Equity Bottom-Up

• While Alibaba (ADR) (BABA US)‘s 2Q24 revenue and OP closely matched consensus expectations, the company experienced a significant sell-off, resulting in shares plummeting by over 9% yesterday.
• Yesterday’s weak performance may be linked to a 10% pre-earnings price surge, anticipating robust results. The postponement of the Cloud Spin-off could also have contributed to the decline.
• We maintain a bearish stance on Alibaba Group Holding (9988 HK) as we identify other fundamental and structural downside catalysts might become increasingly important and price-sensitive as time progresses.

• Shakey’s Pizza (PIZZA PM) reported a 28% YoY/26% YoY sales/net profit increase for Q3 FY23 due to a sales softening in September. 
• Sales are expected to strengthen into Q4 as there is a seasonal uplift, although the QoQ increase is not expected to be in line with previous years.
• The stock trades at 12.9x/9.9x PE FY23e/24e and will continue to see double-digit CAGR sales momentum.  The management retained its >30% YoY growth target for FY23e. 

• Based in Hong Kong, Dream International is one of the largest toy manufacturers in the world. It specializes on plush stuffed toys and plastic figures. 
• Despite the global toys markets going into destocking cycle, the company has generated significant growth in operating profit in the past year driven by strong demand for plush stuffed toys.
• If we assume a moderate 20% YoY increase in dividends in 2023, this would imply DPS of HKD 0.48 and this would suggest a dividend yield of 12.7% current prices. 

• Rakuten Bank shares have experienced something of a re-rating, but we believe it has further to go, with attractive fundamentals and relatively undemanding valuations compared to its digital peers
• Rakuten Bank is well positioned to benefit from the tailwind of the steepening yield curve in Japan, with its low LDR, growing loan book and healthy capital ratio
• It is leveraging off the Rakuten Group eco-system; not only is it growing its client base, but also nearly a third of clients use Rakuten Bank as their primary bank

• Huawei Technologies Co. Ltd. on Thursday began taking preorders for the first electric vehicle (EV) it co-developed with auto partner Chery Automobile Co. Ltd., upping the ante in its push into China’s highly competitive EV market.
• Equipped with a digital cockpit powered by Huawei’s HarmonyOS 4.0 and an advanced assisted driving system, the Luxeed S7 is the first electric sedan marketed under Huawei’s Smart Selection business model. The previous releases with other auto partners were SUVs.
• The Luxeed S7 is available for pre-order in four versions with a starting price of 258,000 yuan ($35,417), according to Huawei’s Vmall website.

• In 1H23, Hygeia Healthcare Group (6078 HK) reported revenue growth of 15% YoY to RMB1,760 million, mainly driven by a 16% YoY growth in hospital business.
• Hygeia’s gross profit margin contracted 20bps YoY to 32.4%. Riding on 5.6x increase in government grant, operating profit jumped 33% YoY to RMB420M, leading to 320bps margin expansion to 23.9%.
• In July, Hygeia acquired Chang’an Hospital for RMB1,660 million. The acquisition will provide Hygeia with greater room to expand its business in the northwest region of the PRC.  

Throughout Q323, Immix shared encouraging updates for the clinical development of lead CAR-T asset NXC-201, including the announcement of orphan drug designation (ODD) in both multiple myeloma (MM) and amyloid light chain amyloidosis (ALA). In October 2023, the company shared positive efficacy and safety updates and we believe the data so far could support NXC-201 as the first outpatient CAR-T therapy, subject to regulatory approval, addressing the myriad of challenges associated with current CAR-Ts. In the quarter, Immix also shared positive interim data for its lead TSTx asset, IMX-110, and we anticipate further updates across Q423 to FY24. Net cash at the end of the period stood at $19.6m, which we estimate should provide an operating cash runway into Q424. As we adjust for our expense estimates based on year-to-date results, update net cash and roll our model forward, our valuation for Immix adjusts to $86.6m or $4.0 per share (from $90.7m or $4.2/share previously).

• GEVO completed the previously announced expansion of renewable natural gas to 400,000 MMBtu from 355,000 MMBtu.
• On the Verity front, an agreement was signed with a third ethanol producer customer in the US Southwest, taking total planned volume of ethanol tracked to more than 300 million gallons per year or 2% of the US ethanol market.
• Additionally, GEVO also signed, finalized, and executed the previously announced US Department of Agriculture (USDA) grant of up to $30 million for the Climate-Smart Farm-to-Flight Program.

• Sam Altman – one of OpenAI’s founders and its CEO – has been ousted from the firm citing lack of consistent communication with the board. 
• OpenAI has garnered significant spotlight around Gen AI. Surely it is generating revenues at a rapid clip but far from making profits. What will this leadership transition mean?
• Sam’s ousting was totally not expected. On 6th November, OpenAI held its first ever developer conference which was led by him. Earlier this week, he spoke at APEC conference. 

Foresight Solar Fund (FSFL) achieved record cash generation of £87.8m from its underlying assets to 30 September 2023, driven by favourable fixed prices, despite production being below budget. As a result, FSFL paid down £10m of its revolving credit facility (RCF) during the period. After the Q3 period, FSFL sold 50% of its 99MW Lorca portfolio in Spain for €26.9m, at a 21% premium to its Q3 holding value. The proceeds from this transaction will be used to further reduce the RCF. Global revenues are 85% contracted for 2024, ensuring forecast net dividend cover of 1.5x until at least 2025. FSFL remains on target to pay its full year dividend.

• Alibaba’s operating margin rose to 15% in 2Q24 versus 12% in 2Q23.
• Every expense as percentage of total revenue decreased and EBITDA of every business line increased.
• We believe the reorganization is going smoothly and the stock has an upside of 82%. Buy.

• Sea Ltd (SE US) saw its 3Q2023 result swing back to a loss after turning on investment at Shopee during 3Q2023 in the face of competition.
• The company was open about its renewed investment in growth during the previous quarter in the face of threats from TikTok Shop, which may have lessened post its Indonesia expulsion. 
• Sea Ltd may not have engendered itself with investors impressed with its ability to pivot like no other to actual profitability, now introducing an element of uncertainty. Valuations reflect this.

• Nippon Paint Holdings (4612 JP) announced a better-than-expected 3Q23 results this week, mainly driven by a resilient China decorative paint business. 
• The company also raised 2023 operating profit guidance, expecting around 6% higher operating profit (Y168bn from Y158bn previously).
• At 21x forward PE, the company is attractively valued given the growth profile and strong market share position in most end-markets. 

• ROE is now 24.4% in 1H24 compared with 18.0% last year. ROE consistently rising well, from 15.9% in FY21.
• Quarterly net profit up 47% YoY in 2Q24. On an annualized basis, net profit in FY24 can show considerable delta from FY23, a year when returns and profit were good.
• Costs are well-contained. SG&A to assets was 23.7% at its recent peak and now it’s 20.8%. SG&A to revenue is now 55.5% compared with 65.3% at its recent peak.

• In Q2FY24, Max Healthcare Institute (MAXHEALT IN) reported revenue growth of 17% YoY and 6% QoQ to INR18.3B, driven by higher ARPOB and occupied bed days.
• EBITDA grew 21% YoY and 14% QoQ to INR4.5B, leading to a 100 basis point YoY and 190 basis point QoQ margin expansion to 28.7%.
• MHIL expect greenfield 300 bed hospital in Dwarka, South-west Delhi will be commissioned in later half of Q4FY24. It was originally expected to be commissioned in Q2FY24.

• Q1-2 FY3/2024 results demonstrated robust growth by Geniee with sales growth of 23.7% YoY and operating profit growth of 99.9% YoY.
• The Marketing SaaS segment has seen robust sales growth and margin improvement YoY, paving the way for a resilient earnings stream going forward.
• However, given a weaker-than-expected outlook for the advertising market both domestically and overseas, the company has lowered FY3/2024 guidance whilst maintaining its medium-term guidance range for FY3/2026.

• In H1FY24, Takara Bio Inc (4974 JP) reported 41% YoY decline in revenue to ¥19.1B, dragged by 46% YoY decrease in revenue from reagents, which contributed 78% of total revenue.
• Operating profit plunged 87% YoY to ¥1.4B, 28% ahead of guidance, due to lower-than-expected R&D expenses. Net profit decreased 87% YoY to ¥1.1B, 67% higher than the guidance.
• Takara Bio has cut FY24 sales, operating profit, and net profit guidance by 15%, 63%, and 64%, respectively, as the company is anticipating a sluggish life science R&D market globally.

• BayMedica registers strong Y/Y growth. Although BayMedica reported a 61% decline in sequential revenue in the opening quarter of its new fiscal year ending June 30, 2024, the $902K in sales reported for 1QFY24 was nevertheless almost triple the $321K generated in the year-ago quarter.
• The immaturity of rare cannabinoids ingredients market for health & wellness products makes it difficult to determine definitively any seasonality in the business.
• However, it should not go unnoticed that the sequential sales drop in the latest summer quarter does repeat the pattern reported in 1QFY23 when sequential sales at BayMedica declined by almost 40%. 

With indexed rental growth continuing and rent collection recovering, Triple Point Social Housing REIT’s (SOHO’s) Q323 dividend was fully covered, and we expect this to continue. Meanwhile, while the board continues its focus on closing the share price discount to NAV, it has concluded that any further capital return is dependent on significant additional liquidity being generated through property sales.

• iPower reported $26.5 million in revenue in 1QFY24, its highest quarterly revenue ever, compared with $26.0 million in 1QFY23.
• The company’s performance was helped by business generated by its SuperSuite supply chain partnerships, currently on a $7 million annual run rate.
• The company’s TikTok Shop sales also contributed to the solid sales results.

• Our review of the  three stocks here reveals considerable run room ahead as revenue  recovery in Asia gaming is  outpacing  forecasts.
• These companies  have proven   resilient after taking big hits during covid crisis.
• Balance sheets are stronger, revenue  rising, margins  improved–much of  this not as yet  reflected in valuations.

• Global silicon wafer area shipments declined 10% QoQ in Q323 but customer inventory remains at historical highs and is showing no signs of declining
• SUMCO’s Operating Profit forecasted to fall by ¥8.6 billion QoQ in Q423 
• The company vowed to make “substantial” production cuts in a bid to bring their inventory situation under control. 

• Tencent (700 HK) ’s 3Q2023 revenues fell marginally below consensus, however, OP beat consensus estimates. Domestic games returned to growth after a flat quarter in 2Q2023.
• Both Online Advertising and Fintech businesses have seen strong increase in top line with GPM approaching new highs for the two businesses.
• Though Tencent’s earnings show a recovery, we would remain cautious given the slowdown in Chinese economy and Tencent failing to make into new game approval list since July 2023.

• In this insight, we discuss three key catalysts that are likely to positively impact SK Telecom in the next several months.
• The current gap between SK Telecom’s 2023 expected dividend yield (6.6%) and US 10 year treasury note (4.47%) is 2.13%.
• The gap between SK Telecom’s dividend yield and US 10 year treasury note yield could widen to 3-4%+ in 2024, making SK Telecom’s dividend yield more attractive. 

• Advertising, international game, and Fintech grew by two digits, but domestic entertainments were stagnant.
• The gross margins of all business lines improved and admin expense as percentage of total revenue decreased.
• We believe the stock has an upside of 30% for the year end of 2024.

• Freee KK (4478 JP) ’s 1QFY06/2024 results beat consensus estimates. Introduction of qualified invoicing system in October has resulted in strong corporate user growth for the company.
• Upfront investment in selling and marketing has helped freee onboard a large no. of corporate clients prior to the introduction of the new invoice system.
• Freee expects selling and advertising spending to decline going forward which should help the company reach break-even in FY06/2025E.

• The inventory adjustment of consumer electronics products is nearing completion and industrial products will end later.
• Silergy Corp (6415 TT)‘s short-term growth momentum comes from the demand of new smartphone, while its long-term growth momentum comes from the automotive, new energy and high-performance computing area.
• In 1H24, the pro forma gross profit margin can be maintained at around 50%.

• Taste Gourmet (8371 HK) reported Q2 profits 25% over our expectations at 30 mn HKD (81% YoY), led by net margin expansion to 11.2% (vs. our expectation of 8.8%)
• The net cash of 133 mn HKD represents around 27% of market capitalization, which is used to increase the restaurant count in HK from 42 to 48 QoQ.
• The company declared a 5.5 cent interim dividend (Vs. 4.8 cents last year). We believe they can declare a 12.5/13 cent dividend for FY24 (March-End)

• In H1FY24, Terumo Corp (4543 JP)‘s revenue increased 10% YoY to ¥443.9B, mainly driven by a 13% YoY growth in C&V business, due to strong global demand of catheter products.  
• Revenue from TIS (catheter) segment reported 12% YoY growth to¥176.5B, driven by a 12% YoY growth in overseas business, with EU and China being the main drivers.
• Terumo has reiterated FY24 guidance, which implies significant improvement in operating profit in H2FY24 due to the realization of the full effect of global price revision and cost cutting initiatives.

• XPER reported third quarter results in line with our forecast and reaching an inflection point in revenue where the operating leverage of the business becomes visible.
• Ahead of the results, there had been worries over XPER’s exposure to consumer electronics and pay TV industries that could cripple revenue growth.
• XPER reported third quarter revenue of $130.4 million compared to our forecast of $130.9 million. Adjusted EBITDA reached $9.3 million compared to our forecast of $9.2 million

• Looks like Sea (SE US) decided to take a detour back to the land of losses this quarter.
• But it’s not a massive issue. They’ve maintained close to 7% QoQ revenue growth, so things should be okay.
• Investors likely won’t delve into the details further to uncover the substantial costs hidden behind that apparent growth.

• Dearth of international flights from Chinese and Russian carriers — 2nd & 3rd biggest global aviation market, will distort supply, underpins strong yields and profitability.  
• SIA’s cost management is superior thanks to high asset utilisation, stable SGD vs. the USD, and access to attractive financing.  SIA’s competitors severely lack these attributes. 
• We forecast FY24 net profit of SGD2.4b (+13.1% YoY) and peg it to 10x PE to derive a TP of SGD8.07, +30% UPSIDE potential.  

• Grab‘s 3Q2023 results demonstrate a high degree of success in achieving a delicate balance between growth and profitability, with significant progress across all verticals, and a  broadening of product offerings.
• The company turned adjusted EBITDA breakeven for the first time in 3Q2023, through lower incentives, cost efficiencies, and lower regional corporate costs, with further progress towards FCF breakeven in 4Q2023.
• Grab remains confident about the outlook with guidance revised upwards, with the company looking at some potentially interesting M&A, which should be earnings accretive and beneficial to the ecosystem. 

• Back in late 2020, Livzon Pharmaceutical Group (1513 HK) proposed spinning off 39.4%-held Livzon Diagnostics on Chinext. After numerous filings with the regulators … crickets.  
• Livzon has now proposed listing Livzon Diagnostics on the National Equities Exchange and Quotations with an intention of transitioning listed shares to the Beijing Stock Exchange (BSE).
• The CSRC recently introduced a raft of initiatives to spur investor interest in the BSE. After all-but-abandoning the prior listing, Livzon looks to be cashing in on this recent excitement. 

• Haier Smart Home (6690 HK) is less exposed to China’s real estate market than one would have thought. Despite poor property industry, HSH still generated 12.9% earnings growth in 3Q23.
• We are delighted to see further margin pick-up in 2Q23-3Q23, thanks to digitalisation and better efficiency. We believe such a trend can be sustained over the next 12-18 months. 
• More innovative products will drive market share, and better margin can support a 13% 3-year earnings CAGR. ROE is high at 17-8% despite net cash (8.8% of share price).   

• Earnings season wrapping up — Hon Hai & Asustek recently reported… Some AI names rallied hard but our Nvidia L/S trade still working
• Hon Hai’s margin expansion story is finally starting to be realized. Stock’s perceived political risk could be an opportunity.
• How Asustek plans to take the lead globally in AI PCs; Gaming PCs will be the first key battleground. MSI could be an interesting play on Asustek’s recent strong performance.

• Takashimaya saw a strong increase in sales in 1H2023, helping profit rise to record levels with much of the growth coming from clothing and expects similar for the full year. 
• Unlike many rivals, the department store is not at all sanguine about the prospects for continued growth in luxury sales and the inbound tourist market – calling it a bubble.
• It is instead emphasising profit growth over higher sales by targeting locals through store upgrades and better cost performance clothing – while also closing stores that are no longer viable.

• The 4Q23F results will be higher than 3Q23, but lower than 4Q22.
• If the market is unchanged, and it will be slightly upside in 2024F market. 
• For the target of GM 10% is still unchanged in 2025F.

• Asustek reported results on November 13th that beat analyst expectations thanks to a major margin rebound. The stock soared post results.
• Asus plans to be the first company globally to release an AI PC, leveraging extensive AI R&D across different devices as well as its leading market share in gaming PCs.
• However, gaming PC competitor MSI is already moving fast; Shows how gaming PCs are likely to be the first AI PC battleground. Long Asustek, remains preferred over Acer.

• Hon Hai beat expectations yesterday when it reported thanks to higher than expected margins. Gross margin rose to its highest level since 2018, hitting 6.7%.
• The company has maintained its 2025E 10% gross margin target and implied that 2024 will see significant margin improvement as new higher margin businesses ramp up revenue contribution.
• Two key market concerns: News of Chinese government investigation and political risk given Mr. Gou running for president. Company said operations continue as normal. Hon Hai remains a Structural Long.

• Today after the close, Ajinomoto Co (2802 JP) announced a large secondary offering of 14.3mm shares (2.75% of shs out). At last price that is ¥82bn.
• At the same time, they announced a 10mm share (1.92%) ¥40bn buyback to be conducted from the delivery date of the Offering through 31 March 2024. 
• Over time, there would be some index upweight as float increases. On a net basis, this is a small deal on a low vol stock with a semiconductor story lurking.

• Appier’s Q3 demonstrated a 39% YoY revenue increase, reaching a record JPY7.1B. This was driven by substantial growth in the US/EMEA markets (117% YoY), customer expansion, and Digital Content growth.
• Appier’s gross margin expanded from 51.3% to 52.6% and the operating margin reached a historical high of 4.4%. Despite ongoing investments, EBITDA margins hit12.1%, showcasing strong operating leverage.
• Appier’s revised full-year outlook, with increased revenue target (JPY 26.2B), operating income (JPY0.70B), and EBITDA (JPY2.6B), exceeds consensus expectations by 1%, 11%, and 8%, respectively.

• TSMC’s ADR premium is 10.4%, this is a decent level to short it based on the historical trading range.
• UMC’s ADR premium is near a good level to short the spread but one should wait for it to rise above 1.5% in our view.
• UMC ADR short interest continues to trend higher; TSMC ADR short interest continues to fall.

• We suspect that the recent strength in Sea (SE US)‘s price performance is likely due to short covering, with shorts incentivized to cover after a nearly 38% gain.
• As earnings approach, short positions have been increasing since late October, likely anticipating another earnings disappointment from Sea Ltd’s Q3 report on November 14, 2023.
• Consensus estimates for Sea Ltd are at their lowest since its inception. A modest outperformance could lead to a squeeze in short interest.

• China Feihe (6186 HK) saw major derating (from around 20x PE to the current high-single-digit PE) coupled with sizable earnings drop (-28% yoy in 2022/-25% yoy in 1H23) since 2022. 
• The investment thesis or trade thesis here is a play on the rise of new born babies in 2024, the year of the dragon in China. 
• The margin of safety here is also high given a 7% forward dividend yield (Feihe has pledged to increase dividend payout ratio going forward).

• Impressive progress to date – Q1-4 FY9/2023 results were at record highs for the company, demonstrating a sustained track record of above-average profitability and disciplined capital allocation via M&A.
• Business diversification to life sciences has led to sales mix improvement and a more resilient business in our view.
• Company guidance for FY9/2024 indicates a decrease in earnings YoY, attributed to the accumulation of strategic upfront investments for business development. 

• We retain Bank of Baroda as the deep value Indian bank from our peer group, for its modest valuations, healthy ROE and further improvements in pre- and post-provision returns
• The market seems unconvinced by HDFC Bank but we retain it as our quality bank pick, with its potential for savings from the HDFC merger and its strong balance sheet
• Axis bank stays on our watchlist, but its premium valuations are the challenge; we remain negative on State Bank of India for its delinquency risks and limited progress on returns

• Life Insurance of India (LICI IN) reported its 1H24 earnings which are a continuation of the poor performance of the largest life insurer in India.
• Total sales were down -10% (individual sales – flat y-o-y); VNB margins falling; outlook not positive. Not positive shifts in product mix or distribution trends.
• We value LIC at 0.5x FY25e P/EV, implying a -15% downside from the current price, reflecting poor sales growth, loss of market-share and its failure to turn-around the business model.

• Success of disruptive innovation – we believe Q1-2 FY3/2024 results were ahead of the run-rate for FY guidance, driven by 1) sustained growth in maintenance and repair service contracts, and
• 2) stronger than expected demand for modernization services, resulting in gross margin improvement QoQ in Q2 FY3/2024 via amplified proposal effectiveness and increases in pricing.
• We expect to see JES continue to successfully disrupt the market via innovation, driven by secular growth as building owners convert to reputable independent providers for cost management and structural demand from aging elevators requiring modernization.

• Both Himax and Novatek reported their results last week; both delivered gross margins at the high-end or above their previous guidance.
• Both companies showed a continued decline in inventory levels. Himax is trading at one of the cheapest levels relative to Novatek in history.
• Novatek sees industry inventory levels as normalized and expects 2024E to be an industry growth year. We rate both stocks as Structural Longs.

• ASICS reports solid Q3 results, featuring a 14.5% rise in net sales, 31% rise in operating profit, improved gross margin, and digital growth.
• ASICS revises FY23 outlook with increased sales and operating profit. New OP guidance of Y52b is inline with consensus
• Market to focus on new Mid-Term Plan (end-Nov). Valuation at 16x forecast EBIT still a discount to average 18x multiple.

• Li Auto’s revenue increased by 271% YoY and vehicle deliveries increased by 296% YoY in 3Q23.
• NIO will dismiss 10% of its employees and even 20% in some departments.
• We do not believe Alibaba will take over the whole Best Inc.

• BeiGene performed well in 23Q3. Product sales maintained strong growth momentum. Together with effective cost control measures, net loss significantly narrowed (close to breakeven), which exceeds expectation.
• BeiGene plans to rely primarily on BRUKINSA/tislelizumab to achieve breakeven, which means BRUKINSA needs to contribute about US$2 billion revenue. Given prescriptions volume, however, Astrazeneca’s Calquence is the biggest holdup.
• Whether BeiGene’s overall revenue can reach US$4 billion is the key point of marginal change in logic. How to further reduce SG&A/R&D expenses has become important topic at this stage.

• NCsoft plans to launch the highly anticipated new MMORPG game called Throne and Liberty in Korea on 7 December 2023.
• NCsoft reported operating profit of 16.5 billion won (down 89% YoY) and  revenue of 423.1 billion won (down 30% YoY) in 3Q 2023. 
• Throne and Liberty has a solid chance to become successful globally through Amazon Game platform, which is likely to drive a strong turnaround of NCsoft’s sales and profits.

• Japan Post Insurance might seem undervalued based on a regression analysis, but its relatively strong RoE was due to extraordinary gains.
• The company has a much larger portion of its investment securities being carried at cost on the balance sheet vs. its peer, Dai-ichi Life.  
• Against the backdrop of Japan’s “higher for longer” theme, its embedded value growth could be under more pressure due to ANW’s m-t-m adjustments and very weak new business value.

• The share price has risen by more than 20% in the past month as 1H results beat guidance, FY guidance was raised and the yen weakened.
• The 2-for-1 stock split may also have attracted retail investors. But the new FY guidance implies lower 2H guidance. 
• The outlook is for higher but volatile sales and profits. Valuations are reasonable but not compelling. Wait for a pullback.

• Sheng Siong (SSG SP) continues to maintain steady, low, single-digit growth in revenue and flat profitability despite a challenging environment. 
• Inflation trends reversing due to lower power costs in 2024, and an improvement in its product mix could lead to increased low double-digit profitability (10-11% YoY). 
• Trading at 18.5x/17.6x FY23e/24e PE and 3.9% dividend yield, the stock remains on our watchlist if a correction leads to a favorable entry point.

• Wolters Kluwer is executing on the second year of its strategic plan, with bold steps taken during the past few months
• The business model is solid, with recurring revenues totaling 80% of the group’s total revenues. 
• Management is positive about the pipeline, the retention rates, and the promising net promoter scores seen in H2; the key element for determining revenue growth in 2024

• In 3Q23, SK Biopharmaceuticals (326030 KS) reported Xcopri U.S. revenue of KRW75.7 billion, up 60% YoY and 19% QoQ, driven by accelerating new patients being treated with the drug.
• In 3Q23, operating loss narrowed sequentially to KRW10.7 billion. However, operating loss widened compared to year-ago period, mainly due to higher operating costs of the company’s U.S. subsidiary.
• The company is on track to report a profitable Q4. With continued momentum, Xcopri is expected to hit blockbuster status by generating revenue of $1B in the U.S. in 2029.

• Deere & Company manufactures and distributes various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services.
• The Production and Precision Agriculture segment provides mid-size tractors, combines, cotton pickers and strippers, sugarcane harvesters, harvesting front-end equipment, sugarcane loaders, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers.
• The Small Agriculture and Turf segment offers utility tractors, and related loaders and attachments; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment, and utility vehicles, as well as implements for mowing, tilling, snow and debris handling, aerating, residential, commercial, golf, and sports turf care applications; other outdoor power products; and hay and forage equipment. 

• Reports emphasizing that SMIC fell short of 3Q expectations don’t make much sense. The real test starts this quarter with 7nm smart phone processors for Huawei in mass production.
• Profits are under pressure from low capacity utilization, rising depreciation and continued high investment. Cash flow is adequate. The balance sheet is sound.
• The share price dropped 6.8% on Friday after rising 44% from late August to early November. 4Q guidance points to near-zero operating and net profit. Recovery will take time.

• In 3Q23, Celltrion Inc (068270 KS) reported revenue and operating profit of KRW672B (+4% YoY) and KRW268B (+25% YoY), respectively, driven by broad-based growth across biosimilar portfolio and CMO revenue.
• Operating profit margin is approaching 40% level, highest level in last two years, driven primarily by sales growth around high margin products. Net profit jumped 33% YoY to KRW221B.
• In Oct’23, Celltrion received FDA approval for Zympentra, which is Celltrion’s first product approved as a new drug in the U.S., and is expected to receive patent protection until 2040.

• More y/y improvement (or decline deceleration) for PC/server, power management IC (PMIC), CMOS sensor/touch controller, GaAs RF/VCSEL, gaming GPU card, memory, and foundry vendors
• GaAs RF/VCSEL and gaming GPU card vendors saw very impressive sales growth, driven by new phones introduction and rush orders to use NVIDIA RTX 4090 gaming card for AI training.
• Stronger than expected Oct for TSMC and Gigabyte might drive 4Q sales and near term share price upside; Visera, Andes Tech, and AP Memory might see sales and price downside.

• Results of 9th national VBP was released. The average price reduction was 58% and the maximum price reduction was over 90%. Hengrui (600276 CH)‘s challenge in VBP has just begun.
• The whole CXO sector is more like a cyclical industry than a high-barrier industry. There’re still some pressures/risks have not been fully released. Its future may be darker than before.
• Asymchem’s stock price performance follows the entire CXO sector. Whether Asymchem can obtain large Tirzepatide orders and provide investors with high certainty of outlook is the key for valuation reversal.

SIGA recapped several key developments in its Q3 update, signalling strong top-line momentum going into Q423. Most notably, the recent $18m procurement deal with the European Health Emergency Preparedness and Response Authority (HERA) has surprised to the upside, with more value to be unlocked, in our opinion. With upcoming BARDA (oral and IV TPOXX), Department of Defense (DoD) and HERA deliveries, Q423 will likely be a busy quarter for SIGA. We have increased our FY23 product revenue estimates to c $164m ($155m previously) to reflect the HERA orders, although this has been offset by lower R&D revenue estimates ($8.9m vs $20.5m previously) following the receipt of the final payment under the PEP research contract with the DoD (in Q323). Management continues to target the PEP regulatory submission in 2024 (despite undertaking a trial data reanalysis) and we view this as a next significant milestone for SIGA. Incorporating the results and latest net cash figure, our valuation adjusts to $17.24/share ($17.46/share previously).

• INCJ made a lot of money on Renesas Electronics (6723 JP) over the years and arguably did a great job helping the firm change direction. Now they are out.
• Last night they launched a block sale through JPM and Bof A for 130.2317mm shares. They priced the heavily-oversubscribed deal at a discount of 8% or ¥2143/share. 
• That’s a big discount (so bad broking) for such oversubscription on a clearly-flagged deal but now they are out. 

• First mover advantage is half-truth. For every academic study proving that first-mover advantages exist, there is a study proving they do not.
• Engineers at OpenAI, scaled up a special machine learning method using large data sets to create GPT or “Generative Pre-trained Transformer.”
• Launch of ChatGPT has put OpenAI revenues on steroids with reports suggesting USD 1.3B this year (versus USD 28 million before ChatGPT was rolled out).

• We expect that Tencent’s C3Q23’s revenue/non-IFRS operating profit/IFRS net income to be 2.3%/3.3%/4.2% above consensus.
• We raised estimates of Tencent’s international game growth to 12% YoY to reflect the success. We also expect Tencent’s advertising business to benefit from e-commerce advertisers’ competition.
• We raised the Target Price to HK$425, which implies 22.4X PE in 2024.

• OpenAI held its first developer conference on November 6th. The event announced the launch of OpenAI’s latest model and feature upgrades.
• The latest OpenAI model, GPT-4 Turbo offers drastically lower costs, updated knowledge cutoff, better vision and voice support, and improved API.
• Event unveiled custom chatbots called GPTs for specific applications, showcasing expanded domain knowledge. They’ll be sold in a digital store, adding a new revenue stream for OpenAI.

• Eclat Textile Company (1476 TT) is a vertically integrated textile company, with around 20% net profit margin, similar to Shenzhou Intl Group Holdings (2313 HK).
• The company just reported 3Q23 results, with sales down 26% yoy and net profit down 28% yoy.  Starting the next quarter 4Q23, the company is expected to return to growth.
• The company now trades at 23x 2024E earnings.  I believe the valuation is reasonable as growth returns, and there are potential upside catalysts. 

• Based on the some judgments, SMIC consider it will be relatively flat demand in 2024F.
• SMIC took into consideration geopolitical instability and allowed equipment vendors to submit orders in advance. 
• Currently, only a few manufacturers are stockpiling smartphones in response to this wave. The overall industry remains relatively stable.

• Revenues of US$568.5 million, down 10% sequentially and down 9.7% YoY, at the bottom of the previously guided range.
• Net loss of $25.8 million compared to a profit of $7.8 million in the previous quarter and $65.5 million in the year ago period.
• With current quarter gross margins in the 2-5% range, HHGrace has flipped from best in class in H123 to the worst in class now.

• Softbank’s exposure to WeWork continues to haunt it beyond the close of 2QFY23, due to its credit support agreements
• Aside from WeWork, we continue to see risks to valuations supporting the NAV; in particular, Arm Holdings and SVF2 which accounted for 45% of group equity value
• Softbank shares trade at a 45% discount to the stated NAV yet there is downside risk to Arm’s valuation along with questions over private company valuations at SVF1 and SVF2

• Foxconn is facing one of its biggest compliance challenges on the Chinese mainland, where the key iPhone assembler has been caught in the crosshairs of government investigators.
• Multiple Foxconn-affiliated entities are being investigated by Chinese authorities as part of probes into the company’s mainland facilities, Caixin confirmed Monday with Foxconn Industrial Internet Co. Ltd., the Taiwanese contract manufacturer’s Shanghai-listed arm.
• State-owned newspaper Global Times first reported Sunday that Foxconn, also known as Hon Hai Precision Industry Co. Ltd., was facing tax and land-use probes into its mainland facilities.

• KE Holdings’ (Beike) C3Q23 revenue was 7.7%/11.6% higher than our est./cons., non-GAAP net income beat our est./cons. by 35%/119%. Existing home sales and non-transaction biz drove the bottom line beat.
• We expect Beike C4Q23 to grow 20% YoY, 33% in existing home and 5% in new home, supported by gradual recovery of home transaction and Beike’s market share gain;
• We reiterate BUY rating and raised TP by US$0.5 to US$24.5/ADS, also taking into account of progress in home renovation and rental management.

• Two days before Huawei and Chery releasing their Luxeed S7 sedan to rival Model 3, LI unveiled the technical details of its MPV entry MEGA; 
• We see MEGA taking a meaningful market share from BYD’s Denza D9, GM’s GL8, GAC’s Trumpchi M8, all selling ~10K a month. We raise MEGA’s 2024 shipment to 57K;
• We raise LI’s TP from US$40 to US$47 and maintain BUY.

• Duolingo reported stronger than expected 3QFY23 results, including revenues of $137.6M (consensus: $132.2M) and net income of $2.8M. The company raised guidance for FY23 revenues and total bookings. 
• Stock indicated up ~9% after hours. Duolingo beat all key estimates. However, ABPDAU declined to $25.38, while net new ARR growth will slow in 4Q and the next fiscal year. 
• With a market cap of ~$8.2B on a fully diluted basis, Duolingo shares trade at ~14x and ~11x EV/Rev on my respective FY23/FY24 estimates, a significant premium to comparable companies.

• ACMR reported C3Q23 revenue, non-GAAP EBIT, GAAP net profit (5%), 21%, in-line vs. our est., and (3%), 63%, 49% vs. cons., respectively. Gross margin beat by +9ppts due to FX.
• ACMR received a second order from a U.S. semiconductor maker, which indicates potential for significant market share gain by 2025. SK Hynix is engaging its entire product line, per management.
• We maintain BUY rating and US$ 30 TP, implying 18x FY23 EV/Earnings.

• Unrealized HTM losses continued to balloon as interest rates crept higher.
• What has caused SVB’s demise seems to have now been forgotten and ignored by investors.
• We took a deep dive into 3 U.S. Banks, First Foundation, Wells Fargo and Bank of America on their HTM losses.

• Australis Oil & Gas (ASX:ATS) is an oil and gas producer/developer, with a strategic and controlling position in the emerging Tuscaloosa Marine Shale (TMS) oil play, onshore US.
• The TMS is an Eagle Ford-equivalent but early-stage oil play with gross recoverable oil potential of around 7bn barrels – this is likely to be the next big thing.
• Australis represents a highly- leveraged and attractive exposure to the transformational potential of the TMS oil play. 

• Saudi Aramco will invest more in the refining and petrochemical businesses in China as the Saudi Arabian oil giant tries to wring more money from every barrel of oil the kingdom produces amid a global shift toward a low-carbon economy, a company executive said.
• Aramco’s Senior Vice President of Strategy and Market Analysis Fahad Al-Dhubaib talked up China’s importance to the company’s business in Asia and worldwide.
• “Our partnerships in China enable us to help create new pathways for growth by working with a country driving the increased integration of refining and petrochemical processes,” Al-Dhubaib told Caixin last month in a written interview.

• IPAR benefited from consumers continuing to purchase fragrances in the third quarter and retailers beginning to stock inventory for the holiday shopping season
• IPAR reported third quarter sales of $368.0 million in line with what the Company had previously disclosed in October
• IPAR has several new product introductions in 2024 and begins to generate sales from Roberto Cavalli and Lacoste brands as well, which should result in IPAR growing sales in 2024

• Rubicon Organics is a leading producer of premium cannabis products in Canada.
• In a challenging market, the company is differentiated by offering top-shelf, organically grown flower in the higher-margin premium market.
• Interim CEO, CFO, and Director Margaret Brodie joined us on The Water Tower Hour to discuss how Rubicon is overcoming the common Canadian obstacles. 

• SES has made significant advancements in engineering and materials, particularly in the cathode, resulting in high stability and improved safety for high Ni cathodes.
• The company has also developed new technologies for pouch cell engineering, electrolyte, lithium metal anode protection, and charging protocols, reducing the risks associated with thermal runaway in both Li-Metal and Li-ion batteries.
• Despite the challenges and the trade-off between energy density and safety in the battery industry, SES aims to improve safety without compromising other parameters, opting for a high-energy density approach and overcoming difficulties to achieve its goal.

• Recruit Holdings (6098 JP)  reported 2QFY03/2024 results today. Revenues decreased YoY due to decline in HR Tech revenues, while operating profit for the quarter increased YoY. OP missed consensus marginally.
• As we expected, the new pricing model has negatively impacted HR Tech revenues, and the segment’s earnings are forecast to decline further going into the second half.
• There is further downside to earnings and the company’s share price has moved up during the last few days, and we are set to nicely gain on the Short side.

For our next Corporate Webinar, we are glad to welcome OUE Commercial REIT’s CEO and Executive Director, Han Khim Siew, and CFO, Lionel Chua.

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

The Corporate Webinar will be hosted on Tuesday, 28 November 2023, 19:00 SGT.

About OUE Commercial REIT

OUE Commercial Real Estate Investment Trust (“OUE C-REIT”) is one of the largest diversified Singapore REITs with total assets of S$6.0 billion as at 30 June 2023. With six assets in Singapore and one in Shanghai, the property portfolio comprises 1,643 upper upscale hotel rooms, as well as approximately 2.2 million square feet of prime office and retail space.

In Singapore, OUE C-REIT’s office assets – OUE Bayfront, One Raffles Place and OUE Downtown Office, are situated within the CBD where medium-term supply is limited. OUE C-REIT also owns two hotels, Hilton Singapore Orchard and Crowne Plaza Changi Airport, which are well-positioned to capture the continued rebound in tourism and MICE demand. Complementing Hilton Singapore Orchard is Mandarin Gallery, a choice location for international brands in the heart of Orchard Road.

On 30 October 2023, OUE C-REIT obtained a “BBB-” credit rating with a stable outlook from S&P Global Ratings.

• If Skylark Co Ltd (3197 JP)‘s pricing and footfall growth trend persists, it’s likely the company and consensus will revise annual revenue targets upward.
• The OP is also expected to exceed Q3 estimates with an OP of ¥7.9bn, prompting a necessary upgrade of annual guidance by ¥5.0-6.0bn.
• Yet, we’ll approach Skylark’s earnings trade cautiously, considering its current valuation.

• The read-across for Inner Mongolia Yili Industrial Group (A) (600887 CH)‘s 3Q23 results and briefing to China Mengniu Dairy Co (2319 HK) was overall positive.
• For 3Q23, Yili’s sales grew 3% yoy and net profit increased 59% yoy, mainly due to lower raw milk prices, better product mix, cost savings and low base.
• China Mengniu Dairy Co (2319 HK) continues to be a good value play, with reasonable valuation (15x 2024E PE), stable growth (above 10% net profit growth), and proactive shareholder returns.

• Cisarua Mountain Dairy (CMRY IJ) stands out from the overall FMCG space in Indonesia, with 21% revenue growth versus a flat to negative performance for the overall market.
• The company’s growth in 3Q2023 was predominantly driven by premium consumer foods at +46% YoY but dairy was also positive, with the company increasing promotional spending but maintaining margins.
• The outlook for 4Q2023 looks promising driven by increased distribution outlets, especially general trade plus the launch of new products for both consumer food and dairy. 

• Presenting a clear growth roadmap – following disclosure of the new medium-term business plan (‘MTBP2027’ covering FY3/2025 to FY3/2027) and long-term growth strategy (‘Vision1000’ depicting timing around 2030), we have revised our earnings estimates for FY3/2025 and FY3/2026.
• These reflect 1) acquisitive growth impact towards FY3/2027 as capital is allocated to the fast-growing Strategy/DX Consulting business, and 2) stronger margin growth driven by productivity enhancements and improving sales mix.
• We believe diversifying into new market sectors will open new growth opportunities and develop a more resilient business. 

• Shortage/Oversupply, price hike/cut, automotive/industrial demand and inventory corrections are still cyclical. Gross margin should double from 22-24% now once utilization returning to 100% and no more free wafer by 2025.
• LCD driver foundry is facing a structural competition as China panel customers are building a local supply chain.
• Attractive below NT$70 as: 1. inventory correction should be done by 2Q24; 2. global 8″ foundry sales y/y improvement began 3Q23; 3. closing to cyclical low P/BV of 2.5x.

• Q323 revenues of $1.85 billion, flat sequentially but down 11% YoY. Net income was $249 million, up 5% sequentially but down 26% YoY.
• At a midpoint of $1.85 billion, forward guidance is once again flat sequentially. Overall it was a solid report with guidance slightly better than UMC delivered last week.
• Despite the solid quarter, the company’s outlook for 2024 was bleak with a 50% CapEx cut, LTAs under mounting pressure & ominous-sounding LTA “True Up” on the horizon. 

• 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), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
• Post a sharp correction, stocks trade at appetizing valuations, and with results seasons around the corner, we will provide updates for all names. 

• ATEN reported third quarter results after having already warned there were order push outs towards the end of the period.
• ATEN has been trying to diversify the revenue stream to reduce the volatility order flow disruptions could have on the business
• ATEN managed to maintain gross margin above 80 percent, a feat that does not get much recognition from investors. ATEN should continue to achieve gross margin above 80 percent