Equity Bottom-Up

• We estimate that Baidu’s 1Q23/2023 bottom line would beat cons. by 13.2%/6.5%, mostly driven by better-than-expected recovery of ads business and cost-saving measures. 
• We remain optimistic about Baidu’s AIGC leading position, because Baidu still gains the edge for its first-mover advantage and continuous investment. 
• Maintain BUY rating and raise TP to US$175, implying 17.9X PE in 2023

• After losing nearly a third of its value, Amazon looks more attractive than a year ago.
• Investors should be mindful of recency bias when evaluating Amazon’s share price attractiveness.
• The unique business model also poses some risks that should be considered regardless of one’s investment horizon.

• Q1 better-than-expected sales led by Fashion & Leather Goods; positive surprise in the Selective Retailing division
• Beat on the back of China’s economic recovery and the resilience of the rest of the world, particularly Europe
• EPS estimates lifted by 4% and 5%. Momentum is strong.

• Open House (3288-JP) is a niche homebuilder in Japan that has a special expertise in building/selling cheap detached homes in urban cities.
• It participates in many segments of the residential property market, though earns the lions share (~60-65%) of its profits from the single-family homes business.
• Despite its relatively modest profile in the investment community, the company has a ~US$4bn capitalization. It trades at ~1.3x 2023e P/B and ~6.8x P/E.

• GTX has entered into an agreement with its two largest shareholders to force the conversion of its Series A Preferred stock into common stock
• The agreement with Centerbridge Partners and Oaktree Capital Management calls for GTX to repurchase shares $570 million of Series A Preferred stock and pay dividends owed
• GTX had already claimed it would have reached the adjusted EBITDA requirement for the forced conversion. The transaction is accretive to GTX’s earnings.

• Hisamitsu Pharmaceutical Co (4530 JP) reported better-than-expected FY23 results, as OTC business revenue from the overseas market, specially Salonpas increased more than expected. OTC business contributed 54% of total revenue.
• The company guided for FY24 revenue of ¥132B (+3% YoY), operating profit of ¥11.8B (+2% YoY), and net profit of ¥10.6B (-10% YoY). Dividend for FY24 is expected at ¥85/share.
• With the resumption of outdoor events globally, Hisamitsu’s OTC business will be the main growth engine, going ahead. The company is on track to achieve 7th mid-term management plan target.  

• IBM has delivered a positive return of nearly 20% over the past two years, but that has little to do with actual business performance.
• In addition to sluggish growth, IBM’s declining profitability remains a problem.Issues related to the company’s high debt load, low dividend coverage and an addiction to acquisitions have not gone away.

• Being an IBM (NYSE:IBM) shareholder hasn’t been easy over the years as the market continues to make new highs, while IBM still trades at levels from 2010.

• We expect JDL to report C1Q23 net revenue in-line with cons., and non-IFRS net margin lower than cons. by (0.5ppts). 
• Our FY23 revenue and net-profit forecasts are (5%) and (6%) below consensus, respectively. JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; 
• JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; We maintain JDL’s SELL rating and cut its TP to HK$ 9.2.

Norcros’s FY23 trading update highlighted a solid performance, particularly in the UK in H2, as well as the closure of the loss-making Norcros Adhesives division. We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share gain and M&A opportunities given its robust balance sheet. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly relating to the pension, have been resolved. We maintain our estimates and our 252p/share valuation implying c 40% upside.

• Charles Schwab is due to release its first-quarter 2023 earnings report on Monday.
• The firm’s sell-side trading activities remain in decline.
• The company’s elevated price-to-book multiple is a severe concern as slowing growth, a goodwill build-up, and recent impairment losses provide structural problems.

• Retail media in its traditional sense is nothing new, simply referring to the use of advertising in stores, but in modern terms retail media is something far, far bigger. 
• It is not only a trend in the US, but one that is about to explode in Japan – although in a very different format.
• With purchase rates up two-fold in early experiments, the potential for brands advertising through retail stores will be significant with some estimates suggesting a ¥20 trillion market.

• After declaring a whopping 18% dividend yield in FY22, we expect Shougang Fushan Resources (639 HK)’s generous payments to continue as they could declare another 14% in FY23e.
• The margin of safety is high as there is a cash buffer (55% of the market cap in cash) and 10-year average annual free cash flows of 1.5 bn HKD.
• China’s FAI stimulus and stabilizing the steel margins could be catalysts to drive the share price forward in the short term.

• TCS reported weaker than expected growth and margins. YoY growth in constant currency (CC) terms came in at just 10.7%. Operating Margin (OPM) came in at 24.1% vs 25% expected.
• North America in particular has seen some demand slowdown, largely due to deferment of discretionary projects and delayed decision making. Europe is improving as energy crisis is receding.
• Looking forward, Europe, in particular UK, is likely to lead the growth. North America may also come back as the banking crisis there seems to have been contained.

• Adastria is on a roll, capturing more market share in both the core apparel market as well as through licensing (Forever 21) and home decoration and other lifestyle markets.
• Until now, it has focused on slightly premium mass markets but a new chain will face Uniqlo and Muji head on in apparel basics.
• It is also adding a new basics chain in home decoration and hoovering up contracts to supply apparel to chain stores. 

• Infosys reported a weak Q4FY23 with QoQ CC (Constant Currency) growth down by -3.2%. OPM (Operating Margin) contracted QoQ by -50bp to 21%, and was weaker than 21.5%+ expected. 
• Led by macro concerns, demand outlook remains cautious with FY24 growth guided to be 4-7% YoY in CC terms.
• The bottom end of the FY24 OPM guidance has been lowered to 20% vs 21% achieved in FY23. Overall OPM guidance for FY24 is 20-22%.

• Adi Sarana Armada (ASSA IJ) provides unique exposure across Indonesia’s mobility ecosystem from car leasing to auctions and omnichannel used car sales together with logistics and last-mile delivery.
• The company booked relatively strong sales growth last year, with very strong growth from used cars and logistics with slower auctions but profitability was impacted by bigger losses at Anteraja.
• The outlook for 2023 looks more positive for both sales and profitability, with the ongoing growth in used car sales, recovery in the auction business, and last mile under Anteraja. 

• The Keepers Holdings (KEEPR PM) declares its FY22 results on the 14th of April 2023, and Shakey’s Pizza (PIZZA PM) on the 20th of April 2023. 
• Despite its recent move upwards, The Keepers Holdings (KEEPR PM) trades at 9.6x/7.5x FY22e/23e PE and Shakey’s Pizza (PIZZA PM) at 17.7x/11.3x FY22e/23e, with both boasting high double-digit future growth.
• We discuss our expectations on the results for FY22 and prospects for Q1 2023. For mid/small-cap investors, these are great companies to invest in for exposure to the Philippines.

Vietnam Enterprise Investments (VEIL) is the UK’s largest and oldest listed Vietnamese equities closed-end fund. Despite Vietnam’s bright economic outlook, Vietnamese equities were hit hard in 2022 by a toxic mix of unwelcome domestic and global developments, creating a disconnect between Vietnam’s favourable economic fundamentals and equity valuations. VEIL underperformed over this period due to its quality growth bias, as investors fled to defensive sectors, but the fund has consistently achieved its objectives of capital growth and outperformance on a rolling three-year basis and over the longer term. VEIL’s managers are confident 2023 will be a better year, both for the market and for the trust. They expect government initiatives to be effective in addressing domestic market issues, while the State Bank of Vietnam’s recent rate cuts and easing guidance should sooth investors’ rate hike jitters. If the managers are correct, the gap between Vietnam’s growth prospects and low equity valuations should begin to close, and VEIL’s performance should recover accordingly.

• We expect Luckin to report 1Q23 revenue at 77.0% YoY to RMB4,257mn, non-GAAP operating margin and net margin are expected to increase 12.6ppt and 9.1ppt to 16.4% and 13.2%; 
• We think the current moderate competition can bring positive externality to coffee players, whereas it may hurt street tea shops; 
• We maintain the stock as BUY and raise TP by US$1 to US$41.

• We expect JD to report C1Q23 top-line and non-IFRS net income (1.7%) and (12%) vs. consensus, respectively. 
• We expect revenue to decline (1%) YoY in 1Q23 and grow just 3% YoY in FY23, due to (1) slow recovery in key product categories like electronics; (2) team restructuring;
• And (3) competitive landscape. We maintain SELL and US$27 TP. Our TP implies 10x 2024 P/E.

• Consensus FY+2 EBIT seems inflated by around 16%, driven by optimistic assumptions of recovery in China and growth in North America and Europe.
• However, apparel demand in China was lower than expected, while wage hikes and a potential US recession could negatively impact profitability in the short-medium term.
• As risks are skewed to the downside, we remain short Fast Retailing (9983 JP) leading up to 2QFY23 results.

• Shift Inc (3697 JP) reported 2QFY08/23 results on Monday. Revenue increased 34.7% YoY to ¥21.0bn (vs consensus ¥21.3bn vs guidance ¥21.1bn) while OP grew 74.8% YoY to ¥3.3bn (vs consensus ¥2.4bn).
• Both GPM and OPM improved significantly reaching record highs as unprofitable projects came to an end with cost optimisation initiatives removing previous concerns over declined margins in 1QFY08/23.
• Shift’s share price closed at ¥25,870 closing 15.8% higher than the previous close at the end of yesterday’s trading following its strong set of earnings.

• HPL Electric & Power (HPLE IN) is one of the key players in domestic electric meters market and domestic on-load, change-over switches market. The company also manufactures LED products.
• Forensic overview of the company indicates poor capital allocation in the past, along with cash generation issues.
• One must also keep a note of the inherent credit risk, as well as some interesting line items such as software and designs, on the balance sheet.

• Boryung Pharmaceutical (003850 KS) reported stellar Q4 results, with revenue increasing 21% YoY, driven prescription drugs. 2022 revenue and operating profit surged 20%+ YoY and surpassed guidance.
• Boryung has guided for 2023 revenue and operating profit of KRW810 billion and KRW61 billion, representing growth of 12% and 1%, YoY, respectively.
• Driven by in-licensed drugs and pipeline progress, Boryung’s target of KRW1 trillion revenue and KRW200 billion operating profit by 2026, seems achievable.

The Competition and Markets Authority (CMA) has rejected the remedy proposed by United Health (the bidder) and EMIS to reduce the risks to competition and has announced it is launching a Phase 2 investigation into the acquisition. The bidder and EMIS have confirmed they will proceed with the Phase 2 investigation. Due to the investigation, they have extended the long stop date for the deal and extended the period during which EMIS shareholders will be entitled to dividends by one year.

• We continue to view JUNSHI’s Phase III pipeline, consisting of Senaparib (JS109/IMP4297)(PARP), Ongericimab (JS002)(PCSK9), Bevacizumab (biosimilar) and VV116 (COVID)(RdRp) as unexciting; 
• Phase I/II drug Tifcemalimab (TAB004/JS004)(BTLA mAb) is interesting, but may not last to reach product sales;
• We acknowledge the bad news has already been priced in and raise the TP to HK$21, but JUNSHI still has unfavourable risk reward profile in our opinion.

• This is our first report on a global investment behemoth, KKR & Co.
• Inc.
• The company delivered strong set of quarterly results surpassing Wall Street expectations on all fronts.

• EBIT beat – loss came in lower by 2.43%, Δ $(0.73)m vs. ACF est.;
• EBITDA beat – loss came in lower by 2.43%, vs. ACF est.;
• EPS beat (+ fully diluted) loss 4.22% lower vs. ACF est.

• NTGR has been going through a product transition cycle in a soft demand environment for more than a year, but recent promotion activity suggests an end could be near
• The scale of promotions seems to have abated in the first quarter of 2023 even though demand has yet to return.
• NTGR had been projecting the first quarter would be the low point of the year with sequential revenue growth in the second quarter. 

• UnitedHealth Group Inc.’s first-quarter earnings report might settle lower than anticipated as prices on long-term solutions have softened.
• The company has a rich history of beating earnings estimates, and its cash-based earnings exceeded its accrual-based income in 2022.
• UnitedHealth Group Incorporated (NYSE:UNH) is set to release its first-quarter earnings results before trading opens on Friday, the 14th.

• Binjiang Service Group (3316 HK) reported a solid earnings growth of 28% YoY, with revenue up 41%. Binjiang has outperformed its peers in the PMC space by a long way.
• Net cash on the balance sheet increased to 37% of the current market capitalization, led by the growth of operating profits and payables.
• The PE FY23e/24e now is a modest 11.2x FY23e/9.2x FY24e with dividend yield of 5.4%/6.5% FY23e/24e (assuming a 60% payout ratio).

• The share price has declined by 15% from its March high, perhaps on misplaced concerns about its HTM bond book and capitalization. 
• We have little concern about a collapse in the Japanese housing market and see little impact from higher defaults on capitalization. 
• We see a modest 19% downside if management continues to build up excess capital.  Hibiki’s plan points to over 20% upside. 

• We believe the following three catalysts will likely drive share price of Solus Advanced Materials’ continued outperformance relative to the market this year. 
• They include the sale of Solus Biotech, improved control of its operating costs, and rapid increase in capacity for copper foil.
• The company has already secured strong order backlog from customers including LG Energy Solution, Tesla Motors, and SK On.

• ITMG went ex-dividend yesterday, paying out a whopping 16.8% (6416 Rph/share) final dividend in addition to the interim dividend of 10.8% (4128 Rph/share), bringing the FY22 yield to >27%.
• After payment of the 474 mn USD final dividend and 223 mn USD tax liability, we estimate the company will have >1.0 bn USD net cash (~33% mkt cap). 
• At current coal prices (NEX 190 USD/ton), the Indonesian coal producer trades on a 20% dividend yield for FY23 assuming a 65% dividend payout ratio (in line with historical payout).

• Samsung is finally cutting semiconductor production while Micron makes further cuts to both production and capital spending. 
• Demand for Japanese semiconductor production equipment has stopped growing and the Japanese government plans to restrict exports in the months ahead. 
• An optimist would say that the bad news is now all in the price, but this is not good for Tokyo Electron (TEL) and its shares are not cheap.

• Dongfang Electric (1072 HK)‘s management update suggested that its outlook remains encouraging. Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x.  
• It is positive towards pumped storage, alternative power storage and hydrogen energy. Although they may not have significant near-term contribution, DEC is well-positioned in the long term.
• While new A-shares issue will dilute EPS, this should lower gearing (including contract liabilities) to 32.1%, from 49.2%, and is positive to H-share holders as book value will be enhanced.

• Sumber Alfaria Trijaya (AMRT IJ) remains one of the most interesting proxies for retail spending in Indonesia, with a nationwide Alfamart footprint in the most popular mini-market format. 
• The company’s latest numbers confirm the momentum behind and the recovery with improving margins. Alfamart expanded its store numbers aggressively in FY2022 and will continue into 2023. 
• Sumber Alfaria Trijaya will push aggressively in expanding its Lawson convenience stores this year on top of its mini-market expansion as a future growth driver. 

• China TCM’s concentrated TCM granules business improved significantly in 22H2, and the total revenue in 22H2 also increased by 42% YoY, indicating that the decline trend has been significantly curbed.
• Due to its SOE background+ national standard setters with the largest number of national standards filed, China TCM would be the beneficiary of the industry’s transformation during this dividend period.
• Due to low base last year, China TCM’s performance would rebound this year. Considering favorable policies and large growth potential in TCM granules, we’re optimistic about its share price performance.

• Takara Bio Inc (4974 JP) has raised FY23 revenue, operating profit, and net profit guidance by 1%, 5%, and 5%, respectively, due to better-than-anticipated sales of the COVID-19 testing-related reagents.
• Takara Bio is heavily exposed to the COVID-19-related reagent revenue. However, the company is witnessing decline in general research reagent revenue in Japan.
• With the shrinking demand for the COVID-19 testing and slower-than-expected recovery in general research reagent in Japan, revenue is expected to decline 25% YoY in FY24.

Since our outlook note published on 7 July 2022, Alkane has made several important announcements. Firstly, it improved its FY23 production guidance to 62,000–70,000oz (a 17% increase) after impressive H123 production at Tomingley and now expects to reach the upper end of this range. This has resulted in our EPS forecast for FY23 increasing by 30.6% from A$0.0445/share to A$0.0582/share. This was followed by the approval of the Tomingley Gold Extension Project, permitting open-cut mining at the Roswell and San Antonio deposits (including underground mining at the former), extending the mine life at Tomingley to at least 2031. Additionally, Alkane announced an inferred mineral resource at Kaiser of 4.7Moz AuE (0.48Mt Cu, 2.05Moz Au). Finally, it reported Q323 gold production of 16,641oz, bringing the current year to date production figure to 54,431oz.

• PDD’s small retailers bought out products of direct sales and claimed full refund.
• The story happened to Alibaba more than ten years ago.
• It can be hard for PDD to enter the high quality market.

• Tencent authorized video editing right to Douyin, one of its main competitors.
• Some of Bilibili’s video uploaders cannot survive the hard time.
• Both Alibaba and Baidu launched their ChatGPT-like apps, but Baidu’s app was .

• Seven & I Holdings (3382 JP) was down as much as 5% on Friday on weak FQ4 earnings as the company’s revenue and OP missed consensus by 1.9% and 2.6% respectively.
• Earnings likely peaked in FQ3 as fuel retail margin and merchandise sales trend reversed in FQ4.
• Given the reversal of fuel retail margin and merchandise sales trend and the negative impact of the exchange rate, the risk rewards appear favourable for a short trade.

• MTR Corp (66 HK) is the lagging stock in Hong Kong although it is a key beneficiary to more Chinese tourists that will arrive soon.
• HK Government has launched a few initiatives to invite tourists to visit Hong Kong that will boost higher ridership for the company. 
• It is now trading at the level prior to COVID with the potential of higher earnings that will come from the ridership increase. 

• China Communications Construction (1800 HK) is expected to generate higher shareholder return through improvement in profitability/cash flow, spin-off, asset disposal and issuance of REITs.
• Operationally, backlog reached Rmb3.39trn at end-FY22, enough to cover 3.9x FY23F revenue. It expects revenue to grow at least 7% and new contract by no less than 9.8% in FY23. 
• Employee incentive scheme has been adopted with targets including FY21-23 earnings CAGR of at least 8% and FY23 return on net assets of 7.7%. This aligns employee interests with shareholders’. 

• Phonepe Pvt Ltd (1732974D IN) ‘s new app, “Pincode”, is based on the ONDC platform and offers hyperlocal e-commerce.
• ONDC-Enabled Pincode could disrupt Zomato (ZOMATO IN) food delivery and grocery businesses.
• Loyal restaurants may choose to offer discounts via ONDC, putting pressure on Zomato (ZOMATO IN)  and Swiggy (1255298D IN) to compete bringing back cash burn and discounting. 

• We expect BABA to report C1Q23 (F4Q23) top-line and non-IFRS net income (5.0%) and (5.9%) vs. consensus, respectively, 
• Due to: 1) weak sales of Taobao, Tmall and 1P sales; 2) the on-going move of a key Cloud client; 
• We maintain US$109 TP as: 1) Taobao and Tmall sales shows recovery trend; 2) near-term benefit of unveiling its LLM AI; and 3) benefit from the new business unit structure.

• Shineway’s 2022 performance was outstanding.Its TCM formula granules business would seize more market share and maintain strong growth momentum, which would continue to be the main performance driver in 2023.
• Considering obvious policy preferences and lower price reduction of TCM in VBP, we recommend investors to leave a place for TCM company in portfolio, and Shineway deserves investors’ attention.
• Shineway is cash rich. Together with promising growth potential and solid financial performance, Shineway’s share price is expected to perform well, which could be a good trading target for investors.

• Huawei Technologies Co. posted its lowest profit margin ever for 2022 but managed a slight revenue gain in the third year of U.S. sanctions that forced the Chinese electronics giant to diversify its business into new sectors from cloud computing to automobiles.
• The company reported net profit of 35.6 billion yuan ($5.18 billion) for 2022, a 69% decline from 2021, on revenue of 642.3 billion, up 0.9% from a year ago.
• Its profit margin fell to a record low of 5.5%.

• Markets expect Popmart to deliver fast growth for years to come, yet we are skeptical because the pop toy business, by definition, is a niche market.
• Blaming COVID for Popmart’s weak results risks focusing too much on near-term cyclical recovery but overlooking structural bottlenecks to growth.
• While we are cautious for long term, continued improvement in business and news flow leading to 1H results will likely result in share price rebound and provide tactical trading opportunity.

• Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.
• Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.
• Japan’s semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.

• Bundamedik Tbk PT (BMHS IJ) reported 15% decline in revenue in 2022. However, non-COVID business recorded revenue growth of 17%. Contribution of core business to total revenue increased to 92%.
• All the key operating parameters improved significantly from pre-COVID level. Occupancy rate of the existing hospitals improved to 66% in 2022 from 58% in 2021. New hospitals recorded 71% occupancy.
• The company aims to achieve revenue growth of ~17% YoY and EBITDA growth of 23–24% YoY in 2023, supported by the significant development of the company’s core business.

• In Part 1 of this series, we emphasized that despite the considerable hype and fear-mongering surrounding it, ChatGPT and recent development in the field of AI deserves a closer look.
• Then we explored ChatGPT’s basic capabilities.
• If you just look at the summary of what it can do, you might conclude that we have just invented a magical unicorn that spews rainbows across the sky as it flies.

• Keurig Dr Pepper share price has been under pressure over the recent months due to higher than expected drop in profitability.
• Beverage segments, however, continue to perform well and would most likely offset weaknesses in coffee.
• Investors should not expect a quick rebound in the company’s free cash flow.

• Otsuka Holdings (4578 JP) reported better-than-expected 2022 result. Revenue increased 16% to ¥1,738B and business profit grew 11% to ¥175B, driven by the four global products and the nutraceutical segment.
• Revenue from four global products surged 26% to ¥619B, representing 54% of pharmaceutical revenue. Otsuka expects the momentum to continue and these products to record revenue of ¥637B in 2023.
• For 2023, Otsuka has guided for record-high revenue and net profit of ¥1,800B (+4% YoY) and 158B (+18% YoY), respectively, driven by increased revenue from growth businesses.

• In this insight, we discuss a pair trade between KT Corp (030200 KS) (go long) and LG Uplus Corp (032640 KS) (go short).
• The three major reasons for going long on KT Corp include a) the potential inclusion in MSCI Korea Standard index, b) attractive valuations, and c) a new CEO. 
• KT Corp is a potential inclusion candidate for MSCI Korea Standard index in May 2023. With foreign room at 17%, it is comfortably above the 15% level threshold requirement.

• Carpentaria-2H testing results continue to build the economic case for EEG
• IP30 gas flow of 3.0 mmcfd/1000m (normalised) is on the button and early analysis suggests gas recoveries of 6-8Bcf/well could be achievable
• The business case is building with upgraded resource certification to come heading to a FID target date of end-2023.

• We expect Miniso to report C1Q23 revenue, operating profit, and net income 3.6%, 18.3% and 16.7% higher than consensus. 
• We think the strong foot traffic to offline stores post CNY bodes well for Miniso’s domestic store sales in 2023;
• We maintain the Buy rating, and raise TP by US$1 to US$25 to factor in the sales recovery from higher foot traffic and ARPU.

• PT Surya Citra Media Tbk (SCMA IJ) had an exciting 2022, with a ramp-up in new audience share-winning original content along with the boost from the Word Cup rights. 
• Both SCTV and IVM gained significant audience share in 2022, and Vidio led the charge on OTT driven by killer content, finishing the year with 5m paying subscribers. 
• Profitability was hit by a sharp rise in production costs and investment in Vidio but we expect significant improvement in 2023. Valuations are attractive with SCMA on 12x FY2023E PER. 

• Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear, with a core colour range supplemented by regular limited-edition releases, all with FSC (Forest Stewardship Council) certification throughout the supply chain.
• The company has operations in Australia (67% of sales), UK, (30% of sales) and the US (3% of sales). A H1 FY23 sales decline of 5.7% was better than our industry average estimate of-19% cycling lockdown, while lower sales and marketing spend saw EBITDA in-line with the pcp at $7.6m, the highest of any industry peer.
• H2 FY23 should see similar trends and deliver EBITDA well above consensus.

• Atour reported its 4Q22 revenue/non-GAAP operating profit/non-GAAP net income 8.0%/78.3%/114.6% higher than our estimate. 
• We adjust Atour’s hotel expansion estimate from 2.4k to 1.9k until 2025 due to its low appetite in expanding midscale segment.
• We raise our 2023 earnings estimate due to better operating efficiency, but trimmed its hotel network expanding pace in 2023-2025, leading to TP cut by US$2.5 to US$34.

• Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
• EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
• The NT energy basins are fast developing as strategic high-calorific gas bolsters for east coast Australia’s future domestic requirements, growing Gladstone LNG ullage and potential supply for Darwin’s expanding LNG export terminals, amid funding support from Territory and Federal governments.

• Nayuki reported C2H22 top line 0.9% below our estimate but 18% below consensus，due to deteriorating cost ratios; 
• Company chose to drastically expand store count by ~600 in 2023. Our concern is that Nayuki stores now are drastically different from its past.
• The company is abandoning its premium teahouse position, which begets unknown consequences in our opinion; We keep the TP unchanged at HK 3.1 and maintain SELL.

• Step One Clothing (ASX:STP) is a Direct to Consumer (DTC), 100%-own-brand underwear retailer specialising in anti-chafe bamboo underwear across men’s and women’s wear.,
• A H1 FY23 sales decline of 5.7% was better than our industry average estimate of -19%, while  EBITDA was in-line with the pcp, the highest of any industry peer.
• On our estimates this superior business model currently trades at a PER of 1.0x ex-cash. Inventory is the key risk, currently representing ~two years’ sales, but is low fashion risk.leared.

• X2M Connect Ltd (ASX:X2M) has developed and is commercialising a patented proprietary Internet of Things (IoT) solution predominantly focused on the utilities sector across the Asia Pacific region, converting legacy meters into smart meters.
• The company has announced it has secured $1.8m in hardware water quality sensor sales in China with three new contracts.
• The contracts bring the contribution from China to $3.4m this financial year to date which exceeds the revenue generated from China in FY22.

• Amaero International Ltd (ASX:3DA) is a global specialist in metal additive manufacturing for the defence, aerospace, and other industrial sectors.
• Following a strategic review, Amaero has shifted its focus to titanium powder production and has created a new United Arab Emirates-based enterprise, Amaero Advanced Metals Ltd, to build an 827-tonne a year titanium powder operation within Abu Dhabi’s KEZAD industrial park.
• The nuances of the focus have shifted since the company first announced plans to concentrate on the UAE and titanium powder operations but “Plan B” allows Amaero shareholders to retain 100% ownership of the project which has been scaled back to focus on the opportunity with the greatest economic return.

• Xiaomi Corp (1810 HK) ’s share price has been down more than 10% over the last 12-months with weakening of the company’s earnings particularly the smartphone business.
• Xiaomi’s entry into premium segment has not much helped its smartphone biz as it faces stiff competition from Apple and Samsung in the premium segment.
• The company spends aggressively on EVs to drive growth, however, with EV subsidies not renewed and intense competition, this may not help Xiaomi in the near term.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2023. 
• The excessive gaps in the preferred and common shares of CJ Corp, Samsung Electronics, and LG Electronics could reverse in the next several months, in our view. 
• We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung SDI which have especially high discounts for the preferred shares versus their counterpart common shares.

• Sinopharm Group Co Ltd H (1099 HK) reported strong 2022 results, with annual revenue exceeding RMB550B and net profit achieving 10% YoY growth. Growth was driven by pharmaceutical distribution business.
• EPS increased 10% YoY to RMB2.73, ahead of consensus of RMB2.64. The company has increased its final dividend to RMB0.82 per share from RMB0.75 per share in the prior year.
• With favorable industry tailwind and China reopening, consensus expects Sinopharm to report double-digit revenue and EPS growth through 2025.

• PT Metrodata Electronics had a strong finish to the year with FY2022 net profit growth of +14.1% YoY driven by both its ICT distribution and Solutions & Consulting (S&C) businesses.
• The S&C business continues to thrive on Indonesia’s ongoing digitalisation, especially in the financial sector with the advent of digital banking but also in the telecom and oil&gas sectors. 
• PT Metrodata sees a slower outlook for the consumer outlook but strong momentum behind commercial sales and S&C as digitalisation continues, and new growth from the Public Sector. Valuations attractive.

• Indocement Tunggal Prakarsa (INTP IJ) released solid FY2022 results despite inclement conditions for the industry, as it utilised more low CV coal and alternative fuels and raised prices.
• The company now has much better access to cheaper DMO coal, which accounted for 60% of requirements in 2H2022, which provides a lower and more sustainable cost base for 2023.
• Indocement has continued to aggressively expand its distribution footprint across Indonesia in 2022, allowing it to access regional areas of demand. Valuations are attractive versus history.

• This is our first report on a global media and entertainment player, Formula One Group.
• Its fourth quarter result was mixed and the company surpassed the revenue expectations of Wall Street but missed out on meeting earnings expectations.
• The company introduced a new brand campaign in the quarter to demonstrate F1’s position in the sporting and entertainment worlds.

• This is our first report on Prudential, a major provider of life and health insurance.
• Prudential had a very strong quarter with 19% sales growth.
• Despite slower revenue recognition in the life insurance market, the company has been witnessing strong cash flows and returned over $800 million to shareholders in the latest quarter.

• Ally Financial has emerged as a potential target after the recent events in the banking sector.
• There are certain macroeconomic risks involved, but the company has changed dramatically over the past decade.
• There are also major differences between the recently failed banks and Ally Financial that need to be considered, according to the company.

• SDRL reported its long awaited fourth quarter results after the Company consummated the purchase of Aquadrill.
• It was in the Q123 when SDRL was able to generate revenue from its new Brazilian contracts making it more likely investors would minimize their interest on the Q4 results
• The purchase of Aquadrill provides scale to SDRL’s operations through a larger fleet size and being able to internally manage the Aquadrill fleet as contracts begin the expire

• Sino Biopharm’s 2022 performance isn’t satisfactory, but the Company is gradually getting rid of the negative influence of VBP. We expect Sino Biopharm to achieve faster performance recovery than Hengrui.
• Most of Sino Biopharm’s innovative drugs are biosimilars and Me-Too products, which will face fierce competition once approved for listing. The revenue target of HK$100 billion by 2030 looks challenging. 
• Corporate governance deficiencies and lack of the next big variety are the reasons why the market is reluctant to offer high valuation. The new CEO needs time to prove his ability. 

• Nagacorp’s 1Q23 and full year 2022 results confirm our prior call that Nagacorp revenues would ramp faster back to baseline 2019 than the market anticipates.
• Trading at HKD$5.97 with a forward P/E of 13.18 makes the stock attractive early in the recovery cycle and headed higher as 1Q23 results indicate.
• Superior management has always been a strength of Nagacorp. It has been recognized by Institutional Investor as Asia’s #1 most honored company for investor relations and returns.

• Taiwan ADR premiums have continued to decline; a long holiday in Taiwan has opened up some rare opportunities given U.S. markets kept trading.
• UMC ADR’s are trading at a rare relatively deep discount and represent an opportunity.
• ChipMOS ADRs are also trading a rare relatively deep discount and are another opportunity to long the ADR spread.

• While we like Sinotrans (598 HK) in the long term, we are caution that 1Q23 result may be disappointing. Its 4Q22 earnings already showed 49.1% YoY and 73.3% QoQ decline.
• Indicators including China’s PMI new export orders, export growth, container shipping freight rates (SCFI) and airfreight rates all showed that the recovery trend is weak. 
• 9% of FY22 profit is from exchange gain as Rmb depreciated, and this may not happen again. Consensus forecast of just 10% decline in FY23 net profit seems overly optimistic. 

Paradigm has announced day 168 (six-month) data from the PARA_OA_008 trial, which is evaluating injectable pentosan polysulfate sodium (iPPS) as a potentially disease-modifying treatment for knee osteoarthritis (kOA). Highlights from the interim data include: structural changes in several disease features as measured by magnetic resonance imaging (MRI), potential support for disease-modifying OA drug (DMOAD) activity from trends in biomarker data, and persistent positive responses in WOMAC scores. During the second half of CY23, Paradigm intends to discuss with the FDA and EMA a potential regulatory pathway for DMOAD indication labelling; we believe that the outcome, along with clarification on the Phase III development pathway, could represent a significant catalyst for the company.

• JD Health’s 2022 results were more optimistic than expected. We think the past three-year pandemic as well as the broadening of service scenarios are main drivers for rapid performance/user growth.
• If turning losses into profits is “a phased victory”,striving for higher profit margins and healthier revenue structure is the key task in next stage,but JD Health may fail this transformation. 
• After China reopens, JD Health’s user scale could be difficult to maintain such rapid growth in 2023 and onwards. Without breakthrough in service revenue, its valuation expansion potential could be limited. 

• Pegavision Corp (6491 TT) has started 2023 on a weak note. During 1Q23, the company recorded revenue of NT$1,460M, representing YoY decline of ~2% and QoQ decline of ~18%.
• During January and February 2023, Pegavision’s Chairman, Guo Ming-Dong has sold 53K and 66K shares, respectively, thereby reducing his shareholding to ~1.57M from initial ~1.9M.
• Disappointing monthly revenue, coupled with regular insider selling should limit the near-term upside potential of Pegavision. Since end of February, Pegavision shares have corrected 10%.

Light Science Technologies Holdings has conditionally raised £1.5m (gross) through a placing and private subscription at 1p/share. The company also intends to raise up to £0.5m (gross) at 1p/share via the Winterflood Retail Access platform. The proceeds will predominantly be used for product development and intellectual property protection in the company’s controlled environment agriculture (CEA) division, as well as for general working capital purposes.

Immix Biopharma’s FY22 results reflected a busy period as management ramped up clinical activity across multiple programs. In a major development, Immix expanded its portfolio with the in-licensing of NXC-201, an autologous CAR-T therapy being investigated for the treatment of multiple myeloma (MM) and AL amyloidosis (ALA) currently in the ongoing Phase I/II NEXICART-1 study. With the increase in R&D activity primarily associated with in-licensing NXC-201, Immix reported an operating loss of $8.2m in FY22 (FY21: $1.4m) and we estimate that its net cash position of $13.4m at end-December 2022 provides a cash runway into Q423. Given the company’s increased disclosure of its arrangement with the licensors and of future NEXICART-I study costs, as well as its communicated strategy to expand clinical studies in the US, we now include NXC-201 in our valuation. We value Immix at $77.1m or $5.5 per share (previously $61.5m or $4.4 per share).

Utilico Emerging Markets Trust’s (UEM’s) manager Charles Jillings, at value-focused ICM Group, is excited about the prospects for the trust as he strongly believes that the operational strength of investee companies is not reflected in their current share prices. He has good visibility into the businesses in UEM’s portfolio, and a recent trip to Latin America reinforced his view that their management teams are taking advantage of available growth opportunities. Jillings and his team are making a dedicated effort to introduce UEM to a wider audience, including retail investors, via a greater number of presentations and an active social media presence. Up to 10% of the portfolio may be held in unlisted securities, which includes top 10 holding Petalite, whose recent revaluation has led to a meaningful uplift in UEM’s NAV.

• GTX updated its annual outlook by forecasting results would be towards the high end of the previous guidance range.
• GTX also highlighted the opportunity to force the conversion of the Series A Preferred stock by the middle of the year.
• GTX had previously issued a sales outlook of $3.55 billion to $3.85 billion and adjusted EBITDA of $555 million to $615 million