Equity Bottom-Up

• Coinbase sees the looming opportunity in the global crypto futures & derivatives market. It’s positioning itself to capitalize on a market that’s been hollowed out over last 12-18 months.
• We explore 3 key areas of Coinbase’s business that we believe Wall Street is overlooking. These include: Coinbase International, ETF Spot approvals, and Base Chain
• We estimate Coinbase has the potential to realize additional top-line revenue in the range of 15-20% on the low-end to +150% increase on the high-end over the next few years.

• From 200 properties, the Cambodian government now only allows 87 shrinking capacity but increasing footfall for existing properties like Nagaworld in Phnom Penh.
• Nagaworld enjoys a moat in metro Phnom Penh–this supply reduction expands its base.
• H1 performance strong, reduced national capacity will contribute to revenue gains from a wider geography for the largest single integrated luxury resort in Cambodia.

• Global Digital Niaga (BliBli) continues to stand out from peers given a differentiated omnichannel model plus a greater portion of 1P but 3P sales are growing driven by Tiket.com.
• TPV growth surpassed revenue growth in 1H2023 driven by Tiket.com but take rates and gross margins improved, as the company cut back on promotional spending and improved cost efficiencies. 
• BliBli booked organic growth with more users and a significant pick-up in the average order value, partially driven by Tiket.com. 

• Visa-Free travel for Chinese tourists is certainly a boost for the Airports of Thailand (AOT TB) .
• Compared to 2019 operational numbers, the 2023 number is still very low despite the large YoY gain thanks to the low base in 2022. 
• The valuation is still high as the share price has run ahead of its fundamentals.

• Remitly (RELY) offers remittances services with 5m active customers, in over 170 countries, with 4 billion bank accounts, and 4,800 corridors, mostly to persons in US, Canada. 
• Revenue growth is strong at 49% YoY in 2Q23 and averaging 43% YoY for the preceding 5 quarters, with active customers up 474,000 in 2Q23 QoQ vs 371,000 in 1Q23
• Costs remain high, GAAP earnings are in loss, but this is due to stock-based compensation; adjusted EBITDA is now USD20.4m in 2Q23 from an adjusted EBITDA loss YoY

• Novartis’ return of PD-1 to BeiGene may actually have nothing to do with TIGIT project. Long-term strategic adjustment and decreasing value of tislelizumab to Novartis could be the core reasons.
• Abandoning PD-1 is a simple decision for Novartis, but not for BeiGene, who will do its best to promote FDA approval for tislelizumab, aiming to expand internationalization and stabilize valuation.
• We advise investors not to focus too much on whether or not tislelizumab will eventually get FDA approval,because the actual peak sales tislelizumab can contribute to BeiGene could be disappointing.

• The upcoming demand is expected to reduce in 4Q23F, with the most obvious decline in 40nm and 8″ demand.
• Wafer ASP is expected to remain relatively stable until 4Q22F, even though revenue is not anticipated to pick up in 1H24F.
• We expect the market to reach its lowest point in the first half of 2024F. The most likely scenario indicates a potential recovery around the third quarter of 2024F.

• While Yamazaki Baking (2212 JP)‘s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.
• From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.
• Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.

• Despite the absence of special demand related to COVID-19, PHC Holdings (6523 JP)’s Q1FY24 revenue of ¥81.3B was at the same level as Q1FY23 due to favorable Fx impact.
• Operating profit declined 16% YoY to ¥1.7B, due to lower profit in the diabetes management business and a drop in the volume of PCR testing.
• PHC guided for FY24 revenue of ¥355.5B and operating profit of ¥29.3B (+47% YoY). The company expects FY24 net profit of ¥15.6B from a net loss of ¥3.2B in FY23.

• British chip designer Arm Holdings Plc remains committed to China and to working closely with its mainland-based partner following its $4.87 billion IPO, according to chief executive Rene Haas.

• The Softbank-backed firm floated in New York last week via the world’s largest public offering year-to-date. But that has not affected its strategy globally.

• Shanghai-headquartered Arm Technology (China) Co. Ltd., also known as Arm China, operates independently and is the exclusive licensing platform of Arm’s global intellectual property in China

• The pivot in capital allocation plans of Whitehaven Coal (WHC AU) by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us. 
• We think the increase in capex spending in a frothy pricing environment and focus on M&A for spending the 2.6 bn of cash is a coin toss on capital allocation. 
• We prefer names that keep their capital allocation plans consistent, e.g., Indo Tambangraya Megah (ITMG IJ), and would take money off the table here.

• Himax shares have been in downtrend recently, falling 20% since the end of June vs. Novatek up 12%. We met with the Himax for an update.
• Himax at historically very cheap level relative to Novatek, both are exposed to similar display end-markets. Himax trades at just 1x sales on an absolute basis.
• We have a Structural Long view for both stocks, however from an arb perspective see a Long Himax vs. Short Novatek trade opportunity given the large share price divergence.

• Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction
• Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23
• Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.

• Intel kicked off its Innovation conference and announced that its new PC processors with built-in AI coprocessors would launch December 14th. This is positive for the PC supply chain.
• Many types of existing software that used to require expert users can become more valuable with AI capabilities; we believe tomorrow’s AI PC killer apps could be in plain sight.
• Himax Long vs. Novatek Short. Himax is at historically very cheap level relative to Novatek, yet both are exposed to similar display end-markets.

• We reiterate our buy case on Infineon.  The investment case just gets more exiting at these levels
• Infineon is in an excellent position to capture growth in silicon carbide, now expanding in Kulin with Phase II. 
• The Company could generated €7bn in revenues by the end of the decade (up from €3bn) from Silicon Carbide.

• Gilead Sciences Inc. delivered mixed results for the previous quarter, with revenues above the analyst consensus.
• Total product sales, excluding Veklury, displayed significant growth, extending the company’s streak of seven consecutive quarters with year-over-year growth in its base business.
• Despite an anticipated decrease in Veklury sales due to reduced hospitalizations, the total product sales, including Veklury, also showed a substantial year-over-year increase.

• Amazon.com, Inc. delivered positive results and managed an all-around beat last quarter.
• The company has reported revenue of $134.4 billion and operating income of $7.7 billion.
• These are significant contributing causes to AWS’s recent growth and the over twofold increase in revenue over other service providers.

• Paramount Global managed to exceed analyst expectations in terms of revenue and earnings, demonstrating sustained focus on corporate spending containment and good momentum in its D2C sector.
• Affiliate and subscription revenue increased by a healthy 12% in Q2 and again showed how the combination of traditional and streaming led to net growth for the business.
• Paramount’s 47% increase in D2C subscription revenue was mostly attributable to Paramount+, where the company saw subscriber growth, increased ARPU, and lower churn rates.

• Cloudflare, Inc. delivered an all-around beat in the previous quarter.
• The second quarter’s total revenue reached 32% year over year to $308.5 million.
• In the quarter, Cloudflare received 10 million active worker applications, a 250% increase since December and a 490% increase year over year.

• TSMC’s ADR premium/discount appears to have shown a clear decline in trading range recently, down from the 10% level.
• UMC & ASE joined corporate days today in Taipei, which could be supportive of their premiums in the near-term.
• We provide spread levels we view as compelling from a risk/reward perspective.

• Activist investor, Strategic Capital, has taken a significant 5% stake in the underperforming steel company
• Yodogawa stacks up in line with the sector on operating metrics but its under leveraged balance sheet has crimped Returns on Equity and valuations
• We expect that the activist will seek to improve the company’s ROE through an improvement in capital allocation. That is bullish

• Seven & I Holdings (3382 JP)‘s share price has remained below ¥6,600 since the end of its bull run in March 2023.
• Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
• Seven & I faces valuation risks, trading near peak multiples with diminishing growth prospects.

• In this insight, we conducted fundamental analysis on Longfor, which has always been perceived as the best Chinese developer among all private players
• However, since Chairlady resigns due to personal reasons, and given the policy clamp down, we think Longfor may not be able to sustain its competitive advantages over time
• Longfor was trading at a premium to CRL and COLI, we believe the valuation premium should narrow over time.  On a relative basis we are not positive on Longfor

• Booking Holdings Inc. managed to exceed analyst expectations in terms of revenue as well as earnings.
• The 268 million hotel nights booked in the second quarter increased by 9% year over year, and the $39.7 billion in gross bookings, the largest quarterly total ever, surged by 15% year over year.
• The positive demand environment caused hotel nights and revenue bookings to surpass the company’s previous projections.

• During 1H24 CGF expects to sell its bank for ~AUD36m which could include a AUD11m gain and allow to free-up bank capital of around AUD40-50m.
• Return on capital is now at the highest it has been since FY10 at 6.2% with a substantial 160bps increase in normalized ROE in 2H23 YoY to 13.1%
• 85% market share of annuity FUM from 50% about 10 years ago, operating in system with strong forced savings in superannution funds now at AUD3.5tr up 91% over 10 yrs.

• Last week, the trio of DBS, UOB and OCBC averaged 3.4% gains, bringing their average 3Q23-to-date total return to 8.7%.
• The 3Q23-to-date has seen the trio of DBS, UOB & OCBC report combined 2Q23 Net Interest Income (NII) of S$8.26 billion, marking the third-consecutive quarter that combined quarterly NII has been above the S$8.0 billion mark.
• DBS Group Holdings (DBS), United Overseas Bank (UOB) and Oversea-Chinese Banking Corporation (OCBC) also moved in tandem averaging a 4% gain on the week.

• Dropbox, Inc. delivered a positive result and managed an all-around beat in the last quarter, driven by FormSwift’s revenue growth and some improvement in the company’s SKUs, as the development it observed in late Q1 carried over into Q2.
• In the quarter, the company launched Dropbox AI.
• Furthermore, Dropbox introduced a new activation homepage to simplify admins setting up their teams and becoming familiar with the product.

• Bank Negara Indonesia (BBNI IJ)continues to focus on growing the quality end of its corporate loan book, and de-risking its smaller sized commercial loans, whilst growing consumer exposure.
• The bank’s digital initiatives remain core, with strong growth in mobile transactions by value as well as the number of users, whilst BNI Direct is driving digitisation of business customers.
• Hibank has launched, growing FMCG related loans fast, with the help of Mayora Indah. BNI valuations remain attractive, with the bank trading on 1.2x FY2023E PBV with 15% ROE.

In H123 Esker reported strong growth in revenue (+16% y-o-y in constant currency (cc)) and bookings (+18% y-o-y cc) but this was outweighed by increases in costs, resulting in an operating margin decline. The company is taking measures to counter this, both in its contract pricing and by slowing the pace of hiring. While FY23 revenue outlook is unchanged, management reduced the mid-point of operating margin guidance by 1% to 12%. We have conservatively reduced our operating profit forecasts, which for FY23 were at the upper end of the new guidance range.

• Year to date, Intel’s data center revenues are down 28% YoY. 
• By comparison, AMD’s year-to-date revenues are down just 6% YoY
• Why is AMD performing so much better than Intel in the data center and will their market share growth continue?

• AviChina Industry & Technology H (2357 HK) is expected to see sustained profit upturn in 2H23 following a 26.8% growth in 1H23. Continued geopolitical turmoil will still benefit it.  
• All its listed A-share subsidiaries recorded a pick-up in earnings momentum in 2Q23, and this indicates solid underlying demand as well as the impact of product developments.
• Avicopter PLC (600038 CH) has seen volume and price recovery after product portfolio refinement while new products have stimulated the ancillary system and related business.

• LIC Housing Finance (LICHF IN) posted a strong Q1FY24, despite an adverse one-off reversible impact. Q1FY24 PAT came in at INR 1319cr vs INR 1191cr QoQ and INR 927cr YoY.  
• With the interest rates stabilizing, housing demand has been improving. LICHF’s asset quality has been also improving, adjusted for one-off technical glitch related deterioration.  
• At around 6x P/E based on our projected FY24E PAT, LICHF is available quite cheap and has potential to more than double from the current levels. 

• INSTITUTIONS were net buyers of Singapore stocks over the five trading sessions through to Sep 14, with S$18.4 million of net institutional inflow, while 24 primary-listed companies conducted buybacks with a total consideration of S$25.9 million. led the share buyback consideration tally, buying back 1.2 million shares at an average price of S$12.58 per share, followed by which bought back 5.36 million shares at an average price of S$1.13 per share.
• The five trading sessions saw 60 changes to director interests and substantial shareholdings filed for close to 30 primary-listed stocks.

• The National Health Commission and The People’s Daily made “mild” statements about anti-corruption in China healthcare, bringing investors “new hope”. However, there could be a “misconception” regarding the anti-corruption movement. 
• There was news that some type 2 vaccines could be converted to type 1 vaccines. Even though some vaccines will be affected by this policy, others will not.
• Kangtai’s had strong 23H1 net profit, but it has little investment value due to lack of core R&D strength.Kangtai’s vaccines face the risk of being included in national immunization program.

• We foresee a potentially higher rebound in the near future, resulting in higher growth rate in 2023F for TSMC.
• Due to the ramping up of production for 3nm, the GM is expected to decrease by 2-3%. However, there is an policy to add up at least 2% for TSMC. 
• The CoWoS is still being closely watched because of NVDA’s demand, and it will take time to get TSMC ready to satisfy the likely demand for CoWoS.

• CSL Ltd (CSL AU) expects strong growth in immunoglobulin franchise to continue following record plasma collections. Optimizing plasma collection costs, improving yields, and new products launches should support margin recovery.
• In June 2023, first patient has received Hemgenix in the U.S. With global annual peak sales estimate of $2.4B in 2030, Hemgenix is a compelling opportunity for CSL.
• CSL Seqirus is anticipated to deliver another strong year driven by demand for its differentiated products. The company began influenza vaccine shipment across the U.S. for 2023–24 influenza season.

• Nine months ago I first wrote on Anycolor (5032 JP). I thought the guidance growth pattern and valuations remarkable. Results handily beat guidance. Now we’re in Year 2 of guidance.
• After the first full year listed, FY2024 guidance was for +30% in revenue to ¥33bn, and +35% growth in OP. For Q1, reported yesterday, actual results were +51% and +91%.
• The stock is popping this AM, but it is still cheap vs growth rates and margins. There are, notably, still “context issues” here. They merit some consideration (and investigation).

• XL Axiata (EXCL IJ) continues to impress with its growth in revenues and data, driven by its 4G focus and high-quality network, with improving margins at the same time.
• The XL convergence story continues to build, with convergence penetration increasing but the real kicker wILL come once the restructuring with Link Net completes but benefits are already accruing. 
• XL Axiata remains the purest data player in Indonesia, with convergence set to be the next driver. Valuations are attractive on 4.4x FY2024E EV/EBITDA with strong growth ahead. 

• Since the inclusion in the Southbound Stock Connect 7 trading days ago, ZJLD Group (6979 HK)’s stock price is up 16%, suggesting strong interest from the southbound investors.
• ZJLD has one of the best channel inventory and distributor perception among all the sauce aroma baijiu brands currently.
• Expect further share price upside mainly from southbound buy, as the baijiu sector is one of the most followed sectors in A-share.     

• In the face of mounting American political and regulatory pressure, the Chinese video app TikTok officially launched an online shopping feature in the U.S., aiming to cash in on its popularity among 150 million American users.
• TikTok Shop will give brands, merchants, and creators the tools to sell directly through content on the app, the ByteDance Ltd.-owned enterprise said in a press release.
• Users will now find a “Shop” button prominently displayed in certain videos and can buy tagged products directly from videos and livestreaming.

• Huawei Technologies Co. Ltd. and its auto partner Seres Group Co. Ltd. (601127.SH +10.01%) launched an upgraded version of the Aito M7 electric SUV on Tuesday, marking the latest push by the tech giant into China’s highly competitive auto market.
• With a starting price of 249,800 yuan ($34,280), deliveries of the luxury electric vehicle (EV) will begin immediately, Huawei said in a press release. The company is also offering a discount of 33,000 yuan to customers who place their orders before Oct. 7.
• The model, which comes in five variants, is also equipped with Huawei ADS 2.0, the latest generation of its automated driving software and a digital cockpit powered by its Harmony operating system, the company said.

• Mitsubishi UFJ Financial Group Inc. delivered a solid result and managed an all-around beat last quarter.
• Despite increased G&A expenses, the company managed to rebound in terms of NOP, reaching a level before the introduction of negative interest rates.
• We give Mitsubishi UFJ Financial Group Inc. a ‘Hold’ rating with a revised target price.

• JD.com Inc. managed to surpass the revenue and earnings expectations of Wall Street.
• Service revenues grew, of which marketing and marketplace revenues were up.
• During the quarter, JD.com noticed strong user engagement trends, including higher purchase rates and ARPU on its app.

• Pegasystems delivered disappointing results as the company could not meet Wall Street’s revenue and earnings expectations.
• Pega achieved a remarkable feat in the first half of 2023 by producing $114 million in cash flow from operations and $123 million in free cash flow.
• The free cash flow dollars produced in the first half of the year was $123 million.

The managers of Baillie Gifford US Growth Trust (USA), Gary Robinson and Kirsty Gibson, aim to invest in exceptional US businesses with the potential to grow substantially faster than the market and deliver exceptional returns over the long term. Businesses capable of such growth tend to operate at the cutting edge of technology-led change, and USA has exposure to companies focused on artificial intelligence, space travel and drone delivery. The fluctuating fortunes of growth stocks over the past couple of years, combined with some de-rating of USA’s unlisted holdings, mean that USA’s performance has undershot market returns during the first five years since inception. Cumulative returns over the five years ended August 2023 totalled 49.1% in NAV terms, lagging the market return of 73.8%. However, the managers believe the ‘phenomenal’ fundamental performance of many portfolio holdings, combined with their very good growth prospects, augur well for the company’s ability to realise its return target over the longer term.

• We retain Bank Negara as our top pick for its deep value attributes of low PE multiples and its attractive PEG ratio relative to sound returns and strong liquidity metrics
• We also stick with our positive call on Bank Mandiri, for its premium returns and undemanding PE multiples; Bank Central Asia, albeit fully valued, has impressive liquidity and return metrics
• Bank Rakyat again registered worsening pre-provision returns in 2Q23, even if there was QoQ cost of risk relief; its loan mix implies a high structural cost of risk going forward

• Toyota Group autoparts maker Aisin Seiki (7259 JP) today announced a new Medium-Term Plan. They plan to shift their business away from “entrusted” business, towards BEV, Brakes, and “Safe/Comfort Entry”
• They aim to grow revenues 25% from 2021 to 2025 and an additional 10-20% by 2030. 
• They also aim to improve investment and capital efficiency, and that’s where we can look at the interesting possibilities.

• Aisin’s stock price rose by +8% today after the company held its MTP strategy briefing
• Aisin to restructure its business portfolio and focus on new growth areas for EV’s – eAxle, battery frames, and braking technologies
• Aisin aims to generate ¥400b from balance sheet reform – asset sales, inventory management and sale of cross-shareholding.

• Ryohin Keikaku (7453 JP) experienced a 45% leap in its share price since its last earnings announcement, primarily fueled by a positive OP surprise of nearly ¥3.0bn.
• Our analysis indicates the potential for another big earnings beat in FQ4, primarily because the consensus remains conservative in its cost assumptions.
• Additionally, we anticipate that the company will provide FY24 OP guidance in the range of ¥45-50bn. This would constitute a significant upside surprise compared to the current FY24 consensus.

• Perfect Medical Health (1830 HK) will report its H1 2024 results in late November 2023. We expect slow China growth to result in revenue/profit growth of 10%/15% YoY. 
• The company will continue to open outlets in HK, and the plan is to open ten by the end of FY24 (3-4 at the end of H1FY24e).  
• The stock trades at 12.7x PE FY24e, with an 8.7% dividend yield and around 16% of the market capitalization in net cash and investments (~800 mn HKD). 

• Health And Happiness (H&H) (1112 HK) has transformed from an infant formula company to a nutritional supplements company.
• The company currently trades at 5.3x 2024E PE – still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.
• As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually. 

• NEC’ is up almost 90% year-to-date to 16X EPS guidance for this fiscal year and 12x targeted EPS three years out. It now looks fairly valued.
• Profit growth is led by IT Services for the private and public sectors, with strength in finance and system integration. 
• Social Infrastructure is growing, but in the red. Aerospace and national security are profitable, but margins are low.

• Snap-on Incorporated achieved decent growth in both sales and profitability in its most recent result.
• Moreover, Snap-on’s success in the Tools Group highlighted its ability to innovate and cater to customer needs effectively.
• Snap-on’s customization and profitability, particularly in low-volume production, have been a driving force behind its growth.

• Our estimations for FY 2023 annual revenue range at around $8,023 million and for 2024 at around $9,219 million.
• The company’s annual revenue reached $6,622 million in 2022 compared to $5,106 million in 2021, post- ing an increase by 29.69%.
• Constellation Software’s gross profit for FY 2022 was $2,271 million, increased by 44.74% compared to $1,569 million for the corresponding period of 2021.

• Japan has a solid if stagnant footwear market, yet it only has one compelling nationwide footwear retailer.
• ABC Mart continues to outperform its smaller rivals, with little competition as its main rivals decline further.
• The real competition is coming from brands selling directly to customers via their own stores and online – and low-cost retailers nipping at its heels from below.

• After Sun Hung Kai Properties (16 HK) released its interim results, shares declined 12.7% intra-day this past Monday, touching a 14-year low, before closing down 9.5%. 
• The same day, the Kwok family increased their stake in the company, purchasing ~2.2mn shares for ~HK$175mn.  
• SHKP is currently trading a trailing P/B of 0.36x versus its five-year average of 0.54x, and the five-year average preceding Covid of 0.68x.

• GTVs for Yahoo’s shopping division fell by 8% in 1Q2023. 
• Although this was expected and gross profits did improve, the downturn reflects deeper concerns.
• Even the group’s Zozo fashion platform are much more slowly.

• SMFG can benefit like peer banks from BOJ policy change, but less so than MUFG, while at the same time, there does not appear to be a strong alpha story
• ROE and ROA for SMFG show now expansion over the years, and this is stark contrast to MUFG, part of this appears to be due many weak subsidiaries
• Credit costs are now averaging 23bps over the past four quarters vs 13bps during 1Q18 to 4Q19, not improving credit metrics like many others, with high write-offs.

• Mediatek shares rallied recently on high volume and are approaching their 52-week highs. We however warn investors to beware emerging news of Huawei/SMIC’s chip capabilities.
• Mediatek announced last week its flagship mobile phone chip was preparing for high volume manufacturing with TSMC’s most advanced 3-nanometer process node.
• However, we believe Huawei’s recent Mate 60 chip development could pose a threat to Mediatek’s market share outlook. We downgrade our rating from Structural Long to Neutral, target price NT$815.

• Shougang Fushan Resources (639 HK) experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates. 
• Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing. 
• We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents  FY22: 43 cents).

• In 1H23, Otsuka Holdings (4578 JP) reported revenue growth of 16% YoY to ¥947.5B, ahead of the guidance of ¥867B, as all operating segments recorded increased revenue.
• In 1H23, revenue from pharmaceutical segment grew 21% YoY to ¥637.9B, mainly driven by the growth of the four global products, which contributed 49% of segment revenue.
• Encouraged by a better-than-expected 1H23 result, Otsuka has raised 2023 guidance. The company has increased revenue, operating profit, and net profit guidance by 6%, 17%, and 19%, respectively.

• The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price. 
• We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
• Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive. 

• India Supply Chain Rising — Hon Hai is helping Apple launch with India-made iPhone 15’s on Day 1. These days, Apple likely wants to diversify away from China even faster.
• ARM IPO prices at high end of range, is backed by TSMC, Apple, Nvidia, Samsung, Intel.
• We downgrade Mediatek: After rally, beware of Huawei/SMIC chip capabilities causing market to realize Mediatek could lose market share.

• Longboat is acquiring Topaz Number One, its partner in Malaysia for an initial consideration of US$0.1 mm in shares in Longboat.
• The transaction will boost Longboat’s WI in the Production Sharing Contract over Block 2A offshore Sarawak from 36.75% to 52.5%.
• The 15.75% WI in the block is the only asset of Topaz Number One.

• News broke yesterday that Daniel Zhang is no longer leading Alibaba (ADR) (BABA US)‘s Cloud Business unit.
• The statement from Alibaba’s current chairman, in which he mentions that Zhang would “switch to a different approach and continue to fight alongside us at Alibaba” raises skepticism.
• We also think that the $1.0bn Alibaba committed to a technology fund could be seen as a form of compensation to ensure Daniel Zhang’s silence.

• The biggest Japan banks by assets, in spotlight as near ending of negative interest rates, with lowest LDR, so highest bonds, cash, can see major benefit from YCC relief
• Years of low ROE at 5-7% seem behind MUFG now with 12-17% in past two quarters, where leverage is not out of control, with cost improvements key
• Loss loans down 29% over past two years, can support low credit costs, which dropped sharply from 81bps to 15bps from 3Q23 to 1Q24, possibly moving to reversals

• Life is good for the NIFTY Index (NIFTY INDEX) at 20K. Strong domestic sentiment is likely to continue. 
• Paytm (PAYTM IN) posted strong operating metrics for August, but this will be the second last update as the company moves to quarterly disclosures for reasons not completely justified. 
• Other Ideas discussed include Poonawalla Fincorp (POONAWAL IN) , Dabur India Ltd (DABUR IN) and Landmark Cars along with upcoming IPOs. 

• It’s a “show me the money” versus a “build it and they will come” approach
• New fab construction will be based solely on customer commitments.
• It’s a curiously cautious plan and highly unlikely to succeed

• IHI’s share price has declined 16% on news that Pratt & Whitney would need to ground more planes due to problems with its PW1100 turbofan engines
• IHI has a 15% share of the revenue and risk from this program. The new engine was expected to be a major earnings driver over the next several years
• We believe that IHI will be forced to revise down OP guidance to a loss. The bigger impact could be on FCF and future capex plans. 

• Foshan Haitian Flavouring & Food (603288 CH), the largest condiment player in China is facing structural weakening of moat from a changed operating environment post-COVID. 
• Both catering and home consumption segments are faced with structural growth pressures that are difficult to solve for the company. 
• Expect further earnings weakness and derating in valuation multiple in the near term. 

• Japan’s Universal Entertainment’s Okada Manila casino unit removes another obstacle to its long quest to transform into a NASDAQ traded IPO.
• Judge rules that Okada is free of any obligations to US Space 26 Capital Partners.
• UE’s goal to take the casino public, despite expectations that the Spac will appeal, is likely to move forward toward identifying a new partner.

• The job openings in the US declined to 8.827m in July 2023, marking the lowest since March 2021, and falling well below projected 9.465m job openings for the month.
• On the other hand, web traffic on Recruit Holdings (6098 JP) ’s job platform Indeed has declined in July compared to June 2023 while it has improved slightly on Glassdoor.
• HR Tech segment’s top line growth declined 9.1% YoY in 1QFY03/2024 and the company has shifted into a new pricing model which we think would further impact segment’s growth.

• Dollar General Corporation’s results were a major disappointment as the company failed to meet Wall Street’s revenue and earnings expectations.
• Due to higher average borrowing amounts and interest rates, interest expense climbed to $84 million in Q2 from $43 million in Q2 of last year.
• Dollar General has experienced a significant drop in its stock value this year, sparking speculation about potential activist investors eyeing the company.

• We think the mild recovery is driven by the delayed orders in Jul. and Aug, thus expect transaction volume to be flattish MoM in Sep.
• We think the recovery is on-track and expect Oct. volume to begin recovery and expect more meaningful rebound in Mar.-Apr. 2024, supported by 1) strong leading indicators from property agents, 
• 2) refer to the recover trajectory in 2014-2015.  We maintain the stock as BUY rating and maintain TP at US$24/ADS.

• The street’s expectations for Meituan’s bottom line have gone too pessimistic for 2023 while in the meantime too optimistic for 2024 and beyond.
• Besides the macro weakness, we see the company’s growth increasingly be constrained by the business model itself, resulting in only 14% CAGR for bottom line over 2023-25 by our calculation.
• We take investors’ indifference to Meituan’s strong bottom line growth for 2023 as a signal they are discounting the sharp deceleration kicking in from 2024. Stay neutral.

• After announcing full year results, one investment bank revised down share price target excessively (we will look at reasons).  On Monday, HSBC also announced adjustment of mortgage rate cap
• These 2 events caused a sell-off in the property sector, SHKP, in particular, was down 10% and trading at HKD80 per share. We think it is overdone
• At this valuation, market is pricing in super bearish scenario.  At 0.38x P/B, I think it is a bargain to buy now.  It is a value trade.

• Our updated NAV analysis of Doosan Corp (000150 KS) suggests implied market cap of 3.6 trillion won or target price of 217,392 won which is 47% higher than current price. 
• To value Doosan Corp, we have assumed a market value of 2.8 trillion won for Doosan Robotics (454910 KS).
• The sharp increase in share price of Doosan Corp today (up 28%) is likely to have been a reflection of the initial strong demand for Doosan Robotics IPO.  

• We contacted drivers here in Shanghai and asked about their experience at Tuhu stores.
• Franchised stores are well positioned in the aftermarket and Tuhu is the largest store chain among them.
• However, Tuhu sets high standards for workshops, but average standards for mechanics.

• The growth rate of total revenue accelerated to 23% YoY in 1H23 from 15% YoY in 2H22 and 9% YoY in 1H22.
• Tea revenue grew by 60% YoY in 1H23 as the company caught the fashion of sugar free.
• We believe the stock has an upside of 41% for yearend 2024.

• Intel’s upcoming Meteor Lake family of chips will include a new specific component specifically for running AI processes locally on PCs.
• Meteor Lake will enable mass market adoption of AI PCs by providing a platform for developers to create more advanced AI PC applications than are currently possible.
• Meteor Lake’s launch could start by end-October. Intel’s Innovation conference September 19-20th will likely add visibility. Intel’s potential supports a Long thesis for Taiwan’s PC supply chain.

• The Board of YSK has recommended that shareholders accept a TOB for the company’s shares
• Although a 35% premium to the undisturbed share price, the deal is not particularly generous to long-suffering shareholders
• Activist investor, Minami Aoyama, has been buying a significant stake in YSK. Will the deal go through?

• Classys (214150 KS) reported solid performance in 2Q23, with revenue and operating profit growing 40% and 52%, YoY, respectively, mainly driven by consumables sales in both domestic and overseas markets.  
• Despite increase in advertising and R&D expenses, operating profit margin expanded 370 basis points to 50.4%. Net profit increased 34% YoY to KRW18.6 billion.
• With 1H23 revenue of KRW84.9 billion, Classys is on track to meet 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.

• WDFC faces continued headwinds with consumer spending remaining limited and distillate prices going up.
• We doubt WDFC would be able to raise prices with higher input costs since their customers were already trying to avoid the last series of price adjustments.
• The consumer is picking where they are spending their finite capital. In recent months it has become clear the consumer is not willing to invest in maintenance around the home

• With global focus to a lower carbon and more climate resilient future, multiple Singapore-listed stocks have continued to press ahead with pivots to sustainable energy which include solar and wind assets, or more fuel-efficient transportation solutions.
• To support the global energy transition, it aims to grow net profit contribution from its sustainable solutions portfolio to 70% by 2025.
• In 2022, Sembcorp Industries renewables capacity grew 60% to 9.8GW and Sembcorp Industries commissioned Southeast Asia’s largest energy storage system in six months.