Equity Bottom-Up

• Hotel Shilla, one of the largest operators of duty free shops in Korea, will be a major beneficiary of the return of the group tours from China to Korea.
• We expect the consensus to raise the company’s sales estimates in 2024 to 2025 by about 3-7% and net profit estimates by 20-25%+ in this period. 
• Currently, Hotel Shilla Pref/Common stock price ratio is 0.61 which is 22% below the five year average of 0.78. 

• Rakuten Bank is a clear beneficiary of the steepening yield curve in Japan, with its low LDR and healthy capital ratio
• Rakuten Bank’s LTM PE multiple of 11.4x, LTM PBV ratio of 1.5x and ROE of 13.8% makes it the best ROE to PBV ratio bank among its digital peers
• Rakuten Bank is also the lowest cost to serve Japanese digital bank; it is narrowing the PBV ratio discount gap with SBI Sumishin

• Li Ning (2331 HK) reported today a headline beat on 1H23 results, with sales up 13% yoy and net profit down 3% yoy.
• Both numbers are around 5% better than the already low market expectations. 
• However, a closer look at the results shows that the quality of the beat is low. 

• Sino Land is a developer in Hong Kong and China with both DP and IP rental business. 
• Sino Land has a net cash position of HKD41bn, its strong balance sheet makes the stock a defensive play
• Despite trading at attractive valuation (0.46x P/B), we see there is a lack of catalyst and the stock may remain as value trap

Pixium Vision recently announced that it has received a €3m bridge financing loan from shareholders Sofinnova (€1m) and Bpifrance (€2m), which extend its cash runway through to the end of November. The loan will bear interest at 12% pa and mature on 31 July 2023. The loan is a positive step and signal of confidence from these two institutional investors as Pixium works towards securing broader additional financing to bring it past the conclusion of the PRIMAvera European pivotal study, for which results are still anticipated in or around year-end 2023. We maintain our pipeline rNPV valuation of €140.1m but our equity valuation per pre-consolidation basic share is €0.90 (vs €0.92 previously) after adjusting for estimated H123 net debt.

SIGA has reported Q223 results, which came in largely as expected, and management has provided key operational highlights. Activity in the second half of the year has started to firm up with upcoming TPOXX deliveries (for H223) and better-than-expected international orders (offsetting IV orders that will likely be received in FY24). We maintain our FY23 product revenue estimate of $155m and note H223 management sales guidance of $143–158m. We await further clarity on PEP immunogenicity trials, which we believe are the next material catalyst. As we incorporate the reported quarterly results and slight shift in revenue mix for the balance of the year, our valuation adjusts to $1.24bn or $17.46 per share (vs $1.25bn or $17.53 per share previously).

• ARLO reported another quarter of net subscriber adds above expectations and putting the Company on a faster pace to achieve 3 million paying subscribers
• At the end of the June quarter, ARLO had annualized recurring revenue of approximately $200 million even though hardware revenue has remained at levels not seen in two years
• The recurring revenue model gave ARLO the ability to generate free cash flow in the Q2. This inflection point should solidify ARLO’s valuation on a recurring revenue basis

• In Egypt, 2Q23 WI production was 11,579 boe/d (guidance of 10.6-11.6 mboe/d) with 13 new wells drilled in 1H23. • As a result of this strong operational performance, VAALCO has increased the lower end of the FY23 production guidance range from 20.4-24.4 mboe.d to 22.4-24.3 mboe/d.
• With better drilling efficiency in Canada and Egypt, the FY23 capex guidance has been reduced from US$70-90 mm to US$65-75 mm.

• ________________________________________ ADX Energy (ADX AU)C; target price of A$0.08 per share: A high-quality industry partner in Austria to fund and accelerate Anshof development – ADX is farming out 30% WI in the Anshof discovery to MND.
• MND will also fund ADX’s share of drilling and completion costs of A$3.9 mm per well (total of A$7.8 mm for two wells).
• Kosmos Energy (KOS US/LN): 2Q23 results – 2Q23 net production was ~58 mboe/d.

Country Garden Holdings Co. Ltd., one of China’s largest property developers, said it expects to report a record, multibillion-dollar net loss for the first half, raising further concerns as the company slides deeper into a debt crisis.

Guangdong-based Country Garden estimated its net loss at 45 billion yuan to 55 billion yuan ($6.2 billion to $7.6 billion) for the first six months of 2023, compared with a net profit of 1.91 billion yuan a year ago, according to a Hong Kong exchange filing late Thursday.

The company warned July 31 that it would report red ink for the first half.

• The revenue growth rate rose to 14% in 1Q24, compared to the past four stagnant quarters.
• All businesses continued to improve their margins, so that the general operating margin rose to 19% in 1Q24 versus 12% in 1Q23.
• We believe the re-organization is successful and the stock price is overly impacted. Buy.

• Alibaba (ADR) (BABA US)‘s 1QFY24 revenue and OP beat consensus by RMB 9.2bn and RMB 14.4bn respectively, possibly on the back of a successful 6.18 shopping festival.
• It looks like Alibaba Group Holding (9988 HK) has decided to abandon its New Retail Strategy and instead, put more effort into e-commerce, especially on popular platforms like Taobao and Tmall.
• Although this is a good-sign and could rally the stock short-term, we would still steer clear of Alibaba as we remain skeptical about the overall health of the Chinese economy.

• The moment of truth is here, the Chinese are finally coming back to Japan. 
• Keisei Electric Railway Co (9009 JP) is one of the biggest beneficiaries of increased tourist arrivals in Japan. 
• It is trading at 0.04 PEG, a very low valuation considering its potential for producing large growth rate. 

• Stylam Industries (SYIL IN) reported a good quarter on the profitability front, with PAT up 32.4% YoY but revenues down 4% YoY. 
• Exports showed degrowth temporarily by 11% YoY due to a slowdown in Europe and other key markets, but the company guided an improvement in subsequent quarters. 
• Trading at 20x/16x FY24e/25e, the stock is not a steal, but with a remarkable growth profile of 20-25% CAGR, we see tremendous potential as a multibagger for the company.

• We expect Huitongda (HTD) 1H23 revenue in-line with consensus, and non-IFRS NI 15.6% lower than consensus. 
• The lower bottom-line is due to 1) product mix change result in lower gross margin; 2) higher impairment loss from account receivables due to its SME focused model.
• We maintain the stock as SELL. We raise TP by HK$2.5 to HK$20.5 to factor in the upward revision of NI from downsizing of minority interest.

• In this insight, we lay out the thesis that LG H&H is likely to be one of the biggest beneficiaries of the return of Chinese group tours to Korea. 
• LG H&H consistently generated more than 1 trillion won in operating profit from 2018 to 2021.
• We expect LG H&H to generate 1 trillion won or more in operating profit in 2024 and 2025, which would be 20-25%+ higher than current consensus estimates in this period. 

• SMFG achieved less of its FY24 profit forecast than peer megabanks; less upgrades
• SMFG reported a far lower ROE than peer megabanks & some worse financial metrics
• SMFG’s JPY bonds are only 0.88x of total equity; it is less leveraged than peer megabanks

• ECVT has gone from one maintenance issue at the beginning of the year to another that is expected to impact second half results and creates near-term headwind for investor sentiment.
• Maintenance and CapEx spending is likely to receive much of the scrutiny from investors after ECVT had two issues this year. However, they are unrelated, and one was from weather
• The sell-off in ECVT’s stock price after the quarterly results reflects investor anxiety over the business being able to generate free cash flow on a consistent basis

• Taste Gourmet (8371 HK) reported its Q1 FY24 with revenues up 47% YoY and core profits up 349% YoY.  We believe that the company will report stronger revenues in Q2.
• The restaurant count increased from 39 to 42 by the end of Q1 FY24 for HK. As of the latest date, the company has 46 restaurants in HK. 
• The company also had 126.5 mn HKD of net cash at the end of Q1 FY24 (vs 118 mn HKD in FY23), almost 20% of the current market capitalization. 

• In the past several days, there have been numerous new flow that the Chinese government is likely to allow group tours to South Korea and Japan in the coming days. 
• The group tours from China to South Korea which has been banned since March 2017, are expected to resume after six years, according to the Korean Embassy in China.
• Nikkei Asia also reported on 9 August that the Chinese government is ready to allow group tours to Japan as early as this week.

• AMD reported Q2’23 revenues of $5.4 billion, $100 million above the guided midpoint, flat sequentially but down 18% YoY, largely attributable to weakness in their client segment revenues.
• Q3’23 revenue of $5.7 billion at the midpoint,  a modest 5.5% increase sequentially and ~2.5% YoY.
• AMD has a lot riding on its MI300 launch but can it really take a bite from NVIDIA’s lunch?

• Softbank and the Vision Fund’s exposure to WeWork – estimated at USD1.8bn – look increasingly to be at risk of being written off
• Masa’s debts to SoftBank stand at USD5.1bn at 1QFY23 end and we believe that private company valuations are vulnerable, especially in the light of the recent Union Square Ventures write-downs
• Softbank shares trade at a 36% discount to the stated NAV; with Alibaba gone, the potential Arm IPO valuation is critical but SVF1 and 2 private company valuations remain questionable

• Credit cost surge in 1H23 is strangely tempered in 2H23 results, although still rising
• Despite rising credit costs, they remain at relatively low levels compared with history
• Data on credit metrics suggest to us that credit costs should have been higher in 2H23

• KPIT reported a strong Q1FY24 with 7.1% constant-currency (CC) revenue growth and EBIDTA growth of 13.3% QoQ. EBITDA margin expanded by 90bp QoQ to end at 20%.
• KPIT is upbeat about the demand environment. OEMs are continuing to spend heavily on new technologies. KPIT itself is investing significantly in R&D, especially Generative AI.
• Deal wins was healthy at $190mm vs typical run-rate of $150mm+. The pipeline is also healthy across practices.

• In our latest South Korean banks screener; we stick with quality play Hana Financial but remove contrarian call Industrial Bank of Korea, due to fast rising credit quality headwinds
• NPLs and precautionary quality credits continue on a rising trend, whilst Hana seems to be containing delinquency better than most
• Hana has a low PBV ratio relative to its premium ROE, high post-provision returns, a sound CET1 ratio and a healthy LDR; Kakaobank is one for the watchlist

• U.S. has announced new bans on PE and VC investment into key Chinese tech industries.
• Elan Microelectronics, ChipMOS reported good results, two longs to consider as we still see upside.
• Apple earnings short-term trades update — We’re closing out both trades, one at a loss and one roughly flat.

• FUJIFILM Holdings (4901 JP) reported 1QFY03/24 results today. Both revenue and OP increased 5.6% and 5.2% YoY to ¥660.8bn (vs consensus ¥649bn) and ¥52.2bn (vs consensus ¥52.1bn) respectively.
• Materials segment’s earnings were negatively impacted during the quarter due to a stagnant semiconductor market, however, we expect segment’s earnings to improve with the completion of Entegris acquisition.
• Despite the company successfully transitioning into a healthcare player, Fujifilm is still trading in line with imaging/photocopy players and there is significant upside to the company’s current share price.

• CPNG reported C2Q23 top-line, adjusted EBITDA, and GAAP net profit in-line, 45%, and 102% vs. our estimate, and 2%, 27%, and 49% vs. consensus, respectively.
• Product commerce EBITDA margin rose 2ppts QoQ, which offset the 126% QoQ increase to developing offerings losses, which rose due to increased investment in its Taiwan business.
• Given improved product commerce profitability, we raise our TP to US$ 14.4, but maintain SELL to reflect the impact of China e-commerce on CPNG.

• We have been covering UE for five years principally because we were bullish about its intentions to bring its Manila casino business public.
• Our focus has shifted. We see the casino IPO as inevitable but we like the stock now because it has performed well in its core Pachinko and media businesses post-covid. 
• If the Okada casino deal gest past current legal issues it would be a catalyst “bonus” to holders who come into the stock now, on a slight dip.

• There is no refuting the strong net interest income figures at DBS, although it seems toppy
• DBS took credit costs/assets at 4bps in 2Q23 vs 13bps average during FY18, FY19 quarterly
• There are not many banks that we can turn too with over 50% QoQ decline in credit costs

• Swire Properties is one of the largest office and retail landlords in HK.  Office is facing headwind despite should see recovery in the long-term.  HK retail is recovering.
• Swire announced to spend 100bn to expand its portfolio in terms of capital management, yet it did not announce a share buyback that many investors would like to see
• Lack of share buyback, with weak HK office and China retail, could drag Swire’s share price.  Despite we see value in the stock, it could remain as value trap

• Fancl released 1QFY24 results last week. While revenue was broadly in line with consensus at ¥27.2bn (consensus ¥26.9bn), OP beat consensus by around 27% to generate an OP of ¥3.2bn.
• While there were certain performance improvements in the flagship brands “FANCL” and “ATTENIR” during FQ1, there are no definitive signs that they are completely out of trouble.
• Meanwhile, it looks like competition has affected Fancl Corp (4921 JP)’s plan to cut advertising costs. Thus, FY24 OP guidance could be under pressure.

• The main focus will remain on Direct-to-Consumer profitability, but areas such as the recently announced restructuring plan and pricing power in parks & experiences also deserve attention.
• The main focus is on the company’s Direct- to- consumer profitability.
• It has been three months since my latest update on The Walt Disney Company (NYSE:DIS) when I highlighted a number of reasons why the company is finally in a good position to deliver on its bottom line figures.

• PayPal stock has fallen dramatically on speculations regarding the near-term future.
• The market is now pricing-in significant deterioration of the company’s top or bottom line.
• The management is making the right moves to secure long-term competitive advantages, while also rewarding shareholders, according to the report.

• From a niche player to a global high-flyer – Shofu is a domestic market leader in developing and manufacturing dental materials and equipment.

• With its proprietary technology and expertise, it is aiming to become a global top 10 player with a strategic focus on overseas expansion.

• With an addressable market estimated to become up to 20 times larger than Japan, growth prospects are high and the company is gaining solid traction with FY3/2023 results set to reach record highs.

• Glencore plc’s first half earnings landed softer than most of its shareholders would’ve liked.
• We think a period of stability is near, but key indicators fail to suggest the miner is set for a steep recovery.
• Mining powerhouse, Glencore plc (OTCPK:GLCNF) released its first-half earnings results on Tuesday and delivered a few surprises by doing so.

CLIQ Digital delivered robust growth in H123, with 37% year-on-year growth in both revenue and EBITDA at a maintained margin of 15.8%. Growth continues to be driven by growing marketing spend and investment into evolving the bundled content offering. Given a more competitive bidding market, management is focusing on acquiring customers with a higher lifetime value to create a more profitable subscriber base. Management has reiterated both its FY23 and mid-term FY25 guidance and our headline forecasts remain unchanged. Despite CLIQ’s share price performance faring better than the peer average valuation, it remains at a significant discount to peers on both EV/sales and EV/EBITDA multiples. In our view there continues to be significant upside to the current share price on our current estimates.

• Teenage Mutant Ninja Turtles: Mutant Mayhem had a smash opening grossing over 50M USD at the box office in its first week of operation.
• The box office success de-risks the upside potential for Playmates Toys as successful movies have a high likelihood of driving toy sales.
• Paramount+ launching the new TMNT-inspired series will also drive Ninja Turtles’ revival even more.

• Yakult Honsha (2267 JP)‘s OP fell short of market expectations by ¥500 million in 1QFY24, leading to a 15% drop in the company’s share price.
• With the post earnings price reaction, Yakult’s FY+2 PE has fallen to its lowest level since before the global financial crisis, currently standing at around 18.7x.
• We think this price reaction is unwarranted as the fundamentals haven’t changed. Thus, creates an opportunity for short-term gains by staying bullish on the stock.

• According to various public news sources, Brazil’s Suzano SA, the world’s largest pulp maker, and a few private equity players may participate in the bidding for Vinda International (3331 HK).
• Note that the controlling shareholder Essity is looking to potentially dispose its stake, announced in April this year. 
• Two major drivers of share price – pulp price and competition – likely have reached the bottom and could improve in 2H23. 

• 1Q sales growth was strong, but the operating margin was squeezed by the cost of overseas expansion.
• The company’s finances remains very strong, but balance sheet ratios reflect the loss of earnings momentum and the dividend payout remains low.
• Shares sold off on margin contraction, but valuations still  high. A quick rebound cannot be taken for granted.

• KT Corp (030200 KS)’s shares were up 4.1% today to 32,000 won driven by better than expected results in 2Q 2023 and the nomination of a new CEO. 
• KT has nominated Kim Young-Seop, the former CEO of LG CNS as the new CEO of the company.
• KT Corp has attractive valuations. It is trading at only 2.6x EV/EBITDA, 6.7x P/E, and 0.5x P/B in 2023. These valuation multiples are much cheaper than SK Telecom.

• Sun Pharmaceutical Industries (SUNP IN) reported 11% YoY revenue growth to INR118B in Q1FY24, mainly driven by the U.S. business. EBITDA margin expanded 109bps to 27.9%.
• Net profit declined 2% YoY to INR20B due to certain one-off charges amounting to INR3B. Excluding the exceptional items, adjusted net profit grew 14% YoY to INR23B.
• With 26 marketed products globally, Sun Pharma is betting big on specialty products. Specialty pipeline includes 5 molecules undergoing clinical trials. Specialty R&D accounts for 35% of total R&D spends.

• BeiGene maintained strong product sales in 23H1 and its net loss continued to narrow. This means that BeiGene has realized the cost control problem and entered a healthy growth phase.
• Our revenue forecast indicates BeiGene is approaching the minimum threshold for turning losses into profits. A more likely scenario is revenue need to reach over US$4 billion to be breakeven
• However, regardless of the calculation, BeiGene ‘s valuation is still unreasonably high. Its potential/certainty is nowhere near that of Alnylam. Maintaining sustained high growth is not easy because “accidents” remain.

• Triumph-Bajaj midsize bike melds the expertise of Triumph Motorcycles and Bajaj Auto Ltd (BJAUT IN)  for top-tier quality, targeting the midsize market with dual-brand prowess.
• Triumph-Bajaj sparks fervour with strong inquiries and bookings in tier-two and tier-one locations, though supply constraints present challenges.
• Triumph stands out targeting the 30+ age group seeking premium leisure riding, employing exclusive dealerships and unique pricing to enhance ownership experience.

• International Housewares Retail (1373 HK) reported weaker than expected numbers, with revenues down 3% YoY and profits down 18% YoY for FY23 (down 10%/42% for H2 FY23).
• The cause for the decline was the roll-off in COVID-related subsidies worth 30 mn HKD and weak revenues in Q4 FY23 owing to a surge in outbound travel.
• The company declared a 10-cent final dividend ( Full Year: 22 cents). Post the correction in share price, it represents an 8.3% dividend yield. 

• ACMR reported C2Q23 top-line, non-GAAP EBIT, and non-GAAP net profit 22%, 130%, and 209% vs. our est., and 25%, 228%, and 248%, respectively. 
• As FY guidance was unchanged, we suggest that the revenue beat was due to tool delivery faster than expected (i.e., order pull-in).
• We maintain our FY23 revenue estimate, but raise our net margin estimate to reflect the better-than-expected impact of USD appreciation on profitability. 

• We believe that Kuaishou’s outsized bottom-line beat for 1H23 was driven by stronger advertising and e-commerce business and cost reduction than the street expected.
• However, the market’s muted response suggests that investors are looking beyond 1H23 or even FY23 to price in a mature growth outlook.
• Kuaishou is trading at ~40x our FY23 estimate against 24% earnings CAGR from 2023 to 2025 which represents a hefty valuation premium over other China tech giants.

• Astellas Pharma (4503 JP) reported Q1FY24 results, with revenue beating and operating and net profit missing consensus. Revenue declined 2%, while operating and net profit increased 17% and 13%, respectively.
• Astellas has reiterated FY24 revenue guidance of ¥1,520B, while reduced operating profit guidance by ¥29B to ¥259B (+95% YoY) and net profit guidance by ¥23B to ¥204B (+106% YoY).
• On August 4, Iveric Bio has received FDA approval for Izervay for the treatment of geographic atrophy secondary to age-related macular degeneration, which impacts approximately 1.5M people in the U.S.  

• ZHD reported F1Q/C2Q23 top-line, non-GAAP operating profit and non-GAAP net profit in-line, in-line and (32%) vs. consensus, respectively. Earnings miss was driven by wider tax expense.  
• ZHD’s B2C e-commerce platform GMV continued to decline, which we suspect is due to the continued impact of STAT, especially Shein.
• We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of ecommerce customers. 

• Transport industry officials want to ban ‘free shipping’, forcing customers to pay for all deliveries and even redeliveries.
• The aim is to reduce demand in time for new rules on driver overtime due to come into force next year and should relieve pressure on Yamato and others.
• There is also more collaboration to reduce costs and labour: Yamato has scrapped its small packet business entirely, passing customers on to Japan Post. 

• We expect Li Auto to report 2Q23 top line and GPM 2.3%/in line vs. cons. We think Li Auto’s share gain in Q1/Q2 reflects market consolidation.
• Our channel check found its weekly order intake remains robust at ~10k. We expect the capacity ramp-up to lead to Q3 delivery of ~100k, 12% vs. cons. 
• We reiterate Li Auto as our top pick, due to 1)  strong model cycle (L9/L8/L7) and channel expansion; 2) margin upside. Li’s MEGA BEV could be the next catalyst.

• HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued. 
• Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.
• Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.

• We expect MNSO to report C2Q23 revenue 4.6% higher than cons and non-GAAP NI in-line with cons. The beat is due to strong sales from larger ticket size &store expansion.  
• We think the brand upgrade strategy had effectively drove up Miniso stores’ blended ASP, combined with mild recovery of foot traffic, leading to 46% YoY growth in China revenue.
• Besides, we anticipate 37% YoY growth in oversea revenue and 43% YoY growth in total revenue in C2Q23. We maintain Buy rating and raise TP by US$0.5 to US$26.

• In terms of net fund flows over the month, retail investors net bought S$8.2 million of S-Reits while institutional investors net sold S$86.4 million in the sector.
• However, there were 10 S-Reits and property trusts which recorded net institutional inflows in the month of July.
• They were Keppel DC Reit, CapitaLand Integrated Commercial Trust (CICT), CapitaLand India Trust (Clint), ESR-Logos Reit, Far East Hospitality Trust, Digital Core Reit, Paragon Reit, Sasseur Reit, First Reit, and BHG Retail Reit.

• Share buybacks by primary listed companies 28 Jul – 3 Aug 2023 Stocks that booked the highest net institutional outflow over the five sessions included Singapore Airlines, Frasers Logistics & Commercial Trust, Genting Singapore, Jardine Matheson, CapitaLand Investment, Venture Corporation, Mapletree Pan Asia Commercial Trust, Suntec Reit and Sheng Siong Group.
• There were four primary-listed companies conducting share buybacks over the five trading sessions through to Aug 3 with a total consideration of S$11.4 million.

• On Friday container giant AP Moeller – Maersk A/S (MAERSKB DC) raised FY23 guidance, lifting the bottom of its EBITDA range & increasing target FCF from US$2bn+ to US$3bn+
• Despite beating Q2 expectations and raising FY guidance, management warned that the “normalization” of container shipping conditions is taking longer than anticipated
• Maersk’s shares traded down on the news, but the company’s statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk’s TTM ROIC 34%!)

• Sanofi, a French multinational healthcare company, terminated the SHP2 inhibitor RMC-4630 development and commercialization agreement in 2022. The company did not disclose any specific reasons.
• However, Revolution Medicines regained all global rights granted to Sanofi, and management reiterated that RMC-4630 is a potentially important RAS oral inhibitor in the company’s pipeline.
• A US-based oncology company completed a public equity offering in March and raised ~$324M of net proceeds. Moreover, Revolution Medicines acquired EQRx and secured access to $1B+ of capital. 

• Eisai Co Ltd (4523 JP) reported 7% YoY revenue growth in Q1FY24, due to the growth of anticancer agent Lenvima mainly in the U.S. and insomnia treatment Dayvigo in Japan.
• The company has reiterated FY24 guidance, which calls for 4% YoY revenue decline, 25% YoY growth in operating profit, and 31% YoY decline in net profit.
• On July 6, 2023, Eisai received full FDA approval for Leqembi (lecanemab) injection for the treatment of Alzheimer’s disease. Leqembi is progressing steadily toward treating 10K U.S. patients in FY24.

• The rally of TCM companies has probably come to an end. But we think there would be good trading opportunities in 23Q4. Things could become challenging again in 24Q1.
• If P/E is used when calculating the valuation of innovative pharmaceutical companies, unreasonable situations may arise. Sales profit rather than net profit could be a better choice for P/E.
• Although iRay’s current P/E has fallen in reasonable range, due to concerns about its long-term growth prospects, valuation could further decline in long term. So, just short-term trade is recommended.

• Mettler-Toledo International delivered a mixed result in the recent quarter, with revenues below market expectations but managed to surpass the analyst consensus regarding earnings.
• The sales growth included strong growth in the company’s service business as well as solid performance across its industrial product classes.
• In China, market demand deteriorated due to growing uncertainty around the pace of limited government stimulus and economic growth.

• The Hershey Company delivered mixed results for the previous quarter, with revenues well below analyst expectations but managed earnings beat.
• The categories continued performing pretty well, with consumer demand for every great-tasting snack staying quite buoyant across the globe.
• Advertisements, as well as related consumer marketing expenses, increased.

• Keurig Dr Pepper delivered a solid result and managed an all-around beat in the last quarter.
• The consolidated results of the quarter were quite healthy, with strong revenue momentum and sequentially accelerating EPS and income growth.
• In the CSD category, Dr Pepper gained market share, strengthened by the success of Strawberries and Cream and the continued momentum of Dr Pepper Zero Sugar.

• Royal Caribbean managed to exceed analyst expectations in terms of revenue as well as earnings.
• During the quarter, the company delivered an increase in the number of vacations and saw good guest satisfaction scores.
• For Royal Caribbean Cruises, new hardware has been quite a great differentiator enabling it to attract new customers into its vacation ecosystem and drive quality demand.

• WW Grainger Inc. delivered mixed results for the previous quarter, with revenues below the analyst consensus.
• The quarter finished with daily sales growth.
• Along with the strong top-line growth of WW Grainger, it delivered continued ROIC, robust operating cash flow, and substantial EPS growth.

• Valero Energy Corporation delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
• The refineries of Valero ran well with the throughput capacity utilization because refinery margins were supported by continuous demand balances and tight product supply.
• We give Valero Energy Corporation a ‘Hold’ rating with a revised target price.

• Martin Marietta Materials delivered an all-around beat in the most recent quarterly results.
• Martin Marietta achieved robust results across many areas, which includes an increase in consolidated total revenues, consolidated gross profit, adjusted EBITDA, and aggregates gross profit.
• We give Martin Marietta Materials a ‘Hold’ rating with a revised target price.

• In our prior insight Ferrari: Classic Fisher Company, Almost Perfect Score on The Fisher 15 Framework, we talked about Ferrari N.V. (RACE US) being a classic Fisher company.
• Q2 2023 (a quarter with 14% revenue growth/34% profit growth) showed the execution runway (order book/product mix) is tremendous, and over the long term, value can be created.
• In the short term, though, trading at 46x/40x FY23e/FY24e despite upping its guidance, there could be a case to queue up for a more favorable entry price. 

• The ACCC has decided not to authorize the ANZ takeover of Suncorp-Metway Bank
• Can be positive for ANZ without executive risk, integration costs, unknown new risks
• Differentiator ANZ to peers its islessor exposure to Australia, and better credit metrics

• With that out of the way, let’s dive into Taste Gourmet, a catering group listed in the secondary market (or GEM board) of the Hong Kong Stock Exchange.
• Catering is usually a business with little moat, characterised by low barriers to entry. 
• While some brands are widely recognizable, humans generally want to devour something different each day, therefore it is an everyday struggle for restaurants to stand out among competition.

• Toyota Motor Corp., the world’s biggest car seller, has announced plans to consolidate its research and development (R&D) resources in China and ramp up its focus on electric vehicles (EVs), as it attempts to revive stalling sales in the highly competitive market.
• The Japanese automaker said on Monday it would change the name of its largest R&D facility in China from Toyota Motor Engineering & Manufacturing (China) Co. Ltd. to Intelligent ElectroMobility R&D Center by TOYOTA (China) Co. Ltd., and consolidate engineers from its three China ventures into the newly named facility based in Changshu, Jiangsu province.
• Among other plans, it would also strengthen local development of electrified vehicles (EVs) including battery, hybrid and plug-in hybrid models and accelerate the development of an electric powertrain with its two biggest suppliers, Denso Corp. and Aisin Corp., the company said.

• 3P, subscription, and AWS grew by mid to high teen while ad segment increased by 20%+
• The mix-shift from product to services in Amazon continues as services mix increased from ~40% in 2018 to ~60% in 2023.
• Let’s start more segment level discussion with AWS.

• Ideanomics had a strong quarter.
• Solectrac and Energica, in particular, demonstrated strong growth and demand in the agriculture and motorcycle markets.
• Ideanomics remains committed to its capital investment for future profitability, with an optimistic outlook driven by the increasing demand for the company’s products and services.

• TPL captured more water business in the second quarter than the Company had previously achieved leading to revenue and earnings exceeding our expectations
• The water business has been a revenue source smoothing out the volatility associated with the movement in oil and gas prices and production levels
• While TPL is not expecting to repeat second quarter levels in the third quarter, the water business should continue to perform better than previously expected

• 2Q23 revenue of $37.6 million was above consensus of $36.4 million.

• The challenging advertising market conditions have continued but EPS of $0.09 was significantly ahead of consensus of a loss of $0.01.

• The company (which has no debt) has more than $73 million in cash and reaffirmed its full-year guidance.

• ASRT reported better than expected second quarter revenue, but surprised investors with the announcement of a generic competitor for Indocin leading to management pulling guidance.
• Indocin has been on the market for many years and generic competition was likely. Yet, there is no information on how well the competitor could manufacture enough indomethacin 
• We do not believe the third quarter is at risk and we doubt more generic competitors would surface.

Canacol Energy issued an operational update on 3 August that included gas sales and drilling plans. July 2023 gas sales were 197mmcf/day, in line with sales a year earlier. However, perhaps more importantly, the group is mobilising two additional rigs to increase production capacity to meet potential higher demand due to the emerging El Niño effect.

• We believe the added threat from Apple Pay has been one of the reasons for the worsening profit margins and lower than expected sales growth of Kakao Pay in 2Q23. 
• After the poor earnings results in 2Q 2023,the consensus is likely to reduce Kakao Pay’s sales estimate in 2024 by 3-5% and positive operating profit to be postponed to 2025. 
• We continue to be Bearish on Kakao Pay due to its high valuations, likelihood of consensus earnings downgrades, heightened competition, and concerns about continued profit margin weakness.   

• HK inno.N (195940 KS) recorded impressive sequential improvement in 2Q23 result, while YoY comparison is negatively impacted by high base due to one-off cervical cancer vaccine revenue recorded in 2Q22.
• In 2Q23, revenue increased 11% QoQ to KRW204B and operating profit grew 172% QoQ to KRW15B. Growth was mainly driven by a 19% QoQ growth in K-CAB domestic revenue.
• HK inno targets KRW1T K-CAB revenue by entering 100 countries globally by 2028. The company is adding new growth engines such as IV fluids products, MSD vaccine, and biosimilars.

• Intel Corporation delivered a positive result and managed an all-around beat last quarter, demonstrating ongoing financial improvement and validating its market approach.
• As per the management, Intel’s ability to successfully implement all of its process and product roadmaps is restoring consumer trust in the company.
• We give Intel Corporation a ‘Hold’ rating with a revised target price.

Founder Securities Co. Ltd.’s third-largest shareholder, China Cinda Asset Management Co. Ltd., is selling 2% of the brokerage’s stock worth 1.2 billion yuan ($166 million).

The share sale is to meet Cinda’s needs for corporate operations, Founder Securities said Monday night in a statement.

China Cinda, the nation’s biggest state-owned bad-debt manager, plans to sell as many as 165 million shares of Founder Securities between Aug. 23 and Feb. 22, 2024, through centralized bidding, the brokerage said.

• JEV announced its first boiler sales order which will support a district heating system of a prominent university.
• This morning, Jericho Energy Ventures Inc. (JEV:TSXV, OTC:JROOF) announced that it has signed its first boiler sales order with a prominent Western University to support its district heating system.
• Additionally, last week, JEV announced a collaboration with a leading alcoholic beverage company to conduct a study using the DCC boiler.

• Strategic shifts continue to reap rewards–IDHoldings’Q1 FY3/2024 performance demonstrated a continuation of the robust results experienced in FY3/2023, with DX remaining the core demand driver.
• Business segment sales in System Management, IT Infrastructure, and Cybersecurity, Consulting, and Training grew strongly YoY, demonstrating that the company’s efforts to remodel its business have been successful to better support and serve its customers.
• We have kept our earnings estimates unchanged for FY3/2024 and beyond, with the expectation that high-margin DX demand will continue, driving continued profitability improvements in the business.

• EDG reported assay results for four drill holes at the Eagle Zone, intersecting high-grade mineralization to a downhole depth of 284m, extending the down-dip plunge by ~180m.
• This morning, Endurance Gold Corporation (EDG:TSXV) provided an update on the ongoing exploration program at its Reliance Gold Project and assay results for four of the deepest holes drilled to date in the Eagle Zone.
• The assays summarized in Table 1, are from the first four holes drilled to test the downdip extensions of mineralization at the Eagle Zone.

Worldwide Healthcare Trust (WWH) has two co-managers, Sven Borho and Trevor Polischuk, at global healthcare specialist OrbiMed. They are very optimistic about the fundamentals for the healthcare sector. The managers are encouraged by high levels of industry innovation, increased clarity around US drug pricing, which removes a long-term overhang, and the acceleration in M&A, which historically has been an important driver for the performance of healthcare stocks. WWH’s results have already benefited from the recent acquisitions of three of its biotech holdings at meaningful premiums to their pre-bid share prices, as pharma companies seek to bolster their revenues and pipelines ahead of an upcoming major patent cliff. The managers are particularly bullish on the prospects for emerging (smaller-cap) biotech stocks as these have experienced the worst and longest period of underperformance in their history. WWH has recently had a 10:1 share split to make the company more accessible for smaller investors.

• Comcast Corporation delivered an all-around beat in the most recent quarterly result.
• Total revenue increased, driven by ongoing operating leverage at the company’s high-margin Connectivity & Platforms business as well as significant growth at studios and theme parks.
• Residential connectivity revenue increased with growth in domestic broadband, wireless revenue, and international connectivity.

• Country Garden Services (6098 HK) announced a profit warning for 1H23 last night, expecting sales to increase by 3-4% yoy and net profit to see a 0-10% drop yoy.
• The company also announced the intention to repurchase up to 10% of total shares outstanding. 
• Share price up +18% following the profit warning and share buyback announcement – a good read-across for the rest of the sector that will report interim results later this month. 

• Luckin Coffee reported 2Q23 revenue beat our est. by 7.5%, and non-GAAP NI beat our estimate by 84.1%. 
• The top-line beat is driven by stronger product sold on average store sales, the bottom-line beat is driven by economies of scale and less than estimated sales promotion.  
• We maintain the stock as BUY rating and raise TP by US$5.5 to US$43/ADS (27x PE in 2023) to factor in the outlook of sustainable margin improvement.

• We expect Hua Hong to report C1Q23 top-line and non-IFRS net income in-line and (24%) vs. cons., respectively, missing mainly due to one-time costs. 
• Hua Hong’s post-A share IPO valuation is cheap at 0.7x P/B, but we expect that weakening industrials demand and a slow recovery to hamper shipments.
• We maintain BUY but cut Hua Hong’s TP to HK$ 34 reflecting lowered wafer shipments estimates for FY24/25. Our TP implies 15x FY24 PE.

• Hanwha Galleria (452260 KS) is the 23rd company in our Korea Small Cap Gems series. 
• Hanwha Galleria is a spun-off company from Hanwha Solution. Hanwha Galleria’s shares have declined 39% since being relisted on 31 May 2023. 
• Hanwha Galleria is a deep value stock with undervalued real estate assets. Chairman’s son is also buying aggressively and there is a big catalyst for Five Guys launch in Korea. 

• ANA has just announced that it will purchase carbon removal credits underpinned by Direct Air Capture (DAC)
• The purchase of 30,000 credits over 3 years is virtually nothing compared to the company’s annual CO2 emissions over 12 million tons
• Assuming that DAC is expected to remove just 10% of emissions, we estimate that it could wipe out over 70% of operating profit

• Realized/Unrealized gains on securities are increasingly oversized relative to profit
• In the latest quarter these are USD10.1bn compared with net profit of USD7.0bn
• HSBC’s credit costs rose over 100% both YoY and QoQ

• The market’s reaction to WuXi AppTec’s 23H1 report was positive due to some improvements in performance, but we don’t think WuXi AppTec has reversed its predicament completely if look closely.
• We deep dive the challenges/risks in macro environment faced by US/Europe. The orders WuXi AppTec received from MNCs can’t guarantee future growth momentum if the US cannot achieve “soft landing”.
• We advise investors not to be blinded by the high growth of CXO in the past since the prosperity of CXO industry may face continuous downward pressure in the future.

• We estimate Taste Gourmet (8371 HK) to deliver 39% YoY revenue growth and about 13% YoY profit growth (adj 350% YoY) for Q1 FY24e, to be declared on August 10th.
• The company is expected to go ex-dividend on the 4th of August and pay out a 5.2-HK cent final dividend by the 24th of August for FY23.  
• Trading at 6x FY24e PE /20% of the market capitalization in cash and a 9-10% dividend yield ( based on a 50-60% payout ratio) represents a great investment opportunity.

• Q2’23 revenues of $12.9 billion, down 15% YoY but up ~10% QoQ and handily beating the guided midpoint of $12 billion.
• Q3 outlook for $13.4 billion at the midpoint, up 3.8% sequentially
• Mr Gelsinger envisages a centrino-like era of AI-enabled PCs, starting with Meteor Lake in H2’23. Is this realistic?

• Teradyne delivered an all-around beat in the previous quarter.
• The company’s performance met expectations, but segment-wise, the test business showed more strength, while robotics faced challenges with softer demand.
• Teradyne also recently introduced the Teradyne Archimedes analytics solution, an open architecture that brings real-time analytics to semiconductor testing.