% yoy increase in marketing costs, as well as increased finance costs.
• The company maintained the FY24 outlook of 17% topline growth and an operating profit margin of 12% (FY1H24:  7.2%). 

• Perfect Medical Health (1830 HK) results showed 7% revenue growth and 10% YoY profit (27% YoY adjusted profit for subsidies) growth in H1 FY24.
• The company declared a 14.2 cent/share interim dividend. H2 dividends usually are higher, so we expect a 32-35 cent dividend for FY24. 
• This is another dividend-yielding gem, trading at 12.0x PE FY24e, a 9% dividend yield, and 15% of the market cap in cash and investments with a >50% ROE. 

• YSB would be added to KraneShares CSI China Internet ETF.Cornerstone investors could opt to cash out directly,taking advantage of improved liquidity, which means even they’re not optimistic about YSB’s prospects.
• YSB’s profit margin is disappointing. It would be hard for YSB to deliver decent profits in the end. This business does not make money. YSB is also short of money.
• Since going public, YSB’s share price has been on a rollercoaster, which has deviated from the fundamentals, but it should be pointed out eventually stock prices will return to fundamentals.

• The equity linked securities (ELS) losses related to Hang Seng China Enterprises Index (HSCEI INDEX) could lower dividend expectations for Korean banks in 2024. 
• On average, if H-Index declines below 5,699, then the majority of the investors on these H-Index could start to incur major losses starting 1Q 2024. 
• Amid challenges of lower interest rates expectations and higher losses from ELS products, major Korean banks could be more hesitant on share buybacks and increasing their dividends in 1H 2024.

• Meituan (3690 HK) ‘s 3Q2023 revenues beat estimates while OP for the quarter was well below consensus estimates.
• There were clear signs of slowdown in earnings growth due to macroeconomic challenges and weaker demand. 4Q earnings are expected to decline further.
• Meituan’s share price went down by about 11% following its earnings announcement as slowdown in core local commerce and weakening earnings have concerned investors.

• Korean Air Lines (003490 KS) is cheap, against peers and its own history. The impending merger with Asiana Airline is a major overhang  
• Business is good, with steady passenger loads and yields, and cargo showing decent signs of recovery. Lower fuel prices could surprise on the upside 
• Target Price KRW23,868 based on FY24 P/BV of 0.81x (1SD below mean). Too little upside for the level of uncertainty. PASS   

• MNSO reported C3Q23 revenue in line with our estimate/consensus, and non-GAAP operating income in line with our estimate.
• However, stock fell 14% over two days, mainly on concern of slowdowns in overseas distributors;
• Based on our channel checks, overseas distributor inventory has always been a problem, more so when heightened US interest rate pricking the consumption bubble in developing markets.

• In this Insight, we review the recent performance of ABB India Ltd (ABB IN) , Siemens Ltd (SIEM IN) , Polycab India (POLYCAB IN) and Havells India (HAVL IN). 
• Most companies have performed in line with our expectations, we expect sectorial dynamics to remain in play. 
• We continue to favour ABB over Siemens (ABB/SIEM), Polycab over Havells (POLYCAB/HAVL).

• Taiwan Tech companies beat analyst expectations by a high rate in the latest quarter
• Semiconductors: Consensus could be underestimating a margin rebound for 2024E
• Hardware aggregate forecast earnings growth increased significantly for 2024E as compared to just three months ago

• Although it is still early to determine the extent of the utilization rate that could be reached in UMC for 2Q24F, there is a greater chance for a rebound.
• UMC’s high-end technology, specifically 28nm, has a utilization rate of over 80% in 4Q23F. 
• MediaTek is UMC’s largest client, dominating in WiFi, TV SoC, Bluetooth, and other areas.