Equity Bottom-Up

• Shin-Etsu Polymer Co., Ltd. has entered into a contract to transfer its PVC pipe manufacturing business to Sekisui Chemical Co
• Asset Value, a vocal activist shareholder, has likely had some strong words about better capital allocation.
• The unwinding of the parent-child relationship (one way or the other) is where the real value creation lies

• Starting in 2024, Shimadzu plans to produce high-end analytical instruments and medical systems in China. It must do this in order to maintain market access. 
• China is the company’s largest and fastest growing market outside Japan. Concerns about IP protection notwithstanding, we regard this as a positive development.
• The shares are down 10% from its 52-week high and selling at 23x this fiscal year’s EPS guidance, which looks conservative. Buy for the long term.

• Splunk Inc. delivered a decent result and managed an all-around beat in the last quarter, marked by solid execution, operational discipline, and favorable customer engagement.
• Total revenue experienced a healthy year-over-year increase, demonstrating Splunk’s ability to achieve this growth while managing costs underscores its strategic approach.
• Additionally, Splunk continued to innovate by leveraging AI in security and observability, introducing the concept of Splunk AI to empower organizations to detect, investigate, and respond more efficiently.

• Salesforce delivered an all-around beat in the previous quarter.
• The company’s non-GAAP operating margin increased in the quarter.
• Salesforce also had fantastic victories throughout the quarter with JPMorgan, Bayer, FedEx, Maersk, as well as the Department of Veterans Affairs.

• With 46 restaurants in HK (up 35% YoY) and the end of dining restrictions, we estimate an inflection point in earnings for Q2 FY24 for Taste Gourmet (8371 HK) 
• We estimate revenues/earnings up 45%/40% YoY for Q2 2024 ( to be reported in November) and that the company declares a semi-annual dividend of around 5.5-6 cents (8% annualized). 
• With a solid base for H2 2024, the stock trades at 8.5x/5.9x PE FY23/24e and a 10% FY24e dividend yield with 23% of the market cap in cash.

• CrowdStrike Holdings managed to exceed analyst expectations in terms of revenue as well as earnings.
• The company outperformed top and bottom line metrics expectations, achieving strong, scalable growth, amazing leverage, and operating within its target model overall.
• CrowdStrike also successfully implemented a go-to-market strategy centered on cloud security this past quarter, hosting a virtual cloud security summit with over 12,500 security and DevOp attendees, followed by cloud-focused partner and sales plays.

• Weigao’s 23H1 performance was unsatisfactory. 2023 full-year performance may continue to be under pressure because Weigao needs some time to digest the negative impact of centralized procurement on orthopaedic business.
• Weigao has hired advisers to find potential buyers for Argon. if Argon is ultimately sold, then the long-term prospects of Weigao’s interventional business and internationalization need to be reassessed.
• The unsatisfactory share price performance is related to Weigao’s business model – spin-off subsidiaries and IPO separately. There could be rebounds, but it is still possible for Weigao to underperform.

• Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025. 
• The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others. 
• Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue. 

• Dollar Tree delivered a solid result and managed an all-around beat in the last quarter.
• For the quarter, Dollar Tree produced a combined increase in sales of 8.2% to $7.3 billion, 6.9% enterprise comp growth, and operating income of $287.8 million, resulting in earnings per share of $0.91.
• In the Dollar Tree sector, with a slight offset from average ticket, their 7.8% comp was driven by 9.6% increased visitation.

• Veeva Systems managed to exceed the revenue expectations as well as the earnings expectations of Wall Street, with a total revenue of $590 million and a non-GAAP operating income of $212 million.
• The Veeva team has made some truly impressive accomplishments as they develop the next generation of CRM.
• Nearly 25% of their revenue comes from Veeva CRM and their add-ons.

• Williams-Sonoma delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
• Williams-Sonoma achieved these outcomes despite a more promotional environment and softer industry metrics by focusing on regular price selling, leveraging the company’s market advantages, enhancing customer service, and managing costs.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Intuit Inc. managed to exceed the revenue expectations as well as the earnings expectations of Wall Street.
• The company raised revenue by 13% for the entire year, produced good operating margin growth, and finished the year on a high note.
• Revenue from the desktop environment and QuickBooks Desktop Enterprise revenue increased significantly.

• Advance Auto Parts delivered a mixed set of results for the previous quarter with revenues above the analyst consensus.
• Their net sales increased during the quarter.
• During Q2, Advance Auto Parts observed increase in DIY omnichannel and DIFM.

• Eubiologics (206650 KS) recorded 24% YoY revenue growth to KRW31B in 1H23, due to strong export demand of oral cholera vaccine. Operating profit jumped 6x, while net profit surged 3x.
• In May 2023, Eubiologics and its partner have launched Euvichol-Plus in India. With a huge unmet need, Euvichol, an effective cholera vaccine is expected to see strong uptrend in India.
• Eubiologics has signed a technology transfer agreement with DEK Vaccines to enable the domestic production and supply of the cholera vaccine in Ghana. This opens additional revenue stream for Eubiologics.

EMIS reported H123 revenue and adjusted operating profit in line with board expectations. Revenue grew 2% year-on-year and adjusted operating profit was 7% higher, with an adjusted operating margin of 26.9% (+120bp y-o-y). The company closed H123 with net cash of £48.5m. Assuming the takeover of EMIS is not effective prior to 7 October, on 23 October the company will pay an interim dividend of 21.3p to shareholders on the register on 6 October.

• The 9th national VBP has begun. We analyzed the major big varieties with sales over RMB1 billion included in this VBP and the impact on related domestic pharmaceutical companies. 
• “Concept validation” of the business model of Chinese Biotech companies has been completed. Even under enormous pressure of medical insurance fee control policy, drug sales remain a reliable profit model.
• Medlive’s weak share price performance has a reason. The significant profitability increase in 23H1 wasn’t from the improvement of main business. Its business model needs time to be further validated.

• NetApp delivered an all-around beat in the most recent quarterly result.
• The company’s rigorous operational management and the enthusiastic customer response to its innovation continue to yield positive results.
• They are also making strategic purchases in order to lock in significant loan NAND pricing and reduce future price increases.

• NetEase delivered a mixed set of results in the quarter, with revenues well below expectations, but managed an earnings beat.
• Revenues from the Fantasy Westward Journey Saga continued to increase year over year in the quarter, again impressing the industry with this IP’s enduring appeal.
• In the second quarter, Cloud Music’s GP margin increased significantly because of the growth of membership services and ongoing cost-cutting initiatives.

• Royal Bank of Canada managed to exceed analyst expectations in terms of revenue and earnings.
• Revenue increased by 19% to $14.5 billion because of the strength of their diversified business strategy, which delivered revenue growth across all of their businesses.
• In Corporate Banking and Investment Banking, the Royal Bank of Canada kept moving its operations toward globalization and expanded the range of industries and products it served.

Severfield’s AGM statement highlights that FY24 is expected be in line with management expectations and that the quality of the orderbooks – both in the UK and Europe, and India – remains a key support for the future. That said, the outlook for the UK and continental Europe is less robust in the short term than it was due to the impact of high inflation and the rising interest rate cycle. The FY24e P/E rating of c 7x remains comfortably below the long-term average of 10.0x, implying that some risk is discounted in the rating. The stock yields more than 5%.

• Combustible tobacco is declining globally, but Japan Tobacco (2914 JP) is defying the odds by outperforming the industry significantly through capturing market share from competitors.
• Also in Heated Tobacco, Japan Tobacco is slowly but steadily capturing market share from IQOS and other heated tobacco makers.
• There will be no price hikes this year, but we think that there’s enough spillover from the price hikes in the past 3-4 years to maintain JT’s OP growth momentum.

• Rio Tinto Ltd (RIO AU) invited the investing community to Mongolia in early July.
• During the briefing comments were made regarding its position in Entree Resources (ETG CN) which makes us believe a deal is imminent. These comments were later deleted from its transcript.
• We expect newsflow around Rio/Entree’s future relationship before arbitration starts in April 2024.

• Singapore credit growth turned negative at -3% YoY in July where STAN has major exposure, while many regions, are not high growth, where credit metrics are worsening, like HK, China
• 88% of loans in well-developed countries, so that the old moniker of STAN being ‘an Emerging Market Bank’ may no longer apply, with NPLs as an overlying risk
• Credit costs rose 6x from 1Q23 to 2Q23, but the 19bps level in 2Q23 remains low relative to its longer-term 62bps average – which excludes the Asian Financial Crisis

• Since the launch of Thai Singapore Depository Receipts in May, the three inaugural Thai SDRs – Airports of Thailand (AOT) , CP All and PTT Exploration & Production (PTTEP) – collectively traded over S$11 million on the Singapore Exchange.
• The top traded SDR was PTTEP on the back of volatility in oil prices with max and daily trading ranges of (20 ticks) and 1% (7 ticks), respectively.
• Airports of Thailand PLC is the largest publicly traded company in Thailand and the world’s largest airport operator by market capitalization.

• Peptidream Inc (4587 JP) has reported strong result for H1 2023. Revenue jumped 88% YoY, and both the operating and net losses have narrowed compared with the year-ago period.
• 2023 guidance remains unchanged, with revenue of ¥30B (+12% YoY), core operating profit of ¥6.7B (-31% YoY), and net profit of ¥2.7B (-64% YoY).
• In the mid-term (over the next 3–4 years), Peptidream aims for revenue of ~¥50B. The company has set a goal to reach revenue of ~¥100B by 2030.  

• HHH held its annual investor day updating investors on the continued increase in population at its MPC, but that was not enough to offset the decline in NAV
• HHH’s management reiterated the trends that have fueled the business have continued with price per square foot and acre having increased over the past year.
• HHH is now estimating its NAV at $129 compared to $170 last year. We are lowering our price target to $110 from $150 to reflect the erosion in the NAV

• Rolex acquisition of Bucherer signals the company’s intention to own retail distribution and gain access to what its competitors are doing, with the battleground currently being Europe.
• We believe it will take years for Rolex to digest this acquisition before foraying into other markets, but with a similar approach, potentially making Oriental Watch (398 HK) a target.  
• Trading at 6.9x PE with 50% of the market cap in cash and a ~15% dividend yield, the company presents a great investment opportunity. 

• Astra International (ASII IJ) looks set to have another year of positive growth driven by strong performance from its Auto and 2W businesses and steady performance from United Tractors.
• The company’s move into the EV space has begun with 16 models hybrid or BEV models already launched, with 4W hybrid outperforming ICE given narrowing price differentials. 
• Astra International (ASII IJ) continues to invest in core growth areas of the Indonesian economy, with a strong sustainability bent. Valuations are attractive versus history on 8.3x FY2024E PER. 

• Sea Ltd began to step on the gas in terms of promotions in 2Q2023, even warning of potential quarterly losses, mainly due to perceived threats in Indonesia from TikTop Shop.
• Reports that TikTok Shop will be banned in Indonesia will provide significant relief in terms of competition as it is targeted for unfair competition versus local MSMEs through cheap imports.
• Sea Ltd has also relaunched FreeFire in India, which could become a significant catalyst for the recovery of the gaming business.  Valuations are attractive on both sales and earnings.

• The agreement helps Intel fill up some long-underutilised fab capacity at their Rio Rancho, New Mexico facility
• Tower likely gets a bargain-basement opportunity to increase their percentage of 300mm wafer capacity
• Tower’s automotive business grew from 11% of revenues in 2022 to 19% of revenues in H1’23. Greater 300mm capacity will help them meet this demand once foundry starts to recover. 

• Luckin Coffee is creating a stir with an unusual offering to capture the attention of Chinese coffee drinkers: lattes with a nip of Kweichow Moutai’s baijiu.
• The coffee chain partnered with China’s luxury liquor maker Kweichow Moutai to launch an alcohol-infused coffee drink, the so-called “sauce-flavored latte,” referring to the popular savory notes of Moutai liquors.
• The tie-up between Luckin and Moutai, the maker of China’s national liquor baijiu, triggered a buying frenzy. Discussions about whether it is safe to drive after consuming the alcohol-infused drink topped China’s social media Monday with 430 million views.

• Godrej Properties (GPL IN) is one of the large real estate developers in India. The company has diversified presence across four of the largest markets in India. 
• Even though Godrej has strong booking pipeline, the company however faces trouble in generating cash historically.
• Its low ROCE, fragile earnings quality remains a concern. Other concerns include JV exposure, CWIP ageing along with few disclosure woes.

• NVIDIA Corporation delivered an all-around beat in the previous quarter.
• Notably, the Data Center segment experienced remarkable growth, driven by solid demand from prominent cloud service providers and major internet companies.
• In the quarter, Google Cloud and NVIDIA have recently introduced advanced AI infrastructure and tools.

• Chinese consumers have been buying Huawei’s latest flagship smartphone faster than stores can keep up with online and in some parts of the country, sources tell Caixin, amid mounting speculation the telecom giant has been able to weather U.S. sanctions.
• Huawei Technologies Co. Ltd. began shipping the new Mate 60 Pro Sunday, several people familiar with the matter told Caixin, five days after the phone’s discreet launch.
• A number of distributors told Caixin on Monday that the Mate 60 Pro had immediately sold out upon delivery.

• Credit metrics appear worse than headlines, with what may be inflated substandard loans now at 66% of total NPLs in 1H23 compared with 21% in 1H21, requiring low provisions
• High net charge-offs can partly explain this, but high growth from RMB1.6bn during 2H18/1H19 compared with RMB7.5bn during 2H22/1H23, shows major deterioration
• 2Q23 saw CZB take credit costs of RMB10.3bn or 2.48% of loans, far higher than most other periods, but there remains high volatility, where very high figures rarely repeat QoQ

• Due to the sharp appreciation of Hana Micron’s share price this year, its valuation discount to companies such as HPSP has narrowed substantially. 
• Samsung Electronics is one of the major customers of Hana Micron. Samsung recently reported that it has successfully secured the right to supply advanced memory chips to NVIDIA.
• We do not believe Hana Micron’s valuations are attractive right now. Rather than chasing after its shares, we would rather wait for its shares to retreat (20-30%) a bit.

• Super Seven are chiefly responsible for the rally in the S&P 500. >80% of the index gains this year were due in large part to the Super Seven.
• Amazon, Apple, Google, Meta, Microsoft, Nvidia, & Tesla are referred to as Super Seven. S&P is market-cap weighted. Little wonder that Super Seven have an outsized impact on it.
• Having strongly priced in expectations, investors wait for the Super Seven to deliver. Falling short can result in sharp price pullback. What next for the Super Seven?

• Modern Dental Group (3600 HK) reported strong 1H23 performance, with 12% YoY revenue growth to HK$1.6B, driven by increase in demand for its products from existing, returning, and new customers.
• With increasing economies of scale resulting from China re-opening and global dental industry recovery and increase in the proportion of digital solution cases, net profit jumped 109% YoY to HK$210M.
• Despite macroeconomic headwinds, the company is confident that the medium and long-term global demand for dental prosthetics is expected to continue due to key irreversible demographic factors and trends.

• With shares trading near its all-time low since its listing on HKEX in 3Q19, we think it could be worthwhile taking another look at Budweiser Brewing APAC (1876 HK)’s valuation.
• China’s beer industry and regional markets are expected to sustain growth momentum in Q3, driven by tourism’s impact on increased beer consumption.
• We think it’s worth keeping an eye on Budweiser APAC, as we suspect that it could start to break out from the current downtrend in the near term.

• ARM IPO — TSMC says will decide this week whether to participate. ARM is a company potentially without peers and enjoys support from Apple, Nvidia, AMD, and Samsung.
• Elan, Yageo, ChipMOS top gainers in Taiwan — Three of our Longs have done well most recently on high volume and little new public news.
• Recent Dell & HP results provide additional clarity on the coming AI PC wave.

• Agile Response to Visa Changes: NextEd’s nimble approach to the end of the COVID-19 408 visa showcases adaptability in uncertain times.
• Tech Sector Growth Potential: Expanding in the thriving tech field, NextEd taps into strong post-study work rights and sector support.
• Regulatory Challenges: Navigating regulatory shifts, NextEd’s resilience shines amid uncertainty in the non-university education landscape.

• AKR Corporindo (AKRA IJ) has secured another major land plot sale at its JIIPE industrial estate in Gresik, with an area of 67 hectares to a Chinese chemical manufacturer.
• The sale puts the company on track to exceed its full-year target sales for the estate. It has also been divulged that the Freeport Smelter is now 75% complete.
• AKR Corporindo (AKRA IJ) remains a crucial proxy for the Indonesian economy through its fuel and chemical distribution business, with JIIPE targeting the EV Battery value chain as future tenants. 

• Luckin Coffee’s new blockbuster Moutai Latte achieved 5.42mn cup sold with RMB100mn GMV in first day. 
• We think Luckin Coffee had effectively achieved two goals through the new premium product: 1) de facto price lifting; 2) extend potential customer base and step into the monetization stage.
• We raised our 2023 revenue and non-GAAP NI on Luckin by 1.6%/4.4%. We maintain the stock as BUY rating and raise TP by US$1 to US$44/ADS.

• PICC P&C’s thesis has materialized and played out well this year, with the stock being HK’s best-performing Chinese insurer.
• Samsung Life’s share price recovered slightly since our last update as LT Korean government bond yields further increased.
• Prudential’s thesis is slowly being played out, with its P/BV discount to AIA having narrowed; but still a long way to go. 

• Japan System Techniques announced its 1Q results for FY24/3 after the close of the market on August 10 (Thursday).
• Key figures on a consolidated basis ; operating profit fell 53.3%, to ¥122 mn on a 10.2% rise in sales, to ¥5,640 mn.
• Ordinary profit fell 53.6%, to ¥134 mn, and net income attributable to the parent company fell 72.4%, to ¥61. 

• Swatch Group enjoys a strong competitive position in the Swiss watch industry, with leading positions across all price segments
• Swatch Group’s 17 watch brands and 2 multi-brand retail companies demonstrate an incredible creativity and savoir-faire
• The stock is currently trading well below its 10-year historical P/E mean.

• L’Occitane (973 HK) announced after market close yesterday that the controlling shareholder has terminated the potential general offer. 
• Shares trade at a significant discount to global cosmetics peers and its own historical trading range, while brands’ growth momentum remain intact. 
• Take advantage of any potential significant sell-down caused by the drop of the privatization attempt. 

• Globalfoundries may be considering filing a complaint regarding TSMC’s recently announced European JV with three of their customers, Bosch, Infineon and NXP
• Yet they just inked their own deal for a JV with ST Micro in France. What gives?
• In conjunction with their recent CFO hiring fiasco, one wonders if all is well with the GF leadership team. 

• Positive retail flows, HNI & AIF inflows, along with global market trends, suggest that the uptrend for the NIFTY Index (NIFTY INDEX) may continue.
• Bullish stocks include Metro Brands (METROBRA IN) and Zydus Wellness (ZYWL IN), while the sentiment for Whirlpool of India (WHIRL IN) is Bearish.
• Highlighted global stocks include Ebix (EBIX US) , Smith (A.O.) (AOS US) and Apple (AAPL US) 

• Strong Q2 results out Tuesday morning beat consensus Revenue and core EPS estimates
• But concerns remain about expense control and longevity of ongoing demand recovery
• Great Q2 results, yes, but we think investors want more clarity about H2 demand

• We turned bullish on Komatsu a year ago and the stock has since returned over 50%.
• Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.
• Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.

• Tower Semi will pay Intel $300 million to acquire and own equipment and other fixed assets to be installed in the New Mexico facility
• Intel’s termination fee on the failure of the proposed Tower Semi acquisition was $353 million
• It’s quite the clever move and doesn’t require China’s approval…

• China Longyuan Power (916 HK) is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.
• Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.
• There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.

In its H123 results, Secure Trust Bank (STB) delivered an 11% y o y increase in operating income, overcoming margin pressure on rising interest rates. However, PBT was £16.5m, 4% lower than in H122 as the bank incurred a one-off impairment charge of £7.0m stemming from a long-standing debt case in Commercial Finance. Excluding this charge, PBT was £23.5m, which implies a 6% beat on our estimates on an annualised basis. Across the group, underlying impairments are resilient, especially in Vehicle Finance where impairments fell to 2.4% (H122: 8.0%) as lending shifted to prime borrowers. We have increased our FY23 and FY24 continuing PBT forecasts to £45m and £55m respectively, leaving the stock trading at P/E ratios of only 4.0x in FY23 and 3.1x in FY24.

• Medtronic Plc (MDT US) announced better-than-expected Q1FY24 result. Revenue of $7.7B increased 6% on organic basis, ahead of guidance of 4.5%. Each of four segments delivered 6% organic revenue growth.
• Adjusted EPS increased 6% YoY to $1.20, ahead of guidance of $1.10–1.12. Outperformance was driven by better-than-expected operational performance and lesser-than-expected unfavorable impact from foreign currency translation.
• The company increased FY24 organic revenue growth guidance to 4.5% versus the prior range of 4.0% to 4.5% and adjusted EPS guidance to $5.08–5.16, 7 cent increase at midpoint.

• Takamiya announced its 1Q results for FY24/3 on August 4, after the close of trading.
• Key figures on a consolidated basis were sales of ¥9,896 mn (+9.7% YoY), operating profit rose 125.5% YoY, to ¥409 mn, ordinary profit rose 41.0%YoY, to ¥615 mn, and quartery net profit rose 33.0%YoY, to ¥417 mn.
• An overview by business segment is as follows

• Dell and HP’s latest results indicate an improving PC industry environment in 2H23E, though weaker than expected China demand has softened initial expectations.
• A key take-away is that a major AI PC upgrade cycle is indeed on the horizon, with additional clarity now provided as to when and how it will unfold.
• A ‘step-change’ AI PC upgrade cycle will make the strength of the current near-term cycle recovery less relevant, and isn’t yet priced-in by the market.

• The Chinese economy looks weak according to the data from the statistics bureau.
• However, many big Chinese internet companies began to recover in Q2 as we mentioned in August.
• Here we list five recovering companies that investors may not pay attention to.

• Despite expected increased demand from returning Asian tourists, Japanese cosmetics companies have been hesitant to revise their 2H 2023 inbound demand projections.
• We are long Kose Corp (4922 JP), Shiseido Company (4911 JP), and Pola Orbis Holdings (4927 JP), as consensus estimates look extra cautious and reasonable and appealing FY+2 valuation multiples.
• We view the risk of Chinese consumers boycotting Japanese cosmetics due to Fukushima wastewater release as relatively low.

• Seven & I has finally sold Sogo Seibu to Fortress Investments.
• It will be pleased to have offloaded a loss-making format it never really understood but at a cost – it will write off more than ¥90 billion in loans.
• Fortress will immediately sell the land under Seibu Ikebukuro and some other assets to Yodobashi with suggestions of major redevelopment of both Ikebukuro and Shibuya.

• Moncler SpA (MONC IM) is an outstanding compounder with clear market leading position in luxury outerwear.
• Moat is increasing every year through relentless focus on brand building. 
• We believe that Moncler deserves a higher PE multiple than its current 22x forward expected earnings.      

• Medipal Holdings (7459 JP) announced strong Q1FY24 result, with a 6% YoY revenue growth to ¥887B, driven by growth across all three business segments.
• However, operating profit declined 8% YoY to ¥12B, mainly due to increase in SG&A expenses. Driven by an extraordinary income of ¥3.3B, net profit jumped 35% YoY to ¥11B.
• The company has reaffirmed FY24 guidance, which calls for a 4.5% YoY revenue growth, flat operating profit, and a 9.3% YoY decline in net profit.

• Uchi Technologies (UCHI MK) results significant highlight was an upgrade in USD revenue for FY23 from “flat”  in Q1 2023 to “high single-digit growth” in Q2 2023.
• Operating margins expanded owing to the depreciating ringgit YoY/QoQ by 350/480 bps to 61.6%. Unfortunately, the increasing effective tax rate (3.5% to 23.7%) resulted in a 13.7% YoY PAT decline. 
• With >60% ROCEs, 12x FY23e PE multiple, and a 7.2% dividend yield, this is a stock to keep on your watchlist.

• This is not a typo: SBI Sumishin Net Bank saw loans up 21% YoY in 1Q24, operating in Japan
• The bank has achieved cost scale, with acquisition cost per account a fraction of 2 yrs ago
• Credit quality remains exceptional, amongst best in Japan, with 0.06% NPL ratio in 1Q24

• Elastic NV (ESTC US) delivered a high quality beat and raise and reported a modest upside to revenue and profitability. The start of the fiscal year looked strong.
• The leading provider of search engine for enterprises and SMBs guided FY24 ahead of consensus estimates. I reiterate our Overweight rating on ESTC.
• The 1Q print was outstanding, with +17% y/y revenue growth, a record non-GAAP Op Margin of ~10% and FCF margin of ~13%.

• We think Kunlun Energy (135 HK) will see its operating momentum accelerate in 2H23, leading by better natural gas sales growth and sustained positive dollar margin performance.
• It has strengthened its financial position in 1H23, with net cash amounting to 36% of market cap. This has demonstrated its cash-generating capability and controlled capex. 
• Its 7.0x and 6.6x PERs for FY23 and FY24 are inexpensive. Its annualised ROE of 10.6% is also attractive. There is room for the other businesses to recover in 2H23.

• KE Holdings (Beike) reported 2Q23 GTV 5.6% lower than our estimate, revenue (2.6%)/0.4% vs. our estimate/consensus, and non-GAAP NI 21.8%/42.9% higher than our estimate/consensus. 
• We think 3Q23 is the trough and expect a rebound in 4Q23 as more substantial supportive policies laying out in China. 
• We maintain the stock as BUY rating and raised TP by US$2 to US$24/ADS

• Mavacamten is expected to be LianBio’s first commercialized product. Due to low diagnostic rate/doctors’ insufficient cognition of HCM, whether it can become a blockbuster drug in China is still uncertain.
• There’s an “insurmountable obstacle” to license-in model, and its “fault-tolerant space” is small. LianBio has to go all the way to the end.Otherwise, the license-in projects will eventually become worthless.
• Due to high cost rate, it’s difficult for LianBio to make profit even with large drug sales. Although pipeline is good, LianBio could still fail to bring investors good returns.

• Aier’s revenue would be up 20%+ YoY in 2023, but one risk is the slowing growth rate of refractive/other consumption upgrading projects in the context of sluggish consumption in 23H2.
• The positive impact of aging on performance would not be able to hedge against the negative impact of declining birth rate, ultimately leading to a decline in overall performance growth.
• When Aier’s external expansion model fails and endogenous growth is lower-than-expectation, we suggest that Aier increase dividends/stock buybacks instead of ineffective expansion. This would make Aier more attractive to investors.

• Share buybacks by primary listed companies 25 – 31 Aug 2023 UOB again led the share buyback consideration tally, buying back 360,000 shares at an average price of S$28.41 per share, followed by Olam Group which bought back 3.25 million shares at an average price of S$1.25 per share.
• Between Aug 28 and 31, SunMoon Food Company non-independent and non-executive director Song XiaoJun acquired 2,055,500 shares at an average price of S$0.02 per share.

• INVESTMENT in artificial intelligence (AI) is booming worldwide – the frenzy fuelled by the release of ChatGPT last November has led to a surge in demand for data centres as well as the real estate investment trusts (Reits) that invest in them.
• NVIDIA shares marked an intra-day record high on Aug 24 of US$502.66 per share two days after the company’s earnings exceeded expectations.
• Singapore Reits with substantial data centre assets include Keppel DC Reit (KDCReit) and Digital Core Reit (DC Reit).

• IPO rules in SSE STAR Market faces adjustments, so investors have lowered expectations, which will affect the fundraising ecology. Recovery of China’s financing environment would be slower than US/Europe.
• The CSRC has issued new policies related to stamp duty, IPO, and reduction of shares held by listed companies, which would significantly affect the capitalization path of pharmaceutical companies.
• Junshi is “an interesting Biotech” that once generated sales/profits in scale, but is losing money again.Since Junshi is outside the first echelon and the gap is widening, we remain conservative. 

• China Mengniu Dairy Co (2319 HK) is a good pick for those seeking value in the China consumer sector. 
• The company currently trades at 15x 2024E PE, compared to over 20x forward PE in the last 5 years, as the industry growth stagnated. 
• We can still expect above 10% net profit growth over the next three years, with the company looking to return more cash to shareholders. 

• Despite worsening doubtful, loss loans, the bank opted to lower impairment costs in 2Q23 YoY
• There is almost no profit growth without the bank’s provision cost decline, in 1H23 and 2Q23
• Loans more than doubled since FY19, but against this LLR/loans continues to decline

• A 100-year-old firm, Next Era Energy is America’s largest utility firm and the world’s largest renewable energy producer commanding a market cap of USD 136.6B.
• Significant capex into Next Era Energy Resources combined with the benefits of the Inflation Reduction Act to drive stock outperformance.
• Downside exposure remains from idiosyncratic risks, weather shocks and an economic recovery which warrants risk management considerations.

• LianBio (LIAN US)‘s new drug application for its lead asset mavacamten is under priority review in China for the treatment of symptomatic obstructive hypertrophic cardiomyopathy, with approval expected in mid-2024.  
• The company is expected to start commercialize mavacamten in Singapore and Macau this year. As of June 30, 2023, LianBio has cash balance of $267M, with runway into H1 2025.
• LianBio is currently conducting phase 3 trial to evaluate the efficacy and safety of TP-03 in Chinese adult patients with Demodex blepharitis. Topline data is expected in 4Q23.

• Guangzhou R&F Properties Co. Ltd. has 48.1 billion yuan ($6.6 billion) of debt due within a year with less than 10 billion yuan on hand as of the end of June, the southern China property developer disclosed.
• Even though R&F extended some debt last year, its first-half financial report showed that it is still mired in a liquidity crisis. R&F Properties delayed payment of 46.7 billion yuan of domestic and offshore bonds in 2022 for three to four years.
• The developer reported a net first-half loss of 5.1 billion yuan, 26% narrower than a year ago.

• Herein we revise our estimates for Culp, which reported 1QFY24 results and issued guidance in the face of continued weak demand juxtaposed against improving and better-than-expected margins.
• Gross margin for CHF, Culp’s mattress fabrics segment, is recovering faster than expected (up ~700 bps in 1QFY24 versus 1QFY23).
• For CUF, Culp’s upholstery fabrics segment, management grew 1QFY24 gross margin by 667 bps despite a significantly down Y/Y sales comparison (~ -17.4%).