Equity Bottom-Up

• Has SK Innovation raised enough money for its longer term ambitions? 
• What is the stock pricing in that is not apparent on the balance sheet? 
• It seems really given their capex outlet, dilutive cap raising is the only solution

• Weight loss drug business has indeed significantly alleviated concerns about overcapacity issue in those leading CDMOs, but they do not have such a strong driving force on CROs.
• The last straw that hits an industry is often not due to the disappearance of demographic dividends/declining demand/poor financial performance of companies, etc., but rather to policy-guided capital flows.
• 3D Medicines (1244 HK) can be said a typical negative example in biopharmaceutical industry, and it is easy to be “manipulated”. We recommend investors stay away from such high-risk company.

• In this insight, we provide the major changes in NPS’ stakes in 25 Korean companies in 3Q 2023.
• In 3Q 2023, NPS reduced its stakes in the IT, construction, and contents related stocks. On the other hand, NPS increased its stakes in China’s re-opening and cosmetics related stocks.
• Five Korean cosmetics stocks that NPS net purchased in 3Q 2023 are up on average 12.8% from end of June 2023 to as of 6 October 2023. 

• Cost at PNB are high and rising, a major drag on its ROA and RORWA, which largely offsets better credit metrics.
• There are many market positives in India banks, but relative to all large peers, Punjab National Bank (PNB IN)has the lowest RORWA
• There is no LDR expansion at PNB. NIM is languishing. Its high 20% govt loans/total loans is high, with 2 peers’ even higher, but better returns.

• Selamat Sempurna remains one of the most interesting industrial players in Indonesia, as an auto and heavy equipment components manufacturer, leading the replacement filter market, and exporting to 100 countries. 
• The company booked growth in sales in 1H2023, despite coming from a high post-COVID base, with margins improving due to lower raw material input prices, without any price rises.
• Selamat Sempurna (SMSM IJ) remains confident in the outlook for the rest of the year and expects sales growth to pick up in 2024 to around +15%. Valuations are attractive.

• Legend Biotech Corp (LEGN US) reported six-fold jump in revenue to $73M in 2Q20, driven by strong uptake of the sole commercialized drug, Carvykti, which generated worldwide revenue of $117M.
• Label expansion applications have been submitted to the FDA and EMA seeking approval of Carvykti for the earlier treatment of patients with relapsed or refractory multiple myeloma.
• Legend Biotech has 11 pipeline programs covering hematologic malignancies and solid tumors. Recent financing activities have fueled the company’s cash balance to $1.5B, which should provide cash runway through 2025.

• Calima Energy (CE1 AU); target price of A$0.45 per share: Operating update in Canada – The 3-well Pisces drilling programme has now been completed.
• 3Q23 production levels continue to be affected by weather related energy cuts and unforeseen work-overs.
• Valeura Energy (VLE CN)C; target price of C$6.40 per share: 3Q23 update – 3Q23 production was 19,961 boe/d.

• Universal Display Corporation managed to exceed the revenue expectations as well as the earnings expectations of Wall Street.
• The company announced $147 million in revenue, $59 million in operating profit, and $50 million in net income, or $1.04 per diluted share, for the second quarter of 2023.
• Universal Display’s revenue guidance range for the year has been reduced from $560 million to $600 million.

• Discovery, Inc. delivered a disappointing set of results as the company could not meet the revenue and earnings expectations of Wall Street.
• The company generated almost $1.7 billion in free cash flow this quarter, and the team anticipates around the same in Q3.
• Their global direct-to-consumer business was mildly EBITDA positive for the first half of this year and nearly breakeven in the second quarter.

• During the recent quarter, McCormick showcased mediocre performance with below-par revenues and on-par earnings.
• In terms of highlights, the company reported constant currency sales growth and noted an improvement in volume performance, excluding China, throughout the year.
• In the Flavor Solutions segment, McCormick continued its exceptional growth momentum, with the third quarter marking its tenth consecutive quarter of double-digit constant currency sales growth.

• Qualys, Inc. delivered an all-around beat in the previous quarter.
• The channel’s share of revenue stayed at 43% from the previous quarter.
• By geo, their overseas business rose 12%, outpacing the 16% rise in the U.S.

Pan American Silver (PAAS) announced the temporary suspension of all operating activities at its La Colorada mine in Mexico due to security concerns at the mine site following the concentrate robbery. The company has not yet provided any indication of the potential restart of mining activities. We currently maintain our estimates and valuation, awaiting more clarity on the timing of the restart.

• Eoflow’s share price has dropped 27% lower than the proposed tender offer price of 30,000 won. Two major factors have negatively impacted Eoflow (294090 KS)’s share price.
• First, in September 2023, there were new data that suggested that popular weight loss drugs including Ozempic and Wegovy could reduce the need for insulin injections with patients with diabetes.
• Second, the ongoing lawsuit by Insulet continues to remain a major headache. Eoflow is not a KISS (“Keep It Simple Stupid”) stock.

• Fast Retail Full-Year Expectations: Anticipate strong FY results, but potential FY8/24 guidance headwinds include weather impacts and yen weakness.
• Management Guidance Risks: The key risk would seem to be China outlook; Japan/Europe’s heatwave impact on fall season; potential for gross margin pressures.
• Valuation: Despite growth prospects, concerns over cyclicality and valuation relative to peers persist.

• Xinyi Glass Holdings (868 HK)‘s stable auto glass business is often overlooked, making up 39% of the company’s gross profit in 1H23.
• Given the current valuation of 7x 2023E PE and 1.3x 2023E PB, the risk reward is skewed to the upside, and downside is protected with the stable auto glass business. 
• The company’s management has been aggressively increasing stake in the company in the last 2 months, gobbling up 11 million shares.

• It is expected that TSMC will have full capacity utilization of 3nm and 5nm technology nodes starting from 1Q24F.
• Regarding 3nm technology, the EUV mask layer will be reduced.
• The total number of iPhone 15 units sold in 2023F is expected over 85 million.

• Higher for longer rate regime makes it difficult for NextEra Energy Partners to raise debt to fund high growth forcing a reduction in growth forecasts.
• Markets have reacted sharply to slashed forecasts with shares of NEP (-52%) & NEE (-22%). Growth is expected to remain lower in the future.
• NEE has performed markedly better than NEP. This is reflected by analyst price targets. However, NEE’s long-term growth story has stumbled raising investor concerns.

• Samsung Biologics (207940 KS) expects 2023 revenue to grow by more than 20% YoY compared to 15–20% YoY growth expectations earlier, due to better-than-expected utilization of Plant 4.
• For the first time in the company’s history, Samsung Biologics has won contracts worth nearly KRW3T during the first half of 2023, with eight contracts worth more than KRW100B each.
• Anticipating strong demand, Samsung Biologics is building its fifth manufacturing plant with 180KL capacity, which is expected to be completed by April 2025.

• SBI Holdings (8473 JP) may not be the easiest company to analyze with its many pages of affiliates, but at the least, it’s profit momentum is strong.
• Securities Group profit is key to the company where growth is excellent in earnings and in the number of new accounts, across many businesses.
• Its two banks in Japan are doing well, growing faster than others, but still SBI Holdings (8473 JP) is more of an alternative financial company to a traditional bank.

• Power output for China Power International (2380 HK) is healthy in Jul-Aug, following the solid trend in 1H23. The drop in hydropower has moderated and wind and solar stayed decent.
• Capacity growth will reach 43% in FY23. With just 7.8% YoY in 1H23, most of the new capacity will be added in 4Q23, accelerating both output and profitability.
• The parent SPIC’s massive clean energy assets are candidates for potential injection. CPI’s high EPS CAGR of 28.8% means that it well deserves premium valuation multiples. 

• • The Indico 6 and Indico 7 wells in the CPO-5 block in Colombia are now back online.
• Each well is expected to reach 4,000 bbl/d gross production (8,000 bbl/d gross total, 2,400 bbl/d net to GeoPark).
• The total gross production of both wells could reach 9,000 bbl/d by YE23.

• ATEN continues to experience challenges with order timing from some of its largest customers. ATEN lowered Q3 revenue forecast after North American service providers delayed their purchases in the quarter
• ATEN has spent the entire year trying to add more enterprise customers to offset this volatility and, while successful, it was not enough in the third quarter.
• ATEN is projecting third quarter revenue between $56.5 million and $58.5 million compared to our estimate of $75.3 million.

• CJ Corp’s share price declined sharply by 10.7% to reach 80,200 won on 4 October. CJ Olive Young is the number one health & beauty store chain in Korea. 
• According to local media, CJ Olive Young is in danger of being fined large amounts of money by the Fair Trade Commission (FTC).
• It appears likely that CJ Corp’s share price could fall further close to the five year low end of the trading range (60,000 won) in the next several weeks.

• Rakuten Group (4755 JP)‘s shares plummeted 80% in 8 years, reaching ¥500 in June 2023 due to ¥1.3 trillion mobile business losses.
• Expecting a positive shift as Rakuten Mobile approaches platinum band access and subscribers poised for exponential growth following the KDDI agreement.
• We are expecting Rakuten Mobile to turn profitable next year, while the consensus is projecting an operating loss of around ¥200bn for the business.

• Taeyoung Engineering & Construction (009410 KS) is the 25th company in our Korea Small Cap Gems series.
• Taeyoung E&C is a mid-sized construction company in Korea with a market cap of 146 billion won. Its shares are trading at P/E of 1x and P/B of 0.2x. 
• At the end of 1H 2023, the company had 6.1 trillion won in order backlog, representing a backlog/sales ratio is 2.3x.

• Apar Industries (APR IN) is the global leader in aluminum and alloy conductor manufacturing. The company is also India’s largest and world’s third largest transformer oil manufacturers. 
• After two silent years during covid, the company’s operations have taken off and there is growth reported in each of its three business segments.
• The balance sheet has also shown improvement and looks stable. But, our principle concerns remain on the operating cash flow side, which looks to be misstated.

• Solaris Resources (SLS CN) yesterday announced it engaged Chinese investment bank CICC to help it with unsolicited M&A approaches.
• Solaris, Filo, Entree Resources, and Los Andes Copper are just four of the junior copper miners screening extremely well on M&A criteria. 
• Most copper supply/demand models forecast a large supply shortage of copper in the coming decade. Junior copper miners with large deposits will become increasingly valuable.

• Despite beating guidance, Micron’s latest earnings report confirms a still-toxic memory market environment
• ASPs for both DRAM and NAND have now declined sequentially for the past eight quarters
• Their HBM3E solution is an unfortunate case of too much, too late. 

• DocuSign, Inc. delivered an all-around beat in the previous quarter, continuing to build momentum in its business by progressing on key projects and enhancing its product offering.
• With a non-GAAP operating margin of 25%, Q2 total sales of $688 million was up 11% from the same quarter last year.
• DocuSign shipped and announced several new, highly developed features for its Web Forms offering during the quarter.

• AutoZone delivered an all-around beat in the most recent quarterly result.
• The company achieved a total sales growth of 7.4% for the fiscal year, accompanied by a 12.9% increase in earnings per share.
• Additionally, the company has introduced new reporting metrics to provide enhanced visibility, including same-store sales results for domestic, international, and total company operations.

• Hugel Inc (145020 KS) reported 28% YoY growth in both revenue and operating profit to KRW81.6B and KRW28B in 2Q23, respectively, driven by solid performance of botulinum toxins and fillers.
• Hugel has resubmitted marketing application for botulinum toxin in the U.S. for the third time, with approval expected in 1Q24. The U.S. is the world’s single largest botulinum toxin market.
• The company is seeing North America, Australia, New Zealand, and China as future growth engines to achieve its long-term target revenue of KRW1 trillion and operating profit margin of 45%.

• Cirrus Logic, Inc. delivered an all-around beat in the most recent quarterly result.
• With the help of its products, shipments, and smartphones, Cirrus Logic achieved revenue of $317 million, which was near the high end of its forecast for the quarter.
• Beyond the laptop market, Cirrus Logic also continues to invest in additional products and client relationships that, in the long run, may increase both its revenue and market variety.

• Bandhan Bank Ltd (BANDHAN IN) has been an underperformer among Indian banks since the start of the COVID-19 pandemic due to asset quality issues in its core Group Microfinance portfolio.
• Bandhan Bank’s leading position in the microfinance sector, strong operating margins, strategic de-risking, self-sustaining capital base, and cheap relative valuations make it a value bet with strong positive re-rating potential.
• We value Bandhan Bank at 2.1x FY25e P/B in the base case, implying a 44% upside. On the other hand, we also discuss the risks to the thesis in detail.

• We believe the undertone in the market is bullish, Large Caps are “out of flavour” and hence an L/S (Long/Short) strategy with INDA/SMIN could be an interesting pair to track. 
• We visited a BYD (1211 HK) showroom in Western India gathering hints of the defensive strategy in India. 
• Other names discussed include Asian Paints (APNT IN), CE Info Systems (MapmyIndia) (1052633Z IN) and Ebix (EBIX US).  

• Topsports International Holdin (6110 HK) is a pure-play on Nike and Adidas retail sales in China, as it is a leading retail partner of Nike and Adidas in China.
• Nike’s Greater China sales grew 12% yoy during the most recent quarter.  During the earnings call, Nike management was bullish on the prospects of the China business.
• The company currently trades at 13x forward PE, with a forward dividend yielf of 7%. 

• In the first table, we provide a list of 56 stocks (2.2% of total) which have dividend yields of 7% or more. 
• The second table is a list of stocks with dividend yields of 7% or more and they are ranked in terms of market cap. 
• These 25 stocks have an average dividend yield of 9.1%. The second table has 12 financials related stocks, representing 48% of total. 

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 4Q 2023. Typically, fourth quarter is when pref stocks are emphasized the most in Korea.
• The excessive gaps in the preferred and common shares of Samsung Electronics (005930 KS), Hotel Shilla (008770 KS), and Amorepacific Corp (090430 KS) could reverse in the next several months.
• We see some attractive longer-term opportunities for Amorepacific, Doosan Fuel Cell, LG Electronics, and Hyundai Motor which have especially high discounts for the preferred shares versus their counterpart common shares.

• Hewlett Packard Enterprise Company delivered a positive result and managed an all-around beat last quarter.
• HPE produced significant free cash flow while increasing its revenue, gross margin, as well as earnings per share year over year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Micron has Outperperformed Nanya Tech & Hynix since our pre-earnings trade. Micron’s valuation has reverted vs. Nanya’s.
• Nanya Tech has recently reported a 15% YoY drop in its latest monthly revenue. Micron just had a US$1.3bn subsidy approved by the Japanese government.
• We are now agnostic on the upcoming relative performance between the three Memory names Micron, Nanya Tech, and SK Hynix. Nanya will report its results on October 11th.

• Despite a challenging market environment, HP increased net revenue, non-GAAP EPS, non-GAAP operating profit, and free cash flow quarter over quarter.
• With $13.2 billion in net revenue, the company’s annualized revenue was down 10% or 7% in constant currency.
• Despite not being immune to the end market concerns, these businesses combined produced strong sequential growth in the quarter.

• After going ex-dividend in June, Water Oasis (1161 HK) corrected and has remained rangebound at the 1.35-1.45 HKD/levels due to negative sentiment on HK/China.
• We expect FY23 results to be reported in late November/early December. We expect an increase of 19%/85%  in Revenue/PAT with a 16-cent dividend for FY23 (11.4% dividend yield).
• Stock trades at 7.6x/6.2x PE FY23e/24e, a dividend yield of 11.4%/14% FY23e/24e with 25% of the market capitalization in cash. 

• Costco delivered an all-around beat in the most recent quarterly result.
• The company reported net income for the 17-week fourth quarter came in at $2.16 billion or $4.86 per diluted share compared to $1.868 billion or $4.20 per diluted share in the 16-week fourth quarter last year.
• In terms of sales, net sales for the 17-week fourth quarter were $77.43 billion, an increase of 9.4% from $70.76 billion in the 16-week fourth quarter last year.

• With the potential corporate action (see additional reading below) there is more interest in Haitong Securities but operationally it does not appear positive, for many reasons
• The company is seeing worse revenue growth in asset management, brokerage and investment banking, while its Haitong Bank can see far higher credit costs
• Total operating costs are now 63% of revenue, tax rate is a lot higher, litigation risks seem to be oversized, with potential impact to costs

• In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 4Q 2023.
• Of the 38 pair trades, 18 of them involved holdcos outperforming opcos YTD and 20 of them involved opcos outperforming holdcos in the same period.
• We highlight 38 pair trades that involve Korean holdcos and opcos.

• UOB can be harder hit than peers due to its greater SME focus. SME’s may be less able to absorb or pass on higher costs, or manage worse demand.
• Domestic credit growth is at -4.1% in July YoY, from -3.3% YoY in June and from 2.1% in May. This can represent risk-aversion, worse demand, deteriorating credit metrics in SG.
• UOB’s Greater China lending is SGD52bn, nearly identical to Thailand, Malaysia combined. Building & Construction NPLs rose from SGD1.1bn to SGD1.4bn HoH to 2Q23.

• Yichang HEC Changjiang Pharma (1558 HK) reported a whopping 148% YoY growth in revenue to RMB3,209M in 1H23. Net profit rebounded to RMB3,209M from a loss of RMB33M in 1H22.
• In H1 2023, revenue from Kewei, approved for first-line treatment of influenza, jumped 186% YoY to RMB2,881M, representing ~90% of total revenue, mainly due to spiking flu cases in China.
• Recently, the company obtained approval for premixed Protamine human insulin injection and submitted marketing application for its self-developed product, Yiqibuvir for the treatment of chronic Hepatitis C in China.

• Singapore Grade A office rent and core CBD Occupancy According to CBRE Research’s latest Singapore Occupier Sentiment Survey, office utilisation in Asia-Pacific outpaced that in Europe and the US.
• Similarly, MPACT saw positive rental reversions in its latest Q2FY23 update, with Mapletree Business Centre at 7.1 per cent and the rest of Singapore office properties and business parks at 8.9 per cent.
• Looking ahead, MPACT expects rents for business parks to remain flat or stable with minimal growth in 2023 despite the expected rise in vacancy, as new and good-quality business parks will command higher rental rates.

• Several provinces have successively introduced policies to encourage childbirth. Increasing medical insurance reimbursement and special additional deduction standards for personal income tax would be the common direction. 
• This year is mainly a period of intensive introduction of relevant fertility support policies, so the impact on company’s performance is limited.The focus would be on next year’s financial results.
• We analyzed the performance of Livzon Pharmaceutical Group In (000513 CH),BGI Genomics (300676 CH) and Jinxin Fertility Group (1951 HK) based on their 23H1 reports, and adjusted our forecast accordingly.

• This week, Rajesh Vashist of SiTime came to talk about SiTime’s new product launch, Epoch. 
• SiTime is still the least understood story in semiconductors because timing is one of the least understood products or applications in semiconductors.
• Timing chips. They are the heartbeat of any system in any communications, processing, computing, or all of the above.

• The fall in share price in the last five months have sent China Communications Construction (1800 HK) back to very attractive level. The market has misread the strong 2Q23 result.
• 2Q23 recurring net profit surged 68.5% as 2Q22 has an inflated base. Gross margin has recorded meaningful YoY recovery while capex, particularly for BOT, has scaled back significantly. 
• There should not be concerns about CCCC’s contract outlook. Its backlog is enough to cover 4.9x FY23F revenue and its PER of 2.7x has provided more than sufficient buffer.

• GTX is scheduled to report third quarter results on October 24, 2023, as the Company continues to make strides in expanding its product offering
• The third quarter results should serve as a catalyst since the Company was expected to repurchase shares and reduce its debt balance during the period
• The impact from the ongoing strike in North America is likely to have minimal impact to GTX if it were to continue for an extended period of time

• We publish a detailed update on the APAC airline sector, featuring ANA, Cathay Pacific, JAL, Korean Air, Qantas and Singapore Airlines, addressing cargo yield normalisation, and unit cost inflation.
• We see 24% upside to consensus EBITDAR for JAL in FY24 to March 2024, and 24% downside risk at Singapore Airlines based on our detailed analysis and quarterly earnings bridges.
• We expect earnings at most carriers to decline in calendar 2024 versus 2023 as the combination of cargo yield normalisation, fuel price pressure, and further capacity restoration prompt margin declines.

• Taiwan AI names rebounded strongly after having previously suffered declines. Nevertheless, many names have outperformed Nvidia and could be good hedges vs. a Long Nvidia position.
• Nanya Tech crashed after the market reacted to Micron’s weaker than expected near-term guidance. We believe the negative reaction to Micron is short-sighted. Please see our piece.
• Delta Thailand crashed vs. Delta Taiwan after the parent sold a stake in the Thai subsidiary. We continue to believe Delta Taiwan offers substantially better value.

• Daiichi Sankyo (4568 JP) reported a 25% YoY revenue growth in Q1FY24, mainly driven by oncology drug Enhertu. The company reiterated FY24 guidance, with revenue and operating profit growing double-digit.
• Daiichi Sankyo’s drug candidate datopotamab deruxtecan demonstrated statistically significant and clinically meaningful progression-free survival benefit in certain types of breast cancer patients in pivotal phase 3 trial.
• Enhertu is well-positioned for geography and indication expansion as well as market share gain. Strengthening oncology portfolio and rich late-stage pipeline entail significant growth opportunity for the company.

• Sonoscape maintained strong growth momentum in 23H1. Profit margin further improved. The Company has entered a stage where scale effect has emerged. However, declining contract liability balance raised our concern.
• Japanese companies setting up factories in China would shake competitive landscape of the domestic market. The anti-corruption campaign could lead to “unexpected impact” on performance in 23H2. 
• We lowered 2023 revenue forecast to RMB2 billion. After negative factors are fully priced in, share price would rebound. 

• Pal Group posted record sales in FY2022 partly because fashion retail recovered but mostly because of it has a huge hit on its hands: variety store 3Coins.
• Cheap variety stores have always been popular and are becoming even more so as prices rise and people spend more on the home.
• 3Coins has doubled sales in 2 years but expects continued strong growth going forward. With fashion sales also improving, Pal Group is one of few solid bets in lifestyle retailing.

• We reviewed our PDD investment thesis trying to incorporate and make sense of various channel checks and sell-side’s research which are often inconsistent and even conflicting.
• While there are many unknowns and ambiguities, we are convinced the street still significantly underestimates PDD’s growth outlook for 2H23, and fails to see a slowdown in FY24.
• Our price target remain unchanged as lower target P/E multiple (to reflect slowdown prospect) is offset by higher FY23 earnings which flow to outer years.  

• OCBC, CapitaLand Investment, UOBKH lead buyback tally OCBC led the share buyback consideration tally, buying back 1.2 million shares at an average price of S$12.74 per share, followed by CapitaLand Investment, which bought back two million shares at an average price of S$3.03 per share.
• This was due mainly to the increase in revenue from hotel operations of S$34.7 million and rental of investment properties of S$2.3 million.

• Ford Motor Co. said Monday it was suspending construction of its $3.5 billion electric-vehicle (EV) battery plant in the U.S. midwestern state of Michigan, where it had planned to manufacture batteries using technology licensed from Contemporary Amperex Technology Co. Ltd. (CATL) (300750.SZ -0.31%).

• “We’re pausing work and limiting spending on construction on the Marshall project until we’re confident about our ability to competitively operate the plant,” Ford spokesperson T.R. Reid said in a statement emailed to Caixin.

• “There are a number of considerations. We haven’t been specific about what they are, nor made any final decision about the planned investment there,” Reid said.

• Taiwan’s AI supply chain names have fallen over the last month, yet many have still outperformed Nvidia by a wide margin over the last six months.
• We don’t want to sell our Nvidia despite market risks — We believe a basket of Taiwan AI stocks can act as a Short to hedge a Long Nvidia position.
• Shorting a basket of Wistron, Quanta, Gold Circuit, and Asia Vital Components can act as a hedge vs. a Long Nvidia position. Below we explain why.

• Prodia is the leading diagnostics company in Indonesia, with over 40% market share as the most trusted brand in the country, given accreditation from the College of American Physicians.
• The company was a huge beneficiary of all the testing over COVID with the result of a post-pandemic correction but sales should see a strong 2H2023 with more like-for-like comparisons.
• Prodia (PRDA IJ) remains one of our top healthcare picks in Indonesia, with rising health consciousness driving higher demand for testing. Valuations are extremely attractive versus Indian peers. 

• Delta Thailand shares crashed over 20% in one day after its Taiwan parent sold a stake in the company.
• Given the small size of the stake sale, we believe the share sale by the parent represents an opportunistic sale to crystallize value from Delta Thailand’s high share price.
• We spoke with Delta Taiwan to update our model. Delta Taiwan continues to offer much better value than Delta Thailand, earning more than double Thailand’s net profit with similar growth.

• Our range for TSMC’s spread trading appears to be working. Premium has rebounded lately and we would Short if breaks above 9.8%.
• Our UMC trading range also appears to be working. We should Short if the premium increases slightly further to break 1%.
• One can consider Shorting ASE’s ADR premium at the current 10.8% premium level. After latest premium spike, risk appears skewed to the downside in the coming weeks.

• Kaspi.kz is the local super-app in Kazakhstan, with payments, marketplace, and Fintech as its three main business segments.
• The company has achieved strong topline and bottom line growth since listing with a RoAE >70% over the years and its share price having gone up ~3x.
• Key concerns arise from its political ties and future growth potential, given the country’s relatively low population/user size.

• VF Corporation delivered a mixed result in the past quarter, with revenues above anticipations, but it failed to surpass the analyst consensus in terms of earnings.
• While their on-time performance and in-stock percentages were both back in line with their expectations, lead times concluded the quarter at typical levels.
• Vans experienced a 22% decline in the quarter and was significantly impacted by the brand’s expected 40% decline in wholesale sales in the Americas.

• We have discovered something interesting from the innovative drug evaluations disclosed by the NMPA over the years. It’s recommended to establish rational expectations for the investment return of biopharmaceutical industry.
• We analyzed the different situations faced by Biotech in IPO/M&A process, so as to help investors make rational judgments. R&D team is likely to be cut regardless of the circumstances.
• We updated views on Huadong. Its old businesses dragged down valuation. It may need to wait until Huadong delivers better-than-expected sales/profit growth in weight-loss management business before further boosting valuation.

• This is a special one-time report on Emerald Holding that is creating ripples in the news circuit, courtesy of the exploration endeavors by its predominant shareholder, Onex.
• Emerald Holding, though operating with a low profile, has been wielding a silent yet significant influence over the events sphere.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• This is a special one-time report on PROS Holdings which has garnered attention due to speculation around a potential sale, as noted in a Reuters report.
• Despite its significant role and contributions to various industries, including airlines, PROS has encountered notable challenges, struggling to achieve profitability.
• Thus, the pertinent questions that arise are related to the feasibility of an acquisition of PROS Holdings and the potential premium that early investors might garner from such a transaction.

• China just announced game approval for September batch. The number of games approved is in-line with the pace of approval in recent month.
• Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Neither Tencent or Netease received approval for any game. Same thing happened for July batch.

• The latest Mate 60 Kirin SOC is a major accomplishment for the Huawei, SMIC combo
• SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV
• SMIC’s accomplishment is not reflected in its share price which lies midways between 52 week highs & lows

• After a heavy decline in ownership between 2016 and 2020, active Asia Ex-Japan managers are re-engaging with Baidu Inc.
• Ownership levels are at 4-year highs, with Baidu one of the key beneficiaries of manager rotation this year.
• Baidu is the 3rd largest holding in the Communication Services sector, but there a plenty of funds with a history of ownership who remain on the sidelines for now.

• Nike (NKE US) reported better than expected 1Q24 results this morning, with the stock up 8% in after market trading. 
• Nike’s inventories declined by 10% yoy during the quarter, which bodes well for Shenzhou Intl Group Holdings (2313 HK), as sales to Nike made up 30% of Shenzhou’s sales.
• Shenzhou is trading at 15x 2024E PE, compared to an average of 21x forward PE over the last decade. 

• Matahari Department Store (LPPF IJ) is the key player in the department store space in Indonesia with a significant transformation well underway to drive future growth and profitability.
• The company had a slightly disappointing Lebaran performance given some seasonal disparities but continues to make significant progress in revamping its merchandise mix, with a strong omnichannel yielding results. 
• Matahari Department Store (LPPF IJ) looks exceptionally cheap on 4.0x FY2024E PER, and with a dividend yield of 20.0% and with earnings expected to rebound in 2024E.

• Helped by the share in the incremental IPL media rights value, RPSG Venture’s (RPSGV) revenue from the sports business revenue jumped to INR 590cr+ in Q1FY24 vs INR 300cr+ YoY.
• Losses in the FMCG business narrowed to INR 63cr vs INR 90cr YoY and INR 70cr QoQ. FMCG revenues continue to be at around INR 400cr+ annualized run-rate.
• RPSGV’s BPO business, Firstsource Solutions (FSOL IN) saw stabilization in de-growth and margins. Margins expanded by 375bp during Q1FY24.

• kopi-C with Thakral’s CEO: “We’ve re-invented ourselves from VCRs to Drones” With the faster pace of development in sectors nowadays, adaptability and willingness to learn from others are crucial in business, says Thakral’s CEO Inderbethal Singh Thakral Building on the momentum, Thakral has invested in Skylark Drones, a start-up specialising in integrating drones in workflows in different industries.

• 4Paradigm, a self-developed AI platform and scenario-specific AI applications provider, has completed an IPO and raised net proceeds of ~HK$836M, excluding the over-allotment option. 
• Founder-Led AI unicorn priced its IPO at the bottom end of the range at HK$55.60 per share. Cornerstone investors agreed to purchase ~13.6M H shares at the IPO price. 
• I like the company’s leadership position in China’s fastest-growing decision-making AI market, large TAM for their enterprise-grade generative AI offering SageGPT and top-tier VC investors. 

• China Petroleum & Chemical Corp., the state-owned energy giant known as Sinopec, is making a bigger push into a renewable energy generated by heat within the earth as the country looks to diversify its sources of green energy.
• Sinopec’s push could serve as a catalyst for fast-tracking the exploration and use of geothermal energy, and spur the development of related technologies in the country, experts said.
• The company said on social media on Sept. 14 that it was expecting a “major development” in its geothermal heating segment and that it was on track to expand its service to more than 60 cities in over 10 regions in China by the end of the year.

• The return of higher crude oil prices could result in Texas Pacific Land (TPL) reporting higher than expected revenue in the third and fourth quarters of 2023
• TPL does not hedge its exposure to energy prices, which would have an outsize benefit when prices move higher like they have in the third quarter
• Crude oil production has been rising even though total rig count has also declined from levels reached earlier in the year

• Hengan International Group (1044 HK) and Vinda International (3331 HK) are both market leaders in China’s personal care industry.
• Hengan’s operations have greater exposure to sanitary napkins and diapers; whereas tissues account for 83% of Vinda’s revenue. Both companies have been impacted by an increase in wood pulp prices.
• Hengan is trading cheap; but Vinda’s bottom line is forecast to return to its glory days. Plus rumours of a possible takeover of Vinda continue to do the rounds. 

• We believe that Warren Buffett’s investments in Japanese trading companies have also positively impacted several Korean trading companies in the past three years. 
• We highlighted seven Korean trading companies three years ago including Posco International and their share prices are up more than 76% on average in this period. 
• Despite their outstanding share price performance in the past three years, there could be some significant headwinds ahead, as evidenced by the steep inverted yield curve.

• Seven Bank Ltd (8410 JP) is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.
• Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts
• Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines.

• ICICI Securities Ltd (ISEC IN) Turbulent Journey: From a disappointing IPO to a challenging delisting attempt.
• Delisting Plan and Shareholder Discontent: ICICI Securities Ltd (ISEC IN)  seeks to become a wholly-owned subsidiary of ICICI Bank Ltd (ICICIBC IN), facing resistance from minority shareholders.
• Uncertain Future: The outcome of the delisting hinges on the decisions of institutional shareholders like Life Insurance of India (LICI IN)  and the board’s actions.

• Kalbe Farma (KLBF IJ) is one of the key proxies for increasing healthcare penetration and health consciousness in Indonesia through prescription drugs, consumer health, and nutritional products.
• The company saw a solid sales performance in 1H2023 driven by prescription drugs. There was some lingering margin pressure from higher materials but this should abate in 2H2023.
• Kalbe Farma continues to develop its digital capabilities, as well as export markets helping to drive efficiencies and growth. Valuations remain below the historical average despite strong earnings recovery ahead.

• Micron’s FY4Q23 results beat expectations. The company expects to return to a positive margin by FY2H24, however projected a higher FY1Q24 loss than consensus expected.
• As suggested would be the case in our pre-results piece, the company said it sees memory prices bottoming and expects improving pricing and profitability ahead for the industry.
• While next quarter’s guidance may be weaker than some expected, we believe the key take-away is that Micron is seeing a memory prices bottom.

• NVIDIA Corp (NVDA US) drives King Yuan Electronics Co, Ltd. (2449 TT) stock price, but their growth is still limited in 2023F.
• King Yuan Electronics Co, Ltd. (2449 TT) acts as a buffer for Mediatek Inc (2454 TT) end demand during 2023F.
• Although it is not yet the time to reverse the downturn in 2023F, King Yuan Electronics Co, Ltd. (2449 TT) is expected to continue its upward trend throughout 2H23F.

• @Cosme continues to carve out a significant share of the cosmetics market, with record sales last year. 
• @Cosme appeals to a wide cross section of the population but this is about to get even wider once it starts selling via Amazon, its biggest shareholder.
• While there is debate about whether Amazon will increase its stake, what is certain is that Amazon will help drive iStyle’s sales growth.

• ARLO reporting better than expected third quarter results would rely on paid subscriber additions remaining on their current trajectory
• The pause in ARLO’s stock price creates greater upside potential as ARLO demonstrates its ability to generate positive earnings and free cash flow with each passing quarter
• ARLO has released a new line up of Essential cameras. ARLO had previously indicated it would update its Essentials cameras this year ahead of the holidays

• Fresenius Medical Care & (FME GR) reported accelerated organic revenue growth of 6% YoY in 2Q23, driven by both operating segments including sequentially stable treatment volumes in the U.S.
• Execution on turnaround plan translates into visible productivity improvements in care delivery segment achieving a Q2 margin at the lower end of the 2025 target margin band of 10–14%.
• The company now expects 2023 operating income to remain flat or decline by up to a low-single-digit percentage (previous target: remain flat or decline by up to a high-single-digit percentage).