Equity Bottom-Up

• A Review on Final Results Oriental Watch recently announced its earnings for the fiscal year, and the results were quite impressive.
• On June 20, 2023, the company reported a revenue of HKD3.7 billion and a net profit of HKD295 million.
• These figures surpassed our initial estimates of HKD3.

• Bangkok Dusit Medical Services (BDMS TB) recorded 4% YoY growth in hospital revenue in 1Q23, driven by higher patient intensity at Center of Excellence (COE) and returning of international patients.
• However, Thai patient revenues decreased 6% YoY due to a decrease of COVID-19 related revenues, in line with improving COVID-19 situation in Thailand.
• BDMS targets to increase its bed capacity to ~9,000 beds in 2027 from 8,400 beds in 2022. BDMS targets revenue CAGR of 6–8% during 2023–2025.

• Takeda Pharmaceutical (4502 JP) announced yesterday that the company has voluntarily withdrawn the US Biologic License Application for dengue vaccine candidate (QDENGA) citing issues over data collection.
• As per Fierce Pharma, the decision to withdraw was due to additional data requested by the FDA which were not captured by Takeda’s Phase 3 TIDES trial.
• Takeda’s share price dropped more than 2.0% during today’s trade, however, we would not be too concerned as efficacy and safety profiles of the trial has already been established.

• In my previous insight Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV, I highlighted why one must explore the stock as a viable investment.
• NCAV (Net current asset value) in FY23 was 7.5 HKD/share ( Vs. current share price of 4.25 HKD/share), with net cash + ST/LT financial investments now at 9.7 HKD/share. 
• Absolute DPS ( dividend per share) was 35 cents representing a yield of 8.2% ( payout ratio of 55%). The trailing PE is 6.6x FY23. 

• On 3 July 2023, the Ministry of Commerce of China announced that it will restrict exports of gallium and germanium starting next month.
• YMC is one of the key beneficiaries in Korea of China’s restriction of gallium exports. YMC makes silicon carbide which can be a substitute material for gallium.
• YMC’s valuation is relatively cheap. Given that YMC currently has a market cap of 150 billion won, this would represent P/E of 7.3x (using 2022 net profit). 

• Marsh & McLennan managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• The company had significant growth in most of its businesses, market sectors, and geographical areas, with Marsh, Guy Carpenter, and Mercer all experiencing faster underlying growth than in the previous quarter.
• Guy Carpenter’s revenue was $1.1 billion, driven by solid growth in all areas and worldwide specializations, reflecting tighter reinsurance market conditions.

Martin Currie Global Portfolio Trust’s (MNP’s) relative performance is back on track following a tough 2022, when investors favoured value and cyclical companies rather than growth businesses. Manager Zehrid Osmani has remained disciplined, seeking high-quality, long-term growth companies, and has retained his five- to 10-year investment horizon. Over the last decade, the trust has generated robust double-digit absolute annual NAV and share price total returns of 10.3% and 10.6% respectively. Within the AIC Global sector, MNP’s NAV total returns are above average over the last one and five years.

• Colgate-Palmolive’s share price performance over the past few years is not as grim as it might look on the surface.
• Improving gross margin remains the only game in town for future shareholder returns, according to the company.
• Colgate-Palmolive Company (NYSE:CL) is rarely seen as an attractive investment opportunity as the company significantly underperformed the S&P 500 and the consumer staples sector in particular over the past 5-year period.

• Yerbaé announced a strategic partnership with Farrell Distribution, a renowned distributor of premium beverages in Vermont.
• YERB.U extended its partnership with CrossFit champion Annie Thorisdottir and launched new flavours in Sprouts Farmers Markets.
• However, Yerbaé (3.7x 2024E sales) continues to trade at a sizeable discount to Celsius at 7.7x 2024E sales and Monster Beverage at 7.0x 2024E sales.

• Three weeks ahead of the global launch of TMNT Mutant Mayhem momentum is building
• Google Trends searches reveal rising interest in both movies and toys
• Risk/Reward is still highly attractive, last time a TMNT movie was a success stock hit 4 HKD

• Ant Group Co. Ltd. has offered to buy back some shares at a whopping 70% discount to the unrealized valuation for its ill-fated IPO, shortly after regulators hit the fintech giant with an almost $1 billion fine.
• Ant Group announced Saturday that it had proposed to repurchase as much as 7.6% at a price that values the company at approximately 567 billion yuan ($78 billion).
• The offer represents a roughly 40% discount to the approximate 960 billion yuan figure achieved in Ant Group’s last fundraising round in 2018, and is around 70% cheaper than the 2.1 trillion yuan valuation touted in its planned 2020 IPO.

• Gasoline retail prices have caught up with declining wholesale prices, and it should lead to around 16-20% QoQ decrease in retail fuel margin to ¥35-37 cents per gallon.
• US gas station merchandise sales exhibited weak performance this year, experiencing YoY growth rates of 5%, -2%, -15%, -17%, and -22% during the first five months.
• We anticipate around 25% downside for Seven & I Holdings (3382 JP) after earnings, as it may face challenges in achieving its FY24 guidance.

• Rorze’s stock price has risen 35% since we became bullish on the stock in August
• Q1 sales and operating profits big miss versus analyst consensus due to slowing semicon capex cycle
• We would be buying into any stock weakness with an eye on recovery in 2H23 into 2024

• Dr Lal PathLabs Ltd (DLPL IN) reported 14% and 16%, YoY, revenue growth from its non-COVID business in 4QFY23 and FY23, respectively.
• The company’s base business is now back to pre-COVID trajectory. Margins are also nearing pre-COVID level. Going ahead, the company has couple of margin levers.
• Due to lesser competitive threat and uncertainty over COVID, FY24 is lesser challenging than the previous year. The company expects higher revenue growth in FY24 than FY23.

• BeiGene and Novartis mutually terminate the Option Agreement on ociperlimab. Our interpretation is Novartis may think its clinical data wouldn’t meet expectations, and is therefore unwilling to take the risk.
• Theoretically, BeiGene still has the possibility of creating miracles to turn things around, but based on the current situation, the risk of TIGIT project failure is already very high.
• We suggest that investors can reduce the position of BeiGene in advance or even consider offload entirely (In case its stock price falls due to unsatisfactory clinical data in 23H2).

• Chariot has raised US mm of new equity priced at £0.14 per share.
• The company is also looking to raise up to an additional US$3 mm through an open offer. 
• The proceeds of the raise will be used to drill four new low cost/low risk exploration wells onshore Morocco in a licence expected to be awarded imminently.

• Moderna’s move into China helps ease its current performance difficulties. But China has its own regulations/policies on vaccines. Whether Moderna can successfully adapt/stand out in China remains to be seen.
• The entire vaccine industry in China is expected to undergo significant changes. We listed the companies in this industrial chain that would benefit from the successful signing with Moderna.
• An important signal behind this deal is that while significant differences remain at the top, mutually beneficial business cooperation between China and US will continue, providing investors with additional options/confidence.

• It attracts investors when a company’s 15-year ROCE averages over 25% (and has never gone below 20%). Sheng Siong (SSG SP) is one of those companies.
• With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.
• We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.

• TSMC winning with Nvidia’s business, beating Samsung due to TSMC’s advanced packaging technology; this highlights the rising importance and complexity of chip packaging.
• China export restrictions for rare earths used in semiconductors highlight opportunity for U.S. and Australian rare earths producers. We identify two potential plays.
• Nanya Technology Earnings: DRAM market has bottomed, sees industry improvement ahead. We see a trading Long opportunity.

• Recruit Holdings (6098 JP) ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.
• The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.
• Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.

• We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus. For C2Q23, we raised (1) Taobao/Tmall GMV/CMR estimates due to return of merchants, 
• (2) International Commerce and Cainiao revenue estimates, and (3) EBITA margin estimates for all groups except cloud. We maintain our BUY rating and raise TP to US$ 116 TP, 
• Due to 1) merchants return to Taobao/Tmall;  2) independent listing of groups; and 3) improved incentive structure after the organizational change.

• HEROZ is an AI technology company that provides advanced AI development expertise to both B2C and B2B sectors.
• With a strategic focus on AI SaaS, it has embarked on a ‘buy-to-build’ strategy to develop profitable recurring revenue streams and accelerate earnings growth.
• In September 2022, it consolidated VarioSecure (4494), a subsidiary offering network security services, and in August 2022 acquired Strategit, a SaaS integration development support business.

• Moderna Inc (MRNA US) has submitted marketing authorization applications for the investigational RSV vaccine, mRNA-1345, in Europe and Australia and initiated submission process in the U.S.
• Moderna anticipates to launch RSV vaccine in 2024 in US. Each year in US, approximately 60,000–120,000 older adults are hospitalized, and 6,000–10,000 of them die due to RSV infection.
• This year, FDA has already approved two RSV vaccines, Arexvy from GSK and Abrysvo from Pfizer, which are scheduled to be launched in the U.S. by this fall.

• Kraft Heinz delivered a positive result and managed an all-around beat in the last quarter.
• In the quarter, the company introduced It Has to be HEINZ, a new worldwide campaign that represents the brand’s first unification under a single creative approach.
• We give The Kraft Heinz Company a ‘Hold’ rating with a revised target price.

• Honda Motor’s results were a major disappointment as the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street. but, their efforts in cost reduction and improved pricing strategies helped maintain an operating profit margin above 5%.
• Additionally, they aim to provide attractive dividends to shareholders, with a significant increase per share and a share buyback program.

• PDD delivered an all-around beat in the previous quarter and the company saw clear recovery trends.
• Revenue increased in the quarter and contributed to a total of RMB37.6 billion.
• PDD has also launched its electronic shopping season and invested millions of RMB for promoting universal and high-quality access to reading.

• Jabil delivered a strong result and managed an all-around beat in the last quarter.
• The company’s growth was driven by improved profitability in electric vehicles, healthcare, renewable energy infrastructure, and cloud sectors.
• The healthcare sector also presents opportunities for Jabil, with increasing interest from OEMs seeking outsourcing manufacturing solutions.

• China’s regulators on Friday imposed Ant Financial Services Group (6688 HK) with a fine of RMB 7.12bn. A day later, Ant Group unveiled a share buyback program worth $6bn.
• The last time media created a positive narrative around Ant Group was in January 2023 when Jack Ma relinquished control of the company.
• However, the media excitement was short-lived as Alibaba Group Holding (9988 HK)‘s share price quickly resumed a downward trend after rising by around 22%.

• CDF’s 1H23 preliminary results suggest that business recovery remains on track. Voices of bottom-fishing are getting louder as free fall in its share price already erased 50% market cap YTD.
• We believe the dynamics have fundamentally changed compared to three years ago when CDF was the stock market darling. Investors need be aware of the anchoring effect in making decisions.
• Moderate growth, pressured margin and contracted valuation multiple will be the new reality facing investors of the stock in our view. Wait for better entry point.

• Meituan’s food delivery has taken 20% of the Hong Kong market share in its first month’s operations.
• The authorities suggests that they will not further restrict financial apps such as AliPay of Ant Group.
• Tencent’s WeChat Pay charged a money transfer commission, but it exempted university campus the next day.

• Last year was pivotal for Yahoo Japan: despite record group performance, GTVs in e-commerce actually fell despite continued strong growth in the sector 
• In a recent survey, Amazon was the most frequently used e-commerce mall at 49.6%, followed by Rakuten (32%), but Yahoo was far, far below at just 9.8%.
• Yahoo Shopping is now not only less popular with consumers, even merchants are dissatisfied – which is saying something when the service is essentially free.

• Bumrungrad Hospital Pub Co (BH TB) recorded 48% YoY increase in revenue from hospital operation to THB6 billion in 1Q23, mainly driven by 78% YoY revenue growth from non-Thai patients.
• International patients contributed 55% of total revenue in 1Q23. Middle East and Indochina remained the two most important growth drivers, with YoY revenue growth of 147% and 60%, respectively.
• The company is constructing a 150-bed boutique hospital in Phuket, one of the world’s most coveted island travel destinations, thereby opening immense opportunity for medical tourism.  

• We cut our revenue estimations for 2H23, mainly due to increased uncertainty surrounding the launch of “Uma Musume.” 
• We also lower our estimations for live streaming due to concerns about macro factors. We slightly raise our estimations for BILI’s advertising business…
• …as we anticipate that it will benefit from gaming and e-commerce. Our rev./non-GAAP net income are 1.0% and (6.4%) vs cons in 2Q23. Cut TP to $12.3, maintaining “Sell” rating.

• VBP would continue to have an impact on Hansoh’s generic drug business in 2023.Such negative impact would gradually fade from 2024 as big varieties have all been included in VBP.
• The core difference between Hansoh and Hengrui is that someone similar to Zhang Lianshan’s role arrived late, resulting in a slower start and weaker overall framework for innovation drug business.
• Hansoh Pharmaceutical (3692 HK) is still in the process of business transformation. Before the harvest time of innovative drug pipeline comes, Hansoh’s valuation growth would still be a long-term story.

• NHSA released the new NRDL negotiation rules of innovative drugs. Some adjustments will bring certain benefits to innovative drugs, but the overall impact will not be as good as expected. 
• Beijing announced that 16 assisted reproduction technologies will be covered by medical insurance reimbursement from July 1. This policy should benefit companies in the assisted reproduction industry chain.
• We analyzed the key flaws of Kintor Pharmaceutical (9939 HK), and we remain skeptical about this company.

• Delta Djakarta (DLTA IJ) is a cheaper small-cap option to play the recovery of tourism in Indonesia instead of Multi Bintang Indonesia (MLBI IJ) 
• It’s 5Yr/10Yr average ROCE is 22%/29% lower than MLBI IJ due to the high net cash on the balance sheet, ~25% of the market capitalization.
• Trading at 11x PE and 10% dividend yield on normalized earnings (Assuming a 110% payout ratio since the 5 Yr average is 120%), the stock is super cheap.

• TOA Paint is Thailand’s leading decorative paints player with a 48% market share and a good track record but it has become caught up by association with STARK Corporation.
• This looks like a guilt by association sell down given there are no visible business connections between STARK and TOA Paint but the eldest son of the family controls Stark.
• The second son of the Patriarch is CEO of TOA Paint, which is otherwise enjoying a strong recovery in demand plus lower input costs. Valuations have declined to attractive levels. 

• Eisai Co Ltd (4523 JP) has received FDA traditional approval for Leqembi injection for the treatment of Alzheimer’s Disease. Following the approval, CMS confirmed broader Medicare coverage for Leqembi.
• Leqembi is the first and only approved treatment shown to reduce the rate of disease progression and to slow cognitive and functional decline in adults with Alzheimer’s Disease.
• Eisai pegged peak sales of Leqembi at $7.3 billion in 2030. The projection is based on the company’s estimate that about 2.5M people will be eligible for treatment by 2030.

• The monthly profit figures at Taishin are rising substantially, suggesting a strong 2Q23
• Taishin’s LDR had declined dramatically in 1Q23, monthly figures may suggest expansion
• With declining credit costs, to match lower NPLs, the outlook for Taishin’s profit is strong

• Olympic Industries (OLYMPI BD)  experienced weak 3Q earnings due to moderated growth, contraction of margins, and the impact of high inflation.
• Square Textiles (SQTT BD) recorded weak 3Q numbers due to factors such as a decline in yarn production, increased energy costs, and decreased yarn prices in the international market.
• Bashundhara Paper Mills (BPML BD)  delivered strong 3Q earnings driven by increased sales, leading to improved profitability.

• The company’s international sales growth is somewhat of a hidden asset, as the arena is underserved.
• Lululemon’s regional brand exposure is expanding with new store openings.
• The stock is theoretically undervalued, which is why the stock is undervalued.

• Amazon has significantly underperformed the broader equity market, in spite of the recent rally.
• The narrative for generative AI is strong, but the share price is currently driven by other factors.
• Margin improvements are being priced-in, which significantly limits any potential upside, without monetary conditions becoming supportive.

• Multi Bintang Indonesia (MLBI IJ) is Indonesia’s leading beer company, with a marketshare of 50% by volume. The company is 89% owned by Heineken. 
• The company has maintained an average 5 Yr/10 Yr ROCE of over 72%/82% and paid out 80-100% of its profits as dividends.  It is also net cash.
• The stock boasts a 6.5%-7% dividend yield and trades at 14-15x PE if profits normalize due to increased tourism in Indonesia, where we believe most of the demand is. 

• The Korean government announced today that it will allow a fourth telco in Korea in order to reduce the oligopoly structure dominated by the three existing telcos.
• This decision to allow another telco in Korea will have a major negative impact on the existing three telcos in Korea.
• On a relative basis, we think that this could have a worse impact than LG Uplus as compared to SK Telecom due to greater price sensitivity of LG Uplus’ customers.

• Genmab A/S (GMAB US) recorded 30% YoY growth in royalty revenue on net sales of Darzalex to DKK1,952 million, representing 68% of total revenue in 1Q23.
• Genmab has guided for 2023 Darzalex royalty revenue of DKK10.4–11.1B, compared to royalty revenue of DKK10.1B in 2022, based on estimated Darzalex 2023 net sales of $9.4 – 10.0B.
• In May 2023, Genmab received FDA approval for Epkinly as the first and only T-cell engaging bispecific antibody for the treatment of relapsed or refractory diffuse large B-cell lymphoma.

• The investor spotlight is on the HDFC Bank-HDFC merger, and we continue to favour HDFC Bank with its positive passive investor momentum, premium returns and merger synergy potential
• Bank of Baroda, although not in the limelight like HDFC bank, is our value stand-out among the Indian bank peer group and it warrants increasing investor attention, in our view
• Bank of Baroda is delivering on improving asset quality and returns; the shares have positive momentum, and we see great value on its 1x PBV ratio to ROE of 15%

• Recent events suggest change is en route at Anglo American plc.
• A managerial shakeup is in full swing with “next generation” leadership emphasized.
• Kio Kumba is pushing for a railway lease deal with the South African government.Investors must consider past and future impairment charges with caution.

• China accounts for over half of the automaker’s global sales.
• There is also potential for Chinese brands to encroach on European markets.
• Tesla’s valuation could be impacted by protectionism and nationalism, with questions over how China will tolerate overseas competitors in its electric vehicle market.

• Three risks in the short term: 1) Decreased gross billings from former legacies due to macro. 2) Lifecycle issues with new games. 3) Market over-optimism regarding new games and AI.
• NetEase still has some positive catalysts in the long term, including: 1) New games and content expansions. 2) Overseas game publishing. 3) Continual improvement in margins.
• We expect NetEase’s revenue in 2Q23 to be slightly lower than the consensus estimates of 2.5%, with a 13.3% beat in profits. Cut TP to $102, but maintain BUY rating.

• 1st Vertical | Recycling and Renewables: A very important vertical segment helping APERAM Group to attain a neutral CO2 emission footprint.
• Innovative business based on new technology. Companies active within the segment are ELG (Recycling), BioEnergia (charcoal production from forests; plant in Brazil, CO2 neutral), Recyco (metal recycling from dust).
• Represented 13% of consolidated EBITDA in FY 2022.

• The stock has surged by more than 60% since the turn of the year.
• The company’s acquisition strategy has resulted in significant market share and an ever-improving profit & loss statement.
• The stock’s PEG ratio of 0.26 speaks volumes.

• Our estimations for 2023 annual revenue range around $6,805 million and for 2024 around $7,354 million.
• The company’s annual revenue reached $9,701 million in 2022, compared to $10,518 million in 2021, posting a de- crease of 7.77%.
• West Fraser Timber Co. Ltd.’s gross profit for 2022 was $4,559 million, a decrease of 22% compared to $5,873 million for the corresponding period in 2021.

• Hero Motocorp (HMCL IN)  & Harley Davidson (HOG US) launched their collaborative creation, the Harley-Davidson X440, in India.
• While this is a step in the right and anticipated direction, there are potentially grave mistakes that need to be corrected.
• For HOG, there is more to lose than to gain from this development. Additionally, Eicher Motors (EIM IN) moat around the brand and a strong riding culture is likely underrated.

• We are bullish on Lawson and see fair value at Y7,500 per share based on 3% FY2/25 DPS of Y225/share
• The domestic convenience store business is recovering post pandemic leading to a possible earnings beat
• The market remains sceptical of mid-term growth drivers like Seijo Ishii and China expansion plans

• kopi-C with CEO of PropNex: ‘We’ve built a culture that can’t be replicated’ So firmly ingrained is this belief in informed decision-making that PropNex’s CEO Mohamed Ismail Gafoor has been advocating consumer education in the last ten years.
• As an integrated real estate services group, PropNex’s key business segments include real estate brokerage, training, property management and real estate consultancy.

• Macrotech Developers (LODHA IN) had several issues on the balance sheet and governance front earlier. While, the debt levels have significantly come down since the time, governance however needs improvement. 
• Flat sales and margin contraction, driven by some bizzarre expenses needs attention including some elongated debtors.
• We suggest investors should remain cautious about future uncertainty, as impairment of loans and adverse outcome of contingent liabilities may have a dent on the balance sheet. 

• SKC announced aggressive plans to expand its rechargeable battery, semiconductor, and ecofriendly materials and it plans to invest about 5 trillion to 6 trillion won in these businesses by 2027. 
• We believe that the company will use a combination of asset sales, sale of its treasury shares, and additional debt and equity raising in the next 3-5 years. 
• While the market welcomes sale of non-core businesses such as SK Pucore and sale of treasury shares, it is likely to have greater concerns about additional debt and equity raising. 

• Today’s post will be an interview with Tony Pialis, founder and CEO of Alphawave.

• Alphawave recently got the all-clear from their KPMG auditor, and shares have been unsuspended.

• This interview is lightly edited for readability. I have some thoughts at the end as well.

• United Rentals continues to perform well as the risk of a recession grows.
• The share price is not expensive as profitability and utilization rates remain strong.
• United Renters remains a sold long-term opportunity, but near-term risks should not be ignored, but United Rental remains a selling long- term opportunity.

Paradigm has announced the completion of patient recruitment for stage one (dose selection) of its pivotal Phase III trial, PARA_OA_002, a multi-centre (US/Australia/UK/EU/Canada), two-stage, adaptive, randomised, double-blind, placebo-controlled study to assess injectable pentosan polysulfate (iPPS) in patients with knee osteoarthritis (kOA) pain. Paradigm has efficiently recruited participants for the trial through various initiatives, such as through its partnership with NFL Alumni Health. Management expects stage one to be complete in Q3 CY23, and for stage two to commence with the most effective dose later in H2 CY23. The selected dose will also be used in the initiation of the separate confirmatory Phase III trial in H2 CY23. These events represent key milestones for Paradigm, in our view.

• Sido Muncul (SIDO IJ) performance during COVID was stellar and posted record high revenues and earnings without sacrificing margins. 
• FY 22’s result was the first time in many years that both revenue and net income decelerated. 
• Current valuations at 19x PER and 7x PBR are not cheap, historically or relative to their peers. 

Ahead of its H123 results and an anticipated period of increased business activity in the second half of the year, we present a preview of SIGA Technologies, which continues to have strong fundamentals (despite the bearish macro environment) with several potential inflection points on the horizon. The nearest catalysts, in our opinion, are the upcoming TPOXX deliveries to the US strategic national stockpile (which we expect in Q3/Q423) and data readouts from the post-exposure prophylactic (PEP) label expansion trials, anticipated in Q323, positive results from which could materially expand SIGA’s addressable market. With a strong balance sheet and potential incremental income generation for shareholders (via dividends and buybacks), we believe that SIGA has a resilient business case in the biotech space.

• We spoke with the management of Perfect Medical Health (1830 HK). The key highlight is a steady recovery for FY24e and an overall expansion of 60% in three years. 
• Expansion plans in HK (75% of revenue) have commenced, with ten centers opening over the year, adding to the existing 22 HK centers (one already opened in June 2023).
• They also highlighted an aggressive long-term goal of making one bn HKD of profit by FY26 (Mkt cap: 4.8 bn HKD) and short-term guidance of 30-40% profit growth for FY24e. 

• Rakuten Group (4755 JP), having experienced an 80% decline in value over the last 8 years, now emerges as an enticing prospect for value investors.
• The combined fair value of Rakuten’s Cards, Bank, and Mobile businesses now surpasses 100% of the company’s market capitalization.
• Rakuten Ichiba, valued at ¥600bn, appears significantly undervalued when compared to ZOZO Inc (3092 JP) and MonotaRO Co Ltd (3064 JP), which hold approximately 2.0x Rakuten Ichiba’s valuation.

• Kao has the lonest period of consecutive earnings growth in the Nikkei’s new “Consecutive Dividend Growth Stock Index”
• With a 2.8% yield and a long history of raising its dividend, Kao should definitely be on the income investor’s radar screen
• Despite the recent underperformance of the stock (-4% ytd), Kao does not represent compelling valuations

• EV adoption in the ASEAN is very low compared to developed markets including the US, the Europe and China due to higher ASPs and lack of logistics, maintenance and repair.
• However, there has been a rapid growth in EV related investment in the region recently, focusing on developing domestic EV markets to make them more affordable while conserving the environment.
• The governments have put forward several incentives such as government funding, tax incentives to buy EVs, while introducing measures to discourage the use of ICE vehicles.

• Q1FY24 AUM growth came in stellar at 9%+ QoQ, led by highest-ever quarterly AUM addition of INR 22700cr vs INR 16537cr QoQ. 
• BAF recorded its highest-ever quarterly increase in customer franchise at 3.84mm, taking the total to 72.98mm vs 69.14mm QoQ. New loans booked were also strong at 9.94mm vs 7.56mm QoQ.
• Deposits book grew strong to INR 49,900cr vs INR 44,666cr, a growth of 11.7%+ QoQ. Liquidity surplus is at INR 12,700cr vs INR 11,852cr QoQ.

• Key customers & their retail partners battling excess inventory, waning consumer demand, and market share losses in certain geographies
• Plans for capacity expansion amid demand uncertainties and alt data and macro picture may prove aggressive and along with risks of reshoring/nearshoring & friend-shoring may prove margin dilutive
• Consensus expectations for 2H23 and 2024 appear overly optimistic and valuation is not cheap given the growth profile

• Fenbi Ltd (2469 HK) is a newly listed China edtech company that focuses on tutoring for China civil servant exams.  
• The company’s share price was caught by a perfect storm in June, dropping by as much as 70% during the month.
• Very interesting opportunity to have exposure to a quality company in a sector that is very different from K12 tutoring.  

• Celltrion Inc (068270 KS) has launched Humira biosimilar Yuflyma in the U.S. market, with a list price of $6,576.50 per month, 5% cheaper than Humira.
• Yuflyma is a citrate-free formulation that is highly concentrated. More than 80% of patients treated with Humira in the U.S. rely on a high-concentration and citrate-free formulation.
• Celltrion has submitted marketing application to the FDA for Eylea biosimilar candidate, CT-P42. The company plans to file for approval for the same in Europe and other countries later.

• One of main criteria for ACCC to allow ANZ’s takeover of Suncorp centers around competition, will it worsen as a result
• There are 8 banks in Australia with over 100 branches, if the takeover is allowed, this puts the 127 Suncorp branches into the 668 branch stable of ANZ
• There is plenty of expert and public testimony that such a merger would see less competition especially in SME and agribusiness loans, and possibly limit physical access to banking

For FY23 Picton Property Income (PCTN) published resilient underlying (EPRA) earnings, which together with strong rent collection supported a 4% increase in DPS paid. The impact of market-wide property yield widening on NAV was mitigated by portfolio outperformance and low gearing. Continuing occupier demand, rent growth and mostly long-term, fixed-rate borrowings are positive indicators for further progress.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety. 
• Post the interim results, we provide short updates on each company and links to our latest work on them. 
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).

• Alibaba’s new chairman decides to provide logistics service to outside customers.
• We believe Alibaba is following JD Logistics, as both companies have large retailer bases.
• We suggest buying JD Logistics the role model instead of Alibaba the follower.

• News out this morning that HDFC Bank and HDFC merger became effective 1 July 
• This occurred after the Boards approved the merger scheme on 30 June
• Funding cost benefits, operating cost synergies, product cross-sale: major benefits

• Great Wall Motor Co. Ltd. (601633.SH +2.50%) said on Wednesday that it will enter the Vietnamese market in August with its Haval H6 hybrid model, while a broader plan to build an assembly plant for new-energy vehicles in the country is set for 2025.
• The Haval H6s will initially be exported to Vietnam from its manufacturing facility in Rayong, Thailand, the Hebei-based carmaker said earlier.
• Vietnam is the fourth-largest auto market in the Association of Southeast Asian Nations (ASEAN) region after Indonesia, Thailand and Malaysia, according to 2022 passenger car sales figures released by the ASEAN Automotive Federation.

• Since its spin-off from Siemens Group’s former Gas and Power division three years ago, momentum for the new formed Company has been picking up
• Siemens Energy is experiencing a rise in demand for green transition technologies as governments worldwide move away from fossil fuels.
• Siemens Gamesa has recently announced a profit warning. We feel that the market over-reacted as the shares plunged over 37% on the day, erasing €7bn in Siemens Energy’s market value.

• We recently discussed BABA’s management changes with more e-commerce practitioners, and our main conclusion is that this change will be more beneficial to BABA’s e-commerce business rather than other subsidiaries;
• BABA is expected to learn from Tencent and ByteDance by shifting from a centralized authority model to a racehorse mechanism. Some subsidiaries, especially AliCloud and Cainiao, undergo a painful transformation;
• This may be good news for BABA because its e-commerce  is the largest of its valuation. We also remind investors to exercise caution regarding the upcoming IPOs of BABA subsidiaries.

• Takara Bio Inc (4974 JP) is anticipating 32% YoY decline in revenue to ¥53B in FY24. Both operating and net profits are expected to decline more than 60% YoY in FY24.
• The company has formulated the medium-term management plan 2026 for the three-year period ending in FY26, with the final-year quantitative targets being operating profit of ¥15 billion and ROE 8%.
• Considering Takara Bio’s FY24 operating profit guidance of ¥8B, FY26 target seems to be aggressive and difficult to achieve.

• Combination of high NIM contraction with high loan growth is not a good combination
• BOC has seen its NIM down 14% in the past year but against 12% loan growth
• PBOC pressure to cut rates and for banks to support ailing debtors, is a risk

For Q123, Nano Dimension reported good progress in revenue, up 43.5% y o-y and 23.6% q-o-q to $15.0m. Continued investment in R&D resulted in an adjusted EBITDA loss of $23.7m. Revaluation of the company’s stake in Stratasys and interest income earned on cash resulted in net income of $22.2m for the quarter. With net cash of $974m at quarter end, the company is well-funded to pursue its acquisition strategy.

abrdn Private Equity Opportunities Trust (APEO) posted a 12-month NAV total return (TR) to end-May 2023 of 7.0%, supported by continued strong portfolio earnings momentum (up 28.7% over the 12 months to end-March 2023 for APEO’s top 50 holdings). Muted global M&A volumes continue to weigh on private equity (PE) exit activity, with APEO’s capital calls in the calendar year to end-May 2023 (£74.0m) outpacing distributions (£54.1m). That said, APEO’s undrawn credit facility and cash of £243.4m at end-May 2023 provide it with decent near-term balance sheet headroom, as these cover 35% of APEO’s outstanding investment commitments (which should be drawn gradually in the coming years).