Equity Bottom-Up

• Ford Motor Co. said Monday it was suspending construction of its $3.5 billion electric-vehicle (EV) battery plant in the U.S. midwestern state of Michigan, where it had planned to manufacture batteries using technology licensed from Contemporary Amperex Technology Co. Ltd. (CATL) (300750.SZ -0.31%).

• “We’re pausing work and limiting spending on construction on the Marshall project until we’re confident about our ability to competitively operate the plant,” Ford spokesperson T.R. Reid said in a statement emailed to Caixin.

• “There are a number of considerations. We haven’t been specific about what they are, nor made any final decision about the planned investment there,” Reid said.

• Taiwan’s AI supply chain names have fallen over the last month, yet many have still outperformed Nvidia by a wide margin over the last six months.
• We don’t want to sell our Nvidia despite market risks — We believe a basket of Taiwan AI stocks can act as a Short to hedge a Long Nvidia position.
• Shorting a basket of Wistron, Quanta, Gold Circuit, and Asia Vital Components can act as a hedge vs. a Long Nvidia position. Below we explain why.

• Prodia is the leading diagnostics company in Indonesia, with over 40% market share as the most trusted brand in the country, given accreditation from the College of American Physicians.
• The company was a huge beneficiary of all the testing over COVID with the result of a post-pandemic correction but sales should see a strong 2H2023 with more like-for-like comparisons.
• Prodia (PRDA IJ) remains one of our top healthcare picks in Indonesia, with rising health consciousness driving higher demand for testing. Valuations are extremely attractive versus Indian peers. 

• Delta Thailand shares crashed over 20% in one day after its Taiwan parent sold a stake in the company.
• Given the small size of the stake sale, we believe the share sale by the parent represents an opportunistic sale to crystallize value from Delta Thailand’s high share price.
• We spoke with Delta Taiwan to update our model. Delta Taiwan continues to offer much better value than Delta Thailand, earning more than double Thailand’s net profit with similar growth.

• Our range for TSMC’s spread trading appears to be working. Premium has rebounded lately and we would Short if breaks above 9.8%.
• Our UMC trading range also appears to be working. We should Short if the premium increases slightly further to break 1%.
• One can consider Shorting ASE’s ADR premium at the current 10.8% premium level. After latest premium spike, risk appears skewed to the downside in the coming weeks.

• Kaspi.kz is the local super-app in Kazakhstan, with payments, marketplace, and Fintech as its three main business segments.
• The company has achieved strong topline and bottom line growth since listing with a RoAE >70% over the years and its share price having gone up ~3x.
• Key concerns arise from its political ties and future growth potential, given the country’s relatively low population/user size.

• VF Corporation delivered a mixed result in the past quarter, with revenues above anticipations, but it failed to surpass the analyst consensus in terms of earnings.
• While their on-time performance and in-stock percentages were both back in line with their expectations, lead times concluded the quarter at typical levels.
• Vans experienced a 22% decline in the quarter and was significantly impacted by the brand’s expected 40% decline in wholesale sales in the Americas.

• We have discovered something interesting from the innovative drug evaluations disclosed by the NMPA over the years. It’s recommended to establish rational expectations for the investment return of biopharmaceutical industry.
• We analyzed the different situations faced by Biotech in IPO/M&A process, so as to help investors make rational judgments. R&D team is likely to be cut regardless of the circumstances.
• We updated views on Huadong. Its old businesses dragged down valuation. It may need to wait until Huadong delivers better-than-expected sales/profit growth in weight-loss management business before further boosting valuation.

• This is a special one-time report on Emerald Holding that is creating ripples in the news circuit, courtesy of the exploration endeavors by its predominant shareholder, Onex.
• Emerald Holding, though operating with a low profile, has been wielding a silent yet significant influence over the events sphere.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is a special one-time report on PROS Holdings which has garnered attention due to speculation around a potential sale, as noted in a Reuters report.
• Despite its significant role and contributions to various industries, including airlines, PROS has encountered notable challenges, struggling to achieve profitability.
• Thus, the pertinent questions that arise are related to the feasibility of an acquisition of PROS Holdings and the potential premium that early investors might garner from such a transaction.

• China just announced game approval for September batch. The number of games approved is in-line with the pace of approval in recent month.
• Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Neither Tencent or Netease received approval for any game. Same thing happened for July batch.

• The latest Mate 60 Kirin SOC is a major accomplishment for the Huawei, SMIC combo
• SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV
• SMIC’s accomplishment is not reflected in its share price which lies midways between 52 week highs & lows

• After a heavy decline in ownership between 2016 and 2020, active Asia Ex-Japan managers are re-engaging with Baidu Inc.
• Ownership levels are at 4-year highs, with Baidu one of the key beneficiaries of manager rotation this year.
• Baidu is the 3rd largest holding in the Communication Services sector, but there a plenty of funds with a history of ownership who remain on the sidelines for now.

• Nike (NKE US) reported better than expected 1Q24 results this morning, with the stock up 8% in after market trading. 
• Nike’s inventories declined by 10% yoy during the quarter, which bodes well for Shenzhou Intl Group Holdings (2313 HK), as sales to Nike made up 30% of Shenzhou’s sales.
• Shenzhou is trading at 15x 2024E PE, compared to an average of 21x forward PE over the last decade. 

• Matahari Department Store (LPPF IJ) is the key player in the department store space in Indonesia with a significant transformation well underway to drive future growth and profitability.
• The company had a slightly disappointing Lebaran performance given some seasonal disparities but continues to make significant progress in revamping its merchandise mix, with a strong omnichannel yielding results. 
• Matahari Department Store (LPPF IJ) looks exceptionally cheap on 4.0x FY2024E PER, and with a dividend yield of 20.0% and with earnings expected to rebound in 2024E.

• Helped by the share in the incremental IPL media rights value, RPSG Venture’s (RPSGV) revenue from the sports business revenue jumped to INR 590cr+ in Q1FY24 vs INR 300cr+ YoY.
• Losses in the FMCG business narrowed to INR 63cr vs INR 90cr YoY and INR 70cr QoQ. FMCG revenues continue to be at around INR 400cr+ annualized run-rate.
• RPSGV’s BPO business, Firstsource Solutions (FSOL IN) saw stabilization in de-growth and margins. Margins expanded by 375bp during Q1FY24.

• kopi-C with Thakral’s CEO: “We’ve re-invented ourselves from VCRs to Drones” With the faster pace of development in sectors nowadays, adaptability and willingness to learn from others are crucial in business, says Thakral’s CEO Inderbethal Singh Thakral Building on the momentum, Thakral has invested in Skylark Drones, a start-up specialising in integrating drones in workflows in different industries.

• 4Paradigm, a self-developed AI platform and scenario-specific AI applications provider, has completed an IPO and raised net proceeds of ~HK$836M, excluding the over-allotment option. 
• Founder-Led AI unicorn priced its IPO at the bottom end of the range at HK$55.60 per share. Cornerstone investors agreed to purchase ~13.6M H shares at the IPO price. 
• I like the company’s leadership position in China’s fastest-growing decision-making AI market, large TAM for their enterprise-grade generative AI offering SageGPT and top-tier VC investors. 

• China Petroleum & Chemical Corp., the state-owned energy giant known as Sinopec, is making a bigger push into a renewable energy generated by heat within the earth as the country looks to diversify its sources of green energy.
• Sinopec’s push could serve as a catalyst for fast-tracking the exploration and use of geothermal energy, and spur the development of related technologies in the country, experts said.
• The company said on social media on Sept. 14 that it was expecting a “major development” in its geothermal heating segment and that it was on track to expand its service to more than 60 cities in over 10 regions in China by the end of the year.

• The return of higher crude oil prices could result in Texas Pacific Land (TPL) reporting higher than expected revenue in the third and fourth quarters of 2023
• TPL does not hedge its exposure to energy prices, which would have an outsize benefit when prices move higher like they have in the third quarter
• Crude oil production has been rising even though total rig count has also declined from levels reached earlier in the year

• Hengan International Group (1044 HK) and Vinda International (3331 HK) are both market leaders in China’s personal care industry.
• Hengan’s operations have greater exposure to sanitary napkins and diapers; whereas tissues account for 83% of Vinda’s revenue. Both companies have been impacted by an increase in wood pulp prices.
• Hengan is trading cheap; but Vinda’s bottom line is forecast to return to its glory days. Plus rumours of a possible takeover of Vinda continue to do the rounds. 

• We believe that Warren Buffett’s investments in Japanese trading companies have also positively impacted several Korean trading companies in the past three years. 
• We highlighted seven Korean trading companies three years ago including Posco International and their share prices are up more than 76% on average in this period. 
• Despite their outstanding share price performance in the past three years, there could be some significant headwinds ahead, as evidenced by the steep inverted yield curve.

• Seven Bank Ltd (8410 JP) is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.
• Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts
• Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines.

• ICICI Securities Ltd (ISEC IN) Turbulent Journey: From a disappointing IPO to a challenging delisting attempt.
• Delisting Plan and Shareholder Discontent: ICICI Securities Ltd (ISEC IN)  seeks to become a wholly-owned subsidiary of ICICI Bank Ltd (ICICIBC IN), facing resistance from minority shareholders.
• Uncertain Future: The outcome of the delisting hinges on the decisions of institutional shareholders like Life Insurance of India (LICI IN)  and the board’s actions.

• Kalbe Farma (KLBF IJ) is one of the key proxies for increasing healthcare penetration and health consciousness in Indonesia through prescription drugs, consumer health, and nutritional products.
• The company saw a solid sales performance in 1H2023 driven by prescription drugs. There was some lingering margin pressure from higher materials but this should abate in 2H2023.
• Kalbe Farma continues to develop its digital capabilities, as well as export markets helping to drive efficiencies and growth. Valuations remain below the historical average despite strong earnings recovery ahead.

• Micron’s FY4Q23 results beat expectations. The company expects to return to a positive margin by FY2H24, however projected a higher FY1Q24 loss than consensus expected.
• As suggested would be the case in our pre-results piece, the company said it sees memory prices bottoming and expects improving pricing and profitability ahead for the industry.
• While next quarter’s guidance may be weaker than some expected, we believe the key take-away is that Micron is seeing a memory prices bottom.

• NVIDIA Corp (NVDA US) drives King Yuan Electronics Co, Ltd. (2449 TT) stock price, but their growth is still limited in 2023F.
• King Yuan Electronics Co, Ltd. (2449 TT) acts as a buffer for Mediatek Inc (2454 TT) end demand during 2023F.
• Although it is not yet the time to reverse the downturn in 2023F, King Yuan Electronics Co, Ltd. (2449 TT) is expected to continue its upward trend throughout 2H23F.

• @Cosme continues to carve out a significant share of the cosmetics market, with record sales last year. 
• @Cosme appeals to a wide cross section of the population but this is about to get even wider once it starts selling via Amazon, its biggest shareholder.
• While there is debate about whether Amazon will increase its stake, what is certain is that Amazon will help drive iStyle’s sales growth.

• ARLO reporting better than expected third quarter results would rely on paid subscriber additions remaining on their current trajectory
• The pause in ARLO’s stock price creates greater upside potential as ARLO demonstrates its ability to generate positive earnings and free cash flow with each passing quarter
• ARLO has released a new line up of Essential cameras. ARLO had previously indicated it would update its Essentials cameras this year ahead of the holidays

• Fresenius Medical Care & (FME GR) reported accelerated organic revenue growth of 6% YoY in 2Q23, driven by both operating segments including sequentially stable treatment volumes in the U.S.
• Execution on turnaround plan translates into visible productivity improvements in care delivery segment achieving a Q2 margin at the lower end of the 2025 target margin band of 10–14%.
• The company now expects 2023 operating income to remain flat or decline by up to a low-single-digit percentage (previous target: remain flat or decline by up to a high-single-digit percentage).

• Since my bearish insight on August 11 (Li Ning (2331 HK):  Low Quality Earnings Beat), Li Ning’s share price has declined by 27% in less than 2 months.
• Anta’s share price on the other hand has been flat during the same time frame (Anta Sports (2020 HK):  Most Resilient In Industry Down-Cycles).
• In this insight, we look at if there are now any positive catalysts on the name, given the steep share price decline.

• Edelweiss reported a strong Q1FY24 earnings led by its asset management and ARC businesses. In particular, the asset management business is scaling up well for Edelweiss.
• In the ARC business, Edelweiss saw strong recoveries during Q1FY24. Also, gradually, Edelweiss is scaling up the retail ARC business.
• The credit business continues to see reduction in the wholesale loan book AUM. Asset quality remains stabilized and the co-lending model is helping Edelweiss to grow well.

• HKEX (388 HK) announced strong results, defying some worsening trends in volume, new listings, with quarterly profit growth rising from 11% to 28% to 34% YoY from 4Q22 to 2Q23
• Cost controls have been key to 31% 1H23 profit growth, with 0% growth depreciation, amortization, financing costs, and taxation, which can continue to support profit delta
• Revenue growth of 18-19% YoY in each of the past 2 quarters is partly driven by new revenue streams, which can offset some weaknesses in traditional metrics

• Nihon M&A Center’s share price has dropped more than 50% YTD despite several news media outlets reporting that there has been a surge in M&A activity among Japanese companies.
• At the same time, the Japanese government also issued new guidelines to promote more M&A activities in the nation to boost competitiveness.
• The no. of M&A transactions for the company has continued to grow however, value per transaction has been on a declining trend suggesting these deals are smaller in size.

• Mitra Keluarga (MIKA IJ) is in the midst of a recovery not yet reflected in headline numbers as the effects of inflated COVID revenues fade and core business takes off.
• The company is a key beneficiary of the new health bill allowing foreign doctors to practice in Indonesia given its best-in-class hospitals located in affluent catchment areas.  
• Mitra Keluarga Karyasehat continues to expand its hospital network, increase treatment intensity, and digitalise its operations. Valuations are attractive given the highest returns amongst its peers, with recovery in motion.

• Despite MercadoLibre’s non-benchmark status, ownership among active EM managers has reached new highs.
• MercadoLibre has been the beneficiary of significant manager rotation over the last year, with 131 funds increasing weights and 29 opening new positions.
• MercadoLibre is now the 8th largest holding on an average weight basis and has recently overtaken AIA Group as the largest overweight stock position across all regions.

• Axonics (AXNX US) believes that the U.S. sacral neuromodulation market is now worth of ~$800M, which is poised to double over the next five years to $1.6B.
• The company has been reporting superior revenue growth since 2020. Axonics raised 2023 revenue guidance to $358M, up 32% YoY. The company has become adjusted EBITDA positive in 2022.
• With superior product portfolio in terms of patient satisfaction, longer product life, and smaller size, Axonics is the stronger player in the U.S. duopoly sacral neuromodulation market.

• ACM Research is a bit of an oddball stock. It’s a US listing of a Chinese company, with 82% ownership of the Chinese subsidiary.
• The US listing is the parent company and has been in the crossfire of US-China trade tensions for years.
• It is probably the best Chinese Semicap company and has real orders with multinational companies, notably SK Hynix.

• Q1 tends to be a seasonally weak quarter for the exhibition business (BEC) and as a result, the revenues declined on a QoQ basis.
• However, in YoY terms, BEC revenues grew 75%+ and exceeded pre-COVID levels, i.e. the revenues are up 7% vs that in Q1FY20.
• The IT Parks business saw marginal improvement of 1% QoQ growth suggesting that the occupancy level is steady. Occupancy is 97% in Tower 4 and 82% in Tower 3.

• Fortinet Inc. delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
• Their quarter was marked by impressive total revenue growth of 26%, driven primarily by solid service revenue expansion exceeding 30% for the second consecutive quarter.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• The news that the Indonesian Government will target social commerce in Indonesia, as well as placing additional scrutiny on imported products sold through digital channels will impact TikTok hard.
• TikTok Shop will not be allowed to operate in Indonesia in its present guise given the requirement to split social media and e-commerce, which will benefit peers Shopee and Tokopedia.
• Sea Ltd through Shopee will be the biggest beneficiary given it will require less promotional spending in Indonesia and it has also re-entered the Indian market with FreeFire. 

• Because of significant business overlap, CK Infrastructure Holdings (1038 HK) looks very similar to Power Assets Holdings (6 HK). And CKI is coming up cheap on my monitor versus PAH. 
• Preceding my comments on CKI/PAH 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%.

• After more than doubling between early April and the end of August, Disco has dropped back. The outlook for demand and valuations suggest potential downside of 20%. 
• Operating profit was down 21% YoY in the June quarter on a 10% decline in sales. Management is guiding for 18% and 32% declines this quarter. 
• Over-Optimistic expectations regarding the pace and degree of cyclical recovery are being squeezed out of the share price. 

• Kanzhun or Boss Zhipin, is the largest online recruiting platform for white collar workers.
• Users exceeded servers’ capacity for the third time this year.
• The positive signal is that recruiters began to grow in 2Q23.

• Ryobi is a global manufacturer of high-quality aluminum die castings used for transmission cases, engine parts, and other vehicle parts
• Ryobi has recently gained market attention following an announcement that the company will produce large electric-vehicle body parts using “gigacasting”
• The stock is expected to benefit from EV adoption with improved earnings and increased market recognition

• Japanese inflation, which peaked at 4.3% in January 2023, gradually decreased to 3.5%, 3.2%, 3.3%, 3.3%, and 3.2% in the subsequent months of 2023.
• Inflation rates remained stable for most items, excluding Fuel, Electricity, Water, and fresh vegetables, indicating the persistence of cost-push inflation.
• In this insight, we analyze the recent quarterly performance of Yakult, Nissin, and Seven & I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.

• Gree Electric Appliances (000651 CH) trades at the lowest valuation multiple among the three major home appliance companies in China, at 7x forward PE and 7% forward yield.
• Investment case rests on stable earnings growth and high dividend payout and yield, which works well in a low interest rate environment in China.
• Resiliency of earnings for Gree is under-appreciated by the market, making rerating possible.

• Adidas has all the ingredients to win: “a great brand, credibility, authenticity, innovation, collaborations, talented people, and a global network”.
• Adidas operates in a highly attractive industry as it benefits from a structural growth from sports, which is playing an increasingly important role in more and more people’s lives
• Although 2023 is a transition year, the following years are very promising in terms of sales, margins, and earnings development.

• As Celltrion (068270 KP) approaches merger clarity, focus will shift to its base business, which remains solid. In Q2 2023, biosimilar, the flagship business, reported a 10% YoY growth.
• Operating profit margin expanded 440bps YoY to 34.9%. Margins are expected to improve further through increasing contribution from high-margin products such as Yuflyma (Humira biosimilar) and Remsima SC.
• Celltrion expects to receive approval for Remsima SC in the U.S. by end of October, which should act as a major catalyst. By 2030, merged entity targets revenue of KRW12T.

• Cosco Shipping Energy Transportation (1138 HK) has rallied sharply on strong earnings recovery, but this is too excessive. We think unrealistic expectation has been built on 2H23 earnings.
• Over the last three months, the spot VLCC rate has collapsed by 90%, indicating a weakened demand outlook. The resilient share price has clearly not yet factored in this movement. 
• The recent surge in crude oil is driven by supply, not demand, factors. This has led to a 14% increase in bunker price which will heighten CSET’s fuel bill.  

• Ajanta Pharma (AJP IN) reported better-than-expected profitability in Q1FY24, due to softening of raw material prices and normalization of freight rates. EBITDA margin expanded 300bps YoY to 26%.
• Revenue increased 7% YoY to INR10B, driven by superior execution in branded generics business and lesser price erosion in the U.S. 73% of the total sales came from branded generic.
• Management maintained mid-teen revenue growth and EBITDA margin guidance of ~25% for FY24. Ajanta Pharma has a positive business outlook due to growing branded generic business and niche U.S. launches.

• August outbound travel activity surged against easy 2022 comps, but offered no surprises
• The pace of outbound capacity rebuild slowed in August — what do airlines see ahead?
• Is there really “pent-up” tourism demand among Chinese consumers? We don’t think so

• Tsuruha is the latest retailer to come under attack from an activist investment fund. 
• As with Seven & I, the company fended off demands to shake up its board, crucially with the support of Aeon, its largest stakeholder.
• The move will likely lead to some careful reconsideration of how Tsuruha and Aeon could work together and may even lead to a Welcia/Tsuruha merger.

Triple Point Social Housing (SOHO) reported solid H123 results. With borrowing costs fixed, growth in indexed rental income partly offset the impact of credit loss provisions against its two unperforming tenants. Progress is being made in resolving these issues, and as there is no read-across to the wider portfolio, we forecast full dividend cover through FY24. Meanwhile, with the demand for specialised supported housing remaining strong, SOHO has entered a partnership with one of the leading providers in the sector.

Games Workshop Group (GAW) enjoyed another record year of revenue and profit growth in FY23 despite the more challenging macroeconomic backdrop and economy-wide cost pressures. Underlying volume growth is testimony to the appeal of the IP to its hobbyists. GAW entered FY24 with strong revenue momentum, implying that the June 2023 release of Leviathan, the 10th edition of its most significant property, Warhammer 40K, has boosted growth in Q124. Easing cost pressures should be supportive of underlying margin progress, albeit the recent strength of sterling provides a headwind to growth if it persists through the year.

• Fee income is down 33% in the most recent quarter which may have prompted the bank to realize gains up 63% in the period to preserve profit growth
• Quality of earnings is not strong, with more than half of the bank’s pre-tax income delta driven by realized and unrealized gains, with credit cost decline the other key driver
• Loss NPLs are now 26% of total NPLs, from 11% a few year ago, suggesting worsening credit metrics. Declining credit costs seem at odds with economy, NPL distribution.

• Singapore received over 9 million tourist arrivals from the start of 2023 to end August, a 204.5% year-on-year increase.
• The 10 most actively traded stocks in the tourism and hospitality sectors have booked net institutional inflows of S$2 million, and returned an average 2.3% total returns in the year-to-date ending 21 Sep.
• International visitor arrivals to Singapore in August dipped slightly to 31 million in August, due to seasonality and after school holidays.

• Palantir Technologies maintained a GAAP operating income in Q2 and achieved GAAP profitability for the quarter.
• In Q2, Palantir closed deals in the US commercial market in about 30 sectors, including pharmaceuticals, energy, consumer goods, utilities, health care, construction, automotive, transportation infrastructure, etc.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Airbnb delivered a solid result and managed an all-around beat in the recent quarterwith over 115 million Nights and Experiences Booked, resulting in revenue of $2.5 billion, marking an 18% year-over-year growth.
• Net income for the quarter stood at $650 million, reflecting a net income margin of 26%, the highest second-quarter margin ever achieved.
• Additionally, free cash flow reached $900 million, a 13% increase from the previous year, with a trailing 12-month free cash flow of $3.9 billion and a margin of 43%.

• 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).
• We add UMP Healthcare (722 HK) to our list of small/mid-cap names we track. The company has just recently declared its full-year results. 

• Micron results this week. The company is likely to call a trough for memory prices and highlight its development of the next most advanced type of HBM DRAM for AI. 
• Taiwan’s market fell, with previous AI-rally beneficiaries continuing to be some of the top losers. Interestingly, Taiwan AI-names outperformed Nvidia over the last three months.
• Intel’s Innovation Conference wrapped up last week, with its new Meteor Lake PC CPUs launching Dec 14th, which is positive for the PC supply chain. Intel shares fell slightly however.

• Micron’s earnings results will be released September 27th. We expect the company to describe a trough for memory pricing happening now and provide a positive outlook for rising prices.
• Micron and Nanya Tech have outperformed SK Hynix recently. Our ‘reversion catch up’ trade has worked. Going forward we believe Micron looks compelling on a relative basis.
• SK Hynix was ahead of peers developing HBM DRAM needed for AI. However, Micron could now convince the market it can catch up by focusing on the next advanced version.

• Besides Thailand and Singapore, Malaysia is one of the countries in South East Asia that are popular tourists destination. 
• Malaysia Airports Holdings (MAHB MK) is the airport operator that benefits from the tourism recovery in Malaysia. 
• Compared to Airports of Thailand (AOT TB) , Malaysia Airport is trading at a lower valuation, although it has recorded better operating numbers YTD. 

• While valuations for Lonking Holdings (3339 HK) do not appear expensive, there is a risk that the 2H23 earnings outlook is weaker than expected. This opens room for disappointment.
• There is no sign that domestic sales have picked up and Jul-Aug was still down significantly. Meanwhile, the strong export in 1H23 has not sustained in the last two months. 
• The weaker A-share market so far in 2H23 also does not bode well for investment gains, which are important contributors to the impressive earnings rebound in 1H23.

• First, let’s talk about Huawei. I want to highlight how lackadaisically the export restrictions have even been applied.
• BIS granted validated end-user status to SMIC in 2007, which meant that as late as 2020, multiple SMIC entities were still receiving tools from American companies.
• BIS got lobbied by tool makers to undo commerce control list regulations in 2018. Also, AMEC has outright stolen tools from US companies.

• Express industry pricing fell by -5% in August, but some companies’ ASPs fell by far more
• Reportedly, we could see movement on planned J&T Express and CaiNiao IPOs this week
• We think SF Holding should outperform its “plain vanilla” express peers in medium-term

• In 2Q23, Lotus Pharmaceutical (1795 TT) reported 53% YoY growth in revenue to NTD4.4B, mainly driven by strong uptake of Lenalidomide and Suboxone in America and branded products in Taiwan.
• Lotus reported an EPS of NTD4.85 for Q2 2023, 285% above EPS of NTD1.26 reported for the same quarter of 2022. This result beat the average analyst’s estimate by NTD0.64.
• Lotus has acquired exclusive global right to develop and commercialize suicidal bipolar therapy NRX-101 and obtained approval for new branded oncology drug Zepzelca in Taiwan.

• The national centralized procurement of high-value medical consumables such as intraocular lens (IOL) and sports medicine medical consumables is about to begin. We listed the companies that could be affected.
• The instability of policies seems to be a consensus among investors regarding China healthcare. However, if truly understand the logic behind policy changes and industry shifts, investors will maintain optimism.
• We analyzed the key points of Biokin. Its valuation is ridiculously high considering the current pipeline situation and commercialization outlook. We think the bubble will eventually burst (e.g. 50% downside).

• On September 21, a debt restructuring agreement was reached with debt holders of Sunac China, in which part of the agreement included Sunac Services shares.
• The debt restructuring for Sunac China should provide a positive feedback loop to the sentiment and fundamentals of Sunac Services.
• The core property management business (86% of sales) grew 8% yoy in 1H23, with total gross floor area growing by 12% yoy. 

• There is a misconception that “MediaTek is gaining the Google TPU v7 project entirely in 2024-25F.”
• Transsion Holding is placing a new order with MediaTek in 4Q23F, which is larger than ~25mn and has the lowest ASP.
• Our current view remains bearish on smartphone demand for 2H23F.

• 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) 2023 approval and subsequent 2024 launch of DW-5LBT lidocaine patch for treatment of neuropathic pain in the US, and 4) clinical trials in 2024 in Japan and application for approval in 2025 of regenerative cell medicine DWR-2206 [NEW].
• Coming into the 3Q, DWTI announced 2 updates not included in its “Business Plan and Growth Potential.”
• On 7/13, DWTI announced the development plan for regenerative cell medicine DWR-2206, aiming to submit a notification of clinical trial at the end of 2023, start clinical trials in 2024, and submit application for approval (NDA) in 2025 (using the expedited conditional and term-limited approval system for regenerative therapeutics).

• PBOC and NAFR included Bank of Nanjing in its latest D-SIBs list, increasing the total D-SIBs to 20
• 13 benchmarks were used to assess the D-SIBs using 1H23 data
• All D-SIBs fulfilled their additional capital requirements as of 1H23, but the buffer is wearing thin for some especially in view of the difficult economic environment 

• Hyatt Hotels Corporation’s results were a major disappointment as the company failed to meet Wall Street’s revenue and earnings expectations.
• The ongoing transformation of Hyatt is gaining momentum, with second-quarter results reinforcing their confidence in executing the strategy outlined during the Investor Day in May.
• Hyatt has set ambitious targets, aiming to achieve $750 million in free cash flow and an 80% asset-light earnings mix by 2025.

• Splunk shares outperformed in 2023 and rose ~69% as total ARR exceeded $4B, operating loss narrowed, and FCF margin improved. The company executed well to drive long-term durable growth.
• Over the past 2 years, Splunk transformed itself into a cloud company. In 2022, WSJ reported that Cisco made a $20B+ takeover offer. However, no deal was on the table. 
• Following M&A rumors, the company’s cloud transition, and strong fundamentals, Cisco offered a $157 per share to acquire Splunk in a $28B mega all-cash deal on September 21, 2023. 

• We are raising our estimates following an upbeat conference call and follow-up with SCS management.

• Our adjusted 3QFY24 estimate, now at $0.25, is up from $0.21 and at the midpoint of guidance.

• Full-year FY24 guidance is now $0.80-0.90. Our new FY24 EPS estimate is $0.88, up from $0.71 pre-release and near the top end of guidance.

• IPG Photonics Corporation delivered a mixed set of results for the previous quarter, with revenues below the analyst consensus.
• They achieved substantial revenue growth in the welding and cleaning applications, led by robust e-mobility and handheld welding solution sales.
• Additionally, 3D printing and solar cell manufacturing applications have seen increased revenue as a result of better investments in these industries.

• Teleflex managed to exceed analyst expectations in terms of revenue as well as earnings.
• Adjusted earnings per share for the same period were $3.41, reflecting a 0.6% increase compared to the previous year.
• The company observed a continued stabilization in hospital staffing, positively affecting second-quarter revenue growth, particularly in products tied to hospital settings.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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